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Summarize this legal judgement text concisely | Appeal No. 255 of 1954.
Appeal by Special Leave from the judgment and decree dated April 29, 1953, of the former Pepsu High Court in R. section A. Nos. 57 and 130 of 1952, arising out of the judgment and decree dated March 8, 1952, of the Court of Addl.
Judge, Faridkot, in Civil Appeal No. 10 of 1952, against the judgment and decree dated December 4, 1951, of the Court of `ubJudge 11 Class, Faridkot, in File No. 13 of 1951.
Jagan Nath Kaushal and K. L. Mehta, for the appellant.
Kapur Chand Puri and Tarachand Brijmohan Lal, for respondents Nos. 1 to 3. 1958.
May 20.
The Judgment of the Court was delivered by SUBBA RAO J.
This appeal by Special Leave against the judgment and decree of the High Court of Patiala and East Punjab States Union raises an interesting question pertaining to the Law of Preemption.
881 The material facts are not in dispute and may be briefly stated: The dispute relates to a land measuring 179 kanals and 2 marlas, situate in village Wanderjatana.
On August 26, 1949, defendants 3 to 7 sold the said land to defendants I and 2 for a consideration of Rs. 37,611.
On August 26, 1950, defendants 8 to 11 instituted a suit, Suit No. 231 of 1950 (Exhibit P. 26/1) in the Court of the Subordinate Judge, 11 Class, Faridkot, to pre empt the said sale on the ground, among others, that they bad a right of preemption.
On January 6, 1951, the vendees, i. e., defendants I and 2, and the plaintiffs therein, i. e., defendants 8 to 11 (appellants in the present appeal), entered into a compromise.
Under the terms of the compromise, the vendees admitted that they had received Rs. 1,700 from defendants 8 to II and that defendants 8 to 1 1 agreed to pay the balance of the consideration, amounting to Rs. 35,911 on the 27th April, 1951,.
It was further agreed that on the payment of the said amount, they should get possession through Court.
As the amount agreed to be paid was in excess of the pecuniary jurisdiction of the Court of the Subordinate Judge, they filed the compromise deed in the Court of the District Judge and on the basis of the said compromise, the District Judge made a decree dated January 23, 1951.
It was provided in the decree that in case defendants 8 to I I failed to pay the balance to the vendees on April 27, 1951, the suit should stand dismissed and that if the said balance was paid on that date, the vendees should deliver possession of the land in dispute to them.
Defendants 8 to 11 deposited the balance of Rs. 35,911 on April 23, 1.951, and got possession of the land on May 17, 1951.
Before the said defendants (8 to 11) deposited the amount in Court under the terms of the compromise decree, the resondents herein, claiming to be owners of land in the same patti, filed Suit No. 13 of 1951 in the Court of the Subordinate Judge, 11 Class, Faridkot, to enforce their right of pre emption.
To that suit the original vendors were impleaded as defendants 3 to 7, the vendees as defendants I and 2 and the plaintiffs in Suit No. 231 of 1950 as defendants 8 to 11.
882 Defendants 8 to 11 contested the suit, inter alia, on the grounds that the plaintiffs had no right of preemption superior to that of theirs, that the suit was barred by limitation and that the whole of the sale consideration had been fixed in good faith and paid.
The learned Subordinate Judge found all the issues in favour of defendants 8 to 11 and dismissed the suit.
On the main issue he found that the said defendants, by obtaining a decree for pre emption before the rival claimants had filed their suit, had become vendees through Court and so the plaintiffs could not succeed unless they had a superior right.
The plaintiffs preferred an appeal to.
the Additionl District Judge, Faridkot, against the said decree.
The District Judge held that the plaintiffs and defendants 8 to 11 had equal rights of pre emption and were entitled to share the sale in the proportion of 3/7 and 4/7 respectively on payment of the proportionate amount of the consideration.
On the main question, he took the view that defendants 8 to 11 did not exercise their right of pre emption when the present suit was instituted for the reason that by the date of the filing of the suit they had not deposited the purchase money in Court.
Both the parties filed Second Appeals against the decision of the District Judge in the High Court of Patiala questioning that part of the decree which went against them.
The High Court upheld that part of the decree of the learned District Judge holding that the plaintiffs were entitled to a share in the suit property but remanded the suit to the District Judge to give his findings on the following two questions: (1) What was the amount paid by defendants 8 to 11 to the original vendees and whether they paid it in good faith; (2) Whether the case would come under section 17C, cl.
(e) of the Punjab Pre emption Act (hereinafter to be referred to as the Act).
As the High Court refused to certify that the case was a fit one for appeal to the Supreme Court, defendants 8 to 11 preferred the above appeal by obtaining special leave of this Court.
The learned Counsel for the appellants raises the following two contentions before us: (1) Section 28 of 883 the Pre emption Act indicates that a property can be divided between equal pre emptors in terms of section 17 of the Pre emption Act only when both the suits are pending before the Court at the time of the passing of the decree ; (2) the appellants exercised their right of pre emption by obtaining a decree or at any rate when they deposited the money payable under the decree and thereby got themselves substituted in place of the original vendees and thereafter, the plaintiff 's can succeed only by proving their superior right to them.
The learned Counsel for the respondents countered the aforesaid argument by stating that the plaintiffs, being pre emptors of equal degree, have got a statutory right under section 17 of the Pre emption Act to share the land with the appellants, and the appellants, having been substituted in place of the original vendees pendente lite, are hit by the doctrine of lis _pendens and therefore, they cannot claim higher rights than those possessed by the original vendees at the time of the filing of the suit.
Before attempting to give a satisfactory answered to the question raised, it would be convenient at the outset to notice and define the material incidents of the right of pre emption.
A concise but lucid statement of the law is given by Plowden J. in Dhani Nath vs Budhu (1) thus: A preferential right to acquire land, belonging to another person upon the occasion of a transfer by the latter, does not appear to me to be either a right to or a right in that land.
It is,jus ad rem aliens acquirendum and not a jus ? 'In re aliena. .
A right to the offer of a thing about to be sold is not identical with a right to the thing itself, and that is the primary right of the pre emptor.
The secondary right is to follow the thing sold, when sold without the proper offer to the pre emptor, and to acquire it, if he thinks fit, in spite of the sale, made in disregard of his preferential right." The aforesaid passage indicates that a pre emptor has two rights: (1) inherent or primary right, i.e., a right (1)136 P. R. 1894 at p. 5ii.
884 to the offer of a thing about to be sold and (2) secondary or remedial right to follow the thing sold.
Mahmood J. in his classic judgment in Gobind Dayal vs Inayatullah (1) explained the scope of the secondary right in the following terms: " It (right of pre emption) is simply a right of sub stitution, entitling the pre emptor, by means of a legal incident to which sale itself was subject, to stand in the shoes of the vendee in respect of all the rights and obligations arising from the sale, under which lie, derived his title.
It is, in effect, as if in a sale deed the vendee 's name were rubbed out and pre emptor 's name inserted in its place".
The doctrine adumbrated by the learned Judge, namely, the secondary right of pre emption is simply a right of substitution in place of the original vendee, has been accepted and followed by subsequent decisions.
The general law of pre emption does not recognize any right to claim a share in the property sold when there are rival claimants.
It is well established that the right of pre emption is a right to acquire the whole of the property sold in preference to other persons (See Mool Chand vs Ganga Jal (2)).
The plaintiff is bound to show not only that his right is as good as that of the vendee but that it is superior to that of the vendee.
Decided cases have recognized that this superior right must subsist at the time the pre emptor exercises his right and that that right is lost if by that time another person with equal or superior right has been substituted in place of the original vendee.
Courts have not looked upon this right with great favour, presumably, for the reason that it operates as a clog on the right of the owner to alienate his property.
The vendor and the vendeeire, therefore, permitted to avoid accrual of the right of pre emption by all lawful means.
The vendee may defeat the right by selling the property to a rival pre emptor with preferential or equal right.
To summarize: (1) The right of pre emption is not a right to the thing sold but a right to the offer of a thing about to be sold.
(i) All. 775, 809.
(2) Lah.
258, 273.
885 This right is called the primary or inherent right.
(2) The pre emptor has a secondary right or a remedial right to follow the thing sold.
(3) It is a right of substitution but not of re purchase, i. e., the pre emptor takes the entire bargain and steps into the shoes of the original vendee.
(4) It is a right to acquire the whole of the property sold and not a share of the property sold.
(5) Preference being the essence of the right, the plaintiff must have a superior right to that of the vendee or the person substituted in his place.
(6) The right being a very weak right, it can be defeated by all legitimate methods, such as the vendee allowing the claimant of a superior or equal right being substituted in his place.
The next question is whether this right is modified or otherwise enlarged by the ' provisions of the Act.
Relevant provisions of the Act, material to the present purpose, read thus: Section 4: " The right of pre emption shall mean the right of a person to acquire agricultural land or village immovable property or urban immovable property in preference to other persons, and it arises in respect of such land only in the case of sales and in respect of such property only in the case of sales or of foreclosures of the right to redeem such property".
Section 13: " Whenever according to the provisions of this Act, a right of pre emption vests in any class or group of persons the right may be exercised by all the members of such class or group joint, and, if not exercised by them all jointly, by any two or more of them jointly, and, if not exercised by any two or more of them jointly, by them severally".
Section 17: " Where several pre emptors are found by the Court to be equally entitled to the right of preemption, the said right shall be exercised, (a)if they claim as co shares, in proportion among themselves to the shares they already hold in the land or property ; (b)if they claim as heirs, whether co sharers or not, in proportion among themselves to the shares in which but for such sale, they would inherit the land or property in the event of the vendor 's decease without other heirs; 886 (c)if they claim as owners of the estate or recognised subdivision thereof, in proportion among themselves to the shares which they would take if the land or property were common land in the estate or the subdivision, as the case may be; (d)if they claim as occupancy tenants, in proportion among themselves to the areas respectively held by them in occupancy right; (e)in any other case, by such pre emptors in equal shares.
" Section 19: " When any person proposes to sell any agricultural land or village immovable property or urban immovable property or to foreclose the right to redeem any village immovable property or urban immovable property, in respect of which any persons have a right of preemption, lie may give notice to all such persons of the price at which he is willing to sell such land or property or of the amount due in respect of the mortgage, as the case may be.
Such notice shall be given through any Court within the local limits of whose jurisdiction such land or property or any part thereof is situate, and shall be deemed sufficiently given if it be stuck up on the chaupal or other public place of the village, town or place in which the land or property is situate.
" Section 20: " The right of pre emption of any person shall be extinguished unless such person shall, within the period of three months from the date on which the notice tinder section 19 is duly given or within such further period not exceeding one year from such date as the court may allow, present to the Court a notice for service on the vendor or mortgagee of his intention to enforce his right of pre emption.
Such notice shall state whether the preemptor accepts the price or amount due on the footing of the mortgage as correct or not, and if not, what sum he is willing to pay." " When the Court is satisfied that tile said notice has been duly served on the vendor or mortgagee the proceedings shall be filed.
" Section 28: " When more suits than one arising out of the same sale or foreclosure are pending the plaintiff 887 in each suit shall be joined as defendant in each of the other suits, and in deciding the suits the court shall in each decree state the order in which each claimant is entitled to exercise his right".
The Act defines the right and provides a procedure for enforcing that right.
It does not enlarge the content of that right or introduce any change in the incidents of that right.
Section 4 embodies the preexisting law by defining the right as a right of a person to acquire land in preference to other persons in respect of ,ales of agricultural lands.
Section 13 cannot be read, as we are asked to do, as a statutory recognition of a right of preemptors of equal degree to exercise their rights piece meal confined to their shares in the land.
Section 13 confers on a group of persons, in whom the right of preemption vests, to exercise that right either jointly or severally, that is to say, either the group of persons or one of them may enforce the right in respect of the entire sale.
Section 17 regulates the distribution of preempted land when the Court finds that several pre emptors are equally entitled to the right of pre emption.
But this Section applies only where (1) the right is yet to be exercised and (2) the pre emptors are found by the Court to be equally entitled to exercise the right.
The section does not confer the right on or against a person, who has already exercised the right and ceased to be a preemptor by his being legitimately substituted in place of the original vendee.
(See Mool Chand vs ganga Jal (1) at p. 274 and Lokha Singh vs Sermukh Singh (2)).
Sections 19 and 20 prescribe the procedure for the exercise of the primary right, while section 28 confers a power on the Court to join together two or more suits arising out of the same sale, so that suitable directions may be given in the decree in regard to the order in which each claimant is entitled to exercise the right.
This section is enacted presumably to avoid conflict of decisions and finally determine the rights of the various claimants.
The aforesaid provisions do not materially affect the characteristics of the right of pre (1) Lah.
113 (2) A.I.R. 1952 Punj.
206, 207.
888 emption as existed before the Act.
They provide a convenient and effective procedure for disposing of together different suits, arising out of the same transaction, to avoid conflict of decisions, to fix the order of priority for the exercise of their rights and also to regulate the distribution of the preempted land between rival pre emptors.
The provisions do not in any way enable the preemptor to exercise his right without establishing his superior right over the vendee or the person substituted in his place or to prevent the vendor or the vendee, by legitimate means, to defeat his right by getting substituted in place of the vendee a pre emptor with a superior right to or an equal right with that of the plaintiff.
Nor can we accept the argument of the learned counsel for the appellants that section 28 precludes the Court from giving a decree for pre emption in a case where the two suits were not joined together but one of the suits was decreed separately.
Section 28 enacts a convenient procedure, but it cannot affect the substantative rights of the parties.
We do not see that, if the plaintiffs were entitled to a right of pre emption, they would have lost it by the appellants obtaining a decree before the plaintiffs instituted the suit, unless it be held that the decree itself had the effect of substituting them in place of the original vendees.
We cannot, therefore, hold that the plaintiffs ' suit is in any way barred under the provisions of the Act.
This leads us to the main question in this case, namely, whether the appellants having obtained a consent decree oil January 23, 1951, in their suit against the vendees and having paid the amount due under the decree and having taken delivery of the property and thus having got themselves substituted in place of the original vendees, can legitimately defeat the rights of the plaintiffs, who, by reason of the aforesaid substitution, were only in the position of pre emptors of equal degree vis a vis the appellants and therefore ceased to have any superior rights.
The learned Counsel for the respondents contends that the appellants are hit by the doctrine of lis pendens and 889 therefore the act of substitution, which was effected on April 23, 1951, could not be in derogation of their right of pre emption, which they have exercised by filing their suit on February 15, 1951.
It is now settled law in the Punjab that the rule of lis pendens is as much applicable to a suit to enforce the right of pre emption as to any other suit.
The principle on which the doctrine rests is explained in the leading case of Bellami vs Sabine (1), where the Lord Chancellor said that pendente lite neither party to the litigation can alienate. . the property so as to affect his opponent.
In other words, the law does not allow litigant parties, pending the litigation, to transfer their rights to the property in dispute so as to prejudice the other party.
As a corollary to this rule it is laid down that this principle will not affect the right existing before the suit.
The rule, with its limitations, was considered by a Full Bench of the Lahore High Court in Mool Chand vs Ganga Jal (2).
In that case, during the pendency of a pre emption suit, the vendee sold the property which was the subject matter of the litigation to a person possessing a right of pre emption equal to that of the pre emptor in recognition of that person 's right of pre emption.
This re sale took place before the expiry of the period of limitation for instituting a pre emption suit with respect to the original sale.
The Full Bench held that the doctrine of lis pendens applied to preemption suits; but in that case, the resale in question did not conflict with the doctrine of lis pendens.
Bhide J. gave the reason for the said conclusion at page 272 thus: " All that the vendee does in such a case is to take the bargain in the assertion of his pre existing pre emptive right, and hence the sale does not offend against the doctrine of lis pendens ".
Another Full Bench of the Lahore High Court accepted and followed the aforesaid doctrine in Mt. Sant Kaur vs Teja Singh (3).
In that case, pending the suit for pre emption, the vendee sold the land purchased (i) ; ; (2) Lah. 258, 273.
(3) I.L.R. [1946] Lah.
467, 890 by him to a person in recognition of a superior right of pre emption.
Thereafter, the second purchaser was brought onrecord and was added as a defendant to the suit.
At the time of the purchase by the person having a superior right of pre emption, his right to enforce it was barred by limitation.
The ]High Court held that that circumstance made a difference in the application of the rule of lis pendens.
The distinction between the two categories of cases was brought out in bold relief at page 145 thus: " Where the subsequent vendee has still the means of coercing, by means of legal action, the original vendee into surrendering the bargain in his favour, a surrender as a result of a private treaty, and out of Court, in recognition of the right to compel such surrender by means of a suit cannot properly be regarded as a voluntary transfer so as to attract the application of the rule of lis pendens.
The correct way to look at the matter, in a case of this kind, is to regard the subsequent transferee as having simply been substituted for the vendee in the original bargain of sale.
He can defend the suit on all the pleas which he could have taken had the sale been initially in his own favour. " " However, where the subsequent transferee has lost the means of making use of the coercive machinery of the law to compel the vendee to surrender the original bargain to him, a re transfer of the property in the former 's favour cannot be looked upon as anything more than a voluntary transfer in the former 's favour of such title as he had himself acquired under the original sale.
Such transfer has not the effect of substituting the subsequent transferee in place of the vendee in the original bargain.
Such a transferee takes the property only subject to the result of the suit.
Even if lie is impleaded as a defendant in such suit, he cannot be regarded as anything more than a representative in interest of the original vendee, having no right to defend the suit except on the pleas that were open to such vendee himself ".
This case, therefore, expressly introduces a new element in the applicability of the doctrine of lis pendens 891 to a suit to enforce the pre emptive right.
If the right of the pre emptor of a superior or equal degree was subsisting and enforceable by coercive process or otherwise, his purchase would be considered to be in exercise of that pre existing right and therefore not hit by the doctrine of lis pendens.
On the other hand, if he purchased the land from the original vendee after his superior or equal right to enforce the right of preemption was barred by Limitation, he would only be in the position of a representative in interest of the vendee, or to put it in other words, if his right is barred by limitation, it would be treated as a non existing right.
Much to the same effect was the decision of another Full Bench of the Lahore High Court in Mohammad Sadiq vs Ghasi Ram (1).
There, before the institution of the suit for pre emption, an agreement to sell the property had been executed by the vendee in favour of another prospective pre emptor with an equal degree of right of pre emption; subsequent to the institution of the suit, in pursuance of the agreement, a sale deed had been executed and registered in the latter 's favour, after the expiry of the limitation for a suit to enforce his own pre emptive right.
The Full Bench held that the doctrine of lis pendens applied to the case.
The principle underlying this decision is the same as that in Mt. Sant Kaur vs Te a Singh (2), where the barred right was treated as a non existent right.
The same view was restated by another Full Bench of the East Punjab High Court in Wazir Ali Khan vs Zahir Ahmad Khan (3).
At p. 195, the learned Judges observed: " It is settled law that unless a transfer pendente lite can be held to be a transfer in recognition of a subsisting pre emptive right, the rule of lis pendens applies and the transferee takes the property subject to the result of the suit during the pendency where of it took place".
The Allahabad High Court has applied the doctrine of lis pendens to a suit for pre emption ignoring the limitation implicit in the doctrine that it cannot affect (i) A.I.R. 1946 Lah.
(2) I.L.R. , (3) A.I.R. [1949 East Punj.
[93. 892 a pre existing right.
(See Kundan Lal vs Amar Singh (1)).
We accept the view expressed by the Lahore High Court and East Punjab High Court in preference to that of the Allahabad High Court.
In view of the aforesaid four Full Bench decisions three of the Lahore High Court and the fourth of the East Punjab High Court a further consideration of the case is unnecessary.
The settled law in the Punjab may be summarized thus: The doctrine of lis pendens applies only to a transfer pendente lite, but it cannot affect a pre existing right.
If the sale is a transfer in recognition of a pre existing and subsisting right, it would not be affected by the doctrine, as the said transfer did not create now right pendente lite ; but if the pre existing right became unenforceable by reason of the fact of limitation or otherwise, the transfer, though ostensibly made in recognition of such a right, in fact created only a new right pendente lite.
Even so, it is contended that the right of the appellants to enforce their right of pre emption was barred by limitation at the time of the transfer in their favour and therefore the transfer would be hit by the doctrine of lis pendens.
This argument ignores the admitted facts of the case.
The material facts may be recapitulated: Defendants 3 to 7 sold the land in dispute to defendants 1 and 2 on August 26, 1949, and the sale deed was registered on February 15, 1950.
The appellants instituted their suit to pre empt the said sale on August 26, 1950, and obtained a compromise decree on January 23, 195 1.
They deposited the balance of the amount payable on April 23, 1951, and took possession of the land on May 17, 1951.
It would be seen from the aforesaid facts that the appellants ' right of pre emption was clearly subsisting at the time when the appellants deposited the amount and took possession of the land, for they not only filed the suit but obtained a decree therein and complied with the terms of the decree within the time prescribed thereunder.
The coercive process was still in operation.
if so, it follows that the appellants are not hit by the (i)A.I.R. 1927 All.
VI 893 doctrine of lis pendens and they acquired an indefeasible right to the suit land, at any rate, when they took possession of the land pursuant to the terms of the decree, after depositing in Court the balance of the amount due to the vendors.
We shall briefly touch upon another argument of the learned Counsel for the appellants, namely, that the compromise decree obtained by them, whereunder their right of pre emption was recognized, clothed them with the title to the property so as to deprive the plaintiffs of the equal right of pre emption.
The right of pre emption can be effectively exercised or enforced only when the pre emptor has been sub stituted by the vendee in the original bargain of sale.
A conditional decree, such as that with which we are concerned, whereunder a pre emptor gets possession only if he pays a specified amount within a prescribed time and which also provides for the dismissal of the suit in case the condition is not complied with, cannot obviously bring about the substitution of the decreeholder in place of the vendee before the condition is complied with.
Such a substitution takes effect only when the decree holder complies with the condition and takes possession of the land.
The decision of the Judicial Committee in Deonandan Prashad Singh vs Ramdhari Chowdhri (1) throws considerable light on the question whether in similar circumstances the pre emptor can be deemed to have been substituted in the place of the original vendee.
There the Subordinate Judge made a pre emption decree under which the pre emptors were in possession from 1900 to 1904, when the decree was reversed by the High Court and the original purchaser regained possession and in 1908, the Privy Council, upon further appeal, declared the pre emptors ' right to purchase, but at a higher price than decreed by the Subordinate Judge.
In 1909 the pre eimptors paid the additional price and thereupon again obtained possession.
The question arose whether the pre emptors were not entitled to mesne profits for the period between 1904 to 1909, i.e., during the period the judg (i)(1916) L. R. 44 1.
A. 80.
894 ment of the first appellate Court was in force.
The Privy Council held that during that period the preemptors were not entitled to mesne profits.
The reason for that conclusion was stated at page 84 thus: " It therefore follows that where a suit is brought it is on payment of the purchase money on the specified date that the plaintiff obtains possession of the property, and until that time the original purchaser retains possession and is entitled to the rents and profits.
This was so held in the case of Deokinandan vs Sri Ram (1) and there Mahmud J. whose authority is well recognized by all, stated that it was only when the terms of the decree were fulfilled and enforced that the persons having the right of pre emption become owners of the property, that such ownership did not vest from the date of sale, notwithstanding success in the suit, and that the actual substitution of the owner of the pre empted property dates with possession under the decree ".
This judgment is, therefore, a, clear authority for the position that the pre emptor is not substituted in the place of the original vendee till conditions laid down in the decree are fulfilled.
We cannot, therefore, agree with the learned Counsel that the compromise decree itself perfected his clients ' right in derogation to that of the plaintiffs.
But as we have held that the appellants complied with the conditions laid down in the compromise decree, they were substituted in the place of the vendee before the present suit was disposed of.
In the aforesaid view, the other questions raised by the appellants do not arise for consideration.
In the result, the appeal is allowed and the suit is dismissed with cost, , throughout.
Appeal allowed.
(1) All.
| Upon the sale of certain village land the appellants filed a suit for pre emption, and a compromise decree was passed allowing pre emption provided the appellants deposited the purchase amountbvacertaindate.
The appellants Posited the amount and got Possession of the land.
Before the appellants deposited 879 the amount, the respondents who were pre emptors of an equal degree, filed a suit to enforce their right of pre emption.
The appellants contended that the land could be divided between two equal pre emptors only when both the suits were pending before the court at the time of the passing of the decree, and that the appellants having obtained the decree and paid the amount got substituted in place of the vendees and the respondents could succeed only by establishing a superior right of pre emption.
The respondents countered that they had a statutory right under section 17 Of the Punjab Pre emption Act to share the land with the appellants and that the appellants, having been substituted in place of the vendees Pendente lite, were hit by the doctrine of lis pendens and could not claim a higher right than the vendees: Held, that the respondents ' suit could not succeed as they (lid not have a superior right of pre emption over the appellants who had become substituted in place of the vendees upon payment of the purchase money under their decree.
A pre emptor has two rights: (i) inherent or primary right to the offer of a thing about to be sold and (2) a secondary or remedial right to follow the thing sold.
The secondary right is simply a right of substitution in place of the original vendee.
Dhani Nath vs Budhu, 136 P. R. 1894 at P. 511 and Gobind Dayal vs Inayatullah, All. 775, followed.
In a suit for pre emption the plaintiff must show that his right is superior to that of the vendee and that it subsists at the time he exercises his right.
This right is lost if before he exercises it another person with an equal or superior right has been substituted in place of the original vendee.
The Punjab Preemption Act defines the right of pre emption and provides a procedure for enforcing it.
It does not enlarge the content of this right nor does it introduce any change in the incidents of the right.
Section 28 Of the Act does not preclude the Court from giving a decree for pre emption in a case where the suits are not joined together and one of the suits has been decreed separately.
The doctrine of lis pendens applies only to a transfer Pendente lite, but it cannot affect a pre existing right.
If the sale is a transfer in recognition of a preexisting and subsisting right, it would not be affected by the doctrine, as the transfer does not create a new right Pendente lite but if the preexisting right became unenforceable by reason of limitation or otherwise, the transfer, though ostensibly made in recognition of such a right, in fact creates only a new right pendente lite.
The appellants ' right of pre emption was subsisting and was not barred by limitation at the time of the transfer in their favour as they had filed a suit and had obtained a decree and the coercive 112 880 process was still in operation.
Consequently the appellants were not hit by the doctrine of lis pentlens and they acquired an indefeasible right to the land when they took possession of it after depositing the purchase money in court.
Mool Chand vs Ganga jal, Lah.
258, Mt. Sant Kaor vs Teja Singh, I.L.R. , Mohammad Sadhiq vs Ghasi Ram, A.I.R. 1946 Lah.
322 and Wazir Ali Khan vs Zahir Ahmad Khan, A.I.R. 1949 East Punj.
193, approved.
Kundan Lal vs Amar Singh, A.I.R. 1927 All.
664, disapproved.
The right of pre emption is effectively exercised or enforced only when the pre emptor has been substituted for the vendee.
A conditional decree whereunder the pre emptor gets possession only if he pays a specified amount within a prescribed time and which also provides for the dismissal of the suit in case the condition is not fulfilled, cannot bring about the substitution of the decree holder for the vendee before the condition is fulfilled.
Such substitution takes effect only when the decree holder fulfils the condition and takes possession of the land.
Deonandan prashad Singh vs Ramdhari Choudhyi, (1916) L. R. 44 I. A. 80, followed.
|
Summarize this legal judgement text concisely | Appeal No. 256 of 1954.
Appeal from the judgment and decree dated July 3, 1953, of the Calcutta High Court in Appeal from Original Order No. 7 of 1953, arising out of the judgment and decree dated August 5, 1952, of the said High Court in Matter No. 84 of 1952.
823 N. C. Chatterjee, section K. Kapur and I. N. Shroff, for the appellant.
C. K. Daphtary Solicitor General of India, H. J. Umrigar and R. H. Dhebar, for respondents Nos. 1 to 3.
B. Sen, section N. Mukherjee, and B. N. Ghosh, for respondent No. 4.
Veda Vyasa and B. P. Maheshwari, for respondent No. 5. 1958.
May 9.
The Judgment of the Court was delivered by section K. DAS J.
This appeal has come to us on a certificate granted by the High Court of Judicature at Calcutta that the case is a fit one for appeal to this Court.
The appellant is Shewpujanrai lndrasanrai Ltd., a private limited company incorporated under the Indian Companies Act, 1913 and carrying on business at 69, Manohar Das Street, Calcutta.
Respondents I and 3 are the Customs authorities concerned; respondent 2 is the Union of India, and respondents 4 and 5 are two banks, called respectively Nationale Handels Bank N. V., a foreign company carrying On business at 1, Royal Exchange Place, Calcutta, and Bharat Bank Ltd., a company incorporated under the Indian Companies Act, 1913, and having its registered office at 143, Cotton Street, Calcutta.
The material facts are these.
The appellant Company carries on business as a bullion merchant and in that capacity used to buy gold and silver in the Calcutta and Bombay markets and sell the same either direct or through bankers at the aforesaid two places.
It is stated that between November 14,1950, and November 20, 1950, the appellant Company, ill the usual course of its business, purchased about 9,478 tolas of gold, and in respect of the said purchases, borrowed money from respondents 4 and 5.
The gold so purchased was deposited with the respondent banks as security for the loans taken, 7,044 tolas being deposited with respondent 4 and about 2,437 tolas 105 824 with respondent 5.
With the consent of the appellant Company, the two Banks respondents 4 and 5, sent the gold to the Calcutta Min for the purpose of assaying.
On November 20, 1950, the Collector of Customs, Calcutta, asked the Mint authorities not to part with the gold, and on November 21, 1950, the gold was seized at the instance of the Customs authorities, Calcutta, in pursuance of a search warrant issued by the Chief Presidency Magistrate, Calcutta.
On the same day, certain books of account of the appellant company were.
also seized from its place of business at 69, Manohar Das Street.
Oil November 22, 1950, the appellant Company received a letter signed by one Jasjit Singh of the Customs Department, requesting the presence of the appellant at the Customs House on November 27, 1950, for opening and checking the bags of bullion which had been seized from the Mint.
Thereafter followed some correspondence, details whereof are not necessary for our purpose, between the Customs authorities and Messrs. Sawday & Co., acting on behalf of the appellant Company.
On December 19, 1950, the appellant Company made an application in the High Court of Calcutta under article 226 of the Constitution in which it asked for the issue of appropriate writs or orders quashing the orders of seizure and detention of its gold and books of account, and for a further direction that the Customs authorities be prohibited from giving effect to the said orders of detention and seizure or from taking any steps in connection with the gold or the books of account seized.
This writ application was heard and disposed of by an order made by Bose J. of the Calcutta High Court on April 23, 1951, the result of which was that the rule was made absolute to this extent only that the seizure of the books of account was declared to be illegal and a direction was made that the books be returned forthwith to the appellant Company.
No order was made about the gold seized and detained.
On June 20, 1951, the Customs authorities sent a notice to the appellant Company which was in these terms: 825 Subject : Seizure of 9,478 19 tolas of gold at the Government of India Mint, Strand Road, Calcutta.
I have been directed by the Collector of Customs to inform you that the above case has been placed before him for adjudication by the Superintendent, Preventive Service.
A copy of the note submitted by the latter together with copies of the assay reports therein referred to are enclosed herewith.
You are requested to show cause in writing within fourteen days from date hereof why penal action should not be taken against you and the 9,478.19 tolas of gold in question under the provisions of sections 167 clause 8 and 168 of the , for alleged violation of section 19 of the same Act read with section 8 of the Foreign Exchange Regulation Act, 1947.
You are also requested to send copies of all documentary evidence including all books of account, vouchers etc., along with your explanation.
On receipt of your explanation, the Collector has directed me to further inform you that in this case a date and time will be fixed for hearing at which you will be required to produce all oral evidence in support of your explanation and also to make your submissions.
" This notice was issued on the strength of an information contained in a note which the Superintendent, Preventive Service of the Customs authorities, submitted and which said that the gold in question had been smuggled into India in violation of the provisions of the (hereinafter referred to as the ) and the Foreign Exchange Regulation Act, 1947 (hereinafter referred to as the Foreign Exchange Act) and that the gold had been sent to the Mint for processing; that is, for melting and casting the same into bars, weighing and stamping the same with the Mint Marks, and also assaying small portions thereof.
On July 3, 1951, the appellant Company submitted its explanation in answer to the aforesaid notice.
The parties were then heard by the then Collector of Customs, Sri Raja Ram Rao; but before the hearing could conclude, Sri Raja Ram.
826 Rao was transferred.
His successor, Mr. J. W. Orr, heard the parties on some days; but on October 11, 1951, Mr. Orr was succeeded by Sri A. N. Puri.
This latter officer heard the parties afresh and concluded the hearing on February 8, 1952.
On May 14, 1952, Sri A. N. Puri passed the order impugned in this case, in which he came to the conclusion that the gold in question (9,478.19 tolas) was smuggled gold and that there was a contravention of the provisions of section 19 of the read with section 8 of the Foreign Exchange Act.
The final order which he made was in these terms : " I accordingly order that the entire quantity of the gold seized on the 21st November, 1950, amounting to 9,478.19 tolas be confiscated under section 167(8) of the .
In lieu of confiscation, however, I give the owner of the said gold an option under section 183 ibid to pay a fine of Rs. 10,00,000 (Rupees ten lakhs only) in addition to the proper customs duty and other charge leviable thereon within four months from the date of the despatch of this order.
The release of the gold will be further subject to the production of a permit from Reserve Bank of India within the aforesaid period.
" On June 19, 1952, the appellant Company filed a second writ petition in the High Court of Calcutta in which it asked that (a) a writ of certiorari do issue against respondents I to 3 calling upon them to produce the record of the proceeding resulting in the impugned order of May 14,1952, and for quashing the same; (b) a writ of mandamus do issue requiring respondents 1 to 3 to forbear from giving effect to the orders of seizure, detention and confiscation of the appellant 's gold and further requiring the said respondents to return the gold to the appellant; and (e) a writ of prohibition do issue restraining the said respondents from taking any further steps in pursuance of the order of confiscation etc.
This second writ application was dealt with and disposed of by Bose J. by his order dated August 5, 1952.
Broadly speaking, the two main grounds on which he held the impugned order to be bad ",ere these.
The learned Judge held 827 that by purporting to proceed under 182 of the in the present case, the Customs authorities had acted in prejudice to the provisions of section 23 of the Foreign Exchange Act and this was in violation of section 8(3) of the Foreign Exchange Act as it stood at the relevant time.
He said: " If the petitioners had not been implicated in the charge it might have been open to the Customs authorities to proceed under section 182 if steps were intended to be taken only against the offending goods but the notice to show cause makes it clear that that is not the case.
Although I am not prepared to go to the length of holding that section 23 of the Foreign Exchange Regulation Act altogether excludes the operation of section 182 of the and although I have no doubt, that in appropriate cases where section 23 is not attracted, recourse can be had to section 182 of the , the present case is one in which adoption of the procedure under section 182 of the has prejudiced section 23 of the Foreign Exchange Regulation Act.
The entire proceedings before the Customs authorities must therefore be held to be without jurisdiction.
" Secondly, he held that the conditions which the Collector of Customs had imposed in the impugned order for release of the confiscated gold were not warranted by the statute, and as the impugned order was one composite order, different parts whereof could not be severed one from the other, the entire order must be held to have been made without jurisdiction.
On these findings, the rule was made absolute, the impugned order was quashed and respondents I to 3 were directed to forbear from giving effect to the order.
Then there was an appeal which was heard by a Division Bench consisting of Das and Mookerjee JJ.
That Bench held that the proceeding under the was in the nature of a proceeding in rem and an order of confiscation or penalty passed in such a proceeding was not a quasi judicial act, but an administrative or executive act, in respect of which no application for the issue of a writ of certiorari under 828 article 226 of the Constitution lay.
On a construction of section 8(3) of the Foreign Exchange Act, as it stood at the relevant time, it held that the restrictions mentioned therein had a double effect and the remedies available under section 167(8) of the and under section 23 of the Foreign Exchange Act were cumulative in nature.
It said: " The former remedy (meaning the remedy under the ) is intended to levy the customs duties and is mainly directed against the goods; the latter is penal, intended to punish the person concerned in the act of smuggling.
There is thus no question of the former proceeding prejudicing the latter proceeding. " Accordingly the Division Bench held that the first ground on which Bose J. had held the impugned order to be bad was not sustainable.
With regard to the conditions imposed in the impugned order for the release of the confiscated gold, it held that the invalidity, if any, of the imposition of such conditions did not affect the main order of confiscation.
It said Section 183 casts an imerative duty on the officer adjudging confiscation to give the owner of the goods an option to party such a fine as the officer thinks fit in lieu of confiscation.
The duty so cast is an exercise of jurisdiction by the officer concerned quite separate from the exercise of his jurisdiction under section 167(8) imposing confiscation and penalty.
If any illegality has attached in the matter of exercise of his jurisdiction under section 183, the illegal condition may be set aside.
" In the result, it accepted the appeal and set aside the judgment and order of Bose J.
The present appeal is from the aforesaid judgment and order of the Division Bench dated July 3, 1953.
There are two preliminary points which we may conveniently dispose of here, before we go on to the main contentions urged on behalf of the appellant Company.
In giving a certificate in this case the learned Chief Justice, with whom Das Gupta J. agreed, expressed the view that the question whether the proceeding in which the order appealed from was 829 made was of a civil or crinlinal nature, or was, in the language of article 132 of the Constitution, other proceeding ' was not free from difficulty; he added that, in any event, article 135 of the Constitution applied in the present case, because it was not disputed that certain questions of interpretation of the Constitution were involved and, therefore, the case was clearly one where an appeal would lie to the Federal Court immediately before the commencement of the Constitution.
The learned Solicitoreneral, who has appeared before us on behalf ' of respondents I to 3, has not accepted as correct the view that article 135 justified the grant of a certificate in this case.
He has not, however, pressed us to decide in this case the question of the competency of the certificate given by the High Court, and has raised no objection to a decision of the appeal on merits.
The question whether a proceeding on a writ application is of a civil or criminal nature within the meaning of those expressions in articles 133 and 134 of the Constitution has led to some divergence of opinion in the High Courts, and we understand that it is one of the questions for decision in some cases which we have recently admitted.
In the view which we have taken of the present case on merits and the further eircumstance that it is open to us to give special leave to the appellant under Art,. 136 of the Constitution, we do not think that it is necessary in the present case to decide the question mooted by the learned Chief Justice in his order dated December 1, 1953, and we prefer not to express any opinion thereon.
The other point relates to the view expressed by the High Court in the order under appeal that an order of confiscation or penalty under the is a mere administrative or executive act, in respect of whic` no application for a writ of certiorari lies.
It is necessary to state that the point is now concluded by two recent decisions of this Court.
In F. N. Roy vs Collector Of Customs, Calcutta (1), this Court held that the imposition of a fine under section 167(8) of the was really a quasi judicial act and in the (1) ; 830 later decision of Leo Roy Frey vs The Superintendent, District Jail, Amritsar and another (1), it has been held that in imposing confiscation and penalties under the , the Collector acts judicially.
Therefore, the view that an order of confiscation or penalty under the is a mere administrative or executive act is no longer tenable.
Now, we proceed to a consideration of the two main points urged on behalf of the appellant Company.
It has been argued before us that on a proper construction of section 8 (3) of the Foreign Exchange Act (as it stood at the relevant time) read with section 19 of the , it was not legally open to the customs authorities in the present case to take any action against the appellant Company under the , as such action prejudiced the provisions of section 23 of the Foreign Exchange Act.
To appreciate this point it is necessary to read some of the relevant sections of the Foreign Exchange Act and the .
Sub sections (1) and (2) of section 8 of the Foreign Exchange Act impose restrictions on import and export of currency and bullion.
Sub section (1) states, inter alia, that the Central Government may, by notification in the official gazette, order that, subject to such exemption, if any, as may be contained in the notification, no person shall, except with the general or special permission of the Reserve Bank, bring or send into the States any gold or silver.
Such a notification was published on August 25, 1948, which said in substance that except with the permission of the Reserve Bank, no person shall bring into the States from any place outside India.
any gold, bullion, etc, sub section (3) was at the relevant time in these terms 8 (3) The restrictions imposed by subsections (1) and (2) shall be deemed to have been imposed under section 19 of the , without prejudice to the provisions of section 23 of this Act, and all the provisions of that Act shall have effect accordingly.
" The aforesaid sub section was later deleted by Act (i) ; 831 VIII of 1952, and a new section, namely, section 23A,was introduced which provided inter alia that the restrictions imposed by sub sections
(1) and (2) of section 8 shall be deemed to have been imposed under section 19 of the and all the provisions of that Act shall have effect accordingly except that section 183 thereof shall have effect as if for the word " shall " therein, the word " may " were substituted.
At the time relevant for the purpose of the present case, sub section
(3) of section 8 was in full force and effect and the question under our consideration has to be decided with reference to that sub section.
We then come to section 23 of the Foreign Exchange Act which at the relevant time was in these terms: " 23.
Penalty and Procedure. (1) Whoever contravenes any of the provisions of this Act or of any rule, direction or order made thereunder shall be punishable with imprisonment for a term which may extend to two years or with fine or with both, and any Court trying any such contravention may, if it thinks fit and in addition to any sentence which it may impose for such contravention, direct that any currency, security, gold or silver, or goods or other property in respect of which the contravention has taken place shall be confiscated.
(2). . . . . . . . . . (3) No Court shall take cognisaince of any offence punishable under this section. except upon a complaint in writing made by a person authorised in this behalf by the Central Government or the Reserve Bank by a general or special order: Provided that where any such offence is the contravention of any of the provisions of this Act or any rule, direction or order made thereunder which prohibits the doing of an act without permission, no such complaint shall be made unless the person accused of the offence has been given an opportunity of showing that he had such permission.
(4) If the person committing an offence punishable under this section is a company or other body corporate, every director, manager, secretary, or other 106 832 officer thereof shall, unless he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent its commission, be deemed to be guilty of such offence.
" Turning now to the , we start with section 19 which is in Chapter IV.
It says " 19.
The Central Government may, from time to time, by notification in the Official Gazette, prohibit or restrict the bringing or taking by sea or by land goods of any specified description into or out of India across any customs frontier as defined by the Central Government.
" Section 167 occurs in Chapter XVI of the and in so far as it is relevant for our purpose, it states " 167.
The offences mentioned in the first column of the following schedule shall be punishable to the extent mentioned in the third column of the same with reference to such offences respectively: Section of Offences.
this Act to Penalties.
which offence has reference.
If any goods the Such goods shall be importation or liable to confiscation exportation of and any person concerned which is for the in any such offence shall time being prohibited be liable to a penalty or restricted by or 18 $ 19 not exceeding three times under Chapter IV of this the value of the goods, Act, be imported into or not exceeding one or exported from India thousand rupees contrary to such prohibition or restriction; Section 182 of the deals with adjudication of confiscation and penalties referred to in section 167 aforesaid.
It states 833 " 182.
In every case, except the cases mentioned in section 167, Nos 26, 72 and 74 to 76, both inclusive, in which, under this Act, anything is liable to confiscation or to increased rates of duty; or any person is liable to a penalty, such confiscation, increased rate of duty or penalty may be adjudged (a) without limit, by a Deputy Commissioner Deputy Collector of Customs, or a Customs collector; (b) up to confiscation of goods not exceeding two hundred and fifty rupees in value, and imposition of penalty or increased duty, not exceeding one hundred rupees, by an Assistant Commissioner or Assistant Collector of Customs; (c) up to confiscation of goods not exceeding fifty rupees in value, and imposition of penalty or increased duty not exceeding ten rupees, by such other subordinate officers of Customs as the Chief Customs authority may, from time to time, empower in that behalf in virtue of their office: Provided that the Chief Customs authority may, in the case of any officer performing the duties of a Customs collector, limit his powers to those indicated in clause (b) or in clause (c) of this section, and may confer on any officer, by name or in virtue of his office, the powers indicated in clauses (a), (b) or (c) of this section.
" Section 183 has an important bearing on one of the questions urged before us and is in these terms: " 183.
Whenever confiscation is authorised by this Act, the officer adjudging it shall give the owner of the goods an option to pay in lieu of confiscation such fine as the officer thinks fit.
" Section 184 of the states that whenever anything is confiscated under section 182, such thing shall thereupon vest in Government, and the officer adjudging confiscation shall take and hold possession of the thing confiscated and every officer of police, on the requisition of such officer, shall assist in taking and holding such possession.
Section 186 of the states, inter alia, that the award of any confiscation, penalty or increased rate of duty under the Act by an officer of Customs shall not prevent the 834 infliction of any punishment to which the person affected thereby is liable under any other law.
Now, the argument urged on behalf of the appellant arising as it does out of section 8(3) of the Foreign Exchange Act and section 19 of the is this.
Under sub section
(3) of section 8 a restriction imposed by a notification made under sub section
(1) of the section shall be deemed to have been imposed under section 19 of the and all the provisions of the shall have effect accordingly; but the argument is that this deeming provision is subject to an important qualification contained in the words without prejudice to the provisions of section 23 of this Act ', meaning thereby the Foreign Exchange Act.
The contention is that though the restriction imposed under sub section
(1) of section 8 is to be deemed to have been imposed under section 19 of the , such deeming is to be without prejudice to, that is, subject to the provisions of section 23 of the Foreign Exchange Act; therefore, where a contravention of any of the provisions of the Foreign Exchange Act has taken place such as is punishable under section 23 thereof, the only remedy available in such a case is the one under section 23 and it is not open to the Customs authorities to take action against the offender under sections 167 (8), 182 and 183 of the .
It is contended that this is the true scope and effect of sub section
(3) of section 8 of the Foreign Exchange Act, if due regard is paid to the clause 'without prejudice to the provisions of section 23 of this Act occurring therein.
It is further pointed out that there is power under section 23 itself to confiscate the goods in respect of which the contravention has taken place.
On behalf of respondents I to 3, however, it is contended that the clause " without prejudice to the provisions of section 23 " does not mean "subject to the provisions of section 23 " and its true effect is merely this: when there is contravention of the restrictions imposed by sub section
(1) and (2) of section 8, which restrictions are deemed to have been imposed under section 19 of the , the contravention may have a double effect; it involves a violation of the provisions of the and may at the same time involve 835 a violation of the provisions of the ForeignExchange Act and, if the offender is known, two remedies may be available to the authoritiesconcerned; one remedy is to proceed under the relevant provisions of the and the other under the relevant provisions of the Foreign Exchange Act.
These two are concurrent remedies, which are not mutually exclusive, though in the matter of punishment the question may arise whether a person can be punished twice for the same act or offence.
On a careful consideration of these rival contentions we have come to the conclusion that it is not necessary on the facts of the present case to decide the larger question as to whether two remedies are available to the authorities concerned in respect of a contravention which comes both under the and the Foreign Exchange Act and if so, to what extent the two remedies are concurrent, cumulative or otherwise.
Let us confine ourselves to the application of sub section
(3) of section 8 of the Foreign Exchange Act to the facts of this case.
That sub section states firstly, that the restrictions imposed by sub sections
(1) and (2) shall be deemed to have been imposed under section 19 of the ; secondly, it states that the aforesaid deeming provision shall be without prejudice to the provisions of section 23 of the Foreign Exchange Act; and thirdly, it states that all the provisions of the shall have effect accordingly.
The construction put forward on behalf of the appellant Company is that where section 23 of the Foreign Exchange Act is applicable, any other remedy under the is barred; because that is the effect of the second part of the sub section which says that the deeming provision shall be without prejudice to the provisions of section 23 and the concluding part of the sub section which says that all the provisions of the shall have effect accordingly is controlled by the second part, as is indicated by the use of the word ' accordingly therein.
The learned Solicitor General has put forward a different construction.
According to him, the second part of the sub section when it says without prejudice to the provisions of section 23 ' merely 836 means that the remedy under section 23 is also available in an appropriate case, but it does not bar the remedy available under the ; otherwise, the third and concluding part of the sub section is renderedotiose.
He has further suported his contention by a reference to section 23A, inserted in 1952, which repeats the phraseology of deleted sub section
(3) of section 8 but makes it sufficiently clear what the meaning of the clause I without prejudice to the provisions of section 23 is.
We do not so decide, but let us assume that the construction put forward on behalf of the appellant is the one that should be accepted in this case.
The question then is does section 23 of the Foreign Exchange Act apply to the facts of this case and could the appellant Company be proceeded against under that section ? A distinction must at once be drawn between an action in rem and a proceeding in personal.
Section 23 of the Foreign Exchange Act is a proceeding against the offender, and is applicable to the person who contravenes any of the provisions of that Act, even though on a conviction for such contravention, the Court may, if it thinks fit and in addition to any sentence which it may impose for such contravention, direct that the goods in respect of which the contravention has taken place be confiscated.
In substance it is a proceeding against a person for the purpose of penalising him for a contravention of the provisions of the Foreign Exchange Act, and such a proceeding is available when the offender is known.
Take, however, a case where the offender (the smuggler, for example) is not known, but the goods in respect of which the contravention has taken place are known and have been seized.
Section 167(8) of the contemplates a case of this nature, when it describes the offence in col. 1 in the following words ,, If any goods, the importation or exportation of which is. . prohibited or restricted be imported into or exported from India contrary to such prohibition or restriction.
" The penalty provided is that the goods shall be liable to confiscation.
There is a further provision in the penalty column that any person concerned in any such 837 offence shall be liable to a penalty not exceeding three times the value of the goods etc.
The point to note is that so far as the confiscation of the goods is concerned, it is a proceeding in and the penalty is enforced against the goods whether the offender is known or not known; the order of confiscation under section 182, , operates directly upon the status of the property, and under section 184 transfers an absolute title to Government.
Therefore, in a case where the Customs authorities can proceed only against the goods, there can be no question of applying section 23 of the Foreign Exchange Act and even on the construction put forward on behalf of the appellant Company as respects section 8(3), the remedy under the against the smuggled goods cannot be barred; when on the facts of the case section 23 can have no application, no question of prejudicing its provisions by the adoption of the procedure under the can at all arise.
Bose J. was fully aware of this distinction between section 23 of the Foreign Exchange Act and section 167(8) of the .
Indeed, he expressly said that he had no doubt that in appropriate cases where section 23 is not attracted, recourse can be had to section 182 of the ; but lie thought that the notice which was issued to the appellant Company in this case on June 20, 1951, showed that the intention was to proceed against the offender also, and this, according to him, made a difference and brought in section 23.
We are unable to agree.
We have quoted.
the notice in an earlier part of this judgment.
The notice asked the appellant to show cause why penal action should not be taken against it and the gold under the provisions of section 167(8) for alleged violation of section 19, , and section 8, Foreign Exchange Act.
Neither the notice, nor the note of the Superintendent, Preventive Service (enclosed with the notice) suggested that the appellant was the smuggler and, therefore, liable to penalty under section 23 of the Foreign Exchange Act.
Section 167(8) of the provides for two kinds of penalties when contraband goods are imported into or exported from India; one is confiscation of the 838 goods which is an order in rem and the other is a penalty on the person concerned in any such offence; that is, the offence described in column I of item (8).
Taking the view most favourable to the appellant, it may be said that the notice contemplated both kinds of proceedings namely one in rem and the other in personam and asked the appellant to show cause against the imposition of both penalties mentioned in the third column of section 167(8); but the notice did not show any intention, nor did it suggest even a pos sibility, of proceeding against the appellant under section 23 of the Foreign Exchange Act.
There is, we think, an appreciable difference between the expression any person concerned in any such offence ' occurring in the third column of section 167(8) of the and the expression whoever contravenes any of the provisions of this Act occurring in section 23 of the Foreign Exchange Act.
A person may be concerned in the importation of smuggled gold, without being a smuggler himself or without himself contravening any of the provisions of the Foreign Exchange Act.
In this sense, the scope of section 167(8), , is different from that of section 23 of the Foreign Exchange Act.
Moreover, in the case under our consideration, the only penalty imposed under section 167(8) was the confiscation of the gold which indicates that the authorities proceeded with the proceeding in rem and dropped the proceeding in personam; therefore, no question of prejudicing the provisions of section 23, Foreign Exchange Act, arose in this case.
We think that Bose J. was in error in thinking that the adoption of the procedure under the prejudiced in any way the provisions of section 23, Foreign Exchange Act, in the present case.
On this finding, it is unnecessary to go into any of the larger questions which were canvassed before us in the course of arguments.
We were addressed at some length on (1) what would happen to the smuggled goods if the offender died in the course of a trial tinder section 23 and the provisions of the were not available; (ii) what would be the position if two contradictory findings were given with regard to the 839 goods one by the Customs authorities under the and the other by the Court tinder section 23, Foreign Exchange Act in case two concurrent remedies were open; and (iii) what would happen to the safeguards given to an accused person under section 23, if it were open to the Customs authorities to by pass section 23,and proceed under the .
These are interesting and, may be, important questions; and we have no doubt that they will be decided when they really fall for decision in an appropriate case.
In the case under present consideration, it is sufficient to state that on the facts found, no prejudice was caused to the provisions of section 23 by adopting the procedure resulting in the impugned order of confiscation, and the contention of the appellant that the Customs authorities had no jurisdiction to adopt the procedure under the cannot be accepted as correct.
This brings us to the second main contention urged on behalf of the appellant.
By the impugned order the Collector of Customs confiscated the gold, and in lieu thereof gave the appellant an option to pay a fine of Rs 10,00,000 (Rupees ten lakhs).
It is not disputed that the impugned order up to the extent stated above was within his jurisdiction to make.
The Collector, however, imposed two other conditions for the release of the confiscated gold; one was the production of a permit from the Reserve Bank of India in respect of the gold within four months from the date of despatch of the impugned order and the other was the payment of proper customs duties and other charges leviable in respect of the gold within the same period of four months.
The High Court held, rightly in our opinion that the Collector had no jurisdictin to imposposed the aforesaid two conditions.
It has been fairly concened by the learned Solicitor General that there is no provision in the Foreign Exchange Act or the under which the Reserve Bank could give permission in respect of smuggled gold with retrospective effect; if it could, there would be no offence under section 167(8) and the order of confiscation itself would be 107 840 bad.
As to the second condition of payment of customs duty etc., the learned Solicitor General referred us to a decision of the Bombay High Court in Keki Hormasji Elavia vs The Union of India (Civil Application No. 1296 of 1953 decided on August 18, 1953) referred to in a Compilation of.
Judgments in Customs Cases, published by the Central Board of Revenue, and submitted that customs duty was payable under section 88 of the , as in the Bombay case.
The facts of the Bombay case were entirely different; it was found there that the goods, which were toilet and perfumery goods, had been smuggled through the port of Kantiajal near Surat without payment of any duty and in those circumstances, it was held that section 88 applied.
In the case before us there is no finding by what means the gold was smuggled by sea or landand it is difficult to see how section 88, which relates to goods not cleared or warehoused within four months after entry of vessel, can be of any help in the present Case.
We are, therefore, of the view that the Collector of Customs had no jurisdiction to impose any of the two conditions mentioned above .
What then is the result? On behalf of the appellant it has been argued that the order being a composite and integrated order, it is not severable; and secondly, it is contended that on an application for a writ of certiorari, the superior Court must quash the whole order when it is found to be bad and in excess of jurisdiction even as to a part thereof The question of severability does not present any great difficulty.
It has been the subject of consideration in more than one decision of this Court, and in the recent decision in R. M. D. Chamarbaugwalla vs Union of India (1) the principles governing it have been summarised.
Applying those principles we find no difficulty in holding that the invalid conditions imposed by the Collector are not so inextricably mixed up that they cannot be separated from the valid order of confiscation and fine in lieu thereof; there is also no doubt that the Collector would have passed the order of confiscation and fine in lieu thereof on his finding (1)[1957] S.C.R. 930.
841 that the gold was smuggled gold, even if he realised that the conditions he was imposing were invalid; it is also clear that the conditions do not form part of a single scheme which can be operative only as a whole.
Learned counsel for the appellant has referred us to the sixth rule enunciated in Chamarbaugwalla 's decision (supra) and has contended that if the invalid conditions are expunged, what remains of the impugned order cannot be enforced without making an alteration or modification as to the time limit fixed, and therefore the whole order must be struck down as void.
We are unable to agree.
The sixth rule aforesaid is based on the ground that the Court cannot make alterations or modifications in order to enforce what remains of a statute after expunging the invalid portions thereof ; otherwise it will amount to judicial legislation.
No such consideration arises in the case before us.
There is no legal difficulty in enforcing the rest of the impugned order after separating the invalid conditions therefrom; on the passing of the order of confiscation, the gold vests in Government and section 183 does not make it obligatory on the Collector to fix a time limit for payment of the fine in lieu of confiscation.
It is really for the benefit of the owner that a time is fixed for payment of the fine.
Even if the time limit is altered, by no stretch of imagination can it be said that such alteration amounts to judicial legisla tion.
For these reasons we agree with the Division Bench of the High Court that the invalid conditions imposed by the Collector in this case are severable from the rest of the impugned order.
Learned counsel has relied on the decision in The King vs Willesden Justices, Ex parte Utley(1) for his contention that the High Court has no power, on certiorari, to amend the impugned order by striking out the invalid conditions; nor has this Court, on an appeal from an order on an application for the issue of a writ of certiorari, any power higher than that of the High Court.
He has contended that the essence of the remedy of certiorari is that it necessarily involves revising the decision of the inferior court to which it is (1)[1948] 1 K. B. 397. 842 directed in one of three ways: (a) by quashing it ; (b) by removing the case and trying it in a court of competent jurisdiction ; or (c) by causing it to be reheard.
According to English precedents, so argues learned counsel, certiorari involves an examination of a decision of the Court to which it is addressed to see " What of right and according to the law and custom of England we shall see fit to be done " (see Short and Mellor 's Practice of the Crown Office, 2nd Edn.
504 505).
We do not think that we are called upon in this case to go into the early history of the prerogative writ of certiorari in England or even to decide.
what is the extent of the power of the High Court, on a prayer for the issue of a writ in the nature of a, writ of certiorari, under article 226 of the Constitution.
Broadly speaking, it is true that an essential feature of a writ of certiorari is that the control which is exercised through it over judicial or quasi judicial tribunals or bodies is not in an appellate but supervisory capacity.
This Court observed in T. C. Basappa vs T. Nagappa and Another (1), at p. 257 " In granting a writ of certiorari the superior Court does not exercise the powers of an appellate Tribunal.
It does not review or reweigh the evidence upon which the determination of the inferior Tribunal purports to be based.
It demolishes the order which it considers to be without jurisdiction or palpably erroneous but does not substitute its own views for those of the inferior Tribunal.
The offending order or proceeding so to say is put out of the way as one which should not be used to the detriment of any person.
" In the same decision, it was also observed: " In view of the express provisions in our Constitution we need not now look back to the early history or the procedural technicalities of these writs in English law, nor feel oppressed by any difference or change of opinion expressed in particular cases by English Judges.
We can make an order or issue a writ in the nature of certiorari in all appropriate cases and in appropriate manner, so long as we keep (1)[1955] 1 S.C.R 250.
843 to the broad and fundamental principles that regulate the exercise of jurisdiction in the matter of granting such writs in English law.
" In King vs Willesden Justices (supra) the applicant was convicted and fined pound 15 for failure to stop his vehicle on being so required by a police constable in uniform, contrary to the Road Traffic Act, 1930, section 20, sub section 3.
The ground for the application was that the maximum penalty prescribed by section 20, subsection 3, for the offence in question was a fine of pound 5 and that therefore the penalty of pound 15 imposed by the justices was bad in law and in excess of their jurisdiction.
Lord Goddard C. J. said: " Our attention has been called to several cases, including Reg.
vs Stade, , Reg.
vs Kay, (1873) L. R. 8 Q. B. 324, and Reg.
vs Cridland, (1857) 7 E. & B. 853, but having considered them all, my opinion remains as it was at the outset, that if a sentence be imposed which is not authorised by law for the offence for which the defendant is convicted, that makes the conviction bad on its face and being a bad conviction, it can be brought up here to be quashed, and when so brought up, must be quashed, for this court has no power, and never has had any power, on certiorari, to amend the conviction.
" It is worthy of note that the decision proceeded on the footing that the man had a penalty imposed upon him which the law did not permit him to suffer and that made the conviction bad; and the conviction being bad, the applicant was entitled to his order of certiorari.
But we think that there is a more convincing answer to the contention urged on behalf of the appellant.
In an earlier part of this judgment.
we have quoted in extenso the prayers which the appellant had made in its petition in the High Court.
The appellant did not confine itself to asking for a writ of certiorari only, but asked for a mandamus requiring respondents I to 3 to forbear from giving effect to the orders of seizure, detention and confiscation of the gold and further requiring them to return the gold, and also asked for a writ of prohibition restraining respondents 844 1 to 3 from taking further steps in pursuance of the order of confiscation.
These prayers were neither unnecessary nor a inere surplusage; they were appropriate for the purpose of avoiding the conditions which the Collector had imposed for release of the gold.
It is well settled that where proceedings in an inferior court or tribunal are partly within and partly without its jurisdiction, prohibition will lie against doing what is in excess of jurisdiction.
(see Halsbury 's Laws of England, 3rd Edn.
11, para.
216, p. 116).
In the recent decision in Dalmia 's case, Shri Ram Krishna Dalmia V. Shri Justice section R. Tendolkar and others(1), this Court held a part of a notification made under section 3 of the Commission of Enquiry Act (LX of 1952) to be bad, and holding that it was severable from the rest of the notification, deleted it and held that rest of the notification to be good.
Therefore, we do not see any insuperable difficulty in the present case in prohibiting respondents I to 3 from enforcing the two invalid conditions which the Collector of Customs had imposed for release of the gold on payment of the fine in lieu of confiscation, and the time limit of four months fixed by the Collector must accordingly run from the date of this order.
The only other points that require consideration are the points urged on behalf of the two banks, respondents 4 and 5.
These respondents say that though the general property in the goods pledged remained with the pledgor, a special property passed to the pledgee in order that he might be able to sell the pledge if and when his right to sell arose.
They complain that they have been deprived of this special property by reason of the proceeding resulting in the impugned order, adopted under the by the Collector of Customs; they contend that their right is guaranteed under article 19(1)(f) of the Constitution, and the provisions of the in so far as they take away the pledgee 's right without providing for a notice to the pledgee or an option to pay the fine in lieu of confiscation are not reasonable restrictions in the interests of the general (1)[1959] S.C.R. 279.
845 public within the meaning of el.
(5) of the said Article.
Our attention has been drawn to section 19A of the which enables the Central Government to make regulations, either general or special, respecting the detention and confiscation of goods the importation of which is prohibited, and the conditions, if any, to be fulfilled before such detention and confiscation, and also to subsection (1) thereof under which the Chief Customs Officer may require the regulations to be complied with and may satisfy himself in accordance with those regulations that the goods are such as are prohibited to be imported.
It is pointed out that no regulations have yet been made, and in the absence of any regulations the Customs officers have an uncontrolled and unguided power in the matter of detention and confiscation of goods.
So far as the Nationale Handels Bank N. V., respondent 4, is concerned, it has no right under article 19.
Assuming that a company can be a citizen as defined in the Constitution, respondent 4 admittedly is a foreign Company possessing no rights of a citizen of this country.
On the same assumption the Bharat Bank Ltd., respondent 5, being an Indian Company may have the rights of a citizen under article 19; but in the circumstances which we shall presently state, we do not think that its complaint as to the infraction of a fundamental right can be raised at this stage.
Apart altogether from the considerations which the learned Solicitor General has pressed (as to which it is un necessary for us to express any final opinion), namely, (1) that a pledgee cannot have a right higher than that of the pleader, (ii) that the pledgor does not cease to be the owner by reason of the pledge, and (iii) that in an action in rem the order operators directly upon the status of the property and, as in this case, vests the property absolutely in Government, there are certain other circumstances which militate against the claim now put forward by respondent 5.
The order of the Collector shows that all throughout the adjudication proceedings respondent 5 was represented by counsel before the Collector.
The Collector passed his order oil May 14, 1952, and a copy was forwarded 846 to respondent 5.
The respondent took no steps against the order, but was content with its position as respondent to the application which the present appellant filed in the High Court.
It is also to be noticed that the Collector 's order shows that he was not fully satisfied with the story of the appellant that the gold had been pledged with the Banks in the manner suggested.
So far as the transactions with the Bharat Bank are concerned, he said: " The Majud Bahi (stock book) of the firm showed a closing balance of gold weighing tolas 2,457 6 0 as lying with the Bharat Bank Ltd., on 17th November, 1950, whereas the closing balance on that date according to the Bank 's statement was tolas 4,651 14 0.
The firm 's representative gave reasons for this difference which was mainly that instructions were given to the Bharat Bank on the 17th November, 1950 to send gold weighing tolas 2,236 7 0 to Sewadin Bansilal of Bombay but the actual delivery of this gold to this person at Bombay did not take place until the 22nd November 1950.
The Auditors, however, observed that they had not seen any correspondence with the Bank in support of the above information which they received verbally.
" In the High Court when the case was before Bose J. respondent 5 challenged the order of the Collector on several points including the alleged infraction of his fundamental right.
This objection was not, however, accepted, and Bose J. allowed the writ application on two other grounds which we have mentioned earlier.
In the appeal before the Division Bench, respondent 5 again relied on article 19 (1) (f ), and the Division Bench affirmed the finding of Bose J. that as the did not directly legislate in respect of the freedom guaranteed by article 19 (1) (f ), that Article had no application.
Again, respondent No. 5 took no steps against the judgment and order of the Division Bench dated July 3, 1953 a judgment and order which it now challenges as incorrect.
All along the line, it preferred to sail with the appellant but figuring as a respondent only; it was the appellant who moved the High Court for a certificate, obtained such 847 certificate and brought this appeal to this Court.
Respondent 5 took no action against the judgment and order of which it now complains.
In these circumstances, we do not think that respondent 5 can now be allowed to complain of a violation of its fundamental right, apart from and independently of the appellant.
The result, therefore, is as follows.
The impugned order is good as to the confiscation of the gold and the payment of fine in lieu thereof.
The Collector of Customs had jurisdiction to make that order on his finding that the gold was smuggled gold.
He, however, had no jurisdiction to impose the other two conditions which he imposed for the release of the gold.
Though the High Court held on appeal that the invalid conditions were severable from the rest of the order, it did not give any appropriate direction regard ing those conditions as it should have done, but allowed the appeal and dismissed the writ application in too.
We think that the appropriate order to pass in this case is to dismiss the writ application in so far as it seeks to quash the impugned order of confiscation of the gold and the payment of fine in lieu thereof, and to allow it in so far as it wants a direction restraining respondents 1 to 3 from enforcing the two invalid conditions imposed by the Collector of Customs, which the Collector had no jurisdiction to impose.
The time limit of four months given by the Collector will accordingly run from the date of this order.
The appeal is accordingly allowed to the very limited extent indicated above but dismissed as to the rest, and in the circumstances of this case, particularly in view of the invalid conditions imposed by the Collector, we direct that the parties must bear their own costs of the hearing in this Court.
Appeal allowed in part.
| The appellant company was carrying on business as a bullion merchant and in that capacity purchased about 9478 tolas of gold.
On information that the gold in question was smuggled, the customs authorities issued a notice to the appellant to the effect that the case had been placed before the Collector of Customs for adjudication by the Superintendent, Preventive Service, The notice stated inter alia : " You are requested to show cause . why penal action should not be taken against you and the 9478,19 tolas of gold in question under the provisions of sections 167(8) and 168 of the , for alleged violation of section 19 of the same Act read with section 8 of the Foreign Exchange Regulation Act, 1947 ".
The Collector of Customs, after hearing the parties, came to the conclusion that the gold in question was smuggled gold and that there was a contravention of the provisions of section 19 of the read with section 8 of the Foreign Exchange Regulation Act, and made an order in these terms: " I accordingly order that the entire quantity of the gold seized on the 21st November, 1950, amounting to 9478.19 tolas be confiscated under section 167(8) of the .
In lieu of confiscation, however, I give the owner of the said gold an option, under section 183 ibid to pay a fine of Rs. 10,00,000 (Rupees ten lakhs only) in addition to the proper customs duty and other charge leviable thereon within four months from the date of the despatch of this order.
The release of the gold will be further subject to the production of a permit from the Reserve Bank of India within the aforesaid period ".
The appellant challenged the validity of the order and contended (i) that on a proper construction of section 8(3) of the Foreign Exchange Regulation Act read with section 19 of the , it was not legally open to the customs authorities to take any action against it under the , as such action would prejudice the provisions of section 23 of the Foreign Exchange Regulation Act, and (2) that, in any case, the conditions which the Collector of Customs had imposed in the impugned order for release of the confiscated gold were not warranted by the statute, 822 and that as the order was a composite and integrated one it was not severable and, therefore, should be quashed : Held, (1) that the scope of section 167(8) of the , is different from that of section 23 Of the Foreign Exchange Regulation Act, 1947.
Whereas under section 23 Of the Foreign Exchange Regulation Act proceedings are taken in Personam against the offender for the purpose of penalising him for the contravention of the provisions of the Act, an order for confiscation of the smuggled goods under section 167(8) Of the is one in rem.
There is a difference between the expression " any person concerned in any such offence " occurring in the third column of section 167(8) of the and the expression "whoever contravenes any of the provisions of this Act " occurring in section 23 of the Foreign Exchange Regulation Act.
A person may be concerned in the importation of smuggled goods, without being a smuggler himself or without himself contravening any of the provisions of the Foreign Exchange Regulation Act.
In this case, the only penalty imposed under section 167(8) Of the was confiscation of the gold, which indicated that the customs authorities had dropped the proceedings in personam; consequently, the adoption of the procedure under the did not prejudice in any manner the provisions Of. section 23 Of the Foreign Exchange Regulation Act.
The question whether two remedies are available to the authorities concerned in respect of a contravention which comes both under the and the Foreign Exchange Act was left open.
(2) The Collector of Customs had no jurisdiction to impose the two conditions for the release of the confiscated gold ; but, as the aforesaid conditions are severable from the rest of the impugned order, the latter is valid as to the confiscation of the gold and the payment of fine in lieu thereof.
R. M. D. Chamarbaugwalla vs Union of India, [1957] S.C.R. 930 and Shri Ram Krishna.
Dalmia vs Shri justice section R. Tendolkar and others; , , applied.
The relevant sections of the , and the Foreign Exchange Regulation Act, 1947, are set out in the judgment.
|
Summarize this legal judgement text concisely | minal Appeal No. 183 of 1957.
862 Appeal by special leave from the judgment and order dated January 21, 1957, of the Patna High Court in Criminal Appeal No. 34 of 1956, arising out of the judgment and order dated January 23, 1956, of the Court of the 2nd Assistant Sessions Judge at Darbhanga in Sessions Trial No. 52 of 1955.
P. K. Chatterjee, for the appellant.
D. P. Singh, for the respondent.
May 20.
This appeal by special leave is limited to a particular question only, namely, correctness of the conviction of the appellant Galfu Sah for an offence under section 436 read with section 109, Indian Penal Code, and the propriety of the sentence passed thereunder.
The short facts are these.
Some 22 accused persons, of whom the appellant was one, were tried by the learned Assistant Sessions Judge of Darbhanga for various offences under the Indian Penal Code alleged to have been committed by them.
The prosecution case was that on May 16, 1954, in village Dharhara in the district of Darbbanga a, mob of about 40 50 persons, including the accused persons, formed an unlawful assembly, the common objects of which were (1) to dismantle the hut of one Mst.
Rasmani, (2) to set fire to it and (3) to commit assault, if resisted.
One Tetar Mian, who was the chaukidar of village Dharhara, had come to the village at about 10 a.m. to ascertain births and deaths for the purpose of supplying the said information to the officer in charge of the police station for registration.
When this chaukidar reached near the hut of Mst.
Rasmani, who was the widow of one Ganpat, he found the mob engaged in dismantling the hut.
The chaukidar protested.
On this, it was alleged, the appellant hit him with a lathi on the left high.
The chaukidar then raised an alarm and several other persons came there including Ramji, Nebi and Munga Lal.
Thereafter, it was alleged, the appellant ordered another member of the unlawful assembly named Budi to set fire to the hut of Mst.
Rasmani and he further ordered an assault 863 on Ramji and Nebi.
Budi, it was alleged, set fire to the hut and the hut was burnt.
Some members of the mob chased Ramji and Nebi and assaulted them.
The learned Sessions Judge found that all the accused persons before him did form an unlawful assembly and came to the hut of Mst.
Rasmani on the date and at the time alleged, armed with weapons, with the common object of dismantling the hut and of committing an assault on remonstrance.
He held that in prosecution of the aforesaid common objects the offences of rioting and hurt etc., were committed.
So far as the charge of arson was concerned, he held that the act of incendiarism was an isolated act of some members of the unlawful assembly, there being no common object of the entire unlawful assembly to set fire to the hut of Mst.
Rasmani.
He accepted the evidence given before him to the effect that the present appellant had given the order to Budi to set fire to the hut and that Budi had set fire to it in consequence of the abetment.
Accordingly, he convicted the accused persons of various offences under sections 147, 148 and 323 etc.
of the Indian Penal Code.
Budi was further convicted under section 436, Indian Penal Code, and the present appellant under section 436 read with section 109, Indian Penal Code.
There was then an appeal to the High Court of Patna and the learned Judge who heard it found that the evidence against Budi in respect of the allegation that he had set fire to the hut of Mst.
Rasmani was not very satisfactory and he acquitted Budi of the charge under section 436, Indian Penal Code.
So far as the appellant Gallu Sah was concerned, he held that the evidence satisfactorily established that Gallu Sah had given the order to set fire to the hut and the hut was actually set on fire by one member or another of the unlawful assembly.
On this finding, he affirmed the conviction and sentence of the appellant under section 436 read with section 109, Indian Penal Code, the sentence being one of four years ' rigorous imprisonment.
The conviction and sentence of the appellant for the offences under sections 147 and 323, Indian Penal Code, were also affirmed, but the conviction and sentence 110 864 under section 324 read with section 149, Indian Penal Code, were set aside.
We are, however, not concerned with those convictions and sentences and nothing more need be said about them.
We now come to the particular question to which this appeal is limited, namely, propriety of the conviction and sentence passed on the appellant for the offence under section 436 read with section 149, Indian Penal Code.
Mr. P. K. Chatterjee has appeared on behalf of the appellant and has contested the correctness of the conviction on two grounds: firstly, he has submitted that the evidence on which the conviction was based is the same evidence which was given against Budi Sah, and if that evidence was disbelieved with regard to Budi Sah, it should not have been believed against the appellant; secondly, he has submitted that though he does not wish to contend that in every case where the principal offender has been acquitted of the offence, a person said to have abetted the commission of the offence must also be acquitted, there is no evidence in this particular case that whoever set fire to the hut of Mst.
Rasmani did so in consequence of the order of the appellant, assuming that the appellant gave an order to set fire to the hut, and therefore, the conviction of the appellant for abetment is bad in law.
As to the first point, the learned Judge has in his judgment given good reasons why the evidence of the witnesses with regard to Budi Sah was not accepted and why the testimony of the same witnesses was accepted with regard to the appellant.
The witnesses on this point were four persons, namely, Tetar, Ramji, Nebi and Munga Lal.
Tetar, it appears, did not mention in his first information that Budi had set fire to the hut, but he did mention that the appellant had given the order to set fire to the hut A similar infirmity was found in the evidence of Ramji who also failed to tell the sub inspector of police that Budi had set fire to the hut.
Nebi, it appears, could not be cross examined as he died before the trial began in the Court of Session.
So far as Munga Lal was concerned, it was elicited in cross examination that he did not speak at the spot, or subsequently, to any of his co. 865 villagers that Budi had set fire to the hut.
On these grounds the learned Judge did not accept the testimony of the aforesaid four witnesses so far as the allegation against Budi was concerned.
The infirmity which was found in the evidence of the aforesaid four witnesses with regard to Budi Sah was not, however, present so far as the allegation against the present appellant was concerned, and the learned Judge expressly said that the evidence of the aforesaid four witnesses was consistent against the appellant.
We see no violation of any rule of law nor even of prudence in the learned Judge accepting the testimony of some of the witnesses against the appellant, though he did not accept that testimony against Budi Sah.
We now turn to the second point urged on behalf of the appellant.
It must be emphasised here that the learned Judge was satisfied that (1) the appellant gave the order to set fire to the hut and (2) tha the hut was actually set fire to by one member or another of the unlawful assembly, even though the unlawful assembly as a whole did not have any common object of setting fire to the hut of Mst.
Rasmani.
The point taken by learned counsel for the appellant is that when the learned Judge did not accept the evidence of the witnesses that Budi set fire to the hut, there was really no evidence to show that the person who set fire to the hut of Mst.
Rasmani did so in consequence of the order given by Gallu Sah.
The learned Advocate points out that one of the essential ingredients of the offence is that the act abetted must be committed in consequence of the abetment.
It is necessary to read at this stage some of the sections of the Indian Penal Code with regard to the offence of abetment.
Section 107 defines what abetment is.
It says " section 107.
A person abets the doing of a thing, who First.
Instigates any person to do that thing; or Secondly.
Engages with one or more other person or persons in any conspiracy for the doing of that thing, if an act or illegal omission takes place in pursuance of that conspiracy, and in order to the doing of that thing; or 866 Thirdly.
Intentionally aids, by any act or illegal omission, the doing of that thing.
" Section 108 is in two parts and explains who is an abettor in two circumstances (1) when the offence abetted is committed and (2) when an act is committed which would be an offence if committed by a person capable by law of committing an offence with the same intention or knowledge as that of the abettor.
We are not concerned with the second circumstance in the present case.
We are concerned with a person who abets the commission of an offence.
Then comes section 109 which is in these terms: " section 109.
Whoever abets any offence shall, if the act abetted is committed in consequence of the abetment, and no express provision is made by this Code for the punishment of such abetment, be punished with the punishment provided for the offence.
Explanation.
An act or offence is said to be committed in consequence of abetment, when it is committed in consequence of the instigation, or in pursuance of the conspiracy, or with the aid which constitutes the abetment.
" It seems to us, on the findings given in the case, that the person who set fire to the hut of Mst.
Rasmani must be one of the persons who were members of the unlawful assembly and he must have done so in consequence of the order of the present appellant.
It is, we think, too unreal to hold that the person who set fire to the hut of Mst.
Rasmani did so irrespective, or independently, of the order given by the present appellant.
Such a finding, in our opinion, would be unreal and completely divorced from the facts of the case and it is necessary to add that no such finding was given either by the learned Assistant Sessions Judge who tried the appellant or the learned Judge of the High Court.
As we read the findings of the learned Judge, it seems clear to us that he found that the person who set fire to the hut of Mst.
Rasmani did so in consequence of the abetment, namely, the instigation of the appellant.
It is necessary to refer to two decisions to which our attention has been drawn by the learned Advocate.
867 The decision in Raja Khan vs Emperor (1) related to a case where one Torap Ali was held to be guilty of cheating by personating one Sabdar Faraji and using his name on a surety bond.
The charge against Torap Ali was that he was the principal in the case and the charge against Raja Khan and Cherak Ali Akon, the two appellants in that case, was that they abetted by being present at the personation which was alleged to have been committed by Torap Ali.
Torap Ali was acquitted by the jury.
The learned Judge who presided at the jury trial did not, however, tell the jury what would be the effect of the acquittal of Torap Ali on the charge of abetment against Raja Khan and Cherak Ali.
It was because of this omission that the conviction of Raja Khan and Cherak Ali was set aside.
The head note of the report, however, said in general terms that where a person is charged with having committed an offence and another is charged with having abetted him in the commission thereof, and the prosecution fails to substantiate the commission of the principal offence, there can be no conviction for abetment.
This general statement was considered in a later decision in Umadasi Dasi vs Emperor (2), and it was pointed out that in the majority of cases the aforesaid general statement might bold good; but there are exceptions to the general rule, particularly when there is evidence which satisfactorily establishes that the offence abetted is committed and is committed in consequence of the abetment.
We accordingly hold that the conviction of the appellant for the offence under section 436 read with section 109, Indian Penal Code, is not bad in law.
As to the sentence it does not appear to us that it errs oil the side of severity.
It has been stated that the appellant was released on bail on serving out the sentence passed against him for the offences under sections 147 and 323, Indian Penal Code.
In our opinion, the appeal has no merit and must be dismissed.
The appellant must now surrender himself to serve out the remainder of his sentence.
(1)A.I.R. Appeal dismissed.
| The prosecution case was that a mob Of 40 50 persons including the appellant, formed an unlawful assembly with the common objects of dismantling the hut of R, of setting fire to it and committing assault, if resisted; they assaulted some persons, and the appellant ordered one Budi to set fire to the hut and Budi set fire to it with the result that it was burnt down, Twenty two persons including the appellant and Budi, were sent up for trial.
The Sessions judge found that all of them formed an unlawful assembly with the common objects of dismantling the hut and committing assault on remonstrance, but that there was no common object to set fire to the hut and the act of incendiarism was an isolated act of some members of the unlawful assembly.
He found that the appellant had given the order to Budi to set fire to the hut and Budi had set fire to it in consequence of the abetment.
The Sessions judge convicted the accused persons under sections 147, 148 and 323 of the Indian Penal Code.
Budi was further convicted under section 436 and the appellant under section 436 read with section 109 of the Indian Penal Code.
On appeal the High Court set aside the conviction of Budi under section 436 holding it not proved that he had set fire to the hut.
The High Court upheld the conviction of the appellant under section 436 read with section :cog holding that he had given the order to set fire to the hut and that it was actually set on fire by one of the members of the unlawful assembly.
The appellant challenged his conviction under section 436 read with section 109 on the ground that it was not established that the person who set fire to the hut had done so in consequence of the order of the appellant Held, that the appellant was rightly convicted under section 436 read with section 109 of the Indian Penal Code.
On the findings given in the case it must be held that the person who set fire to the hut was one of the members of the unlawful assembly and that he did so in consequence of the order of the appellant.
Raja Khan vs Emperor, A.I.R. 1920 Cal. 834 and Umadasi Dasi vs Emperor Cal. 112, referred to.
|
Summarize this legal judgement text concisely | minal Appeal No. 178 of 1957.
117 920 Appeal by special leave from the order dated May 28, 1956, of the former Nagpur High Court in Criminal Revision No. 150 of 1956 arising out of the order dated February 2, 1956, of Shri K. L. Pandey, Special Magistrate at Nagpur in Criminal Case No. I of 1955.
R. Patnaik, for the appellant.
section N. Bindra and R. H. Dhebar, for the respondent.
May 22.
The Judgment of the Court was delivered by KAPUR J.
This is an appeal against the judgment and order of the High Court of Nagpur confirming the decision of the Special Magistrate disallowing the application of the appellant to give evidence as a witness under section 342A of the Criminal Procedure Code.
The Advocate General of Madhya Pradesh, on January 13, 1953, filed a complaint against the appellant and three others under section 282 of the Indian Companies Act and sections 465 and 477A of the Indian Penal Code.
The proceedings commenced in 1954 before a Magistrate but on May 18, 1955, they were transferred to a Special Magistrate who commenced the recording of evidence on July 4, 1955.
On August 12, 1955, the Criminal Procedure Code (Amendment) Act (26 of 1955) received the assent of the President and came into force on January 2, 1956.
In this judgment it will be referred to as the Amending Act and the Code of Criminal Procedure as the Code.
On January 14, 1956, the appellant made an application to the Magistrate claiming the right to appear as a witness on his own behalf under section 342A of the amended Code "in disproof of the charges made against him ".
His application was dismissed and so was his revision to the High Court of Nagpur which held: " While it must be conceded that the wording of clause (c) as also the other clauses of section 116 of the amending Act could have been put in simpler and more direct language, its ingenuous circumlocution cannot be allowed to cloak.
its true meaning or to permit the construction which the applicant seeks to 921 put upon it.
The language used doe, , not justify hold ing that when the statute says " this Act it means only " some of the provisions of this Act Thus the High Court was of the opinion that the proceedings pending before the Special Magistrate would be according to the procedure laid down in the unamended Code and the appellant could not therefore appear as a witness under section 342A of the amended Code.
According to the provisions of the unamedded Code an accused person could not appear as a witness in his defence although for the purpose of enabling him to explain circumstances appearing in the evidence against him the Court could put such questions as it considered necessary.
Section 118 of the Evidence Act deals with persons who are competent to testify as witnesses but in view of section 342 of the unamended Code no accused person could appear as a witness and there fore section 118 was inapplicable to such persons.
Article 20(3) of the Constitution provides that no person accused of an offence shall be compelled to be a witness against himself and section 342A was inserted into the Code by section 61 of the amending Act.
It provides: S.342A " Any person accused of an offence before a Criminal Court shall be a competent witness for the defence and may give evidence on oath in disproof of the charges made against him or any person charged together with him at the same trial: Provided that (a) he shall not be called as a witness except on his own request in writing; or (b) his failure to give evidence shall not be made the subject of any comment by any of the parties or the Court to give rise to any presumption against him:self or any person charged together with him at the same trial." Thus the law was amended and the accused person has become a competent witness for the defence but he cannot be compelled to be a witness and cannot be called as a witness except at his own request in writing and his failure to give evidence cannot be 922 made the subject matter of comment by the parties or the Court.
The question that arises for decision is whether to a pending prosecution the provisions of the amended Code have become applicable.
There is no controversy on the general principles applicable to the case.
No person has a vested right in any course of procedure.
He has only the right of prosecution or defence in the manner prescribed for the time being by or for the Court in which the case is pending and if by an Act of Parliament the mode of procedure is altered he has no other right than to proceed according to the altered mode.
See Maxwell on Interpretation of Statutes on p. 225; The Colonial Sugar Refining Co. Ltd. vs Irving (1).
In other words a change in the law of procedure operates retrospectively and unlike the law relating to vested right is not only prospective.
The amending Act contains provisions in regard to the procedure to be applied to pending cases in section 116 which is as follows: S.116 " Notwithstanding that all or any of the provisions of this Act have come into force in any State (a)the provisions of section 14 or section 30 or section 145 or section 146 of the principal Act as amended by this Act shall not apply to or affect, any trial or other proceeding which, on the date of such commencement, is pending before any Magistrate and every such trial or other proceeding shall be continued and disposed of as if this Act had not been passed ; (b)the provisions of section 406 or section 408 or section 409 of the principal Act as amended by this Act shall not apply to, or affect, any appeal which, on the date of such commencement, is pending before the District Magistrate or any Magistrate of the First class empowered by the State Government to hear such appeal, and every such appeal shall, notwithstanding the repeal of the first proviso to section 406 or of section 407 of the principal Act, be heard and disposed of as if this Act had not been passed; (i)(1905) A.C. 369,"372. 923 (c)the provisions of clause (w) of section 4 or section 207A or section 251A or section 260 of the principal Act as amended by this Act shall not apply to, or affect, any inquiry or trial before a Magistrate in which the Magistrate has begun to record evidence prior to the date of such commencement and which is pending on that date, and every such inquiry or trial shall be continued and disposed of as if this Act had not been passed; (d)the provisions of Chapter XXIII of the principal Act as amended by this Act shall not apply to, or affect, any trial before a Court of Sessions either by jury or with the aid of assessors in which the Court of Sessions has begun to record evidence prior to the date of such commencement and which is pending on that date, and every such trial shall be continued and disposed of as if this Act had not been passed; but save as aforesaid, the provisions of this Act and the amendments made thereby shall apply to all pro ceedings instituted after the commencement of this Act and also to all proceedings pending in any Criminal Court on the date of such commencement.
" It was contended on behalf of the respondent that the following words in clause (c) of section 116 of the amending Act " and every such enquiry or trial shall be continued and disposed of as if this Act had not been passed " mean that no provision of the Act would be applicable to pending trials and particular stress was laid on the words " as if this Act had not been passed".
If that is the interpretation to be put then it would be in conflict with the last portion of the section i. e. " Save as aforesaid the provisions of this Act and the amendments made thereby shall apply to all proceedings instituted after the commencement of this Act and also to all proceedings pending in any Criminal Court on the date of such commencement.
" The language used in this portion of the section in regard to the proceedings which are instituted after the commencement of the amended Code is identical with that dealing with proceedings pending in a Criminal Court on the date of its commencement.
Therefore if this Act applies to all proceedings which commenced 924 after the Act came into force they would equally apply to proceedings which had already commenced except those provisions which have been expressly excluded.
If the whole section is construed in the manner contended for by the respondent then there will be a conflict between the words used in the various clauses and words used in the main section 116 and it is one of the principles of interpretation that the words should be construed in such a manner as to avoid a conflict.
Thus construed the words of cl.
(c) and the words of the rest of the section 116 would mean this that the pro visions of sections 4 (w), 207A, 251A or 260 of the Code as amended shall not apply or affect any enquiry or trial before a Magistrate where the recording of evidence has started prior to the date of the commencement of the amending Act and every such enquiry should be continued and disposed of as if these sections had not been enacted.
Except as to this and except as to the provisions mentioned in sub cls.
(a), (b) and (d) the other provisions of the amended Code would be applicable to such proceedings which is also in accordance with the general principles applicable to amendments in procedural law.
By section 34 of the amending Act, section 251 of the Code was substituted by two sections i. e. 251 and 251A. Section 251 lays down the procedure in warrant cases.
It provides: section 251 " In the trial of warrant cases by Magi.
strates,the Magistrate shall, (a) in any case instituted on a police report, follow the procedure specified in section 215A; and (b) in any other case, follow the procedure specified in the other provisions of this Chapter.
" Sub clause (a) deals with cases instituted on a police report and sub cl.
(b) with other cases.
To the former section 251A is applicable and to other cases procedure specified in other provisions in Chapter 21 is made applicable.
Section 342A is in Chapter 24 and there is nothing in the amending Act or the amended Code which makes the provision of section 342A inapplicable to criminal proceeding , which are pending before a Magistrate and in which the recording of evidence has commenced.
925 In our opinion on the plain construction of the words used in section 116 of the amending Act, section 342A available to the appellant.
The High Court, it appears, was misled into construing the words in clause (c) of section 116 i. e. "as if this Act had not been passed".
The High Court was therefore in error and the appellant is entitled, in our view, as a competent witness for the defence to testify in disproof of the charges made against him or any other person charged together with him at the same trial.
We would, therefore., allow this appeal, set aside the order of the courts below and hold that the application made by the appellant to appear as a witness was well founded and should have been allowed.
Appeal allowed.
| A complaint was filed against the appellant on January 13,1953, and the Special Magistrate trying him commenced the recording of evidence on July 4, 955.
During the trial the Criminal Procedure Code (Amendment) Act (26 of 955) came into force on January 2, 1956, which introduced section 342 A in the Code of Criminal Procedure.
The appellant made an application to the Magistrate claiming the right to appear as a witness on his own behalf under section 342 A in disproof of the charges made against him.
The Magistrate rejected the application on the ground that section 342 A could not be applied to pending proceedings which would be according to the procedure laid down in the unamended Code: Held, that on a plain construction of section ii6 of the amending Act which provided for procedure to be followed in pending cases section 342 A was clearly applicable in such cases.
Under the general law also a change in procedure operates retrospectively.
|
Summarize this legal judgement text concisely | Appeal No. 150 of 1955.
Appeal from the judgment and decree dated August 20, 1952, of the Punjab High Court in Regular First Appeal No. 107 of 1949 arising out of the judgment 140 1100 and decree dated March 22, 1948, of the Court of the sub Judge 1st Class, Panipat, in Suit No. 361 of 1947.
Dr. J. N. Banerjee and K. L. Mehta, for the appellant.
Gopal Singh, for respondents Nos.
1 to 9.
May 23.
The Judgment of the Court was delivered by GAJENDRAGADKAR J.
If a Hindu governed by the customary law prevailing in the Punjab succeeds to his maternal grandfather 's estate, is the property in his hands ancestral property qua his own sons? This is the short and interesting question of law which arises in this appeal.
The appellant is the son of Sarup, respondent 10.
On the death of his mother Musammat Rajo, respondent 10 inherited the suit properties from his maternal grandfather Moti.
On March 22, 1927, he executed a registered mortgage deed in respect of the said properties in favour of Shibba the ancestor of respondents I to 9 for Rs. 5,000.
Subsequently, on April 12, 1929, he sold the equity of redemption to the said mortgagee Shibba for Rs. 11,000.
In Suit No. 145 of 1946 filed by the appellant in the court of the Sub Judge, Panipat, from which the present appeal arises, the appellant had claimed a declaration that the two transactions of mortgage and sale in question did not bind his own reversionary rights, because the impugned transactions were without consideration and were not supported by any legal necessity. 'His allegation was that his family was governed by the custom prevailing in the Punjab and, under this custom, the property in suit was ancestral property and he was entitled to challenge its alienation by his father respondent 10.
Respondents 1 to 9 disputed the appellant 's right to bring the present suit and urged that the alienations by respondent 10 were for consideration and for legal necessity.
It was, however, common ground that respondent 10 and the appellant were governed by the custom prevailing in the Punjab.
The learned trial judge held that the property in dispute was ancestral qua the appellant 1101 and that the impugned alienations were not effected for consideration or for legal necessity.
He, however, held that the appellant was not born at the time when the mortgage deed in question was executed and so he was not entitled to challenge it.
In the result the appellant was given a declaration that the sale in dispute did not bind the appellant 's reversionary rights in the property after the death of respondent 10.
The appellant 's claim in regard to the mortgage was dismissed.
Respondents 1 to 9 went in appeal against this decree to the District Judge at Karnal and contended that the suit had abated in the trial court as a result of the death of one of the defendants pending the decision of the learned trial judge.
The learned District Judge rejected this contention but he set aside the decree and remanded the suit for proceedings for substituting the legal representatives of the deceased defendant Ram Kala.
After remand the legal representatives of the deceased Ram Kala were brought on record and ultimately the original decree passed by the trial court ",as confirmed by the learned trial judge.
Respondents I to 9 again challenged this decree by preferring an appeal to the District Judge at Karnal.
The learned District Judge held that the value of the subject matter of the suit was more than Rs. 5,000 and so he ordered that the memorandum of appeal should be returned to respondents I to 9 to enable them to file an appeal before the High Court.
That is how respondents I to 9 took their appeal to the High Court of Punjab.
The High Court took the view that the appeal had in fact been properly filed the District Court; but even so it did not ask respondents 1 to 9 to go back to the District Court, but condoned the delay made by the said respondents in the presentation of the appeal before itself and proceeded to deal with the appeal on the merits.
The High Court held that the property inherited by respondent 10 was 'not ancestral property qua the appellant, and so it allowed the appeal preferred by respondents 1 to 9 and dismissed the appellant 's suit.
In view of the fact that the point of law raised before the High Court was not free from doubt the High 1102 Court ordered that parties should bear their own costs throughout.
The appellant then applied for and obtained a certificate from the High Court under the first part of section 110 of the Code of Civil Procedure.
It is with this certificate that the present appeal has come before this Court and the only point which has been raised for our decision is whether the property in suit can be held to be ancestral property between the appellant and respondent 10.
Under the Hindu law, it is now clear that the only property that can be called ancestral property is property inherited by a person from his father, father 's father or father 's father 's father.
It is true that in Raja Chelikani Venkayyamma Garu vs Raja Chelikani Venkataraman ayyamma (1) the Privy Council had held that under Mitakshara law the two sons of a Hindu person 's only daughter succeed on their mother 's death to his estate jointly with benefit of survivorship as being joint ancestral estate.
This decision had given rise to a conflict of judicial opinion in the High Courts of this country.
But in Muhammad Husain Khan vs Babu Kishva Nandan Sahai (2) this conflict was set at rest when the Privy Council held that under Hindu law a son does not acquire by birth an interest jointly with his father in the estate which the latter inherits from his maternal grandfather.
The original text of the Mitakshara was considered and it was observed that the ancestral estate in which, under the Hindu law, a son acquires jointly with his father an interest by birth, must be confined to the property descending to the father from his male ancestor in the male line.
Sir Shadi Lal, who delivered the judgment of the Board, explained the earlier decision of the Privy Council in Raja Chelikani Venkayyamma Garu 's case (1) and observed that in the said case " it was unnecessary to express any opinion upon the abstract question whether the property which the daughter 's son inherits from his maternal grandfather is ancestral property in the technical sense that his son acquires therein by birth an interest jointly with him." The learned Judge further clarified the position by stating that the (1) (19O2) L.R. 29 I.A. 156.
(2) (1937) L.R. 64 I.A. 250.
1103 phrase 'ancestral property ' used in the said judgment was used in the ordinary meaning, viz., property which devolves upon a person from his ancestor and not in the restricted sense of the Hindu law which imports the idea of the acquisition of interest on birth by a son jointly with his father.
Thus there is no doubt that under the Hindu law property inherited by a person from his maternal grandfather is not ancestral property qua his sons.
The question which arises in the present appeal is: what is the true position in regard to such a property under the Customary law prevailing in the Punjab ? This question has been considered by Full Benches of the High Court of Punjab on three occasions.
Let us first consider these decisions.
In Lehna vs Musammat Thakri (1), it was held by the Full Bench (Roe section J. and Rivaz J., Chatterji J. dissenting) that " in the village community where a daughter succeeds, either in preference to, or in default of, heirs male, to property which, if the descent had been through a son, would be ancestral property, she simply acts as a conduit to pass on the property as ancestral property to her sons and their descendants and does not alter the character of the property simply because she happens to be a female ".
Chatterji J., however, held that the word "ancestral" can only be used in a relative and not in a fixed or absolute sense in customary law, and before this character can be predicated of any property in the hands of a male owner, it must be found that it has descended to him from a male ancestor and in the case of a claim by collaterals, from a male ancestor common to him and the claimants.
It is apparent from the majority judgment that the learned judges did not find the alleged custom about the character of the property proved by any evidence.
They proceeded to deal with the question rather on a priori considerations and the main basis for the decision appears to be that the property cannot lose its character of ancestral property merely because it has come through a female who succeeded her father in default of male heirs.
Chatterji J. dissented from this (1) [1895] 30 P.R. 124.
1104 approach.
He observed that he could not recall any instance in which property derived from or through any female ancestor among Hindus had been decided to fall within the category of ancestral property under the customary law.
He also pointed out that the statement of the learned author of the Digest on the Customary Law of the Punjab on this point did 'not support the majority view.
Thus it would not be unreasonable to say that the majority decision in this case is not a decision on the proof of custom as such.
The same point was again raised before a Full Bench of the High Court of Punjab in Musammat Attar Kaur vs Nikkoo (1).
Sir Shadi Lal C. T. who delivered the principal judgment of the Full Bench conceded that there was " a great deal to be said in favour of the proposition that, unless the land came to a person by descent from a lineal male ancestor in the male line, it should not be treated as ancestral." He also conceded that the decision in the earlier Full Bench case of Lehna (2) did not rest upon any evidence relating to custom on the subject but was based on what the majority of the judges considered to be the general principles of the customary law, and upon the argument abinconvenienti.
The learned Chief Justice then took into account the fact that the question about the character of such property even under the Hindu law was not free from doubt and he referred to the conflict of judicial opinion on the said point.
Having regard to this conflict the learned Chief Justice was not inclined to reopen the issue which had been concluded by the earlier Full Bench decision, and basin(, himself on the doctrine of stare decisis he held that the majority decision in Lehna 's case (2), should be treated as good law.
It would be noticed that the judgment of Sir Shadi Lal C. J. clearly indicates that, on the merits, he did not feel quite happy about the earlier decision in Lehna 's case (2).
It appears that the same question was again raised before another Full Bench of the High Court of Punjab in Narotam Chand vs Mst.
Durga Devi (3).
In this (1) Lah. 356.
(2) [1895] 30 P.R. 124.
(3) I.L.R. 1105 case the main question which arose for decision was under article 2 of the Punjab Limitation (Custom) Act I of 1920.
This article governs suits for possession of ancestral immoveable property which has been alienated on the ground that the alienation is not binding on the plaintiff according to custom.
It provides for two periods of limitation according as a declaratory decree is or is not claimed.
In dealing with the point as to whether the suit in question attracted the provisions of article 2 of Act I of 1920, the Full Bench had to consider whether the property in suit was ancestral property or not; and that raised the same old question whether property from maternal grand father in the hands of a grandson can be described as ancestral property or that such property in the hands of a daughter can be given that description.
The matter appears to have been elaborately argued before the Full Bench.
The previous Full Bench decisions were cited and reference was made to two decisions of the Privy Council which we will presently consider.
Mahajan J., as he then was, who delivered the main judgment of the Full Bench held that the property inherited by a Hindu from his maternal grandfather is not ancestral qua his descendants under the customary law of the Punjab.
The learned judge also held that the two Privy Council decisions cited before the court had in effect overruled the earlier Full Bench decisions of the Punjab High Court.
It is this last decision of the Full Bench which has been followed by the High Court in the present proceedings.
The appellant contends that the high Court was in error in not following the earlier Full Bench decisions on this point and it is urged on his behalf that the decision of the last Full Bench in Narotam Chand 's case (1), should not be accepted as correct.
We do not think that the appellant 's contention is well founded.
So far as the statement of the customary law itself is concerned, Rattigan 's Digest which is regarded as an authority on the subject, does not support the appellant 's case.
Inpara.
59 of the Digest of Civil Law for the Punjab chiefly based on the customary law it is (1) I.L.R. 1106 stated that ancestral immoveable property is ordinarily inalienable (especially amongst Jats, residing in the Central Districts of the Punjab) except for necessity or with the consent of male descendants or, in the case of a sonless proprietor, of his male collaterals.
Provided that the proprietor can alienate ancestral immoveable property at pleasure if there is at the date of such alienation neither a male descendant nor a male collateral in existence.
Following this statement of the law the learned author proceeds to explain the meaning of ancestral property in these words: "Ancestral property means, as regards sons, property inherited from a direct male lenial ancestor, and as regards collaterals property inherited from a common ancestor ".
Thus, so far as the customary law in the Punjab can be gathered, the statement of Rattigan is clearly against the appellant.
Then as regards the first Fall Bench decision in Lehna 's case (1), as we have already pointed out, there is no discussion about any evidence of custom and indeed no evidence about the alleged custom appears to have been led before the learned judges.
It is, therefore, difficult to accept this decision as embodying the learned judges ' considered view on the question of custom as such.
That in effect is the criticism made by Chatterji J. in his dissenting judgment and we are inclined to agree with the views expressed by Chatterji J. When this question was raised before the second Full Bench in Mst.
Attar Kaur 's case (2), Sir Shadi Lal C. J. rested his decision on stare decisis mainly because the true position on the said question even under the Hindu law was then in doubt.
This consideration has now lost all its validity because, as we have already indicated, the true position under the Hindu law about the character of such property has been authoritatively explained by Sir Shadi Lal himself in the Privy Council decision in Muhammad Husain Khan 's case (3 ).
That is why we think not much useful guidance or help can be derived from this second Full Bench decision.
The last Full Bench decision in Narotam Chand 's case (4), is (1) [1895] 30 P.R. 124.
(2) Lah.
(3) (1937) L.R. 64 I.A. 250.
(4) I.L.R. 1107 based substantially on the view that, as a result of the Privy Council decision in Muhammad Husain Khan 's case (1), the two earlier Full Bench decisions must be taken to have been overruled.
Besides, the learned judges who constituted this Full Bench have also examined the merits of the two earlier judgments and have given reasons why they should not be takedas correctly deciding the true position under the customary law.
In our opinion, the view taken by this Full Bench is on the whole correct and must be confirmed.
It would now be necessary to consider the two Privy Council decisions on which reliance has been placed by Mahajan J., as he then was, in support of his conclusion that they have overruled the earlier Full Bench decisions.
In Attar Singh vs Thakar Singh(") the Privy Council was dealing with a suit by Hindu minors to set aside their father 's deed of sale of the lands in suit to the defendants on the ground that they were ancestral.
It was held that, as the plaintiffs claimed through their father as son and heir of Dhanna Singh, the onus was on them to show that the lands were not acquired by Dhanna Singh and, as that onus was not discharged, the lands must be deemed to be acquired properties of Dhaiina Singh and that deed could not be set aside.
The parties to this litigation were governed by the customary law of the Punjab.
In dealing with the character of the property in suit, Lord Collins who delivered the judgment of the Board observed that " it is through father, as heir of the above named Dhanna Singh, that the plaintiffs claimed, and unless the lands came to Dhanina Singh by descent from a lineal male ancestor in the male line, through whom the plaintiffs also in like manner claimed, they are not deemed ancestral in Hindu law.
" This statement indicates that, according to the Board, it is only where property descends from the lineal male ancestor in the male line that it partakes of the character of ancestral property.
It may be conceded that the question as to whether property inherited from a maternal grandfather is ancestral property or (1) (1937) L.R. 64 I.A. 250.
(2) (1908) L.R. 35 I.A. 206.
141 1108 not did not arise for the decision of the Board in this case; but it is significant that the words used by Lord Collins in describing the true position under the Hindu law in regard to the character of ancestral property are emphatic and unambiguous and this statement has been made while dealing with the case governed by the customary law of the Punjab.
This statement of the law was cited with approval and as pertinent by Sir Shadi Lal when he delivered the judgment of the Board Muhammad Husain Khan 's case (1).
The learned judge has then added that " Attar Singh 's case (2), however, related to the property which came from male collaterals and not from the maternal grandfather and it was governed by the custom of the Punjab; but it was not suggested that the custom differed from the Hindu law on the issue before their Lordships ".
The effect of these observa tions would clearly appear to be that the test laid down in Attar Singh 's case(2) would apply as much to the Hindu law as to the customary law of the Punjab.
In our opinion, these observations made by Sir Shadi Lal are entitled to respect and have been rightly relied upon by Mahajan J., as he then was, in the last Full Bench case (Narotam Chand 's case (3)), to which we have already referred.
We may add that it may not be technically correct to say that these observations overrule the earlier Full Bench decision of the Punjab High Court on the point.
We entertain no doubt that, if the relevant observations of Lord Collins in Attar Singh 's case (2) had been considered in the second Full Bench decision, they would have hesitated to rely on the doctrine of stare decisis in support of their final decision.
There is one more point which still remains to be considered.
Having regard to the principle of stare decisis, would it be right to hold that the view expressed by the High Court of Punjab as early as 1895 was erroneous ? the principle of stare decisis is thus stated in Halsbury 's Laws of England(4): (1) (1937) L.R. 64 I.A. 250.
(2) (1908) L.R. 35 I.A. 206.
(3) I.L.R. (4) 2nd Edn., Vol.
XIX, P. 257, para.
1109 " Apart from any question as to the Courts being of co ordinate jurisdiction, a decision which has been followed for a long period of time, and has been acted upon by persons in the formation of contracts or in the disposition of their property, or in the general conduct of affairs, or in legal procedure or in other, ways, will generally be followed by courts of higher authority than the court establishing the rule, even though the court before whom the matter arises afterwards might not have given the same decision had the question come before it originally.
But the supreme appellate Court will not shrink from overruling a decision, or series of decisions, which establish a doctrine plainly outside the statute and outside the common law, when no title and no contract will be shaken, no persons can complain, and no general course of dealing be altered by the remedy of a mistake.
" The same doctrine is thus explained in Corpus Juris Secundum(1) " Under the stare decisis rule, a principle of law which has become settled by a series of decisions generally is binding on the courts and should be followed in similar cases.
This rule is based on expediency and public policy, and, although generally it should be strictly adhered to by the courts, it is not universally applicable.
" The Corpus Juris Secundum (2), however, adds a rider that "previous decisions should not be followed to the extent that grievous wrong may result; and, accordingly, the courts ordinarily will not adhere to a rule or principle established by previous decisions which they are convinced is erroneous.
The rule of stare decisis is not so imperative or inflexible as to preclude a departure therefrom in any case, but its application must be determined in each case by the discretion of the court, and previous decisions should not be followed to the extent that error may be perpetuated and grievous wrong may result.
" In the present case it is difficult to say that the doctrine of stare decisis really applies because the (1) VOL XXI P. 302, para. 187.
(2) VOI.
P. 322, para.
110 Correctness of the first Full Bench decision has been challenged in the Punjab High Court from time to time and in fact the said decision has been reversed in .950.
Besides, in 1908, the Privy Council made emphatic observations in Attar Singh 's case (1) which considerably impaired the validity of the first Full Bench decision ; so it would be difficult to say that the decision of the first Full Bench has been consistently followed by the community since 1895.
It cannot also be said that reversal of the said decision shakes any title or contract.
The only effect of the said decision was to confer upon the son of the person who inherited the property from his maternal grandfather the right to challenge his alienation of the said property.
It is doubtful if such a right can be regarded as the right in property.
It merely gives the son 'in option either to accept the transaction or to avoid it.
It cannot be said today that any pending actions would be disturbed because this right has already been taken away by the Full Bench in 1950.
In this connection, it may also be relevant to consider another aspect of this matter.
If it is held that the property inherited from maternal grandfather is not ancestral property, then it would tend to make the titles of the alienees of such property more secure.
Besides, we are satisfied that the decision of the first Full Bench is wholly unsustainable as a decision on the point of the relevant custom.
We are, therefore, inclined to take the view that the doctrine of stare decisis is in applicable and should present no obstacle in holding that the earlier cases of the Full Bench of the Punjab High Court were not correctly decided.
In the result we confirm the finding of the High Court that the property in suit is not ancestral property and that the appellant has no right to bring the present suit.
The appeal accordingly fails and must be dismissed.
The appellants will pay the respondent 's costs in this Court; and parties will bear their own costs in the courts below.
Appeal dismissed.
(1) (1908) L.R. 35 I.A. 2o6.
| Under the customary law of the Punjab property inherited by a Hindu male from his maternal grandfather is not ancestral property qua his sons.
Narotam Chand vs Mst.
Durga Devi, I. L. R. (1950) Punj. 1, approved.
Lehna vs Musammat Thakyi, (1895) 30 P. R. I24 and Musammat Attar Kaur vs Nikkoo, Lah. 356, not approved.
The rule of stare decisis is not an inflexible rule and is inapplicable where the decision is clearly erroneous and when its reversal does not shake any titles or contracts or alter the general course of dealing.
|
Summarize this legal judgement text concisely | iminal Appeal No. 82 of 1953.
Appeal under article 134(1)(c) of the Constitution of India from the Judgment and Order dated the 16th August, 1953, of the High Court of Judicature at Hyderabad in Criminal Appeal No. 1557/6 of 1950, arising out of the Judgment and Order dated the 16th October, 1950, of the Court of Special Judge, Warangal, in Case No. 28/2 of 1950.
A. A. Peerbhoy, J. B. Dadachanji and Rajinder Narain for the appellant.
Porus A. Mehta and P. G. Gokhale for the respondent.
590 1954.
May 6.
The Judgment of the Court was delivered by GHULAM HASAN J.
The appellant was tried and convicted by the Special Judge, Warangal, for various offences under the Hyderabad Penal Code.
These correspond to sections 302, 307, 347 and 384 of the Indian Penal Code, the sentences awarded under the first two sections respectively being death and life imprisonment, and separate sentences 'of two years ' rigorous imprisonment under the latter two.
two learned Judges of the High Court, who heard the appeal, differed, Manohar Pershad J. upholding the convictions, and the sentences and M. section Ali Khan J. acquitting the appellant.
The third learned Judge, A. Srinivasachari J., on reference which was Occasioned by the difference of opinion agreed with Manohar Pershad J. Leave to appeal to this Court was granted by the two agreeing Judges.
The occurrence which led to the prosecution of the appellant took place on September 13,1948, which was the beginning of the first day of Police action in Hyderabad.
The appellant, who was Reserve Inspector of Police stationed at Mahbubabad at the material time, according to the prosecution story, visited two villages Rajole and Korivi accompanied by a number of Razakars and the Police.
He arrested Janaki Ramiah (P.W. 5) and Nerella Ramulu (P.W. 9) at Rajole and took them to Korivi.
Outside this village in the waste land he spotted four men going to their fields and shot at them with his gun.
The deceased Mura Muthiah and Somanaboyanna Muthandu (P.W. 2) were injured in the knee, while the other two Kotta Ramiah (P.W. 3) and Kancham Latchiah (P.W. 4) were uninjured.
The latter two hid themselves behind the babul trees.
P.W. 2 also ran away and hid himself in the bajra fields a few yards away but the deceased remained where he fell.
The appellant searched for the three persons who had run away.
He caught P.W. 3 and P.W. 4 and brought them to the spot where the deceased was lying but he could not trace P.W. 2.
The appellant seeing that Mora Muthiah was not dead, shot him in the chest and killed him.
The whole party 591 consisting of P.W. 3, P.W. 4, P.W. 5 and P.W. 9 then went to Korivi village.
The appellant stayed at the house of one Maikaldari in the village and spent the night there.
Maikaldari and one Berda Agiah (P.W. 8) both asked the appellant why he had arrested P.W. 3 and P.W. 4, for they were not Congress men.
Upon this the appellant released them.
The prosecution story proceeds that the father (P.W. 1) of the deceased saw the appellant in the night of the 13th September and asked him why he had killed his son.
The appellant without saying more advised him to cremate the dead body.
P.W. I borrowed wood from the people and cremated the body.
Four months later the appellant went and ,stayed at the Government bungalow Korivi, sent for P.W. I and offered him Rs. 200/ as hush money for not disclosing the offence.
The offer was refused.
P.W. 3 and P.W. 4 who had been released told the father of P.W. 2 next morning that his son was lying injured in the bajra field.
He went and had P.W. 2 removed to the hospital where his injuries were attended to.
On the same morning the appellant, who had detained P.W. 5 and P.W. 9 in custody, asked them to pay Rs. 200/ when they would be released.
P.W. 5 went with a constable to the house of P.W. 6 and P.W. 7 and borrowed Rs. 100/ from each of them.
On this being paid he was released.
P.W. 9 was unable to pay any money and he was let off.
The defence was a denial of the offence.
The appellant denied having zone to the village in question or having committed any of the offences attributed to him.
He stated that he was posted at Mahbubabad in order to stop the subversive activities of the communists and that the witnesses being communists had falsely implicated him.
He produced witnesses in defence.
The First Information Report was lodged on April 14,1949.
This delay was due to the disturbed conditions prevailing at the time and does not affect the truth of the story.
The appellant was prosecuted and the charge sheet submitted against him on October 30, 1949.
The charge was framed by a Munsiff Magistrate who committed the appellant to the Sessions.
As already ,stated, the learned Special Judge convicted and 592 sentenced the appellant and his convictions and sentences were upheld by a majority of two Judges.
It has been argued by Mr. Peerbhoy, learned counsel on behalf of the appellant, that his client had no fair trial and has detailed a number of circumstances as supporting his contention.
We think it unnecessary to deal with each and every one of these circumstances as in our opinion they do not affect the substance of the matter and are too trifling to justify the conclusion that the appellant suffered any prejudice or that any miscarriage of justice had resulted.
We shall confine ourselves only to a few of them which need examination.
It was complained that the appellant was not furnished with copies of the statements of prosecution Witnesses recorded by the Police and this hampered the appellant in cross examining the witnesses with reference to their previous statements.
It appears that the appellant filed an application through counsel on August 28, 1950, asking for copies of such statements under section 162 of the Code of Criminal Procedure.
The corresponding section of the Hyderabad Penal Code is 166 which is not the same as section 162.
While under section 162 it is the duty of the Court to direct a copy of the statement of a witness recorded by the Police in the course of investigation to be furnished to the accused with a view to enable him to cross examine such a witness with reference to his previous statement, no such duty is imposed by section 166 and the matter is left entirely to the discretion of the Court.
This application was made for re cross examination of witnesses which obviously refers to the last stage of the prosecution evidence.
The order passed on the application as translated is unintelligible and does not convey the real intention of the Court.
The original which was shown to us, however, leaves no doubt whatever that the Court ordered that the case diaries and the statements were in Court and the appellant 's counsel could look into them with a view to help him in the re cross examination of the witnesses but if the Court later felt the necessity of furnishing copies, the matter would be considered.
No complaint was made before the Special Judge about any prejudice having been caused to the 593 appellant by this order, nor was this point taken before the High Court.
Had the appellant any legitimate ground for grievance on this score, he would no doubt have raised it before the High Court.
We think, therefore, that there is no substance in this point.
It was also contended that the prosecution should have produced the duty register of the appellant who was a Government servant in order to put the matter beyond doubt whether,the accused had left the Headquarters on the crucial date.
We do .lot think that it was any part of the duty of the prosecution to produce such evidence, particularly in view of the fact that direct evidence of the offence was produced in the case.
It appears, however, that the appellant himself summoned the Sub Inspector of Police with the attendance register for 1358 Fasli, corresponding to October, 1948.
The Deputy Superintendent of Police in his letter had stated that the entries for October were made in the register for 1357 Fasli and that register was destroyed during the Police action.
The appellant 's counsel inspected the register and on noticing that the entry for October did not find a place therein and had been made in the previous register for 1357 Fasli, which was destroyed during the Police action, he withdrew the witness.
The appellant satisfied himself from the inspection of this register that the desired entries were not to be found.
Since the register containing the material entries was destroyed, it was impossible for the prosecution to discharge the alleged burden of proving the entries in the duty register on the material date.
It was also faintly contended that there was no evidence to show that Mura Muthiah had actually died.
The father of the deceased gave evidence that the dead body of his son was cremated by him and in this he was supported by other witnesses.
There is no force in this point.
Upon the whole we are satisfied that the appellant has not been able to substantiate his contention that he did not have a fair trial.
The next contention advanced by the appellant 's learned counsel is that there was a misjoinder of 76 594 charges, that though the charges of murder and attempt to murder could be joined and tried together, the charges of extortion and wrongful confinement were distinct offences for which the appellant should have been charged and tried separately as required by the mandatory provisions of section 233 of the Code.
The first two offences took place on September 13, 1948, in the night, while the act of extortion took place next morning on the 14th and the latter charge had nothing whatever to do with the offences committed on the previous night.
Learned counsel contends that where, as here, there is disobedience to an express provision as to the mode of trial contained in section 233, the trial is wholly vitiated and the accused is not bound to show that the misjoinder has caused any prejudice to him.
The contention is based on the case of Subramania Ayyar vs King Emperor(1) showing that the misjoinder of distinct offences being prohibited by the express provision of the Code renders the trial illegal and does not amount to a mere irregularity curable by section 537.
This was a case in which the accused was charged with 41 acts extending over a period of two years which was plainly against the provisions of section 234 which permitted trial only for three offences of the same kind if committed within a period of twelve months.
The decision of Lord Halsbury, Lord Chancellor, in this case was distinguished in the case of Abdul Rahman vs The King Emperor (1) by the Privy Council.
That was a case of conviction on a charge of abetment of forgery in which the depositions of some witnesses were not read over to the witnesses but were handed over to them to read themselves.
It was held that though the course pursued was in violation of the provisions of section 360, it was a mere irregularity within section 537 and that as no failure of justice had been occasioned, the trial was not vitiated.
Both the above cases were referred to by the Privy Council in Babulal Chaukani vs King Emperor(1).
The question in that case arose as to the true effect of section 239(d), which provides that persons who are (1) 28 I.A. 257.
(2) 541.A. 96, (3) A.I.R. 1938 P.C. 130, 595 accused of different offences committed in the course of the same transaction may be charged and tried together.
The question was whether the correctness of the joinder which depends on the sameness of the transaction is to be determined by looking at the accusation or by looking at the result of the trial.
It was held that the relevant point of time is the time of accusation and not that of the eventual result.
The charges in this case were conspiracy to steal electricity and theft of electricity both under the Electricity Act and under the Penal Code.
The Privy Council referred to the fact that the parties had treated an infringement of section 239(d) as an illegality vitiating the trial under the rule stated in Subramania Ayyar vs King Emperor(1) as contrasted with the result of irregularity as held in Abdul Rahman vs The King,, Emperor (2) .
The Privy Council merely assumed it to be so without thinking it necessary to discuss the precise scope of the decision in Subramania 's case, because in their view the question did not arise.
Again in Pulukuri Kottaya and Others vs Emperor (3) the Privy Council treated a breach of the provisions of section 162 of the Code as a mere irregularity curable under section 537 and as no prejudice was caused in the particular circumstances of that case, the trial was held valid.
Reference was made to Subramania Ayyar vs King Emperor(1) as one dealing with the mode of trial in which no question of curing any irregularity arises but if there is some error or irregularity in the conduct of the trial, even though it may amount to a breach of one or more of the provisions of the Code, it was a mere irregularity and in support of this reference was made to Abdul Rahman vs The King Emperor(1).
Several decisions of the High Courts were referred to in course of the arguments with a view to showing what is the true state of the law in view of the Privy Council decisions referred to above but we do not think that that question arises in the present case.
We are of opinion that the present is not a case under section 233 of the Code and it is, therefore, unnecessary to consider whether the violation of its provisions amounts to an illegality vitiating the trial altogether (1) 28 I.A. 257.
(2) 54 I.A. 96.
(3) A.I.R. 1947 P.C. 67.
596 or it is a mere irregularity which can be condoned under section 537.
Section 233 embodies the general law as to the joinder of charges and lays down a rule that for every distinct offence there should be a separate charge and every: such charge should be tried separately.
There is no doubt that the object of section 233 is to save the accused from being embarrassed in his defence if distinct offences are lumped together in one charge or in separate charges and are tried together but the Legislature has engrafted certain exceptions upon this rule contained in sections 234, 235, 236 and 239.
Having regard to the facts and the circumstances of this case, we are of opinion that the present case falls under section 235.
It provides that if in one series of acts so connected together as to form the same transaction, more offences than one are committed by the same person, he may be charged with, and tried at one trial for, every such offence.
The prosecution story as disclosed in the evidence clearly shows that the offence of extortion committed on the 14th September was one of a series of acts connected with the offence of murder and attempt to murder committed on the previous day in such a way as to form the same transaction.
The prosecution case was that when the appellant accompanied by his party came, he caught hold of two persons (P.W. 5 and P.W. 9) at Rajole and proceeded to Korivi.
He took them into custody without any rhyme or reason.
Then outside the village seeing the deceased, P.W. 2, P.W. 3 and P. W. 4 he shot at them.
The deceased fell down while the others ran away.
He pursued them and brought two of them back to the spot where the deceased was lying but was yet alive.
He shot him in the chest and killed him.
Then he proceeded to the village itself where he stayed for the night.
He released P. W. 3 and P. W. 4 on the intercession of certain persons but kept P. W. 5 and P. W. 9 in wrongful confinement and released them only next morning after extorting Rs. 200 from P. W. 5.
These incidents related in the evidence leave no manner of doubt that from the moment the appellant started from the Police Station, he committed a series of acts involving killing, injuring people, unlawfully confining others and 597 extorting money from one of them.
We are satisfied that the series of acts attributed to the appellant constitute one transaction in which the two offences which are alleged to be distinct were committed.
The case falls squarely within the purview of section 235 of the Code and we are, therefore, of opinion that such misjoinder was permitted by the exception.
No question of contravention of any express provision of the Code such as section 233 arises and in the circumstances it is not necessary for us to consider how far the violation of any express provisions of the Code relating to the mode of a trial or otherwise constitutes an illegality which vitiates the trial as distinguished.
from an irregularity which is curable under section 537.
This conclusion in our opinion disposes of the contention about misjoinder of the charges.
The fact that the offence of extortion was committed at a different place and at a different time does not any the less make the act as one committed in the course of the same transaction.
Turning to the merits of the matter, we are not satisfied that any prejudice was caused to the appellant in fact.
It is not possible to say that the Court being influenced by the evidence on the question of extortion was easily led into the error of believing the evidence on the question of murder.
The witnesses on the point of extortion are P.W. 5 and P.W. 9.
These are the two persons who were taken away from village Rajole and were wrongfully confined, P.W. 5 being released on payment of Rs. 200 and the other let off without payment.
These two witnesses are also witnesses to the fact of murder, in addition to the other three witnesses, P.W. 2, P.W. 3 and P.W. 4.
P.W. 5 was injured by the gun shot but survived.
The other two were scared on hearing the gun shot and ran away taking protection under the babul tree.
It is not possible to contend that the Sessions Judge having believed the evidence of extortion from P.W. 5 must have been persuaded into believing that the story of murder deposed to by him must be correct, for there is not only the evidence of P. W. 5, but three other inde pendent witnesses.
Lastly it was contended that the judgment of one of the agreeing Judges Manohar Pershad J. is purely 598 mechanical and does not show that he has applied his mind to the facts of the case.
No such complaint is made about the judgment of the other agreeing Judge Srinivasachari J.
It is true that the learned Judge has made copious quotations verbatim from the evidence of the witnesses and his comment upon the evidence is not as full and detailed as might be expected but this practice of writing judgments in this way seems fairly general in Hyderabad though we cannot help saying that it is not to be commended.
It is the obvious duty of the Court to give a summary of the evidence of material witnesses and to appraise the evidence with a view to arriving at the conclusion whether the testimony of the witness should be believed.
We do not think, however, that the criticism that the judgment is mechanical and does not show a proper appreciation of the evidence is well founded.
The prosecution evidence was believed by the trial Judge and the defence evidence to the effect that the deceased was killed by the Military and that the appellant was not present at the time of the occurrence was disbelieved.
This finding was accepted by both the learned agreeing Judges.
This Court cannot interfere with the finding arrived at, on an appreciation of the evidence.
We are satisfied that there is no good ground for disturbing the conviction of the appellant.
The only question which remains for consideration is whether the sentence of death is the appropriate sentence in the present case.
No doubt there are no special circumstances which justify the imposition of any other but the normal sentence for the offence of murder.
We think, however, that where the two Judges of the High Court on appeal are divided in their opinion as to the guilt of the accused and the third Judge to whom reference is made agrees with one of them who is upholding the conviction and sentence, it seems to us desirable as a matter of convention though ,not as a matter of strict law that ordinarily the extreme penalty should not be imposed.
We accordingly, while maintaining the conviction of the appellant, reduce his sentence to one of transportation for life.
In other respects the appeal stands dismissed.
All the sentences will run concurrently.
| Section 233 of the Code of Criminal Procedure (Act V of 1898) embodies the general law as to the joinder of charges and lays down a rule that for every distinct offence there should.
be a 589 separate charge and every such charge should be tried separately.
No doubt the object of section 233 is to save the accused from being embarrassed in his defence if distinct offences are lumped together in one charge or in separate charges and are tried together but the Legislature has engrafted certain exceptions upon this rule contained in sections 234, 235, 236 and 239.
Section 235 of the Code of Criminal Procedure provides that if in one series of acts so connected together as to form the same transaction, more offences than one are committed by the same person, he may be charged with, and tried at one trial for every such offence.
The prosecution story showed that the offence of extortion committed on a particular day was one of a series of acts connected with the offence of murder and attempt to murder committed on their previous day in such a way as to form one transaction.
The incidents related in the evidence left no doubt that from the moment the accused (a Reserve Inspector of Police) started from the Police State, he committed a series of acts involving killing, injuring people, unlawfully confining others and extorting money from one of them and therefore the series of acts attributed to him constituted one transaction in the course of which two offences which were alleged to be distinct were committed.
Held, that under the circumstances the case fell within the purview of section 235 of the Code of Criminal Procedure and such joinder was permitted by the exception enacted in that section.
Where the two Judges of the High Court on appeal are divided in their opinion as to the guilt of the accused and the third Judge to whom reference is made agrees with one of them who is upholding the conviction and sentence, it is desirable as a matter of convention though not as a matter of strict law that ordinarily the extreme penalty should not be imposed.
|
Summarize this legal judgement text concisely | ppeal No.
239 of 1954.
Appeal from the judgment and decree dated December 12, 1950, of the Patna High Court in Appeal from Original Decree No. 188 of 1945 arising out of the judgment and decree dated December 18, 1945, of the Court of the Additional Subordinate Judge, IV Class, Gaya, in Title Suit No. 4 of 1945.
Purshottam Tricumdas and section P. Varma, for the appellant.
S.P. Sinha and R. C. Prasad, for respondents Nos. 1 4, 8 10, 13 and 14.
May 23.
The Judgment of the Court was delivered by SUBBA RAO J.
This appeal by certificate tinder article 133 (1) (a) of the Constitution of India is directed against the judgment and decree of the High Court of Judicature at Patna setting aside those of the Subordinate Judge, Gaya, in a suit for redemption of an usufructuary mortgage.
Deokinand, the common ancestor of plaintiff respondents 1 to 4 and proforma respondents 6 to 12, executed a document dated August 20, 1923, in favour of Mahant Tokhnarain Puri of Nadra, the predecessor ininterest of defendant 1, hypothecating eight annas milkiat share in mauza Lodipur, Mahimabigha, Tauze No. 4246 for the purpose of discharging a debt of Rs. 31,701 payable by him to the Mahanth.
There are conflicting versions in regard to the nature of this transaction respondents claim it to be a usufructuary 1087 mortgage, while the appellant asserts it to be a lease.
The plaintiff respondents instituted Title Suit No. 4 of 1945 in the Court of the Additional Subordinate Judge 1V, Gaya, for redemption of the said document on the basis that it was a usufructuary mortgage, for rendition of accounts and for the recovery of surplus profits due to them.
The appellant pleaded, inter alia, that the suit for redemption was not maintainable as the document was not a mortgage but lease, that on the assumption that it was a mortgage it would only be an anomalous mortgage in respect where of there was no statutory liability to render accounts to the plaintiff, that even if it was a usufructuary mortgage, it was governed by the provisions of section 77 of the Transfer of Property Act taking the mortgage out of the purview of section 76 (d) and (g) of the said Act.
It is not necessary to particularize other defences as nothing turns upon them in the appeal.
The learned Subordinate Judge held that the document created a usufructuary mortgage and not a lease and that section 77 of the Transfer of Property Act applied to the document exonerating the appellant from any liability to render accounts.
In the result, the learned Subordinate Judge gave a conditional decree in favour of respondents I to 4 for possession on their depositing in Court a sum of Rs. 26,839 7 0 within six months from the date of the decree.
The plaintiff respondents preferred an appeal against that decree to the High Court at Patna.
The High Court agreed with the learned Subordinate Judge that the document was a sufructuary mortgage but differed from him on the question of applicability of section 77 of the Transfer of Property Act.
The High Court set aside the decree of the learned Subordinate Judge and passed instead a preliminary decree for redemption and sale on default of payment: the decree also directed the rendition of accounts between the parties in the light of the directions given in the judgment.
The second defendant against whom the decree was passed preferred the above appeal.
The point to be first decided is whether the transaction is a lease as contended by the contesting respondents.
The only guiding rule that can be extracted 1088 from the cases on the subject is that the intention of the parties must be looked into and that 'once you get a debt with security of land for its redemption, then the arrangement is a mortgage by whatever name it is called ' (See Ghosh on Mortgages, V Edn., Vol. 1, p. 102).
Let us now examine the terms of the document Exhibit A (3) to ascertain the intention of the parties.
The document was obviously not drafted by a trained mind.
It appears to be a confused product of one of those village document writers.
We shall read the document, omitting the recitals not material to the question raised: The first part of the document recited that the executant was heavily indebted to the other party under mortgage bonds and also otherwise and that common friends settled that a part of the properties mortgaged should be let out in ijara with possession at a lower rate of interest so that 'the increment of interest may be checked and the present necessities may be met ".
It was also stated in the document that in respect of the said property there was a pre existing thika (lease) dated April 21, 1922, in favour of Munshi Dodraj Lal alias Munshi Jatadhari Lal, for a period of 9 years and that under the said lease, Rs. 2,205 was taken by the executant as peshgi money without interest and the rent was fixed at a sum of Rs. 2,205.
Then the document proceeds to state thus: " In respect of Rs. 29,496 the total sum of peshgi money, he should, for the satisfaction of interest thereon, get executed a usufructuary mortgage deed bearing a lower rate of interest in respect of 8 annas share i. e., half share in mauza Lodipur Mahima Bigha, principal with dependencies, together known and unknown tola and totals . . . . . . for term of 15 years on fixing Rs. 2,205 as the annual rental and by getting mortgaged there.
under 8 annas proprietary interest, thikadari interest together with peshgi money and the right to receive thikadari rent from the said thikadars.
Accordingly, at the request and entreaty of me, the executant, the said Mahanthji took pity at my condition and agreed to my request and got ready to get usufructuary mortgage deed executed.
Therefore, 1, the executant, 1089 ". . . have voluntarily let out in ijara with possession the whole and entire 8 annas i. e., half of Mauza Lodipur Mahima Bigha. .for a peshgi money of Rs. 31,701that Rs. 29,496, the peshgi money bearing interest at 1/2 per cent.
per month and Rs. 2,205, tile peshgi money without interest, at an annual rental of Rs. 2,205 including revenue and cesses, for a term of 15 years, commencing from 1331 Fasli to 1345 Fasli . . . and have put him in possession and occupation of the ijiara property as my representative.
It is desired that the said ijaradar should enter into and remain in possession and occupation of the ijara property and so long as the thika of ' Munshi Dodraj Lal alias Jatadhari Lal . . . . . . is intact and in force, he should realize the rent from the above named thikadars and their heirs and representatives in accordance with the stipulations made in the thika patta and kabuliat as representative of me, the executant, and bring it into his possession and use, that is to say, on his own authority he should set off Rs. 1,769 12 0 on account of the interest on the peshgi money bearing interest mentioned in this deed, year after year, and pay the remaining sum of Rs. 435 4 0, the amount of rent due by the ijaradar, i.e., the reserved rent, to me, the executant, and my heirs and representatives The ijaradar should not make any default.
If he does so, he and his heirs and representatives shall be held liable to pay interest at 1/2 per cent.
per month.
" Then the document proceeds to incorporate the terms agreed upon by the parties, to take effect after the termination of the thikadari interest.
It is stated: " The ijaradar of this ijara deed or his heirs and representatives on his own authority shall be competent to bring the thika property into his sir possession as ijara property as a representative of me, the executant, in accordance with the stipulations made in the patta and kabuliats after setting off Rs. 2,205 the peshgi money due to the thikadars by me, the executant, against the annual thikadari rent.
The said ijaradar should make his own arrangement for the cultivation of the ijara property, get it cultivated 1090 by others, realise the nakdi and jinsi income of the ijara property from the tenants and appropriate the produce of both the shares thereof.
1, the executant, and my heirs and representatives neither have nor shall have any right, claim and.
demand in respect of tile produce or the income of the ijara property so long as the ijara deed is intact except getting Rs. 435 4 0, the rent after the payment and deduction of interest on the peshgi money bearing interest.
" The document then allocates the liability in respect of improvements and sums spent in regard to boundary disputes to one or other of the parties to the document and then it continues to state: " The peshgi money amounting to Rs. 31,701 with and without interest as mentioned in this ijara deed has been realized from the ijaradar in this manner that I allowed Rs. 28,246, the amount of loan principal with simple and compound interest as per account given below after remission of the interest due to the ijaradar under all the three mortgage bonds to be set off against the peshgi money by getting a note made to that effect on the back of the said mortgage bonds which I allowed to remain with the ijaradar as a proof of pavnient of the peshgi money covered by this deed The term of this ijara deed with possession shall terminate in the month of Jeth, 1345 Fasli, when 1, the executant, or my heirs and representatives shall repay Rs. 31,701 being the peshgi money with and without interest mentioned in this deed in cash and in one lump sum to the said ijaradar or his heirs and representatives, 1 shall bring the ijara property into my sir possession.
If I do not repay the peshgi money with and without interest on the expiry of the term of this ijara deed with possession, then, till the repayment of the whole and entire peshgi money with and without interest, this ijara deed with possession shall precisely with all the stipulations remain in force and intact.
1, the executant, or my heirs and representatives shall not put forward any sort of claim or demand in respect of an increase in the produce save and except the claim 1091 for getting rent as fixed and the mentioned above. . . . . . . . . in security of the payment of the peshgi money with or without interest mentioned in this ijara deed I, the executant, have mortgaged, hypothecated, encumbered and made liable the ijara property.
I do hereby make a trustworthy declaration that till the repayment of the entire peshgi money of the ijaradar I shall not in any way directly or indirectly on any allegation mortgage, hypothecate.
encumber and transfer the ijara property.
" The gist of the aforesaid transaction may be stated thus: The executant was indebted to the other party in a large amount under mortgage bonds 'and otherwise.
Through the intervention of common friends, with a view to salvage some property, the amount due from the executant to the other party was fixed in the sum of Rs. 29,496 and it was settled that half share in mauza should be given as security to the other party.
At the time of the execution of the document there was an outstanding thika document in favour of a third party, whereunder the said party advanced a sum of Rs. 2,205 to the executant and agreed to pay Rs. 2,205 as annual rent.
As the other party agreed to discharge the advance paid by the third party to the executant, the right to collect the rent from him was also agreed to be given as security to the other party.
With the result, the executant received Rs. 31,701 under the document, out of which Rs. 29,496 bore interest at i per cent.
per month and Rs. 2,205 did not carry interest, presumably because the other party did not actually pay the amount to the executant.
The document divided the transaction into two parts.
The first part dealt with the terms governing the parties during the subsistence of the thikadari interest; the second part mentioned the terms binding on the parties after the expiry of the said interest.
During the first period, the other party would receive the annual rent of Rs. 2,205 from the thikadars, set off Rs. 1,769 12 0 on account of interest on the peshgi money bearing interest and pay the 139 1092 remaining sum of Rs. 435 4 0 as reserved rent to the executant.
After the expiry of the thikadari interest in 1338 Fasli, the other party would take actual possession by setting off Rs. 2,205 the peshgi money due to the thikadars by the executant, against the annual thikadari rent.
After getting possession of the ijara property, the other party would make arrangements for its cultivation and appropriate the produce towards interest, paying the executant only a sum of Rs. 435 4 0 as rent.
The previous deeds were dis charged and endorsements to that effect made on the back of the documents.
If the debt was not discharged within 1345 Fasli, it was agreed that till the repayment of the entire peshgi money, the ijara deed with possession would precisely with all stipulations remain in force and intact.
The executant, in express terms, undertook not to put forward any sort of claim or demand in respect of the increase in the produce except and save to get rent as fixed in the document.
From the aforesaid summary of the recitals in the document, the following facts emerge: (1) The executant owed large sums of money to the other party; (2) interest at i per cent.
per month was agreed to be paid on the sum of Rs. 29,496, i.e., on the entire consideration excluding that amount which was advanced by the thikadars to the executant; (3) the manner of discharging the debt was prescribed in the document, namely, that during the subsistence of the thikadari interest, the other party would receive the rent from the thikadars and appropriate Rs. 1,769 12 0 on account of interest and pay a sum of Rs. 435 4 0 as rent to the executant and that after the expiry of the thikadari interest, the other party would take physical possession of the land and appropriate the produce towards interest and pay only a sum of Rs. 435 4 0 as rent to the executant; (4) on the expiry of 15 years period or after the extended period, the executant would pay the entire principal amount to the other party; (5) 8 annas share in the mauza was specifically given as security for the amount payable by the executant.
Under the document, there was a relationship of creditor and debtor between the 1093 parties and the property was given as security for the payment of the amount advanced with interest.
Though the document is described as a cowle, the parties, who have had earlier transactions, must be deemed to have known the nature of the transaction they were entering into.
In clear and express terms the nature of the transaction has been stated in more than one place.
The executant, requested the other party, in respect of the advance amount and interest to get executed by him a usufructuary mortgage deed bearing a lower rate of interest in respect of the 8 annas share.
After mentioning the various terms, the executant restated the intention of the parties in the following terms: "In security of the payment of the peshgi money with or without interest mentioned in this ijara deed, I, the executant, have mortgaged, hypothecated, encumbered and made liable the ijara property." Therefore, whatever ambiguity there might be in the recitals that was dispelled by the unambiguous declaration made by the parties that the property was given as security for the loan and the document was executed as a mortgage.
The gist of the document was not a letting of the premises, with a rent reserved, but a mortgage of the premises with a small portion of the income of it made payable to the plaintiff.
There is, therefore, no scope for the argument in this case that the document is a lease and not a mortgage.
We hold, agreeing with the High Court, that the document is a mortgage and not a lease.
Even so, it was contended by the learned Counsel for the appellant that the document did not create an usufructuary mortgage but only an anomalous mortgage.
This contention was raised as a foundation to the argument that if the document was an anomalous mortgage, the rights and liabilities of the parties would be governed by the terms of the contract between them and not by the provisions of section 76 of the Transfer of Property Act.
The question does not really fall to be decided in this case.
Whether the transaction is a usufructuary mortgage or an anomalous mortgage, in the circumstances of the case, there will 1094 not be any difference in the matter of rendition of accounts, for in the ultimate analysis, as we would presently show, the true construction of the relevant terms of the document would afford an answer to the question raised.
We shall, therefore, proceed to consider the question on the alternative basis.
If it was a usufructuary mortgage, it is contended by the appellant that he was not liable to render accounts to the mortgagor, as, Linder the mortgage deed, he was authorized to take the receipts in lieu of interest within the meaning of section 77 of the Transfer of Property Act.
The relevant provisions of the Transfer of Property Act are as follows: "Section 76: When during the continuance of the mortgage, the mortgagee takes possession of the mortgaged property, (g)he must keep clear, full and accurate accounts of all sums received and spent by him as mortgagee, and, at any time during the continuance of the mortgage, give the mortgagor, at his request and cost, true copies of such accounts and of the vouchers by which they are supported; (h)his receipts from the mortgaged property, or, where such property is personally occupied by him, a fair occupation rent in respect thereof, shall, after deducting the expenses properly incurred for the management of the property and the collection of rents and profits and the other expenses mentioned in clauses (c) and (d), and interest thereon, be debited against him in reduction of the amount (if any) from time to time due to him on account of interest and, so far as such receipts exceed any interest due, in reduction or discharge of the mortgage money the surplus, if any, shall be paid to the mortgagor; " Section 77: Nothing in section 76, clauses (b), (d), (g) and (h), applies to cases where there is a contract between the mortgagee and the mortgagor that the receipts from the mortgaged property shall, so long as the mortgagee is in possession of the property, be taken in lieu of interest on the principal money, or in lieu of such interest and defined portions of the principal.
" 1095 Section 76(g) of the Transfer of Property Act imposes a liability on a mortgagee to keep, full and accurate accounts supported by vouchers.
So too, he is under a statutory liability under cl. 'h ' to debit the nett receipts of the mortgaged property in deduction of the amount due to him from time to time on account of interest and where such receipts exceed any interest due, in reduction and discharge of the mortgagemoney and to pay the surplus, if any, to the mortgagor.
Therefore, every mortgagee in possession is bound to keep clear, full and accurate accounts and to render the accounts to the mortgagor in the manner prescribed in cl. 'h '.
But section 77 enacts an exception to the mortgagee 's liability under cls.
(g) and (h) of section 76.
Under that section (section 77), if there is a contract between the mortgagor and the mortgagee, whereunder it is agreed that the receipts of the mortgaged property should, so long as the mortgagee is in possession of the property, be taken in lieu of interest and a defined portion of the principal, the mortgagee is freed from the statutory liability to keep accounts or to render accounts to the mortgagor in the manner prescribed under cls.
(g) and (h) of section 76 of the Act.
This is so because, the receipts are set off against the interest, and there is nothing to account for.
Therefore, to insist upon the mortgagee to keep accounts or render accounts to the mortgagor would be an empty forma lity.
The essential condition for the application of this section is that the receipts of the property should be taken in lieu of interest or in lieu of interest and a defined portion of the principal.
The contention of the learned counsel for the respondents is that unless the contract authorizes the mortgagee to take the entire receipts in lieu of interest or in lieu of interest and defined portions of principal, this section cannot be invoked; for it is said that the principle behind the section is that one is set off against the other, with the result, there is nothing to be accounted for, whereas if only a part of the receipts is agreed to be paid towards interest or in lieu of such interest and defined portions of the" principal, there would be surplus in the hands of the mortgagee, which would have to be 1096 accounted for.
On the basis of that distinction, an argument is advanced to the effect that, as in the present case, the mortgagee had to pay a sum of ]Is.
435 4 0 to the mortgagor, he was not authorized by the mortgagor tinder the agreement to take the entire receipts in lieu of interest, etc., within the meaning of section 77 of the Transfer of Property Act.
To put it differently, the argument is that out of the receipts from the mortgaged property a portion was paid to the mortgagor and the mortgagee was authorized to take only the balance in lieu of interest and, therefore, there was no contract between the mortgagor and the mortgagee for the latter taking the entire receipts in lieu of interest.
We find it difficult to accept this argument.
Under Exhibit A(3), the mortgagee undertook an unconditional obligation to pay a sum of Rs. 435 4 0 in respect of the property mortgaged to him.
This obligation was not made to depend upon the receipts from the property in the possession of the mortgagee.
Whether there was yield from the land or not, he had to make the payment to the mortgagor.
Though he had to pay the rent as a consideration for his enjoyment of the land as a mortgagee, his liability did not depend upon the receipts from the land he had to pay, receipts or no receipts.
His liability was also not confined to the receipts, for he was under a personal obligation to pay the amount to the mortgagor.
On the other hand, the mortgagee was expressly authorized to take the entire income from the land and appropriate the same towards interest and the mortgagor agreed not to put forward any claim or demand in respect of any increase in the produce.
Shortly stated, the mortgagee was under a personal obligation to pay Rs. 435 4 0 to the mortgagor and had a right to take the entire receipts from the land in lieu of interest.
It is not a case, therefore, where receipts from the mortgaged property are divided between mortgagor and mortgagee, but one where the mortgagee pays a specified amount to the mortgagor and appropriates the entire receipts in lieu of interest.
We, therefore, hold that, under the mortgage deed, Exhibit A(3), there is a contract between the 1097 mortgagee and the mortgagor within the meaning of section 77 of the Transfer of Property Act, to the effect that the receipts from the mortgaged property should be taken in lieu of interest.
Relying upon the judgment of the High Court, a further attempt was made by the learned Counsel for the respondents to contend that the mention of a specified rate of interest in the document is indicative of the fact that under the document the mortgagee, would have to take only such part of the nett receipts sufficient to discharge the interest and credit the balance to the mortgagor.
The mere mention of a rate of interest does not necessarily lead to the conclu sion.
The rate of interest may be stipulated for estimating the amount payable towards interest so that the parties may visualize whether the nett receipts could reasonably be set off against the interest.
The rate may also be given for other reasons.
The Judicial Committee, in Pandit Bachchu Lal vs Chaudhri Syed Mohammad Mah (1), held that notwithstanding the fact that a particular rate of interest was mentioned in the mortgage deed, there was a contract within the meaning of section 77 of the Transfer of Property Act.
It was a case of a mortgage with possession and a particular rate of interest was mentioned in the mortgage deed.
There was a provision for repayment of the principal either in whole or in part before the stipulated period, but it was otherwise provided that the mortgagee should appropriate the surplus profits towards interest, he having no claim to interest and the mortgagors having no claim to the profits.
The Privy Council held, on a construction of the mortgage deed, that the said deed contained a contract within the meaning of section 77 of the .
In Exhibit A 3, though the rate of interest is stated at i per cent.
per month, it was obviously mentioned to enable the parties to approximately fix the amount to be appropriated by the mortgagee from and out of the rent received from the thikadar.
No doubt, the same rate of interest is also mentioned when the (1) 1098 parties are dealing with their rights after the expiry of the thikadari interest, but in more than one place they have stated in clear and unambiguous terms that the mortgagee could appropriate the produce towards interest and that the mortgagor would not put forward any sort of claim or demand in respect of any increase in the produce.
In view of the clearly expressed intention of the parties, we cannot hold from the mere fact that the rate of interest is mentioned that the document does not come under the purview of section 77 of the .
We hold that section 77 of the applies to the document and therefore the mortgagee is not liable to render any account to the mortgagor.
On the footing that the mortgage is an anomalous mortgage, we arrive at the same result.
The learned Counsel for the appellant contends that if the mortgage is an anomalous mortgage, the parties are only governed by the provisions of section 98 of the and not by the provisions of section 77 of the Act.
Section 98 says: " In the case of an anomalous mortgage, the rights and liabilities of the parties shall be determined by their contract as evidenced in the mortgage deed, and, so far as such contract does not extend, by local usage.
The question whether this section excludes the operation of other relevant provisions of the Act, including s.77, need not be considered in this case, for, whether s.77 applies, as the learned Counsel for the respondents contends, or the terms of the contract would govern the rights of the parties, as the learned counsel for the appellant argues, the result would be the same for the question to be decided is whether under the terms of the mortgage, the mortgagee has the right to appropriate the entire nett receipts in lieu of interest,.
We have already held that in Exhibit A(3) not only there is such a recital but there is a specific term whereunder the mortgagor expressly agreed not to claim any produce received by the mortgagee.
Whether section 77 applies or not, under the express terms of the contract, 1099 the appellant is not liable to render accounts for the excess receipts.
No other point is raised before us.
In the result, the decree of the High Court is set aside and that of the Subordinate Judge is restored.
The appellant will have his costs throughout.
Appeal allowed.
| D executed a document in favour of M hypothecating an eight annas share in a village for the purpose of discharging a debt of Rs. 29,496 payable by him to Al.
In respect of this property there was a pre existing think in favour of j for a period of 9 years, under which D took Rs. 2,205 as peshgi money without interest and the annual rent was fixed at RS.
2,205.
The document provided that (i) interest at 1/2 per cent.
per month was payable on the sum Of Rs. 29,496 ; (ii) (luring the subsistence of the thika M would receive the rent from j and appropriate Rs. 1,769 12 o towards interest and pay Rs. 435 4 o as rent to D ; (iii) after the expiry of the thika M would take physical possession of the land and appropriate the produce towards interest and Pay Rs. 435 4 o as rent to D; (iv) on the expiry of the thika M would repay the peshgi amount of Rs. 2,205 to j and this sum was added to principal amount due ; (v) on the expiry of 15 years, or after the extended period, D would repay the entire principal amount; (vi) and the property was given as security for the amount payable by D.
The respondents who are successors of D instituted a suit for redemption on the basis that the transaction was a usufructuary mortgage, for rendition of accounts and for recovery of surplus profits.
The appellant, successor of M, contended that the suit for redemption was not maintainable as the transaction was not a mortgage but a lease, and that even if it was a mortgage there was no statutory liability to render accounts as the document provided that the receipts were to be taken in lieu of interest and the case was governed by section 77, Transfer of Property Act : Held, that the transaction was a mortgage and not a lease.
The guiding rule of construction is that the intention of the parties must be looked into and that once there is debt with security of land for its redemption the arrangement is a mortgage by whatever name it is called.
Held, further, that there was a contract between the mort gagor and the mortgagee within the meaning Of section 77, Transfer of Property Act to the effect that the receipts from the mortgaged property be taken in lieu of interest and consequently the mortgagee was not liable to render accounts.
The stipulation 1086 in the document for payment of Rs. 435 4 0 to the mortgagor was a personal obligation of the mortgagee and he had a right to take the entire receipts from the land in lieu of interest.
Though the rate of interest is stated as per cent.
per month it was mentioned to enable the parties to approximately fix the amount to be appropriated by the mortgagee from and out of the rent received from the thikadar.
The mere fact of the mention of the rate of interest could not make section 77 inapplicable in view of the clearly expressed intention of the parties.
Pandit Bachchu Lal vs Chaudhri Syed Mohammad Mah, (1033) , referred to.
|
Summarize this legal judgement text concisely | Criminal Appeals Nos. 120 & 121 of 1955.
497 Appeals from the judgment and order dated December 16, 1954, of the Mysore High Court at Bangalore in Criminal Appeals Nos. 49 and 50 of 1953 arising out of the judgment and order dated May 19, 1953, of the Court of the Third Additional Sessions Judge at Bangalore in Bangalore Sessions Case No. 7 of 1953.
V. Krishnamurthy and R. Gopalakrishnan, for the appellants.
G. Channappa, Assistant Advocate General for the State of Mysore and T. M. Sen, for the respondent.
April 14.
The Judgment of the Court AA as delivered by KAPUR J.
These two appeals under article 134(1)(c) of the Constitution arise out of the judgment and order of the High Court of Mysore at Bangalore confirming the convictions and sentences passed upon the appellants who were accused Nos. 2, 3 and 4 respectively by the Third Additional District Judge, Bangalore.
Accused Nos. 1, 5 and 6 who have been acquitted and the appellants were charged as follows: "I. . . hereby charge you A 1 Sanjeeva Rao, A 2 Srikantiah, A 3 Sidda, A 4 Kidaripathi, A 5 Hanumantha and A 6 Pujari Anantha as follows: 1.That you on or about the 25th day of August 1952 at Mayasandra in Magadi Taluk were members of an unlawful assembly the common object of which was to murder deceased Anne Gowda and thereby committed an offence punishable under section 143 of the Indian Penal Code and within the cognizance of the Court of Sessions.
2.That you A 2 Srikantiah.
, A 3 Sidda, A 4 Kadaripathi, A 5 Hanumantha and A 6 Pujari Anantha, on or about the 25tb.
day of August 1952 at Mayasandra in Magadi Taluk did commit murder by intentionally causing the death of Anne Gowda and thereby committed an offence punishable under section 302 of the Indian Penal Code, and within the cognizance of the Court of Sessions.
And that you A 1 Sanjeeva Rao on or about 498 the 25th day of August 1952 at Mayasandra in Magadi Taluk abetted the commission of the offence of murder by A 2 to A 6 which was committed in consequence of your abetment and thereby committed an offence punishable under sections 109 and 302 of the Indian Penal Code, and within the cognizance of the Court of Sessions.
" Thus all of them were charged with being members of an unlawful assembly, the common object of which was to murder the deceased, Anne Gowda.
The appellants along with Hanumantha accused No. 5 and Pujari accused No. 6 were further charged with committing murder of Anne Gowda by intentionally causing his death.
No doubt the charge does not contain the words " in furtherance of the common inten tion of all " but short of that the charge is as near them as it could be.
Accused No. I Sanjeeva Rao was further charged with abetting the offence of murder.
The trial Court acquitted all the accused of the charge under section 143 Indian Penal Code and accused Nos. 5 & 6 of the charge under section 302 but he convicted accused No. 1 under section 302/109 and the appellants under section 302 and sentenced them all to transportation for life.
They took an appeal to the High Court and the State appealed against the order of acquittal of accused Nos.
5 & 6 and the order of acquittal under section 143.
The High Court acquitted accused No. I Sanjeeva Rao of abetment of murder after the matter was referred to a third judge under section 429 of the Criminal Procedure Code as there was a difference of opinion between the two judges of the Division Bench hearing the appeal and thus the case of abetment set up by the prosecution failed.
It upheld the acquittal of accused Nos.
5 and 6.
The charge of unlawful assembly of which the common object was the murder of Anne Gowda the deceased also failed because of the acquittal of Sanjeeva Rao accused No. 1 Hanumantha accused No. 5 and Pujari accused No. 6 thus leaving only the appellants.
Their conviction for an offence under section 302, Indian Penal Code and the sentence of transportation was upheld.
The trial Court 's finding against them was as follows; 499 " So far as A 2 Srikantiah, A 3 Sidda and A 4 Kadaripathi alias Kunta are concerned, there is ample evidence to show that they alone inflicted injuries on the deceased Anne Gowda and caused his death.
Thus a prima facie case has been made out against them for the murder of Anne Gowda ".
The High Court in appeal said: "The evidence on the whole is consistent and in fact it is so consistent that it was being urged on behalf of the accused that each witness was repeating what the other says.
Some of the important witnesses have been mentioned in the First Information Report and the inquest itself was over within 24 hours after the incident.
Taking the consistent evidence of the witnesses and the probabilities of the case it has to be stated that the evidence of the prosecution witnesses as regards the incident has to be believed We have not had the advantage of a critical and analytical examination of the evidence of the prosecution witnesses by either of the courts below nor has the evidence against each of the appellants been collated and therefore it was necessary for its to examine the evidence in some detail.
The evidence of the witnesses for the prosecution shows that the deceased Anne Gowda and the party of Sanjeeva Rao accused No. I had considerable amount of enmity between each other.
On the date of the occurrence, i. e., August 25, 1952, the deceased had gone to Ramanagram where in a Magistrate 's Court a case had been brought against him by accused No. 1.
After the case was over the deceased and P. W. 18 Gangabyriah who was a co accused in the case and Putta P. W. 20 who was a witness traveled by the bus which reached a place called Kudur at about 7 p.m. From Kudur the deceased accompanied by his two companions and also P.W. 17 Thimmappa and P.W. 19 Puttarangiah and P.W. 21 Basavalingappa who had gone for shopping to the shop of P. W. II Subba Rao, started for their village Yollapore.
When they reached the bund of the tank of Mayasandra, accused Nos.
I and 5 and the appellants came from the opposite side.
Accused No.
I flashed his torch on to the 500 deceased and his companions.
Thereupon appellant No. 1 who is the brother of Sanjeeva Rao accused No. 1 gave a blow with his chopper which cut into two the torch which at the time :was in the hand of P.W. 18 Gangabyriah and on the instigation of accused No. 1 to kill the deceased the appellants started their attack on him.
Appellant No. 3 Sidda gave a blow from behind on the right side of the neck of the deceased with his chopper and accused No. 4 Kadaripathi aimed a, blow on his head but to ward off the blow the deceased raised his hand and the blow fell on his hand.
The deceased then ran towards the tank chased by the accused Nos. 1 and 5 and the appellants.
He fell into a shallow water pit.
Accused Nos. 5 and 6 who were empty handed are stated to have caught hold of him and the appellants gave five or six blows to the deceased with choppers.
Accused Nos. 5 and 6 then released him but the appellants continued the assault with their choppers and caused 24 incised injuries.
This story is supported by P.W. 17 Thimmappa, P.W. 18 Gangabyriah, P.W. 19 Puttarangiah and P.W. 20 Putta and lastly P .
W. 21 Basavalingappa.
The First Information Report which was lodged at about 1 a.m., on August 26, was made by P.W. 17 Thimmappa and ' the whole incident is there set out along with the names of the accused as well as the witnesses.
When the house of Appellant No. 3 Sidda was searched a bloodstained chopper M. O. 11 was produced by him before the Panchayatdars.
Similarly the house of accused No. 4 Kadaripathi was also searched and that appellant also produced a chopper there.
As the prosecution has not proved that any of these choppers was stained with human blood it cannot get much assistance from this recovery.
The medical witness P.W. 2 , found as many as 24 injuries.
Of these injury No. 5 was described as follows: "A transverse incised wound in front of the neck 5" long 2 1/2" deep, cutting the skin, muscles, arteries, veins above the thyroid cartilage, pharynx and muscles in front of the vertebral column.
On the right side the wound starts 2" below.
the lobule of the right 501 ear, runs to the left and ends 2" below and 1" behind the lobule of the left ear".
All the other injuries were incised varying in degree of seriousness.
The medical witness 's opinion was that injury No. 5 is a fatal injury sufficient to cause death All the other injuries taken as whole may be fatal "The prosecution has not proved as to who caused injury No. 5 nor has it specified the injuries caused by individual appellants.
The question then arises; what is the offence which the appellants are guilty of, if any.
Courts below have accepted the testimony of the witnesses which establishes that there was enmity between the parties and that on the date of the occurrence the deceased had gone to the Magi strate 's Court at Ramanagram for the case which had been brought at the instance of accused No. 1.
The evidence also shows that on that date appellants 3 and 4 were seen together at Kudur in front of the shop of P.W. 10 at about 6 p.m.
When accused No. 3 was asked by Siddappa P.W. 10 as to what had 'brought him there, his reply was that he was waiting for somebody who was coming by Renuka Bus Service ".
The testimony of P.W. 11 on this point is that he saw accused Nos. 3 and 4 and another man about 5 30 p.m. or 6 p.m. in front of his shop.
He asked them why they had come.
They replied that "they had come to see some persons coining by Renuka Bus" and there is evidence to show that the deceased and his two companions had come from Ramanagram by this Bus Service at about 7 p.m.
The evidence of prosecution witnesses Nos.
17 to 21 also establishes that when the deceased and his party arrived near the bund of the tank the party of the accused came towards them.
One of the accused Sanjeeva Rao (accused No. 1) flashed a torch and the others started attacking the deceased with choppers at the instigation of that accused.
Injuries were caused on the head, the neck and the shoulders or on the right and left forearms which must have been caused when the deceased tried to, save himself by raising his arm to protect his head.
The common intention of the 6 502 appellants is clear from the fact that not only were they armed with deadly weapons which they used to cause injuries to the deceased at the place where they first met him and his companions but they also chased him when he tried to run away to save himself and all of them continued assaulting him with these deadly weapons till he was dead.
The evidence further shows that all of them took part in the assault.
There were 24 injuries on the person of the deceased and of them twenty one were incised.
They are either on his head or the neck or the shoulders and on the forearms.
All these except perhaps the last are vital parts of the body and anybody who causes injuries with weapons of the kind that the appellants used must be fixed with the intention of causing such bodily injury or injuries as would fall within section 300 of the Indian Penal Code.
The question has then been raised that there was no charge under section 34 and therefore the accused cannot be convicted of liability as sharers in an offence by the 'application of section 34, i. e., in prosecution of the common intention of all.
Now intention is a question ,of fact which is to be gathered from the acts of the parties and whoever caused injury No. 5 or the persons who caused the other injuries on the vital parts of the body could have had no other intention but of causing the death considering the nature and number of inju ries and the weapons used.
The omission to mention section 34 of the Indian Penal Code in the charge cannot affect the case unless prejudice is shown to have resulted in consequence thereof.
The charge was that the appellants and others were members of an unlawful assembly, the common object of which was to murder the deceased.
Although there is a difference in common object and common intention, they both deal " with combination of persons who become punishable as sharers in an offence ", and a charge under section 149, Indian Penal Code is no impedi ment to a conviction by the application of section 34 if the evidence discloses the commission of the offence in furtherance of the common intention of all.
In the second charge it was clearly stated that the appellants and accused Nos.
5 & 6 committed the 503 murder by.
intentionally causing the death of the deceased.
No doubt it would have been better if in the charge section 34 had been specified.
But the mere omission to specify it cannot in the circumstances of this case have any effect as no prejudice has been alleged or shown.
As a matter of fact this question was never agitated in either of the Courts below.
This Court in Willie (William) Slaney vs The State of Madhya Pradesh (1) has laid down the law in regard to the effect of a defect in a charge.
In that case the charge was under section 302, read with section 34 and the conviction was under section 302, Indian Penal Code.
It was there pointed out that procedural laws are designed to subserve the ends of justice and not to frustrate them and 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 is curable under section 537, Criminal Procedure Code.
See: Pulukuri Kotayya vs King Emperor (2).
As was pointed by Viscount Sumner in Atta Mohammad vs King Emperor (3): " In the complete absence of any substantial injustice, in the complete absence of anything that outrages what is due to natural justice in criminal cases, their Lordships find it impossible to advise His Majesty to interfere.
The object of a charge is to warn the accused person of the case he is to answer.
It cannot be treated as if it was a part of a ceremonial.
Bose J. observed in William Slaney 's case, (1) with reference to sections 232 (1) and 535 of the Criminal Procedure Code where the words used are " by the absence of a charge " in section 232(1) and no charge was framed " in section 535: " We see no reason for straining at the meaning of these plain and emphatic provisions unless ritual and form are to be regarded as of the essence in criminal trials.
We are unable to find any magic or charm in the ritual of a charge.
It is the substance of these provisions that count and not their outward form.
To hold otherwise is only to provide avenues of escape for the guilty and afford no protection to the innocent." (1) ; , 1165.
(2) (1946) L.R. 74 I.A. 65, 75.
(3) (1929) L.R. 57 I.A. 71, 76.
504 The imperfection in the charge is curable provided no prejudice has been shown to have resulted because of it.
The appellants had notice that they were being tried as " sharers in the offence " ' and their liability was collective and vicarious and not individual.
No doubt they, were charged, under section 149 of the Indian Penal Code with being members of an unlawful assembly the common object of which was murder of the deceased but they were also charged that they with accused Nos.
5 & 6 had committed murder by intentionally causing the death of the deceased.
The prosecution led evidence to show that at least two of the appellants were waiting for the arrival of the evening Bus by which the deceased and his companions were traveling and that the appellants and others met them at the bund and there was a concerted attack by them followed by a chase and assault with choppers by all the appellants resulting in death because of 24 injuries of a serious nature given by the appellants collectively.
Of these injury No. 5 individually and others cumulatively were sufficient in the ordinary course of nature to cause death.
Section 34 is only a rule of evidence and does not create a substantive offence.
It means, that if two or more persons intentionally do a thing jointly it is just the same as if each of them had done individually.
As the Privy Council have pointed out in Barendra Kumar Ghosh vs King Emperor (1) " Sect.
34 deals with the doing of separate acts, similiar or diverse, by several persons, if all are done in further ance of a ' common intention, each person is liable for the result of them all, as if he had done them himself.
The appellants ' defence was a total denial of taking part in the offence.
When examined under section 342 of the Criminal Procedure Code they stated that the prosecution case was false.
They did not state anything indicative of prejudice having resulted as a consequence of a defect in the charge.
To every question put to them, their reply was that the prosecution evidence was false.
One such question and the answer to it was: Q. " The witnesses have deposed that at about (1) (1924) L.R., 52 I. A.40, 51.
505 8 30 on the night of 25th August, 1952, you along with the accused persons 1, 3, 4 and 5 came upon the tank bund holding a matchu in the hand in order to hit Anne Gowda.
What do you say regarding this matter ? A.This is absolutely false.
" In answer to another question as to whether he had assaulted the deceased with a chopper, appellant No. 1 stated that he never saw the deceased on that date and the evidence was false and the other two appellants just stated that the evidence for the prosecution was false.
The form of the questions indicates notice to the appellants that the, prosecution was relying on collective responsibility and their having acted with a common intention.
They did not plead prejudice due to the want of section 34 in the charge itself.
The judgment of the High Court does not indicate that any such objection was taken before it.
The grounds of appeal taken in the High Court are not before us, but their application under article 134 (1)(c) made to the High Court shows that objection was taken as to the failure to specify section 34 in the following words: " There is no charge framed in the case against accused 2, 3 and 4, 5 and 6 for ail offence under Section 302 read with Section 34 of the Indian Penal Code.
It was, therefore, not a case in which accused 2, 3, 4 alone could be convicted of the charge under Section 302 by resorting to the rule of common intention under Section 34 of the Indian Penal Code for two reasons, viz., (a) There is no charge under Section 34 of the Indian Penal Code; (b) If it is implied ', Accused 5 and 6 are out of the grove and there is no evidence of any prior conspiracy conducive to that requisite inference.
Further it will be seen from the evidence of the eye witnesses it is not possible to predicate which blow caused by which instrument, by which accused resulted in death.
Therefore it is a case which accused 2, 3 and 4 are charged on individual responsibility alone for having caused murder punishable under Section 302, Indian 506 Penal Code individually.
Neither the trial Court nor it is submitted the High Court has considered this aspect of the matter and has considered the individual responsibility of accused 2, 3 and 4 for their individual acts" and in their grounds of appeal filed in this Court the language is the same.
Nowhere has it been alleged that as a result of omission to specify section 34 in the charge there was any prejudice and nothing is disclosed whether by the trend of cross examination or by anything on the record to show that the appellants were misled by this omission in the charge.
No case of prejudice has been alleged or established and there are no facts on the consideration of which the conclusion could be reached that the conviction under section 302 is vitiated as a result of prejudice.
This Court in Rawalpenta Venkulu vs The State of Hyderabad (1), held that the omission to add section 34 of the Indian Penal Code in a charge had only an academic significance where the accused had notice as to what they were being charged with.
That was a case where in pursuance of a conspiracy to commit murder the accused after locking the room in which the deceased was sleeping set fire to it and thus caused his death.
The charge against the accused persons was only under section 302 without section 34.
On the evidence the intention to kill was held proved as each one of the appellants had actively contributed to setting fire to the room by putting lighted matches to it while the deceased had been trapped in it and " each one of them therefore severally and in pursuance of the common intention brought about the same result by his own act.
" In the trial Court the Sessions Judge had explained the charge as follows: " You are charged of the offence that you with the assistance of the other present accused with common intention. . . . . . " From this the Court came to the conclusion that the accused had clear notice that they were being charged with the offence of committing murder in pursuance of their common intention and, therefore, the omission (1) A.I.R. 1956 S.C. 171, 507 of section 34 in the charge had only academic significance and had in no way misled the accused.
Thus the accent was on whether the accused were misled or not or any prejudice resulted from the omission in the charge and on the facts and circumstances of that case this Court was of the opinion that they were not and there was no prejudice.
Chikkarange Gowda vs State of Mysore (1), was relied upon by the appellants ' counsel.
In that case the accused persons were charged as follows: " That you on or about the 18th day of April, 1951, at Talkad were member of an unlawful assembly and in prosecution of the common object or intention or such as you know to be likely to be committed in prosecution of that object or intention, namely, in killing Putte Gowda, caused the death of Putte Gowda and Nanje Gowda, and you are thereby under section 149 read with section 34 Penal Code, guilty of causing the said murders, an offence punishable under section 302, Penal Code and within the cognizance of the Court of Sessions.
" The Sessions Judge found that the common object of the unlawful assembly or the intention of the accused was not merely to assault Putte Gowda but also to kill him.
The High Court on appeal held that there was no evidence to prove or establish any plan for concerted action or any common object to kill that individual.
But it was of the opinion that the people of the locality were annoyed with Putte Gowda and the common object of the assembly as a whole was to give severe and open chastisement only.
The person who was stated to, have given the fatal injury to Putte Gowda was acquitted by the High Court on the ground of insufficiency of evidence and the other two accused were held guilty for severely assaulting the deceased and guilty of murder.
In this Court it was contended that on the findings given by the High Court in regard to the common object of the unlawful assembly, the conviction under section 302/34 or section 149 was unsustainable and that the manner in which the charges under section 149 and 34 were mixed up it could not be said that the (1) A.I.R. 1956 S.C. 731, 508 accused had a reasonable opportunity of meeting the charges against them.
This Court observed that " on the finding of the High Court none of the members of the unlawful assembly had the intention of killing Putte Gowda.
" It also held that the way in which the charge was framed gave the accused no effective notice of the case they had to meet.
In these circumstances the case of separate common intention of three persons was distinct from the common object of the other members of the unlawful assembly and, therefore, the question was not whether the specific charge under section 34 was or was not necessary but whether a reasonable opportunity of meeting the case of some of the accused having a separate common intention different from that of others of the unlawful assembly, was given and as the finding was that it had not been given the conviction of the two accused for offence under section 302/34 was unsustainable.
That case has not laid down a rule different from Willie (William) Slaney 's case (1).
It merely emphasises that in the case of imperfection of a charge if prejudice is shown a conviction of an accused would be insupportable.
In the present case the common intention of the appellants is indicated by their conduct, the ferocity of the attack, the weapon used, the situs of the injuries and their nature and there was preconcert as shown by the evidence of P. Ws. 10 and 11.
They have therefore been rightly convicted of murder as sharers ill the offence We would, therefore, dismiss these appeals.
Appeals dismissed.
(1) ; 140, 1 1165.
| Six persons were charged under section I43 Indian Penal Code for being members of an unlawful assembly the common object of which was to murder one Anne Gowda.
Five of them were further charged under section 302 Indian Penal Code for committing murder by intentionally causing the death of Anne Gowda, and the sixth was charged under section 302/109 Indian Penal Code for abetment of murder.
The trial Court acquitted all the six accused under section 143, acquitted two of them but convicted the three appellants under section 302, and convicted the sixth accused under section 302/109.
On appeal the High Court maintained the conviction of the appellants under section 302 but acquitted the sixth accused under section 302/109.
It was contended by the appellant that as the prosecution had not established which of the appellants had given the fatal blow none of them could be convicted under section 302 simpliciter and that as no charge had been framed under section 34 they could not be convicted under section 302/34 Indian Penal Code : Held, that the omission to mention section 34 Indian Penal Code in the charge could not affect the case unless prejudice was shown to have resulted in consequence thereof.
The charge was that the appellants and two others committed the murder by intentionally causing the death of the deceased.
The appellants had notice that they were being tried as " sharers in the offence " and that their liability was collective and vicarious and not individual.
The appellants had neither alleged nor shown that the omission to specify section 34 in the charge had caused them any prejudice.
Common intention is a question of fact and is to be gathered from the acts of the parties.
The evidence showed that there was preconcert, that the appellants attacked the deceased with choppers injuring him on the head, the neck, the shoulders and the forearms and that the appellants not only caused injuries to the deceased at the place where they met him but they also chased him when he tried to run away to save himself and continued to assault him with the deadly weapons till he was dead.
The conduct of the appellants, the ferocity of the attack, the weapons used, the situs of the injuries and their nature together with the fact that there was preconcert established that the common intention of the appellants was to murder the deceased.
|
Summarize this legal judgement text concisely | iminal Appeal No. 69 of 1956.
Appeal by special leave from the judgment and order dated November 18, 1955, of the Orissa Hioh Court at Cuttack, in Criminal Revision No. 20 of 1955 arising out of the Judgment and order dated December 23, 1954, of the Court of the Sessions Judge at Sambalpur in Criminal Appeal No. 111(S) of 1954.
Tara Chand Mathur and K. L. Arora, for the appellant.
N.S. Bindra and R. H. Dhebar for the respondent.
August 19.
The Judgment of the Court was delivered by IMAM J.
This appeal by special leave is limited to the question ' whether transport includes possession, and so the double punishment for possession and transport is not warranted by law 's stated in ground (xi) of the petition for special leave.
On the facts found there can be no question that the appellant went in a rickshaw from the Sambalpur Road Railway Station to the State Transport Bus Stand with a trunk and a bedding in order to proceed to a place called Bargarh.
He bought a ticket for Bargarh and took his seat in the bus after loading his trunk and bedding on top of it.
On information received by the Officer in charge of Sadar Police Station of Sambalpur, the bus was detained near the 148 1164 police station, while on its way, and all the trunks and beddings on it were unloaded, and the passengers of the bus were asked to take their respective trunks and beddings.
The passengers took their trunks and beddings.
One trunk and a bedding, however, remained on the ground.
The appellant claimed the bedding to be his own, but denied the trunk to be his property.
The bedding and the trunk were brought to the thana and the trunk was opened.
The trunk contained opium weighing six seers and six and half chhataks.
On the facts found, the trunk was identified as that of the appellant, and there can be no question that he was in possession of the opium.
The only question for consideration, having regard to the limited ground upon which special leave was granted, is whether the appellant could also be punished for being in possession of opium, as it is suggested that transport ' includes I possession '.
The appellant was sentenced under section 9 (a) for possession ' of opium and under section 9(b) for 'transport ' of opium, and sentenced to undergo rigorous imprisonment for three months tinder each count, the sentences to run consecutively.
Section 4 of the Opium Act, 1878 (Act 1 of 1878) reads as follows: "Except as permitted by this Act, or by any other enactment relating to opium for the time being in force, or by rules framed under this Act or under any such enactment, no one shall (a) possess opium; (b) transport opium; . . . . . . . . .
It is clear from the provisions of section 4 that no one shall possess opium or transport opium, except under the circumstances mentioned in the section.
Section 9 provides that: " Any person who, in contravention of this Act, or of rules made and notified under section 5 or section 8 (a) possesses opium, or (b) transports opium . . . . . . . . . . 1165 shall, on conviction before a Magistrate, be punished for each such offence with imprisonment for a term which may extend to one year, or with fine which may extend to one thousand rupees, or with both.
" This was the provision in section 9 before its amendment by Act 111 of 1957 which provided that on conviction before a Magistrate, a person convicted of any of the offences mentioned in section 9 shall be punishable for each such offence with imprisonment which may extend to three years, with or without fine.
We are, however, not concerned in this particular case with the punishment provided by the amendment, as the offence was committed previous to it.
The provisions of the Opium Act make it clear that possession of opium and transport of opium contrary to the provisions of the Act or any other enactment relating to opitum or to rules framed under the Act, are two separate offences.
Mere possession of opium may not, on the proved facts of a particular case, involve any question of transporting it.
Transport of opium may, in certain circumstances, include the element of possession, while in other cases, it may not.
A person may transport opium through various agencies and yet not be in possession of it at the time it was trans ported.
On the other hand, a person may transport opium and yet be in possession of it.
In the latter case, such a person would be guilty both of transporting opium and being in possession of it.
Under the Act, 'transport ' means to remove from one place to another within the, same State '.
A person may remove opium and be in possession of it while removing it, and he can also remove, it from one place to another within the same State in circumstances when while removing it he is not in possession of the opium.
The intention of the Legislature appears to have been that neither possession of doium nor transporting of opium was permissible, if such possession or transporting was in contravention of the provisions of the Opium Act or any other enactment relating to opium, or rules framed under the Opium Act.
It seems therefore that where a person transports opium and is in possession of it at the time he was transporting it, he has committed 1166 two offences, viz., (1) of transporting opium; and (2) of possessing opium.
He can therefore be convicted for both the offences.
As to the sentence which can be imposed, reference to section 35 of the Code of Criminal Procedure and section 71 of the Indian Penal Code is necessary.
Section 35 of the Code of Criminal Procedure provides that where a person is convicted at one trial of two or more offences, the Court may, subject to the provisions of section 71 of the Indian Penal Code, sentence him, for such offences, to the several punishments prescribed therefor which such Court is competent to inflict ; such punishments, when consisting of imprisonment to commence the one after the expiration of the other in such order as the Court may direct, unless the Court directs that such punishment shall run concurrently.
Section 35 therefore permits the passing of separate sentences for different offences and for them to run consecutively unless the Court directs that they shall run concurrently.
This, however, is subject to the provisions of section 71 of the Indian Penal Code.
Section 71 of the Indian Penal Code provides: " Where anything which is an offence is made up of parts, any of which parts is itself an offence, the offender shall not be punished with the punishment of more than one of such his offences, unless it be so expressly provided.
Where anything is an offence falling within two or more separate definitions of any law in force for the time being by which offences are defined or punished, or where several acts, of which one or more than one would by itself or themselves constitute an offence, constitute, when combined, a different offence, the offender shall not be punished with a more severe punishment than the Court which tries him could award for any one of such offences.
" It is clear from these provisions that where anything is an offence falling within two or more separate definitions of any law in force for the time being by which offences are defined or punished, the offender shall not be punished with a more severe punishment than the 1167 Court which tries him could award for any one of such offences.
The maximum sentence which could have been imposed upon the appellant for any one of the offences of which he had been convicted was one year 's imprisonment.
In other words, even if separate sentences were passed under section 9, sub sections (a) and (b), the sum total of these sentences should not exceed one year 's imprisonment.
In the present case, the sentence imposed upon the appellant has been in all 6 months, 3 months ' imprisonment under each count.
It would appear, therefore, that the sentence passed upon the appellant did not contravene the provisions of section 71 of the Indian Penal Code.
In our opinion, the appellant , %,as rightly convicted under section 9 (a) and (b) of the Opium Act, and there has been no illegality in the sentence imposed upon him.
It was strongly urged on behalf of the appellant that there might be a reduction in the sentence.
Instead of a sentence of imprisonment being imposed, the appellant may be sentenced to a substantial fine.
In our opinion, offences against the Opium Act are serious ones, and we cannot accede to the request made.
A sentence of 6 months ' imprisonment cannot be considered as unduly severe.
The appeal is accordingly dismissed.
| The appellant was caught while he was himself transporting opium.
He was convicted under section 9(a) of the Opium Act for posession " of opium and under section 9(b) of the Act for " transport of opium and was sentenced to undergo rigorous imprisonment for three months under each count, the sentences to run consecutively.
The appellant contended that " transport " included " possession " and so the double punishment for possession and transport was not warranted by law : Held, that possession of opium and transport of opium are two separate offences and the appellant could be convicted for 1163 both the offences.
Transport of opium may, in certain cases, include the element of possession, and in other cases, it may not.
A person transporting opium through other agencies may not be in possession of it at the time it was transported.
But a person transporting opium himself would be in possession of it and would be guilty of both offences.
The sentence passed upon the appellant did not contravene the provisions of section 71 of the Indian Penal Code.
Section 71 provides that where anything is an offence falling within two or more separate definitions of the law, the offender shall not be punished with a more severe punishment than that provided for any one of such offences.
Though separate sentences were passed against the appellant unders .9(a)and(b),the sum total of these sentences did not exceed one year 's imprisonment the maximum provided for any of these offences.
|
Summarize this legal judgement text concisely | Appeal No. 149 of 1958.
1149 Appeal by special leave from the judgment and order dated September 2, 1957, of the Allahabad High Court in First Appeal No. 474 of 1956, arising out of the judgment and order dated July 30, 1956, of the First Additional Civil Judge, Kanpur, in Civil Suit No. 257 of 1953.
Appellant in person.
C. B. Gupta, 0.
C. Mathur and C. P. Lal, for respondent No.1.
G. C. Mathur and C. P. Lal, for respondent No. 4. 1958.
August 19.
The Judgment of the Court was delivered by BHAGWATI J.
This appeal with special leave under article 136 of the Constitution raises an interesting question of limitation.
The appellant was appointed an Overseer by the Municipal Board, Kanpur, on March 5, 1937, with the approval of the Superintending Engineer, Public Health Department, Lucknow.
He was confirmed by the Board 's special resolution dated July 2, 1938, and continued in employ up to March 19, 1951, when a copy of the resolution No. 1723 passed by the Board on March 5, 1951, purporting to dismiss him from employ was handed over to him.
Against the said resolution dated March 5, 1951, the appellant filed an appeal to the Uttar Pradesh Government on April 7, 1951, but was informed by a G. 0.
dated April 7, 1952, that his appeal had been rejected.
This information was received by him on April 8, 1952.
Thereafter on December 8,1952, the appellant filed the suit out of which the present appeal arises, being Suit No. 257 of 1953 in the Court of the Additional Civil Judge, Kanpur, impleading the Municipal Board, Kanpur, Shri section B. Gupta, Municipal Engineer, Shri Brahmanand Misra, the then Chairman of the Municipal Board and the Government of Uttar Pradesh as defendants and challenged the legality of the dismissal order passed against him on the ground that the previous approval of the Superintending Engineer, Public Health Department was not taken as required by the rules, that the 1150 appellant was denied an opportunity of being heard in person by the Board, that no show cause notice for the proposed punishment of dismissal was issued to him by the Board nor were the charges framed by it, that the dismissal order did not specify the charges, that some of the grounds on which he was dismissed did not form the subject matter of the charges at all, that in any case, the charges framed were false and malicious.
The appellant prayed for a declaration that the order of his dismissal was ultra vires, illegal and void and claimed a total amount of Rs. 10,951 in respect of damages, allowances for doing officiating work, bonus, arrears of salary and provident fund.
The suit was contested mainly by the Board and its defence was to the effect that the order of dismissal was not vitiated on the grounds of illegality or irregularity and in any case the suit was barred by limitation.
The trial court found: (a)that the appellant 's substantive appointment was that of an Overseer and not that of a Drainage Overseer as claimed and the approval of the Superintending Engineer, Public Health Department, Lucknow, for his dismissal was not necessary; (b)that the order of dismissal of the appellant was ultra vires on the ground that he was not given an opportunity of being personally heard by the Board; (c) that no notice to show cause against the proposed punishment was issued by the Board; (d)that the order of dismissal was based on certain grounds which were not the suubject matter of the charge and that the Chairman of the Board was not competent to try the appellant; but (e)that the suit of the appellant was barred by limitation.
The trial court accordingly dismissed the suit with costs.
The appellant carried an appeal.
being First Appeal .No.
474 of 1956 before the High Court of Judicature at Allahabad and contended that the suit filed by him against the Board was within limitation.
The appellant relied upon the provisions of section 326 of the U. P. Municipalities Act (U. P. 11 of 1916) (hereinafter 1151 referred to as "the Act") and contended that the period of six months contemplated by sub section
(3) of section 326 plus the period of two months required for giving notice for filing the suit against the Board under sub section
(1) of section 326, that is, 8 months should be computed from April 8, 1952, on which date the order of the dismissal of his appeal by the U. P. Government was communicated to him and not from March 5, 1951, when the order of his dismissal by the Board was passed or March 19,1951, when that order of dismissal was communicated to him by the Board.
The High Court was of opinion that the Resolution dated March 5, 1951, passed by the Board took effect immediately as it was an order which was complete and effective by itself and its operation was not postponed for any further period nor was its effect suspended until the State Government had passed orders in appeal.
It accordingly came to the conclusion that the appellant 's suit was barred by limitation under section 326 of the Act.
In view of the said finding the High Court did not go into any other questions at issue between the parties but dismissed the appeal with costs.
An application filed by the appellant for a certificate for leave to appeal to this Court proved infructuous, with the result that the appellant applied for and obtained from this Court special leave to appeal against this judgment of the High Court.
The only question that arises for our determination in this appeal is whether the appellant 's suit was barred by limitation, because if that is determined against the appellant it will be conclusive of this appeal.
Section 326 of the Act runs as under: " 326(1) No suit shall be instituted against a Board, or against a member, officer or servant of a board in respect of an act done or purporting to have been done in its or his official capacity, until the expiration of the two months next after notice in writing has been, in the case of a Board, left at its office, and in the case of a member, officer or servant, delivered to him or left at his office or place of abode, 1152 explicitly stating the cause of action, the nature of the relief sought, the amount of compensation claimed and the name and place of abode of the intending plaintiff and the plaint shall contain a statement that such notice has been so delivered or left.
(3) No action such as is described in sub section (1) shall, unless it is an action for the recovery of immoveable property or for a declaration of title thereto, be commenced otherwise than within six months next after the accrual of the cause of action.
Prima facie the period of six months provided in section 326(3) above would commence to run after the accrual of the cause of action and the cause of action on which the appellant came before the Court was his wrongful dismissal from employ by the Board.
Even the extension of this period by two months, the requisite period of the notice under section 326(1) would not save the appellant from the bar of limitation because be instituted his suit more than eight months after the Resolution dated March 5, 1951, dismissing him from employ was communicated to him.
The appellant, therefore, particularly relied upon the provisions of section 58(1) and (2) of the Act and urged that the cause of action accrued to him on April 8, 1952, when the order of dismissal of his appeal by the U. P. Government was communicated to him and the suit which he had filed on December 8, 1952, was therefore within time.
Section 69 of the Act which applied to the appellant read as under: " A board may, by special resolution, punish or dismiss any officer appointed under section 68 subject to the conditions prescribed in section 58 in respect of the punishment or dismissal of an Executive Officer," and Section 58(1) and (2) provide: " section 58(1): A board may punish, dismiss or remove its Executive Officer by a special resolution supported by not less than 2/3rd members constituting the board, subject to his right of appeal to the State Government 1153 within 30 days of the communication to him of the, order of punishment or dismissal.
(2):The State Government may suspend the Executive Officer pending the decision of ail appeal under sub section (1) and may allow, disallow or vary the order of the Board.
" It was argued by the appellant on the strength of these provisions that the special resolution passed by the Board was subject to his right of appeal to the State Government within 30 days of the communication thereof to him and in the event of his filing an appeal against the same within the period specified, the resolution was kept in abeyance and did not come into operation until the decision of the appeal by tile State Government.
If that was so, lie contended, his wrongful dismissal by the Board became operative as from the date when the decision of the State Government was communicated to him and that was the date on which the cause of action in regard to his wrongful dismissal accrued to him, with the result that the suit filed by him within 8 months of such communication (including the period of 2 months ' notice) was well within time.
He also supported this position by relying upon the provisions of section 58(2) which empowered the State Government to suspend an employee pending the decision of the appeal, contending that such power vested in the State Government posited that the order of dismissal every though validly passed in accordance with the conditions specified in section 58(1) was not to become effective until such decision was reached, because only in such event the State Government would be in a position to pass an order of suspension pending the decision of the appeal.
If the order of dismissal passed by the Board was to come into effect immediately on such special resolution being passed, there would be no meaning in the State Government being empowered to suspend the officer who had been already dismissed and the provision in that behalf would then be nugatory.
It was, therefore, argued that such power vested in the State Government necessarily involved the consequence that the order of dismissal could not be operative by its 1154 own force but would continue in abeyance until the decision of the appeal, once an appeal was filed by the employee against the order within the period specified.
On a plain reading of the provisions of section 58(1) and (2), we are of opinion that this contention of the appellant is not tenable.
One condition of the validity of the order of dismissal made by the Board is that the special resolution in that behalf should be supported by not less than 2/3rd members constituting the Board.
Once that condition is fulfilled.
there is nothing more to be done by the Board and the only right which then accrues to the officer thus dealt with by the Board is to appeal to the State Government within 30 days of the communication of that order to him.
He may choose to exercise this right of appeal or without adopting that procedure he may straightaway challenge the validity of the resolution on any of the grounds available to him in law, e.g., the non observance of the principles of natural justice and the like.
There is nothing in the provisions of section 58(1) to prevent him from doing so and if without exercising this right of appeal which is given to him by the statute he filed a suit in the Civil Court to establish the ultra vires or the illegal character of such resolution it could not be urged that such a suit was premature, he not having exhausted the remedies given to him under the statute.
The principle that the superior courts may not in their discretion issue the prerogative writs unless the applicant has exhausted all his remedies under the special Act does not apply to a suit.
There is nothing in section 58(1) which expressly or impliedly bars his right of suit.
The provisions contained in section 58(2) above would also not help him for the simple reason that the power which is vested in the State Government of suspending an employee pending the decision of the appeal can hardly be said to be a condition of the order of the Board.
In any event, that power is given to the State Government for giving relief to the employee who has thus appealed, against the rigour of the order of dismissal passed by the Board against him.
The employee may have been dismissed by the 1155 Board, in which case on looking at the prima facie aspect of the matter the State Government may as well come to the conclusion that the operation of the order of dismissal may be stayed and he be suspended instead, thus entitling him to subsistence allowance during the pendency of the appeal.
If the appeal is eventually dismissed the order of dismmissal by the Board will stand; if the appeal is allowed he will be entitled to continue in the employ and enjoy all the benefits and privileges of such employment, but lie would not have to starve during the period that the appeal was pending before the State Government.
The provisions of section 58(2) have to be read along with those of section 58(1) and it cannot be urged that the power of suspension vested in the State Government is to be exercised in any other case except that of dismissal or removal of the employee by the Board.
In the case of any other punishment an order of suspension passed by the State Government pending the decision of the appeal would only mean that during the pendency of the appeal the State Government is empowered to visit on him a higher punishment than what has been meted out to him already by the Board.
Such an absurd position could never have been thought of by the legislature and the only way in which section 58(1) can be read consistently with section 58(2) is to construe this power of suspension vested in the State Government to apply only to those cases where a higher punishment than suspension has been meted out by Board to the employee.
Section 58(2) merely prescribes the powers which the State Government may exercise in the matter of the appeal which has been filed by the employee against the order of the Board.
The mere filing of an appeal has not the effect of holding the order of the Board in abeyance or postponing the effect thereof until the decision of the appeal.
Such a construction would on the other hand involve that even though a special resolution was passed by the Board dismissing or removing the employee he would continue to function as such and draw his salary pending the decision of his appeal, once he filed an appeal to the, State Government as prescribed.
We do not see any words in 147 1156 section 58(1) and (2 which would suspend the operation of the order passed by the Board or render it ineffective by reason of the filing or the pendency of the appeal.
As a matter of fact the legislature in section 61(3) of the very same Act while dealing with the right of appeal from the order , of the executive officer has expressly provided for such a contingency and enacted that when an appeal was filed within the specified period the order would remain suspended until the appeal was decided.
A comparison of the provisions of section 58(1) and section 61(3) of the Act is thus sufficient) to show that no such consequence was intended by the legislature when it enacted section 58(1) of the Act.
A similar provision enacted in the proviso to section 71 of the U. P. District Boards Act (U. P. X of 1922) may also be referred to in this context.
While dealing with the powers of dismissal or punishment of a Secretary or Superintendent of education by the Board the legislature enacted a proviso thereto that the Secretary or the Superintendent of education of a Board, as the case may be, shall have a right of appeal to the State Government against such resolution within one month from the date of the communication of the resolution to him, and that the resolution shall not take effect until the period of one month has expired or until the State Government has passed orders on any appeal preferred by him.
The absence of any such provision in section 58 of the Act also goes to show that no such consequence was intended by the legislature.
The enactment of section 58(1) in the manner in which it has been done giving to the employee only a right of appeal to the State Government within 30 days of the communication to him of the order of the Board without anything more is enough to show that neither was the suspension of the order nor the postponement of the effect thereof as a result of the filing of an appeal ever in the contemplation of the legislature.
It may be noted in passing that the appellant relied upon a decision of the Allahabad High Court in Dist.
Board, Shahjahanpur vs Kailashi Nath (1), which turned on the construction of section 71 of the U.P. District (1) A I.R. 1948 All.
1157 Boards Act set out above in support of his contention.
The provisions of that section, however, are quite distinct from those of section 58(1) of the Act before us and this case was rightly distinguished by the High Court in the judgment appealed against inasmuch as by the express terms of section 71 under consideration there, the dismissal was not to take effect until the period of one month had expired or until the State Government had passed orders on any appeal preferred by the employee.
It is, therefore, clear that even though the order passed by the Board was subject to the right of appeal given to the employee in the manner aforesaid, the operation of the order was not suspended nor was its effect in any manner postponed till a later date by the mere filing of the appeal and it became effective from the date when it was communicated to the employee.
The cause of action, if any, accrued to the employee on the date of such comunication and the period of limitation commenced to run from that date.
If this is the true position on a plain construction of the provisions of section 58(1) and (2) of the Act what is the other principle which the appellant can call to his aid in order to support his contention ? He tried to equate the special resolution passed by the Board with a decree passed by a trial court and the decision of the appeal by the State Government with a decree passed by an appellate court and urged that in the same manner as a decree of the trial court became merged in the decree passed by the appellate court and no decree of the trial court thereafter survived, the decision of the appeal by the State Government replaced the special resolution passed by the Board and such decision if adverse to him gave him a cause of action and the period of limitation commenced to run against him only from the date of such decree.
The argument was that even though the cause of action in respect of such wrongful dismissal arose on the date when the order of the Board was communicated to him, once an appeal was filed by him against that order within the period prescribed that cause of action was suspended and became merged in the cause of action which 1158 would accrue to him on the decision of his appeal by the State Government.
The special resolution of the Board would then merge into the decision of the State Government on appeal and the only thing which then survived would be the decision of the State Government on which either there would be a resuscitation or revival of the cause of action which had accrued to him on the communication of the order of the Board or the accrual of a fresh cause of action which could be ventilated by him within the period of limitation commencing therefrom.
The initial difficulty in the way of the appellant, however, is that departmental enquiries even though they culminate in decisions on appeals or revision cannot be equated with proceedings before the regular courts of law.
As was observed by this Court in State of Uttar Pradesh vs Mohammad Nooh (1): ". . 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 dismissing an appeal therefrom and an order rejecting an application for revision by the head of the department ( an 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 therefrom by an appeal court and the order dismissing the revision petition by a yet higher court. . . 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 analogy of the decisions of the courts of law would therefore be hardly available to the appellant.
Our attention was drawn in this connection to cases arising tinder section 144 of the Code of Civil Procedure which have held that the period of limitation is to be calculated from the date of the original decree which gave rise to the right of restitution and not from the date of the decision of the last appeal which was filed (1) ; 1159 against it.
Reliance was placed on the following observations of B. K. Mukherjea J. (as he then was) in Bhabarajan Das vs Nibaran Chandra (1): " The question therefore that really falls for determination is as to whether the time for such an application ought to be calculated from the date of the decision of the last appeal, or from the decree which for the first time gave the appellant a right to apply for restitution.
It is conceded by the learned Advocate for the appellant that lie had undoubtedly the right to pray for restitution at the time when the judgment was passed by the Munsif.
His contention is that it was not necessary for him to apply at the first opportunity as there was an appeal taken against that decision of the trial judge and lie could wait till the judgment of the Appellate Court was pronounced.
After the Appellate Court had passed its decision the decree of the trial court would no longer be in existence and lie would be entitled to base his rights to get restitution on the Appellate Court 's decree.
I find myself unable to accept this contention as tenable.
If the right to apply for restitution was available to the appellant as soon as the first court passed its judgment, time would certainly begin to run from that date under article 181 and the mere fact that the judgment was challenged by way of an appeal which might eventually set it aside, does not, in lily opinion, operate to suspend the running of time.
Nor would the appellate Courts decree into which the decree of the trial Court would undoubtedly merge give the party a fresh starting point for limitation.
The analogy.
of the decree of the trial court merging into a decree of the appeal court clearly does not apply to these cases.
The observations of Rankin C.T. in Hari Mohan vs Parameshwar Shau (1) are also in point.
the learned Chief Justice at " But the application to be made under section 144 is an application which must be made to the Court of the first instance whether the decree varied or reversed was passed by that Court or a higher Court.
(1) A.I.R. 1939 Cal.
349, 35. (2) Cal.
61 78.
1160 That Court has to determine whether the applicant is entitled to any and what benefits, by way of restitution or otherwise, by reason of the decree of the appellate court varying or reversing a previous decree.
We have to determine this case under article 181, of the Limitation Act, which directs us, in general language, to find out the date on which the applicant 's right accrued.
In the ordinary and natural meaning of the words, their right accrued immediately the District Judge reversed the decision of the trial court, and reduced the amount of the plaintiff 's claim.
Unless, therefore, we are required by reason of the nature of the matter to ignore the effect of that decision, because it was confirmed on appeal, it seems to me to be wrong to do so.
To refuse so to do does not involve the proposition that two decrees for the same thing may be executed simultaneously.
Nor does it involve, so far as I can see, the affirmance of any other proposition that can be regarded as inconvenient or absurd.
Further, when even if the analogy applies, where the decree of the appeal court only affirms the decree of the trial court, this Court has held in the State Of U. P. vs Mohd. Noolt (1), that the original decree of the trial court remains operative.
This Court has said at p. 611 : " 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 therefrom 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 (2), or for computing the period of limitation for an application for final decree in a mortgage suit as in Jowad Hussain vs Gendait Singh (3).
But as pointed by Sir Lawrence Jenkins in delivering the judgment of the Privy Council in Juscurn Boid vs Pirthichand Lal (4), whatever be the theory under other systems of law, under the Indian law and procedure an original decree is not suspended (1) ; (2) 41 I.A. 104.
(3) 53 1. A. 197.
(4) 46 I.A. 52.
1161 by the presentation of an appeal nor is its operation interrupted where the 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.
" The original decree being thus operative what we are really concerned with is the commencement of the period of limitation as prescribed in the relevant statuite and if the statute prescribes that it commences from the (late of the accrual of the cause of action there is no getting behind these words in spite of the apparent iniquity of applying the same.
As was pointed out by Seshagiri Ayyar J. in Mathu Korakkai Chetty vs Madar Ammal (1): " Therefore in my opinion, the true rule deducible from these various decisions of the Judicial Committee is this: that subject to the exemptions, exclusion, mode of computationalid.
the excusing of delay, etc., which are provided in the Limitation Act, the language of the third column of the first schedule should be ,go interpreted as to carry out the true intention of the legislature that is to say, by dating the cause of action from a date when the remedy is available to the party.
" The cause of action in the present case accrued to the appellant the moment the resolution of the Board was communicated to him and that was the date of the commencement of the limitation.
The remedy, if any, by way of filing a suit against the Board in respect of his wrongful dismissal was available to him from that date and it was open to him to pursue that remedy within the period of limitation prescribed under section 326 of the Act.
The result is no doubt unfortunate for the appellant, because the trial court found in his favour in regard to his plea of wrongful dismissal.
If he had only brought the suit within the period prescribed by section 326 of the (I) Mad. 185, 213.
1162 Act, he might possibly have got some relief from the Court.
He however chose to wait till the decision of the State Government on his appeal and overstepped the limit of time to his own detriment.
We are unable to come to any other conclusion than the one reached above and the appeal must, therefore, stand dismissed; but in the peculiar circumstances of the case, we make no order " to costs.
The appellant was given leave to proceed as a pauper and he prosecuted this appeal in form a pauperis .
section lie has failed in the appeal and we do order that he shall pay the court fee which would have been paid by him if he had not been permitted to appeal as a pauper.
The Registrar shall send to the AttorneyGeneral for India a memorandum of the court fees payable by him as required by Or.
XIV, r. 12, of the Supreme Court Rules.
Appeal dismissed.
| The appellant was appointed as overseer by the Municipal Board, Kanpur, on March 5, 1937, and continued in its service up to March 19, 1951, when a copy of the resolution passed by the Board on March 5, 1951, purporting to dismiss him from service was handed over to him.
On April 7, 1951, he filed an appeal to the Government against the order of dismissal from service, but he was informed on April 8, 1952, that his appeal was rejected.
Thereafter on December 8, 1952, the appellant instituted a suit challenging the legality of the order of dismissal on various grounds, and the question arose whether the suit was within time.
Sub section (I) Of section 326 of the U. P. Municipalities Act, 1916, provided that no suit shall be instituted against a Municipal Board " until the expiration of the two months next after notice in writing has been left at the office of the Board. explicitly stating the cause of action " ; and sub section
(3) stated that " no action such as is described in sub section
(1) shall. be commenced otherwise than within six months next after the accrual of the cause of action ".
The appellant contended that the cause of action accrued to him on April 8, 1952, when the order of dismissal of his appeal to the Government was communicated to him and the suit, filed within eight months of that date, was within time, and relied on the provisions of section 58 (1) and (2), read with section 69, of the Act, which gave an officer dismissed by the Board a right of appeal to the Government within 30 days of the communication to him of the order dismissal : Held, that though the order passed by the Board on March 5, 1951, was subject to a right of appeal to the Government, the operation of the order was not suspended by the mere filing of the appeal, and the order became effective from March 19, 1951, when it was communicated to the appellant.
The cause of action, therefore, accrued to him on that date, and the suit filed by him on December 8, 1952, was barred by limitation under section 326 of the U. P. Municipalities Act, 1916.
|
Summarize this legal judgement text concisely | Appeals Nos. 224 and 225 of 1954.
Appeals from the judgment dated December 31, 1947, of the former Nagpur High Court in Misc.
(First) Appeal No. 310 of 1943, arising out of the Award dated March 31, 1943, of the Court of the Arbitrator, Addl.
and Sessions Judge, Khandwa.
Achhru Ram and Naunit Lal, for appellant (In C. A. No. 224/54) and respondent (In C. A. No. 225/54).
C. K. Daphtary, Solicitor General for India, R. Ganapathy Iyer and R. H. Dhebar, for respondent (In C. A. No. 224/54) and appellant (In C. A. No. 225/54).
August 22.
The Judgment of the Court was delivered by VENKATARAMA AIYAR J.
Both these appeals are directed against the judgment of the High Court of Nagpur passed in an appeal under section 19(1) (f) of the Defence of India Act, 1939, hereinafter referred to as the Act.
In exercise of the power conferred by section 75(A) of the Rules framed under the Act, the Central Government requisitioned on February 19, 1941, certain properties belonging to Hanskumar Kishanchand, the appellant in Civil Appeal No. 224 of 1954.
As there was no agreement on the amount of compensation payable to him, the Central Government referred the determination thereof to Mr. Jafry, Additional District Judge, Khandwa, under section 19(1) (b) of the Act.
On March 31, 1943, Mr. Jafry pronounced his award, by which lie awarded a. sum of Rs. 13,000 as annual rent for, the occupation of the premises.
Against this award, there was an appeal to the High Court of Nagpur under section 19(1) (f) of the Act, and that was heard by a Bench consisting of Grille C. J. and Padhve J.
By their judgment dated December 31, 1947, they enhanced the annual rent payable to the appellant by a sum of Its. 3,250, and they also allowed certain other sums as compensation for dislocation of the High School which 150 1180 was being run on the property.
The appellant applied for leave to appeal against this judgment to the Federal Court under sections 109 and I 10 of the Code of Civil Procedure in respect of the amounts disallowed.
A similar application was also filed by the Government with reference to the enhancement of compensation.
On August 25, 1949, both these applications were granted, and a certificate was issued that the appeals fulfilled the requirements of sections 109 and 110 of the Code of Civil Procedure.
That is how the two appeals come before us.
Hanskumar Kishanchand is the appellant in Civil Appeal No. 224 of 1954 and the Union of India, in Civil Appeal No. 225 of 1954.
At the opening of the hearing, a preliminary objection was taken by the learned Solicitor General to the maintainability of Civil Appeal No. 224 of 1954 on the ground that the judgment of the High Court passed in appeal under section 19(1) (f) was an award and not a judgment, decree or order within the meaning of sections 109 and 110 of the Code of Civil Procedure, and that accordingly the appeal was incompetent.
If this contention is right, Civil Appeal No. 225 of 1954 preferred by the Government would also be incompetent.
That, of course, does not preclude the Government from raising the objection as to the maintainability of the appeal, though the result of our upholding it would entail the dismissal of Civil Appeal No. 225 of 1954 as ' well.
We accordingly proceed to dispose of the objection on the merits.
It will be convenient at this stage to refer to the provisions of the Act bearing upon the present, controversy.
Section 19(1) provides that: " Where. any action is taken of the nature decribed in sub section (2) of section 299 of the Government of India Act, 1935, there shall be paid compensation, the amount of which shall be determined in the manner, and in accordance with the principles, hereinafter set out. . " Section 19(1) (a) provides for the amount of compensation being fixed by agreement, and section 19(1) (b) enacts that : " Where no such agreement can be reached, the Central Government shall appoint as arbitrator a 1181 person qualified under sub section (3) of section 220 of the above mentioned Act for appointment as a Judge of a High Court.
" Sub section (c) of section 19(1) provides for the appointment by the Central Government of a person having expert knowledge as to the nature of the property acquired and for the nomination of an assessor by the person to be compensated, for the purpose of assisting the arbitrator.
Sub section (e) of section 19(1) enacts that the arbitrator in making his award shall have regard to the provisions of sub section
(1) of section 23 of the Land Acquisition Act, 1894, so far as the same can be made applicable.
Then comes sub section
(f), which is important for the present purpose, and it is as follows: "An appeal shall lie to the High Court against an award of an arbitrator except in cases where the amount thereof does not exceed an amount prescribed in this behalf by rule made by the Central Government.
" Then we have sub section
(g), which is as follows: " Save as provided in this section and in any rules made thereunder, nothing in any law for the time being in force shall apply to arbitrations under this section.
" On these provisions, the contention on behalf of the Government is that the reference under section 19(1),(b) and the appeal under section 19(1) (f) are all arbitration proceedings, that the decision of the High Court in the appeal is really an award, and that it is, in consequence, not appealable under sections 109 and 110 of the Code of Civil Procedure, as they apply only to judgments, decrees or orders of Courts and not to awards.
Mr. Achbru Ram, learned counsel for the appellant does not dispute that the proceedings under section 19(1) (b) are by way of arbitration, but he contends that when once the matter comes before the High Court by way of appeal under section 19(1)(f), it becomes a civil proceeding under the ordinary jurisdiction of the Court, and that any decision therein is open to appeal under sections 109 and I 10 of the Code of Civil Procedure.
He further contends that even apart from those provisions, the appeal was competent under Cl. 29 of the Letters Patent, and that, 1182 the certificate granted by the High Court is under that provision as well.
Before discussing the authorities cited on either side in support of their respective contentions, it will be useful to state the well_established principles applicable to the determination of the present question.
When parties enter into an agreement to have their dispute settled by arbitration, its effect is to take the lis out of the hands of the ordinary Courts of the land and to entrust it to the decision of what has been termed a private tribunal.
Such an agreement is not hit by section 28 of the Contract Act as being in restraint of legal proceedings, because section 21 of the Specific Relief Act expressly provides that " save as provided by the , no contract to refer present or future differences to arbitration shall be specifically enforced ; but if any person who has made such a contract . and has refused to perform it sues in respect of any subject which he has contracted to refer, the existence of such contract shall bar the suit.
" There is a similar provision in section 28 of the Contract Act which is applicable, where the is not in force.
Where an arbitration is held in pursuance of such an agreement and that results in a decision, that decision takes the place of an adjudication by the ordinary Courts, and the rights of the parties are thereafter regulated by it.
It is true that under the law the Courts have the authority to set aside the award, , made by arbitrators on certain grounds such as that they are on matters not referred to arbitration, or that the arbitrators had misconducted themselves, or that there are errors apparently the face of the award.
But where the award is not open to any such objection, the Court has to pass a decree in terms of the award, and under section 17 of the , an appeal lies against such a decree only on the ground that it is in excess of, or not otherwise in accordance with the award.
In other words, it is the decision of the arbitrator where it is not set aside that operates as the real adjudication binding on the parties, and it is with a view to its enforcement that the, Court 'is authorised to pass a decree in terms thereof.
There is thus a sharp distinction between a 1183 decision which is pronounced by a Court in a cause which it hears on the merits, and one which is given by it in a proceeding for the filing of an award.
The former is a judgment, decree or order rendered in the exercise of its normal jurisdiction as a Civil Court, and that is appealable under the general law as for example, under sections 96, 100, 104, 109 and 110 of the Code of Civil Procedure.
The latter is an adjudication of a private tribunal with the imprimatur of the Court stamped on it, and to the extent that the award is within the terms of the reference, it is final and not appealable.
The position in law is the same when the reference to arbitration is made not under agreement of parties but under provisions of a statute.
The result of those provisions again is to withdraw the dispute from the jurisdiction of the ordinary courts and to refer it for the decision of a private tribunal.
That decision is an award, and stands on the same footing as an award made on reference, under agreement of parties.
It is for this reason that section 46 of the X of 1940 enacts that: " The provisions of this Act, except subsection (1) of section 6 and sections 7, 12, 36 and 37 shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an arbitration agreement and as if that, other enactment were an arbitration agreement; except in so far as this Act is inconsistent with that, other enactment or with any rules made thereunder.
" Nor does it make any difference in the legal position that the reference under the statute is to a Court as arbitrator.
In that case, the Court hears the matter not as a Civil Court but as persona designata, and its decision will be an award not open to appeal under the ordinary law applicable to decisions of Courts.
A statute, however, might provide for the decision of a dispute by a Court as Court and not as arbitrator, in which ease, its decision will be a decree or order of Court in its ordinary civil jurisdiction, and that will attract the normal procedure governing the decision of that Court, and a right of appeal will be comprehended therein.
The position therefore is that if the 1184 reference is to a Court as persona designata, its decision will not be open to appeal except to the extent that the statute so provides; but that if, on the other hand, it is to a Court as Court, its decision will be appealable under the general law, unless there is something in the statute, which abridges or takes away that incident.
It may be a question whether the reference to a Court under a particular statute is to it as a Court or as persona designata ; but when once it is determined that it is to it as persona designata, there call be no question that its decision is not open to appeal under the ordinary law.
We shall now consider the authorities hearing on the question.
On behalf of the Government, the decisions in Rangoon Botatoung Company vs The Collector, Rangoon (1), The Special Officer, Salsette Building Sites vs Dossabhai Bezonji (2), The Special Officer, Salsette Building Sites vs Dassabhai Bozanji Moti.
wala (3), Manavikraman Tirumalpad vs The Collector of the Nilgris (4) and Secretary of State for India in Council vs Hindusthan Co operative Insurance Society Limited (5) were relied on as supporting the contention that the present appeals are incompetent.
In Rangoon Botatoung Company vs The Collector, Rangoon (1), the facts were that certain properties had been acquired tinder the Land Aequistion Act of 1894, and the Collector had determined the amount of compensation payable to the quondam owners.
On their objection as to the quantum of compensation, the matter was referred to the decision of the Chief Court of Burina.
It was heard by a Bench of two Judges, who determined that a sum of Rs. 13,25,720 was payable as compensation.
Dissatisfied with this decision, the owners preferred an appeal to the Privy Council under the provisions of tile Code of Civil Procedure.
A pre limilary objection was taken to the maintainability of the appeal on the ground that the decision sought to be appealed against was not a judgment of Court but an award and was therefore not appealable.
In giving effect to this objection, the Board observed: " Their Lordships cannot accept the argument or (1) (1912) 39 I.A. 197.
(2) Bom.
(3) (4) Mad.
(5) (193I) L.R. 58 I.A. 259.
1185 suggestion that when once the claimant is admitted to the High Court he has all the rights of an ordinary suitor, including the right to carry an award made in an arbitration as to the value of land taken for public purposes up to this Board as if it were a decree of the High Court made in the course of its ordinary jurisdiction.
" Shortly after this judgment was pronounced, the question arose for determination in The special officer, Salsette Building Sites vs Dossabhai Bezonji (1), whether a decision given by the High Court in appeal under section 54 of the Land Acquisition Act was a judgment within Cl.
39 of the Letters Patent, so as to enable a party to appeal to the Privy Council under that provision.
The applicant sought to distinguish the decision in Rangoon Botatoung Company vs The Collector, Rangoon (2) on the ground that there, the decision sought to be appealed against was that of the Chief Court of Burma, and the question of maintainability fell to be decided on the terms of the, Code of Civil Procedure, whereas in the instant case, the party had a right to appeal to the Privy Council under Cl.
39 of the Letters Patent.
In rejecting this contention, the High Court referred to the observations in Rangoon Botatoung Company 's Case (2) already quoted, and observed " This passage shows that it is a mistake to suppose that the award made in such a case by the High Court is a decree within the ordinary jurisdiction to which the Civil Procedure (" 'ode refers; and it seems to me it would be equally erroneous to regard such an award as a final judgment or order within the meaning of clause 39 of the Letters Patent.
" Leave to appeal to the Privy Council was accordingly refused.
There was an application to the Privy Council for special leave in this matter, but that was also rejected, and the report of the proceedings before the Privy Council in The special Officer, salsette Building Sites vs Dassabhai Basanji Motiwala (3)shows that the interpretation put by the Bombay High Court in The Special officer, salsette Building sites vs Dossabhai Bezonji (1) was accepted as correct.
In Manavikraman Tirumalpad vs The Collector of the (1) 130m 506.
(2) (1912) L.R. 39 I.A. 197.
(3) (1913) 17 C.W.N. 42I. 1186 Niligris(1) the question was whether a judgment of the High Court passed in an appeal under the Land Acquisition Act was a judgment within the meaning of Cl. 15 of the Letters Patent so as to entitle a party to file a further appeal to the High Court under that provision, and it was held, on a consideration of the authorities above referred to, that it was not.
Secretary of State for India in Council vs Hindusthan Cooperative Insurance Society Limited (2) is a decision under the Calcutta Improvement Act, 1911.
Under that Act, there is a tribunal constituted for determining the amount of compensation payable on acquisition of land, and under the Calcutta Improvement (Appeals) Act, 1911, an appeal is provided in certain cases from the decision of the tribunal to the Calcutta High Court.
The point that arose for determination was whether the decision given by the High Court in appeal under this provision was open to further appeal to the Privy Council.
In answering it ill the negative, the Privy Council observed that in view of the decision in Rangoon Botatoung Company vs The Collector, Rangoon (3), there could be no right of appeal against the decision of the High Court.
It further held that this conclusion was not affected by the amendment of the Land Acquisition Act, 1921, providing for an appeal to the Privy Council against the decision of the High Court under section 54 of that Act, as that amendment could not be held to have been incorporated by reference in the Calcutta Improve ment Act, 1911.
The law as laid down in the above authorities may thus be summed up: It is not every decision given by a Court that could be said to be a judgment, decree or order within the provisions of the Code of Civil Procedure or the Letters Patent.
Whether it is so or not will depend on whether tile proceeding in which it was given came before tile Court in its normal civil jurisdiction, or de hors it as a persona designata.
Where the dispute is referred to the Court for determination by way of arbitration as in Rangoon Botatoung Company vs The Collector, Rangoon (3), or where it comes (1) Mad.
(2) (1931) L.R. 58 I.A. 259.
(3) (1912) L.R. 39 I.A. 197.
1187 by way of appeal against what is statedly an award as in ' The Special Officer, Salsette Building Sites vs Dossabhai Bezonji (1), Manavikraman Tirumalpad vs The Collector of the Nilgris (2) and Secretary of State for India in Council vs Hindusthan Co operative Insurance Society Limited (3) then the decision is not a judgment, decree or order under either the Code of Civil Procedure or the Letters Patent.
Now, Mr. Achhru Ram contests this last proposition, and relies strongly on the decision in National Telephone Company Limited vs Postmaster General (4), as supporting his position.
There, the question arose on the construction of certain provisions of the Telegraph (Arbitration) Act, .1909.
Section I thereof enacted that certain differences between the Postmaster General and any other person should, if the parties agreed, be referred for decision to the Railway and Canal Commission constituted under an Act of 1888 ; and section 2 provided that all enquiries under the reference should be conducted by the Commission in accordance with the Act of 1888.
Pursuant to a reference under these provisions, the Railway and Canal Commission had determined certain disputes, and the question was whether its decision was open to appeal.
Under the Act of 1888, the Commission was constituted a Court of record and an appeal lay against its decision to the Court of Appeal except on questions of fact and locus standi.
It was held by the House of Lords that as under the Act of 1888 the reference to the Commission was to it as a Court, the reference under the Telegraph (Arbitration) Act, 1909, to that tribunal must also be held to be to it as a Court and not as a body of arbitrators, and an appeal against its decision was therefore competent.
The position was thus stated by Viscount Haldane L. C.: " When a question is stated to be referred to an established Court without more, it, iii my opinion, imports that the ordinary incidents of the procedure of that Court are to attach, and also that any general right of appeal from its decision likewise attaches.
" (1) Bom.
(2) Mad.
(3) (1931) L.R. 58 I.A. 259.
(4) 151 1188 It may be noted that it was the use of the word " arbitration " in the title to the Act that furnished the ground for the contention that the proceedings before the Commission were of the nature of arbitration.
But that description, however, could not alter the true character of the reference under the Act, which was in terms to the Commission as a Court of record.
In fact, there was no element of arbitration in the proceedings.
It is true that under that Act there could be a reference only by agreement of parties.
That, however, could not make any difference in the character of the proceedings before the Commission, as a statute can provide for the jurisdiction of the Court being invoked as a Court on the agreement of parties, as for example, on a case stated under Order 36 of the Code of Civil Procedure.
There is thus nothing in National Telephone Company Limited vs Postmaster General (1), which can be said to conflict with the law as laid down in Rangoon Botatoung Company vs The Collector, Rangoon.
(2) that when the reference is to a Court as arbitrator, its decision is not open to appeal.
The distinction between the two classes of cases, where the reference is to court as court and where the reference is to it as arbitrator, was again pointed out by the Privy Council in Secretary of State for India vs Chelikani Rama Rao (3).
There, the question arose with reference to certain provisions of the Madras Forest Act, 1882.
That Act provides that claims to lands which are.
sought to be declared reserved forests by the Government are to be enquired into by the Forest Settlement Officer, and an appeal is provided against his decision to the District Court.
The point for decision was whether the decision of the District Court was open to further appeal under the provisions of the Code of Civil Procedure.
The contention was that the reference to the District Court under the Act was to it not as a Court but as arbitrator, and that therefore its decision was not open to appeal on the principle laid down in Rangoon Botatoung Company 's Case In repelling this contention, (1) (2) (1912) L.R. 39 I.A. 197.
(3) (1916) L.R. 43 I.A, 192.
1189 Lord Shaw observed that under the Land Acquisition Act the proceedings were ,from beginning to end ostensibly and actually arbitration ' proceedings ", but that the proceedings under the Forest Act were essentially different in character.
" The claim was " he said, " the assertion of a legal right to possession of and property in land; and if the ordinary Courts of the country are seized of a dispute of that character, it would require, in the opinion of the Board, a specific limitation to exclude the ordinary incidents of litigation" The principles being thus well settled, we have to see in the present case whether an appeal to the High Court under section 19(1)(f) of the Act comes before it as a Court or as arbitrator.
Under section 19(1)(b), the reference is admittedly to an arbitrator.
He need not even be a Judge of a Court.
It is sufficient that he is qualified to be appointed a Judge of the High Court.
And under the law, no appeal would have lain to the High Court against the decision of such an arbitrator.
Thus, the provision for appeal to the High Court under section 19(1)(f) can only be construed as a reference to it as an authority designated and not as a Court.
The fact that, in the present case, the reference was to a District Judge would not affect the position.
Then again, the decision of the arbitrator appointed under section 19(1)(b) is expressly referred to in section 19(1)(f) as an award.
Now, an appeal is essentially a continuation of the original proceedings, and if the proceedings under section 19(1)(b) are arbitration proceedings, it is difficult to see how their character can suffer a change, when they are brought up before an appellate tribunal.
The decisions in The Special Officer, Salsette Building Sites vs Dossabhai Bezonji (1), The Special Officer, Salsette Building Sites vs Dassabhai Basanji Motiwala (2), Manavikraman Tirumalpad vs The Collector of the Nilgris (3) and Secretary of State for India in Council vs Hindusthan Co operative Insurance Society Limited (4) proceed all on the view that an appeal against an award continues to be part of, and a (1) Bom.
(2) (3) Mad.
(5) (1931) L.R. 58 I.A. 259.
1190 further stage of the original arbitration proceedings.
ln our view, a proceeding which is at the inception an arbitration proceeding must retain its character :as arbitration, even when it is taken up in appeal, where that is provided by the statute.
The question whether an appeal under section 19(1)(f) is of the nature of arbitration proceedings, and whether the decision given therein is an award came up directly for consideration in Kollegal Silk Filatures Ltd. vs Province of Madras (1) before a Bench of the Madras High Court consisting of Patanjali Sastri and Chandrasekhara Aiyar JJ.
and it was held by them that the word "arbitration" in section 19(1)(g) of the Act covered the entire proceedings from their com mencement before the arbitrator to their termination in the High Court on appeal where an appeal had been preferred, and the High Court in hearing and deciding the appeal acted essentially as an arbitration tribunal.
We agree with this decision that the appeal under section 19(1) (f) is an arbitration proceeding.
We must therefore hold that the decision of the High Court in the appeal under that provision is not a judgment, decree or order either within sections 109 and I 10 of the Code of Civil Procedure or cl. 29 of the Letters Patent of the Nagpur High Court, which corresponds to cl. 39 of the Letters Patent of the Calcutta, Madras and Bombay High Courts, and that, therefore, the present appeals are incompetent.
Mr. Achbru Ram finally contended that even if no appeal lay under sections 109 and 110 of the Code of Civil Procedure or cl. 29 of the Letters Patent, it was, nevertheless within the competence of this Court to grant leave to appeal, and that this was a fit case for the grant of such leave.
He argued that the Privy Council had the power to grant leave to appeal against the decision of the Nagpur High Court in the appeal under section 19(1) (f), that under section 3(a)(ii) of the Federal Court (En. largement of Jurisdiction) Act I of 1948 that power became vested in the Federal Court, and under article 135 it has devolved on this Court, and that in the exercise of that power we should grant leave to appeal against (1) I.L.R. 1191 the decision now under challenge.
it is sufficient answer to this contention that the Federal Court had power under section 3(a) (ii) to grant leave only when the proposed appeal was against a judgment, and that, under the definition in section 2(b), meant a judgment, decree or order of a High Court in a civil case; and that on our conclusion that the decision in the appeal under section 19(1) (f) is not a judgment, decree or order but an award, no order could have been passed granting special leave under section 3(a) (ii).
In the result, we dismiss both the appeals as incompetent.
The parties will bear their own costs in this Court.
Appeals dismissed.
| These two appeals were preferred against the decision of the Nagpur High Court in an appeal under 'section 19(1)(f) of the Defence of India Act, 1939, modifying an award of compensation made 1178 under section 19(i)(b) of that Act in respect of certain premises requisitioned by the Government under 75(A) of the Rules framed under the Act.
Both the parties applied for and obtained leave to appeal to the Federal Court under sections 109 and 110 of the Code of Civil Procedure.
A preliminary objection was taken on behalf of the Government that the decision of the High Court was an award and not a judgment, decree or order within the meaning of sections 109 and 110 of the Code and as such no appeal lay therefrom : Held, that the objection must prevail and both the appeals stand dismissed.
There could be no doubt that an appeal to the High Court under section 19(1)(f) Of the Defence of India Act from an award made under section 19(i)(b) of that Act was essentially an arbitration proceeding and as such the decision in such appeal cold not be a judgment, decree or order either under the Code of civil procedure or under Cl. 29 Of the Letters patent of the Nagpur High Court.
Kollegal Silk Filatures Ltd. vs province, of Madyas, I. I,.
R. , approved.
There is a well recognised distinction between a decision given by the Court in a case which it 'hears on merits and one given by it in a proceeding for the filing of an award.
The former is a judgment, decree or order of the Court appellable under the general law while, the latter is an adjudication of a private individual with the sanction of the Court stamped on it and where it does not exceed the terms of the reference, it is final and not appealable.
There can be no difference in law between an arbitaration by agreement of parties and one under a statute.
A referrence to arbitration under a statute to a court may be to it either as a court or as an arbitrator.
If it is to it as a court, the decision is a judgment, decree or order appealable under the ordinary law unless the statute provides otherwise, while in the latter case the Court functions as a persona designata and its decision is air award not appealable under the ordinary law but only under the statute and to the extent provided by it.
An appeal being essentially a continuation of the original proceedings, what *as at its inception an arbitration proceeding must retain its character as an arbitration proceeding even where the statute provides for an appeal, Rangoon Botatung Company vs The Collecter , Rangoon (1912) L.R. 39 I.A. 197 .The special officer sales the building sites Dassabhai Beznoji, Bom 506 the special officer sales the Building sites vs Dassabhai Bozanji Motiwala Manavikram Tirumalpad vs the Collector of the Nilagrie, Mad 943 and secretary of state for India in council vs Hindustan Co operative Insurance society Limited ,(1931) L.R. 58 I. A 259 relied on.
National Telephone Company Limited vs Postmaster General, , explained.
|
Summarize this legal judgement text concisely | minal Appeal No. 49 of 1956.
Appeal by special leave from the judgment and order dated October 13, 1954, of the Madras High Court in Criminal Revision Case No. 267 and 1954 154 1212 (Criminal Revision Petition No. 249 of 1954) arising out of the judgment and order dated January 12, 1954, of the Court of the District and Sessions Judge as Tiruchirapalli in Criminal Revision Petition No. 17 of 1953.
R. Ganapathy Iyer and G. Gopalakrishnan, for the appellant.
No one appeared for the respondents.
August 25.
The Judgment of the Court was delivered by SINHA J.
The only question for determination in this appeal by special leave, is whether the petition of complaint, disclosed a prima facie offence under section 295 of the Indian Penal Code.
The courts below have taken the view that it did not, and on that ground, it stood summarily dismissed, before evidence pro and con had been recorded.
It appears that the appellant filed a petition of complaint in the court of the Additional First Class Magistrate, Tiruchirappalli, against the respondents, three in number.
The petition of complaint alleged inter alia that the first accused is the leader of Dravida Kazakam (a community of persons who profess to be religious reformers, one of whose creeds is to carry on propaganda against idol worship), and as such, be was out to " vilify a certain section of the Hindu community and do propaganda by holding meetings and writing articles.
" It is further alleged in the petition of complaint that " recently, the first accused announced his intention of breaking the image of God Ganesa, the God sacred to the Saiva Section of the Hindu Community on 27th May, 1953, in a public meeting at Town Hall.
This caused terror commotion in the mind of the Saivite Section of the Hindu Community.
" The complainant claims to be a Saivite.
The complainant further alleged in his petition that on May 27, 1953, at about 5 30 p.m., the accused broke an idol of God Ganesa in public at the Town Hall Maidan, and before breaking the idol, lie made a speech, and expressly stated that he intended to insult the feelings of the Hindu community by breaking the idol of God 1213 Ganesa.
The said act of breaking the idol was alleged to have been actively abetted by instigation and aid by the other two accused persons, who also made speeches.
The petition of complaint also alleged that the said act of breaking the image of God Ganesa was done with the intention of insulting the religious feelings of certain sections of the Hindu community, who hold God Ganesa in veneration, and that the acts complained of, amounted to offences under sections 295 and 295A of the Indian Penal Code.
On those allegations, the petition of complaint (dated June 5, 1953) prayed that processes might issue against the three accused persons.
In the list of witnesses appended to the petition, figured the Additional District Magistrate, the Sub Divisional Magistrate, the Town Sub Inspector of police, Tiruchi Fort, and Sub Magistrate, Tiruchy Town.
On the same date, the learned magistrate examined the complainant on oath.
The complainant made statements in support of his allegations in the petition of complaint.
Thereupon, the learned magistrate directed that the petition of complaint be sent to the Circle Inspector of police, Trichy, for inquiry and report under section 202, Criminal Procedure Code.
On June 26, 1953, on receipt of the police report which " showed that though the occurrence as alleged had taken place it was a point of law if the act of the accused would amount to any offence ", the learned magistrate passed his order, dismissing the complaint under section 203 of the Criminal Procedure Code.
In the course of his order, the learned magistrate observed as follows: "The mud figure of Ganesa alleged to have been broken by accused is not an object held sacred or worshipped by any class of persons.
Simply because it resembled the God Ganesa held in veneration by a section it cannot become an object hold sacred.
Even Ganesa idol abandoned by the people as unworthy of worship loses its sanctity and it is no longer an object held sacred by anybody, since such given up idols are found in several places of defilement.
It is not an offence if a person treads union any such abandoned idol.
Therefore the breaking of mud figure of Ganesa 1214 does not amount to an offence under Section 295, Indian Penal Code. " "The speeches delivered by the accused with deliberate and malicious intention of outraging religious feelings of a community, no doubt amount to an offence under Section 295 A, Indian Penal Code.
But for laying a complaint under this section the sanction of the Government is necessary.
This section has been clearly mentioned in the complaint and it cannot be said it was included by oversight.
Without a proper sanction an offence under this section is unsustainable.
I therefore see no sufficient ground for proceeding with the complaint and I dismiss the same under section 203, Criminal Procedure Code.
" The complainant moved the learned Sessions Judge of Tiruchirappalli, by his petition in revision, filed on July 9, 1953, under sections 435 and 436 of the Criminal Procedure Code, for setting aside the order of dismissal of the complaint.
In the petition filed in the Court of Session, the complainant stated that the petition was confined to the complaint in respect of the alleged offence under section 295, Indian Penal Code, and that it did not seek to revise the order of dismissal of the complaint in respect of an offence tinder section 295 A of the Indian Penal Code.
The learned Sessions Judge dismissed the petition by an order dated January 12, 1954, holding, in agreement with the learned magistrate, that the acts complained of did not amount to an offence under section 295, Indian Penal Code.
In the course of his order, the learned Sessions Judge made the following observations: " I agree with the learned Magistrate that the acts complained of do not amount to an offence.
The accused, who profess to be religious reformers in a campaign against idolatory organized a public meeting at which they broke an earthern image of the God Ganesa.
The particular image broken was the private property of the accused and was not in itself an object held sacred by any class of persons; nor do I think that idol breaking by a non believer can reasonably be regarded by a believer as an insult to his religion ; and the ingredients of Section 295, Indian Penal Code, are therefore not made out.
" 1215 The complainant then moved the High Court in its revisional jurisdiction under section 439 of the Code of Criminal Procedure.
The matter was heard by a learned single Judge of that Court.
The learned single Judge also agreed with the courts below in the reasons given by them for dismissing the petition of complaint, and refused to order further inquiry.
In the course of his judgment, he discussed the question whether a mud image of God Ganesa, came within the scope of the words " any object held.
sacred by any class of persons " in section 295, and he answered the question in the negative.
In this connection, he referred to the judgment of the Full Bench of the Allahabad High Court in the case of Queen Empress vs Imam Ali (1), which is directly an authority for this proposition only that the word 'object ' in section 295 of the Indian Penal Code, does not include animate objects.
That case dealt with the complaint of killing a cow.
Edge C. J. in the course of his judgment, made an observation that the word ' object ' should be interpreted ejusdem generis with the words 'place of worship ', and by way of an example of such an inanimate object, he mentioned an idol.
That observation, if anything, is not against the complainant.
The learned single Judge also referred to the case of Romesh Chunder Sannyal vs Hiru Mondal (2), which also is not in point inasmuch as it dealt with the case of a dedicated bull.
But the learned Judge seemed to draw from those cases the inference which may be stated in his own words, as follows: " Interpreted like that, it would mean that the section would apply only to cases where an idol in a temple is sought to be destroyed, damaged, or defiled.
The words 'any object held sacred by any class of persons ' even otherwise will apply only to idols in a temple or when they are carried out in processions on festival occasions.
The object held sacred ' will mean only the idols inside the temple and when they are taken out in processions on festival occasions.
In such circumstances as in the present case the breaking is nothing more than a doll taken from the shop.
(1) All. 150.
(2) Cal.
1216 Though the intention of the respondents may be to decry the feelings and wound the susceptibilities of a large section of the people, still the intention alone is not sufficient unless it is carried out by an act which must fall within the scope of this section.
The dolls in the shop, though they may resemble several of the deities in the temple, cannot be held to be objects held sacred by any class of persons.
In modern society there are several images of the deities in the drawing rooms of several houses.
It cannot for a moment be suggested that these images are objects held sacred.
These have got to be distinguished from the objects held sacred, which can only be when they are duly installed in a temple and from which they are subsequently taken out in procession on festival occasions.
What was broken therefore by the respondents is nothing more than a doll taken either from a shop or made for the occasion, and it cannot by any means be called ail object held sacred.
The offence is not made out and the dismissal is therefore justified.
" The petitioner moved the High Court for the necessary certificate of fitness for making an appeal to this Court.
The learned Judge, who had heard the case on merits, also dealt with this application, and refused to certify that this was a fit case for appeal to this Court under article 134(1)(c) of the Constitution.
The petitioner moved this Court and obtained the necessary special leave to appeal.
It is regrettable that the respondents have remained ex parts in this Court.
The learned counsel for the appellant has urged that the courts below had unduly restricted the meaning of the words of section 295, particularly, the words " any object held sacred by any class of persons ", and that the words have been used in their fullest amplitude by the Legislature, in order to include any object consecrated or otherwise, which is held sacred by any class of persons, not necessarily belonging to a different religion or creed.
In the first place, whether any object is held sacred by any class of persons, must depend upon the evidence in the case, so also the effect of the words " with the intention of thereby insulting the religion of any class 1217 of persons or with the knowledge that any class of persons is likely to consider such destruction, damage or defilement as an insult to their religion.
" In this case, the facts alleged in the petition, do not appear to have been controverted, but the learned magistrate, as also the learned Sessions Judge and the learned Judge in the High Court, have thrown out the petition of complaint solely on the ground that the image of God Ganesa, treated by the respondents as alleged by the complainant, could not be said to be held sacred by any class of persons.
In the instant case, the insult alleged was by destruction of the image of God Ganesa.
Apart from the question of evidence, which had yet to be adduced, it is a well knonwn fact that the image of Lord Ganesa or any objective representation of a similar kind, is held sacred by certain classes of Hindus, even though the image may not have been consecrated.
The learned Judge in the Court below, has given much too restricted a meaning to the words any object held sacred by any class of persons ", by holding that only idols in temples or idols carried in processions on festival occasions, are meant to be included within those words.
There are no such express words of limitation in section 295 of the Indian Penal code, and in our opinion, the learned Judge has clearly misdirected himself in importing those words of limitation.
Idols are only illustrative of those words.
A sacred book, like the Bible, or the Koran, or the Granth Saheb, is clearly within the ambit of those general words.
If the courts below were right in their interpretation of the crucial words in section 295, the burning or otherwise destroying or defiling such sacred books, will not come within the 'Purview of the penal statute.
In our opinion, placing such a restricted interpretation on the words of such general import, is against all established canons of construction.
Any object however trivial or destitute of real value in itself, if regarded as sacred by any class of persons would come within the meaning of the penal section.
Nor is it absolutely necessary that the object, in order 1218 to be held sacred, should have been actually worshipped.
An object may be held sacred by a class of persons without being worshipped by them.
It is clear, therefore, that the courts below were rather cynical in so lightly brushing aside the religious susceptibilities of that class of persons to which the complainant claims to belong.
The section has been intended to respect the religious susceptibilities of persons of different religious persuasions or creeds.
Courts have got to be very circumspect in such matters, and to pay due regard to the feelings and religious emotions of different classes of persons with different beliefs, irrespective of the consideration whether or not they share those beliefs, or whether they are rational or otherwise, in the opinion of the court.
As a result of ' these considerations, it must be held that the courts below have erred in their interpretation of the crucial words of section 295 of the Indian Penal Code.
But the question still remains whether, even after expressing our strong disagreement with the interpretation of the section by the courts below, this Court should direct a further inquiry into the complaint, which has stood dismissed for the last about 5 ),ears.
The action complained of against the accused persons, if true, was foolish, to put it mildly, but as the case has become stale, we do not direct further inquiry into this complaint.
If there is a recurrence of such a foolish behaviour on the part of any section of the community, we have no doubt that those charged with the duty of maintaining law and order, will apply the law in the sense in which we have interpreted the law.
The appeal is, therefore, dismissed.
Appeal dismissed.
| The words " any object held sacred by any class of persons" occurring in section 295 Of the Indian Penal Code are of general import and cannot be limited to idols in temples or idols carried on festival occasions.
Not merely idols or sacred books, but any other object which is regarded as sacred by any class of persons, whether actually worshipped or not, fall within the description.
Queen Empress vs Imam Ali, All. 150 and Romesh Chunder Sannyal vs Hiru Mondal, Cal.
852, considered.
Consequently, in a case where the allegation in the petition of complaint was that one of the accused broke the idol of God Ganesa in public and the two others actually aided and abetted him with the intention of insulting the religious feeling of the complainant and his community who held the deity in veneration and the trial Magistrate, on receipt of the Police report that the alleged occurrence was true, dismissed the complaint under section 203 of the Code of Criminal Procedure holding that the breaking of a mud image of Ganesa was not an offence under section 295 of the Indian Penal Code and the Sessions judge and the High Court in revision, agreeing with the view of the trial Court, refused to direct further enquiry : Held, that the courts below were clearly in error in inter preting section 295 of the Indian Penal Code in the way they (lid, but since the complaint stood long dismissed, no further enquiry need be directed into the matter.
Held, further, that the Courts must be circumspect in such matters and pay due regard to the religious susceptibilities of different classes of persons with different beliefs, whether they shared those beliefs or not or whether those beliefs in the opinion of the Court were rational or not.
|
Summarize this legal judgement text concisely | Appeals Nos. 358 and 359 of 1957.
Appeals by special leave from the judgment and decree dated April 4, 1956, of the Patna High Court in M. J. C. Nos.
546 and 590 of 1955.
J. N. Banerjee and R. C. Prasad, for the appellant (In both appeals).
Basanta Chandra Ghose I and P. K. Chatterjee, for respondents Nos.
1 10 & 12 57 in C. A. No. 358/57.
M. C. Setalvad, Attorney General of India, Nooni Chakraverty and B. P. Maheshwari, for respondent No. 59 in C A. No. 358/57 and Respdt.
No. 1 in C. A. No. 359/57.
R.Patnaik, for respondent No. 63 in C.A. No. 359/57.
August 22.
The Judgment of the Court was delivered by 1193 GAJENDRAGADKAR J.
Where an industrial dispute has been referred to a tribunal for adjudication by the appropriate government under section 10 (1) (d) of the , (XIV of 1947), can the said government supersede the said reference pending adjudication before the tribunal constituted for that purpose ? That is the short question which falls to be considered in these two appeals by special leave.
The question arises in this way: On October 8, 1954, by Notification No. III/DI 1602 /54 L 15225, the government of Bihar referred an industrial dispute between the management of the Bata Shoe Co. Ltd., Digbaghat (Patna), and their 31 workmen, mentioned in annexure I A ', in exercise of the powers conferred on the said government by section 7 read with section 10(1) of the Act.
The dispute was whether the dismissal of the workmen in question was justified; if not, whether they were entitled to reinstatement or any other relief For the adjudication of this dispute, an industrial tribunal with Mr. Ali Hassan as the sole member was consti tuted.
This was reference No. 10 of 1954.
Then, on January 15,1955, by Notification No. III/DI 1601/55 L. 696, a similar industrial dispute between the same Bata Company and its 29 other workmen was referred by the government of Bihar to the same tribunal.
This was reference No. I of 1955.
While the proceedings in respect of the two references, which had been consolidated by the tribunal, were pending before it and had made some progress, the government of Bihar issued a third Notification No. III/Di 1601/55 L 13028 on September 17, 1955, by which it purported to supersede the two earlier notifications, to combine the said two disputes into one dispute, to implead the two sets of workmen involved in the two said disputes together, to, add the Bata Mazdoor 'Union to the dispute, and to refer it to the adjudication of the industrial tribunal of Mr. Ali Hassan as the sole member.
The dispute thus referred to the .
tribunal was, " Whether the dismissal of the 60 workmen, mentioned in annexure 'B ', was justified or unjustified; and to what relief, if any, those workmen are entitled ?" On receipt of this notification, the tribunal passed an 1194 order on September 19, 1955, cancelling the hearing of the two prior references which had been fixed for October 3, 1955, and directing that the files of the said references should be closed.
The Bata Company and its workmen then filed two separate applications before the High Court of Judicature at Patna under articles 226 and 227 of the Constitution and prayed that the last notification should be quashed as being illegal and ultra 'vires.
These.
two applications were numbered as M. J. C. Nos. 546 and 590 of 1955 respectively.
On April 4, 1956, the High Court held that the government of Bihar had no power or authority to supersede the earlier notifications, allowed both the applications and issued a writ in the nature of certiorai quashing the impugned notification of September 17, 1955, and also a writ in the nature of mandamus requiring the industrial tribunal to proceed expeditiously with reference cases Nos. 10 of 1954 and I of 1955 and to bring them to a conclusion in accordance with law.
Against this order the government of Bihar applied for and obtained leave from this court on June 26, 1956.
That is how the two present appeals have come for disposal before US.
In both the appeals, the appellant is the State of Bihar and.
the respondents are the Bata Company and its workmen respectively.
On behalf of the appellant, it is urged before us that the High Court at patna was in error in holding that the government of Bihar had no power or authority to set aside the two earlier notifications and to refer the dispute in question for adjudication to the industrial tribunal under section 10(1) of the Act.
In order to appreciate the background of the, impugned notification, it would be relevant, to mention some material facts.
It appears that the workmen of the company 's factory at Digha formed a, union at the close of the last World War.
The president of the said union was Mr. John and its general secretary was Mr. Fateh Narain Singh.
On June 22, 1947, the company entered into a collective agreement with the said union and by mutual consent the Standing Orders and 1195 Rules, certified under the Industrial Employment (Standing Orders) Act of 1946, were settled.
The union was recognised as the sole and exclusive collective bargaining agency for the workmen of the company.
Towards the end of 1954, two groups of the union were formed and rivalry grew between them.
One group was led by Mr. Fateh Narain Singh and other by Mr. Bari.
On January 22, 1954, the union ' through its general secretary Mr. Fateh Narain Singh served on the company a " slow down notice " with effect from February 24, 1954, and on February 6, 1954, Mr. Bari purporting to act as the president of the union asked his followers to go on strike as from February 23, 1954.
The demands made by Mr. Fateh Narain Singh gave rise to conciliation proceedings under the Act and ended in the settlement which was duly recorded on February 8, 1954.
In spite of the said settlement some workmen, including the sixty workmen in question who supported Mr. Bari, went on an illegal strike on February 23, 1954, although as members of the union they were bound by the ,settlement.
The majority of the workmen were opposed to the strike and in fact on February 16, 1954, a letter signed by 500 workmen who dis associated themselves from the strike, was received by the company.
The company was requested to make suitable arrangements to enable these workmen to attend their duties.
The strike succeeded only partially because out of 854 workmen employed in the company 's factory at Digha nearly 500 workmen attended the factory in spite of the threats of the strikers.
The strike was declared illegal by the appellant under section 23 (c) of the Act.
Subsequently, the company served the strikers with charge sheets and in the end, 274 workmen, including the sixty workmen in question, were dismissed from service by the company.
Thereafter the union entered into negotiations with the company, as a result of which it was agreed that 110 strikers would be employed by the company in the same manner in which 76 strikers had already been employed by it.
It was further 152 1196 agreed that 30 strikers were to remain dismissed and not considered eligible for employment or for any benefits.
In regard to the remaining 30 strikers, the company agreed to consider their cases later on for reemployment.
During these negotiations, the sixty workmen in question did not make any demand to the management for reinstatement either individually or collectively.
nor was their case raised by any other Organisation or body of workmen.
In the result, so far as the union was concerned the dispute regarding the whole body of strikers who had been dismissed by the company came to an end by virtue of, the agreement between the company and the union.
Notwithstanding this agreement, Mr. Sinha, the conciliation officer, wrote to the company on September 3, 1954, that he desired to hold conciliation proceedings inrespectof,some of the dismissed workmen.
The dispute raised by the sixty workmen was not sponsored by any Organisation or body of workmen.
In fact the secretary of the union wrote to the Commissioner of Labour on September 22, 1954, that he strongly objected to the alleged dispute of sixty workmen being referred to adjudication.
It was under these circum stances that the appellant issued the first two notifica tions on October 8, 1954 and January 15, 1955.
On May 30, 1955, the union made an application before the tribunal alleging that the ' majority of the workmen were opposed to the reinstatement of the sixty workmen in question and consequently it had interest in the proceedings before the tribunal.
Two applications were made before the tribunal by other workmen to be joined to the proceedings on the ground that they were opposed to the reinstatement of the workmen whose cases were pending before the tribunal.
All these applications were rejected by the tribunal.
It would appear that Mr. Fateh Narain Singh then moved the Department of Labour Government of Bihar, and it was apparently pursuant to the representation made by him that the third notification was issued by the appellant superseding the first two notifications and referring the whole dispute afresh to the 1197 industrial tribunal with the union of Mr. Fateh Narain Singh added as a party to the proceedings.
That in brief is the genesis of the impugned notification in the present case.
Dr Bannerjee for the appellant has urged before us that in dealing with the question about the powers of the appropriate government under section 10(1) of the Act, it would be necessary to bear in mind the facts which led to the cancellation of the first two notifications and the issue of the third impugned notification.
He contends that in issuing the third notification the appellant has acted bona fide and solely in the interests of fair play and justice ; it came to the. conclusion that it was necessary that the union should be heard before the disputes in question are.
adjudicated upon by the Industrial Tribunal and that it would be more convenient and in the interest of industrial peace and harmony that the dispute should be referred to .the tribunal 'in a more comprehensive and consolidated form bringing before the tribunal all the parties interested in it.
In our opinion, the bona fides of the appellant on which reliance is placed by Dr. Banerjee are really not: relevant for determining the appellant 's 'powers under section 10(1) of the Act.
If the appellant has authority to cancel the notification issued under section 10(1), and if the validity of the cancelling notification is challenged on the ground of mala fides, it may be relevant and material to inquire into the motives of the appellant.
But if the appellant has no authority to cancel or revoke a notification issued under section 10(1), the bona fides of the appellant can hardly validate the impugned cancellation.
That is why, we think, the appellant cannot base its arguments on the alleged bona fides of its conduct.
it is conceded by Dr. Bannerjee that the Act does not expressly confer any power on the appropriate government to cancel or supersede a reference made under section 10(1) of the Act.
He, however, argues that the power to cancel or supersede such a reference must be hold to be implied, and in support of his argument he relies on the, provisions of section 21 of the (X of 1897).
Section 21 provides 1198 that " where, by any Central Act or Regulation, a. power to issue notifications, orders, rules or bye laws is conferred, then that power includes a power, exercisable in the like manner and subject to the like sanction and conditions (if any), to add to, amend, vary or rescind any notifications, orders, rules or byelaws so issued ".
It is well settled that this section embodies a rule of construction and the question whether or not it applies to the provisions of a particular statute would depend on the subject matter, context, and the effect, of the relevant provision,% of the said statute.
In other words it would be necessary to examine carefully the scheme of the Act, its object and all its relevant and material provisions before deciding whether by the application of the rule of construction enunciated by section 21, the appellant 's contention is justified that the power to cancel the reference made under section 10(1) can be said to vest in the appropriate government by necessary implication.
If we come to the conclusion that the context and effect of the relevant provisions is repugnant to the application of the said rule of construction, the appellant would not be entitled to invoke the assistance of the said section.
We must, therefore, proceed to examine the relevant provisions of the Act itself.
It is clear that the policy of the Act is to secure and preserve good relations between the employers and their workmen and to maintain industrial peace and harmony.
It is with this object that section 3 of the Act contemplates the establishment of the Works Committees whose duty it is to promote measures for securing and preserving amity and good relations between the employers and the workmen.
If the Works Committee is unable to settle the disputes &rising between the employer and his workmen, conciliation officers and the boards of conciliation offer assistance to the parties to settle their disputes.
Sections 3, 4, 5, 12 and 13 refer to the working of this machinery contemplated by the Act.
It is only where the conciliation machinery fails to bring about settlement between the parties that the Act contemplates compulsory adjudication of the industrial disputes by labour courts and 1199 tribunals as the last alternative.
The appropriate government is authorised to constitute labour courts and tribunals under and subject to the provisions of a. 7 and section 7A respectively.
It is in respect of the compulsory adjudication that under section 10, the appropriate government is given wide discretion to decide whether or not the dispute between the employer and his employees should fie referred to the board, court or ' tribunal.
Section 10 (1) (d) provides inter alia that where the appropriate government is of opinion that any industrial dispute exists or is apprehended, it may at any time, by order in writing refer the dispute to a tribunal for adjudication.
The condition precedent for the reference to the industrial tribunal is that the appropriate government must be satisfied that an industrial dispute exists or is apprehended.
It is not in every case where the parties allege the existence of an industrial dispute that a reference would be made under section 10 (1); it is only where the test of subjective satisfaction of the appropriate government is satisfied that the reference can be made.
Thus it is clear that the appropriate government is given an important voice in the matter of permitting industrial disputes to seek adjudication by reference to the industrial tribunal.
But once an order in writing is made by the appropriate government referring an industrial dispute to the tribunal for adjudication under section 10 (1), proceedings before the tribunal are deemed to have commenced and they are deemed to have concluded on the day on which the award made by the tribunal becomes enforceable under section 17A.
This is the effect of section 20(3) of the Act.
This provision shows that after the dispute is referred to the tribunal, during the continuance of the reference proceedings, it is the tribunal which is seized of the dispute and which can exercise jurisdiction in respect of it.
The appropriate government can act in respect of a reference pending adjudication before a tribunal only under section 140(5) of the Act, which authorises it to add other parties to the pending dispute subject to the conditions mentioned in the said provision.
It would therefore be reasonable to hold that except for cases 1200 falling under section 10(5) the appropriate government stands outside the reference proceedings, which are under the control and jurisdiction of the tribunal itself.
Even after the award is made it is obligatory on I the appropriate government under section 17(1) to publish the said award within a period of thirty, days from the date of its receipt by the, appropriate government. 'Sub section (2) of section 17 says that subject to the provisions of section 17A, the award published under (1) of section 17 shall be final and shall not be called in question by any court in any manner whatsoever Section 19(3) provides that an award shall, subject to the other pro visions of section 19, remain in operation for a period of one year from the date on which it becomes emforceable under section 17A.
It is true that as.
17A and 19 confer on the appropriate government powers to modify the provisions of the award or limit the period of its: operation but it is unnecessary to refer to these provisions in detail.
The scheme of the provisions.
in Chapters III and IV of the Act would thus appear to be .
to leave the reference proceedings exclusively within the jurisdiction of the tribunals constituted under the :Act and to make the awards,of such tribunals binding between the parties, subject to the special powers conferred of the appropriate government under as.
17A and 19.
The appropriate government undoubtedly has the initiative in the matter.
It is only where it makes an order in writing refering an industrial dispute to the adjudication of the tribunal that the reference proceedings can commence but the scheme of the relevant provisions would prima facie seem to be inconsistent with any power in the appropriate government to cancel the reference made under section 10 (1).
The power claimed by the Happening to cancel a reference made unders.
10(1) seems also to be inconsistent with some other provisions of the Act.
The proviso to section 10 lays down that the appropriated government shall refer a dispute relating to the public utility service when a notice under section 22 has been given, unless it considers that the notice has been frivolously or vexatiously given, or that it would be inexpedient so to refer the dispute.
This proviso, indicates that in regard 1201 to a dispute relating to public utility concerns normally the government is expected to refer it for adjudication.
In such a case if ' the government makes the reference it is difficult to appreciate that it would be open to the government pending the proceedings of the said reference before the Industrial Tribunal to cancel the reference and supersede its original order in that behalf.
Section 10, sub section
(2) deals with the case where ' the parties to are industrial dispute apply to the appropriate government in the prescribed manner, either jointly or separately, for a reference of the dispute to the appropriate authority, and it provides that in such a case if the appropriate government is satisfied that the persons applying represent the majority of each party it shall make the reference accordingly.
ln such a case all that the government has to satisfy itself about is the fact that the, demand for reference is made by the majority of each party, and once this condition is satisfied, the government is under obligation to refer the dispute for industrial adjudication.
It is inconceivable that in such a case the government can claim power to cancel a reference made under section 10(2).
Indeed in the course of his arguments, Dr. Banerjee fairly conceded that it would be difficult to sustain a claim for an implied power of cancellation in respect of a reference made under section 10(2).
There is another consideration which is relevant in dealing with this question.
Section 12 which deals with the duties of the conciliation officer, provides in substance that the conciliation officer should try his best to bring about settlement between the parties.
If no settlement is arrived at, the conciliation officer has to make a report to the appropriate government, as provided in sub section
(4) of section 12.
This report must contain a full statement of the relevant facts and circumstances and the reasons on account of which in the opinion of the officer the settlement could not be arrived at.
Sub section (5) then lays down that if, on a consideration of the report, the appropriate government is satisfied that there is a case for reference to a board, labour court, tribunal or national tribunal, it may make such a reference.
Where the appropriate 1202 government does not make such a reference it shall record and communicate to the parties concerned its reasons therefor.
This provision imposes on the appropriate government an obligation to record its reasons for not making a reference after receiving a report from the conciliation officer and to communicate the said reasons to the parties concerned.
It would show that when the efforts of the conciliation officer fail to settle a dispute, on receipt of the conciliation officer 's report by the appropriate government, the government would normally refer the dispute for adjudication ; but if the government is not satisfied that a reference should be made, it is required to communicate its reasons for its decision to the parties concerned.
If the appellant 's argument is accepted, it would mean that even after the order is made by the appropriate government under section 10(1), the said government can cancel the said order without giving any reasons.
This position is clearly inconsistent with the policy underlying the provisions of section 12(5) of the Act.
In our opinion, if the legislature had intended to confer on the appropriate government the power to cancel an order made under section 10(1), the legislature would have made a specific provision in that behalf and would have prescribed appropriate limitations on the exercise of the said power.
It is, however, urged that if a dispute referred to the industrial tribunal under section 10(1) is settled between the parties, the only remedy for giving effect to such a compromise would be to cancel the reference and to take the proceedings out of the jurisdiction of the industrial tribunal.
This argument is based on the ,assumption that the industrial tribunal would have to ignore tile settlement by the parties of their dispute pending before it and would have to make an award on the merits in spite of the said settlement.
We are not satisfied that this argument is well founded.
It is true that the Act does not contain any provision specifically authorising the industrial tribunal to record a compromise and pass an award in its terms corresponding to the provisions of O. XXIII, r. 3 of the Code of Civil Procedure.
But it would be very 1203 unreasonable to assume that the industrial tribunal would insist upon dealing with the dispute on the merits even after it is informed that the dispute has been amicably settled between the parties.
We have already indicated that amicable settlements of industrial disputes which generally lead to industrial peace and harmony are the primary object of this Act.
Settlements reached before the conciliation officers or( boards are specifically dealt with by sections 12(2) and 13(3) and the same are made binding under section 18.
There can, therefore, be no doubt that if an industrial dispute before a tribunal is amicably settled, the tribunal would immediately agree to make an award in terms of the settlement between the parties.
It was stated before us at the bar that innumerable awards had been made by industrial tribunals in terms of the settlements between the parties.
In this connexion we may incidentally refer to the provisions of section 7 (2)(b) of the Industrial Disputes (Appellate Tribunal) Act, 1950 (XLVIII of 1950), which expressly refer to an award or decision of an industrial tribunal made with the consent of the parties.
It is true that this Act is no longer in force; but when it was in force, in providing for appeals to the Appellate Tribunal set up under the said Act, the legislature had recognised the making of awards by the industrial tribunals with the consent of the parties.
Therefore, we cannot accept the argument that cancellation of reference would be necessary in order to give effect to the amicable settlement of the dispute reached by the parties pending proceedings before the industrial tribunal.
In this connexion it may be relevant to refer to some other provisions of the Act, which impose restrictions on the parties (luring the pendency of the reference proceedings.
Under section 10(3), where an industrial dispute has been referred to an industrial tribunal, the appropriate government may by order prohibit the continuance of any strike or lock out in connexion with such dispute which may be in existence on the date of the reference.
Similarly, under section 33, during the pendency of the proceedings before an industrial tribunal, no employer shall (a) in regard to any matter connected with the dispute, alter, to the prejudice 153 1204 of the workmen concerned in such dispute, the conditions of service applicable to them immediately before the commencement of such proceedings or (b) for any misconduct connected with the dispute, discharge or punish, whether by dismissal or otherwise, any workmen concerned in such dispute, save with the express permission in writing of the authority before which the proceeding is pending.
Failure to comply with the provisions of section 33(1) is made punishable under section 31 of the Act.
These provisions show that during the pendency of the proceedings before the industrial tribunal the parties to the dispute are expected to maintain status quo and not to take any action which would disturb industrial peace or prejudice a fair trial before the industrial tribunal.
If the power to cancel a reference made under section 10 (1) is held to be implied, the proceedings before the industrial tribunal can be terminated and superseded at any stage and obligations and liabilities incurred by the parties during the pendency of the proceedings would be materially affected.
It is because all these provisions are intended to operate as a self contained Code governing the compulsory adjudication of industrial disputes under the Act, that section 15 enjoins upon the industrial tribunals to hold their proceedings expeditiously and to submit their awards as soon as it is practicable on the conclusion of the proceedings to the appropriate government.
Thus time is usually of essential importance in industrial adjudications and so the Act imposes an obligation on the industrial tribunals to deal with their proceedings as expeditiously as possible.
If the appropriate government has by implication the power to cancel its order passed under section 10(1), the proceedings before the industrial tribunal would be rendered wholly ineffective by the exercise of such power.
Apart from these provisions of the Act, on general principles it seems rather difficult to accept the argument that the appropriate government should have an implied power to cancel its own order made under section 10(1).
If on the representation made by the employer or his workmen the appropriate government considers the matter fully and reaches the conclusion that an 1205 industrial dispute exists or is apprehended and then makes the reference under section 10(1), there appears to be no reason or principle to support the contention that it has an implied power to cancel its order and put an end to the reference proceedings initiated by itself In dealing with this question it is important to bear in mind that power to cancel its order made under section 10(1), which the appellant claims, is an absolute power; it is not as if the power to cancel implies the obligation to make another reference in respect of the dispute in question ; it is not as if the exercise of the power is subject to the condition that reasons for cancellation of the order should be set out.
If the power claimed by the appellant is conceded to the appropriate government it would be open to the appropriate government to terminate the proceedings before the tribunal at any stage and not to refer the industrial dispute to any other industrial tribunal at all.
The discretion given to the appropriate government under section 10(1) in the matter of referring industrial disputes to industrial tribunals is very wide; but it seems the power to cancel which is claimed is wider still; and it is claimed by implication on the strength of section 21 of the .
We have no hesitation in holding that the rule of construction enunciated by section 21 of the in so far as it refers to the power of rescinding or cancelling the original order cannot be invoked in respect of the provisions of section 10(1) of the .
It would now be necessary to refer to the decisions to which our attention was invited in the course of arguments.
For the appellant Dr. Bannerjee has strongly relied on the decision of this court in Minerva Mills Ltd. vs Their Workmen (1).
He contends that Mahajan J. who delivered the judgment of the court, has expressly observed in his judgment that from the relevant provisions of the Act "It could not be held that it was implicit in section 7 that the government could not withdraw a dispute referred to a tribunal or make the appointment of a tribunal for a limited period of time.
" The argument is that this observation shows that the government can withdraw a pending reference from one tribunal and refer it to another tribunal, and, (1) ; 1206 according to the appellant, that is exactly what has been done by it in the present case.
In the case of Minerva Mills Ltd. (1), however, the question about the implied power of the appropriate government to cancel its order made under section 10 did not arise for consideration.
The point which was raised by the appellant was that the government had no power to appoint a tribunal for a limited duration ; and the argument was that if industrial disputes are referred to a tribunal, all the said disputes must be determined by the said tribunal and not by any other tribunal, notwithstanding that the appointment of the original tribunal was for a limited duration.
The first tribunal in the said case had been appointed on June 15, 1952, and some industrial disputes had been referred to it.
The tribunal was appointed for one year.
During its tenure the tribunal disposed of some of the disputes referred to it, but four disputes still remained undisposed of.
For disposing of these references, a second tribunal was appointed on June 27, 1952.
The validity of the constitution of the second tribunal was impugned by the appellant and it was urged that it is the first tribunal alone which can and must try the remaining disputes.
This argument was rejected by this court, and it was held that it was perfectly competent to the appropriate government to appoint a tribunal for a limited duration.
It would be noticed that in this case there was no question of cancelling an order made under section 10(1).
The said order remained in force, and the only step which the government took was to make an order constituting a fresh tribunal to dispose of the references which had not been adjudicated upon by the first tribunal.
It was on these facts that this court took the view that it was competent to the government to refer the said remaining disputes for adjudication to the second tribunal.
Strictly speaking there was no occasion to withdraw any dispute from the first tribunal; the first tribunal had ceased to exist; and so there was no tribunal which could deal with the remaining disputes already referred under section 10(1).
That is why the government purported to appoint a second tribunal to deal with the said dispute.
In our opinion, the decision in the Minerva Mills Ltd. (1) cannot be (1) ; 1207 cited in support of the proposition that the appellant has power to cancel the order of reference made by it under section 10(1).
The decision of this court in Strawboard Manufacturing Co. Ltd. vs Gutta Mill Workers ' Union (1), is then cited in support of the proposition that the appellant has implied power to cancel its order made, under section 10(1).
In this case, the government of the State of Uttar Pradesh had referred an industrial dispute to the Labour Commissioner on February 18, 1950, and had directed the Commissioner to make his award not later than April 5, 1950.
While the proceedings were pending before the Commissioner, two additional issues were referred to him.
Ultimately, the award was made on April 13, and it was sought to be validated by the issue of a notification by the Governor of Uttar Pradesh on April 26, by which the time for making the award was retrospectively extended up to April 30, 1950.
This court held that the notification retrospectively extending the period to make the award was invalid.
Since the award had been made beyond the period prescribed by the original notification, it was void.
It is, however, argued that in dealing with the (question of the validity of the award it was observed by Das J. (as he then was), " In the circumstances, if the State Government took the view that the addition of those two issues would render the time specified in the original order inadequate for the purpose it should have cancelled the previous notification and issued a fresh notification referring all the issues to the adjudicator and specifying a fresh period of time within which he was to make his award.
The State Government did not adopt that course." As we read the judgment, we are not inclined to accept the appellant 's assumption that the passage just cited expresses the view accepted by this court.
Read in its context the said passage appears to state the argument urged by Dr. Tek Chand on behalf of the appellant.
The appellant appears to have urged in substance that if the State Government thought that the addition of new issues referred to the Commissioner by subsequent notification made it difficult for him to submit his award (1) ; 1208 within the specified time, the local government should have cancelled the original reference, made a fresh comprehensive reference and given him requisite time for making his award.
Since that was not done, the position could not be rectified by the issue of the impugned notification retrospectively extending the time originally fixed.
It is in connexion with this argument that the statement on which reliance is placed was apparently made by the learned counsel for the appellant.
If that be the true position, no argument can be based on these observations.
It is conceded that the question about the power of the appropriate government to cancel an order of reference made under section 10(1) did not arise for discussion or decision in this case.
The third decision to which reference has been made in support of the appellant 's case is the decision of Bishan Narain J. in The Textile Workers ' Union, Amritsar vs The State of Punjab and others (1).
Bishan Narain J. appears to have taken the view that the power to cancel an order of reference made under section 10(1) can be implied by invoking section 21 of the , because he thought that by the exercise of such a power, the appropriate government may be able to achieve the object of preserving industrial peace and harmony.
The judgment shows that the learned judge was conscious of the fact that " this conclusion may have the effect of weakening a trade union 's power of negotiation and may encourage the individual firms to deal directly with its (their) own workmen but it is a matter of policy with which I have nothing to do in these proceedings.
" In dealing with the present question, we would not be concerned with any questions of policy.
Nevertheless, it may be pertinent to state that on the conclusion which we have reached in the present case there would be no scope for entertaining the apprehensions mentioned by the learned judge.
As we have already indicated, the scheme of the Act plainly appears to be to leave the conduct and final decision of the industrial dispute to the industrial tribunal once an order of reference is made under section 10(1) by the appropriate government.
We must accordingly hold that Bishan Narain J. was (1) A.I.R. 1957 Pun.
1209 in error in taking the view that the appropriate government has power to cancel its own order made under section 10(1) of the Act.
The decision of the Kerala High Court in Iyyappen Mills (Private) Ltd., Trichur vs State of Travancore Cochin (1), is not of much assistance because in this case the learned judges appear to have taken the view that the first tribunal before which the industrial dispute was pending had ceased to exist at the material time when the dispute was referred by the local government for adjudication to the second tribunal.
If that be the true position, the conclusion of the learned judges would be supported by the decision of this court in Minerva Mills Ltd. (2).
Then, in regard to the observations made by Sinha J. in Harendranath Bose vs Second Industrial Tribunal (3), it is clear that the learned judge was in error in seeking to support his view that the appropriate government can cancel its order made under section 10(1) by the observations found in the judgment of this court in Strawboard Manufacturing Co. Ltd. (4).
We have already stated that the said observations are really a part of the arguments urged by the appellant before this court in that case and are not obiter observations made by the learned judge.
The last case to which reference must be made is the decision of Rajamannar C. J. and Venkatarama Aiyar J. in South India Estate Labour Relations Organisation vs The State of Madras (5).
In this case the Madras Government had purported to amend the reference made by it under section 10 of the Act and the validity of this amendment was challenged before the court.
This objection was repelled oil the ground that it would be open to the government to make an independent reference concerning any matter not covered by the previous reference.
That it, took the form of an amendment to the existing reference and not an additional reference is a mere technicality which does not merit any interference in the writ proceedings.
The objection was one of form and was without substance.
It would thus appear that the question before (1) (2) ; (3) (4) ; (5) 1210 the court was whether the appropriate government can amend the reference originally made under section 10 so far as the new matters not covered by the original reference are concerned, and the court held that what the appropriate government could have achieved by making an independent reference, it sought to do by amending the original reference itself.
This decision would not assist the appellant because in the present case we are not considering the power of the govern ment to amend, or add to, a reference made under section 10(1).
Our present decision is confined to the narrow question as to whether an order of reference made by the appropriate government under section 10(1) can be subsequently cancelled or superseded by it.
We must, therefore, confirm the finding made by the learned judges of the High Court at Patna, that the notification issued by the appellant cancelling the first two notifications is invalid and ultra vires.
That takes us to the question as to the form in which the final order should be passed in the present appeals.
The High Court has purported to issue a writ of certiorari against the State Government quashing the impugned notification.
It has, however, been held by this court in The State of Madras vs C. P. Sarathy (1) that in making a reference under section 10(1) tile appropriate government is doing an administrative Act and the fact that it has to form an opinion as to the factual existence of an industrial dispute as a preliminary step to the discharge of its function does not make it any the less administrative in character.
That being so, we think it would be more appropriate to issue a writ of mandamus against the appellant in respect of the impugned notification.
We would also like to add that since the first two industrial disputes referred by the appellant under the first two notifications have remained pending before the tribunal for a fairly long time, it is desirable that the tribunal should take up these references on its file and dispose of them as expeditiously as possible.
In the result, the appeals fail and must be dismissed with costs.
Appeals dismissed.
| Section 10(1) of the , does not confer on the appropriate Government the power to cancel or supersede a reference made thereunder in respect of an industrial dispute pending adjudication by the tribunal constituted for that purpose.
Nor can section 21 of the , vest such a power by necessary implication.
It is well settled that the rule of construction embodied in section 21 of the can apply to the provisions of a statute only where the subject matter, context and effect of such provisions are in no way inconsistent with such application.
So judged it is clear that that section cannot apply to section 10(1) of the .
Minerva Mills Ltd. vs Their Workmen, ; , held inapplicable.
1192 Strawboard Manufacturing Co. Ltd. vs Gutta Mill Workers ' Union, ; , explained.
The Textile Workers ' Union, Amritsar vs The State of Punjab and others, A. I. R. 1957 pun.
255 and Hayendranath Bose vs Second Industrial Tribunal, , overruled.
South Indian Estate Labour Relations Organisation vs The State of Madras, , distinguished.
Consequently, where the appropriate Government by two notifications, issued one after the other, referred two industrial disputes between two batches of workmen and their employer for adjudication to the industrial tribunal constituted for that purpose and, thereafter, by a third notification superseded the two earlier notifications and the High Court, on the applications of both the workmen and the employer under articles 226 and 227 of the Constitution, issued a writ of certiorari quashing that notification and by a writ of mandamus required the tribunal to proceed expeditiously with the two references and the State Government appealed: Held, that the impugned notification was invalid and ultra vires 'and the finding of the High Court must be affirmed.
Held, further, that since a reference under section 10(1) of the was in the nature of an administrative act, the more appropriate writ to issue would be one of mandamus and not one in the nature of certiorari.
The State of Madras vs C. P. Sarathy, , referred to.
|
Summarize this legal judgement text concisely | minal Appeal No. 77 of 1958.
Appeal by special leave from the judgment and order dated February 26, 1958, of the Punjab High Court in Criminal Appeal No. 860 of 1957, arising out 155 1220 of the judgment and order dated December 23, 1957, of the Additional Sessions Judge at Ambala in Sessions No. 20 of 1957 and Trial No. 32 of 1957.
Harnam Singh and Sadhu Singh, for the appellant.
Har Parshad and T. M. Sen, for the respondent.
September 2.
The Judgment of the Court was delivered by IMAM J.
The appellant and one Prem were tried for the murder of Nirmala Devi, wife of Banwari Lal, a Practising lawyer at Rupar.
The appellant was sentenced to death while Prem was sentenced to imprisonment for life.
The appellant and Prem appealed against their conviction and sentence to the High Court of Punjab.
Their appeals were dismissed and their conviction and sentence were affirmed by the High Court.
The appellant obtained from this Court special leave to appeal and in the present appeal the only question for consideration is whether the appellant was rightly convicted and sentenced for the murder of Nirmala Devi.
The case of Prem is not before us.
At Rupar, Banwari Lal practised as a lawyer.
His wife, the deceased Nirmala Devi lived with him there with their child, eight months old.
With them also lived Banwari Lal 's sister Vina, a girl of about 16 to 17 years of age.
Banwari Lal had employed Prem as a servant about four months before the murder of Nirmala Devi on February 12, 1957.
This Prem was a youngster of about fourteen years of age at that time.
According to the prosecution, lie was an associate of the appellant who was posted at Rupar in the capacity of a foot constable in the police force.
The appellant and Prem became friendly and it is said that the appellant had an eye on the ornaments of the deceased Nirmala Devi, which she was in the habit of wearing when she went out.
The deceased was a young person in her twenties and of good character.
She used to be left alone in the house with her child, when Banwari Lal went to court and Vina went to school.
Prem, however, used to remain at the house.
It is the case of the prosecution that the appellant in 1221 conspiracy with Prem took advantage of the deceased being alone in the house, when the appellant went upstairs and killed Nirmala Devi and stole her ornaments, while Prem remained down stairs with her child.
Vina had returned from school round about, 12 30 in the afternoon as it was the recess time.
At that time Nirmala Devi was in the drawing room feeding her child.
Prem was also at the house at that time.
Vina again returned to the house at about 3 45 p.m.
She enquired from Prem as to where Nirmala Devi was and was told by him that he did not know as he himself had been absent from the house.
Vina, thereafter, went upstairs to the kitchen to take her food.
Banwari Lal had returned from court at about 3 15 p.m., earlier than usual, as he had to attend an election meeting at the Municipal Office.
He was accompanied by a pleader Sudarshan Kumar Jain who was going to Chandigarh.
He had intended to give him a cup of tea, but finding the door leading through the staircase to the residential portion looked and thinking that his wife was not at home, lie and his friend left for the Municipal Hall.
Banwari Lal returned to his house at about 4 45 p.m.
He enquired from Prem as to where his wife was and was informed by him that she had gone out.
He went upstairs and saw his sister Vina eating her food.
On opening the drawing room, however, Banwari Lal was stunned to find his wife lying dead on the floor in a pool of blood.
lie noticed several injuries on her and that some of her jewellery was missing.
He proceeded to the police station almost opposite to his house and lodged a First Information Report about the murder at 5 p.m.
There can be no manner of doubt that an audacious and a brutal murder of a young and a defenceless person had taken place with the intention of robbing her of her ornaments.
The fact of murder has been apply proved and has not been seriously questioned.
The only matter for consideration is Whether the evidence established that the deceased Nirmala Devi was murdered by the appellant with the assistance of Prem.
The evidence upon which the prosecution relied for 1222 conviction is the confession of Prem, the statement of the appellant which led to the recovery of the ornaments belonging to Nirmala Devi from the possession of one Raj Rani a mistress of the appellant, the recovery of a blood stained dagger from his belongings at the police station and his conduct after the murder.
So far as the confession of Prem was concerned, it was retracted by him in the Court of Session.
Prem 's statement under section 342 to the Committing Magistrate, however, which had been brought on to the record under section 287 of the Code of Criminal Procedure, clearly stated that the confession was a voluntary one.
Indeed, his statement to the Committing Magistrate showed that the crime was committed by the appellant and that Prem had assisted him in the commission of that crime.
Although in the Court of Session Prem had retracted his confession, his memorandum of appeal in the High Court would indirectly suggest that the con fession made by him was voluntary and true.
Before we consider whether the confession was a voluntary and a true one, it is necessary to deal with the submission on behalf of the appellant that the confession, having been retracted by Prem, is irrelevant so far as the appellant is concerned as the retracted confession of an accused cannot be used against his co accused.
Although on behalf of the appellant it had not been argued that the retracted confession of Prem was inadmissible, we regard the submission that it was irrelevant and cannot be used against the appellant as tantamount to saying the same thing.
Section 30 of the Indian Evidence Act states: " When more persons than one are being tried jointly for the same offence, and a confession made by one of such persons affecting himself and some other of such persons is proved, the Court may take into consideration such confession as against such other person as well as against the person who makes such confession.
" It will be clear from the terms of this section that where more persons than one are being tried jointly for the same offence, a confession made by any one of them affecting himself and any one of his co accused 1223 can be taken into consideration by the court not only against the maker of the confession but also against his co accused.
The Evidence Act nowhere provides that if the confession is retracted, it cannot be taken into consideration against the co accused or the confessing accused.
Accordingly, the provisions of the Evidence Act do not prevent the Court from taking into consideration a retracted confession against the confessing accused and his co accused.
Not a single decision of any of the courts in India was placed before us to show that a retracted confession was not admissible in evidence or that it was irrelevant as against a co accused.
An examination of the reported decisions of the various High Courts in India indicates that the preponderance of opinion is in favour of the view that although it may be taken into consideration against a co accused by virtue of the provisions of section 30 of the Indian Evidence Act, its value was extremely weak and there could be no conviction with out the fullest and strongest corroboration on material particulars.
The corroboration in the full sense implies corroboration not only as to the factum of the crime but also as to the connection of the (co accused with that crime.
In our opinion, there appears to be considerable justification for this view.
The amount of credibility to be attached to a retracted confession, however, would depend upon the circumstances of each particular case.
Although a retracted confession is admissible against a co accused by virtue of section 30 of the Indian Evidence Act, as a matter of prudence and practice a court would not ordinarily act upon it to convict a co accused without corroboration.
On this basis it is now to be seen whether the confession was voluntary and true.
It will then be necessary to consider whether the confession has received full and strong corroboration in material particulars both as to the crime and the appellant 's connection with that crime.
It was strongly urged that the police had adopted a device to get the accused Prem into their custody again on a charge of theft as lie had already been placed in the judicial lock up after his arrest in 1224 connection with the murder of the deceased Nirmala Devi.
He was arrested on June 25, 1957, in connection with a burglary which had taken place on December 5, 1956, and he had been since then in police custody in connection with the investigation of that case until July 10, 1957, the last day of remand to police custody.
On July 10, 1957, Prem made a confession before a Magistrate concerning the murder of Nirmala Devi.
Prem was discharged in the burglary case on July 20, 1957.
Having adopted this device of getting Prem into police custody the police were in a position to exercise great influence upon Prem, a, young ' lad of about 14 years of age.
When lie made his confession on July 10, 1957, he must have been still labouring under the influence of the police and sufficient time was not given by the Magistrate to remove that influence.
The Magistrate ought not to have recorded his confession on July 10, 1957.
He ought to have remanded Prem to jail custody for a few days in order that the police influence may be removed from his mind.
We have examined the record and find no justification for the suggestion made that the police adopted a device to got the accused Prem in to their custody again by arresting him in the burglary case of December 5, 1956.
It is true that the accused Prem was discharged from the burglary case on July 20, 1957, but there is nothing on the present record to suggest that his arrest in the burglary case of December 5, 1956, was without justification and that it was done purely for the purpose of getting him back into police custody.
It is true that Prem had been in police custody from June 25, 1957 to July 10, 1957, and the Magistrate might as well have refrained from recording his confession on July 10, 1957.
It is clear, however, from the record of the Magistrate that at 1 p.m. the accused Prem was produced before him by the police for the recording of his confession.
The Magistrate told him that lie was not a police officer but a Magistrate and that he was at liberty to think over the matter whether he would volunteer to make a confession and gave him time, until 2 p.m. for this purpose.
He further explained to Prem that he should 1225 consider himself quite free and not make a statement under the influence or temptation of anybody.
At 2 p.m. the Magistrate took various precautions.
All the doors and the windows of his room were closed.
Everyone, except Prem, was turned out.
The police were asked to stand in the verandah from where they could not see Prem.
Prem was again told that he must regard himself as quite free and should not be under the influence of the police or anybody else.
The Magistrate then put a series of questions which have been recorded in the form of questions and answers.
By question 7, the Magistrate enquired how long Prem had been in police custody and from where he bad been brought that day, to which, the answer was that some 5 months back he had been arrested since then sometimes he had been sent to jail and sometimes had been kept in police custody.
By question 8, the Magistrate asked whether he was kept awake during that period or had been given greased diet (Mnaggan giza, etc.), which we understand to mean whether he had been given greasy food which would induce a sleepy condition in persons eating such food, to which question he replied that he had enjoyed regular sleep and had been taking common diet.
At the beginning, of course, the police had kept him awake.
The Magistrate also enquired whether the police or any other person had made any promise or had given any undertaking to help Prem or had given all temptation to him or had influenced or frightened him.
If so, he should state this fully from his heart, to which Prem replied that he had not been given any promise, temptation or inducement, nor was he subjected to fear or exhortation.
He had been merely asked to make a true statement.
Prem then said that he would make his statement of his own free will and the Magistrate could believe him or not.
The Magistrate also asked Prem whether any one had beaten him or if there was any mark of injury on his body, to which, the answer was 'no '.
The Magistrate then examined the body of Prem and found that there was no mark of injury on his person.
The Magistrate then asked as to why he was making a confession, to which, Prem answered 1226 that he was doing so of his own free will and to lessen the burden of his heart.
The nature of the questions put and the manner in which the Magistrate examined Prem clearly showed that the Magistrate took every precaution to be satisfied whether Prem was going to make a voluntary statement.
We are satisfied that during the period of police custody between the 25th of June and July 10, 1957, Prem was not induced to make a confession.
He made the confession voluntarily.
That the confession was voluntary finds support from Prem 's statement to the Committing Magistrate under section 342 of the Code of ' Criminal Procedure.
In that statement Prem told the Magistrate in answer to various questions the following story: He had been employed as a domestic servant by the lawyer Banwari Lal.
He had developed during this period friendship with the appellant.
The appellant had told him that he would commit rape on Nirmala Devi and would rob her of her ornaments and, if she resisted, he would murder her.
He informed the appellant on February 11, 1957, that Nirmala Devi would be alone in her house at about mid day on February 12, 1957.
He had received on February 11, 1957, a dagger wrapped in a pajama from the appellant and bad kept it in the store behind the office of Banwari Lal On February 12, 1957, he informed the appellant that Nirmala Devi was alone in the house.
He had handed over the dagger and the pajama to the appellant on February 12, after taking it out of the store room.
The appellant had sought his assistance in the commission of rape, robbery and murder of Nirmala Devi and he had been promised a half share in the booty.
To the question whether he had kept watch over the house of Banwari Lal when the appellant entered it for committing rape, robbery and murder of Nirmala Devi, Prem answered that he was made to stand near the stair case by the appellant and that he kept watch while the appellant committed the crime.
He finally admitted to the Committing Magistrate that the confession which had been recorded on July 10, 1957, was a voluntary confession.
When asked whether he had to say anything else, Prem told the Committing 1227 Magistrate that he had made a true statement before him and also in the Court of the Magistrate who had recorded his confession.
Shorn of details the substance of the story told by Prem to the Committing Magistrate is in keeping with the substance of his confession recorded on July 10, 1957.
It is to be further remembered that the statement of Prem to the Committing Magistrate was brought on to the record of the Court of Session under section 287 of the Code of Criminal Procedure which directs that the statement should be read as evidence.
Although Prem retracted the confession in the Court of Session, his memorandum of appeal filed in the High Court showed that he had acted under the influence of the appellant and had been allured by him to achieve his object.
He, however, pleaded that be should not have received such severe punishment.
On the contrary, lie should have been acquitted.
These circumstances clearly indicate that the confession recorded on July 10, 1957, was a voluntary confession.
It remains now to be seen whether it was a truthful confession.
Prem asserted in his confession that he had acquaintance with the appellant previous to the appellant 's posting to Rupar and their association continued at Rupar.
There is nothing inherently improbable in this story of Prem.
It is true that there is not much evidence to corroborate Prem.
that lie and the appellant were acquainted and used to associate.
Banwari Lal had seen them talking to each other once or twice before the murder.
The police station at which the appellant was posted was almost opposite to the house of Banwari Lal where Prem was employed as a servant and there was every probability of the appellant and Prem meeting.
It is significant that on the day of murder of Nirmala Devi, in the afternoon, Prem was present in the compound of the police station with a child in a perambulator.
Foot constable Gurbachan Singh, P.W. 4, enquired from Prem as to why he had gone inside the police station.
On this the appellant asked Gurbachan Singh not to remonstrate with Prem as he was a mere, boy.
Gurbachan 156 1228 Singh had stated that previously he had never seen Prem going inside the police station with a perambulater.
The intervention of the appellant suggests that he knew Prem and was friendly towards him.
Prem 's story that he was employed as a servant by Banwari Lal is corroborated by the evidence of Banwari Lal himself, his sister Vina and his clerk Naranjan Das.
In the nature of things there could be no corroboration of Prem 's story about the appellant 's proposal to rape and rob Nirmala Devi and, if necessary, to murder her.
According to Prem 's confession a day before the murder he had been given a dagger by the appellant along with a _pajama and that Prem took the pajama and the dagger to the upper storey of Banwari Lal 's house having concealed it in the kothri of firewood which was near the office room of Banwari Lal.
This part of his story receives corroboration from the evidence of Banwari Lal that after the murder he had found a blood stained pajama, Exbt.
P. 14, banging on the door of the store room which is at the back of the residential portion of the house.
Banwari Lal is supported by Nand Lal, P.W. 34, Motor Mobile Patrol Sub Inspector, who recorded the First Information of Banwari Lal.
According to him, he found the pajama hanging on one of the shutters of an almirah fixed in the wall in the fuel room situate at the back of the room where Nirmala Devi was found lying dead.
It was bloodstained.
Banwari Lal had clearly stated that this pajama did not belong to him or any one in his house.
The existence of the pajama in Banwari Lal 's house lends corroboration to the story of Prem that he had been given this pajama and that he had concealed it in the kothri of fire wood near the office of Banwari Lal.
The statement of Prem that he had asked Raj sabziwala to bring down the perambulator of the child and that he did so, finds corroboration from the evidence of Gurbachan Singh that in the afternoon he found Prem accused in the police station with a child in a perambulator.
The presence of the accused Prem at Banwari Lal 's house near about the time of the murder appears to 1229 be clear.
When Vina had left for her school at 9 45 a.m., Prem was in the house.
Vina returned to the house from her school at about 12 30 noon.
At that time Prem was present in the verandah in front of the office.
When she finally returned from the school at about 3 45 p.m., apparently Prem was not in the house but arrived shortly thereafter.
The murder was committed at any time between 12 30 p.m. and 2 15 p.m. if the appellant was the murderer, because Gurbachan Singh 's evidence showed that the appellant was at the thana at 2 15 p.m.
Apparently, the appellant went out with Gurbachan Singh and returned to the thana with him in time for Gurbachan Singh to be on duty from 3 p.m.
If the appellant was the murderer he must have committed the murder before 2 15 p.m. Nirmala Devi was alive at 12 30 p.m. when Vina saw her feeding her child.
Assuming that Vina did not stay long, as she had come to get some money to purchase a copy book, it would not be unreasonable to assume that Nirmala Devi was alive up to 12 40 or 12 45 p.m.
The interval of time between that and 2 15 p.m., when the appellant was seen at the police station, is about 1 1/2 hours.
It would be probable that during this time Prem was present in the house and when he says that lie was present there there is no inherent improbability in his statement.
At 3 45 p.m., when Vina arrived, no doubt Prem was not in the house, but he came shortly thereafter and Vina took from him the child of Nirmala Devi.
This clearly shows that Prem had gone out of the house with the child of Nirmala Devi which one would not normally expect him to do at that time of the day, if Nirmala Devi had left the house to do shopping or to visit anyone.
If Nirmala Devi was in the house and alive it was most unlikely that Prem accused would have taken her child out of the house.
Prem 's statement that he was amusing the child while the appellant was doing his nefarious work appears to be true, because the child was with him and he had been seen at the police station with a child in a perambulator.
If the circumstances tend to show that in all probability Prem was in the house from 12 30 p.m. to 2 15 p.m. then his 1230 story that he was present at the house when the appellant came there appears to be a truthful statement.
It is significant that when Vina arrived at the house at 3 45 p.m. she found the door of the stair case locked.
When Prem arrived she saw the key in his hand, although Prem had said it was lying on the floor.
He opened the lock of the door of the stair case with that key and Vinia went upstairs to the second floor where she went to the kitchen and took her food.
When Banwari Lal arrived at his house at about 3 15 p.m. he found his office room locked from outside.
He wanted to go to the residential portion for taking tea, but found the door of the stair case locked from outside.
Finding the door of the stair case leading to the residential portion of his house locked, he came down and went away in connection with the election work.
On his return he enquired from Prem about the whereabouts of his wife and Prem told him that she had gone out.
He wished to go upstairs to the residential portion of the house and Prem at his request opened the lock of the stair case, the key being with him.
According to Banwari Lal, the usual practice was to lock the door of the office which adjoins the stair case and to bolt the other door from inside, but on the day of the murder the door adjoining the stair case was looked while the other door was lying open.
Banwari Lal 's clerk, Naranjan Das, came to the house at 4 15 or 4 30 p.m.
He went up to the verandah in front of the office and found both the doors of the office locked from outside.
He asked Prem to open the office, but Prem told him that the key of one of the locks which was fixed on the door adjoining the stair case, had been lost.
He gave the key of the other lock and then Prem took out a key from his pocket and opened the lock fixed on the other door of the office.
There is no reason to distrust all this evidence which would indicate that after Vina had left the house on her first visit at about 12 30 p.m. the two doors were locked from outside which was something unusual and that the keys of the looks of these doors were with Prem.
He had given evasive answers about the keys to Vinia and Naranjan Das 1231 while the key was in his pocket.
These circumstances also indicate the truthfulness of Prem 's statement that he was present in the house during the period in which Nirmala Devi was murdered.
His statement in the confession that the appellant had locked the door and had thrown the key in tile office verandah and that while he sat there, the child, while playing, picked up the key and that he said to the girl (presumably Vina) there was the key and then he un locked the door appears to be true.
Reference in some detail to the various statements of Prem in the confession and the circumstances proved by the evidence of various witnesses became necessary in order to ascertain whether Prem had made a truthful statement about his presence at the house during the period in which Nirmala Devi was murdered and also as to the part he had played in assisting the appellant to commit the murder.
While it is true that in the confession Prem does not attribute to himself any participation in the murder itself, it is not to be for gotten that the murder of Nirmala Devi could not have taken place without his aid.
Whoever entered the house of Banwari Lal in broad day light could not have gone upstairs without the knowledge and cooperation of Prem.
According to his statement lie knew what was the intention of the appellant and to assist him in the accomplishment of his purpose he had concealed in his master 's house the pajama and the dagger given to him by the appellant.
If he did not actually participate in the murder he would be equally guilty of the murder if that murder was committed with his aid and his connivance.
The confession, as a whole, concerning the murder of the deceased appears to us to be true and we have no hesitation, after a very careful consideration of all the circumstances appearing in the case, in saying so.
In our opinion, Prem 's confession was not only voluntary and true but it had been corroborated in material particulars regarding the general story told by him in his confession.
The other question which now remains for consideration is whether the confession received material corroboration connecting the appellant with the murder of Nirmala Devi.
1232 Amongst the appellant 's possessions a dagger was recovered which appeared to be blood stained but owing to the long delay in sending it to the Chemical Examiner its origin could not be determined.
From the medical evidence it appears that the dagger in question could have inflicted the kind of injuries suffered by Nirmala Devi.
The most important corroboration, however, is the recovery of the ornaments of the deceased.
These ornaments, according to Banwari Lal, she had been wearing on the day of the murder when he left for court.
On some statement made by the appellant his mistress Raj Rani was visited by the authorities and in the presence of respectable witnesses some ornaments were recovered and they were identified as the ornaments of the deceased.
The evidence of Raj Rani also showed that these ornaments were given to her by the appellant.
She apparently had no reason to depose against the appellant, because she had said in her evidence that she wished to meet the appellant before giving clue to the ornaments and that she wished to give the ornaments to the police in his presence.
The defence case was not that these ornaments did not belong to the deceased but that, on the contrary, they were hers but had been produced by Banwari Lal during the police investigation and that it was falsely alleged that they had been recovered from Raj Rani.
The evidence of Charan Dass, P. W. 24, President of the Municipal Committee of Rupar, however, clearly shows that in his presence the appellant made a statement to the police to the effect that one gold kara and seven gold bangles had been given by him to Raj Rani.
This statement was made on August 3, 1957.
His evidence also shows that on August 9, 1957, he accompanied the police party from Rupar to Jangpura and that Raj Rani took them to her sister 's house.
She brought out a trunk from inside the room.
She opened the lock of the trunk and produced from it a tin box which contained a gold kara and seven gold bangles.
The evidence of GoriShanker, a Municipal Commissioner of Rupar is to the same effect and corroborated Charan Dass.
The courts below believed these two witnesses.
We have examined 1233 their evidence with some care in view of the submission on behalf of the appellant that they should not be relied upon.
There is nothing in their evidence to show that they were in any way hostile to the appellant or had any motive to depose against him.
The courts below having believed these witnesses, we would not ordinarily go behind their view on a question of fact.
Having regard, however, to the con sequences which arise as a result of the acceptance of their evidence in this particular case, we have examined their evidence in the light of the submission made on behalf of the appellant.
It was suggested that at the earlier stage the police investigation was not properly conducted and the public were dissatisfied.
A deputation of influential persons met the Chief Minister as a result of which a more active and thorough investigation took place.
It may be that influential persons of Rupar interviewed the Chief Minister, being dissatisfied with the manner in which the investigation was taking place.
There is, however, nothing to show that Charan Dass or Gori Shanker were amongst those who had interviewed the Chief Minister or that they had taken part in any agitation against the police concerning the manner of the investigation.
It is difficult to believe that two responsible persons such as the President of the Municipal Committee and one of its members would go out of their way to depose to certain events which would provide very strong evidence against the appellant and lead to his conviction on a capital charge, unless they had really heard the statement of the appellant and witnessed the recovery as deposed to by them.
It was then suggested that, apparently, Charan Dass had no real reason to go to the police station on August 3, 1957, and, therefore, his story that he heard the appellant make the statement which led to the recovery of the ornaments was false.
Charan Dass, however, had stated the reason for his visiting the police station.
He went there to complain to the police that people parked their push carts in the bazar and thus obstructed the passage.
In our opinion, as the President of the Municipal Committee of Rupar, if a nuisance was 1234 being created by people parking their push carts in the bazar, it was a natural thing for him to go to the police station in order to get such obstruction removed and for the police to see that the nuisance did not continue.
We can find nothing strange in the conduct of Charan Dass or Gori Shanker in having gone to the police station in the circumstances deposed to by them.
We have no hesitation in believing the evidence of Charan Dass and Gori Shanker that the appellant made a statement to the effect that he had given one gold kara and seven gold bangles to Raj Rani and that the same were recovered from Raj Rani in their presence.
It would appear, therefore, on the evidence of Raj Rani and these witnesses, that not long after the murder of Nirmala Devi the appellant was in possession of her ornaments and that he had given them to Raj Rani.
The ornaments being in possession of the appellant soon after the murder would show that he either stole the ornaments or was in possession of them knowing or having reason to believe that they were stolen properties.
Nirmala Devi had been murdered by someone who had stolen her ornaments.
According to the confession of Prem it was the appellant who had gone up stairs where Nirmala Devi was Sometime after the departure of Vina.
He had given the appellant the pajama and the dagger.
Thereafter, the appellant left the house leaving the pajama behind.
After the departure of the appellant no outsider entered the house.
It is clear, therefore, that in order to steal the ornaments the thief killed Nirmala Devi.
The circumstances clearly indicate that the thief was no other than the appellant.
It seems to us, therefore, that the confession of Prem receives strong and substantial corroboration connecting the appellant with the crime of the murder of the deceased Nirmala Devi.
The conduct of the appellant from 2 15 p.m. onwards clearly shows that he was in a disturbed state of mind which is consistent with his having committed the crime, It is curious that lie was uttering the word I Nirmala.
It had been suggested to Gurbachan Singh that the Assistant Sub Inspector Rikhi Ram had a 1235 daughter with whom the appellant had illicit connection and that her name was Nirmala, but the witness stated that he had no knowledge about it.
The appellant in his statement under section 342 of the Code of Criminal Procedure before the Sessions Judge admitted that he was shouting out the name of Nirmala but he had a love affair with a girl named Nirmala, daughter of Rikhi Ram.
We are not prepared to accept the explanation of the appellant as to how he was calling out the name of Nirmala so soon after the murder of Nirmala Devi.
This conduct of the appellant may not by itself have been corroboration of sufficient importance to enable a court to convict the appellant on the retracted confession of Prem.
No stronger and no better corroboration, however, of the confession of Prem could be had than the evidence which showed that the appellant had been in possession of Nirmala Devi 's ornaments soon after her murder.
There were several comments made on the evidence by the learned Advocate for the appellant, but those comments were with reference to unimportant matters and were not at all relevant.
In an appeal by special leave it is not ordinarily permissible to make submissions on questions of fact.
The principal matter with which we have been concerned in this appeal was whether the confession of Prem had been corroborated in material particulars regarding the general story told by him and in material particulars tending to connect the appellant with the murder of the deceased.
We have no hesitation in saying that the confession of Prem has been amply corroborated in both respects.
Recovery of the ornaments of the deceased at the instance of the appellant incriminated him to the fullest extent and lent the strongest corroboration to the con fession of Prem from which it was apparent that no other person than the appellant could have murdered Nirmala Devi.
The appeal is accordingly dismissed.
Appeal dismissed.
| The appellant was tried along with P for the offence of murder.
The prosecution case was that the appellant, in conspiracy with P who was employed as a servant in the house of the deceased, took advantage of the deceased being alone in the house with her child, went upstairs and killed her and stole her ornaments, while P remained downstairs with the child.
The evidence upon which the prosecution relied for conviction consisted of the confession of P, the statement of the appellant which led to the recovery of the ornaments belonging to the deceased from the possession of the mistress of the appellant, the recovery of a blood stained dagger from his belongings at the police station and his conduct after the murder.
The confession of P was later retracted by him in the Court of 'Session.
It was contended for the appellant that a retracted confession of an accused cannot be used against his co accused Held, that a voluntary and true confession made by an accused though it was subsequently retracted by him, can be taken into consideration against a co accused by virtue Of section 30 of the Indian Evidence Act, but as a matter of prudence and practice the court should not act upon it to sustain a conviction of the co accused without full and strong corroboration in material particulars both as to the crime and as to his connection with that crime.
The amount of credibility to be attached to a retracted con fession would depend upon the circumstances of each particular case.
Held, further, that on the evidence in the case the confes sion of P was voluntary and true and was strongly corroborated in material particulars both concerning the general story told in the confession concerning the crime and the appellant 's connection with crime.
|
Summarize this legal judgement text concisely | Appeal No. 326 of 1955.
1250 Appeal by special leave from the judgment and decree dated April 10, 1953, of the Madras High Court in Second Appeal No. 1815 of 1949, arising out of the judgment and decree dated January 28, 1949, of the Court of Subordinate Judge, Bapatla, in A. section No. 188 of 1947, against the judgment and decree dated December 23, 1946, of the District Munsif, Ongole, in O. section No. 139 of 1946.
M. C. Setalvad, Attorney General for India and R.Ganapathy Aiyar, for the appellants.
A. V. Viswanatha Sastri, M. R. Rangaswami Aiyangar, T. section Venkataraman and K. R. Choudhury, for the respondents.
September 4.
The Judgment of the Court was delivered by VENKATARAMA AIYAR J.
This appeal arises out of a suit for partition of joint family properties instituted on April 2, 1942, in the Court of the District Munsif, Ongole, on behalf of one Kakumanu Ramanna, a minor of the age of about 2 1/2 years by his material grandfather, Rangayya, as his next friend.
The first defendant is his father.
The second and third defendants are the sons of the first defendant by his deceased first wife.
The fourth defendant is the second wife of the first defendant and the mother of the plaintiff .
The fifth defendant is the daugther of the first defendant by the fourth defendant.
In the plaint, three grounds were put forward as to why the minor plaintiff should have partition: (1) It was said that the mother of the plaintiff was ill treated, and there was neglect to maintain her and her children.
Both the District Munsif and the Subordinate Judge on appeal, held that this had not been established, and no further notice need be taken of it.
(2) It was then said that there had been a sale of the family properties to one Akkul Venkatasubba Reddi for Rs. 2,300, that there was no necessity for that sale, and that its object was only to injure the plaintiff.
That sale is dated May 9, 1939.
(3) Lastly, it was alleged that item 2 had been purchased on June 1, 1938, and item 11 on June 14, 1939, with joint family 1251 funds, but that the sale deeds had been taken in the names of the second and third defendants with a view to diminish the assets available to the plaintiff.
In addition to these allegations, it was also stated in the plaint that the family was in good circumstances, and that there were no debts owing by it.
On June 20, 1942, the defendants filed their written statements, wherein they claimed that the purchase of items 2 and 11 had been made with the separate funds of the second and third defendants, and that the joint family had no title to them.
They further alleged that the family had debts to the extent of Rs. 2,600.
Sometime in January 1943, the minor plaintiff died, and his mother who was the fourth defendant was recorded as his legal representative, and transposed as the second plaintiff.
The suit was in the first instance decreed, but on appeal, the Subordinate Judge remanded the case for trial on certain issues.
At the rehearing, it ",as proved that the first plaintiff was born on December 20, 1939.
On that, the District Munsif held that the sale of the family properties to Akkul Venkatasubba Reddi and the purchase of items 2 and II in the names of the second and third defendants having been anterior to the birth of the minor plaintiff, no cause of action for partition could be founded thereon.
The District Munsif also held on the evidence that the purchase of items 2 and 11 was not shown to have been made with separate funds, and that therefore they belonged to the joint family and further that the family owed no debts and that the allegations contra in the statements were not made out.
But he held, however, that this did not furnish a cause of action for partition.
In the result, he dismissed the suit.
There was an appeal against this judgment to the Court of the Subordinate Judge of Bapatla, who affirmed the findings of the District Munsif that items 2 and 11 belonged to the joint, family, and that there were no debts owing by it.
But he also agreed with him that as the sale and purchases in question were prior to the birth of the minor plaintiff, the suit for 159 1252 partition based thereon was not maintainable.
He accordingly dismissed the appeal.
The second plaintiff took the matter in second appeal to the High Court of Madras, and that was heard by Satyanarayana Rao J. who held that as the defendants had falsely claimed that items 2 and 11 were the separate properties of the second and third defendants, their interest was adverse to that of the minor and that the suit for partition was clearly beneficial to him.
He accordingly granted a preliminary decree for partition.
The present appeal has been brought against it on leave granted by this Court under article 136.
The learned Attorney General who appeared for the appellants advanced two contentions in support of the appeal: (1) that there was a concurrent finding by both the courts below that the suit was not instituted for the benefit of the minor, and that the High Court had no power to reverse it in second appeal; and (2) that, in any event, as the minor plaintiff had died before the suit was heard and before the court could decide whether the institution of the suit was for his benefit, the action abated and could not be continued by his mother as his legal representative.
On the first question, the contention of the appellants is that it is a pure question of fact whether the institution of a suit is for the benefit of a minor or not, and that a finding of the courts below on that question is not liable to be interfered with in second appeal.
But it must be observed that the finding of the Subordinate Judge was only that as the impugned sale and purchases were made before the minor plaintiff was born, no cause of action for partition could be founded by him thereon, and that, in our opinion, is a clear misdirection.
The transactions in question were relied on by the minor plaintiff as showing that the defendants were acting adversely to him, and that it was therefore to his benefit that there should be a partition.
It is no doubt true that as the plaintiff was not born on the date of those transactions, the defendants could not have entered into them with a view to injure him, though even as to this it should be noted that in May and June, 1253 1939 when the transactions were concluded, the first plaintiff was in the womb, and the first defendant admits knowledge of this, in his evidence.
But assuming that there was no intention to defeat the rights of the first plaintiff at the time when the transactions in question were entered into, that does not conclude the matter.
The real point for decision is whether the defendants were acting adversely to the minor, and if, after he was born, they used documents which might have been innocent when they came into existence, for the purpose of defeating his rights to the properties comprised therein, that would be conduct hostile to him justifying partition.
Now, what are the facts ? In the written statements which were filed shortly after the institution of the suit while the first plaintiff was alive, defendants I to 3 combined to deny his title to items 2 and I 1, and at the trial, they adduced evidence in support of their contention that they were the separate properties of defendants 2 and 3.
Even in the Court of Appeal, the defendants persisted in pressing this claim, and further maintained that the joint family had debts, and both the courts below had concurrently held against them on these issues.
These are materials from which it could rightly be concluded that it was not to the interest of the minor to continue joint with the defendants, and that it would be beneficial to him to decree partition.
In holding that as the transactions in question had taken place prior to his birth the minor could not rely on them as furnishing a cause of action, the courts below had misunderstood the real point for determination, and that was a ground on which the High Court could interfere with their finding in second appeal.
We accept the finding of the High Court that the suit was instituted for the benefit of the minor plaintiff, and in that view, we proceed to consider the second question raised by the learned Attorney General and that is the main ques tion that was pressed before us whether the suit for partition abated by reason of the death of the minor before it was heard and decided.
The contention on behalf of the appellants is that while in the case of an adult coparcener a clear and 1254 unambiguous expression on his part of an intention to become divided will have the effect of bringing about a division in status and the filing of a suit for partition would amount to such an expression, that rule can have no application in the case of a minor, as under the law he is incapable of a volition of his own.
It is conceded by the appellants that a suit for partition could be entertained on behalf of a minor plaintiff, and decreed if the court decides that it, is in the interests of the minor.
But it is said that in such a case, the court exercises on behalf of the minor a volition of which lie is incapable, that it is not until that volition is exercised by the court that there can be a division in status, and that, therefore, when a minor plaintiff dies before the court adjudicates on the question of benefit to him, he dies an undivided coparcener and his interest survives to the other coparceners and does not devolve on his heirs by inheritance.
The contention of the respondents, on the other hand, is that a suit for partition instituted on behalf of a minor coparcener stands on the same footing as a similar suit filed by an adult coparcener, with this difference that if the suit is held by the court not to have been instituted for the benefit of the minor it is liable to be dismissed, and no division in status can be held to result from such an action.
In other words, it is argued that a suit for partition on behalf of a minor effects a severance in status from the date of the suit, conditional on the court holding that its institution is for the benefit of the minor.
The question thus raised is one of considerable importance, on which there has been divergence of judicial opinion.
While the decisions in Chelimi Chetty vs Subbamma (1), Lalta Prasad vs Sri Mahadeoji Birajman Temple (2) and Hari Singh vs Pritam Singh(3), hold that when a suit for partition is filed on behalf of a minor plaintiff there is a division in status only if and when the Court decides that it is for his benefit and passes a decree, the decisions in Rangasayi vs Nagarathnamma (4), Ramsing vs Fakira (5) and Mandliprasad vs Ramcharanlal (6), lay down that when such a (1) 442.
(2) All.
(3) A.I.R. 1936 Lah.
(4) Mad.
(5) I.L.R. (6) I.L.R. 1255 suit is decreed, the severance in status relates back to the date of the institution of the suit.
While Chelimi Chetty vs Subbamma (1) decides that when a minor on whose behalf a suit is filed dies before hearing, the action abates, it was held in Rangasayi vs Nagarathnamma (2) and Mandliprasad vs Ramcharanlal (3) that such a suit does not abate by reason of the death of the minor before trial, and that it is open to his legal representatives to continue the suit and satisfy the court that the institution of the suit was for the benefit of the minor, in which case there would be, a division in status from the date of the plaint and the interests of the minor in the joint family properties would devolve on his heirs.
To decide which of these two views is the correct one, we shall have to examine the nature of the right which a minor coparcener has, to call for partition and of the power which the court has, to decide whether the partition in question is beneficial to the minor or not.
Under the Mitakshara law, the right, of a coparcener to share in the joint family properties arises on his birth, and that right carries with it the right to be maintained out of those properties suitably to the status of the family so long as the family is joint and to have a partition and separate possession of his share, should he make a demand for it.
The view was at one time held that there could be no partition, unless all the coparceners agreed to it or until a decree was passed in a suit for partition.
But the question was finally settled by the decision of the Privy Council in Girja Bai vs Sadashiv Dhundiraj (4), wherein it was held, on a review of the original texts and adopting the observation to that effect in Suraj Narain vs lqbal Narain (5), that every coparcener has got a right to become divided at his own will and option whether the other coparceners agree to it or not, that a division in status takes place when he expresses his intention to become separate unequivocally avid unambiguously, that the filing of a suit for partition is a clear expression of such an intention, and that, in consequence, (1) Mad.
(2) Mad.
(3) I.L.R. (4) (1916) L.R. 43 I.A. 151.
(5) (1912) L.R. 40 I.A. 40,45.
1256 there is a severance in status when the action for partition is filed.
Following this view to its logical conclusion, it was held by the Privy Council in Kawal Nain vs Prabhu Lal (1), that even if such a suit were to be dismissed, that would not affect the division in status which must be held to have taken place, when the action was instituted.
Viscount Haldane observed: "A decree may be necessary for working out the result of the severance and for allotting definite shares, but the status of the plaintiff as separate in estate is brought about by his assertion of his right to separate, whether he obtains consequential judgment or not." The law being thus settled as regards coparceners who are sui juris, the question is whether it operates differently when the coparcener who institutes the suit for partition is a minor acting through his next friend.
Now, the Hindu law makes no distinction between a major coparcener and a minor coparcener, so far as their rights to joint properties are concerned.
A minor is, equally with a major, entitled to be suitably maintained out of the family properties, and at partition, his rights are precisely those of a major.
Consistently with this position, it has long been settled that a suit for partition on behalf of a minor coparcener is maintainable in the same manner as one filed by an adult coparcener, with this difference that when the plaintiff is a minor the court has to be satisfied that the action has been instituted for his benefit.
Vide the authorities cited in Rangasayi vs Nagarathnamma (2 ) at p. 137.
The course of the law may be said, thus far, to have had smooth run.
But then came the decision in Girja Bai vs Sadashiv Dhundiraj (3) which finally established that a division in status takes place when there is an unambiguous declaration by a coparcener of his intention to separate, and that the very institution of a suit for partition constituted the expression of such an intention.
The question then arose how far this principle could be applied, when the suit for partition was instituted not by a major but by a minor acting through his next friend.
The view was expressed that (1) (1917) L.R. 44 I.A. 159.
(2) Mad.
(3) (1916) L.R. 43 I.A. 151.
1257 as the minor had, under the law, no volition of his own ' the rule in question had no application to him it was not, however, suggested that for that reason no .suit for partition could be maintained on behalf of a minor, for such a stand would be contrary to the law as laid down in a series of decisions and must, if accepted, expose the estate of the minor to the perils of waste and spoliation by coparceners acting adversely to him.
But what was said was that when a court decides that a partition is for the benefit of a minor, there is a division brought about by such decision and not otherwise.
It would follow from this that if a minor died before the court decided the question of benefit lie would have died an undivided coparcener of his family and his heirs could not continue the action.
In Chelimi Chetty vs Subbamma (1), the point directly arose for decision whether on the death of a minor plaintiff the suit for partition instituted on his behalf could be continued by his legal representatives.
It was held that the rule that the institution of a suit for partition effected a severance of joint status was not applicable to a suit instituted on behalf of a minor, and that when he died during the pendency of the suit" his legal representative was not entitled to continue it.
The ground of this decision was thus stated: " It was strongly argued by the learned pleader for the respondent that as the plaint states facts and circumstances which, if proved, would be good justification for the court decreeing partition, therefore at this stage we must proceed on the basis that there was a good cause of action and there was thus a severance of status effected by the institution of the suit.
This clearly does not amount to anything more than this, that it is open to a person who chooses to act on behalf of a minor member of a Hindu family to exercise the discretion on his behalf to effect a severance.
What causes the severance of a joint Hindu family is not the existence of certain facts which would justify any member to ask for partition, but it is the exercise of the option which the law lodges in a member of the joint family to say whether he shall continue to remain (1) Mad.
1258 joint or whether he shall ask for a division.
In the case of an adult he has not got to give any reasons why lie asks for partition but has simply to say that he wants partition, and the court is bound to give him a decree.
In the case of a minor the law gives the court, the power to say whether there should be a division or not, and we think that it will lead to considerable complications and difficulties if we are to say that other persons also have got the discretion to create a division in the family, purporting to act on behalf of a minor.
" This decision was cited with approval in Lalta Prasad vs
Sri Mahadeoji Birajman Temple (1), wherein it was observed: " The effect, therefore, we think, of an action brought by a minor through his next friend is not to create any alteration of status of the family, because a minor cannot demand as of right a separation; it is only granted in the discretion of the court when, in the circumstances, the action appears to be for the benefit of the minor.
See Chelimi Chetty vs Subbamma (2).
" In Hari Singh vs Pritam Singh (3), a suit for partition instituted on behalf of a minor was decreed, the court finding that it was for the benefit of the minor.
The question then arose as to the period for which the karta could be made liable to account.
It was held, following the decisions in Chelimi Chetty vs Subbamma (2 ) and Lalla Prasad vs Sri Mahadeoji Birajman Temple (1), that as the severance in status took place only on the date of the decision and not when the suit was instituted, the liability to account arose only from the date of the decree and not from the date of the suit.
It may be mentioned that in Chhotabhai vs Dadabhai (4) Divatia J. quoted the decision in Chelimi Chetty vs Subbamma (2) with approval, but as pointed out in Ramsing vs Fakira (5) and by the learned judge himself in Bammangouda vs Shankargouda (6), the point now under consideration did not really arise for decision in that case, and the (1) All. 461.
(2) Mad.
(3) A.I.R. 1936 Lah.
(4) A.I.R. 1935 Bom.
(5) I.L.R. (6) A.I.R. 1944 Bom.
1259 observations were merely obiter.
It is on the strength of the above authorities that the appellants contend that when the minor plaintiff died in January 1943, the suit for partition had abated, and that his mother had no right to continue the suit as his heir.
Now, the ratio of the decision in Chelimi Chetty vs Subbamma (1) and it is this decision that was followed in Lalta Prasad 's Case (2 ), Hari Singh vs Pritam Singh (3) and Chhotabhai vs Dadabhai (4) is that the power to bring about a division between a minor and his coparceners rests only with the court and not with any other person, and that, in our judgment, is clearly erroneous.
When a court decides that a suit for partition is beneficial to the minor, it does not itself bring about a division in status.
The court is not in the position of a super guardian of a minor expressing on his behalf all intention to become divided.
That intention is, in fact, expressed by some other person, and the function which the court exercises is merely to decide whether that other person has acted in the best interests of the minor in expressing on his behalf ail intention to become divided.
The position will be clear when regard is had to what takes place when there is a partition outside court.
In such a partition, when a branch consisting of a father and his minor son becomes divided from the others, the father acts on behalf of the minor son as well; and the result of the partition is to effect a severance in status between the father and his minor son, oil the one hand and the other coparceners, on the other.
In that case, the intention of the minor to become separated from the coparceners other than his father is really expressed on his behalf by his father.
But it may happen that there is a division between the father and his own minor son, and in that case, the minor would normally be represented by his mother or some other relation, and a partition so entered into has been recognised to be valid and effective to bring about a severance in status.
The minor has no doubt the right to have the partition set aside if it is shown to have been prejudicial to him but if that is not established, the partition (1) Mad.
(3) A.I.R. 1936 Lah.
(2) All.
(4) A.I.R. 1935 BOM.
160 1260 is binding on him.
Vide Balkishen Das vs Ram Narain Sahu (1).
And even when the partition is set aside on the ground that it is unfair, the result will be not to annul the division in status created by the partition but to entitle the minor to a re allotment of the properties.
It is immaterial that the minor was represented in the transaction not by a legal guardian but by a relation.
It is true, as held in Gharib Ul Lah vs Khalak Singh (2) that no guardian can be appointed with reference to the coparcenary properties of a minor member in a joint family, because it is the karta that has under the law the right of management in respect of them and the right to represent the minor in transactions relating to them.
But that is only when the family is joint, and so where there is disruption of the joint status, there can be no question of the right of a karta of a joint family as such to act on behalf of the minor, and on the authorities, a partition entered into on his behalf by a person other than his father or mother will be valid, provided that person acts in the interests of and for the benefit of the minor.
If, under the law, it is competent to a person other than the father or mother of a minor to act on his behalf, and enter into a partition out of court so as to bind him, is there any reason why that person should not be competent when he finds that the interests of the minor would best be served by a division and that the adult coparceners are not willing to effect a partition, to file a suit for that purpose on behalf of the minor, and why if the court finds that the action is beneficial to the minor, the institution of the, suit should not be held to be a proper declaration on behalf of the minor to become divided so as to cause a severance in status? In our judgment, when the law permits a person interested in a minor to act on his behalf, any declaration to become divided made by him on behalf of the minor must be held to result in severance in status, subject only to the court deciding whether it is beneficial to the minor; and a suit instituted on his behalf if found to be beneficial, must be held to bring about a division in status.
That (1) (1903) L.R. 30 I.A. 139.
: (2) (1903) L.R. 30 I.A. 165.
1261 was the view taken in a Full Bench decision of the Madras High Court in Rangasayi.
vs Nagarathnamma (1), wherein Ramesam J. stated the position thus: " These instances show that the object of the issue whether the suit was for the benefit of the minor is really to remove the obstacle to the passing of the decree.
It is no objection to the maintainability of the suit.
In my opinion therefore in all such cases the severance is effected from the date of the suit conditional on the court being able to find that the suit when filed was for the benefit of the minor.
" The same view has been taken in Ramsing vs Fakira (2) and Mandliprasad vs Ramcharanlal (3), and we agree with these decisions.
On the conclusion reached above that it is the action of the person acting on behalf of a minor that brings about a division in status, it is necessary to examine what the nature of the jurisdiction is which the courts exercise when they decide whether a suit is for the benefit of a minor or not.
Now, the theory is that the Sovereign as parens patriae has the power, and is indeed under a duty to protect the interests of minors, and that function has devolved on the courts.
In the discharge of that function, therefore, they have the power to control all proceedings before them wherein minors are concerned.
They can appoint their own officers to protect their interests, and stay proceedings if they consider that they are vexatious.
In Halsbury 's Laws of England, 3rd Edn., Vol.
XXI, p. 216, para.
478, it is stated as follows: " Infants have always been treated as specially under the protection of the Sovereign, who, as parens patriae, had the charge of the persons not capable of looking after themselves.
This jurisdiction over infants was formerly delegated to and exercised by the Lord Chancellor; through him it passed to the Court of Chancery, and is now vested in the Chancery Division of the High Court of Justice.
It is independent of the question whether the infant has any property or not.
" (1) Mad.
(2) I.L.R. (3) I.L.R. 1262 It is in the exercise of this jurisdiction that courts require to be, satisfied that the next friend of a minor has in instituting a suit for partition acted in his interest.
When, therefore, the court decides that the suit has been instituted for the benefit of the minor and decrees partition, it does so not by virtue of any rule, special or peculiar to Hindu law but in the exercise of a jurisdiction which is inherent in it and which extends over all minors.
The true effect of a, decision of a court that the action is beneficial to the minor is not to create in the minor proprio vigore a right which he did not possess before but to recognise the right which had accrued to him when the person acting on his behalf instituted the action.
Thus, what brings about the severance in status is the action of the next friend in instituting the suit, the decree of the court merely rendering it effective by deciding that what the next friend has done is for the benefit of the minor.
It remains to consider one other argument advanced on behalf of the appellants.
It was urged that the cause of action for a suit for partition by a minor was one personal to him, and that on his death before hearing, the suit must abate on the principle of the maxim, actio personalis moritur cum persona.
But that maxim has application only when the action is one for damages for a personal wrong, and as a suit for partition is a suit for property, the rule in question has no application to it.
That was the view taken in Rangasayi vs Nagarathnamma (1) at pp.
137 138 and in Mandliprasad vs Ramcharanlal (2) at p. 871, and we are in agreement with it.
All the contentions urged in support of the appeal have failed, and the appeal is accordingly dismissed with costs.
The amounts paid by the appellants to the respondents in pursuance of the order of this Court dated March 7, 1958, will be taken into account in adjusting the rights of the parties under this decree.
(1) Mad.
Appeal dismissed.
| In a suit instituted on behalf of a Hindu minor for partition of the joint family properties, the minor plaintiff died during the pendency of the suit and his mother as the legal representative was allowed to continue the suit as the second plaintiff, and the suit was decreed as it was found that the defendants had been acting against the interests of the minor and that the suit for partition was therefore beneficial to him.
It was contended for the appellants that the suit had abated by reason of the death of the minor before the suit was heard and before the Court could decide whether the institution of the suit was for his benefit.
Held, that when a suit is instituted by a person acting on behalf of a minor for the partition of the joint family properties, a declaration made by him on behalf of the minor to become divided brings about a severance in status, subject only to the decision of the Court that the action is beneficial to the minor.
The true effect of the decision of the Court is not to create in the minor a right which he did not possess before but to recognise the right which had accrued to him when the action was instituted.
Rangasayi vs Nagarathnamma, Mad. 95, Ramsingh vs Fakira, I. L. R. and Mandilprasad vs Ramcharanlal, I.L.R. , approved.
Case law reviewed.
Accordingly, the suit did not abate and the legal represen tative was entitled to continue the suit and obtain a decree on showing that when the suit was instituted it was for the benefit of the minor.
Held, further, that the suit did not abate on the ground either that the cause of action for a suit for partition by a minor was one personal to him, because such a suit is one relating to property.
|
Summarize this legal judgement text concisely | iminal Appeal No. 28 of 1956.
Appeal by special leave from the judgment and order dated June 21, 1954, of the Calcutta High Court in Criminal Revision No. 811 of 1953.
1264 Ranadeb Chaudhury and P. K. Chatterjee, for the appellants.
B. Sen and P. K. Bose, for the respondents.
September 11.
The Judgment of the Court was delivered by KAPUR J.
This appeal by special leave raises a question of interpretation of section 237 of the Indian Companies Act.
Appellant No. 1 is One of the past directors of the Bank of Commerce Ltd., now in liquidation and appellant No. 2 was its Managing Director.
The Bank was ordered to be wound up by the High Court of Calcutta on August 7, 1950, and one G. K. Dutt, Bar at law was appointed its Official Liquidator but on September 7, 1950, the Official Receiver was appointed in place of Dutt.
On July 23, 1952, respondent No. 1 filed in Court of the Presidency Magistrate a complaint against the appellant under sections 120B, 406, 467, 477A, Indian Penal Code and 182A of the Indian Companies Act and stated that he was doing so under the authority of the official liquidator and the official liquidator had obtained the directions of the High Court to file the complaint.
On May 5, 1953, the appellant applied to the I residency Magistrate for dismissal of the complaint as being without the sanction of the Company Judge and therefore the official liquidator in his official capacity was incompetent to prefer the complaint, being the creation of the statute he could only act within the four corners of the statute.
He possessed only those powers which the statute conferred on him.
This application was dismissed by the Presidency Magistrate on June 13, 1953.
The appellant then applied to the High Court for quashing the criminal proceedings on the ground that the prosecution was ab initio void because of the absence of prior direction judicially given by the High Court under section 237(1) of the Indian Companies Act.
The High Court found against the appellants and discharged the rule.
The learned Chief Justice held that the provisions of section 237(1) are no bar to a prosecution by the liquidator; that under section 237(1) there is nothing in the nature of a judicial proceedings 1265 that it could not be said that the order was not a valid direction under section 237(1).
He said: " There can be no question in the present case that the relevant facts were all placed before the Company Judge, because they are all set out in the report of Adhikary and the affidavits annexed there to to which the order expressly refers and with reference to which the liberty to bring legal proceedings was expressly given.
In view of those circumstances, it is impossible to say that the Company Court had not before it all the facts on which the prosecution is based or that it did not apply its mind to the considerations relevant to section 237(1) ".
He also held that clause (a) of section 179 empowers the liquidator to institute or defend legal proceedings in the name of the company and that it was expressly concerned with the powers of ' the liquidator whereas section 237 dealt with the powers of the Court to give, directions.
P. B. Mukherji J. gave a concurring judgment.
After referring to the history of section 237, he held that under that section the Company Judge can act ex parte and it was not necessary for him to hear a director or an officer of the company com plained against and that direction given under that section was not a condition precedent to a prosecution by the official liquidator nor is it the intention of that section to impinge on the powers of a criminal court under the Code of Criminal Procedure.
Leave to appeal having been refused by the Calcutta High Court, the appellants have come to this Court in pursuance of special leave.
On the application of the official liquidator Bachawat J. an January 15, 1951, made an order which must be taken to be one under section 179.
In this order it was said: And it is further ordered that the said applicant be at liberty to institute or defend any suit or prosecution, or other legal proceedings, civil or criminal in the name and on behalf of the said Bank and to continue all pending suits and execution proceedings by or against the said Bank and for that purpose to engage advocates, Vakils and other.
lawyers and to 1266 pay out of the assets of the said Bank in his hands all costs of and incidental to such suits, prosecutions and/or legal proceedings ".
On July 22, 1952, the official liquidator obtained the order from Bannerji J. which the High Court has held, and in our opinion rightly, to be an order under section 237(1) of the Indian Companies Act.
This order said: " It is ordered that the said applicant be at liberty to take such civil or criminal proceedings as he may think necessary over the report of the said Jasoda Dulal Adhikary read with the affidavits of H. Sen Gupta and Nepal Chandra Adhikary read with the affidavits of H. Sen Gupta and Nepal Chandra Mitra as set out in the said Exhibit " A " ".
The passage already quoted from the judgment of the learned Chief Justice shows that all the relevant facts were before the Company Judge, as they were all set out in the affidavits placed before him.
The complaint was then filed on July 23, 1952.
During the pendency of the complaint the appellants took an appeal against the order of the Company Judge dated July 22, 1952, but it was dismissed on the objection taken by the liquidator that it was an administrative order and not a judicial order.
On August 5, 1953, the official liquidator took out misfeasance proceedings under section 235 of the Companies Act and the appellants then applied to the High Court for quashing the criminal proceedings already started on the ground of commencement of proceedings under section 235.
This application was also heard with the rule which was issued on June 29, 1953, and it was dismissed by the same judgment by which the rule was discharged, i. e., of June 21, 1954.
The general scheme of the Companies Act is that the Court should have complete control of all proceedings in winding up and it was therefore urged that the official liquidator was not authorised to do anything either without the sanction of the Court or without its directions.
Section 179 deals with the powers of official liquidator.
It provides: 1267 The official liquidator shall have power, with the sanction of the court, to do the following things: (a) to institute or defend any suit or prosecution or other legal proceeding, civil or criminal in the name and on behalf of the company;. . . " Under section 180 the Court may provide that the official liquidator may exercise any of the powers given under section 179 without the sanction or intervention of the Court.
Section 183 deals with the exercise and control of liquidator 's powers.
Sub section 3 authorises him to apply to the Court for directions in relation to any particular matter arising in the winding up.
Subsection 4 is a provision under which the official liquidator is entitled to use his own discretion in the administration of the assets of the company and in the distribution amongst the creditors.
Sub section 5 provides: " If any person is aggrieved by any act or decision of the official liquidator, that person may apply to the Court and the Court may confirm, reverse or modify the act or decision complained of, and make such order as it thinks just in the circumstances ".
These provisions show that section 179 deals with the powers of the liquidator.
Under section 235 the Court has the power to assess damages against delinquent directors and the Court may on the application of the liquidator or a creditor or a contributory examine into the conduct of a director and compel him to pay or restore money or property or to contribute such sum to the assets of the company by way of compensation in respect of any misfeasance on his part and this power may be exercised irrespective of the criminal liability of the director.
Section 237 deals with prosecution of delinquent director and the relevant portion of this section is: (1) " If it appears to the Court in the course of a winding up by, or subject to the supervision of, the Court, that any past or present director, manager or other officer, or any member, of the company has been guilty of any offence in relation to the company for which he is criminally liable, the Court may, either on 161 1268 the application of any person interested in the winding up or of its own motion, direct the liquidator either himself to prosecute the offender or to refer the matter to the registrar.
(2) If it appears to the liquidator in the course of a voluntary winding up that any past or present director, manager or other officer, or any member of the company has been guilty of any offence in relation to the company for which he is criminally liable, he shall forthwith report the matter to the registrar and shall furnish to him such information and give to him such access to and facilities for inspecting and taking copies of any documents, being information or documents in the possession or under the control of the liquidator relating to the matter in question, as he may require.
(3) Where any report is made under sub section (2) to the registrar, he may, if he thinks fit, refer the matter to the Central Government for further enquiry, and the Central Government shall thereupon investigate the matter and may, if they think it expedient, apply to the Court for an order conferring on any person designated by the Central Government for the purpose with respect to the company concerned all such powers of investigating the affairs of the company as are provided by this Act in the case of a winding up by the Court.
(4) If on any report to the registrar under sub section
2 it appears to him that the case is not one in which proceedings ought to be taken by him, he shall inform the liquidator accordingly, and thereupon, subject to the previous sanction of the Court, the liquidator may himself take proceedings against the offender.
(5) If it appears to the Court in the course of voluntary winding up that any past or present director, manager or other officer, or any member, of the company has been guilty as aforesaid, and that no report with respect to the matter has been made by the liquidator to the registrar, the Court may, on the application of any person interested in the winding up or of its own motion, direct the liquidator to make such a report, and on a report being made accordingly, 1269 the provisions of this section shall have effect as though,the report has been made in pursuance of the provisions of sub section (2).
(6) If, where any matter is reported or referred to the registrar under this section, he considers that the case is one in which a prosecution ought to be instituted, he shall place the papers before the Advocate General or the public prosecutor and if advised to do so institute proceedings : Provided that no prosecution shall be undertaken without first giving the accused person an opportunity of making a statement in writing to the registrar and of being heard thereon.
. . . . . . . . . . It was this section which the appellants pressed in support of the argument that without the order of the Court the official liquidator cannot lodge a criminal complaint against a past director and if he does so the proceedings will be ab initio void.
All that sub section
(1) requires is that if the Court finds in the course of winding up that any past or present director, etc., has been guilty of any offence in relation to the company the Court may either on the application of the person interested or of its own motion direct the liquidator to prosecute the offender or to refer the matter to the registrar.
In the latter case if the registrar finds that the prosecution ought to be instituted he can do so if advised by the Advocate General or the public prosecutor.
But emphasis was placed by counsel for the appellants on the proviso that no prosecution could be undertaken without first giving the accused person an opportunity of making a statement to the registrar or of being heard and it was urged that if the registrar cannot institute prosecution without first giving an opportunity to the person accused to file an explanation, no directions could be given by the judge unless the persons accused are first allowed an opportunity of giving an explanation.
But this contention must be repelled.
Under section 237 (1) the Court may direct the liquidator to himself prosecute the offender or to refer the matter to the registrar.
Giving an opportunity to the offender before such direction is given by 1270 the Court is not a prerequisite of the Judge making in order under sub section
Under sub section
(6) the registrar is required to give the offender an opportunity to show cause before a prosecution is undertaken.
That is a far step from saying that section 237(1) of the Companies Act requires a Judge to give the offender an opportunity before he gives a direction for prosecution by the liquidator or for reference to the registrar.
It was further urged that under sub s (4) in the case of voluntary liquidation, the liquidator has to proceed after obtaining the sanction of the Court and therefore it was urged that the liquidator cannot institute criminal proceedings without such sanction in the case of winding up by the Court.
Whatever may be the case of a liquidator under voluntary winding up sub section
(1) of section 237 makes no such provision in the case of compulsory liquidation.
Our attention was drawn to some passages from the Indian Companies Act by Sircar & Sen, 1937 Edition.
At page 624 it is stated that the object of the section is to provide against abuses and indiscriminate commencement of prosecutions and also for the first time a provision has been made under this section for prosecutions being conducted as crown prosecutions.
In a passage at page 628 it is stated: " But before the Court can exercise its jurisdiction it must come to the conclusion that in the course of winding up the person intended to be charged under this section has been guilty of an offence in relation to the company for which he is criminally liable.
But such a finding is not to prejudice the accused in any way in his trial.
Per Chitty J. in re Charles Denham & Co. Ltd. L.T. 570 at 571.
" The procedure under section 237(1) as stated in this book at the same page is as follows: " The application should be made on a petition verified by an affidavit in which materials must be set out sufficient to make out a prima facie case.
It is not quite settled as to whether the liquidator should make the application upon notice to any one.
Generally the application should be ex parte, but 1271 the Court may direct notice to be given to any person who is in its opinion entitled to be heard ".
These passages do not support the contention that before a prosecution can be validly instituted against a past director the sanction of the Court is necessary.
Mr. Choudhuri then relied on an observation of Buckley J.
In Re London and Globe Finance Corporation (1) also quoted in Sircar & Sen 's book at page 625.
There the principles guiding the Court in ordering prosecutions have been laid down as follows: " I have next to consider upon what principles I ought to exercise the power given me by section 167 of the Companies Act, 1862, to direct the official receiver to institute and conduct a prosecution at the expense of the assets.
It is obvious that no one legitimately can or ought to institute a criminal prosecution with a view to his personal profit.
Neither should a prosecution be instituted from motives of vengeance against the offender.
The motive of every prosecution ought, to be to inflict punishment upon the criminal for the proper enforcement of the law and for the advantage of the State and with a view to deter others from doing the like ".
This passage does not support the giving of an opportunity to the offender before the Judge can give direction nor do they affect the powers of the liquidator to start a prosecution or the, criminal court to entertain a complaint when filed by the liquidator.
The following passage from Buckley 's Company Law under the commentary under section 334 of the English Companies Act, 1948, which corresponds to section 237 of the Indian Companies Act was then referred to: " Proceedings will accordingly be taken by the Director of Public Prosecutions (or Lord Advocate) or not at all ".
But this is because of the peculiar and express language of section 334 tinder which the Judge can only direct the liquidator to refer the matter to the Director of Public Prosecutions or to Lord Advocate as the case may be.
In the English Act, special provision has been made for England saving the institution of (1) , 733. 1272 criminal proceedings by private prosecutors.
Merely because no such provision has been made in regard to scotland does not affect the argument.
Mr. Choudhuri then relied on certain English cases dealing with the mode of giving directions.
In re Northern Counties Bank Limited(1) the Judge had ordered the liquidator to ascertain by circular the wishes of the creditors and after they had appeared to oppose the starting of the prosecution, it was held (1) that it did not sufficiently appear that the offence had been committed and (2) that as 2/3 of the creditors opposed the application the prosecution should not be ordered as expenses will have to be paid from out of the money belonging to the creditors.
The main question for decision in that case was whether the prosecution should be at the cost and expense of the assets of the company but competency of the liquidator to file the complaint was not in dispute.
Reference 'was then made to Palmer 's Company Precedents, 1952 Edition, Vol.
II, again stating as to when leave to prosecute should be given but the law stated there does not support the case for the appellants.
At page 605 it is stated : " The summons will be ex parte, and should be supported by affidavit showing a strong case for prosecution, and also the extent of the assets and liabilities.
The court is not willing when the assets are small, to sanction proceedings which may swallow up or largely reduce those assets ".
The form at p. 607 does not show that under the English Companies Act when liberty is given to prosecute the person accused is heard.
All that is required is that the court will make its order upon affidavits etc.
filed before it and it can also order that the costs and charges incurred by the liquidator shall be paid out of the assets of the company.
It was next contended that although the language of section 237 was not in the negative form still the effect of the words was that no prosecution could be instituted without the sanction of the Court being obtained by the liquidator.
In support of the submission counsel (1) 1273 relied on The Queen vs Cubitt (1) which was a case under the Sea Fisheries Act which created certain offences and by section 11 provided: "The provisions of this Act. . . shall be enforced by sea fishery officers ", who are defined by that section and it was held that the effect of the words was that no one except the sea fishery officer could prosecute an offence under the Act.
But there are no such words of limitation in section 237.
In Taylor vs Taylor(2) the words of the statute were "entitled to the possession or the receipt of the rents and profits" and it was held that the order under the statute could only be made upon a petition which was within the words above quoted and if there was no such person no order could be made but that again was decided on the peculiar language of the statute.
Counsel also relied on Nazir Ahmad vs Crown (3) where it was held that if the statute authorises the doing of an act in one way then it had to be done in that way or not at all.
The argument of Mr. Choudhuri really comes to this that the complaint filed on behalf of the official liquidator was incompetent in the absence of a direction under section 237 or without complying with the procedure laid down in that section.
Section 237(1) does not lay down any procedure for the giving of directions and the provisions in regard to the action taken by the registrar do not have any relevancy to what the court should do before it gives directions.
English cases that have been cited do not go to the extent of saying that no prosecution can be instituted without the sanction of the court.
They deal with another subject and that is the circumstances in which the Judge would give directions for prosecution and would sanction the assets of the company to be expanded in prosecution.
Besides nowhere has it been stated that the court cannot give directions without first hearing the persons accused or that the directions of the Judge are a condition precedent to the lawful institution of criminal proceedings by the liquidator.
(1) (2) (3) (1936) L.R. 63 I.A. 372, 381. 1274 On the other hand it has been held that under section 179 of the Indian Companies Act no sanction is required for commencing a prosecution.
In Jaswantrai Manilal Akhaney vs The State of Bombay (1) at the instance of the official liquidator a report was lodged with the police against the Managing Director of a Bank and the police submitted a charge sheet to the Magistrate.
It was observed by Sinha J. at page 502: " In terms the section laws down the powers of the official liquidator.
Such a Liquidator has to function under the directions of the court which is in charge of the liquidation proceedings.
One of his powers is to institute prosecutions in the name and on behalf of the company under liquidation with the sanction of the court.
This section does not purport to impose any limitations on the powers of a criminal court to entertain a criminal prosecution launched in the ordinary course under the provisions of the Code of Criminal Procedure ".
It was also pointed out in this judgment that section 179 contains no words corresponding to the language of Drug Control Order, 1943, which was held to be a condition precedent for instituting prosecution in the case of Basdeo Aggarwalla vs King Emperor (2) nor are there any prohibitory words like those that are contained in sections 196 and 197 of the Criminal Procedure Code.
In the former case no prosecution could be instituted without the previous sanction of the Provincial Government and the latter provides that " no court shall take cognizance. . . .
There are two cases decided by two Indian High Courts which support the submission of the respondents ' counsel.
In Emperor vs Bishan Sahai (3) it was held that the Companies Act nowhere provides that without the directions of a Judge no criminal prosecution can be instituted.
In Mrityunjoy Chakravarti vs Provot Kumar Pal(4), it was held that neither section 179 nor section 237 indicates that if the liquidator takes action without a (1) ; (2) (3) I.L.R. (1937) All.
(4) A.I.R. 1953 Cal.
1275 direction of the Court this action would be illegal or invalid or it would invalidate a prosecution.
It would thus appear that both on the language of section 237(1) as well as on precedent the complaint made by the liquidator against the appellants suffers from no such infirmity as to make the proceedings null and void.
The section contains no such words which indicate that such a prosecution cannot be instituted by a liquidator without the sanction of the Judge or that the Court cannot take cognizance of a complaint without such sanction or direction.
Section 179 as the learned Chief Justice of Calcutta High Court has rightly pointed out, deals with the powers of liquidators to institute or defend proceedings with the sanction of the Court and section 237(1) deals with the powers of the Court to give directions for prosecution of delinquent directors, etc.
It was further urged on behalf of the respondents that in the case before us there was a proper direction under section 237(1).
The judgment of the High Court shows that before the learned Judge gave a direction on July 22, 1952, there were before him proper materials and, therefore, his sanction was perfectly valid, legal and proper.
Before this order made by Bannerji J. there was an order of Bachawat J. dated January 15, 1951, under section 179 and, therefore, when the liquidator authorised his Assistant, respondent No. 1 to institute the proceedings he was entitled to do so.
As we have said above even in the absence of such directions the legality of the criminal proceedings instituted would not be affected.
Nothing that we have said in this judgment must be taken to be an expression of opinion which in any way affects the control by the Judge of proceedings in winding up or over the liquidators.
We would, therefore, dismiss this appeal.
Appeal dismissed.
| The Official Liquidator got a complaint under sections 120 B, 406, 467 and 477A, 'Indian Penal Code filed before the Presidency Magistrate against the appellants one of whom was a past director and the other the Managing Director of the Bank of Commerce Ltd., which was in compulsory liquidation.
The appellants applied to the Presidency Magistrate for dismissal of tile complaint on the ground that the Official Liquidator was incompetent to prefer the complaint as there was no sanction of the Company judge.
This was dismissed.
The appellants then applied to the High Court for quashing the criminal proceedings on the ground that the prosecution was ab initio void because of the absence of a prior direction judicially given by the High Court under section 237(1) of the Indian Companies Act.
The High Court rejected the application.
Held, that a direction of the Court under section 237(1) of the Indian Companies Act was not a condition precedent to the prosecution of the appellants by the Official Liquidator.
In fact, a valid and proper direction had been given by the Court under section 237(1) to the Official Liquidator for the prosecution of the appellants.
In giving a direction under this section the Court could act ex parte and it was not necessary to give to the appellants any opportunity of being heard.
Section I79 Of the Companies Act deals with the powers of liquidators to institute or defend legal proceedings with the sanction of the Court and section 239(1) deals with the powers of the Court to give directions for prosecution of delinquent directors, etc.
In the present case, the Court had made an order under section I79 giving liberty to the Official Liquidator to institute or defend legal proceedings, and the Official Liquidator was entitled to lodge the complaint against the appellants even without a direction under section 237(1).
|
Summarize this legal judgement text concisely | iminal Appeal No. 76 of 1958.
Appeal by special leave from the judgment and order dated March 4, 1958, of the Patna High Court in Criminal Appeal No. 50 of 1958 and Death Reference No. 3 of 1958 arising out of the judgment and order dated January 18, 1958, of the Court of the 1st Additional Judicial Commissioner of Chotanagpur at Ranchi in Sessions Trial No. XC of 1957.
B. R. L. Iyengar, for the appellant.
1338 R. H. Dhebar for the respondent.
September 19.
The Judgment of the Court was delivered by section K. DAS J.
This is an appeal by special leave.
The appellant is Ratan Gond, aged about 28 years.
Tried on a charge under section 302, Indian Penal Code, he was convicted and sentenced to death by the learned Additional Judicial Commissioner of Ranchi in the State of Bihar.
The learned Additional Judicial Commissioner submitted the record to the High Court of Patna for confirmation of the sentence, as he was required to do under the provisions of section 374 of the Code of Criminal Procedure.
Ratan Gond also preferred an appeal to the High Court.
The appeal and the reference under section 374, Criminal Procedure Code, were heard together by a Division Bench of the said High Court and it accepted the reference and dismissed the appeal thereby confirming the sentence of death passed upon the appellant.
On May 19, 1958, the appellant prayed for and obtained special leave and then filed the present appeal in pursuance of the leave granted to him.
The facts lie within a, narrow compass.
The appellant was a resident of village Urte, Tola Banmunda, police station Kolebera in the district of Ranchi.
One Mst.
Jatri (P. W. 2), who was a widow, also lived in the same village and same Tola.
She had two young daughters, one named Baisakhi and the other named Aghani.
Baisakhi was about nine years old and Aghain about five years old.
The subject of the present appeal is the murder of the girl Baisakhi.
On a Tuesday, May 7, 1957, the two sisters, Baisakhi and Aghani, had gone out to Pluck wild berries in a hilly jungle situated at a short distance from their village, the distance being estimated variously by various witnesses from 300 yards to a little more than a mile.
We may give here some idea of the location of the village and the hilly area near it.
According to the evidence of Rup Ram (P. W. 1), uncle of the two girls, Tola Banmunda consists of about 40 houses.
At a short distance to the north, there is a hilly tract known 1339 as Amtis Chua hill.
Close to the hill, there are jungles on two sides and there is also a spring or well in between the two strips of jungles.
On Tuesday, Mst.
Jatri (P. W. 2) had herself gone to pluck berries known as Keond berries at another place.
When she left the house in the morning, her two daughters were in the house.
Jatri came back at about noon and found Aghani alone in the house.
She enquired from Aghani about the elder sister Baisakhi and Aghani made certain statements to her mother as well as to other persons later that day and the next day.
Aghani, however, died within a few months of the occurrence, before her statements could be recorded in a judicial proceeding.
The courts below have referred to, and the High Court has relied on, the statements of Aghani.
One of the points urged on behalf of the appellant is that the statements of Aghani were not admissible in evidence either under section 32 or section 33 of the Evidence Act (I of 1872).
As we are of the view that this contention is correct, we are omitting all reference to the statements of Aghani in stating the facts of the case.
When Baisakhi did not return to the house even in the evening Mst.
Jatri went in the direction of Amtis Chua hill, but could not find Baisakhi.
Next morning, information was sent to Rup Ram (P. W. 1) about the fact that Baisakhi was missing, Rup Ram having gone to village Targa for making tiles on the preceding Monday.
Rup Ram came back to Banmunda on Wednesday, May 8, 1957.
In the meantime certain other villagers including Dalpat Sai (P. W. 4), mukhia of the village, and Sohar (P. W. 5), chaukidar of the village, had been informed that Baisakhi was missing.
Aghani took Rup Ram and these villagers to the foot of Amtis Chua hill and showed them the spring or well.
This village party found the headless body of Baisakhi at a short distance from the aforesaid spring.
The body was identified by Mst.
Jatri and others as the dead body of Baisakhi by reason of the white saree of yellow border which Baisakhi was wearing, five red " churis " round the right hand, two red " churis " round the 170 1340 left hand, one " bera " round the left hand, one brass ring on the left finger and certain beads of a " mala " which Baisakhi had put on.
When the headless dead body was discovered and identified, Dalpat Sai left some of his companions to guard the dead body and went to the house of the appellant, but did not find him there.
He then sent Rup Ram and the chaukidar to the police station which was at a distance of 43 miles.
He also sent some volunteers of the Gram Panchayat to look for the appellant.
On Thursday, May 9, 1957, at about 10 a.m., Rup Ram and the chaukidar appear ed at the police station of Kolebera and Rup Ram gave an information, which was recorded by the Assistant Sub Inspector of Police.
This information referred to the statements of Aghani and to the other facts which had been discovered by that time.
On the same Thursday, the appellant was found in the house of his sister 's husband in another village called Karmapani.
The appellant was caught hold of by the village volunteers and brought back to village Banmunda on Thursday.
At about 1 or 2 p. m. on that day, he was questioned by Dalpat Sai (P.W.4) mukhia of the Gram Panchayat, Krishna Chandra Singh (P. W. 7), Sarpanch of the Gram Panchayat, and Praduman Singh (P. W. 13), one of the panches of the Panchayat, and it is stated that the appellant made an extra judicial confession to these persons to the effect that he had killed the child Baisakhi for greed of money, as a contractor who was building a, bridge on the Lurki river had offered Rs. 80 for a human head.
The appellant was detained by the aforesaid village authorities till the Assistant Sub Inspector of Police arrived at the village on Friday, May 10, 1957.
The Assistant Sub Inspector arrived at about 3 a.m.
He was taken to the place where the headless dead body of Baisakhi lay.
The Assistant Sub Inspector made an inquest on the dead body and seized the articles found there including 29 beads of the " mala " ' which Baisakhi was wearing and which lay scattered near the place.
The Assistant Sub Inspector of Police arrested the appellant, who was already in custody of the mukhia.
The house of the 1341 Weapon called " balua " was found in the north facing room of the house, between a wall and the roof.
This " balua " had certain blood stains on it, but the stains having disintegrated, the origin of the blood could not be determined.
It is stated that on being questioned where the head of the girl Baisakhi was, the appellant took the Assistant Sub Inspector of Police and some of the villagers to a place at a short distance of 100 yards or so from where the dead body was.
At that place were discovered some strands of bloodstained hair which were seized by the Assistant SubInspector of Police.
The strands of hair looked like the hair on the bead of a female person and the Chemical Examiner later reported that the strands of hair were stained with human blood and "appeared to be scalp hair of human (female) origin morphologically ".
After further investigation by two different Sub Inspectors of Police, the appellant was sent up for trial.
There was an enquiry by a Magistrate of the first class, who, at the conclusion of the enquiry, committed the appellant for trial by the Court of Session.
The defence of the appellant was that he had been falsely implicated.
He denied that he killed Baisakhi near the jungle at Amtis Chua hill.
He further denied that he had made any extra judicial confession to Dalpat Sai, Krishna Chandra Singh and Praduman Singh.
He denied that any blood stained weapon was found in his house by the Assistant Sub Inspector of Police and he also denied that he was absent from his village or was found in the house of his sister 's husband in village Karmapani.
The learned Additional Judicial Commissioner, as also the High Court, rightly stated that the case against the appellant rested on (a) circumstantial evidence and (b) the extra judicial confession stated to have been made by the appellant.
The courts below concurrently held that the extra judicial confession was voluntary and it did not appear to them to have been caused by any inducement, threat or promise having reference to the charge made against 1342 he appellant so as to attract the provisions of section 24 of the Evidence Act.
They further held that the confession, though later denied by the appellant, was sufficiently corroborated by the circumstantial evidence and the confession and the circumstantial evidence read together led to only one reasonable inference ', namely, that the appellant had killed the child Baisakhi in the hope of getting some money.
It is not disputed that in an appeal filed by special leave under article 136 of the Constitution it is not normally open to the appellant to raise questions of fact or to ask for interference by us with concurrent findings of fact, unless the findings are vitiated by errors of law or the conclusions reached by the courts below are so patently opposed to well established principles as to amount to a miscarriage of justice.
Mr. Iyengar for the appellant has urged before us three main points.
Firstly, he has submitted that the extra judicial confession said to have been made by the appellant is not admissible in evidence.
Secondly, he has contended that even if admissible, there is no guarantee of its truth.
Thirdly, he has submitted that even with regard to circumstantial evidence, the courts below have relied on inadmissible evidence, with particular reference to the statements of Aghani, to establish one of the circumstances, namely, that the appellant was last seen with Baisakhi before her murder.
His argument is that the other circumstances established against the appellant, namely, the recovery of the blood stained " balua ", of the blood stained hair and the absence of the appellant from the village on Wednesday, do not carry the case against the appellant far enough so as to complete the chain and make them inconsistent with any hypothesis other than the guilt of the appellant.
He has submitted that in considering the circumstantial evidence in this case the courts below have departed from the well established principle that the circumstances affirmatively proved against an accused person must be of such a character as to be consistent only with his guilt and inconsistent with any reasonable hypothesis of his innocence.
1343 Before we examine the aforesaid submissions, it is necessary to state that the finding of the courts below that Baisakhi was murdered some time between May 7 and May 8, 1957, and that the headless dead body which was discovered on May 8, 1957, was correctly identified as the dead body of the girl Baisakhi has not been challenged before us.
The postmortem examination on the dead body was held on May 11, 1957, and the ante mortem injuries which the doctor found were (1) complete severance of the head from the neck,(2)one incised wound on the left shoulder and (3) anincised wound on the left upper arm.
The doctor 's evidence makes it quite clear that the unfortunate girl was brutally done to death.
The identification of the headless dead body also rests on a very sure foundation.
We have already referred to the clothing, ring, beads, etc., from which the identity of the dead body was established.
The murder of the girl Baisakhi having been clearly established, the courts below rightly applied their mind to a consideration of the principal question in the case, namely, if the appellant was responsible for that murder.
This brings us to a consideration of the submissions made on behalf of the appellant.
We may say at the very outset that we agree with learned counsel for the appellant that the statements of Aghani, who unfortunately died within a few months of the occurrence before her statements could be recorded in a judicial proceeding, were not admissible in evidence either under section 32 or section 33 of the Evidence Act.
Section 33 is clearly out of the way because Aghani made no statements in a judicial proceeding or before any person authorised by law to take her evidence.
The only relevant clause of section 32 which may be said to have any bearing is cl.
(1) which relates to statements 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 the case before us, the statements made by Aghani do not relate to the cause of her death or to any of the circumstances relating to her death ; on the contrary, the statements relate to the death of her sister.
We are, therefore, of the opinion 1344 that the statements do not come within section 32(1) of the Evidence Act and, indeed, Mr. Dhebar appearing on behalf of the State, has conceded that section 32(1) does not apply to the statements of Aghani.
Excluding the statements of Aghani, what then is the evidence against the appellant ? Firstly, we have the extra judicial confession.
Then, we have the following circumstances which the courts below have held to have been clearly established against the appellant, namely, (a) recovery of the blood stained " balua " from a room of the appellant, (b) recovery of the blood stained strands of hair from a place pointed out by the appellant and (c) disappearance of the appellant from the village immediately after the murder and his arrest in village Karmapani in circumstances mentioned by Maheshwar Sai (P. W. 6).
Lastly, there is another adverse circumstance which arises out of the total denial by the appellant of the recovery of the blood stained " balua " and of his arrest in village Karmapani.
As to the extra judicial confession, two questions arise: is it voluntary, and, if so, is it true ? The appellant denied at a later stage that he had made a confession, but it is not necessary to consider in this case the abstract question as to whether, as against its maker, a conviction can be based on a confession which is found to be voluntary and true.
It is enough to state that usually and as a matter of caution, courts require some material corroboration to such a confessional statement, corroboration which connects the accused person with the crime in question, and the real question which falls for decision in the present case is if the circumstances proved against the appellant afford sufficient corroboration to the confessional statement of the appellant, in case we hold that the confessional statement is voluntary and true.
Let us first see if the confession was voluntary.
Section 24 of the Evidence Act states: "A confession made by an accused person is irrelevant in a criminal proceeding, if the making of the confession appears to the Court to have been caused by any inducement, threat or promise having reference to the charge against the accused person, 1345 proceeding from a person in authority and sufficient, in the opinion of the Court, to give the accused person grounds which would appear to him reasonable for supposing that by making it he would gain any advantage or avoid any evil of a temporal nature in reference to the proceedings against him ".
Mr. Iyengar has referred us to the evidence of the three witnesses, Dalpat Sai (P.W. 4), Krishna Chandra Singh (P. W. 7), and Praduman Singh (P. W. 13), Mukhia, Sarpanch and Panch respectively of the Gram Panchayat.
We agree with Mr. Iyengar that having regard to the provisions of the Bihar Panchayat Raj Act (Bihar VIII of 1948) the aforesaid three persons can be said to be persons in authority within the meaning of section 24.
The question, however, is are there any circumstances which tend to show that the making of the confession appears to have been caused by any inducement, threat or promise, having reference to the charge against the appellant and proceeding from any one of the aforesaid three persons and sufficient in the opinion of the court to give the appellant grounds which would appear to him to be reasonable for supposing that by making it he would gain any advantage or avoid any evil of a temporal nature in reference to the proceedings against him.
The courts below have categorically answered this question in the negative.
We have examined the evidence of the three witnesses mentioned above.
That evidence shows that the appellant was brought to the house of Dalpat Sai (P. W. 4) at about 10 a.m. on Thursday (May 9, 1957).
He was questioned for some time; Dalpat Sai (P.W. 4) said that he was questioned for about two hours.
The evidence of Dalpat Sai makes it clear, however, that it was not a process of continuous questioning for two hours.
Ratan was given some food and then, when he was questioned, he kept quiet for some time and then said that he had killed the girl because the contractor who was building the bridge on river Lurki had offered to pay a sum of Rs. 80 for a human head.
Having examined the evidence of the three witnesses who prove the extra judicial confession, we do not come to 1346 a conclusion different from the one arrived at by the courts below.
Mr. Iyengar referred us to the observations made by Cave J. (as he then was) in The Queen vs Thompson(1).
That was a case in which a prisoner was tried for embezzling the money of a company.
It was proved at the trial that, being taxed with the crime by the Chairman of the company, the prisoner said that he had taken the money.
The Chairman stated that at the time of the confession, no threat or promise was made, but he said to the prisoner 's brother, " It will be the right thing for your brother to make a statement " and the court drew the inference that the prisoner, when he made the confession, knew that the Chairman had spoken these words to his brother.
In these circumstances, the learned Judge said: " I prefer to put my judgment on the ground that it is the duty of the prosecution to prove, in case of doubt, that the prisoner 's statement was free and voluntary, and that they did not discharge themselves of this obligation ".
He further added that there were always reasons to suspect those confessions which were supposed to be the offspring of penitence and remorse, and which nevertheless were repudiated by the prisoner at the trial.
It is true that in the case under our consideration the appellant denied to have made the confession which he had made earlier; but we find no such circumstances as were present in Thompson 's case (1), such as the statement of the Chairman of the company to the brother of the prisoner.
It is true that the appellant was brought back from village Karmapani by members of the village volunteer force.
He was taken to the village authorities to whom he made a confession.
The evidence does not even remotely suggest that any threat, promise or inducement was made.
The only circumstance relied on by Mr. Iyengar is that it took about two to three hours from the time when the appellant was brought to the house of the mukhia up to the time when he made his confessional statement.
Mr. Iyengar has relied on In re Kataru Chinna Papiah (2), where a Superintendent of Police questioned the accused person for four hours at night (1) , 18.
(2) A.I.R. 1940 Mad.
136. 1347 and again for two hours in the morning.
It was pointed out that this was a flagrant violation of the relevant rule in the instructions issued to police officers.
All that we need say is that there was no such questioning in the present case.
Another decision to which Mr. Iyengar has invited our attention is Hashmat Khan vs The Crown (1).
We do not think that that decision is of any assistance to Mr. Iyengar.
It was held therein that a mere possibility of there having been some inducement is not sufficient to attract section 24 of the Evidence Act; but only when it appears to the court that the confession has been made as a result of some inducement held out by a person in authority that it becomes irrelevant.
That was a case in which the accused person, when questioned, was told that it would be better for him if he told the truth; it was held that this amounted to an inducement within the meaning of section 24 of the Indian Evidence Act.
As to the truth of the confession, nothing has been brought to our notice which would show that the confessional statement contained any untrue or inaccurate statement.
It is true that the prosecution has given no evidence to show that the contractor who was building the bridge over river Lurki, or for that matter, any contractor, had offered a sum of Rs. 80 for a human head.
In the very nature of things, it is not expected that any contractor, even if he had made such an offer, will admit having done so, and we do not think that the prosecution can be asked to give evidence in support of any such offer.
We recognise that in ordinary and normal circumstances nobody asks for a human head for building abridge; nor is it usual normally for a person to accept such an offer, even if it is made.
We must not forget, however, that we are dealing in this case with aboriginal people who are ,still steeped in superstition.
It is worthy of note that Maheshwar Sai (P. W. 6) said that when the appellant was taken in custody in village Karmapani, he did not even enquire why he was arrested; on the contrary, he offered Rs. 20 and a he goat to the witness and (1) Lah.
171 1348 implored the latter to save him.
Such a statement was again of an incriminatory nature, and if the evidence of Maheshwar Sai is correct, the statement was absolutely voluntary and was not the result of any questioning at all.
For these reasons, we do not think that the reference to an offer of Rs. 80 for a human head in the confessional statement of the appellant necessarily destroys its veracity.
There can be no doubt that the recovery of the blood stained " balua " (even though the origin of the blood could not be determined owing to disintegration) and of the blood stained strands of female hair at the place pointed out by the appellant, are circumstances clearly proved against the appellant.
These circumstances may not be sufficient by themselves to prove that the appellant was the murderer, but there is no doubt that they lend assurance to the confes sional statement of the appellant, assurance of a kind which connects the appellant with the crime in question.
This is a case in which the confession and the circumstances have to be read together.
There is the additional circumstance that soon after the murder the appellant disappeared from his village and when arrested in another village, his conduct was such as to show that he was suffering from a guilty mind.
On the top of all this, there is the total denial by the appellant that any blood stained " balua " was recovered from his house or that he disappeared from the village after the murder.
It is unfortunate that the learned Additional Judicial Commissioner did not ask the appellant to explain the recovery of the blood stained strands of female hair.
That was an important circumstance against the appellant and when the learned Additional Judicial Commissioner examined the appellant under the provisions of section 342 of the Code of Criminal Procedure he should have asked the appellant to explain this circumstance.
We take this opportunity of inviting the attention of the learned Additional Judicial Commissioner to this very serious omission.
Another omission on the part of the learned Additional Judicial Commissioner is his failure to comply with the provisions of section 287 of the Code of 1349 Criminal Procedure.
The examination of the accused recorded by or before the Committing Magistrate does not appear to have been tendered by the prosecutor in the present case; at least we do not find any such statement in the printed paper book.
We are satisfied, however, that no prejudice has been caused.
The Assistant Sub Inspector of Police who gave evidence of the recovery of blood stained hair from a place pointed out by the appellant was not even cross exa mined on the point.
The defence of the appellant was a total denial and even if the recovery of the blood stained strands of female hair was put to the appellant, he would undoubtedly have denied such recovery as having been made at his pointing out the place.
To sum up: we see no reasons to differ from the conclusion arrived at by the courts below that the confessional statement made by the appellant was voluntary and admissible; there are no reasons for thinking that it was not true.
The circumstances clearly proved against the appellant, even excluding the circumstance which rested on the statements of Aghani, afford sufficient corroboration to the confession of the appellant, though denied at a later stage, and the corroboration is of such a nature as to connect the appellant with the murder of the child Baisakhi.
The only reasonable inference which can be drawn from the confession read with the circumstantial evidence is that the appellant killed the child Baisakhi between May 7 and 8, 1957, in the hope of getting some money.
Whether that hope was realised or not is more than we can tell.
The head was never recovered, but there can be no doubt that the dead body was correctly identified to be the dead body of the child Baisakhi.
As to the sentence, in view of the circumstances in which the child Baisakhi was killed, we do not think ,that we shall be justified in interfering with it in the present case.
For these reasons, we hold that the appeal is without merit and must be dismissed.
Appeal dismissed.
| The appellant was charged with the murder of a girl Baisakhi.
On information given by Aghani, younger sister of the deceased, the headless body of the deceased was re covered.
The appellant absconded but was found in another village and was brought back by the village volunteer force.
On interrogation by the Mukhia, Sarpanch and a panch of the Gram Panchayat the appellant made an extrajudicial confession.
A blood stained cutting weapon was recovered from a room of the appellant.
At his instance some strands of hair were recovered from a place at a short distance 1337 from the place where the dead body had been recovered, which were stained with human blood and appeared to be scalp hair of a human female.
The appellant was convicted and sentenced to death and the High Court upheld the conviction and sentence.
The Courts took into consideration the statements made by Aghani to her mother and to other persons that the deceased was last seen in the company of the appellant.
Aghani, however, died before her statement could be recorded in a judicial proceeding.
It was contended by the appellant that the statements of Aghani were inadmissible, that the extra judicial confession was not relevant and that the circumstantial evidence was not sufficient to establish the guilt of the appellant.
Held, that the statements of Aghani were not admissible either under section 32 or section 33 Of the Evidence Act.
Section 33 had no application as her statement was not made in any judicial proceeding or before any person authorised by law to record the same.
The statements did not relate to the cause of her death or to any circumstances relating to her death but related to the death of her sister and did not fall under cl. 1 of section 32 which was the only clause which could have any bearing on the question.
Held, further, that though having regard to the Bihar Panchayat Raj Act, the Mukhia, Sarpanch and panch of the Gram Panchayat to whom the extra judicial confession was made were persons in authority within the meaning Of section 24 Evidence Act, no threat, promise or inducement for making the confession was proved.
The facts that the appellant was brought back to the Village by the village volunteer force and that it took two or three hours before he made the confession do not indicate that the confession was not voluntary.
There was nothing to show that the confession contained any untrue or inaccurate statement.
The circumstantial evidence may not be sufficient by itself to prove the guilt of the appellant, but it afforded sufficient corroboration to the confession and the corroboration was of such a nature as to connect the appellant with the murder.
|
Summarize this legal judgement text concisely | iminal Appeal No. 79 of 1956.
Appeal by special leave from the judgment and order dated September 7, 1955, of the Patna High Court in Criminal Appeal No. 370 of 1954, arising out of the judgment and order dated July 26, 1954, of the Court of the Special Judge at Bhagalpur in Special Case No. 14 of 1954.
B. R. L. Iyengar, for appellant No. 1.
section P. Sinha and P. C. Agarwala, for appellant No. 2.
R. C. Prasad, for the respondent.
August 18.
The Judgment of the Court was delivered by SINHA J.
This appeal by special leave is directed against the concurrent judgments and orders of the courts below, convicting the two appellants under section 120B read with section 165A, Indian Penal Code, and sentencing them to rigorous imprisonment for 18 months, and to pay a fine of Rs. 200 each, and in default of payment of fine, to undergo further rigorous imprisonment for 6 months.
A separate conviction under section 165A has been recorded in respect of the first appellant, Badri.
Under this head, he has been sentenced to rigorous imprisonment for 18 months, the sentence to run concurrently with the sentence under the common charge.
The facts as found by the courts below, which could not be successfully challenged before us, areas follows: The second appellant, Ramji Sonar, is a goldsmith by profession and runs a shop on the main road in the village Naogachia.
In that village there is a police station and the shop in question is situated in between the police station building and the residential quarters of the Inspector of police, who was the First Informant in the case, resulting in the conviction and 1143 sentences of the appellants as stated above.
The first appellant, Badri, runs a school for small boys in the same village about 50 yards away from the shop a foresaid of the second appellant.
On August 22,1953, the First Informant, who, holding the position of an Inspector of police, was in charge of the police station, made a seizure of certain ornaments and molten silver from a vacant building in front of the house of the second appellant, Ramji.
Those ornaments were being melted by six strangers coining from distant places, with implements for melting, said to have been supplied by Ramji.
The seizure was made on the suspicion that the ornaments and the molten silver were stolen property, which were to be sold to Ramji in a shape which could not be identified with any stolen property.
After making the seizure list of ' the properties, thus seized, the police officer arrested Ramji, as also the other six strangers.
Ramji was .released on bail that very day.
Police investigations into the case, thus started, followed.
During that period, on August 24, 1953, at about 7 30 p.m., the Inspector was on his way from his residential quarters to the police station, when both the appellants accosted him on the road, and Ramji asked him to hush up the case for a valuable consideration.
The Inspector told them that he could not talk to them on the road, and that they should come to the police station.
Thereafter, the Inspector reported the matter to his superior officer, the D.S.P. (P.W. 8), and to the sub inspector, P.W. 9, attached to the same police station.
On August 31, the same year, the first appellant, Badri, came to the police station,.
saw the Inspector in the central room of the thana, and offered to him a packet wrapped in a piece of old newspaper, containing Rs. 500 in currency notes.
He told the Inspector, (P. W. 1), that the second appellant, Ramji, had sent the money through him in pursuance of the talk that they had with him in the evening of August 24, as a consideration for hushing up the case that was pending against Ramji.
At the time the offer was made, a number of police officers besides a local merchant, (P.W. 7), were present there.
The Inspector at once 1144 drew up the first information report of the offer of the bribe on his own statement and prepared a seizure list of the money, thus offered, and at once arrested Badri and put him in the thana lock up.
After the usual investigation the appellants were placed on their trial, with the result indicated above.
Both the courts below have found that the prosecution case, a summary of which has been given above, has been proved by good and reliable evidence, and that the defence case that the prosecution was started by the inspector out of spite and in order to defend himself against the consequences of wrongfully arresting Ramji, was unfounded.
We are not impressed with the halting criticism of the evidence adduced in this case on behalf of the prosecution and accepted by the courts below.
Ordinarily, this Court does not interfere with concurrent findings of fact.
The only serious question raised in this appeal is the point raised on behalf of the second appellant, Ramji, as to whether the statement made by the first appellant, Badri, on August 31, 1953, that he had been sent by the second appellant with the money to be offered by way of bribe to the police officer, was admissible against him.
The learned counsel for the appellant was not able clearly to formulate his grounds of objection to the admissibility of that piece of evidence, which is the basis of the charge against both the accused persons.
Section 10 of the Indian Evidence Act, is a complete answer to this contention.
The section is in these terms: " 10.
Where there is reasonable ground to believe that two or more persons have conspired together to commit an offence or an actionable wrong, anything said, done or written by any one of such persons in reference to their common intention, after the time when such intention was first entertained by any one of them, is a relevant fact as against each of the persons believed to be so conspiring, as well for the purpose of proving the existence of the conspiracy as for the purpose of showing that any such person was a party to it. " The incident of August 24, when both the appellants 1145 approached the inspector with the proposal that he should hush up the case against the second appellant, for which he would be amply rewarded, is clear evidence of the two persons having conspired to commit the offence of bribing a public servant in connection with the discharge of his public duties.
There cannot, therefore, be the least doubt that the court had reasonable grounds to believe that the appellants had entered into a conspiracy to commit the offence.
Therefore, the charge under section 120B had been properly framed against both of them.
That being so, anything said or done by any one of the two appellants, with reference to the common intention, namely, the conspiracy to offer bribe, was equally admissible against both of them.
The statement made by the first appellant on August 31, that he had been sent by the second appellant to make the offer of the bribe in order to hush up the case which was then under investigation, is admissible not only against the maker of the statement the first appellant but also against the second appellant, whose agent the former was, in pursuance of the object of the conspiracy.
That statement is admissible not only to prove that the second appellant had constituted the first appellant his agent in the perpetration of the crime, as also to prove the existence of the conspiracy itself.
The incident of August 24, is evidence that the intention to commit the crime had been entertained by both of them on or before that date.
Anything said or done or written by any one of the two conspirators on and after that date until the object of the conspiracy had been accomplished, is evidence against both of them.
It was faintly suggested on behalf of the second appellant, that the charge under section 120B of the Indian Penal Code, had been deliberately added by the prosecution in order to make the first appellant 's statement of August 31, admissible against the second appellant, as otherwise it could not have been used as evidence against him.
As already indicated, the incident of August 24, is a clear indication of the existence of the conspiracy, and the court was perfectly justified in drawing up the charge under section 120B also.
It is no 1146 answer in law to say that unless the charge under that section had been framed, the act or statement of one could not be admissible against the other.
Section 10 of the Indian Evidence Act, has been deliberately enacted in order to make such acts and statements of a co conspirator admissible against the whole body of conspirators, because of the nature of the crime.
A conspiracy is hatched in secrecy and executed in darkness.
Naturally, therefore, it is not feasible for the prosecution to connect each isolated act or statement of one accused with the acts or statements of the others, unless there is a common bond linking all of them together.
Ordinarily, specially in a criminal case, one person cannot be made responsible for the acts or statements of another.
It is only when there is evidence of a concerted action in :furtherance of a common intention to commit a crime, that the law has introduced this rule of common responsibility, on the principle that every one concerned in a conspiracy is acting as the agent of the rest of them.
As soon as the court has reasonable grounds to believe that there is identity of interest or community of purpose between a number of persons, any act done, or any statement or declaration made, by any one of the co conspirators is, naturally, held to be the act or statement of the other conspirators, if the act or the declaration has any relation to the object of the conspiracy.
Otherwise, stray acts done in darkness in prosecution of an object hatched in secrecy, may not become intelligible without reference to the common purpose running through the chain of acts or illegal omissions attributable to individual members of the conspiracy.
It was also suggested that the statement made by the first appellant on August 31, about the purpose of the payment, having been made after the payment, was not admissible in evidence because the object of the conspiracy had been accomplished before the statement in question was made.
Reliance was placed in this connection upon the decision of their Lordships of the Judicial Committee in Mirza Akbar vs The King Emperor.(1).
But that decision is itself an answer to the (1) (1940) L.R. 67 I.A. 336.
1147 contention raised.
The payment was made, and the statement that it was being made with a view to hushing up the case against the second appellant is a part of the same transaction, that is to say, the statement accompanied the act of payment of the bribe.
Hence, it cannot be said that the statement was made after the object of the conspiracy had already been accomplished.
The object of the conspiracy was the hushing up of the criminal case against the second appellant by bribing the public servant who was in charge of the investigation of the case.
The object of the conspiracy was yet far from being accomplished when the statement in question was made.
The leading case on the subject is that of R. vs Blake (1).
That decision is an authority both for the positive and the negative aspects of the question.
It lays down what is admissible and what is not admissible.
It held that the documents actually used in effectuating the objects of the conspiracy, were admissible, and that those documents which had been created by one of the conspirators after the object of the conspiracy had been achieved, were not admissible.
section 10 of the Indian Evidence Act is on the same lines.
It is manifest that the statement in question in the present case was made by the first appellant in the course of the conspiracy, and accompanied the act of the payment of the money, and is clearly covered by the provisions of section 10, quoted above.
It must, therefore, be held that there is no substance in the only question of law raised in this appeal.
It is, accordingly, dismissed.
Appeal dismissed.
| The appellants were prosecuted on charges under section 120B read with section 165A of the Indian Penal Code, for having conspired to commit the offence of bribing a public servant in connection with the discharge of his public duties.
The case against them was that on August 24, 1953, when the Inspector of Police who was in charge of the investigation of a case in which the second appellant was involved, was on his way to the police station, the appellants accosted him on the road and the second appellant asked him to hush up the case for valuable consideration.
Some days later, on August 31 the first appellant offered to the Inspector at the police station a packet containing Rs. 500 in currency notes and told him that the second appellant had sent the money through him in pursuance of the talk that they had with him on August 24, as a consideration for hushing up the case.
The courts below accepted the evidence adduced on behalf of the prosecution and convicted the appellants.
On appeal by special leave it was contended that the court had no reasonable grounds to believe that the appellants had entered into a conspiracy to commit the offence and that the statement of August 3 I was not admissible against the second appellant because (1) the charge under section 120B had been deliberately added in order that the act or statement of the one would be admissible against the other, and (2) the object of the conspiracy, namely the payment of the hush money, had been accomplished before the statement in question was made: Held, (1) that the incident of August 24 was evidence that the intention to commit the offence had been entertained by both the appellants on or before that date showing a clear indication of the existence of the conspiracy, and that the statement made by the first appellant on August 31 was admissible not only to prove that the second appellant had constituted the first appellant his agent in the perpetration of the crime but also to prove the existence of the conspiracy ; the court was therefore justified in drawing up the charge under section 120B along with that under section 165A of the Indian Penal Code.
(2)that the payment of the bribe and the statement of August 31 accompanying it, were part of the same transaction, having been made in the course of the conspiracy, and the 1142 statement in question was therefore admissible under section 10 of the Indian Evidence Act.
Mirza Akbar vs The King Emperor, (1940) L. R. 67 I. A. 336 and R. vs Blake, ; , relied on.
|
Summarize this legal judgement text concisely | Appeal No. 87 of 1957.
Appeal from the judgment and decree dated December 1, 1955, of the Allahabad High Court in Special Appeal No. 18 of 1955, arising out of the judgment and order dated November 30, 1954, of the ' said Court in Civil Misc.
Writ No. 355 of 1952.
H. N. Sanyal, Additional Solicitor General of India, G. C. Mathur and C. P. Lal, for the appellants.
P. R. Das and B. P. Maheshwari, for the respondent.
B. P. Maheshwari, for Agra Bullion Exchange (Intervener).
K. Veeraswami and T. M. Sen, for the State of Madras (Intervener).
R. C. Prasad, for the State of Bihar (Intervener).
H. N. Sanyal, Additional Solicitor General of India, B. Gopalakrishnan and T. M. Sen, for the Union of India (Intervener).
September 23.
The Judgment of the Court was delivered by BHAGWATI J.
The facts leading up to this appeal lie within a narrow compass.
The respondent is a firm registered under the Indian Partnership Act dealing in Bullion, Gold and Silver ornaments and forward contracts in Silver Bullion at Banaras in the State of Uttar Pradesh.
For the assessment years 1948 49, 1949 50 and 1950 51 the Sales Tax Officer, Banaras, the appellant No. 1 herein assessed the respondent to U. P. Sales Tax on its forward transactions in Silver Bullion.
The respondent had deposited the sums of Rs. 150 12 0, Rs. 470 0 0 and Rs. 741 0 0 for the said 1352 three years which sums were appropriated to wards the payment of the sales tax liability of the firm under the respective assessment orders passed on May 31, 1949, October 30, 1950 and August 22, 1951.
The levy of sales tax on forward transactions was held to be ultra vires, by the High Court of Allahabad by its judgment delivered on February 27, 1952, in Messrs. Budh Prakash Jai Prakash vs Sales Tax Officer, Kanpur (1) and the respondent by its letter dated July 8, 1952, asked for a refund of the amounts of sales tax paid as aforesaid.
The appellant No. 2, the Commissioner of Sales Tax, U. P., Lucknow, however, by his letter dated July 19, 1952, refused to refund the same.
The respondent thereafter filed in the High Court of Allahabad the Civil Misc.
Writ Petition No. 355 of 1952 under article 226 of the Constitution and asked for a writ of certiorari for quashing the aforesaid three assessment orders and a writ of mandamus requiring the appellants to refund the aforesaid amounts aggregating to Rs. 1,365 12 0.
The judgment of the Allahabad High Court was confirmed by this Court on May 3, 1954, in Sales Tax Officer, Pilibhit vs Budh Prakash Jai Prakash () and the writ petition aforesaid was heard by Chaturvedi J.
The learned judge by an order dated November 30, 1954, quashed the said assessment orders in so far as they purported to assess the respondent in respect of forward contracts in silver and also issued a writ of mandamus directing the appellants to refund the amounts paid by the respondent.
The appellants filed a Special Appeal No. 18 of 1955 in the High Court of Allahabad against that order of the learned Judge.
A Division Bench of the said High Court heard the said appeal on December 1, 1955.
It was argued by the Advocate General on, behalf of the appellants that the amounts in dispute were paid by the respondent under a mistake of law and were therefore irrecoverable.
The Advocate General also stated categorically that in that appeal he did not contend that the respondent ought to have (1) (1952) A.L.J 332.
(2) [I955] 1 S.C.R. 243.
1353 proceeded for the recovery of the amount claimed otherwise than by way of a petition Under article 226 of the Constitution.
The High Court came to the conclusion that section 72 of the applied to the present case and the State Government must refund the moneys unlawfully received by it from the respondent on account of Sales Tax.
It accordingly dismissed the appeal with costs.
The appellants then applied for a certificate under article 133(1)(b) of the Constitution which certificate was granted by the High Court on July 30, 1956, on the Advocate General 's giving to the Court an undertaking that the State will, in any event, pay the costs, charges and expenses incurred by or on behalf of the respondent as taxed by this Court.
This appeal has accordingly come up for hearing and final disposal before us at the instance of the Sales Tax Officer, Banaras, appellant No. 1, the Commissioner, Sales Tax, U.P., Lucknow, appellant No. 2 and the State of U.P., appellant No. 3.
The question that arises for our determination in this appeal is whether section 72 of the applies to the facts of the present case.
The learned Additional Solicitor General appearing for the appellants tried to urge before us that the procedure laid down in the U.P. Sales Tax Act by way of appeal and/or revision against the assessment orders in question ought to have been followed by the respondent and that not having been done the respondent was debarred from proceeding in the civil courts for obtaining a refund of the monies paid as aforesaid.
He also tried to urge that in any event a writ petition could not lie for recovering the monies thus paid by the respondent.
Both those contentions were, however, not available to him by reason of the categorical statement made by the Advocate General before the High Court.
The whole matter had proceeded on the basis that the respondent was entitled to recover the amount claimed in the writ petition which was filed.
No such point had been taken either in the grounds of appeal or in the statement of case filed before us in this Court and we did not feel justified in allowing the 1354 learned Additional Solicitor General to take this point at this stage.
Section 72 of the is in the following terms: " A person to whom money has been paid, or anything delivered by mistake or under coercion, must repay or return it.
" As will be observed the section in terms does not make any distinction between a mistake of law or a mistake of fact.
The term " mistake " has been used without any qualification or limitation whatever and comprises within its scope a mistake of law as well as a mistake of fact.
It was, however, attempted to be argued on the analogy of the position in law obtaining in England, America and Australia that money paid under a mistake of law could not be recovered and that that was also the intendment of section 72 of the .
The position in English law is thus summarised in Kerr on " Fraud and Mistake " 7th Edn., at p. 140: " As a general rule it is well established in equity as well as at law, that money paid under a mistake of law, with full knowledge of the facts, is not recoverable, and that even a promise to pay, upon a supposed liability, and in ignorance of the law, will bind the party.
" The ratio of the rule was thus stated by James L. J. in Rogers vs Ingham(1) : " If that proposition were trite in respect of this case it must be true in respect to every case in the High Court of Justice where money has been paid under a mistake as to legal rights, it would open a fearful amount of litigation and evil in the cases of distribution of estates, and it would be difficult to say what limit could be placed to this kind of claim, if it could be made after an executor or trustee had distributed the whole estate among the persons supposed to be entitled, every one of them having knowledge of all the facts, and having given a release.
The thing has never been done, and it is not a thing which, in my opinion, is to be encouraged.
Where people have a (1) ,356.
1355 knowledge of all the facts and take advice, and whether they get proper advice or not, the money is divided and the business is settled, it is not for the good of mankind that it should be reopened. " (See also National Pari Mutual Association Ltd. vs The King (1) and Pollock on Contract, 13th Edn., at pp.
367 & 374).
The American doctrine is also to the same effect as appears from the following passage in Willoughby on the Constitution of the United States, Vol. 1, p. 12: " The general doctrine that no legal rights or obligation can accrue under an unconstitutional law is applied in civil as well as criminal cases.
However, in the case of taxes levied and collected under statutes later held to be unconstitutional, the tax payer cannot recover unless he protested the payment at the time made.
This, however, is a special doctrine applicable only in the case of taxes paid to the State.
Thus, in transactions between private individuals, moneys paid under or in pursuance of a statute later held to be unconstitutional, may be recovered, or release from other undertakings entered into obtained.
" The High Court of Australia also expressed a similar opinion in Werrin vs The Commonwealth (2) where Latham C. J. and MacTiernan J. held that money paid voluntarily under a mistake of law was irrecoverable.
Latham C. J. in the course of his judgment at p. 157 relied upon the general rule, as stated in Leake on Contracts, 6th Edn.
(1911), p. 63 " that money paid voluntarily, that is to say, without compulsion or extortion or undue influence and with a knowledge of.
all the facts, cannot be recovered although paid without any consideration.
" It is no doubt true that in England, America and Australia the position in law is that monies paid voluntarily, that is to say, without compulsion or extortion or undue influence and with a knowledge of all facts, cannot here covered although paid without any consideration.
Is the position the same in India ? (1) (2) 172 1356 It is necessary to observe at the outset that what we have got to consider are the plain terms of section 72 of the as enacted by the Legislature.
If the terms are plain and unambiguous we cannot have resort to the position in law as it obtained in England or in other countries when the statute was enacted by the Legislature.
Such recourse would be permissible only if there was any latent or patent ambiguity and the courts were required to find out what was the true intendment of the Legislature.
Where, however, the terms of the statute do not admit of any such ambiguity, it is the clear duty of the courts to construe the plain terms of the statute and give them their legal effect.
As was observed by Lord Herschell in the Bank of England vs Vagliano Brothers (1) : " I think the proper course is in the first instance to examine the language of the statute and to ask what is its natural meaning uninfluenced by any considerations derived from the previous state of the law, and not to start with enquiring how the law previously stood, and then, assuming that it was probably intended to leave it unaltered, to see if the words of the enactment will bear an interpretation in conformity with this view. " "If a Statute, intended to embody in a code a particular branch of the law, is to be treated in this fashion, it appears to me that its utility will be almost entirely destroyed, and the very object with which it was enacted will be frustrated.
The purpose of such a statute surely was that on any point specifically dealt with by it, the law should be ascertained by interpreting the language used instead of, as before, by roaming oyer a vast number of authorities in order to discover what the law was, extracting it by a minute critical examination of the prior decision. . .
This passage was quoted with approval by their Lordships of the Privy Council in Narendranath Sircar vs Kamal Basini Dasi (2) while laying down the proper mode of dealing with an Act enacted to codify a particular branch of the law.
(1) , 144.
(2) Cal.
563, 571.
1357 The Privy Council adopted a similar reasoning in Mohori Bibee vs Dhurmodas Ghose (1) where they had to interpret section 11 of the .
They had before them the general current of decisions in India that ever since the passing of the the contracts of infants were voidable only.
There were, however, vigorous protests by various judges from time to time; and there were also decisions to the contrary effect.
Under these cir cumstances, their Lordships considered themselves at liberty to act on their own view of the law as declared by the Contract Act, and they had thought it right to have the case reargued before them upon this point.
They did not consider it necessary to examine in detail the numerous decisions above referred to, as in their opinion the " whole question turns upon what is the true construction of the Contract Act itself ".
They then referred to the various relevant sections of the and came to the conclusion that the question whether a contract is void or voidable presupposes the existence of a contract within the meaning of the Act and cannot arise in the base of an infant who is not " competent to contract.
" In Satyabrata Ghose vs Mugneeram Bangur & Co. (2), section 56 of the came up for consideration by this Court.
B. K. Mukherjea J. (as he then was) while delivering the judgment of the Court quoted with approval the following observations of Fazl Ali J. in Ganga Saran vs Ram Charan (3): " It seems necessary for us to emphasise that so far as the courts in this country are concerned, they must look primarily to the law as embodied in sections 32 and 56 of the .
and proceeded to observe : " It would be incorrect to say that section 56 of the Contract Act applies only to cases of physical impossibility and that where this section is not applicable, recourse can be had to the principle of English law on the subject of frustration.
It must be held also that to the extent that the deals (1) (1902) L.R. 30 I.A. 114.
(2) ; (3) ; , 52. 1358 with a particular subject, it is exhaustive upon the same and it is not permissible to import the principles of English law dehors these statutory provisions.
The decisions of the English courts possess only a persuasive value and may be helpful in showing how the courts in England have decided cases under circumstances similar to those which have come before our courts.
" It is, therefore, clear that in order to ascertain the true meaning and intent of the provisions, we have got to turn to the very terms of the statute itself, divorced from all considerations as to what was the state of the previous law or the law in England or elsewhere at the time when the statute was enacted.
To do otherwise would be to make the law, not to interpret it.
(See Gwynne vs Burnell (1) and Kumar Kamalranjan Roy vs Secretary of State (2).
The courts in India do not appear to have consistently adopted this course and there were several decisions reached to the effect that section 72 did not apply to money paid under a mistake of law, e.g., Wolf & Sons vs Dadyba Khimji & Co. (3) and Appavoo Chettiar vs section 1.
Co. (4).
In reaching those decisions the courts were particularly influenced by the English decisions and also provisions of section 21 of the which provides that a contract is not voidable because it was caused by a mistake as to any law in force in British India.
On the other hand, the Calcutta High Court had decided in Jagdish Prasad Pannalal vs Produce Exchange Corporation Ltd. (5), that the word " mistake " in section 72 of the included not only a mistake of fact but also a mistake of law and it was further pointed out that this section did not conflict with section 21 because that section dealt not with a payment made under a mistake of law but a contract caused by a mistake of law, whereas section 72 dealt with a payment which was either not under a contract at all or even if under a contract, it was not a cause of the contract.
(1) (2) L. R. 66 I. A. 1, 10.
(3) Bom.
631, 649.
(4) A.I.R. 1929 Mad.
(5) A.I.R. 1946 Cal.
1359 The Privy Council resolved this conflict in Shiba Prasad Singh vs Srish Chandra Nundi(1).
Their Lordships of the Privy Council observed that the authorities which dealt with the meaning of " mistake " in the section were surprisingly few and it could not be said that there was any settled trend of authority.
Their Lordships were therefore bound to consider this matter as an open question, and stated at p. 253: " Those learned judges who have held that mistake in this context must be given a limited meaning appear to have been largely influenced by the view expressed in Pollock and Mulla 's commentary on section 72 of the , where it is stated (Indian Contract & Specific Relief Acts, 6th Edn., p. 402): " Mistake of law is not expressly excluded by the words of this section; but section 21 shows that it is not included ".
For example, Wolf & Sons vs Dadyaba Khimji & Co. (2).
Macleod J. said referring to section 72 " on the face of it mistake includes mistake of law.
But it is said that under section 21 a contract is not voidable on the ground that the parties contracted under a mistaken belief of the law existing in British India, and the effect of that section would be neutralized if a party to such a contract could recover what he had paid by means of section 72 though under section 21 the contract remained legally enforceable.
This seems to be the argument of Messrs. Pollock and Mulla and as far as I can see it is sound.
" In Appavoo Chettiar vs South Indian Rly. (3), Ramesam and Jackson JJ. say: " Though the word ' mistake ' in section 72 is not limited it must refer to the kind of mistake that can afford a ground for relief as laid down in sections 20 and 21 of the Act. .
Indian law seems to be clear, namely, that a mistake, in the sense that it is a pure mistake as to the law in India resulting in the payment by one person to another and making it equitable that the payee should return the money is no ground for relief." Their Lordships have found no case in which an opinion that ',mistake" in section 72 must be given a limited meaning has been based on any other ground.
In their (1) (1949) L.R. 76 I.A. 244.
(2) Bom.
(3) A.I.R. 1929 Mad.
1360 Lordships ' opinion this reasoning is fallacious.
If a mistake of law has led to the formation of a contract, section 21 enacts that that contract is not for that reason voidable.
If money is paid under that contract, it cannot be said that that money was paid under mistake of law ; it was paid because it was due under a valid contract, and if it had not been paid payment could have been enforced.
Payment " by mistake " in section 72 must refer to a payment which was not legally due and which could not have been enforced ; the " mistake " is thinking that the money paid was due when, in fact, it was not due.
There is nothing inconsistent in enacting on the one hand that if parties enter into a contract under mistake in law that contract must stand and is enforceable, but, on the other hand, that if one party acting under mistake of law pays to another party money which is not due by contract or otherwise, that money must be repaid.
Moreover, if the argument based on inconsistency with section 21 were valid, a similar argument based on incon sistency with section 22 would be valid and would lead to the conclusion that section 72 does not even apply to mistake of fact.
The argument submitted to their Lordships was that section 72 only applies if there is no subsisting contract between the person making the payment and the payee, and that the does not deal with the case where there is a subsisting contract but the payment was not due under it.
But there appears to their Lordships to be no good reason for so limiting the scope of the Act.
Once it is established that the payment in question was not due, it appears to their Lordships to be irrelevant to consider whether or not there was a contract between the parties under which some other sum was due.
Their Lordships do not find it necessary to examine in detail the Indian authorities for the wider interpretation of " mistake " in section 72.
They would only refer to the latest of these authorities, Pannalal vs Produce Exchange Corp. Ltd. (1), in which a carefully reasoned judgment was given by Sen J.
Their Lordships agree with this judgment.
It may be well to add that their (1) A.I.R. 1946 Cal.
1361 Lordships ' judgment does not imply that every sum paid under mistake is recoverable, no matter what the circumstances may be.
There may in a particular case be circumstances which disentitle a plaintiff by estoppel or otherwise.
" We are of opinion that this interpretation put by their Lordships of the Privy Council on section 72 is correct.
There is no warrant for ascribing any limited meaning to the word I mistake ' as has been used therein and it is wide enough to cover not only a mistake of fact but also a mistake of law.
There is no Conflict between the provisions of section 72 on the one hand and sections 21 and 22 of the on the other and the true principle enunciated is that if one party under a mistake, whether of fact or law, pays to another party money which is not due by contract or otherwise that money must be repaid.
The mistake lies in thinking that the money paid was due when in fact it was not due and that mistake, if established, entitles the party paying the money to recover it back from the party receiving the same.
The learned Additional Solicitor General, however, sought to bring his case within the observations of their Lordships of the Privy Council that their judgment did not imply that every sum paid under mistake is recoverable no matter what the circumstances might be and that there might be in a particular case circumstances which disentitle a plaintiff by estoppel or otherwise.
It was thus urged that having regard to the circumstances of the present case, (i) in so far as the payments were in discharge of the liability under the U.P. Sales Tax Act and were voluntary payments without protest and also (ii) inasmuch as the monies which had been received by the State of U. P. had not been retained but had been spent away by it, the respondent was disentitled to recover the said amounts.
Here also, we may observe that these contentions were not specifically urged in the High Court or in the statement of case filed by the appellants in this court; but we heard arguments on the same, as they were necessarily involved in the question whether section 72 of 1362 the applied to the facts of the present case.
Re: (i): The respondent was assessed for the said amounts under the U. P. Sales Tax Act and paid the same; but these payments were in respect of forward transactions in silver.
If the State of U. P. was not entitled to receive the sales tax on these transactions, the provision in that behalf being ultra vires, that could not avail the State and the amounts were paid by the respondent, even though they were not due by contract or otherwise.
The respondent committed the mistake in thinking that the monies paid were due when in fact they were not due and that mistake on being established entitled it to recover the same back from the State under section 72 of the .
It was, however, contended that the payments having been made in discharge of the liability under the U. P. Sales Tax Act, they were payments of tax and even though the terms of section 72 of the applied to the facts of the present case no monies paid by way of tax could be recovered.
We do not see any warrant for this proposition within the terms of section 72 itself.
Reliance was, however, placed on two decisions of the Madras High Court reported in (1) Municipal Council, Tuticorin vs Balli Bros. (1) and (2) Municipal Council, Rajahmundry vs Subba Rao (2).
It may be noted, however, that both these decisions proceeded on the basis that the payments of the taxes there were made under mistake of law which as understood then by the Madras High Court was not within the purview of section 72 of the .
The High Court then proceeded to consider whether they fell within the second part of section 72, viz., whether the monies had been paid under coercion.
The court held on the facts of those cases that the payments had been voluntarily made and the parties paying the same were therefore not entitled to recover the same.
The voluntary payment was there considered in contradistinction to payment under coercion and the real ratio of the decisions was that there was no coercion or duress exercised by the authorities for (1) A.I.R. 1934 Mad.
(2) A.I.R, 1937 Mad.
1363 exacting the said payments and therefore the payments having been voluntarily made, though under mistake of law, were not recoverable.
The ratio of these decisions, therefore, does not help the appellants before us.
The Privy Council decision in Shiba Prasad Singh vs Srish Chandra Nandi (1) has set the whole controversy at rest and if it is once established that the payment, even though it be of a tax, has been made by the party labouring under a mistake of law the party is entitled to recover the same and the party receiving the same is bound to repay or return it.
No distinction can, therefore, be made in respect of a tax liability and any other liability on a plain reading of the terms of section 72 of the , even though such a distinction has been made in America vide the passage from Willoughby on the Constitution of the United States, Vol. 1, p. 12 opcit.
To hold that tax paid by mistake of law cannot be recoverd under section 72 will be not to interpret the law but to make a law by adding some such words as " otherwise than by way of taxes " after the word " paid ".
If this is the true position the fact that both the parties, viz., the respondent and the appellants were labouring under a mistake of law and the respondent made the payments voluntarily would not disentitle it from receiving the said amounts.
The amounts paid by the respondent under the U. P. Sales Tax Act in respect of the forward transactions in silver, had already been deposited by the respondent in advance in accordance with the U. P. Sales Tax Rules and were appropriated by the State of U. P. towards the discharge of the liability for the sales tax on the res pective assessment orders having been passed.
Both the parties were then labouring under a mistake of law, the legal position as established later on by the decision of the Allahabad High Court in Messrs. Budh Prakash Jai Prakash vs Sales Tax Officer, Kanpur (2) subsequently confirmed by this Court in Sales Tax Officer, Pilibhit vs Budh Prakash Jai Prakash (3) not having been known to the parties at the relevant (1) (1949) L. R. 76 1.
A. 244.
(2) (3) [1955] I S.C.R. 243.
173 1364 dates.
This mistake of law became apparent only on May 3, 1954, when this Court confirmed the said decition of the Allababad High Court and on that position being established the respondent became entitled to recover back the said amounts which had been paid by mistake of law.
The state of mind of the respondent would be the only thing relevant to consider in this context and once the respondent established that the payments were made by it under a mistake of law, (and it may be noted here that the whole matter proceeded before the High Court on the basis that the respondent had committed a mistake of law in making the said payments), it was entitled to recover back the said amounts and the State of U. P. was bound to repay or return the same to the respondent irrespective of any other consideration.
There was nothing in the circumstances of the case to raise any estoppel against the respondent nor would the fact that the payments were made in discharge of a tax liability come within the dictum of the Privy Council above referred to.
Voluntary payment of such tax liability was not by itself enough to preclude the respondent from recovering the said amounts, once it was established that the payments were made under a mistake of law.
On a true interpretation of section 72 of the the only two circumstances there indicated as entitling the party to recover the money back are that the monies must have been paid by mistake or under coercion.
If mistake either of law or of fact is established, he is entitled to recover the monies and the party receiving the same is bound to repay or return them irrespective of any consideration whether the monies had been paid voluntarily, subject however to questions of estoppel, waiver, limitation or the like.
If once that circumstance is established the party is entitled to the relief claimed.
If, on the other hand, neither mistake of law nor of fact is established.
, the party may rely upon the fact of the monies having been paid under coercion in order to entitle him to the relief claimed and it is in that position that it becomes relevant to consider whether the payment has been a voluntary payment or a payment under coercion.
The 1365 latter position has been elaborated in English law in the manner following in Twyford vs Manchester Corporation (1) where Romer J. observed: " Even so, however, I respectfully agree with the rest of Walton J. 's judgment, particularly with his statement that a general rule applies, namely, the rule that, if money is paid voluntarily, without compulsion, extortion, or undue influence, without fraud by the person to whom it is paid and with full knowledge of all the facts, it cannot be recovered, although paid without consideration, or in discharge of a claim which was not due or which might have been successfully resisted.
" The principle of estoppel which has been adverted to by the Privy Council in Shiba Prasad Singh vs Srish Chandra Nandi (2) as disentitling the plaintiff to recover the monies paid under mistake can best be illustrated by the decision of the Appeal Court in England reported in Holt vs Markham (3) " here it was held that as the defendant had been led by the plaintiffs ' conduct to believe that he might treat the money as his own, and in that belief had altered his position by spending it, the plaintiffs were estopped from alleging that it was paid under a mistake; and this brings us to a consideration of point No. 2 above stated.
Re: (ii): Whether the principle of estoppel applies or there are circumstances attendant upon the transaction which disentitle the respondent to recover back the monies, depends upon the facts and circumstances of each case.
No question of estoppel can ever arise where both the parties, as in the present case, are labouring under the mistake of law and one party is not more to blame than the other.
Estoppel arises only when the plaintiff by his acts or conduct makes a representation to the defendant of a certain state of facts which is acted upon by the defendant to his detriment; it is only then that the plaintiff is estopped from setting up a different state of facts.
Even if this position can be availed of where the representation is in regard to a position in law, no (1) , 241.
(2) [1949] L. R. 76 I. A. 244.
(3) 1366 such occasion arises when the mistake of law is common to both the parties.
The other circumstances would be such as would entitle a court of equity to refuse the relief claimed by the plaintiff because on the facts and circumstances of the case it would be inequitable for the court to award the relief to the plaintiff.
These are, however, equitable considerations and could scarcely be imported when there is a clear and unambiguous provision of law which entitles the plaintiff to the relief claimed by him.
Such equitable considerations were imported by the Nagpur High Court in Nagorao vs G. G. in Council where Kaushalendra Rao J. observed: " The circumstances in a particular case, disentitle the pltf.
to recover what was paid under mistake." " If the reason for the rule that a person paying money under mistake is entitled to recover it is that it is against conscience for the receiver to retain it, then when the receiver has no longer the money with him or cannot be considered as still having it as in a case when he has spent it on his own purposes which is not the case here different considerations must necessarily arise.
" We do not agree with these observations of the Nagpur High Court.
No such equitable considerations can be imported when the terms of section 72 of the are clear and unambiguous.
We may, in this context, refer to the observations of their Lordships of the Privy Council in Mohori Bibee vs Dhurmodas Ghose (2) at p. 125.
In dealing with the argument which was urged there in regard to the minor 's contracts which were declared void, viz., that one who seeks equity must do equity and that the minor against whom the contract was declared void must refund the advantage which he had got out of the same, their Lordships observed that this argument did not require further notice except by referring to a recent decision of the Court of Appeal in Thurstan vs Nottingham Permanent Benefit Building Society (3) (1) A.I.R. 1951 Nag.
372,374.
(2) [19O2] L. R. 30 I. A. 114.
(3) [I9O2] 1 Ch.
1. 1367 since affirmed by the House of Lords and they quoted with approval the following passage from the judgment of Romer L. J., at p. 13 of the earlier report: " The short answer is that a Court of Equity cannot say that it is equitable to compel a person to pay moneys in respect of a transaction which as against that person the Legislature has declared to be void.
" That ratio was applied by their Lordships to the facts of the case, before them and the contention was negatived.
Merely because the State of U. P. had not retained the monies paid by the respondent but had spent them away in the ordinary course of the business of the State would not make any difference to the position and under the plain terms of section 72 of the the respondent would be entitled to recover back the monies paid by it to the State of U.P. under mistake of law.
The result, therefore, is that none of the contentions urged before us on behalf of the appellants in regard to the non applicability of section 72 of the to the facts of the present case avail them and the appeal is accordingly dismissed with costs.
Appeal dismissed.
| Under section 72 of the : " A person to whom money has been paid . by mistake or under coercion must repay or return it ".
The respondent, a registered firm, paid sales tax in respect of its forward transactions in pursuance of the assessment orders passed by the sales tax officer for the years 1949 51, but in 1952, the Allahabad High Court having held in Messrs. Budh Prakash jai Prakash vs Sales Tax Officer, Kanpuy, , that the levy of sales tax on forward transactions was ultra vires, the respondent applied for a refund of the amounts paid, by a writ petition under article 226 of the Constitution.
It was contended for the sales tax authorities that the respondent was not entitled to a refund because (1) the amounts in dispute were paid by the respondent under a mistake of law and were therefore irrecoverable, (2) the payments were in discharge of the liability under the Sales Tax Act and were voluntary payments without protest, and (3) inasmuch as the monies which had been received by the Government had not been retaine but had been spent away by it, the respondent was disentitled to recover the said amounts.
Held, that the term " mistake " in section 72 Of the Indian Con tract Act comprises within its scope a mistake of law as well as a mistake of fact and that, under that section a party is entitled to recover money paid by mistake or under coercion, and if it is established that the payment, even though it be of a tax, has been made by the party labouring under a mistake of law, the party receiving the money is bound to repay or return it though it might have been paid voluntarily, subject, however, to questions of estoppel, waiver, limitation or the like.
Shib Prasad Singh vs Maharaja Srish Chandra Nandi, (1949) L.R. 76 I.A. 244, relied on.
Where there is a clear and unambiguous provision of law which entitles a party to the relief claimed by him, equitable considerations cannot be imported and, in the instant case, the fact that the Government had not retained the monies paid by the respondent but had spent them away in the ordinary course 1351 of business of the State would not make any difference, and under the plain terms of section 72 Of the Act the respondent was entitled to recover the amounts.
Observations in Nagorao vs Governor General in Council, A. 1.
R. , 374, to the effect that where a party receiving money paid under a mistake has no longer the money with him, equitable considerations might arise, disapproved.
|
Summarize this legal judgement text concisely | Appeal No. 481 of 1957.
Appeal by special leave from the judgment and order dated December 12, 1955, of the Punjab High Court (Circuit Bench) Delhi, in Civil Writ Application No. 11 D of 1955.
Gurbachan Singh and R. section Narula, for the appellant.
C.K. Daphtary, Solicitor General of India, H. J. Umrigar and T. M. Sen, for respondents Nos. 1 to 4.
Dr. J. N. Banerjee and P. C. Agarwala, for respondent No. 5. 1958.
September 30.
The Judgment of the Court was delivered by DAS C. J.
The facts material for the purpose of disposing of this appeal by special leave are shortly as follows: The appellants, before us claim to have been dealers in foreign liquor since 1922 and to have, before the partition of the country, held licenses in forms L 1, L 2, L 10 and L 11 at Amritsar, Sialkot and Multan.
The appellants allege that in 1945 they had also secured a license in Form L 2 in respect of some premises in Chawri Bazar, Delhi, but that the operation of the said license had to be suspended on account of the unsuitability of the Chawri Bazar premises.
Then came the communal riots in the wake of the partition of the country and that license could not be renewed.
ln 1951 the appellants applied to the Chief Commissioner, Delhi, (exhibit 1) for licenses both in Forms L 1 and L 2 in respect of Karolbagh or at any place in Delhi.
On May 17, 1951, the Home Secretary to the Chief Commissioner by letter (exhibit 2) conveyed to the appellants the sanction of the Chief Commissioner to the grant to them of license in Form L 2 in respect of Karolbagh, Delhi.
This license has ever since then been renewed from year to 1427 year.
In 1954 a vacancy arose in respect of a license in Form L 2 on account of the closure of the business of Messrs. Army and Navy Stores of Regal Buildings, New Delhi, which held such a license.
Accordingly on January 21, 1954, the appellants submitted an application (exhibit 4) to the Deputy Commissioner for the grant of a foreign liquor license in Form L 2 in the aforesaid vacancy.
In that application the appellants stated, inter alia, that they were " prepared to operate it in such a part of Delhi as may be determined by the authorities ".
Not having received any reply for nearly 3 months and apprehending that interested persons were endeavouring to cause hindrance in the matter of the granting of the license to them on the plea that the appellants had no premises in Connaught Place, the appellants, on March 11, 1954, wrote a letter (exhibit 5) to the Chief Commissioner in which, after pointing out that Karolbagh where they had their L 1 license was in New Delhi, the appellants stated: " In any case, we have already made it clear in our application which we made to the Deputy Commissioner, Delhi on the 21st January, 1954, that we are prepared to operate this license in any locality which the authorities might deem proper ".
This letter was acknowledged by the Personal Assistant to the Chief Commissioner who, on March 15, 1954, stated (exhibit 6) that the " application No. Nil dated 18 3 1954 on the subject of grant of foreign liquor license in Form L 2 " had been forwarded to the Home Secretary, Delhi State, for disposal.
Exhibit 7 to the petition is an important document.
It is a letter dated May 21, 1954, addressed by the appellants to the Excise and Taxation Commissioner stating that " with a view to avoiding any possible objection as to locality etc., we have secured suitable premises also in the Connaught Place area, New Delhi, in which area has occurred a vacancy on account of the surrender of this license by Messrs. Army and Navy Stores ".
The letter concluded with the request that early orders be passed oil their application.
On July 30, 1954, the appellants wrote a long letter (exhibit 8) to the Chief Commissioner claiming justice in the matter of their 1428 application for the L 2 license.
In the second paragraph of that letter it was stated: ,It is now being acclaimed by the party concerned and their friends that they have succeeded in removing the only obstacle that stood in the way of their getting the said L 2 license by so arranging matters that our application has been kept back by the Excise Commissioner and that only five or six other applications of firms without much merit in them have been forwarded to you in order that they might have a smooth sailing as against those applicants ".
The appellants prayed that the Excise Commissioner might be directed to forward all records concerning the case to the Chief Commissioner so that the latter might be able to arrive at a just conclusion and they asked for a hearing to explain their claim fully.
A copy of this letter appears to have been endorsed to the Excise Commissioner on August 13, 1954, by the Under Secretary, Finance.
The Excise Commissioner then wrote a letter No. 295/C/54 dated August 31, 1954, to the Under Secretary, Finance, a copy of which was produced by the learned Solicitor General at the hearing before us.
In this letter the Excise Commissioner explained why the application of the appellants was not considered by him to be a good and proper one and stated that reasons why, according to him, the applications of two , other applicants, including Messrs Gainda Mall Hem Raj (respondent No. 5), should be given the preference.
In the penultimate paragraph of this letter of explanation it was stated: " In the end it may also be added that the applicant has no premises in New Delhi and as such he had no claim.
The license in Form L 2 is granted in respect of certain premises.
" The conclusion was that "under the circumstances there is no force in the application of Messrs. Ghaio Mall and Sons.
" It is apparent that the Excise Commissioner did not remember that the appellants had, by their letter (exhibit 7) of May 21, 1954, addressed to him, stated that they had secured suitable premises also in the Connaught Place area, New Delhi.
Be that as it may, on September 11, 1954, the appellants wrote another letter (exhibit 9) to the Chief 1429 Commissioner pressing their claim.
In this letter reference was made to their letter to the Excise Commissioner of May 21, 1954, (exhibit 7) in which it had been stated that the appellants had secured suitable premises in the Connaught Place area in New Delhi.
A copy of this letter was sent to the same Under Secretary, Finance, to whom the Excise Commissioner had written his letter of August 31, 1954, alleging that the appellants had no premises in New Delhi.
Exhibit 9A is the postal acknowledgment by the Under Secretary, Finance, of the letter containing the copy of the appellants ' letter but it does not appear from the record that the Under Secretary, Finance, thought it necessary to remind the Excise Commissioner that the appellants were maintaining that they had secured suitable premises in New Delhi.
This was followed by a letter (exhibit 10) from the appellants to the Excise Commissioner intimating that an application had been made to the Collector on September 11, 1954, for a change of their premises for L 1 license from Karolbagh, New Delhi to H. 32 Connaught Circus, New Delhi.
Although this letter had been written in connection with the change of L 1 license,, it certainly did specify that the appellants had secured the premises H 32 Connaught Circus.
The personal Assistant to the Excise Commissioner replied (exhibit 11) that the matter was under consideration.
There was a reminder (exhibit 12) sent to the Excise Commissioner on December 8, 1954, about the change of L 1 license from Karolbagh to Connaught Circus.
It appears from papers, for the first time produced before us at the hearing of this appeal, that on September 3, 1954, a note was put up by the Under Secretary, Finance, before the Finance Secretary, Shri section K. Mazumdar.
At the forefront of this note we find the following statement: " The applicants (Messrs. Ghaio Mall and Sons) have no premises in Connaught Circus.
For these reasons, if for no other, their claim has to be rejected.
" The note concluded with the recommendation that, in case it was decided that the vacancy should be filled, the recom mendation of the Excise Commissioner should be accepted, that is to say, the L 2 license should go to 1430 Messrs. Gainda Mall Hem Raj (Respondent No. 5).
On September 8, 1954, the Finance Secretary simply endorsed the file to the Chief Minister who, on September 14, 1954, recorded the following order on the file: " Commissioner 's recommendation may be accepted ".
There is nothing on the record produced before us to indicate that the matter was sent up to the Chief Commissioner or that his concurrence was obtained under section 36 of the Government of Part C States Act (No. 49 of 1951).
On December 14, 1954, the Under Secretary, Finance, wrote to the Excise Commissioner a letter which was for the first time produced at the hearing before the High Court and to which detailed reference will be made hereafter.
On January 15, 1955, the appellants were informed that the change applied for by them in respect of their L 1 license had been allowed.
The appellants were not told anything about the rejection of their application for L 2 license, but evidently they came to know that the L 2 license, for which a vacancy had arisen on account of the closure of Messrs. Army and Navy Stores, had been granted to Messrs. Gainda Mall Hem Raj (respondent No. 5).
On December 24, 1954, the appellants wrote severally to the Home Secretary (exhibit 14) Finance Secretary (exhibit 15) and the Under Secretary, Finance (exhibit 16) asking for a copy of the order or orders granting license to Messrs. Gainda Mall Hem Raj and/or rejecting their own application for L 2 foreign liquor license.
Three postal acknowledgments (Exs.
16A, 16B, 16C) relating to those three letters are on the record.
The appellants got no reply from any of them.
Not having received any reply the appellants on December 21, 1954, moved the Punjab High Court (Circuit Bench) under article 226 for appropriate writs or orders, but as it was not then quite clear whether the order granting the license to Messrs. Gainda Mall Hem Raj had actually been made, the Circuit Bench summarily dismissed that writ application as premature.
There were proceedings taken by the appellants to obtain leave to appeal first from this Court under article 136 which was adjourned sine die and then from the High Court under article 133, but it is not necessary 1431 to go into further details of those proceedings.
After the appellants had definitely ascertained that the L 2 license had been granted to Messrs. Gainda Mall Hem Rai, the appellants, instead of proceeding with their application for leave to appeal to this Court, filed a fresh writ petition in the High Court (Circuit Bench) out of which the present appeal has arisen.
In the present writ petition the appellants have impleaded 7 respondents, namely, (1) The State of Delhi, (2) The Chief Minister, Delhi, (3) The Excise and Taxation Commissioner, Delhi, (3 A) Secretary, Delhi State, (3 B) Under Secretary, Finance, (4) The Chief Commissioner, Delhi and (5) Messrs. Gainda Mall Hem Raj.
The principal ground , urged by the appellants in support of this petition are that the ap plications of the appellants and of the other applicants had never been placed before the Chief Commissioner who, under r. I of Ch.
5 of the Delhi Liquor License Rules, 1935, framed under section 59 of the Punjab Excise Act (Punjab I of 1914), as extended to Delhi, was the only competent authority empowered to grant L 2 license for wholesale and retail vend of foreign liquor to the public and that the Chief Commissioner had never applied his mind to the applications and did not in fact make any order and that respondents Nos. 2 and 3 had purported to exercise jurisdiction and power which were not vested in them by law and that their decision, if any, had not received the con currence of the Chief Commissioner, as requiried by the proviso to section 36 of the Government of Part C States Act.
The appellants pray for the issue of appropriate writs, orders or directions (a) quashing and setting aside the order of granting L 2 license to respondent No. 5, (b) directing the respondent No. 4 (the Chief Commissioner) to hold proper enquiry regarding suitability of premises etc., to hear both the parties and to decide the application of the petitioner before taking tip the application of the 5th respondent.
There is a prayer in the nature of a prayer for further and other reliefs and there is the usual prayer for costs.
182 1432 A Written statement verified by the affidavit of Shri.
section K. Majumdar, the Finance Secretary, has been filed on behalf of respondents I to 4.
In paragraph 5 of that written statement it has been averred that all the applications including the appellants ' application were in fact considered; but it is significant that it has not been stated by whom the applications had been considered.
Messrs. Gainda Mall Hem Raj have filed an affidavit only stating that they had been informed that the Chief Commissioner had sanctioned the grant of the license to them.
The appellants, with the leave of the High Court, filed a consolidated affidavit setting out facts including the fact that although they had written to the Home Secretary, the Finance Secretary and the Under Secretary, Finance, asking for a copy of the order granting the license to Messrs. Gainda Mall Hem Raj, no copy of the order or even a reply to the letters had been received.
In reply to the consolidated fresh affidavit an affidavit affirmed by the Finance Secretary (Shri section K. Majumdar) has been filed.
In paragraph 13 of this affidavit it has been stated that, since no appeal lies against the order of the Chief Commissioner, the question of supplying a copy of the order to the appellants does not arise.
Statements of this kind cannot but leave an impression in the mind of the Court that the respondents were not squarely dealing with the case made by the appellants, but were evading the production of the order of the Chief Commissioner which it was obviously insinuated not to have been made at all.
In order to compel the respondents to produce the original order, if any, the appellants made an application to the High Court supported by an affidavit.
Paragraph 2 of the petition which was quite precise reads thus: " 2.
That with reference to paragraphs 7 & 8 of the written statement and paragraphs 10 and 11 of the affidavit of the Finance Secretary it is submitted that the respondents have not filed any proper return to the rule issued by the Court inasmuch as the original order sought to be quashed with nothings etc., which led to those orders have been withheld by the 1433 respondents.
The respondents have not even stated that the Chief Commissioner, Delhi, who is admittedly the only competent authority for the grant of an L 2 license passed any orders himself.
The replies are evasive.
It is not stated who considered the application of the petitioner i.e. whether it was a clerk who was doing the noting or whether the Collector or the Finance Secretary or the Chief Minister who did it.
" On this application the High Court on April 11, 1955, made the following order: Let the order rejecting the petitioners ' application be brought to court by an officer or official of the department concerned.
" The Finance Secretary filed a reply paragraph 3 of which was in the term , following: " 3.
That I have carefully gone through the relevant papers.
The case of the petitioner was considered along with that of other applicants and it was finally decided to issue the license in favour of Messrs. Gainda Mall Hem Raj.
It was not considered necessary to send an intimation of rejection to all those who had not been granted the license in question.
There is therefore no specific order rejecting the petitioner 's application as ordered to be produced by the Hon 'ble Court.
" Although it was obvious what order of the Chief Commissioner the appellants were insisting on being produced, the respondents were prompt in taking advantage of the wording of the High Court 's order directing the production of the order rejecting the appellants ' application and stated that there was no specific order rejecting the appellants ' application.
This is nothing short of what may be called swearing by the card.
The deponent overlooks the fact that the order granting the license to Messrs. Gainda Mall Hem Raj was in effect tantamount to a rejection of the appellants ' application.
The appellants moved the High Court again on August 8, 1955.
After stating how the respondents were evading the real issue, the appellants in paragraph 5 of the petition categorically 1434 stated that their case was that the Chief Commissioner, Delhi, the competent authority, had not passed any order sanctioning the license in favour of Messrs. Gainda Mall Hem Raj and prayed that the respondents be directed to file the original record of the case including the actual sanction for the grant of the license to Messrs. Gainda Mall Hem Raj.
On August 19, 1955, the Court ordered the relevant records to be called for.
The only thing the respondents could, at long last, produce before the High Court was the letter of the Under Secretary, Finance, to the Excise Commissioner dated December 14, 1954, to which reference has already been made.
Learned Solicitor General appearing for respondents 1 to 4 pointed out that the order which is sought to be quashed was the grant of L 2 license for the year 1954/1955 which has long expired and suggested that the writ petition and consequently the appeal had become infructuous.
It appears that the usual practice in such matters is that once a license in Form L 2 is granted by the Chief Commissioner, it is almost automatically renewed by the Collector from year to year, unless, of course, the licensee is found guilty of breach of any excise rule and that in such cases of renewal there arises no question of vacancy entitling any outside competitor to apply for a license in Form L 2.
That being the position and this is not in dispute it is vitally important for the appellants that we should consider the validity of the grant of the L 2 licence for 1954/1955 to Messrs. Gainda Mall Hem Raj, for in case of our holding that the order granting the same was a nullity on account of its not having been made by the competent authority, the vacancy caused by the closure of business by Messrs. Army and Navy Stores will still remain to be filled up and the appellants will yet have a chance of having their application considered by the competent authority.
We accordingly proceeded to hear the appeal on merits.
The principal question urged before us, as before the High Court, is whether the Chief Commissioner of Delhi made any order under r. 1 of Ch.
5 of the Delhi 1435 Liquor License Rules, 1935.
It is significant that although the Chief Minister, the Excise Commissioner, the Secretary of Delhi State, the Under Secretary, Finance, and the Chief Commissioner have been impleaded in the present proceedings as respondents Nos. 2, 3, 3A, 3B and 4 respectively and although they or at least some of them could have deposed to the material facts of their own personal knowledge, none of them ventured to file an affidavit dealing with the categorical statement of the appellants that no order had at any time been made by the Chief Commissioner for granting the L 2 license to Messrs. Gainda Mall Hem Raj or rejecting the appellants ' application.
Instead of adopting the simple and straight forward way these respondents have taken recourse to putting up the Finance Secretary to give obviously evasive replies which are wholly unconvincing.
It is needless to say that the adoption of such dubious devices is not calculated to produce a favourable impression on the mind of the court as to the good faith of the authorities concerned in the matter.
We must also point out that when a superior court issues a rule on an application for certiorari it is incumbent OD the inferior court or the quasi judicial body, to whom the rule is addressed, to produce the entire records before the court along with its return.
The whole object of a writ of certiorari is to bring up the records of the inferior court or other quasi judicial body for examination by the superior court so that the latter may be satisfied that the inferior court or the quasi judicial body has not gone beyond its jurisdiction and has exercised its jurisdiction within the limits fixed by the law.
Non production of the records completely defeats the purpose for which such writs are issued, as it did in the present case before the High Court.
We strongly deprecate this attempt on the part of the official respondents to bye pass the court.
We are bound to observe that the facts appearing on the records before us disclose a state of affairs which does not reflect any credit on the administration of the erstwhile State of Delhi.
We must, however, say, in fairness to the learned Solicitor General, that he promptly produced 1436 the entire records before us during the hearing of this appeal.
As already stated the principal question, on which arguments have been addressed to us, is whether the Chief Commissioner had made any order for granting the L 2 license to Messrs. Gainda Mall Hem Raj.
The High Court answered the question in the affirmative on two grounds, namely, (1) that the Finance Secretary had made an affidavit stating that the decision regarding the grant of the license to Messrs. Gainda Mall Hem Raj had been taken by the Chief Commissioner, and (2) that the learned Solicitor General stated in specific terms that the matter had in fact been decided by the Chief Commissioner.
On the facts as they now emerge it appears to us that the High Court was under some misapprehension on both these points.
We have already summarised all the statements and affidavits affirmed by the Finance Secretary and it is quite clear that the only thing that he did not say was that the Chief Commissioner had considered the applications or made any order.
The learned Solicitor General, with his usual fairness, also informed us that except relying on the letter of December 14, 1954, lie did not say that the Chief Commissioner had taken any decision in the matter.
This being the position we are free to go into the matter and come to our own decision thereon.
The records, including the documents now produced before us, do not show that the applications had ever been placed before the Chief Commissioner.
There is nothing in the files showing any order or note on the subject made or signed or initialled by the Chief Commissioner.
What transpires is that the Excise Commissioner (respondent No. 3) had by his letter dated August 31, 1954, recorded the reasons why the appellants ' applications could not be entertained, one of the reasons being that they had no premises in the Connaught Place area in New Delhi, that a note was then put up by the Under Secretary, Finance, on September 3, 1954, suggesting that the appellants ' application should be rejected, if for nothing else, for their not having any premises in New Delhi (which 1437 according to the appellants was not a correct statement in view of their letters referred to above) and that the L 2 license should be granted to Messrs. Gainda Mall Hem Raj, that the Chief Minister on September 14, 1954, made an order on the file accordingly and finally that the Under Secretary, Finance, wrote the letter 'dated December 14, 1954, to the Excise Commissioner intimating that the Chief Commissioner had been pleased to approve the grant of the license to Messrs. Gainda Mall Hem Raj.
There is nothing on the record to show that the concurrence with the order of the Chief Minister was obtained from the Chief Commissioner.
The inexorable force of the aforesaid facts, now appearing on the record, inevitably led the learned Solicitor General to concede that, on the records as they are, it is not possible for him to say that the Chief Commissioner had actually made the order, but he contends that, in view of the letter of the Under Secretary, Finance, dated December 14, 1954, the fact that the Chief Commissioner had made the order could not be questioned in any court.
In other words the learned Solicitor General submits that that letter embodies the order of the Chief Commissioner and the court cannot be asked to go behind it and enquire whether the Chief Commissioner had in fact made the order.
In order to succeed in this contention the learned Solicitor General has to satisfy us that this letter is the embodiment of the Chief Commissioner 's order and that it has been duly authenticated.
On the second point he is clearly right, for under a rule 'Made on March 17, 1952, by the then Chief Commissioner, in exercise of powers conferred on him by section 38(3) of the Government of Part C States Act (49 of 1951), an Under Secretary is also a person competent to authen ticate an order or instrument of the Government of Delhi.
The only question that remains for us to consider is whether the letter in question is the order of the Chief Commissioner.
The letter on which the entire defence of the respondents rests is expressed in the following words: 1438 "DELHI STATE SECRETARIAT, DELHI STATE No. F. 10(139)/54 G A & R Dated the 14th December, 54.
From Shri M. L. Batra, M. A., P. C. section, Under Secretary Finance (Expenditure) to Government, Delhi State.
To Shri Dalip Singh, M. A., 1.
R. section, Commissioner of Excise, Delhi State, Delhi.
Subject: Grant of L 2 License.
Sir, With reference to your letter No. 295/C/54 dated the 31st August, 1954, on the above subject, I am directed to say that the Chief Commissioner is pleased to approve under Rule 5. 1. of Delhi Excise Manual Vol.
11 the grant of L 2 ' license to Messrs. Gainda Mall Hem Raj, New Delhi, in place of the L 2 License surrendered by Messrs. Army & Navy Stores, New Delhi.
Necessary License may kindly be issued to the party concerned under intimation to this Secre tariate.
Yours faithfully, (Sd.).
M. L. Batra, Under Secretary, Finance (Exp.) to Government, Delhi State." In the first place it is an inter departmental com munication.
In the second place it is written with reference to an earlier communication made by the Excise Commissioner, that is to say, ex facie, it purports to be a reply to the latter 's letter of August 31, 1954.
In the third place the writer quite candidly states that he had been " directed to say " something by whom, it is not stated.
This makes it quite clear that this document is not the order of the Chief Commissioner but only purports to be a communication at the direction of some unknown person of the order which 1439 the Chief Commissioner had made.
Indeed in paragraph 7 of the respondents ' statement filed in the High Court on February 2,1955, this letter has been stated to have " conveyed the sanction of the Chief Commissioner of the grant of license to the 5th respondent ".
A document which conveys the sanction can hardly be equated with the sanction itself Finally the document does not purport to have been authenti cated in the form in which authentication is usually made.
There is no statement at the end of the letter that it has been written " by order of the Chief Commissioner ".
For all these reasons it is impossible to read this document as the order of the Chief Commissioner.
Learned counsel for Messrs. Gainda Mall Hem Raj relied on our decision in Dattatreya Moreshwar Pangarkar vs The State of Bombay (1).
In that case there was ample evidence on the record to prove that a decision had in fact been taken by the appropriate authority and the infirmity in the form of the authentication did not vitiate the order but only meant that the presumption could not be availed of by the State.
That decision did not proceed on the correctness of the form of authentication but on the fact of an order having in fact been made by the appropriate authority and has thus no application to the present case where it is conceded that the Chief Commissioner had not in fact made or concurred in the making of an order granting the license to Messrs. Gainda Mall Hem Raj.
In the view we have taken it is not necessary for us to consider whether the action taken under the Excise Act and the rules thereunder was a judicial or an executive action, for even if it were of the latter category the letter of December 14, 1954, cannot be treated as an order properly authenticated to which the presumption raised by article 166 of the Constitution will attach.
For reasons stated above we hold that there was no valid order granting the L 2 license to Messrs. Gainda Mall Hem Raj and that in the eye of the law the vacancy arising on the closure of the (1) ; 183 1440 business by Messrs. Army and Navy Stores still remains unfilled.
The applications of the appellants and other applicants were for a grant of L 2 license for 1954/ 1955.
That year has gone past and accordingly in the changed circumstances we direct the Chief Commissioner to fill up the vacancy caused by the closure of the business by Messrs. Army and Navy Stores by inviting applications from intending licensees including the appellants and Messrs. Gainda Mall Hem Raj and granting the same to the most suitable party.
We, therefore, accept this appeal, reverse the order of the High Court and issue a mandamus to the effect aforesaid and also direct the respondents Nos.
1 to 4 to pay the appellants ' costs of this appeal and of the proceedings in the High Court out of which this appeal has arisen.
Messrs. Gainda Mall Hem Raj are to bear their own costs throughout.
Appeal allowed.
| The appellant firm, an unsuccessful applicant for a license for vending foreign liquor in New Delhi for the year 954 1955, moved the High Court under article 226 of the Constitution for a writ of certiorari quashing the order granting the license to a rival applicant and impleaded the Chief Minister, the Excise Commissioner, the Secretary and the Under Secretary, Finance, of the State of Delhi, as it then was, as parties to the application.
Its case in substance was that the applications made for the grant of the licence were never placed before the Chief Commissioner who alone was the competent authority to grant it under Ch.
5, r. i of the Delhi Liquor License Rules, 1935, framed under section 59 Of the Punjab Excise Act (Punj. 1 of 1914), as extended to Delhi, and no order granting the license was ever made by him.
The said opposite parties respondents, although repeatedly called upon by the High Court to do so, did not produce the entire records and filed evasive affidavits and eventually produced a letter written by the Under Secretary, Finance, to the Excise Commissioner intimating that the Chief Commissioner had made the order for granting the license to the rival applicant and maintained that the order had in fact been made by the Chief Commissioner.
The High Court, under a misapprehension of fact and of the true nature and effect of that letter written by the Under Secretary, Finance, to the Excise Commissioner, held that the order had in fact been passed by the Chief Commissioner.
The production of the entire records in the 1425 Supreme Court made it clear, and the respondents also conceded, that the applications were never placed before the Chief Commissioner, nor any order granting the said license was ever made by him.
What had happened was that upon an order made by the Chief Minister on the file in accordance with a note put up by the Under Secretary, Finance, the latter wrote a letter to the Excise Commissioner in reply to a previous one of his, that the license might be granted to the said rival applicant.
That letter, on which the High Court had relied, was in the following terms, With reference to your letter No. 295/C/54 dated the 31st August, 1954, on the above subject, I am directed to say that the Chief Commissioner is pleased to approve under Rule 5. 1. of Delhi Excise Manual Vol.
11 the grant of L 2 license to Messrs. Gainda Mall Hem Raj, New Delhi, in place of the L 2 License surrendered by Messrs. Army & Navy Stores, New Delhi.
Necessary license may kindly be issued to the party concerned under intimation to this Secretariate ".
There was nothing on the record to show that the Chief Commissioner had ever concurred in the order made by the Chief Minister on the file.
Held, that the attempt of the official respondents to by pass the Court must be strongly deprecated, and the order of the High Court must be reversed.
When a superior Court issues a rule on an application for a writ of certiorari, it is incumbent upon the inferior Court or the quasi judicial body, to whom the rule is addressed, to produce the entire records along with the return so that the superior Court may satisfy itself that the inferior Court or the quasijudicial body has not exceeded its lawful jurisdiction.
Non production of such records, as in the instant case, must defeat the purpose which the writ has in view.
Held, further, that in view of the undisputed practice that such a license, once granted by the Chief Commissioner, was almost automatically renewed by the Collector year to year, it could not be said that the writ application and the appeal had become infructuous on the expiry of the period of the license in dispute and it was only proper that the appeal should be heard on merits.
In the facts and circumstances of the case it was impossible to hold that the letter of the Under Secretary embodied the order of the Chief Commissioner or that the Court could not be asked to go behind it.
The letter was clearly a communication of the sanction and could not be equated with the sanction itself.
Although an Under Secretary was competent to authenticate an order made by the Chief Commissioner, the letter in question did not purport to be made in the name of the Chief Commis sioner and therefore the letter could not be treated as a properly 1426 authenticated order to which the presumption raised by article 166 of the Constitution could properly attach.
Dattatreya Moreshwar Pangarkar vs The State of Bombay, , held inapplicable.
|
Summarize this legal judgement text concisely | Appeal No.230 of 1954.
Petition No. 276 of 1953.
Appeal from the judgment and order dated June 7, 1954, of the former Pepsu High Court in Civil Misc.
No. 97 of 1953.
Petition under Article 32 of the Constitution of India for the enforcement of fundamental rights.
731 G.S. Pathak, Veda Vyasa, section K. Kapur and J. B. Dadachanji, for the appellants petitioners.
H. N. Sanyal, Additional Solicitor General of India,R.Ganapathi Iyer, Raj Gopal Sastri and R. H. Dhebar, for the respondents.
April 28.
The judgment of section R. Das C. J., Venkatarama Aiyar, section K. Das and Gajendragadkar JJ.
was delivered by Venkatarama Aiyar J. Bose J. delivered a separate judgment.
VENKATARAMA AIYAR J. Messrs.
Dalmia Dadri Cement Co. Ltd. which is the appellant in Civil Appeal No. 230 of 1954 and the petitioner in Petition No. 276 of 1953, is a public company engaged in the manufacture and sale of cement at a place called Dadri situate in what was once the independent State of Jind.
On April 1, 1938, one Shanti Prasad Jain, a promoter of the above company, obtained certain concessions from the Ruler of Jind under an agreement, exhibit A, and as it is this document that forms the basis of the present claim of the appellant, it is necessary to refer to the, material terms thereof.
Clause (1) of the agreement grants to the licensee, Shanti Prasad Jain, the sole and exclusive monopoly right of manufacturing cement in the Jind State and for that purpose he is authorised in Cl.
(2) to win and work all quarries, strata, seams and beds of kankar, rorey, limestone or other like materials ".
Under Cl.
(7), the licence is to last for a period of 25 years with option for successive renewals.
Clause (10) requires that a public limited company should be formed before July 21, 1936, to work the concessions, and that it should be registered in the Jind State.
Under Cl.
(11), the State is to be allotted 6 per cent.
cumulative preference shares fully paid up of the face value of rupees one lack and ordinary shares fully paid up of the total face value of Rs. 50,000 without any payment whatsoever.
Then there are provisions for the payment of royalty to the State and sale of cement at concession rates to local consumers.
Clause (23) is very material for the present dispute, and is as follows: 93 732 " The Company shall be assessed to income tax in accordance with the State procedure but the rate of income tax shall always be four per cent.
up to a limit of the income of rupees five lacs and five per cent.
on such income as is in excess of rupees five lacs. . .
Clause (24) grants exemption from export, import and other duties excepting consmers.
Clause (37) provides for settlement of all disputes between the parties by arbitration.
In accordance with the terms set out above, the appellant company was duly incorporated in the Jind State, and on May 27, 1938, Shanti Prasad Jain executed in its favour a deed agreeing to transfer all " his rights, privileges and obligations " under exhibit A.
The appellant claims that it has become in this wise entitled as assignee of the licensee to all the benefits granted under exhibit A.
The contention was raised by the respondent that the deed dated May 27, 1938, does not itself purport to assign the rights under the license, exhibit A but merely agrees to do so, and that in the absence of a further deed transferring those rights, the appellant could not claim the rights of assignee.
But Cl.
(35) expressly provides that " the licensee shall transfer his rights to the proposed Company on its formation ", and after the appellant was incorporated, the State had throughout recognised it as the person entitled to the rights and subject to the obligations under the license and realised royalty and levied income tax in accordance with the provisions of exhibit A.
This objection was taken for the first time only in the Writ Petition No. 276 of 1953 in this Court.
It is stated for the appellant and that is not controverted for the respondent that under the law of Jind State an assignment need not be in writing, and that being so, it is open to us to infer such assignment from the conduct of the parties.
We must accordingly decide these cases on the footing that the rights under the license, exhibit A, dated April 1, 1938, had become vested in the appellant by assignment.
On August 15, 1947, India became independent, and on the same date, the Ruler of Jind signed an Instrument of Accession ceding to the Government of India 733 power to legislate with respect to Defence, External Affairs and Communications.
On May 5, 1948, eight of the Rulers of States in East Punjab including Jind entered into a Covenant for the merger of their territories into one State, called the Patiala and East Punjab States Union.
For brevity, this State will hereafter be referred to as the Patiala Union.
Article VI of the Covenant on which the appellant relies in support of its claim is as follows: " The Ruler of each Covenanting State shall, as soon as may be practicable, and in any event not later than the 20th August, 1948, make over the administration of his State to the Raj Pramukh; and thereupon, (a)all rights, authority and jurisdiction belonging to the Ruler which appertain, or are incidental to the Government of the Covenanting State shall vest in the Union and shall hereafter be exercisable only as provided by this Covenant or by the Constitution to be framed thereunder; (b)all duties and obligations of the Ruler pertaining or incidental to the Government of the Covenanting State shall devolve on the Union and shall be discharged by it; (c)all the assets and liabilities of the Covenanting State " shall be the assets and liabilities of the Union; and (d)the military forces, if any, of the Covenanting State shall become the military forces of the Union.
" Article X provides that a Constituent Assembly should be formed as early as practicable, and that it should frame a Constitution for the State, and that until the Constitution is so framed, the Rajpramukh is to have power to make and promulgate Ordinances for the peace and good government of the Union.
Under article XVI, the Union " guarantees either the continuance in service of the permanent members of the public services of each of the Covenanting States on conditions which will be not less advantageous than those on which they were serving on the 1st February, 1948, or the payment of reasonable compensation or retirement or proportionate pension." 734 In accordance with article VI of the Covenant, the Rajpramukh of the Patiala Union took over the administration of Jind on August 20, 1948, and immediately after assumption of office, he promulgated the Patiala and East Punjab States Union Administration Ordinance No. 1 of section 2005.
Section 3 of the Ordinance, which is material for the present discussion, is as follows: " As soon as the administration of any covenanting State has been taken over by the Raj Pramukh as aforesaid all Laws, Ordinances, Acts, Rules, Regulations, Notifications, Hidayate Firman i Shahi, having force of law in Patiala State on the date of commencement of this Ordinance shall apply mutatis mutandis to the territories of the said State and with effect from that date all laws in force in such Covenanting State immediately before that date shall be repealed: Provided that proceedings of any nature whatsoever pending on such date in the courts or offices of any such Covenanting State shall, notwithstanding anything contained in this Ordinance or any other Ordinance be disposed of in accordance with the laws governing such proceedings in force for the time being in any such Covenanting State." This Ordinance came into force on August 20, 1948.
On February 5, 1949, it was repealed and replaced by Ordinance No. XVI of section 2006, section 3(a) whereof being in the same terms as section 3 of Ordinance No. 1 of 8. 2005.
Article X(1) of the Covenant provided, as has been mentioned, for the framing of a Constitution for the Union in the manner provided therein.
That, however did not materialise, and on November 24, 1949, the Rajpramukh issued a proclamation accepting the Indian Constitution as that of the Patiala Union, and thus, the Union became a Part B State under the Constitution.
On April 13, 1950, the Patiala Union accepted the Federal Financial Integration Scheme, and became a taxable territory of the Union of India and the Indian Finance Act, 1950, became applicable to it from April 13, 1950.
The position, therefore, is that as regards liability to be assessed to income tax 735 which is what we are concerned with in these proceedings, the law applicable to the appellant for the period prior to August 20, 1948, was the income tax law of ' Jind, for the period August 20, 1948, to April 13, 1950, the Patiala Income tax Act, section 2001, which came into force under Ordinance No. 1 of section 2005 and after April 13, 1950, the Indian Income tax Act.
Civil Appeal No. 230 of 1954 arises out of proceedings for assessment of income tax for the year 1949 1950.
By its order dated November 11, 1952, the Appellate Tribunal has found that the taxable profits of the appellant for the year of account which is the calendar year 1948 was Rs. 1,94,265, and that finding is not now in dispute.
The substantial point now in controversy is as to the rate at which tax should be levied on that amount, whether it should be what is enacted in the Patiala Income tax Act as contended for the respondent, or what is provided in Cl.
(23) of the agreement, exhibit A, as claimed by the appellant.
On this question, the Appellate Tribunal held that the Patiala Union which was a new State that had come into existence as a result of the Covenant was not bound by the agreements entered into previously by the rulers of the Covenanting States, that the appellant could claim the benefit of that agreement only if the new State chose to recognise it, " that there had been, in fact, no such recognition, and that, in consequence, the tax was leviable as prescribed in the Patiala Income tax Act, section 2001.
On the application of the appellant, the Tribunal referred under section 66(1) of the Indian Income tax Act, the following question for the opinion of the High Court: " Whether the asseessee 's profits and gains earned in the calendar year 1948 were assessable for section 2006 (1949 50) at the rates in force according to the Patiala Income Tax Act of section 2001 read with section 3 of the Patiala & East Punjab States Union Administration Ordinance (No. 1 of section 2005), as repealed and re enacted in section 3 of the Patiala & East Punjab States Union General Provisions (Administration) Ordinance (No. XVI of 2006), or in accordance with clause (23) of the agreement of April, 1938 above referred to," 736 By their judgment dated June 7, 1954, the learned ,Judges of the High Court answered the question against the appellant, but granted a certificate under section 66(A)(2) of the Indian Income tax Act, and that is how Civil Appeal No. 230 of 1954 comes before us.
Meantime, proceedings were taken by the Income tax authorities for assessment of tax for years subsequent to 1949 1950, and the dispute again related to the question whether the amount of tax should be determined in accordance with Cl.
(23) of exhibit A or the provisions of the Indian Income tax Act, 1922.
The Income tax Officer, Rohtak, rejected the contention of the appellant that it was liable to pay tax only in accordance with.
exhibit A and passed orders determining the tax under the provisions of the Indian Incometax Act for the year 1950 1951 on April 28, 1952, for 1951 1952 on May 12, 1952, and for 1952 1953 on March 17, 1953.
Appeals against these orders have been preferred by the appellant, and they are stated to be pending before the Appellate Assistant Commissioner.
On the allegation that the tax as imposed in the orders aforesaid is unauthorised, and that it constitutes an unlawful interference with its rights to carry on business guaranteed under article 19(1)(g), the appellant has filed Petition No. 276 of 1953 for an appropriate writ directing the respondents to levy tax in accordance with the agreement, exhibit A, dated April 1, 1938.
In support of this petition, in addition to the contentions raised in Civil Appeal No. 230 of 1954 the petitioner also urges that even if the Union of India is entitled to repudiate the agreement dated April 1, 1938, it has not, in fact, done so, and that it has, on the other hand, recognised it as good and is therefore not entitled now to go back upon it, and that the levy of tax in accordance with the provisions of the Indian Income tax Act is accordingly illegal.
As the contentions raised in the appeal and in the petition are substantially identical, they were heard together.
Before us, the validity of the assessment of incometax for the year 1949 1950 was challenged by Mr. Pathak on the following grounds: 737 (1)Ordinance No. 1 of section 2005 under which the Patiala Income tax Act Act is sought to be applied to the appellant does not, on its true construction, annul ' the rights granted under exhibit A. (2)If the Ordinance in question is to be construed as having that effect, then it is in contravention of article VI of the Covenant, and is therefore unconstitutional and void.
(3)Even apart from the Covenant, the agreement, exhibit A, is binding on the Patiala Union and the impugned Ordinance is bad as infringing it; and (4)the Patiala Union had, in fact, recognised the rights granted under exhibit A and it is therefore binding on it, as if it were a contract entered into by itself.
(1)On the first question, the argument of Mr. Pathak is this: The Ruler of Jind was an absolute monarch, and his word was law.
The agreement, exhibit A, must therefore be held to be a special law conferring rights on the licensee.
Section 3 of Ordinance No. 1 of section 2005 is a general provision extending all laws of the State of Patiala to the territories of the Covenanting States.
The rule of construction is well established that general statutes should be interpreted so as not to interfere with rights created tinder special laws.
Section 3 of the Ordinance should therefore be construed as not intended to affect the rights conferred under exhibit A. Reliance is placed on the statement of the law in Maxwell 's Interpretation of Statutes, 10th Edn., pp. 176 and 180, and on the observations in Blackpool Corporation vs Starr Estate Co. (1).
Now the rule of construction expressed in the maxim generalia specialibus non derogant is well settled and we shall also assume in favour of the appellant that the agreement, exhibit A, is a special law in the nature of a private Act passed by the British Parliament, and that accordingly section 3 of the Ordinance should not be construed, unless the contrary appears expressly or by necessary implication, as repealing the provisions of exhibit A.
But ultimately, the question is what does the language of the enactment mean ? Section 3 is quite explicit, and (1)[1922] 1 A. C. 27, 34. 738 it provides that from the date of the commencement of the Ordinance " all laws in force in such Covenanting States immediately before that date shall be repealed ", and the proviso further enacts that pending proceedings are to be disposed of in accordance with laws in force for the time being, in the Covenanting States.
In the face of this language which is clear and unqualified, it is idle to contend that Ordinance No. 1 of section 2005 saves the rights of the appellant to the tax concessions under Cl.
(23) of exhibit A. (2)It is next contended by Mr. Pathak that if Ordinance No. 1 of section 2005 is to be construed as extinguishing the right to concessions conferred under exhibit A, then it must be held to be unconstitutional and void.
This contention is based on article VI (b) of the Covenant, which provides that the obligations of the rulers pertaining to or incidental to government of the Covenanting State shall devolve on the Union and be discharged by it.
It is argued that the Ruler of Jind had for good and valuable consideration undertaken certain obligations under Cl.
(23) of exhibit A with reference to taxation which is a governmental function, that he had himself scrupulously honoured them so long as he was a Ruler, and then passed them on under article VI (b) to the new State created under the Covenant, that the Rajpramukh who was a party to the Covenant and claimed under it was bound by that obligation, that his power to enact laws is subject under article VI (a) to the obligations mentioned in article VI (b), and that the impugned law is, if it is to be construed as having the effect of abrogating those obligations, ultra vires his powers under the Covenant and is, in consequence, void.
In answer to this, the respondent contends that the Covenant entered into by the rulers is an act of State and that any violation of its terms cannot form the subject of any action in the municipal courts, that the obligations mentioned in article VI (b) refer not to liabilities under agreements for which there was special provision in article VI (c) but to obligations of the character contemplated by the Instrument of Accession, and that, in any event, the rights granted to the licensee under exhibit A were 739 terminable by the Ruler of Jind at will, and that, in consequence, if the obligation under Cl.
(23) devolved on the Raj Pramukh under article VI (b) it did so subject ' to his rights under article VI (a) to terminate it if he so willed, and that, therefore, the impugned law did not violate article VI (b).
The question that arises for our decision is whether the Covenant was an act of State.
On that, there can be no two opinions.
It was a treaty entered into by rulers of independent States, by which they gave up their sovereignty over their respective territories, and vested it in the ruler of a new State.
The expression " act of State " is, it is scarcely necessary to say, not limited to hostile action between rulers resulting in the occupation of territories.
It includes all acquisitions of territory by a sovereign State for the first time, whether it be by conquest or cession.
Vide Vajesingji Joravar Singji and others vs Secretary of State (1) and Thakur Amar Singji vs State of Rajasthan (2).
And on principle, it makes no difference as to the nature of the act, whether it is acquisition of new territory by an existing State or as in the present case, formation of a new State out of territories belonging to quondam States.
In either case, there is establishment of new sovereignty over the territory in question, and that is an act of State.
Mr. Pathak did not contest the position that the Covenant in so far as it provided for the extinction of the sovereignty of the rulers of the Covenanting States and the establishment of a new State is an act of State.
But he contended that it was much more than that, that it was also in the nature of a Constitution for the new State in the sense that it is a law under which all the authorities of the new State including the Raj Pramukh had to act.
In support of this contention he referred to article X, which provided for the convening of a Constituent Assembly for the framing of the Constitution, and argued that the Articles of the Covenant which provided for the administration of the State by the Rajpramukh were in the nature of an interin (1)(1924) L. R. 51 I. A. 357, 360.
94 (2) ; , 335.
740 Constitution.
He also relied on article XVI, which guaranteed the rights of the permanent members of the public services in the Covenanting States to continuance in service, and contended that this could not be regarded as an act of State but only as a law relating to the administration of the new State.
In this view of the Covenant, he argued, article VI must be held to be a constitutional provision enacted for the protection of private rights, that it was, in conse quence, binding on the ruler of the new State, and that the municipal courts were competent to grant appropriate reliefs for the breach thereof.
This argument proceeds, in our view, on a misconception as to what is an act of state and what is a law of the State conferring rights on the subject, or, as the learned counsel for the appellant termed it, Constitution of the State.
When the sovereign of a Statemeaning by that expression, the authority in which the sovereignty of the State is vested, enacts a law which creates, declares or recognises rights in the subjects, any infraction of those rights would be action able in the courts of that State even when that infraction is by the State acting through its officers.
It would be no defence to that action that the act complained of is an act of state, because as between the sovereign and his subjects there is no such thing as an act of state, and it is incumbent on his officers to show that their action which is under challenge is within the authority conferred on them by law.
Altogether different considerations arise when the act of the sovereign has reference not to the rights of his subjects but to acquisition of territories belonging to another sovereign.
That is a matter between independent sovereigns,and any dispute arising therefrom must be settled byrecourse not to municipal law of either States but to diplomatic action, and that failing, to force.
That is an act of state pure and simple, and that is its character until the process of acquisition is completed by conquest or cession.
Now, the status of the residents of the territories which are thus acquired is that until acquisition is completed as aforesaid they are the subjects of the ex sovereign of those territories 741 and thereafter they become the subjects of the new sovereign.
It is also well established that in the new set up these residents do not carry with them the, rights which they possessed as subjects of the ex sovereign, and that as subjects of the new sovereign, they: have only such rights as are granted or recognised by him.
Vide Secretary of State for India vs Bai Rajbai (1), Vajesingji Joravar Singji and others vs Secretary of State (2), Secretary of State vs Sardar Rustam Khan (3) and Asrar Ahmed vs Durgah Committee, Ajmer (4).
In law, therefore, the process of acquisition of new territories is one continuous act of state terminating on the assumption of sovereign powers de jure over them by the new sovereign and it is only thereafter that rights accrue to the residents of those territories as subjects of that sovereign.
In other words, as regards the residents of territories which come under the dominion of a new sovereign, the right of citizenship commences when the act of state terminates and the two therefore cannot co exist.
It follows from this that no act done or declaration made by the new sovereign prior to his assumption of sovereign powers over acquired territories can quoad the residents of those territories be regarded as having the character of a law conferring on them rights such as could be agitated in his courts.
In accordance with this principle, it has been held over and over again that clauses in a treaty entered into by independent rulers providing for the recognition of the rights of the subjects of the ex sovereign are incapable of enforcement in the courts of the new sovereign.
In Cook vs Sprigg (5), the facts were that the ruler of Pondoland in Africa had granted certain concessions in favour of the appellants and subsequently ceded those territories to the British Government.
The latter having declined to recognise those concessions, the appellants sued for a declaration of their rights thereunder, and the question was whether they had a right of action in respect of what was an act of State.
One of the contentions (1) (1015) L.R. 42 I.A. 229.
(3) (1941) L.R. 68 I.A. 109.
(2) (1924) L. R. 51 T.A. 357, 360.
(4) A.I.R. 1947 P.C. 1.
(5) ,578.
742 urged on their behalf was that the ruler of Pondoland had at the time of cession of his territories expressed his desire to the British Government that the concessions in favour of the appellants should be recognised and that, in consequence, the appellants had the right to enforce them against the new Government.
In rejecting this contention, the Lord Chancellor observed: " The taking possession by Her Majesty, whether by cession or by any other means by which sovereignty can be acquired, was an act of state and treating Sigcau as an independent sovereign which the appellants are compelled to do in deriving title from him.
It is a well established principle of law that the transactions of independent States between each other are governed by other laws than those which municipal courts administer.
" "It is no answer to say that by the ordinary principles of international law private property is respected by the sovereign which accepts the cession and assumes the duties and legal obligations of the former sovereign with respect to such private property within the ceded territory.
All that can be properly meant by such a proposition is that according to the well understood rules of international law a change of sovereignty by cession ought not to affect private property, but no municipal tribunal has authority to enforce such an obligation.
And if there is either an express or a well understood bargain between the ceding potentate and the Government to which the cession is made that private property shall be respected, that is only a bargain which can be enforced by sovereign against the sovereign in the ordinary course of diplomatic pressure." In Vajesingji Joravar Singji and others vs Secretary Of State for India (1), the dispute related to the title of the appellants to certain lands situated in the Panch Mahals.
This area formed at one time part of the dominion of the Scindias of Gwalior, and it was ceded to the British Government by treaty on December 12, 1860.
Clauses (2) and (3) of the treaty provided for (1)(1924) L.R. 51 I.A. 357, 360.
743 the recognition by the new sovereign of rights of the residents under existing leases, jagirs and the like.
The complaint of the appellants was that in 1907 the British Government had proposed to lease the lands to them on terms which infringed their proprietary rights, and that this was in violation of the rights which had been guaranteed under Cls.
(2) and (3) of the treaty, and was, in consequence, bad.
The answer of the Government was that the treaty in question was an act of state and conferred no rights on the appellants.
In upholding this contention, Lord Dunedin observed: " When a territory is acquired by a sovereign state for the first time that is an act of state.
It matters not how the acquisition has been brought about.
It may be by conquest, it may be by cession following on treaty, it may be by occupation of territory hitherto unoccupied by a recognised ruler.
In all cases the result is the same.
Any inhabitant of the territory can make good in the municipal courts established by the new sovereign only such rights as that sovereign has, through his officers, recognized.
Such rights as he had under the rule of predecessors avail him nothing.
Nay more, even if in a treaty of cession it is ,stipulated that certain inhabitants should enjoy certain rights, that does not give a title to those inhabitants to enforce these stipulations in the municipal courts.
The right to enforce remains only with the high contracting parties.
" In Hoani Te Heuheu Tukino vs Aotea District Maori Land Board (1), the question arose with reference to the Treaty of Waitangi entered into by the British Government with the native chiefs of New Zealand in 1840.
Under cl.
(1) of the Treaty, there was a complete cession by the chiefs of all their rights and powers of sovereignty.
Clause (2) guaranteed to the chiefs, the tribes and the respective families and individuals certain rights in lands, forests and fisheries.
In 1935, the Legislature of New Zealand enacted a law, the provisions of which were impugned as ultra vires on the ground that they infrigned the rights (1) 744 protected by cl.
(2) of the Treaty of Waitangi.
In holding that the rights under the Treaty furnished no ground for action in the civil courts, Viscount Simon L. C. referred to the decision in Vajesingji Joravar Singji and others vs Secretary of State (1) and observed : " So far as the appellant invokes the assistance of the court, it is clear that he cannot rest his claim on the Treaty of Waitangi, and that he must refer the court to some statutory recognition of the right claimed by him." The result of the authorities then is that when a treaty is entered into by sovereigns of independent States whereunder sovereignty in territories passes from one to the other, clauses therein providing for the recognition by the new sovereign of the existing rights of the residents of those territories must be regarded as invested with the character of an act of state and no claim based thereon could be enforced in a court of law.
It must follow from this that the Covenant in question entered into by the rulers of the Covenanting States is in its entirety an act of state, and that article VI therein cannot operate to confer on the appellant any right as against the Patiala Union.
This conclusion becomes all the more impregnable when it is remembered that the Covenant was signed by the rulers on May 5, 1948, whereas the new state came into being only on August 20, 1948.
In the decisions cited above, the sovereign against whom the obligations created by the treaty were sought to be enforced was the very sovereign who entered into that treaty or his successor.
But here, the ruler of the Patiala Union against whom article VI is sought to be enforced was not a party to the Covenant at all, because that State had not come into existence on that date.
The person who signed the Covenant was the ruler of the State of Patiala which was one of the Covenanting States, but that State as well as the seven other States which entered into the Covenant stood all of them dissolved on August 20, 1948, when the new Patiala Union came into being.
The new State could not and did not enter into any covenant before August 20, 1948, and therefore, in strictness, it cannot be (1) (1924) L.R. 511.
A. 357, 360.
745 held to be bound by article VI, to which it was not a party.
Considerable emphasis was laid for the appellant on article XVI of the Covenant under which the Union guaranteed the continuance of the service of permanent members of public services, and this 'was relied on as showing that the rights of the subjects of the quondam States were intended to be protected.
This argument is sufficiently answered by what we have already observed, namely, that a clause in a treaty between high contracting parties does not confer any right on the subjects which could be made the subject matter of action in the courts, and that the Patiala Union is not bound by it, because it was not a party to the Covenant.
It should, however, be mentioned that after the formation of the new State oil August 20, 1948, the first legislative act of the sovereign was the promulgation of Ordinance No. 1 of section 2005, and section 4 thereof expressly recognises the rights of the permanent members of public services.
That undoubtedly is a law enacted by the sovereign conferring rights on his subjects and enforceable in a court of law, but at the same time the enactment of such a law serves to emphasise that the Articles have not in themselves the force of law and were not intended to create or recognise rights.
In this connection, reference should also be made to cl.
XVI of the Ordinance which enacts that " the provisions of articles XV and XVII of the Covenant relating to the bar of certain suits and proceedings shall have the force of law.
" In support of his contention that article VI of the Covenant is to be regarded as a Constitutional provision, counsel for the appellant relied on certain passages in the judgment of this Court in Thakur Amar Singji vs State of Rajasthan (1) at pp. 313 and 315 wherein a similar covenant entered into by the rulers of Rajasthan was described as a Constitution.
Apart from the use of the word " Constitution ", we find nothing in these passages which has any bearing on the point now under consideration.
There, the question was as regards the vires of a law enacted by (1)[1955] 2 S.C.R. 303.
746 the Rajpramukh of Rajasthan, and that depended on whether he was the authority in whom the legislative authority of the State was vested within article 385.
This Court held that under the Covenant it was the Rajpramukh who had the power to enact laws, and that the Ordinance issued by him was therefore valid, and it was in that context that the covenant was referred to as a Constitution.
We had not to consider there the question whether the Covenant was an act of state, or whether it was a law conferring on the citizens of the defunct States rights which were enforceable in a court of law.
No such question arose for decision, and therefore the description of the Covenant as a Constitution cannot be read as importing a decision that it is a law conferring rights and not an act of state.
In the result, we hold that the Covenant is in whole and in parts an act of state, that article VI therein does not operate to confer any rights on the subjects of the Covenanting States as against the sovereign of the new State constituted thereunder, and that Ordinance No. 1 of section 2005 is, in consequence, not open to attack as being a violation of article VI.
(3)We shall now consider the contention of the appellant that even apart from article VI of the Covenant, the impugned Ordinance No. 1 of section 2005 is bad in so far as it annuls rights granted by the Ruler of Jind under the agreement dated April 1, 1938.
It was argued that exhibit A was not a mere concession which could be withdrawn by the sovereign at his will and pleasure, but that it was an agreement entered into for valuable consideration and creating mutual rights and obligations, that the appellant had, acting on the agreement, allotted to the State shares of the value of Rs. 1,50,000 without payment and had incurred considerable expense in working the concessions, and that, therefore, it was not open to the Patiala Union to go back upon it.
The decisions in The Piqua Branch of the State Bank of Ohio vs Knoop (1) and Home of the Friendless vs Rouse (2) were relied on as authorities for the proposition that a State is not competent to revoke a grant made by it for consideration.
(1) ; , (2) (1869) 19 L. Ed 495.
747 In The Piqua Branch of the State Bank of Ohio vs Knoop (1), a law of the State of Ohio of the year 1845 had provided for the incorporation of Banks and it contained provisions as to the taxes payable by them to the State and the mode of payment.
In 1851 another Act was passed, the effect of which was to increase the tax payable and the validity of this Act was questioned by a Bank incorporated under the Act of 1845.
It was held by the majority of the Court that the Act of 1845 was a legislative contract, and that the State Legislature was not competent to impair the rights which had been acquired under that contract.
In Home of the Friendless V. Rouse (2), a Society called the Home of the Friendless was established under a charter granted by the State of Missouri.
The charter had provided that the properties of the Society shall be exempt from taxation.
Subsequently, the State proposed to withdraw the concession and impose tax.
It was held by the Supreme Court of the United States that the charter was a contract entered into between the State and the Society, and that there was no power in the State to go behind it.
Now, it should be observed that the decisions cited above were given on section 10 of article 1 of the American Constitution that " no State shall pass a law impairing the obligations of contracts ".
There is, in our Constitution, no similar provision protecting contractual rights, and it would therefore be unsafe to rely on American authorities in deciding on the validity of legislation which interferes with rights under contracts.
And moreover, we are dealing with a contract entered into by a sovereign, whose powers were not subject to any constitutional limitation, and whose word was, as contended for the appellant, law.
But apart from this, there is an obvious reason why the above decisions have no application to the present controversy.
The point for decision there was whether a State which had entered into a contract with its subjects conferring rights on them was entitled to enact a law abridging or abrogating those rights, (1) ; (2) ; 95 748 and the answer was in the negative.
But here, the ,impugned law is that of the Patiala Union and the contract which it affects is not a contract entered into by it but by the Ruler of Jind and unless it can be established that the obligations of the Ruler have devolved on the sovereign of the Patiala Union, the question whether he could repudiate obligations undertaken by him cannot arise.
That would have arisen for consideration if article VI had the effect of imposing obligations on him.
But on our finding that that is not its effect, there is no scope for the contention that the impugned Ordinance is bad as involving breach of contractual obligations, which were entered into by the Patiala Union, or which devolved on it.
(4)Lastly, we have to deal with the contention of Mr. Pathak that the Patiala Union had affirmed the agreement, exhibit A, that, in consequence, it was bound by it as if it had itself entered into it, and that the liability of the appellant to income tax should therefore be determined in accordance with Cl.
(23) thereof.
This contention would be irrefragable if the Patiala Union had, as a fact, affirmed the agreement.
But has that been established ? It has been already observed that the rights of the appellant under exhibit A would become enforceable only if the new State had accorded recognition to them, and what is requisite, therefore, is a declaration or conduct of the Patiala Union subsequent to its formation which could be regarded as amounting to affirmation of exhibit A. Of that, there is no evidence whatsoever.
On the other hand, the first act of the Rajpramukh after assumption of office by him was the promulgation of Ordinance No. 1 of section 2005, the effect of which was to sweep away the rights of the appellant under Cl.
(23) of exhibit A.
It was argued that article VI of the Covenant would at least be valuable evidence from which affirmance of those rights could be inferred.
That is so ; but that inference must relate to act or conduct of the new State, and that can only be after its formation on August 20, 1948.
If there were any acts of the new State which were equivocal in character, it would have been possible to hold in the light of article VI of the 749 Covenant that its intention was to affirm the concessions in Cl.
(23) of exhibit A.
But the act of the new.
sovereign immediately after he became in titulo was the application of the Patiala State laws including the Patiala Income tax Act to the territories of Jind involving negation of those rights.
It was said that the levy of income tax for 1948 1949 was made in accordance with exhibit A, but that relates to a period anterior to the formation of the new State and is within the saving enacted in the proviso to section 3 of the Ordinance.
The appellant has failed to substantiate his plea that there has been affirmance of Cl.
(23) of exhibit A by the Patiala State Union, and this point also must be found against it.
All the contentions urged in support of the appeal fail, and it must therefore be dismissed with costs.
Coming next to Petition No. 276 of 1953, in addition to the contentions already dealt with, the petitioner urged that whatever its rights under the law prior to the Constitution, when once it came into force it conferred on the citizens certain fundamental rights, that the tax concessions which the petitioner had under the agreement, exhibit A, were rights to property and they were protected by article 19(1)(f), and that it was entitled to seek redress under article 32 of the Constitution when those rights were violated.
The decision in Virendra Singh and others vs The State of Uttar Pradesh (1) is relied on in support of this position.
This argument assumes that there were in existence at the date when the Constitution came into force, some rights in the petitioner which are capable of being protected by article 19(1)(f).
But in the view which we have taken that the concessions under Cl.
(23) of exhibit A came to an end when Ordinance No. 1 of section 2005 was promulgated, the petitioner had no rights sub sisting on the date of the Constitution and therefore there was nothing on which the guarantees enacted in article 19(1)(f) could operate.
The petition must therefore be dismissed on this short ground.
In this view, it is unnecessary to express any opinion on the soundness of the contention based on article 295 which was (1) [1955] I S.C.R. 415.
750 urged in support of the petition, or on the scope of article 363.
The petitioner will pay the costs of the respondents.
BOSE J. I agree, but want to reserve my opinion on a point that does not arise here but which the ratio of my learned brother 's judgment will cover unless the reservation that I make is set out.
If I judge aright, international opinion is divided about the effect that a change of sovereignty has on rights to immoveable property.
The English authorities hold that all rights to property, including those in real estate, are lost when a new sovereign takes over except in so far as the new sovereign chooses to recognise them or confer new rights in them.
But that, I gather, is not the view of the International Court of Justice.
According to one of its opinions, which I have quoted at p. 426 of Virendra Singh vs State of Uttar Pradesh private rights acquired under existing law do not cease on a change of sovereignty." Certain American cases take the same view though they can be distinguished on the facts.
But this view, as I understand it, does not extend to personal rights, such as those based on contract, nor, in any event, does the new sovereign assume any obligations of the old State in the absence of express agreement.
I have referred to this at p. 427.
In any event, whether I am right in thinking that that is what I might call the international view, I would agree that for our ,country that is, and should be, the law so far as per sonal rights are concerned.
In the present case, in so far as the right is claimed on the basis of contract, it would fall to the ground on any view; and in so far as it is not founded on contract, it is an obligation that is sought to be fastened on the new State.
There is no contract between the new State and the appellant, so there also he is out of court; and even if there was some agreement or understanding between the high contracting parties, it cannot be enquired into, or enforced, by the municipal (1)[1955] 1 section C. R. 415.
751 courts of the new State.
So I agree that, so far as this case is concerned, the appellant must fail.
But my, learned brother 's judgment is grounded to ' a large extent on the views of the English courts which do not draw the distinction that I am drawing here.
I therefore want to make it clear that this decision must not be used as a precedent in a case in which rights to immoveable property are concerned.
Without in any way committing myself to one view or the other, as at present advised, I feel it may be a pity for us to disregard the trend of modern international thought and continue to follow a line of decisions based on the views of an older Imperialism, when we are not bound by them and are free to mould our own laws in the light of modern thought and conceptions about rights to and in immoveable property.
But in so far as the present case is concerned, I agree that the appeal and the petition under article 32 should both be dismissed.
Appeal and petition dismissed.
| The appellant company which was incorporated in 1938 in the erstwhile State of Jind obtained certain concessions from the Ruler of the State under an agreement dated April 1, 1938, which, inter alia, provided that the State was to be allotted certain shares in the company without any payment and as regards income tax the company was to be assessed at concessional rates.
On May 5, 1948, the Ruler of jind along with the Rulers of seven other States entered into a Covenant for the merger of their territories into one State, Article VI of the Covenant provided, inter alia, that the Ruler of the Covenanting State shall make over the administration of his State to the Rajpramukh of the new State and that all duties and obligations of the Ruler of the Covenanting State shall devolve on the New State and shall be discharged by it.
In accordance with that Article the Rajpramukh took over the administration of jind on August 20, 1948, and immediately after assumption of office promulgated Ordinance No. , by section 3 of which all laws in force in the State of Patiala were made applicable mutatis mutandis to the territories of the New State and that all laws in force in the Covenanting States stood repealed.
On November 24, 1949, the Rajpramukh issued a proclamation accepting the Constitution of India and on April 13, 1950, the New State became a taxable territory of the Union of India.
730 The result of the constitutional changes was that the law relating to income tax applicable to the appellant, for the period prior to August 20, 1948, was that of Jind, for the period August 20, 1948, to April 13, 1950, that of the Patiala Income tax Act and after April 13, 1950, the Indian Income tax Act ; but the appellant contended that the income tax should be levied on him as provided in the agreement entered into with the Ruler of jind, dated April 1, 1938: Held, (1) that section 3 Of the Ordinance No. on its true construction extinguished the right to tax concessions conferred on the appellant under the agreement dated April 1, 1938, and that the appellant cannot rely on that agreement after August 20, 1948.
(2)The Covenant dated May 5, 1948, entered into by the Rulers of the States, is in whole and in parts an act of State and Article VI cannot be relied on by the appellant for the enforcement of the rights conferred on him under the agreement with the Ruler of jind as against the Rajpramukh of the new State, Per section R. Das C. J., Venkatarama Aiyar, section K. Das and Gajendragadkar JJ.
When a treaty is entered into by sovereigns of independent States whereunder sovereignty in territories passes from one to the other, clauses therein providing for the recognition by the new sovereign of the existing rights of the residents of those territories must be regarded as invested with the character of an act of State and no claim based thereon could be enforced in the municipal courts established by the new sovereign unless those rights have been recognised by him.
Secretary of State for India vs Bai Ralbai, (1915) L. R. 42 I. A. 229, Vajasingji Joravarsingji and others vs Secretary of State, (1924) L. R. 51 1.
A. 357, Sccretary of State vs Sardar Rustam Khan, (1941) L. R. 68 1.
A. 109, Cook vs Sprigg, and Hoani Te Heuheu Tukino vs Aotea District Maori Land Board , relied on.
Per Bose J. International opinion is divided about the effect that a change of sovereignty has on rights to immoveable property and this decision must not be used as a precedent in a case in which rights to immoveable property are concerned.
|
Summarize this legal judgement text concisely | Appeal No. 121 of 1955.
Appeal from the judgment and decree dated April 22, 1953/24th February, 1954, of the Allahabad High Court (Lucknow Bench) in F. C. Appeal No. 50 of 1947, arising out of the judgment and decree dated April 15, 1947, of the Court of the Civil Judge, Bahraich, in Regular Suit No. 25 of 1946.
section K. Dar, Ch.
Akhtar Hussain and C. P. Lal, for the appellants.
Niyamatullah, Onkar Nath Srivastava, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for respondent No. 1. 1958.
September 16.
The Judgment of the Court was delivered by 1289 GAJENDRAGADKAR J.
The suit from which this appeal arises relates to a shrine and tomb known as Darga Hazarat Syed Salar Mahsood Ghazi situated in the village of Singha Parasi and properties appurtenant to it.
The plaintiffs who have preferred this appeal are members of ' the Waqf Committee, Darga Sharif, Bharaich, and, in their suit, they have claimed a declaration that the properties in suit were not covered by the provisions of the United Provinces Muslims Waqfs Act (U. P. XIII of 1936) (hereinafter described as the Act).
The declaration, the consequential injunction and the two other subsidiary reliefs are claimed primarily against respondent 1, the Sunni Central Board of Waqf, United Provinces of Agra and Oudh.
Two trustees who did not join the appellants in filing the suit are impleaded as pro forma defendants 2 and 3 and they are respondents 2 and 3 before us.
It appears that respondent 1 purported to exer cise its authority over the properties in suit under the provisions of the Act and that led to the present suit which was filed on October 18, 1946 (No. 25 of 1946).
The appellants ' case is that the properties in suit are outside the operative provisions of the Act and not subject to the jurisdiction of respondent 1, arid so, according to the appellants, respondent 1 has acted illegally and without jurisdiction in assuming authority over the management of the said properties.
That is the basis of the reliefs claimed by the appellants in their plaint.
The appellants ' claim was resisted by respondent I on several grounds.
It was alleged that the properties in suit did form a waqf as defined by the Act and were covered by its operative provisions.
It was urged that respondent I was a duly constituted Sunni Central Board and it was authorised to exercise supervision over the management of the said waqf.
The case for respondent I also was that the appellants ' suit was barred by limitation and was incompetent inasmuch as before the filing of the suit the appellants had not given the statutory notice as required by section 53 of the Act.
On these pleadings several issues were framed by the 1290 learned trial judge; but the principal points in dispute were three : (1) Are the properties in suit governed by the Act ? (2) Is the suit in time ? and (3) Is the suit maintainable without notice as required by section 53 of the Act ? The learned trial judge held that the properties in suit cannot be held to be waqf as defined by the Act.
In his opinion it was not the village Singha Parasi but its profits free from land revenue that had been granted in trust for the shrine and its khadims; and since the usufruct of the profits was subject to the condition of resumption and since the profits had not been vested in the Almighty, the grant cannot be construed to be a waqf as contemplated by Muhamniadan Law.
On the question of limitation the learned judge held that section 5(2) of the Act applied to the suit ; but, according to him, though the suit was filed beyond the period of one year prescribed by the said section, it was within time having regard to the provisions of section 14 of the Limitation Act.
The plea raised by respondent 1 under section 53 of the Act was partly upheld by the learned trial judge; he took the view that the first three relief, , claimed by the appellants were barred but the fourth was not.
In the result the learned judge granted a declaration in favour of the appellants to the effect that " the shrine in question together with its attached buildings and the Chharawa were not waqf properties within the meaning of the Act.
" As a consequence, an injunction was issued restraining respondent 1 from removing or dissolving the committee of management of the appellants and respondents 2 and 3 " not otherwise than provided for under section 18 of the Act in so far as the management and supervision of those properties are concerned in respect of which the appellants were not being granted a decree for a declaration sought for by them in view of the absence of the notice under section 53 of the Act ".
The rest of the appellants ' claim was dismissed.
This decree was passed on April 15, 1947.
1291 Against this decree respondent I preferred an appeal in the High Court of Judicature at Allahabad (Lucknow Bench) and the appellants filed cross objections.
The High Court has reversed the finding of the trial court on the question as to the character of the properties in suit.
According to the High Court the said properties constituted waqf as defined by the Act.
The High Court has also held that the suit filed by the appellants was barred by limitation and was also in ' competent in view of the fact that the statutory notice required by section 53 of the Act had not been given by the appellants prior to its institution.
As a result of these findings the appeal preferred by respondent I was allowed, the appellants ' cross objections were dismissed, the decree passed by the trial court was set aside and the appellants ' suit dismissed (April 22, 1953).
The appellants then applied for and obtained a certificate from the High Court to prefer an appeal to this Court under article 133 of the Constitution.
That is how this appeal has come to this Court.
Though the dispute between the parties raises only three principal issues, the facts leading to the litigation are somewhat complicated ; and it is necessary to mention them in order to get a clear picture of the background of the present dispute.
It is believed that Syed Salar Mahsood Ghazi was a nephew of Muhammad Ghazni and he met his death at the hands of a local chieftain when he paid a visit to Bahraich.
On his death his remains were buried in village Singha Parasi by his followers and subsequently a tomb was constructed.
In course of time this tomb became an object of pilgrimage and veneration.
Urs began to be held at the shrine every year and it was attended by a large number of devotees who made offerings before the shrine.
It is partly from the income of these offerings that the tomb is maintained.
Certain properties were endowed by the Emperors of Delhi in favour of this tomb and accretions were made to the said properties by the savings from the income of the endowed properties and the offerings brought by the devotees.
164 1292 The tomb was managed by a body of persons known as Khuddams of the Darga.
This body had been looking after the Darga and the performance of ceremonies and other services at the shrine.
Whilst the management of the Darga was being thus carried on, Oudh came to be annexed in 1856 and the proclamation issued by Lord Canning confiscated all private properties and inams in the said State.
The properties attached to the Darga were no exception.
Fresh settlements were, however, subsequently made by the Government as a result of which previously existing rights were revived usually on the same terms as before.
This happened in regard to the properties appertaining to the Darga.
It would appear that in 1859 or 1860 a Sanad had been granted to Fakirulla who was the head of the khadims in respect of rent free tenure of the village Singha Parasi.
The grantee was given the right to collect the usufruct of the village which was to be appropriated towards the maintenance of the Darga.
The grantee 's son Inayatulla was apparently not satisfied with the limited rights granted under the Sanad and so he brought an action, Suit No. 1 of 1865, claiming proprietary rights in the said properties.
Inayatulla 's suit was substantially dismissed on November 11, 1870, by the Settlement Officer.
It was held that the proprietary rights of the Government in respect of the properties had been alienated for ever in favour of the charity and so the properties were declared to vest in the endowment.
Inayatulla 's right to manage the said properties under the terms of the grant was, however, recognized.
Soon after this decision, it was brought to the notice of the Chief Commissioner in 1872 that the khadims at the Darga were mismanaging the properties of the Darga and were not properly maintaining the Darga itself.
On receiving this complaint a committee of mussalmans was appointed to examine the affairs of the Darga and to make a report.
The committee submitted its report on February 20, 1877, and made recommendations for the improvement of the management of the Darga and its properties.
According to the committee, it was necessary to appoint a jury of five persons including two khadims to manage the Darga and its properties.
Meanwhile some of the lands appurtenant to the Darga had been sold and offerings made by the devotees as well as other properties had become the subject matter of attachment.
In the interest of the Darga, Government then decided to take possession of the properties under the provisions of Pensions Act, (XXIII of 1873.) This decision was reached after the Government had considered the report made by the Deputy Commissioner on August 31, 1878.
The result of declaring that the properties were governed by the provisions of the Pensions Act was to free the properties from the mortgages created by the khadims.
The management of the Darga and its properties by the Government continued until 1902.
During this period Inayatulla attempted to assert his rights once more by instituting a suit in the civil court in 1892.
In this suit Inayatullah and two others who had joined him claimed possession of the Darga together with the buildings appurtenant thereto and village Singha Parasi.
Their claim was decreed by the trial court; but on appeal the said decree was set aside on July 20, 1897.
The appellate court of the Judicial Commissioner held that Inayatulla 's allega tion that the proprietary interest in the properties vested in him was not justified.
Even so, the appellate court observed that it was not proper or competent for the Government to interfere in the management of the waqf and its properties; the Darga was a religious establishment within the meaning or Religious Endowments Act (XX of 1863) and the assumption of the management of the Darga and its properties was unauthorised and improper.
As a result of these observations the Legal Remembrancer to the Government of the United Provinces of Agra and Oudh filed a suit, No. 9 of 1902, under section 539 (present section 92) of the Code of Civil Procedure.
This suit ended in a decree on December 3, 1902.
By the decree the properties in suit were declared " to vest in the trustees when appointed ".
The decree further provided for a scheme for the management of 1294 the Darga and its properties.
The scheme thus framed came into operation and the trustees appointed under it began to manage the Darga and its properties.
The scheme appears to have worked smoothly until 1934.
In 1934 Ashraf Ali and others clamed (Suit No. 1 of 1934) that an injunction should be issued restraining the defendants from taking part in the management of the affairs of the Darga.
The plaintiffs also prayed that the defendants should be prohibited from spending monies belonging to the waqf on frivolous litigations due to party feelings.
On May 7, 1934, the learned District Judge expressed his regret that animosity and party feelings should find their way in the management of a trust and issued an order directing the defendant committee that no money out of the Darga funds should be spent either in the litigation pending before him, or in any other litigation, without the sanction of the court.
For nearly six years after the date of this order the Darga and its properties appear to have been free from any litigation.
This peace was, however, again disturbed in 1940 when a suit was filed (No. 1 of 1940) with the sanction of the Advocate General by five plaintiffs against the managing committee and its trustees for their removal and for the framing of a fresh scheme.
On October 16, 1941, the suit was decreed.
The managing committee and the trustees, however, challenged the said decree by preferring an appeal to the Chief Court.
Their appeal succeeded and on March 7, 1946, the decree under appeal was set aside, though a few minor amendments were made in the original scheme of management.
Whilst this litigation was pending between the parties, the United Provinces Muslim Waqfs Act (U.P. XIII of 1936) was passed in 1936 for better governance, administration and supervision of the specified muslim waqfs in U. P.
In pursuance of the provisions of the Act, respondent I was constituted and, under section 5(1), it issued the notification on February 26, 1944, declaring the properties in suit to be a Sunni Waqf under the Act.
After this notification was issued, respondent 1 called upon the committee of management of 1295 the waqf to submit its annual budget for approval and to get its accounts audited by its auditors.
Respondent I also purported to levy the usual contributions against the waqf under section 54 of the Act.
The members of the committee of management and the trustees with the exception of two persons held that the properties in suit did not constitute a waqf within the meaning of the Act and that respondent 1 had no authority or jurisdiction to supervise the management of the said properties.
That is how the appellants came to institute the present suit on October 18, 1946, against respondent 1.
That in brief is the back ground of the present dispute.
For the appellants Mr. Dar has raised three points before us.
He contends that the High Court was in error in coming to the conclusion that the properties in suit constituted a waqf over which respondent I can exercise its authority or jurisdiction and he argues that it was erroneous to have held that the appellants ' suit was barred by section 5(2) and was incompetent under section 53 of the Act.
Mr. Dar has fairly con ceded that if the finding of the High Court on the question of limitation or on the question of the bar pleaded under section 53 was upheld, it would be unnecessary to consider the merits of his argument about the character of the properties in suit.
Since we have reached the conclusion that the High Court was right in holding that the suit was barred under section 5(2) and was also incompetent under section 53 of the Act, we do not propose to decide the question as to whether the properties in dispute are waqf within the meaning of the Act.
The plea of limitation under section 5(2) as well as the plea of the bar under section 53 are in substance preliminary objections to the maintanability or competence of the suit and we propose to deal with these objections on the basis that the properties in dispute are outside the purview of the Act as alleged by the appellants.
Before dealing with the question of limitation, it would be useful to refer to the relevant part of the scheme of the Act.
Section 4 of the Act provides for the survey of waqfs to be made by the Commissioner of Waqfs appointed under sub section
(1) of section 4.
Subsection (3) requires the Commissioner to ascertain and determine inter alia the number of Shia and Sunni Waqfs in the district, their nature, the gross income of the properties comprised in them as well as the expenses incurred in the realisation of the income and the pay of the mutawalli.
The Commissioner has also to ascertain and determine whether the waqf in question is one of those exempted from the provisions of the Act under section 2.
The result of this enquiry has to be indicated by the Commissioner in his report to the State Government under subs.
Section 6 deals with the establishment of two separate Boards to be called the Shia Central Board and the Sunni Central Board of Waqfs.
Section 18 defines the functions of the Central Boards and confers oil them general powers of superintendence over the management of the waqfs under their jurisdiction.
After the Boards are constituted a copy of the Commissioner 's report received by the State Government is forwarded to them and, under section 5, sub section
(1), each Central Board is required as soon as possible to notify in the official gazette the waqfs relating to the particular sect to which, according to the said report, the provisions of the Act apply.
It is after the prescribed notification is issued by the Board that it can proceed to exercise its powers under section 18 in respect of the waqfs thus notified.
It is the notification issued by respondent under section 5 (1) and the subsequent steps taken by it in exercise of its authority that have led to the present suit.
Mr. Dar contends that the provisions of section 5 (2) do not apply to the present suit, and so the argument that the suit is barred by limitation under the said section cannot succeed.
It is clear that the notification was issued on February 26, 1944, and the suit has been filed on October 18, 1946.
Thus there can be no doubt that if the one year 's limitation prescribed by section 5 (2) applies to the present suit it would be barred by time unless the appellants are able to invoke the assistance of section 15 of the Limitation Act.
But, according to Mr. Dar, the present suit is outside section 5 (2) 1297 altogether and so there is no question of invoking the shorter period of limitation prescribed by it.
Let us then proceed to consider whether the present suit falls within the mischief of section 5 (2) or not.
Section 5 (2) provides that: " The mutawalli of a waqf or any person interested in a waqf or a Central Board may bring a suit in a civil court of competent jurisdiction for a declaration that any transaction held by the Commissioner of waqfs to be a waqf is not a waqf, or any transaction held or assumed by him not to be a waqf is a waqf, or that a waqf held by him to pertain to a particular sect does not belong to that sect, or that any waqf reported by such Commissioner as being subject to the provisions of this Act is exempted under section 2, or that any waqf held by him to be so exempted is subject to this Act.
" The proviso to this section prescribes the period of one year 's limitation to a suit by a mutawalli or a person interested in the waqif.
Sub section (4) of section 5 lays down that the Commissioner of the waqf 's shall not be made a defendant to any suit under sub section
(2) and no suit shall be instituted against him for anything done by him in good faith under colour of this Act.
The appellants ' argument is that before section 5 (2) can be applied to their suit it must be shown that the suit is filed either by a mutawalli of a waqf or any person interested in the waqf.
The appellants are neither the mutawallis of the waqf nor are they persons interested in the waqf.
Their case is that the properties in suit do not constitute a waqf under the Act but are held by them as proprietors, and that the notification issued by respondent I and the authority purported to be exercised by it in respect of the said properties are wholly void.
How can the appellants who claim a declaration and injunction against respondent I on these allegations be said to be persons interested in the waqf, asks Mr. Dar.
The word ' waqf ' as used in this subsection must be given the meaning attached to it by the definition in section 3 (1) of the Act and since the appellants totally deny the existence of such a waqf they cannot be said to be interested in the ' waqf '.
The 1298 argument thus presented appears prima facie to be attractive and plausible; but on a close examination of section 5 (2) it would appear clear that the words " any person interested in a waqf " cannot be construed in their strict literal meaning.
If the said words are given their strict literal meaning, suits for a declaration that any transaction held by the Commissioner to be a waqf is not a waqf can never be filed by a mutawalli of a waqf or a person interested in a waqf.
The scheme of this sub section is clear.
When the Central Board assumes jurisdiction over any waqf tinder the Act it proceeds to do so on the decision of three points by the Commissioner of Waqfs.
It assumes that the property is a waqf, that it is either a Sunni or a Shia waqf, and that it is not a waqf which falls within the exceptions mentioned in section 2.
It is in respect of each one of these decisions that a suit is contemplated by section 5, sub section
If the decision is that the property is not a waqf or that it is a waqf falling within the exceptions mentioned by section 2, the Central Board may have occasion to bring a suit.
Similarly if the decision is that the waqf is Shia and not Sunni, a Sunni Central Board may have occasion to bring a suit and vice versa.
Likewise the decision that the property is a waqf may be challenged by a person who disputes the correctness of the said decision.
The decision that a property does not fall within the exceptions mentioned by section 2 may also be challenged by a person who claims that the waqf attracts the provisions of section 2.
If that be the nature of the scheme of suits contemplated by section 5 (2) it would be difficult to imagine how the mutawalli of a waqf or any person interested in a waqf can ever sue for a declaration that the transaction held by the Commissioner of the waqfs to be a waqf is not a waqf.
That is why we think that the literal construction of the expression " any person interested in a waqf " would render a part of the sub section wholly meaningless and ineffective.
The legislature has definitely contemplated that the decision of the Commissioner of the Waqfs that a particular transaction is a waqf can be challenged by persons who do not accept the correctness of the said decision, and it is, this class of persons who are 1299 obviously intended to be covered by the words "any person interested in a waqf ".
It is well settled that in construing the provisions of a statute courts should be slow to adopt a construction which tends to make any part of the statute meaningless or ineffective; an attempt must always be made so to reconcile the relevant provisions as to advance the remedy intended by the statute.
In our opinion, on a reading of the provisions of the relevant sub section as a whole there can be no doubt that the expression "any person interested in a waqf " must mean "any person inter ested in what is held to be a waqf ".
It is only persons who are interested in a transaction which is held to be a waqf who would sue for a declaration that the decision of the Commissioner of the Waqfs in that behalf is wrong, and that the transaction in fact is not a waqf under the Act.
We must accordingly hold that the relevant clause on which Mr. Dar has placed his argument in repelling the application of section 5 (2) to the present suit must not be strictly or literally construed, and that it should be taken to mean any person interested in a transaction which is held to be a waqf.
On this construction the appellants are obviously interested in the suit properties which are notified to be waqf by the notification issued by respondent 1, and so the suit instituted by them would be governed by section 5, sub section
(2) and as such it would be barred by time unless it is saved under section 15 of the Limitation Act.
In this connection, it may be relevant to refer to the provisions of section 33 of the Indian Arbitration Act (X of 1940).
This section provides that any party to an arbitration agreement desiring to challenge the existence or validity of an arbitration agreement shall apply to the court and the court shall decide the question on affidavits.
It would be noticed that the expression " any party to an arbitration agreement " used in the section poses a similar problem of construction.
The party applying under section 33 may dispute the very existence of the agreement and yet the applicant is described by the section as a party to the 165 1300 agreement.
If the expression " any party to an arbitration agreement " is literally construed it would be difficult to conceive of a case where the existence of an agreement can be impeached by a proceeding under section 33.
The material clause must therefore be read liberally and not literally or strictly.
It must be taken to mean a person who is alleged to be a party to an arbitration agreement; in other words, the clause must be construed to cover cases of persons who are alleged to be a party to an arbitration agreement but who do not admit the said allegation and want to challenge the existence of the alleged agreement itself.
This liberal construction has been put upon the clause in several judicial decisions: Chaturbhuj Mohanlal vs Bhicam Chand Chororia & Sons Mathu Kutty vs Varoe Kutty (2) ; Lal Chand V. Messrs. Basanta Mal Devi Dayal & Ors.
We may also point out incidentally that in dealing with an application made under section 34 of the Arbitration Act, it is incumbent upon the court to decide first of all whether there is a binding agreement for arbitration between the parties; in other words, the allegation by one party against another that there is a valid agreement of reference between them does not preclude the latter party from disputing the existence of the said agreement in proceedings taken under section 34.
These decisions illustrate the principle that where the literal meaning of the words use& in a statutory provision would manifestly defeat its object by making a part of it meaningless and ineffective, it is legitimate and even necessary to adopt the rule of liberal construction so as to give meaning to all parts of the provision and to make the whole of it effective and operative.
Before we part with this part of the appellants ' case it is necessary to point out that the argument urged by Mr. Dar on the construction of section 5(2) is really inconsistent with the appellants ' pleas in the trial court.
The material allegations in the plaint clearly amount to an admission that the Darga and its appurtenant properties constitute a waqf Under the (1) (2) A.I.R. 1950 Mad.
(3) 1301 Act; but it is urged that they do not attract its provisions for the reason that the waqf in question falls within the class of exemptions enumerated in section 2 (ii)(a) and (c) of the Act.
" The Darga waqf ", says the plaint in para.
11, ,is of such a nature as makes it an exception from the purview of the Act as provided by section 2 of the Act ".
Indeed, consistently with this part of the appellants ' case,, the plaint expressly admits that the cause of action for the suit accrued on February 26, 1944, and purports to bring the suit within time by relying on sections 14, 15, 18 and 29 of the Limitation Act.
In their replication filed by the plaintiffs an attempt was made to explain away the admissions contained in the plaint by alleging that " if ever in any paper or document the word I waqf had been used as a routine or hurriedly then it is vague and of no specific meaning and its meaning or connotation is only trust or amanat " ; and yet, in the statement of the case by the appellants ' counsel, we find an express admission that the subject matter of the suit is covered by the exemptions of section 2, cls.
(ii) (a) and (ii) (c).
Thus, on the pleadings there can be no doubt that the appellants ' case was that the Darga and its properties no doubt constituted a waqf under the Act, but they did not fall within the purview of the Act because they belong to the category of waqfs which are excepted by section 2(ii) (a) and (c).
The argument based on the application of section 2 has not been raised before us and so on a consideration of the pleadings of the appellants it would be open to respondent 1 to contend that the appellants are admittedly interested in the waqf and their suit falls within the mischief of section 5 even if the words " any person interested in a waqf " are literally and strictly construed.
The next question which calls for our decision is whether the appellants ' suit is saved by virtue of the provisions of section 15 of the Limitation Act.
That is the only provision on which reliance was placed before us by Mr. Dar on behalf of the appellants.
Section 15.
provides for " the exclusion of time during which proceedings are suspended " and it lays down that " in computing the period of limitation prescribed for any 1302 suit or application for the execution of a decree, the ,institution or execution of which has been staved by an injunction or order, the time of the continuance of the injunction or order, the day on which it was issued or made and the day on which it was withdrawn, shall be excluded ".
It is plain that, for excluding the time under this section, it must be shown that the institution of the suit in question had been stayed by an injunction or order; in other words, the section requires an order or an injunction which stays the institution of the suit.
And so in cases falling under section 15, the party instituting the suit would by such institution be in contempt of court.
If an express order or injunction is produced by a party that clearly meets the requirements of section 15.
Whether the requirements of section 15 would be satisfied by the production of an order or injunction which by necessary implication stays the institution of the suit is open to argument.
We are, however, prepared to assume in the present case that section 15 would apply even to cases where the institution of a suit is stayed by necessary implication of the order passed or injunction issued in the previous litigation.
But, in our opinion, there would be no justification for extending the application of section 15 on the ground that the institution of the subsequent suit would be inconsistent with the spirit or substance of the order passed in the previous litigation.
It is true that rules of limitation are to some extent arbitrary and may frequently lead to hardship; but there can be no doubt that, in construing provisions of limitation, equitable considerations are immaterial and irrelevant and in applying them effect must be given to the strict grammatical meaning of the words used by them: Nagendra Nath Dey vs Suresh Chandra Dey (1).
In considering the effect of the provisions contained in section 15, it would be useful to refer to the decision of the Privy Council in Narayan Jivangouda vs Puttabai (2).
This case was an offshoot of the well known case of Bhimabai vs Gurunathgouda (3).
It is apparent that the dispute between Narayan and Gurunathgouda (1) (2) (1944) 47 Bom.
L. R. I. (3) P.C. 1303 ran through a long and protracted course and it reached the Privy Council twice.
The decision of the, Privy Council in Bhimabai 's case (1) upholding the validity of Narayan 's adoption no doubt led to a radical change in the accepted and current view about the Hindu widow 's power to adopt in the State of Bombay, but this decision was of poor consolation to Narayan because the judgment of the Privy Council in Narayan, Jivangouda 's case (2) shows that Narayan 's subsequent suit to recover possession of the properties in his adoptive family was dismissed as barred by time.
The dispute was between Narayan and his adoptive mother Bhimabai on the one hand and Gurunathgouda on the other.
On November 25, 1920, Gurunathgouda had sued Bhimabai and Narayan for a declaration that he was in possession of the lands and for a permanent injunction restraining the defendants from interfering with his possession.
On the same day when the suit was filed, an interim injunction was issued against the defendants and it was confirmed when the suit was decreed in favour of Gurunathgouda.
By this injunction the defendants were ordered " not to take the crops from the fields in suit, not to interfere with the plaintiff 's wahiwat to the said lands, not to take rent notes from the tenants and not to obstruct the plaintiff from taking the crops raised by him or from taking monies from his tenants ".
Two important issues which arose for decision in the suit were whether Narayan had been duly adopted by Bhimabai in fact and whether Bhimabai was competent to make the adoption.
These issues were answered against Narayan by the trial court.
Bhimabai and Narayan appealed to the Bombay High Court, but their appeal failed and was dismissed: Bhimabai vs Gurunathgouda (3).
There was a further appeal by the said parties to the Privy Council.
The Privy Council held that the adoption of Narayan was valid and so the appeal was allowed and Gurunathgouda 's suit was dismissed with costs throughout.
In the result the injunction granted by the courts below was dissolved on November 4, 1932.
Oil (1) (1932) 35 Bo . L. R. 200 P. C. (2) (1944) 47 Bom.
L. H. I. (3) 1304 November 25, 1932, Narayan and Bhimabai filed their suit to recover possession of the properties from Gurunathgouda.
They sought to bring the suit within time inter alia on the ground that the time taken up in litigating the former suit or at least the period commencing from the grant of temporary injunction on February 25, 1920 to November 4, 1932, when the injunction was dissolved by the Privy Council, should be excluded under section 15 of the Limitation Act.
This plea was rejected by the trial court and on appeal the same view was taken by the Bombay High Court.
Rangnekar J. who delivered the principal judgment exhaustively considered the relevant judicial decisions bearing on the question about the construction of section 15 and held that the injunction issued against Narayan and Bhimabai in Gurunathgouda 's suit did not help to attract section 15 to the suit filed by them in 1932: Narayan vs Gurunathgouda (1).
The matter was then taken to the Privy Council by the plaintiffs; but the Privy Council confirmed the view taken by the High Court of Bombay and dismissed the appeal: Narayan vs Puttabai (2).
In dealing with the appellants ' argument that the injunction in the prior suit had been issued in wide terms and in substance it precluded the plaintiffs from filing their suit, their Lordships observed that there was nothing in the injunction or in the decree to support their case that they were prevented from instituting a suit for possession in 1920 or at any time before the expiry of the period of limitation.
It appears from the judgment that Sir Thomas Strangman strongly contended before the Privy Council that since the title of the contending parties was involved in the suit, it would have been quite futile to institute a suit for possession.
This argument was repelled by the Privy Council with the observation that " we are unable to appreciate this point, for the institution of a suit can never be said to be futile if it would thereby prevent the running of limitation ".
There can be little doubt that, if, on considerations of equity the application of section 15 could be extended, this was pre (1) (2) (1944) 47 Bom.
L. R. I. 1305 eminently a cast for such extended application of the said provision; and yet the Privy Council construed the material words used in section 15 in their strict grammatical meaning and held that no order or injunction as required by section 15 had been issued in the earlier litigation.
We would like to add that, in dealing with this point, their Lordships did not think it necessary to consider whether the prohibition required by section 15 must be express or can even be implied.
There is another decision of the Privy Council to which reference may be made.
In Beti Maharani vs The Collector of Etawah (1), their Lordships were dealing with a case where attachment before judgment under section 485 of the Code of Civil Procedure had been issued by the court at the instance of a third party prohibiting the creditor from recovering and the debtor from paying the debt in question.
This order of attachment was held not to be an order staying the institution of a subsequent suit by the creditor under section 15 of Limitation Act of 1877.
" There would be no violation of it " (said order), observed Lord Hobhouse, " until the restrained creditor came to receive his debt from the restrained debtor.
And the institution of a suit might for more than one reason be a very proper proceeding on the part of the restrained creditor, as for example in this case, to avoid the bar by time, though it might also be prudent to let the court which had issued the order know what he was about ".
In Sundaramma vs Abdul Khader (2) the Madras High Court, while dealing with section 15 of the Limitation Act, has held that no equitable grounds for the suspension of the cause of action can be added to the provisions of the Indian Limitation Act.
It is true that in Musammat Basso Kaur vs Lala Dhua Singh (3) their Lordships of the Privy Council have observed that it would be an inconvenient state of the law if it were found necessary for a man to institute a perfectly vain litigation under peril of losing his property if he does not ; but this observation must be read in the context of facts with which (1) All. 198, 210, 211.
(2) (1932) I.L.R.56 Mad.
490, (3) (1888) 15 I.A. 211.
1306 the Privy Council was dealing in this case.
The respondent who was a debtor of the appellant had agreed to convey certain property to him setting off the debt against part of the price.
No money was paid by the respondent and disputes arose as to the other terms of the agreement.
The respondent sued to enforce the terms of the said agreement but did not succeed.
Afterwards when he sued for the debt he was met with the plea of limitation.
The Privy Council held that the decree dismissing the respondent 's suit was the starting point of limitation.
The said decree imposed on the respondent a fresh obligation to pay his debts under section 65 of the Indian Contract Act.
It was also held alternatively that the said decree imported within the meaning of article 97 of Limitation Act of 1877 a failure of the consideration which entitled him to retain it.
Thus it is clear that the Privy Council was dealing with the appellants ' rights to sue which had accrued to him on the dismissal of his action to enforce the terms of the agreement.
It is in reference to this right that the Privy Council made the observations to which we have already referred.
These observations are clearly obiter and they cannot, in our opinion, be of any assistance in interpreting the words in section 15.
It is in the light of this legal position that we must examine the appellants ' case that the institution of the present suit had been stayed by an injunction or order issued against them in the earlier litigation of 1940.
We have already noticed that Civil Suit No. 1 of 1940 had been instituted against the appellants with the sanction of the Advocate General for their removal and for the settlement of a fresh scheme.
The appellants were ordered to be removed by the learned trial judge on October 16, 1941; but on appeal the decree of the trial court was set aside on March 7, 1946.
It is the period between October 16, 1941, and March 7, 1946, that is sought to be excluded by the appellants under section 15 of the Limitation Act.
Mr. Dar contends that the order passed by the trial judge on October 16, 1941, made it impossible for the appellants to file the present suit until the final decision of the 1307 appeal.
By this order the appellants were told that they should not in any way interfere with the affairs of the Darga Sharif as members of the committee and should comply with the decree of the court by which they were removed from the office.
It is obvious that this order cannot be construed as an order or an injunction staying the institution of the present suit.
In fact the present suit is the result of the notification issued by respondent I on February 26, 1944, and the subsequent steps taken by it in the purported exercise of its authority under the Act.
The cause of action for the suit has thus arisen subsequent to the making of the order on which Mr. Dar relies; and on the plain construction of the order it is impossible to hold that it is an order which can attract the application of section 15 of the Limitation Act.
We have already held that the relevant words used in section 15 must be strictly construed without any consideration of equity, and so construed, we have no doubt that the order on which Mr. Dar has placed reliance before us is wholly out side section 15 of the Limitation Act.
We would, however, like to add that this order did not even in substance create any difficulty against the institution of the present suit.
The claim made by the appellants in the present suit that the properties in suit do not constitute a waqf and the declaration and injunction for which they have prayed do not infringe the earlier order even indirectly or remotely.
We must accord ingly hold that the High Court was right in taking the view that section 15 did not apply to the present suit and that it was therefore filed beyond the period of one year prescribed by section 5(2) of the Act.
That takes us to the consideration of the next preliminary objection against the competence of the suit under section 53 of the Act.
Section 53 provides that " no suit shall be instituted against a Central Board in respect of any act purporting to be done by such Central Board under colour of this Act or for any relief in respect of any waqf until the expiration of two months next after notice in writing has been delivered to the Secretary, or left at the office of such 166 1308 Central Board, stating the cause of action, the name, description and place of residence of the plaintiff and 'the relief which he claims; and the plaint shall contain a statement that such notice has been so delivered or left ".
This section is similar to section 80 of the Civil Procedure Code.
It is conceded by Mr. Dar that if section 53 applies to the present suit the decision of the High Court cannot be successfully challenged 'because the notice required by section 53 has not been given by the appellants before the institution of the present suit.
His argument, however, is that the notification issued by respondent I on February 26, 1944, did not refer to the Darga and offerings made by the devotees before the Darga and he contends that the present suit in respect of these properties is outside the provisions Of section 53 and cannot be held to be barred on the ground that the requisite notice had not been given by the appellants.
We are not impressed by this argument.
Column 1 of the notification in question sets out the name of the creator of the waqf as Shahan e Mughalia and the name of the waqf as Syed Salar Mahsood Ghazi.
In col. 2 the name of the mutawalli is mentioned while col. 3 describes the properties attached to the waqf.
The tomb of Syed Salar Mahsood Ghazi which is the object of charity in the present case is expressly mentioned in col. 1 and so it is futile to suggest that the tomb or Darga had not been notified as a waqf by respondent 1 under section 5(1).
In regard to the offerings we do not see bow offerings could have been mentioned in the notification.
They are made from time to time by the devo tees who visit the Darga and by their very nature they constitute the income of the Darga.
It is unreasonable to assume that offerings which would be made from year to year by the devotees should be specified in the notification issued under section 5(1).
We must, therefore, reject the argument that any of the suit properties have riot been duly notified by respondent I under section 5(1) of the Act.
If that be so, it was incumbent upon the appellants to have given the requisite notice under section 53 before instituting the present suit.
The requirement as to notice applies to 1309 suits against a Central Board in respect of their acts as well as to suits for any relief in respect of any waqf.
It is not denied that the present suit would attract the provisions of section 53 if the argument that the Darga and the offerings are not notified is rejected.
The result is that the suit is not maintainable as a result of the appellant 's failure to comply with the requirements of section 53.
We would accordingly confirm the finding of the High Court that the appellants ' suit is barred by time under section 5(2) and is also not maintainable in view of the fact that the appellants have not given the requisite notice under section 53 of the Act.
The result is that the appeal fails and is dismissed with costs.
Appeal dismissed.
| The respondent No. 1, a Central Board constituted under the United Provinces Muslims Waqf Act, 1936, by a notification under section 5(1) Of the Act dated February 26, 1944, took into ' management the properties of a Darga Sharif and on October 18, 1946, the appellants, three of the five members of the Managing Committee of the said Darga Sharif, brought the suit, out of which the present appeal arises, for a declaration that the Darga properties did not constitute a waqf within the meaning of the Act and that the respondent No. 1 had no lawful authority to, issue the notification and assume management of the said properties.
It was urged on behalf of respondent No. 1 that the suit had not been brought within one year as prescribed by section 5(2) of the Act, and was as such barred by limitation; and, that since the notice prescribed by section 53 Of the Act had admittedly not been served on the respondent, the suit was incompetent.
It was found that in an earlier suit, brought with the sanction of the Advocate General, against the Managing Committee for their removal and the framing of a fresh scheme, a decree had been passed against the appellants on October 16 1941, and it directed them not to interfere with the affairs of the Darga as members of the said Committee and to comply with the direction removing them from office.
On appeal the said decree was set aside by the Chief Court on March 7, 1946.
It was contended on behalf of the appellants that section 5(2) Of the Act had no application and even if it had, the suit was within time by virtue of the provisions of section 15 of the Limitation Act.
Held, that the contentions raised on behalf of the appellants must be negatived.
The expression " any person interested in a waqf " used in section 5(2) Of the United Provinces Muslims Waqf Act, 1936, pro perly construed, means any person interested in a transaction that is held to be waqf by the Commissioner of Waqfs appointed under the Act and as such the appellants fell within that category.
Where a literal construction defeats the object of the statute and makes part of it meaningless, it is legitimate to adopt a liberal construction that gives a meaning to the entire provision and makes it effective.
Chaturbhuj Mohanlal vs Bhicam Chand Choroyia & Sons, , Mathu Kutty vs Varoe Kutty, A.I.R. 1950 Mad.
4 and Lal Chand vs Messrs. Basanta Mal Devi Dayal & Ors., , referred to.
Rules of limitation are arbitrary in nature and in construing hem it is not permissible to import equitable considerations, and effect must be given to tile strict grammatical meaning of he words used.
Section 15 of the Limitation Act can be attracted only where a suit has been stayed by an injunction or order and the test would be whether its institution would or would not be an act in contempt of the court 's order.
Nagendra Nath Dey V. Suresh Chandra Dey, (1932) 34 Bom.
R. 1065, Narayan Jivangouda vs Puttabai, (1944) 47 Bom.
L.R. Beti Maharani vs The Collector of Etawah, All. 198 and Sundaramma vs Abdul Khader, Mad. 490, relied on.
Musammat Basso Kaur vs Lala Dhua Singh, (1888) 15 I.A. 211, held inapplicable.
The order of the court in the earlier suit was neither an injunction nor an order of the nature contemplated by section 15 Of the Limitation Act and so that section was inapplicable.
Offerings made from time to time by the devotees visiting the Darga Sharif were by their very nature an income of the Darga, and failure to mention them in the notification under section 5(1) Of the Act, did not render the notification defective.
The provision as to notice under section 53 Of the Act was applicable to suits in respect of acts of the Central Board as well as suits for any relief in respect of the waqf.
|
Summarize this legal judgement text concisely | l Appeal No. P 409 of 1958.
Appeal by special leave from the judgment and order dated May 13, 1958, of the Punjab High Court at Chandigarh in First Appeal from Order No. 24 of 1958.
C. B. Aggarwala and Naunit Lal, for the appellant.
H. section Doabia, K. R. Chaudhury and M. K. Ramamurty, for the respondent No. 1. 1958.
September 30.
This appeal by special leave has been filed against the decision of the Punjab High Court confirming the order passed by the Election Tribunal by which the appellant 's election has been declared to be void.
The appellant Shri Baru Ram was elected to the Punjab Legislative Assembly from the Rajaund constituency in the Karnal District.
Initially seventeen candidates had filed their nomination papers in this constituency.
Out of these candidates, thirteen withdrew and the nomination paper filed by Jai Bhagawan was rejected by the returning officer.
That left three candidates in the field.
They were the appellant Baru Ram, Mrs. Prasanni and Harkesh, respondents 1 and 2 respectively.
The polling took place on March 14, 1957, and the result was declared the next day.
Since the appellant had secured the largest number of votes he was declared duly elected.
Soon thereafter Mrs. Prasanni, respondent 1, filed an election petition in which she alleged that the appellant had committed several corrupt practices and claimed a declaration that his election was void.
The appellant denied all the allegations made by respondent 1.
The election tribunal first framed six preliminary issues and after they were decided, it raised twenty nine issues on the merits.
The tribunal was not 1406 satisfied with the evidence adduced by respondent I to prove her allegations in respect of the corrupt practices committed by the appellant and so it recorded findings against respondent 1 on all the issues in regard to the said corrupt practices.
Respondent I had also challenged the validity of the appellant 's election on the ground that the returning officer had improperly rejected the nomination paper of Jai Bhagawan.
This point was upheld.
by the election tribunal with the result that the appellant 's election was declared to be void.
The appellant then preferred an appeal to the Punjab High Court.
He urged before the High Court that the election tribunal was in error in coming to the conclusion that the nomination paper of Jai Bhagawan ' had been improperly rejected.
This contention was accepted by the High Court and the finding of 'the tribunal on the point was reversed.
Respondent 1 sought to support the order of the election tribunal on the ground that the tribunal was not justified in holding that the appellant was not guilty of a corrupt practice under section 123(7)(c).
This argument was also accepted by the High Court and it was held that the appellant was in fact guilty of the said alleged corrupt practice.
In the result, though the appellant succeeded in effectively challenging the only finding recorded by the tribunal against him, his appeal was not allowed because another finding which was made by the tribunal in favour of the appellant was also reversed by the High Court.
That is why the order passed by the tribunal declaring the appellant 's election to be void was confirmed though on a different ground.
It is this order which is challenged before us by Mr. Aggarwal on behalf of, the appellant and both the points decided by the High Court are raised before us by the parties.
At the hearing of the appeal Mr. Doabia raised a preliminary objection.
He contends that the present appeal has been preferred beyond time and should be rejected on that ground alone.
The judgment under appeal was delivered on May 13, 1958, and the petition for leave to appeal under article 136 of the Constitution 1407 has been filed in this Court on September 2, 1958.
It is common ground that the appellant had appliedfor leave to the Punjab High Court on June 9, 1958,and his application was dismissed on August 22, 1958.If the time occupied by the appellants application for leave is taken into account, his appeal would be in time; on the other hand, if the said period is not taken into account, his application would be beyond time.
Mr. Doabia argues that the proceedings taken on an election petition are not civil proceedings and so an application for leave under article 133 of the Constitution was incompetent; the time taken in the disposal of the said application cannot therefore be taken into account in computing the period of limitation.
On the other hand, Mr. Aggarwal urges that section 116A (2) of the Representation of the People Act (43 of 1951) (hereinafter called the Act) specifically provides that the High Court, in hearing an appeal presented to it shall have the same powers, jurisdiction and authority and follow the same procedure with respect to the said appeal as if it were an appeal from an original decree passed by a civil court situated within the local limits of its civil appellate jurisdiction.
The result of this provision is to assimilate the election proceedings coming before the High Court in appeal to civil proceedings as contemplated by article 133 of the Constitution and so, according to him, it was not only open to the appellant but it was obligatory on him to make an application for leave to the Punjab High Court under the said article.
That is why the time occupied by the said proceedings in the Punjab High Court must be excluded in deciding the question of limitation.
We do not propose to deal with the merits of these contentions.
It is not seriously disputed by Mr. Doabia that parties aggrieved by orders passed by High Courts in appeals under section 116A of the Act generally apply for leave under article 133 and in fact such applications are entertained and considered on the merits by them.
It is true that Mr. Doabia 's argument is that this practice is erroneous and that article 133 has no application to the appellate decision of the High Court under section 116A 179 1408 of the Act.
Assuming that Mr. Doabia is right, it is clear that the appellant has merely followed the general practice in this matter when he applied for leave to the Punjab High Court; his application was entertained, considered on the merits and rejected by the High Court.
Under these circumstances we think that even if we were to hold that article 133 has no application, we would unhesitatingly have excused the delay made in the presentation of the appeal; and so we do not think we can throw out the appeal in limine on the ground of limitation.
If necessary we would excuse the delay alleged to have been made in presenting this appeal.
On the merits, Mr. Aggarwal contends that the finding of the High Court that the appellant has committed a corrupt practice under section 123(7)(c) is not supported by any evidence.
Before dealing with this argument it would be relevant to consider the legal position in the matter.
Corrupt practice as defined in section 2(c) of the Act means " any of the practices specified in section 123 ".
Section 123(7)(c) provides inter alia that the obtaining or procuring or abetting or attempting to obtain or procure by a candidate any assistance other than giving of vote for the furtherance of the prospects of that candidate 's election from any person in the service of the Government and who is a member of the armed forces of the Union, is a corrupt practice.
The case against the appellant as set out by respondent 1 in her election petition on this point is that the appellant secured the assistance of Puran Singh who is a member of the armed forces of the Union.
It was alleged that Puran Singh " actively canvassed for the appellant on March 11th to 13th, 1957, in his village and so much so that he subsequently served as his polling agent at polling booth No. 15 at village Kotra on March 14, 1957 ".
Both the tribunal and the High Court are agreed in holding that it had not been proved that Puran Singh actively canvassed for the appellant on March 11th to 13th as alleged by respondent 1.
They have, however, differed on the question as to whether the appellant had appointed Puran Singh as his polling agent for the 1409 polling booth in question.
It would thus be seen that the point which falls for our decision in the present appeal lies within a very narrow compass.
Did the appellant secure the assistance of Puran Singh by appointing him as his polling agent ? Going back to section 123, explanation (2) to the said section provides that " for the purpose of cl.
(7) a person shall be ' deemed to assist in the furtherance of the prospects of a candidate for election if he acts as an election agent or polling agent or a counting agent of that candidate ".
In other words, the effect of explanation (2) is that once it is shown that Puran Singh had acted as polling agent of the appellant, it would follow that the appellant had committed a corrupt practice under section 123(7)(c).
But it is important to bear in mind that before such a conclusion is drawn the provisions of section 46 of the Act must be taken into account.
Section 46 authorises a contesting candidate to appoint in the prescribed manner such number of agents and relief agents as may be prescribed to act as polling agents of such candidate at each polling station provided under section 25 or at the place fixed under subs.
(1) of section 29 for the poll.
There can be no doubt that, when explanation (2) to section 123 refers to a person acting as a polling agent of a candidate, it contemplates the action of the polling agent who is duly appointed in that behalf by the candidate under section 46.
It is only when it is shown that a person has been appointed a polling agent by the candidate and has in consequence acted as such agent for the said candidate that explanation (2) would come into operation.
If, without being appointed as a polling agent by the candidate, a person fraudulently, or without authority, manages to act as the polling agent of the said candidate, explanation (2) would not apply.
That being the true legal position the short point which arises for our decision is whether the appellant had appointed Puran Singh as his polling agent and whether Puran Singh acted as such polling agent at the polling booth No. 15 at Kotra.
What then are the facts held proved by the High Court in support of its conclusion against the appellant 1410 under section 123(7)(c) ? The first point which impressed the High Court is in respect of the writing by which the appellant is alleged to have appointed Puran Singh as his polling agent.
The printed prescribed forms were not available to the candidates and so they had to copy the prescribed form for the purpose of appointing their polling agents.
This position is not disputed.
The form by which Puran Singh is alleged to have been appointed the appellant 's polling agent contains a glaring mistake in that while reciting that the polling agent agreed to act as such polling agent the form says " I agree to act as such following agent " (P. W. 48/1).
The same glaring mistake is to be found in the form by which the appellant admittedly appointed Pal Chand to act as his polling agent at the same polling booth.
The High Court thought that the identity of this glaring mistake in both the forms coupled with the similarity of the handwriting of the rest of the writing in them showed that the two forms must have been written by the same scribe.
This is a finding of fact and it may be accepted as correct for the purpose of our decision.
It would, however, be relevant to add that it is not at all clear from the record that the same scribe may not have written similar forms for other candidates as well.
There is no evidence to show that the scribe who made this glaring mistake had been employed as his own scribe by the appellant.
The High Court was also disposed to take the view that Puran Singh in fact had acted as the polling agent on the day of the election at the said polling booth.
Respondent 1 had examined herself in support of this plea and Banwari Lal whom she examined supported her in that behalf.
The tribunal was not impressed by the evidence of these two witnesses; and it has given reasons for not accepting their evidence as true or reliable.
It is unnecessary to emphasize that, in dealing with an appeal under section 116A of the Act, High Courts should normally attach importance to the findings of fact recorded by the tribunal when the said findings rest solely on the appreciation of oral evidence.
The judgment of the High Court does not show that 1411 the High Court definitely accepted the evidence of the two witnesses as reliable; in dealing with the question the High Court has referred to this evidence without expressly stating whether the evidence was accepted or not; but it may be assumed that the High Court was disposed to accept that evidence.
In this connection, we would like to add that it is difficult to understand why the High Court did not accept the criticism made by the tribunal against these two witnesses.
If we consider the verifications made by respondent I in regard to the material allegations on this point both in her petition and in her replication, it would appear that she had made them on information received and not as a result of personal knowledge; that being so, it is not easy to accept her present claim that she saw Puran Singh working as polling agent; but apart from this consideration, the evidence of respondent 1, even if believed, does not show that Puran Singh was working as a polling agent of the appellant ; and the statement of Banwari Lal that Puran Singh was working as the appellant 's polling agent loses much of its force in view of his admission that he had no knowledge that Puran Singh had been appointed by the appellant as his polling agent.
Even so, we may assume, though not without hesitation, that Puran Singh did act as appellant 's polling agent as alleged by respondent 1.
in dealing with this question the High Court appears to have been considerably influenced by the statement made by Jangi Ram whom the appellant had examined.
In his cross examination, Jangi Ram stated that Jagtu and Pal Chand were the agents of Shri Baru Ram, but he added that Puran Singh was not at the polling booth.
It may be mentioned that the appellant 's case was that he had appointed only one polling agent at Kotra; and this allegation, according to the High Court, was disproved by the statement of Jangi Ram inasmuch as he referred to two polling agents working for the appellant.
In considering the effect of this statement, the High Court has failed to take into account the positive statement of the witness that Puran Singh was not at the polling 1412 station at all.
The evidence of the witness may be rejected if it appears to be unreliable; but if it is accepted, it would not be fair to accept it only in part and to hold that two polling agents had been appointed by the appellant one of whom was Puran Singh.
There is another serious infirmity in the inference drawn by the High Court from the statement of Jangi Ram ; that is that Jagtu to whom the witness has referred as a polling agent of the appellant appears in fact to have acted as a polling agent of Harkesh, respondent 2.
Jhandu, another witness examined by the appellant has stated so on oath and his statement has not been challenged in cross examination.
Thus, reading the evidence of Jhandu and Jangi Ram, it would be clear that Jangi Ram was right when he said that Jagtu was acting as a polling agent but he was wrong when he thought that Jagtu was the polling agent of the appellant.
If the attention of the High Court had been drawn to the unchallenged statement of Jhandu on this point, it would probably not have drawn the inference that Jangi Ram 's evidence supports the case of respondent I about the appointment of Puran Singh as the appellant 's polling agent.
The next ' circumstance on which reliance has been placed in the judgment of the High Court is that Puran Singh has signed the prescribed form appointing him as the polling agent and he must have presented it to the returning officer.
The prescribed form requires that a candidate appointing his polling agent and the polling agent himself should sign the first part of the form.
Then the polling agent is required to take the form to the returning officer, sign in token of his agreeing to work as a polling agent before the said officer and present it to him.
The High Court has found that Puran Singh must have signed the form and presented it as required by law.
Puran Singh was examined by respondent 1; but when he gave evidence, he was allowed to be treated as hostile and cross examined by her counsel.
Puran Singh denied that he had acted as the appellant 's polling agent and that he had signed the form and presented it to the returning officer.
It, however, appears that Chand 1413 Jamadar to whose platoon Puran Singh is attached gave evidence that the signature of Puran Singh on the form in question (P.W. 48/1) appeared to be like the signatures on acquittance rolls which had been admittedly made by him.
On the same question hand writing experts were examined by both the parties.
Mr. Om Parkas was examined by respondent I and he stated that he had compared the admitted signatures of Puran Singh with the disputed signature and had come to the conclusion that Puran Singh must have made the disputed signature.
On the other hand, Mr. Kapur whom the appellant examined gave a contrary opinion.
The tribunal thought that in view of this conflicting evidence it would not be justified in finding that Puran Singh had signed the form.
The High Court has taken a contrary view.
Mr. Aggarwal for the appellant contends that the High Court was in error in reversing the finding of the tribunal on this point.
There may be some force in this contention ; but we propose to deal with this appeal on the basis that the finding of the High Court on this question is right.
The position thus is that, according to the High Court, Puran Singh signed the form appointing him as the appellant 's agent and presented it before the officer.
Puran Singh was seen at the polling booth and the scribe who wrote the form in question also wrote the form by which the appellant appointed Pal Singh as his polling agent at the same booth.
The High Court thought that from these circumstances it would be legitimate to infer that the appellant had appointed Puran Singh as his polling agent and had in fact signed the form in token of the said appointment.
It is the correctness of this finding which is seriously disputed by Mr. Aggarwal before us.
It is significant that from the start the parties were at issue on the question as to whether Puran Singh had been appointed by the appellant as his polling agent; and so respondent 1 must have known that she had to prove the said appointment in order to obtain a finding in her favour on issue 29 under section 123 (7)(c) of the Act.
Respondent I in fact led evidence to prove the signature of Puran Singh but no attempt 1414 was made by her to prove the signature of the appellant on the said form.
The appellant had specifically denied that he had appointed Puran Singh as his polling agent and when he stepped into the witness box he stated on oath that he had not signed any form in that behalf.
Under these circumstances, it was clearly necessary for respondent I to examine competent witnesses to prove the appellant 's signature on the form.
It is true that the appellant 's signature on the form appears to have been overwritten, but it is only the expert who could have stated whether the overwriting in question made it impossible to compare the said signature with the admitted signatures of the appellant.
It appears that after the whole of the evidence was recorded, respondent woke up to this infirmity in her case and applied to the tribunal for permission to examine an expert in that behalf.
This application was made on February 6, 1958; and the only explanation given for the delay in making it was that it was after the appellant denied his signature on oath that respondent I realized the need for examining an expert.
The tribunal rejected this application and we think rightly.
In its order the tribunal has pointed out that respondent I had been given an opportunity to examine an expert and if she wanted her expert to give evidence on the alleged signature of the appellant her counsel should have asked him relevant questions when he was in the witness box.
Thus the position is that there is no evidence on the record to support the case of respondent I that the said alleged signature has in fact been made by the appellant.
The only relevant evidence on the record is the statement of the appellant on oath that he had not signed the form in question.
Mr. Doabia fairly conceded that there was no legal evidence on this point; but his argument was that from the other findings of fact recorded by the High Court it would be legitimate to infer that the appellant had made the said signature.
In our opinion this contention is wholly untenable.
It must be borne in mind that the allegation against the appellant is that he has committed a corrupt practice and a finding 1415 against him on the point would involve serious consequences.
In such a case, it would be difficult to hold that merely from the findings recorded by the High Court it would be legitimate to infer that the appellant had signed the form and had in fact appointed Puran Singh as his polling agent.
Mr. Doabia argues that it is not always absolutely necessary to examine an expert or to lead other evidence to prove handwriting.
It would be possible and legal, he contends, to prove the handwriting of a person from circumstantial evidence.
Section 67 of the Indian Evidence Act provides inter alia that if a document is alleged to be signed by any person the signature must be proved to be in his handwriting.
Sections 45 and 47 of the said Act (I of 1872), prescribe the method in which such signature can be proved.
Under section 45, the opinion of the handwriting experts is relevant while under section 47 the opinion of any person acquainted with the handwriting of the person who is alleged to have signed the document is admissible.
The explanation to the section explains when a person can be said to be acquainted with the handwriting of another person.
Thus, there can be no doubt as to the manner in which the alleged signature of the appellant could and should have been proved; but even assuming that the signature of the appellant can be legally held to be proved on circumstantial evidence the principle which governs the appreciation of such circumstantial evidence in cases of this kind cannot be ignored.
It is only if the court is satisfied that the circumstantial evidence irresistibly leads to the inference that the appellant must have signed the form that the court can legitimately reach such a conclusion.
In our opinion, it is impossible to accede to Mr. Doabia 's argument that the facts hold proved in the High Court inevitably lead to its final conclusion that the appellant had in fact signed the form.
It is clear that in reaching this conclusion the High Court did not properly appreciate the fact that there was no legal evidence on the point and that the other facts found by it cannot even reasonably support the 180 1416 case for respondent 1.
We must accordingly reverse the finding of the, High Court and hold that respondent I has failed to prove that the appellant had committed a corrupt practice under section 123(7)(c) of the Act.
This finding, however, does not finally dispose of the appeal because Mr. Doabia contends that the High Court was in error in reversing the tribunal 's conclusion that the nomination paper of Jai Bhagawan had been improperly rejected.
Mr. Aggarwal, however, argues that it is not open to respondent I to challenge the correctness of the finding of the High Court on this point.
In support of his objection, Mr. Aggarwal has referred us to the decision of this Court in Vashist Narain Sharma vs Dev Chandra (1).
In this case, when the respondent, having failed on the finding recorded by the tribunal in his favour, attempted to argue that he could support the decision of the tribunal on other grounds which had been found against him, this Court hold that he was not entitled to do so.
The provision of the Code of Civil Procedure which permits the respondent to adopt such a course, it was observed, has no application to an appeal filed by special leave under article 136.
"We have no appeal before us on behalf of the respondent ", observed Ghulam Hasan J. " and we are unable to allow that question to be reagitated ".
Mr. Doabia challenges the correctness of these observations.
He relies on section 116A of the Act which empowers the High Court to exercise its jurisdiction, authority and power, and to follow the same procedure, as would apply to appeals preferred against original decrees passed by a civil court within the local limits of its civil appellate jurisdiction.
There is no doubt that, in an ordinary civil appeal, the respondent would be entitled to support the decree under appeal on grounds other than those found by the trial court in his favour.
Order 41, rule 22 of the Code of Civil Procedure, which permits the respondent to file crossobjections recognize the respondent 's right to support the decree on any of the grounds decided against him by the court below.
In the present case no appeal (1)[1955] 1 S.C.R. 509.
1417 could have been preferred by respondent I because she had succeeded in obtaining the declaration that the appellant 's election was void and it should therefore be open to her to support the final conclusion of the High Court by contending that the other finding recorded by the High Court which would go to the root of the matter is erroneous.
Prima facie there appears to be some force in this contention; but we do not think it necessary to decide this point in the present appeal.
Mr. Aggarwal 's objection assumes that respondent I should have preferred a petition for special leave to appeal against the finding of the High Court on the issue in question; if that be so, the application made by her for leave to urge additional grounds can be converted into a petition for special leave to appeal against the said finding, and the delay made in filing the same can be condoned.
As in the case of the preliminary objection raised by respondent 1 against the appellant on the ground of limitation, so in the case of the objection raised by the appellant against respondent I in this matter, we would proceed on the basis that we have condoned the delay made by respondent 1 in preferring her petition to this Court for leave to challenge the finding of the High Court that the nomination form of Jai Bhagawan had been properly rejected.
That is why we have allowed Mr. Doabia to argue this point before us.
We may add that the two points of law raised by the respective objections of both the parties may have to be considered by a larger Bench on a suitable occasion.
On the merits, Mr. Doabia 's case is that the returning officer was not justified in rejecting Jai Bhagawan 's nomination under section 36(2)(b) of the Act.
The facts on which this contention is raised are no longer in dispute.
Mr. Jai Bhagawan who presented his nomination paper to the returning officer on January 29, 1956, was admittedly not an elector in the constituency of Rajaund in the District of Karnal.
It is alleged that he was a voter in another constituency.
When his nomination paper was presented, he did not produce a copy of the electoral roll of the said constituency or of the relevant part thereof or a certified copy of the 1418 relevant entries in the said roll; nor did he produce any of these documents on the first of February which was fixed for scrutiny of the nomination papers.
When the returning officer noticed that the candidate had not produced the relevant document, he gave him, at his request, two hours time to produce it.
The candidate failed to produce the document within the time allowed and thereupon the returning officer rejected his nomination paper tinder section 36 (2)(b) of the Act.
It is true that the candidate subsequently purported to produce before the officer his affidavit that his name was entered as a voter in the list of voters (No. 1074, Constituency No. 6, Karnal Baneket No. 21, Vol. 10), but the returning officer refused to consider the said affi davit because he had already rejected his nomination paper under section 36(2)(b).
Thus the rejection of the nomination paper was the result of the candidate 's failure to produce any of the prescribed documents before the returning officer.
On these facts the question which arises for decision is whether the returning officer was justified in rejecting the nomination paper under section 36(2)(b).
Section 33 of the Act deals with the presentation of nomination papers and prescribe , the requirements for valid nomination.
It would be relevant to refer to sub sections
(4) and (5) of this section.
Sub section (4) provides that on the presentation of the nomination paper, the returning officer shall satisfy himself that the names and electoral roll numbers of the candidate and his proposer as entered in the nomination paper are the same as those entered in the electoral roll.
The proviso to this sub section requires the returning officer to permit clerical or technical errors to be corrected.
Under this sub section it would have been open to Jai Bhagawan while presenting his nomination paper to produce one of the prescribed documents to show his electoral roll number on the roll of his constituency.
However, his failure to do so does not entail any penalty.
Sub section (5) of section 33 deals with the stage of the scrutiny of the nomination papers and it provides that where a candidate is an elector of a different constituency, a copy of the electoral 1419 roll of that constituency or the relevant part thereof or a certified copy of the relevant entry of such roll shall, unless it is filed along with the nomination paper, be produced before the returning officer at the time of the scrutiny.
It is thus clear that when the stage of scrutiny is reached the returning officer has to be satisfied that the candidate is an elector of a different constituency and for that purpose the statute has provided the mode of proof Section 36, sub section
(7) lays down that the certified copies which are required to be produced under section 33 (5) shall be conclusive evidence of the fact that the person referred to in the relevant entry is an elector of that constituency.
In other words, the scheme of the Act appears to be that where a candidate is an elector of a different constituency he has to prove that fact in the manner prescribed and the production of the prescribed copy has to be taken as conclusive evidence of the said fact.
This requirement had not been complied with by Jai Bhagawan and the returning officer thought that the said non compliance with the provisions of section 33(5) justified him in rejecting the nomination paper under section 36(2)(b) of the Act.
The question is whether this view of the returning officer is right.
Section 36 of the Act deals with the scrutiny of nominations and the object of its provisions as shown by sub section
(8) is to prepare a list of validly nominated candidates, that is to say, candidates whose nominations have been found valid and to affix it to the notice board of the returning officer.
Sub section (1) of section 36 provides that on the date fixed for the scrutiny of nominations each candidate and one other person duly authorized may attend at such time and place as the returning officer may appoint and the returning officer is required to give them all reasonable facilities for examining the nomination papers of all candidates which have been duly delivered.
Sub section (2) then deals with the scrutiny of the nomination papers and provides that the returning officer shall decide all objections which may be made to any nomination and may either on such objection, or on his own motion, after such summary enquiry, if any, as he thinks 1420 necessary, reject any nomination on any of the grounds mentioned in cls.
(a), (b) and (c) of the said sub section.
It is obvious that this enquiry must be summary and cannot be elaborate or prolonged.
In fact, sub section
(5) directs that the returning officer shall not allow any adjournment of the proceedings except when such proceedings are interrupted or obstructed by riots, by open violence or by causes beyond hip, control and the proviso to this sub section adds that in case an objection is made the candidate concerned may be allowed time to rebut it not later than the next day but one following the date fixed for scrutiny, and the returning officer shall record his decision on the date to which the proceedings have been adjourned.
Sub section (2) (b) deals with cases where there has been a failure to comply with any of the provisions of section 33 or section 34.
There is no doubt that in the present case there was failure on the part of Jai Bhagawan to comply with section 33(5) and prima facie section 36(2)(b) seems to justify the rejection of his nomination paper on that ground.
Section 33(5) requires the candidate to supply the prescribed copy and section 36(2)(b) provides that on his failure to comply with the said requirement his nomination paper is liable to be rejected.
In other words, this is a case where the statute requires the candidate to produce the prescribed evidence and provides a penalty for his failure to do so.
In such a case it is difficult to appreciate the relevance or validity of the argument that the requirement of section 33(5) is not mandatory but is directory, because the statute itself has made it clear that the failure to comply with the said requirement leads to the rejection of the nomination paper.
Whenever the statute requires a parti cular act to be done in a particular manner and also lays down that failure to comply with the said requirement leads to a specific consequence it would be difficult to accept the argument that the failure to comply with the said requirement should lead to any other consequence.
It is, however, urged that the statute itself makes a distinction between defects which are of a substantial character and those which are not of a substantial 1421 character.
This argument is based upon the provisions of section 36(4) of the Act which provides that the returning officer shall not reject any nomination paper on the ground of any defect " which is not of a substantial character ".
The failure to produce the requisite copy, it is urged, may amount to a defect but it is not a defect of a substantial character.
We are not impressed by this argument.
There is no doubt that the essential object of the scrutiny of nomination papers is that the returning officer should be satisfied that the candidate who is not an elector in the constituency in question is in fact an elector of a different constituency.
The satisfaction of the returning officer is thus the matter of substance in these proceedings; and if the statute provides the mode in which the returning officer has to be satisfied by the candidate it is that mode which the candidate must adopt.
In the present case Jai Bhagawan failed to produce any of the copies prescribed and the returning officer was naturally not satisfied that jai Bhagawan was an elector of ' a different constituency.
If that in substance was the result of Jai Bhagawan 's failure to produce the relevant copy the consequence prescribed by section 36(2)(b) must inevitably follow.
It is only if the returning officer had been satisfied that Jai Bhagawan was an elector of a different constituency that his nomination papers could have been accepted as valid.
It is well settled that the statutory requirements of election law have to be strictly observed.
As observed by Mahajan C. J. who delivered the judgment of this Court in Jagan Nath vs Jagwant Singh(1) ". 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 ".
The learned Chief Justice has also added that ". it is a sound principle of natural justice that the success of a candidate who has won at an election should not be lightly interfered with and any petition seeking such interference must strictly conform to the requirements of the law." In this connection we may usefully refer to another decision of this Court in Rattan Anmol (1)[1954] S.C. R. 892, 895, 896.
1422 Singh vs Atma Ram (1).
While dealing with the question as to whether the requirements as to attestation were of a technical or of an unsubstantial character, Bose J. observed that " when the law enjoins the obser vance of a particular formality, it cannot be disregarded and the substance of the thing must be there ".
We must, therefore, hold that the High Court was right in coming to the conclusion that the nomination paper of Jai Bhagawan had been validly rejected by the returning officer.
Mr. Doabia, however, contends that the view taken by the High Court is purely technical and does not take into account the substance of the matter.
This approach, it is said, is inconsistent with the decision of this Court in Pratap Singh vs Shri Krishna Gupta (1).
It is true that in this case Bose J. has disapproved of the tendency of the courts towards technicalities and has observed that " it is the substance that counts and must take precedence over mere form ".
But in order to appreciate the scope and effect of these observations, it would be necessary to bear in mind the relevant facts and the nature of the point raised before the court for decision in this case.
The question raised was whether the failure of the candidate to mention his occupation as required by r. 9(1)(i) rendered his nomination paper invalid and it was answered by the court in the negative.
The question arose under the provisions of the C. P. and Berar Municipalities Act 11 of 1922.
It is significant that the decision of this Court rested principally on the provisions of section 23 of the said Act according to which " Anything done or any proceedings taken under this Act shall not be questioned on account of any. . defect or irregularity in affecting the merits of the case ".
It was held by this Court that reading r. 9(1) (iii) (c) which directed the supervising officer to examine nomination papers, in the light of section 23, the court had to see whether the omission to set out a candidate 's occupation can be said to affect the merits of the case and on that point there was no doubt that the said failure could not possibly affect the merits of the case.
The High Court had, however, taken a (1) ; , 488.
(2) A.I.R. 1956 S.C. 140,141.
1423 contrary view and it was in reversing this view that Bose J. disapproved the purely technical approach adopted by the High Court.
Where, however, the statute requires specific facts to be proved in a specific way and it also provides for the consequence of non P compliance with the said requirement it would be difficult to resist the application of the penalty clause on the ground that such an application is based on a technical approach.
Indeed it was precisely this approach which was adopted by this Court in the case of Rattan Anmol Singh vs Atma Ram (1).
Mr. Doabia has also relied upon a decision of the Andhra High Court in Mohan Reddy vs Neelagiri Muralidhar Rao (2) in support of his argument that the failure to produce the prescribed copy cannot justify the rejection of the nomination paper.
In our opinion this decision does not assist Mr. Doabia 's contention.
In this case it was urged before the High Court that the document produced by the party was riot a certified copy as required by section 33 (5) of the Act.
This argument was based on the assumption that the certified copy mentioned in section 33(5) of the Act must satisfy the test prescribed by section 76 of the Indian Evidence Act.
The High Court rejected this argument for two reasons.
It held that the certified copy mentioned ins.
33(5) need not necessarily satisfy the test prescribed by section 76 of the Indian Evidence Act.
Alternatively it held, on a consideration of the relevant statutory provisions, that the document in question was in fact and in law a certified copy under section 76 of the Indian Evidence Act.
These points do not arise for our decision in the present appeal.
Mr. Doabia, however, relies on certain observations made in the judgment of the nigh Court and it may be conceded that these observations seem to suggest that according to the High Court the provisions of sections 33(5) and 36(7) do not preclude proof by other means of the fact that the name of the candidate is on the relevant electoral roll.
These observations are clearly obiter.
Even so we (1) ; , 483.
(2) A.I.R. 1958 Andhra Pradesh 485.
181 1424 would like to add that they do not correctly represent the effect of the relevant provisions of the Act.
The result is the appeal is allowed, the order passed by the High Court is set aside and the election petition filed by respondent 1 is dismissed with costs throughout.
Appeal allowed.
| The first respondent filed an election petition against the 1404 appellant on the grounds: (i) that he committed the corrupt practice specified in section 123(7) Of the Representation of the People Act, 195I inasmuch as he had obtained the assistance of one P, a member of the armed forces, who had acted as his polling agent and (ii) that the nomination of one J had been improperly rejected by returning officer.
The election tribunal held that the corrupt practice was not proved but that the nomination of J had been improperly rejected and consequently it declared the election of the appellant to be void.
On appeal the High Court held that the nomination of J was not improperly rejected but that the corrupt practice alleged was established and dismissed the appeal.
The High Court found that P had signed the form a pointing him as the appellant 's polling agent and had presented it before the presiding officer, that P was seen at the polling booth and that the scribe who wrote this form had also written the form by which the appellant had appointed another polling agent.
From these circumstances the High Court drew the inference that the appellant had appointed P as his polling agent and had in fact signed the form in token of such appointment.
With respect to the rejection of the nomination of J the High Court held that J was a voter in a different constituency and that he had failed to produce a copy of the electoral roll when he presented the nomination paper, nor was it produced at the time of the scrutiny or within the time given by the returning officer and that consequently the nomination was properly rejected.
Held, that to establish that the appellant was guilty of the corrupt practice charged it was not sufficient to show that P had acted as his polling agent but it must also be proved that the appellant had appointed P as his polling agent.
This fact the first respondent had failed to prove by any legal evidence.
The facts and circumstances found by the High Court did not inevitably lead to the conclusion that the appellant had signed the form and hence such an inference could not be drawn.
Held, further, that the nomination of J was not improperly rejected.
Where a candidate is an elector of a different constituency he has to prove that fact in the manner prescribed by section 33(5) by the production of a copy of the electoral roll of that constituency or of the relevant part thereof or of a certified copy of the relevant entries thereof.
In the present case there was failure on the part of J to comply with section 33(5) and his nomination was properly rejected under section 36(2)(b).
The failure to comply with section 33(5) is not a defect of an unsubstantial character so as to attract the application Of section 36(4).
When the statute requires specific facts to be proved in a specific way and it also provides for the consequences of non compliance with the said requirement the application of the penalty clause cannot be resisted on the ground that such application is based on a technical approach.
jagan Nath vs jaswant Singh; , ; Rattan 1405 Anmol Singh vs Atma Ram, ; and Pratap Singh vs Shri Krishna Gupta, A.I.R. 1956 S.C. 140, referred to.
Mohan Reddy vs Neelagiri Muralidhar Rao, A.I.R. 1958 A.P. 485, not approved.
|
Summarize this legal judgement text concisely | Appeals Nos. 5 and 6 of 1955.
Appeals from the judgment and decree dated September 15, 1952, of the Madras High Court in Second Appeals Nos.
2256 of 1947and 2545 of 1948, 2 arising.
out of the judgment and decree dated September 19, 1946, of the Court of Subordinate Judge of Kozhikode in Appeal Suit Nos. 336 and 180 of 1946, against the judgment and decree dated October 9, 1945, and June 29, 1946, respectively of the Court of Districts Munsif, Chowghat, in O. section Nos. 131 and 158 of 1945.
B. K. B. Naidu, for the appellants.
V. Karunakara Menon and M. R. Krishna Pillai, for the respondents.
October 1.
The Judgment of the Court was delivered by VENKATARAMA AIYAR J.
The point for determination in these two appeals is whether one Kesavan Kaimal who was one of three executants of a will dated February 10, 1906, became entitled under that will to the properties, which are the subject matter of these appeals.
The will is a short one, and is as follows: " Will executed on 28th Makaram 1081 M. E., corresponding to 10th February, 1906, jointly by Kunhan Kaimal, son of Karayamvattath Katbayakkal Kunhu Kutti Amma, Kesavan Kaimal, son of Theyi Amma and Theyi Amma, daughter of Nani Amma of Etathiruthi amsom and Etamuttan desom in Ponnani Taluk.
We have hereby settled and agreed that all the movable and immovable properties acquired jointly and separately by us till now, and those which we may be so acquiring in future and those which have devolved on us and those which we may yet be obtaining shall be held by us in our possession and under our control and dealt with by us as we please till our death and that subsequent to our death, Kalliani Amma 's children, Kali and Kunhu Kutty, Thona Amma 's children, Parukutty, Kunhunni, Kochu Govindan and Ramar, and the children of the deceased Narayani Amma, namely, Kunhunniri, Kuttiparu and Lakshmikutty and their children and the children who may be born to them as also the children who may be born of them, shall as our heirs and legal representatives, hold the said properties in their 3 possession and enjoy them hereditarily in equal shares amongst themselves.
Except after our death, the aforesaid persons shall not lay claim to any of the properties belonging to us.
It is settled that in the event of our effecting any transfers or alienations of the said properties.
either jointly or severally till our death, the aforesaid ' persons shall have the right and freedom only in respect of the remaining items of properties to the exclusion of those items of properties included in the above transactions.
It is hereby further settled and agreed that subsequent to our death, save our legal representatives aforesaid and such of those as may be born hereafter, no other persons shall have the right to claim to or right of entry upon the entire properties moveable and immoveable found belonging to us.
And we have signed herein in the presence of the undersigned witnesses (signed) Kunhan Kaimal.
( " " ) Kesavan Kaimal.
(" " ) Theyi Amma.
" of the three testators, Theyi Amma died first the exact date of her death does not appear and is not very material and Kunhan Kaimal died thereafter sometime in 1930.
It is the case of Kesavan Kaimal that in the events which had happened, he had become entitled by survivorship to all the properties disposed of by the will, including those of Kunhan Kaimal, and on this footing he conveyed on October 14,1938, seven items of properties, of which three belonged to Kunhan Kaimal, to one Sankarankutti Kaimal and on October 16, 1944, another three items of properties which belonged to Kunhan Kaimal, to Kalyani and Vijayan.
These transfers led to the two litigations; which have culminated in the present appeals.
The legatees under the will dated February 10, 1906, instituted O. section No. 131 of 1945 in the Court of the District Munsif, Chowghat, then in the Province of Madras, for recovery of possession of three items of properties which had belonged to Kunhan Kaimal 4 after redeeming a mortgage for Rs. 100 created over those properties on February 3, 1901.
The plaintiffs claimed that on the death of Kunhan Kaimal in 1930 they had become entitled to those properties as legatees under the will.
Defendants 1 to 3 represented the mortgagees.
Defendant 6 was Kesavan Kaimal, and defendants 4 and 5 were brought on record as persons claiming to be entitled to the suit properties under a deed of transfer by defendant 6, dated October 16, 1944.
Defendants 4 to 6 contested the suit, and pleaded that on a proper construction of the will, the properties of Kunhan Kaimal survived to Kesavan Kaimal on the death of the former in 1930, and that the plaintiffs got no title to them.
This contention was overruled by the District Munsif, and the suit was decreed.
There were two appeals against this decree, A. section No. 179 of 1946 and A. section No. 180 of 1946 in the Court of the Subordinate Judge, Calicut, the former by defendants 4 and 5 and the latter, by defendant 6.
The Subordinate Judge agreed with the construction put on the will by the District Munsif, and dismissed the appeals.
Against that decree, defendant 6 preferred section A. No. 2256 of 1947 in the High Court of Madras.
Basing himself on the deed of transfer dated October 14, 1938, Sankarankutti Kaimal instituted O. section No. 158 of 1945 in the Court of the District Munsif, Chowghat, for recovery of possession of three items of properties, of which one belonged to Kunhan Kaimal absolutely and the other two ' to him and others as co owners.
In the plaint, he alleged that there was an oral lease of the properties to the first defendant and to one Kali Amma, whose legal representatives were defendants 2 and 3, that the defendants were in arrears in the payment of rent, and were disputing his title to the properties, and that he was therefore entitled to eject them.
Defendant 4 is Kesavan Kaimal, the vendor of the plaintiff.
The contesting defendants who were the same as the plaintiffs in O.S. No. 131 of 1945 pleaded that under the will they became entitled to all the properties of Kunhan Faimal, that the oral lease was untrue, and that the 5 suit was barred by limitation.
The District Munsif found all the contentions in favour of defendants 1 to 3 and dismissed the suit.
, Against this decree, there was an appeal, A. section No. 336 of 1946, in the Court of the Subordinate Judge of Ottapalam, and that was dismissed, the Subordinate Judge agreeing with the District Munsif on all the issues.
Against his decree, the plaintiff preferred section A. No. 2545 of 1948 in the High Court of Madras.
Both the second appeals came up for hearing before Raghava Rao J. who held that on its true construction the will operated to vest, in the three testators all the properties covered by it in joint ownership, that, in consequence, on the death successively of Theyi Amma and Kunhan Kaimal, their interest survived to Kesavan Kaimal, and that the transfers made by him on October 14, 1938, and October 16, 1944, were valid.
In the result, both the second appeals were allowed, the suit for redemption, O. section No 131 of 1945, was dismissed, and the suit in ejectment, O. section No. 158 of 1945, was decreed.
Against this judgment, the present appeals have been brought on a certificate granted by this court under article 136.
The sole point for determination in these appeals is whether under the will all the three testators became joint owners of all the properties on which it operated.
After hearing the question fully argued, we have come to the conclusion that that is not the effect of the will, and that the judgment of the High Court contra cannot be supported.
There were three executants of the will.
Each of them possessed properties, which were his or her self acquisitions.
They also owned some properties which they had jointly acquired, but their title to such properties was as tenants in common and not as joint tenants.
Each of them would have been entitled to execute a will of his or her properties, and if that had been done, the legatees named therein would undoubtedly have been entitled to those pro perties.
In the present case, the legatees who were intended to take were the same persons, and it was for that reason that the three testators instead of each executing a separate will jointly executed it.
It ist 6 nevertheless, a will by which each testator bequeathed properties belonging to him or to her, and therefore on the death of each testator, the legatees mentioned in the will would be entitled to the properties of the testator, who dies.
The contention of the respondents which has found favour with the High Court is that the will must be construed as a transfer by the several testators of all their individual properties to themselves jointly as joint tenants.
That would really be a transfer inter Vivos and not a will.
The word "will" is widely known and used, and it has a well understood significance as meaning a disposition which is to take effect on the death of a person.
The executants of the will could not have therefore intended that it should operate inter ViVOs.
Moreover, if the document was intended to take effect as a present disposition, it should have to be stamped under the provisions of the Stamp Act, but the will is an unstamped document.
Coming to the recitals in the will, there are no words by which the executants thereof divest themselves of their individual ownership and vest it in themselves jointly.
It is said that that could be implied from the words " all the movable and immovable properties acquired jointly and separately by us till now, and those which we may be so acquiring in future and those which have devolved on us and those which we may yet be obtaining shall be held by us in our possession and under our control ".
We are unable to read any such implication in those words.
It is difficult to imagine how properties which were to be acquired in future could form the subject matter of a disposition in praesenti.
On the other band, the true purpose of this clause would seem to be to emphasise that the execution of the will does not affect the rights of the testators over their properties, and that is an indication the it is to operate as a will.
The matter appears to us to be concluded beyond all doubt by the terms of clause 3, which provides that the testators could alienate the properties jointly or severally.
If the properties were intended to be impressed with the character of joint property, an alienation by any 7 one of them singly would be incompetent.
In coming to the conclusion to which he did, the learned Judge in the Court below was very largely influenced by the fact that the will dealt with, not only the separate properties of the testators but also of their joint properties, and that there was one disposition as regards all of them.
But this reasoning is based on a misconception of the recitals in the will.
The will does not refer to any joint properties of the testators but to properties jointly acquired by them which is very different.
They would hold these properties as tenants in common, and their share therein would devolve as their separate properties.
It was further argued for the respondents that it could not have been the intention of Theyi Amma, one of the testators, to benefit the legatees under the will in preference to her own son, Kesavan Kaimal, and that, therefore, it must be held that she intended that her son who was the youngest of the testators should take all the properties.
But if Kesavan Kaimal could himself agree to bequeath his properties to those legatees, we see nothing unnatural in his mother also agreeing to bequeath her properties to them they being the heirs of the testators under the Marumakkat tayam Law.
Learned counsel for the respondents sought to rely on the subsequent conduct of the parties as showing that they understood the will as conferring a joint estate on the testators.
It was said that it was in that belief that Kesavan Kaimal was dealing with the properties of the other testators as his own, after their death.
It was also said that the conduct of the other members of the tarwad, including the plaintiffs, showed that they shared that belief.
And this was sought to be made out by reference to the proceedings in E. A. No. 320 of 1938 in section C. No. 480 of 1933.
The facts were that one Kunhunni Kaimal obtained a decree against Kesavan Kaimal in section C. No. 480 of 1933, and in execution of that decree, he brought some of the tarwad properties to sale, purchased them himself and got into possession.
The members of the tarwad then filed an application, E. A. No. 320 of 1938, under 0. 21, r. 100, for redelivery of the 8 properties to them on the ground that the decree and the sale proceedings were not binding on them, and that was dismissed.
In the order dismissing the application, the District Munsif observed that under the will dated February 10, 1906, Kesavan Kaimal had the power to transfer the properties.
This order was relied on in these proceedings as operating as res judicata in favour of the respondents; but that contention was negatived by the Courts below, and has not been repeated before us.
But these proceedings are now sought to be relied on as showing that the members of the tarwad did not dispute the title of Kesavan Kaimal to the properties which were dealt with by the will.
As against this, the appellant referred us to a partition deed dated May 16, 1915, and a mortgage deed dated March 4, 1926, to both of which Kesavan Kaimal was a party, in which be and other members of the family had understood the will in question as meaning that the testators held the properties covered by the will in separate ' and exclusive ownership.
Whatever value one might attach to the above considerations if there was any doubt or uncertainty as to the meaning of the will, when once it is held that the language thereof is clear and unambiguous, evidence of the subsequent conduct of the parties cannot be admitted for the purpose of limiting or controlling its meaning.
In our view, the terms of the will are clear, and the subsequent conduct of the parties sought to be relied on must be disregarded as wholly inadmissible.
We are accordingly of opinion that the will dated February 10, 1906, is what it purports to be a will, and nothing else.
It does not confer any rights inter se on the testators; it only vests the title to the properties disposed of by it in the legatees on the death of the testators.
In this view, the will must be held to be a testamentary disposition by the three testators of their properties operating on the death of each testator on his properties, and is, in effect, three wills combined in one.
A joint will, though unusual, is not unknown to law.
In Halsbury 's Laws of England, Hailsham 's Edition, Vol. 34, p. 17, para.
12, the law is thus stated: 9 " A joint will is a will made by two or more testators contained in a single document, duly executed by each testator, disposing either of their separate properties, or of their joint property.
It is not, however, recognised in English law as a single will.
It operates on the death of each testator as his will disposing of his own separate property, and is in effect two or more wills ".
There is a similar statement of the law in Jarman on Wills, 8th Ed., p. 41.
The following observations of Farewell J. in Duddell in re.
Roundway V. Roundway (1) are apposite: ". in my judgment it is plain on the authorities that there may be a joint will in the sense that if two people make a bargain to make a joint will, effect may be given to that document.
On the death of the first of those two persons the will is admitted to probate as a disposition of the property that be possesses.
On the death of the second person, assuming that no fresh will has been made, the will is admitted to probate as the disposition of the second person 's property. .
It was also argued for the respondents that the will might be construed as a mutual will, but that, in our opinion, is an impossible contention to urge on the recitals of the document.
A will is mutual when two testators confer upon each other reciprocal benefits, as by either of them constituting the other his legatee; that is to say, when the executants fill the roles of both testator and legatee towards each other.
But where the legatees are distinct from the testators, there can be no question of a mutual will.
It cannot be argued that there is, in the present case, a bequest by the testators to themselves.
There is nothing in the will to support such a contention, which would be inconsistent with the position taken by the respon dents that there was a settlement of the properties inter vivos converting separate properties into joint properties.
In this view, on the death of Kunhan Kaimal his properties vested in the legatees under the will dated February 10, 1906, and therefore neither Kesavan Kaimal nor his transferees under the deeds could lay any claim to them.
(1) , 592.
2 10 In the result, the appeals are allowed, the decrees passed by the High Court are set aside, and those of the Courts below are restored, with costs throughout.
Appeals allowed.
| A will executed jointly :by three persons contained, inter alia, the following recitals: " We have hereby settled and agreed that all the moveable and immoveable properties acquired jointly and separately by us till now, and those which we may be so acquiring in future and those which have devolved on us and those which we may yet be obtaining, shall be held by us in our possession and under our control and dealt with by us as we please till our death.
" There were bequests in favour of certain persons and the will provided that in the event of the executants effecting any transfers or alienations of the said properties, either, jointly or severally till their death, the aforesaid persons shall have the right only in respect of the remaining items of the properties.
Two of the testators having died the third claimed that he had become entitled by surviorship to all the properties disposed of by the document on the footing that it was in effect a transfer of all their individual properties to themselves jointly as joint tenants.
Held, that the document was a testamentary disposition by the three testators of their properties operating on the death of each testator on his properties, and was, in effect three wills combined in one.
The properties were held by the testators at, tenants in common and the legatees mentioned in the will would become entitled to the properties of the testator who dies.
|
Summarize this legal judgement text concisely | iminal Appeals Nos. 102 and 103 of 1958.
Appeals by special leave from the judgment and order dated March 28, 1958, of the Calcutta High Court in Criminal Appeal No. 428 of 1957 and reference section 374 Cr. P. C. No. 8 of 1957 arising out of the 1325 judgment and order dated September 21, 1957, of the Court of the Sessions Judge of Cooch Behar in Sessions Trial No. 2 of 1957 (Sept. Sessions) (Sessions Case No. 18 of 1957).
section K. Kapur, for the appellants.
B. Sen, P. K. Ghosh for P. K. Bose, for the respondent.
September 19.
The Judgment of the Court was delivered by IMAM J.
In these appeals the appellants were convicted for the murder of Malchand Bhadani.
A charge under section 302, Indian Penal Code had been framed against each of them.
The Sessions Judge found that the murder had been committed in the furtherance of their common intention.
In his opinion as appellant Bipin Behari Sarkar had actually committed the murder he convicted this appellant under section 302 of the Indian Penal Code.
He convicted the appellant Bishnu Charan Saha under section 302/34 of the Indian Penal Code.
He sentenced both the appellants to death.
The appellants appealed to the Calcutta High Court while the Sessions Judge made a reference for the confirmation of the death sentence passed by him.
The High Court found the appellants guilty under section 302/34 of the Indian Penal Code.
It accordingly confirmed the sentence of death imposed on the appellants by the Sessions Judge.
According to the prosecution, one Tarachand Bhadani had a cloth shop at Mathabhanga in the district of Cooch Bihar.
He was joint in business and mess with his two sons, Prithiraj and the deceased Malchand.
The annual turn over of the shop was between Rs. 50,000 to Rs. 60,000.
On December 18, 1956, Tarachand had gone to Rajasthan and Prithiraj had gone to Falakata Hat.
Accordingly at the shop on that day Malchand was the only person in charge of it.
At about 8 30 p. m., after the close of the day 's business, Malchand was counting the cash in the iron safe in an ante room of the shop when the appellants with one Sanatan Das, who was acquitted at the trial, 1326 called at the shop.
Malchand came out of the anteroom into the shop to attend to these late customers.
He had left open the safe and one of its drawers on the floor.
The appellants purported to make certain purchases and examined various pieces of cloth.
After selection of the cloth they were put into packets.
Cash memoes in duplicate were prepared and signed by Malcliand and the appellant Bishnu Charan Saha.
The cash memoes had been completely filled in.
Two of them had been separated from the cash memo book, but before the 3rd cash memo could be detached from the book, Malchand was struck down by the appellants with a heavy cutting instrument which they had carried.
The neck was so severely cut that the head was nearly severed from the trunk.
Just about then, a neighbour called out to Malchand by way of casual enquiry before retiring for the night.
This so frightened the miscreants that they fled.
The money in the open safe was left untouched.
The motive for the murder was to steal the money from the safe.
On December 25, 1956, the police seized a sharp cutting weapon variously described as a sword or a dagger.
It was found lying close to some shrubbery near Malchand 's shop.
It was stained with human blood.
It was a practice of the shop of Tarachand Bhadani to despatch from time to time, after obtaining Hundis, the accumulated proceeds of the business to Calcutta.
On the morning of December 18, 1956, Prithiraj, before he went to Falakata Hat, had made enquiries from the firm of Bhairabhan Bhowrilal whether any Hundi was available.
As Bhowrilal was not able to supply him the Hundi the cash remained in the shop.
The contents of the safe showed that on December 18, 1956, before Malchand was murdered there was a sum of Rs. 3,913 in cash and 8 1/4 tolas of gold.
There was, therefore, a substantial amount in the safe at the shop which would have been stolen were it not that the miscreants fled after murdering Malchand because of a neighbour calling out to him.
The conviction of the appellants, as pointed out by the High Court, depended entirely on circumstantial 1327 evidence.
The High Court did not rely upon the confessional statement made by the appellant Bishnu Charan Saha to a Magistrate, as, in its opinion, it was not a voluntary statement.
Reference will be made to the circumstantial evidence, upon which the High Court relied, in due course.
Before we deal with that aspect of the case it is necessary to refer to a submission made on behalf of the appellants concerning the tender of pardon under section 337 of the Code of Criminal Procedure to Bishnu Charan Saha and, the failure of the prosecution to comply with the provisions of section 339 of the Code of Criminal Procedure.
It was urged that the provisions of section 339 of the Code not having been complied with the trial ",as vitiated as the appellant Bishnu Charan Saha could not be tried alongwith the appellant Bipin Behari Sarkar.
In order to understand this submission it is necessary to state a few facts.
Bishnu Charan Saha was arrested at about 3 p. m. on December 19, 1956.
His confession was recorded by the Magistrate Mr. section C. Chaudhury on December 20, 1956.
A charge sheet against the appellants and Sanatan Das was submitted by the police on June 20, 1957.
On June 22, 1957, a prayer was made to the Sub divisional Magistrate on behalf of the prosecution that Bishnu Charan Saba may be tendered a pardon under section 337 of the Code of Criminal Procedure and the Magistrate recorded an order to the effect that this appellant was tendered pardon under section 337 of the Code of Criminal Procedure on condition of his making a full and true disclosure of the whole of the circumstances within his knowledge relating to the offence and to every other person concerned whether as principal or abettor in the commission thereof.
The Sub divisional Magistrate bad already reported on June 20, 1957, to the District Magistrate that both he and the other Magistrate of Mathabhanga should not hold the commitment proceedings as they had had something to do with the investigation.
On August 1, 1957, the Magistrate Mr. Sinha, to whom the case had been ultimately transferred, recorded an order to the effect that the three accused had been produced before him and that he had seen the Court 1328 Inspector 's petition praying that the accused Bishnu be made an approver in the case under section 337 of the Code of Criminal Procedure.
This accused had, however, stated that he made the confessional statement before the Magistrate at Mathabhanga as he had been assaulted by the police and that he did not wish to become an approver.
After the completion of the enquiry before commitment, the appellants and Sanatan Das were committed to the Court of Session to stand their trial for the murder of Malchand.
Section 339(1) of the Code provides that " where a pardon has been tendered under section 337 or section 338, and the Public Prosecutor certifies that in his opinion any person who has accepted such tender has, either by wilfully concealing anything essential or by giving false evidence, not complied with the condition on which the tender was made, such person may be tried for the offence in respect of which the pardon was so tendered, or for any other offence of which lie appears to have been guilty in connection with the same matter ".
The proviso to this sub section prohibits the trial of such person jointly with any of the other accused and that such person shall be entitled to plead at such trial that he had complied with the condition upon which such tender was made.
The provisions of this section clearly pre suppose that the pardon which had been tendered to a person had been accepted by him and that thereafter that person had wilfully concealed anything essential or had given false evidence and therefore bad not complied with the condition on which the tender was made to him.
Section 337 of the Code, under which a pardon is tendered, shows that such tender is made on the condition that the person to whom it is tendered makes a full and true disclosure of the whole of the circumstances within his knowledge relative to the offence and to every other person concerned whether as a principal or an abettor to the commission thereof.
Sub section (2) of this section requires that every person who has accepted a tender shall be examined as a witness in the court of the Magistrate taking cognizance of the offence and in the subsequent trial, if any.
1329 It is clear, therefore, that a mere tender of pardon does not attract the provisions of section 339.
There must be an acceptance of it and the person who has accepted the pardon must be examined as a witness.
It is ' only thereafter that the provisions of section 339 come into play and the person who accepted the pardon may be tried for the offence in respect of which the pardon was tendered, if the Public Prosecutor certifies that in his opinion he has, either wilfully concealed anything essential or had given false evidence and had not complied with the condition on which the tender was made.
In the present case, there is nothing on the record to show that on July 22, 1957, although Bishnu Charan Saha had been tendered a pardon, he had accepted the tender.
Indeed, the order sheet of the Sub divisional Magistrate of that date does not even disclose that Bishnu Charan Saha had been produced before him.
On the other hand, when Bishnu Charan Saha and his co accused were produced before the Magistrate Mr. Sinha, to whom the case had been transferred, the prosecution made a prayer to the Magistrate that Bishnu Charan Saha may be made an approver in the case under section 337 of the Code of Criminal Procedure.
This would show that upto that time Bishnu Charan Saha had not accepted the tender of pardon made to him by the Sub divisional Magis trate on June 22,1957.
On the prayer of the Prosecutor made to Mr. Sinha on August 1, 1957, Bishnu Charan Saba flatly denied that he wished to be an approver and had stated that the confessional statement made by him to Mr. Chaudhury was not a voluntary one.
On the facts of the present case, therefore, all that is proved is that at one stage of the proceedings a tender of pardon had been made to Bishnu Charan Saba.
There was, however, no proof that that tender had been accepted by him.
Such being the situation it could not be said that there was in existence an effective pardon under section 337 and that its provisions applied to the facts of the present case.
Consequently, no question arises about the applicability of section 339 to the proceedings before the Magistrate holding an enquiry before commitment or to the trial of the appellants, because the 1330 provisions of section 339 can only come into operation if there is in existence an effective pardon under section 337 of the Code.
In our opinion, on the facts of the present case, there is no foundation for the submission which had been made.
Coming now to the circumstantial evidence in the case upon which the High Court relied for upholding the conviction of the appellants, which may be summed up as follows: (1) The evidence clearly established that the appellants were local men who lived or worked not far from Malchand 's shop.
They accordingly had the means and the opportunity of knowing the state of things obtaining at his shop at a particular date.
(2) The association of the appellants and Sanatan Das immediately prior to the murder.
(3) The evidence of their movements towards the direction of Malchand 's shop.
(4) The evidence concerning their presence in the shop of Malchand shortly before the latter was murdered.
(5) The evidence concerning the appellant Bipin Bihari Sarkar hurrying away from the direction of Malchand 's shop closely followed by the appellant Bishnu Charan Saha.
(6) The evidence of injuries on the palms or fingers of the appellants found at the time of their arrest which took place within 24 hours, or shortly thereafter, of the murder.
(7) The evidence of the presence of human bloodstains on the shirt of Bishnu Charan Saha and bloodstains on the wrapper of Bipin Behari Sarkar with burnt holes at places where the stains were found.
(8) The cash memoes with the signatures of the appellant Bishnu Charan Saha.
(9) In the opinion of the doctor the nature of the injuries on Malchand showed that probably he was overpowered by someone first and then another person pressed the weapon against his neck.
The matter for consideration is whether the circumstantial evidence, as stated above, is sufficient to prove 1331 that the appellants had participated in the murder of Malchand.
Two findings of the High Court may be stated at, this stage before the circumstantial evidence is referred to.
One concerned the cash memoes signed by Bishnu Charan Saha and the other concerned the colour of the wrapper worn by Bipin Behari Sarkar when he was seen by Kali Mohan Sarkar, P. W. 7 going away from a place near the shop of Malchand after the murder.
The cash memoes bore the date 11 12 56 and not 18 12 56.
The High Court gave good reasons for holding that the date 11 12 56 was wrongly entered in these cash memoes after examining the account books of Malchand 's shop and the other circumstances in the case as well as the admission of Bishnu Charan Saha that on December 18, 1956, between 1 30 and 2 p. m. be had caused three cash memoes to be issued in the shop of Malchand.
We find ourselves in complete agreement with the findings of the High Court in this respect.
The wrapper worn by Bipin Behari Sarkar at the time he was seen by Kali Mohan Sarkar was described by the witness as blue in colour whereas, in fact, the recovered wrapper from the house of this appellant was green in colour.
The High Court thought and, in our opinion, rightly that what was in fact green in colour might have appeared to be blue to a witness when seen at night by him.
A mistake in describing the colour accurately in the circumstances of the present case did not materially affect the evidence that Bipin Behari Sarkar was wearing a wrapper at the time he was seen at a spot near Malchand 's shop after the murder.
Further reference to the wrapper will be made when we consider the case of this appellant.
Mohan Lal Sarma, P. W. 4 had stated that at about 8 p.m. on December 18, 1956, he had seen the appellants and Sanatan Das sitting in the latter 's shop.
Bishnu Charan Saha was the first to leave the shop.
10 or 15 minutes later, Bipin Behari Sarkar and Sanatan Das left after padlocking Sanatan 's shop.
The evidence of this witness had been fully accepted 169 169 1332 by the High Court.
Sudhir Ranjan De, P. W. 8 deposed that in the evening of December 18, 1956, at about 7 30 p.m. he had seen Bishnu Charan Saha passing in front of Gostha 's shop which was nearly opposite Malchand 's shop.
He had on his body a Sujni Chaddar.
4 or 5 minutes later, Bipin Behari Sarkar and Sanatan Das were seen going in the same direction.
The High Court believed the evidence of this witness.
It came to the conclusion that on the evidence of Mohan Lal Sarma and Sudhir Ranjan De it was established that at about 8 p.m. the appellants and Sanatan Das were moving towards Malchand 's shop.
There was no doubt some discrepancy about the timing but, as was pointed out by the High Court, the witnesses were giving the time approximately and did not purport to give the exact time.
Kumud Lal Saha, P. W. 2 deposed that at about 8 30 p.m. on December 18,1956, he saw the appellants and Sanatan sitting with Malchand in the latter 's shop.
Malchand was at that time placing cloth for their inspection.
The High Court referred to the various criticisms levelled against the testimony of this witness and after dealing with them came to the conclusion that the witness was a truthful witness and that his evi dence established that the appellants were at the shop of Malchand at about 8 30 p.m. and that Malchand was last seen alive with them.
The evidence of Khum Chand Bothers, P.W. 3 proved that at about 8 30 p.m. on the night of Malchand 's murder he had called out "Malchand " " Malchand ", but had received no reply.
Kali Mohan Sarkar, P. W. 7 proved that at about 8 p.m. on the night in question when he was going home he met the appellant Bipin Behari Sarkar who was going away hurriedly from the direction of the Bazar.
On some enquiry made by the witness this appellant stated that he had been pressed by a call of nature.
Thereafter, the appellant Bishnu Charan Saha was seen coming behind Bipin Behari Sarkar.
Bipin Behari Sarkar had on his person a blue coloured wrapper.
The spot at which he had met the appellant Bipin Behari Sarkar was at a distance of about 100 cubits to the south of the passage meant for sweepers 1333 of Malchand 's house.
He had heard Bishnu Charan Saha calling out " Hei, Hei " to Bipin Behari Sarkar .
The evidence of these witnesses, which had been accepted by the High Court, established that the appellants were seen going in the direction of Malchand 's shop.
Thereafter, they were seen with Malchand at his shop.
Subsequent to that, Bipin Behari Sarkar was seen going away hurriedly at a place not far from Malchand 's shop followed by Bishnu Charan Saha who was calling out to him " Hei, Hei ".
The last time that Malchand was seen alive was in the company of the appellants.
The existence of the cash memoes, which were stained with human blood, with the signatures of Bishnu Charan Saha clearly established that at least Bishnu Cliaran Saha must have been present at the time of the murder because the cash memoes were being made out for him and they were stained with human blood which shows that Malchand was murdered while he was handling the cash memoes.
It had been further proved that Bishnu Charan Saha had on him certain injuries of which one was an incised injury.
The evidence of the doctor was that this injury could have been caused by the same instrument with which the neck injury of Malchand had been caused.
It had been further established that the shirt of Bishinu Charan Saha was stained with human blood.
The explanation offered by Bishnu Charan Saba for the injuries on his person was not accepted by the High Court and, in our opinion, rightly.
Bishnu Charan Saha had stated to the doctor at the time of his examination that injury No. 1 was caused as the result of contact with a grass cutting dao and injuries Nos. 2 and 3 by having drawn his hand over a rough piece of wood, but to the doctor this explanation was unacceptable inasmuch as this appellant was not a left handed person a fact which appeared clear from his formation and development.
When examined under section 342 of the Code of Criminal Procedure Bishnu Charan Saha told the Court that 2 days prior to his examination by the doctor lie had been cutting straw for his cattle with his left hand when his daughter aged about 1334 4 came up from behind and pushed him which resulted in the injury to his finger by its contact with the dao and that he had also received injuries on the back of his finger by striking it against a piece of wood.
So far as the shirt stained with human blood, which was found on his person at the time of his arrest, was concerned, Bishnu Charan Saha seriously disputed the identity of the shirt.
The identity of the shirt, however, had been clearly established.
His explanation to the Court was that some of the stains had been caused by betel spit and that one or two might have been caused by some drops of blood falling on the shirt at the time he had sustained his injuries.
This explanation was also not accepted by the High Court and, we think, rightly.
The evidence therefore established that so far as Bishnu Charan Saha was concerned he was seen in the company of Bipin Behari Sarkar and Sanatan Das near about 8 p. m.
He was seen shortly thereafter, as were the other two, going in a direction which was towards the shop of Malchand.
He was seen along with the other two persons at the shop of Malchand at about 8 30 p.m.
Thereafter, he was seen not far from the shop of Malchand going in the same direction as Bipin Behari Sarkar and calling out to him.
The cash memoes at Malchand 's shop had been signed by him.
He had injuries on his person consistent with their having been caused while the murder of the deceased took place.
The shirt that he was wearing at the time of his arrest was stained with human blood for which he gave no reasonable explanation.
In our opinion, the sum total of the evidence against Bishnu Charan Saha established beyond any reasonable doubt that he had participated in the murder of Malchand.
Coming now to the case of Bipin Behari Sarkar the evidence against him is the same as against Bishnu Charan Saha about the movements towards the shop of Malchand, presence at the shop of Malchand and being seen going away at a place near the shop of Malchand and the existence of injuries on his person.
In addition there was the evidence that a wrapper was seized the next morning after his arrest with marks of 1335 burning round which there were traces of blood.
Unlike the case of Bishnu Charan Saba no signatures of his were found on the cash memoes.
It is a matter for consideration whether in the case of this appellant ' any reasonable doubt could arise as to his guilt.
It was urged that mere movements towards the shop of Malchand, his presence at the shop of Malchand and his being seen going away at a place near the shop of Malchand would not be sufficient circumstantial evidence to convict him.
So far as the injuries were concerned the doctor had admitted that they could have been caused by a split bamboo.
The doctor had at no time stated that they could have been caused by the same weapon which caused injuries to the neck of Malchand.
The existence of the injuries, therefore, was no additional incriminating circumstance from which any conclusion could be drawn against this appellant.
So far as the wrapper was concerned, there was no evidence that the burnt marks found on it were not there before December 18, 1956.
Although blood stains had been found on this wrapper it had not been established that they were human blood stains.
The wrapper was also, therefore, n0 additional incriminating circumstance against this appellant.
It is, however, to be remembered that this appellant was with Bishnu Charan Saha and that Malchand was last seen alive in the company of the appellants.
The murder of Malchand had already taken place when this appellant followed by Bishnu Charan Saha was seen going away hurriedly at a spot near the shop of Malchand and Bishnu Charan Saha was calling out " Hei, Hei " to him.
It is remarkable that this appellant was seen not only at the shop of Malchand but near that shop after he bad been murdered and that he was found to have injuries oil his person when he was arrested at 10 30 p.m. on December 19, 1956.
It would be a remarkable coincidence that both he and Bishnu Charan Saha should have injuries on their persons so shortly after the murder.
Bipin Behari Sarkar denied ownership of the wrapper.
His explanation was not that the burnt marks on the wrapper were there before December 18.
1336 This wrapper had blood stains.
They were too small in quantity to enable a Serologist to determine their origin, but it is remarkable that wherever the bloodstains were found on the wrapper an attempt had been made to burn out those marks.
Unfortunately, for the appellant, his attempt to burn out the bloodstains on the wrapper was not entirely successful.
This was in our opinion, an incriminating circumstance against this appellant.
The circumstantial evidence taken as a whole leaves no room for a reasonable doubt in our minds about the guilt of this appellant.
In our opinion, the High Court rightly found the appellants guilty under section 302/34 of the Indian Penal Code.
It could not be said that the sentence of death for a murder of the kind proved in this case was unduly severe.
The appeals are accordingly dismissed.
Appeals dismissed.
| The two appellants and one other person were accused of committing a murder.
The second appellant made a confession before a Magistrate.
The police submitted a charge sheet against the three accused.
Thereafter the prosecution made a prayer to the sub divisional Magistrate that the second appellant may be tendered a pardon under section 337, Code of Criminal Procedure and the Magistrate recorded an order to the effect that he was tendered a pardon under section 337 on condition of his making a full and true disclosure of the whole of the circumstances within his knowledge.
Before the Committing Magistrate the second appellant stated that the confession made by him was not voluntary and that he did not wish to become an approver.
The appellants were committed to the Court of Sessions and were convicted of the murder and were sentenced to death.
On appeal the High Court confirmed the conviction and sentence.
It was contended by the appellants that the second appellant having been tendered a pardon the joint trial of the appellants was vitiated as it was barred by the proviso to section 339(I) Of the Code.
Held, that there was no effective pardon under section 337 Of the Code and consequently the provisions of section 339 did not come into operation in this case.
A mere tender of pardon does not attract the provisions of section 339 ; there must be an acceptance of the pardon by the accomplice and he must be examined as a witness.
It is only after this that section 339 comes into play if the accomplice who has accepted the pardon fails to comply with the conditions on which the pardon was tendered.
In the present case though a tender of pardon was made to the second appellant there was no proof that it was accepted by him and as such it could not be said that there was in existence an effective pardon under section 337.
|
Summarize this legal judgement text concisely | iminal Appeal No. 29 of 1956.
Appeal from the judgment and order dated August 24, 1955, of the Calcutta High Court, in Criminal Appeal No. 196 of 1954, arising out of the judgment and order dated June 7, 1954, of the Court of the Judge, Special Court, Burdwan, in Special Court case No. 10 of 1952.
section C. Issacs and section N. Mukherjee, for the appellant.
B. Sen and P. K. Bose, for the respondent.
September 11.
The Judgment of the Court was delivered by KAPUR J.
This is an appeal by leave of the High Court of Calcutta against the judgment and order of that Court dismissing the appellant 's appeal against the order of conviction by the Special Court of Burdwan for an offence under section 165 A, Indian Penal Code and six months ' rigorous imprisonment.
The facts leading to this appeal are that one Istipada Ghosh and his son were being tried in the court of an Assistant Sessions Judge, Burdwan, with a jury of five.
During the course of the trial the appellant approached one of the jurors Baidya Nath Mukherjee and offered him illegal gratification as an inducement for giving a verdict favourable to Ghoslies.
On the morning of September 6, 1952, the juror narrated these facts to the police and thereupon the officer in charge sent a Sub Inspector to arrest the appellant if he offered the bribe.
After a little while the appellant came to the appointed place and offered Rs. 40 in four 10 rupee notes to the juror and while he was trying to pass those notes to the juror the Police Officer arrested the appellant.
The First Information Report for an offence under sections 161/116, Indian Penal Code was made soon after.
And after investigation a report 1278 was made by the police officer in charge Burdwan police station which resulted in the case being sent to the Special Judge, Burdwan.
On November 27, 1952, the Government issued the following notification No. 6603J under section 4(2) of the West Bengal Criminal Law Amendment (Special Courts) Act, 1949 (W. B. XXI of 1949): " In exercise of the power conferred by sub section (2) of section 4 of the West Bengal Criminal Law Amendment (Special Courts) Act, 1949 (West Bengal Act XXI of 1949), the Governor is pleased to distribute to the Burdwan Special Court constituted by notification No. 4632J, dated the 22nd August, 1952, under section 2 of the said Act the following cases involving offences specified in the Schedule to the said Act to be tried by the said Special Court: (4) The State versus Bhajhari Mondal, son of Bhuson Chandra Mondal of Katwa Station Bazar Police Station Katwa, district Burdwan tinder sections 161/116 of the Indian Penal Code.
This notification shows that the offence charged against the appellant was one under sections 161/116 of the Indian Penal Code.
The order sheet of the Special Court shows that the records of the case State vs B. C. Mondal under sections 161/116 Indian Penal Code were received by the Special Judge on December 23, 1952, and the Special Court took cognizance of the case, the appellant was summoned for appearance on January 22, 1953, and he did appear on that day.
On December 21, 1953, after several adjournments the hearing of the case was fixed for January 29, 1954, on which date the examination of witnesses commenced.
On February 10, 1954, a charge under section 165A, Indian Penal Code was framed by the Special Judge.
The trial ended on June 7, 1954, and the appellant was convicted under section 165A of the Indian Penal Code and sentenced to six months ' rigorous imprisonment.
Against this order of conviction the appellant took an appeal to the High Court of Calcutta which was dismissed.
It held that the appel 1279 lant had rightly been convicted under section 165,A and that the Special Court had jurisdiction to try the offence under that section from July 28, 1952, to May 9, 1953, under section 7 of the Central Act (XLVI of 1952) and from May 9, 1953, under the West Bengal Act (W. B. XV of 1953).
It also held that any defect in the taking of cognizance was curable under section 529 (e) of the Criminal Procedure Code and that as a matter of fact the Special Judge took cognizance under section 165A and not under sections 161/116, Indian Penal Code.
On December 16, 1955, the High Court granted leave to appeal to this Court.
Counsel for the appellant has not contested the appeal on any question of fact but has confined his arguments to the question of jurisdiction.
He contended that the Special Judge had no jurisdiction to try the case as (1) at the time he took cognizance of the case, section 165A, Indian Penal Code, was not an offence specified in the Schedule of West Bengal Act XXI of 1949; (2) the case distributed to him was one under sections 161/116 an offence which no longer existed in the Indian Penal Code; (3) the Special Judge was exercising jurisdiction under the West Bengal Act (W. B. XXI of 1949) and not under the Central Act (XLVI of 1952) as no Special Judges were appointed by the State Government under that Act; (4) the appellant could not be tried under the West Bengal Act XV of 1953 because there was no distribution of a case against him under section 165A, Indian Penal Code.
In order to decide these matters it is necessary to set out the dates on which the various statutes came into force and to See what provisions were made therein.
On March 11, 1947, Prevention of Corruption Act (Act 11 of 1947) was enacted by the Central Legislature.
The West Bengal Legislature enacted the West Bengal Criminal Law Amendment Act of 1949 (W. B. XXI of 1949) which received the assent of the Governor General on June 23, 1949.
Its preamble shows the objects of the Act to be more speedy trial and more effective punishment of certain offences.
By section 2 of this Act, Special Courts were set up in West Bengal which under section 3 were to be presided over by Special 1280 Judges.
Section 4 provided for allotment of cases for trial to the various Special Judges and also authorised the Provincial Government to transfer any case from one Special Judge to another and to make modifications in the description of cases (whether in the name of the accused or in the charges preferred or in any other manner) as may be considered necessary.
The Special Judge bad jurisdiction to try the cases for the time being allotted to him under section 4 (1) in respect of such of the charges for the offences specified in the Schedule as may be preferred against the accused.
All cases pending before any court or before any other Special Judge were deemed to be transferred to the Special Judge to whom they were allotted.
The Special Judge when trying a case allotted to him could also try any offence whether specified in the Schedule or not with which an accused could be charged at the same trial.
By section 5 the Special Judge could take cognizance of a case without the case being committed and was to follow the procedure of warrant cases and the court of the Special Judge was deemed to be a court of Session trying without a jury.
By section 8 rules of evidence were amended in certain particulars.
Sec tion 9 provided for enhanced punishment.
By section the provisions of the Prevention of Corruption Act were made applicable.
The schedule to the Act enumerates the offences triable by a Special Judge, the relevant items of which were: (1) " An offence punishable under sections 161, 162, 163 or section 165 of the Indian Penal Code. . . . . . . . . . (8) Any conspiracy to commit or any attempt to commit or any abetment of any of the offences specified in items 1 to 7 ".
On July 28, 1952, the Central Legislature enacted the Criminal Law Amendment Act (Act XLVI of 1952) by section 3 of which an offence of abetment, section 165A with an enhanced punishment was inserted.
section 165A. " Whoever abets any offence punishable under section 161 or section 165, whether or not that 1281 offence is committed in consequence of the abetment, shall be punished with imprisonment of either description for a term which may extend to three years, or with fine or with both ".
By section 6 the State Government were authorised by notification to appoint Special Judges for various areas to try the following offences: (a) " an offence punishable under section 161, section 165 or section 165A of the Indian Penal Code (Act XLV of 1860) or subsection (2) of section 5 of the Prevention of Corruption Act (II of 1947); (b) any conspiracy to commit or any attempt to commit or any abetment of any of the offences specified in clause (a). . . " By section 7 exclusive jurisdiction was conferred on Special Judges.
The effect of this enactment was the insertion in the Penal Code of an offence 165A and the creation of Special Judges to be appointed by the State.
On August 12, 1952, the Central Legislature passed another Act, the Prevention of Corruption (Second Amendment) Act (59 of 1952), section 3 of which changes the rules of evidence in regard to presumption and onus by adding sub section 2 to section 4 of the principal Act by which it was provided: Where in any trial of an offence punishable under section 165A of the Indian Penal Code (Act XLV of 1860) it is proved that any gratification (other than legal remuneration) or any valuable thing has been given or offered to be given or attempted to be given by an accused person, it shall be presumed unless the contrary is proved that he gave or offered to give or attempted to give that gratification or that valuable thing, as the case may be, as a motive or reward such as is mentioned in section 161 of the Indian Penal Code or, as the case may be, without consideration or for a consideration which he knows to be inadequate ".
On July 30, 1952, an Act, to amend the West Bengal Act XXI of 1949, the West Bengal Criminal Law Amendment (Special Court Amending Act) (W. B. XII of 1952) received the assent of the President and came into force.
Section 3 of this Act substituted a new section 2 in place of section 2 of the West Bengal Act (W. B. XXI 1282 of 1949).
This substituted section authorised the State Government to constitute Special Courts and to appoint Special Judges to preside over such courts which had jurisdiction throughout West Bengal.
By section 5, the following was substituted in place of section 4 of the West Bengal Act XXI of 1949: " (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1898 (Act V of 1898) or in any other law, the offences specified in the Schedule shall be triable by Special Courts only: Provided that when trying any case, a Special Court may also try any offence other than an offence ,specified in the Schedule, with which the accused may under the Code of Criminal Procedure, 1898, be charged at the same trial.
(2) The distribution amongst Special Courts of cases involving offences specified in the Schedule, to be tried by them shall be made by the State Government ".
The Schedule under the West Bengal Act (W.B. XXI of 1949) was also amended by the insertion of section 164 Indian Penal Code only.
The West Bengal Act XXI of 1949 was further amended by the West Bengal Criminal Law Amendment (Special Courts) Amending Act, 1953 (Act XV of 1953).
It received the assent of the President and came into force on May 9, 1953.
This Act added section 165A, Indian Penal Code in item No. 1 of the Schedule of the 1949 West Bengal Act.
The result of these various enactments, Central as well as State was the creation of Special Courts to try offences which were specified in the case of West Bengal (W. B. XXI of 1949) in the Schedule and in the case of Central Act in the body of the Act itself The West Bengal Act (W. B. XXI of 1949) created Special Judges to try cases involving offences specified in the Schedule and allotted to them by the State Government alone.
Under the Central Act (XLVI of 1952) also the State Government was authorised to appoint Special Judges and the offences specified in the Act were triable by such Judges as stated in section 7(2) of the Act.
The procedure to be followed by the 1283 Special Judges was that prescribed for the trial of warrant cases.
Therefore the jurisdiction of Special Judges appointed under this State enactment to try cases relating to offences specified in the Schedule arose only when they were allotted to them.
By the West Bengal Amending Act of 1952 (W. B. XII of 1952) in place of " Special Judges " the words "Special Courts " were substituted and two conditions necessary for conferring jurisdiction on such Courts were: (1) cases to be tried related to offences specified in the Schedule and (2) the State Government had to make the distribution of such cases to the various Special Courts.
Therefore no Special Court had jurisdiction to try a case unless it was for offences specified in the Schedule and the State Government distributed it to the Special Court.
The notification in the present case specified the name of the accused, the offence for which he was to be tried as one under section 161/116, Indian Penal Code, and the case was distributed to the Special Court, Burdwan for trial.
On the date of the notification section 161 and abetment of section 161 were offences specified in the Schedule but as a result of the amendment by the Criminal law Amendment Act 1952 (XLVL of 1952) section 165A had been inserted in the Code providing for punishment for abetment of offences mentioned in sections 161 or 165.
Section 165A created a distinct and separate offence and therefore abetment of an offence under section 161 was no longer an offence under section 161/ 116 of the Code.
Section 165A was not included in the Schedule to the West Bengal Act (W. B. XXI of 1949).
Counsel for the State contended that this section although not specifically mentioned was all the time specified in and must be deemed to have been specified in the Schedule to the West Bengal Act (W. B. XXI of 1949) because item 8 specifically mentioned abetment of offences in items I to 7 and that section 165A only prescribes punishment for abetment of offences under sections 161 or 165 and cannot be called a new or a different offence.
Section 165A is not merely a restatement of the offence of abetment under section 116 of the Code.
It 163 1284 also comprises abetment under section 109 of the Code and provides an enhanced penalty of three years imprisonment instead of 1/4th of three years imposeable under section 116.
It further attracts the application of section 4 (2) of the Prevention of Corruption Act (11 of 1947) as subsequently amended.
It cannot be, said therefore that merely because the abetment of an offence under section 161 was specified in the Schedule of the West Bengal Act of 1949, section 165A which did not then exist in the Penal Code, must be deemed to have been specified therein.
It is significant that the West Bengal Act was further amended on May 9, 1953, by Act XV of 1953 in order to include section 165A in the Schedule.
It appears therefore that under the notification the case distributed to the Special Court for the appellant 's trial was for a non existing offence because when the Special Judge took cognizance of the case there was no such offence as sections 161/116 of the Indian Penal Code.
The notification did not mention section 165A of the Code and at the time when the Special Judge purported to take cognizance he had no jurisdiction to do so and to try the case as the offence under section 165A was not in the Schedule of the West Bengal Act, 1949, as amended in 1952.
The crucial date for the purpose of determining the jurisdiction of the Court would be the date when the Court received the record and took cognizance of the case and took any step in aid of the progress of the case and not when the evidence of the witnesses began to be recorded.
Under section 4 of West Bengal Act (W.B. XXI of 1949) as amended by the Act of 1952 the jurisdiction of the Court arises when the notification is issued distributing the case to a particular Special Court giving the name of the accused and mentioning the charge or charges against him which must be under one of the offences specified in the Schedule.
In the absence of any of these elements the Special Court would have no Jurisdiction.
The High Court held.
" that the offence under section 165A was always triable by a Special Judge only from 28th July, 1952, to 9th May, 1953, under section 7 of the Central Act 1285 and from 9th May, 1953, under the W. B. Act XV of 1953 ".
As already stated the case which was distributed to the Special Judge was one under section 161/116, Indian Penal Code an offence not then existing in the Code and as section 165A was not in the Schedule as an offence triable by a Special Judge it could not be held that the Special Judge was trying the appellant for an offence under section 165A.
There is nothing to indicate that the appellant was being tried upto May 9, 1953, under section 7 of the Central Act.
No notification of the State Government appointing any Special Judge under section 6 of the Central Act (Act XLVI of 1952) was brought to our notice.
It was on the other hand stated by counsel for the State that there was no such notification.
Nor is there anything to show that the Special Judge of Burdwan was trying the appellants ' case under section 7 of that Act.
We are of the opinion that the trial was not under the Central Act, 1952.
Nor could the trial be under the provisions of West Bengal Act XV of 1953 because no distribution of the appellants ' case was made to the Special Judge by a notification mentioning the charge against him to be one under section 165A, Indian Penal Code.
The High Court also said: " It is true that if the offence under section 165A be regarded as a distinct offence, the Special Judge appointed under the W. B. Act had no jurisdiction in December 1952 to take cognizance of the offence and cognizance could be taken only by a Special Judge appointed under the provisions of the Central Act.
But since in such case the Special Judge must be deemed to have acted erroneously in good faith, the provisions of section 529(e) of the Criminal Procedure Code would apply and the proceedings would not be vitiated. .
It is trial without jurisdiction that vitiates a proceeding (section 530 Cr. P. C.) and not taking of cognizance in good faith without jurisdiction".
But that with respect, is an erroneous application of section 529 of the Code of Criminal Procedure which provides: 1286 " If any Magistrate not empowered by law to do any of the following things, namely: (e) to take cognizance of an offence under section 190,sub section (1), clause (a) or clause (b); erroneously in good faith does that thing, his proceedings shall not be set aside merely on ground of his not being so empowered.
" This section applies to Magistrates and would not apply to a Special Judge whose jurisdiction arises not on his taking cognizance under section 190 of the Code of Criminal Procedure, but on the case for an offence specified in the Schedule being distributed to him by the State Government by notification.
The defect of jurisdiction therefore cannot be cured by section 529(e) of the Code of Criminal Procedure.
The Special Judge war, consequently not a Court of competent jurisdiction and the proceedings before him were null and ineffectual.
We are of the opinion, therefore, that when the case was distributed to the Special Court which is the basis of the jurisdiction of that Court, section 165A was not one of the offences specified in the Schedule and consequently the appellant could not be tried for and convicted of that offence.
The conviction is therefore by a Court which had no jurisdiction to try the case against the appellant and the whole proceedings in this case are null and void.
We would accordingly allow the appeal and set aside the conviction of the appellant under section 165A, I. P. C., and the sentence imposed thereunder.
Appeal allowed.
| On September 6, 1952, the appellant, who was being tried by an Assistant Sessions Judge and a jury, was caught while giving a bribe to one of the jurors.
By a notification dated November 27, 1952, the Government of West Bengal, acting under section 4(2) Of the West Bengal Criminal Law Amendment (Special Courts) Act, 1949, entrusted the case against the appellant under section 161/116 Indian Penal Code to the Special judge, Burdwan, for trial.
Before this date as a result of the introduction of section 165A in the Indian Penal Code by the Criminal Law Amendment Act, 1952, providing for punishment for abetment of offences under sections 161 and 165, abetment of section 161 had ceased to be an offence under section 161/116 though it was an offence specified in the Schedule to the West Bengal Act.
The records were received by the Special judge on December 23, 1952, and he took cognizance of the case.
On February 10, 1954, a charge under section 165 A Indian Penal Code was framed by the Special judge and on July 7, 1954, the appellant was convicted under section 165 A and sentenced to rigorous imprisonment for six months.
An appeal to the High Court of Calcutta was dismissed.
The appellant obtained special leave and appealed.
Held, that the special judge had no jurisdiction to try and convict the appellant for the offence under section 165A Indian Penal Code as when the case was distributed to the Special judge section 165A was not one of the offences specified in the Schedule of the West Bengal Act.
The case which was distributed to the Special judge was one under section 161/116 Indian Penal Code, an offence which was non existent at that time.
Section 165A cannot be deemed to have been specified in the Schedule merely because abetment of the offences under sections 161, 162 163 and 165 Indian Penal Code was specifically mentioned in the Schedule.
The offence under section 165A is a distinct offence.
It is not merely a restatement of the offence of abetment under section 116 ; it comprises also abetment under section 109 and provides for in enhanced penalty.
This defect of jurisdiction could not be cured by section 529(e) of the Code of Criminal Procedure.
Section 529(e) applied to 1277 Magistrates and would not apply to Special judges whose jurisdiction arose not on their taking cognizance under section 190 of the Code but on the case for offences specified in the Schedule being distributed to them by the State Government by a proper notification.
|
Summarize this legal judgement text concisely | Appeal No. 297 of 1955.
Appeal from the judgment and decree dated April 7, 1954, of the Patna High Court in Misc.
Judicial Case No. 327 of 1951.
A. V. Viswanatha Sastri and B. K. Sinha, for the appellant.
K. N. Rajagopala Sastri, R. H. Dhebar and D. Gupta, for the respondent.
October 1.
The Judgment of the Court was delivered by GAJENDRAGADKAR J.
This is an appeal with the, certificate issued by the High Court of Judicature at Patna under section 66A(2) of the Income tax Act (hereinafter called the Act) and it raises a, short question of the construction of section 34(1)(b) of the Act.
This 12 question arises in this way.
Proceedings.
taken by the Income tax Officer, Special Circle, Patna, against Maharaja Bahadur Rama Rajaya Prasad Singh, the father of the appellant, to levy income tax for the year 1945 46.
The total income assessed to income tax by the said order was Rs. 1,60,602.
This amount included the sum of Rs. 93,604 received by the assessee on account of interest on arrears of rent due to him after deduction of collection charges.
It was urged before the Income tax Officer by the assessee that this amount was not liable to be taxed in view of the decision of the Patna High Court in Kamakshya Narain Singh vs Commissioner of Income Tax (1).
The Income tax Officer, however, held that, since the department had obtained leave to appeal to the Privy Council against the said decision, the matter was sub judice and so be would not be justified in accepting the assessee 's contention.
In the result, he included the said amount in the total income for the purposes of assessment, but ordered that the realisation of the tax on the &aid amount should be stayed till the decision of the Privy Council or March 31, 1947, whichever was earlier.
This order was passed under section 23(3) of the Act on December 31, 1945.
Against this order the assessee preferred an appeal before the Appellate Assistant Commissioner of Income tax, Patna.
On May 8, 1946, the appellate authority held that the Income tax Officer was bound to follow the decision in the case of Kamakshya Narain Singh (supra) (1) and so, he set aside the order under appeal in regard to the amount of Rs. 93,604 and directed the Income tax Officer to make fresh assessment.
He also observed that it was not clear as to what portion of the said amount was interest on arrears of agricultural rents and what portion related to interest on arrears of non agricultural rents.
The Income Tax Officer was accordingly directed to determine the latter amount and to levy tax on it.
Pursuant to this appellate order the Income tax Officer made a fresh assessment under sections 23(3) and 31 of the Act on August 20, 1946.
By this order the (1) [1946) 13 total amount of income liable to tax was determined after deducting the whole of the amount of Rs. 93,604 from it.
Some other minor reductions were also allowed in compliance with the appellate order.
The department did not challenge either the appellate order or the subsequent order passed by the Income tax Officer in pursuance of the said appellate order.
Subsequently, on July 6, 1948, the appeal preferred by the department to the Privy Council against the decision of the Patna High Court in Kamakshya Narain Singh 's case (1) was allowed and it was held that interest on arrears of rent payable in respect of agricultural land is not agricultural income for it is neither rent nor revenue derived from land.
As a result of this decision, the Income tax Officer issued a notice to the assessee under section 34 of the Act on September 25, 1948.
This notice called upon the assessee to file a fresh return as the Income tax Officer had reason to believe that a part of the assessee 's income assessable to income tax for the year ending March 31, 1946, had escaped assessment.
It appears that this notice was found to be defective, and so under the provisions of section 34, as amended, a fresh notice was issued by the officer to the assessee on March 18, 1949.
The proceedings thus taken by the officer under section 34 ultimately led to a revised assessment order passed under section 23(3) and section 34 of the Act and the amount of Rs. 93,604 was added to the assessment amount as interest on arrears of rent.
This revised assessment order was passed on April 30, 1949.
The assessee appealed against this order but the appellate authority dismissed the assessee 's appeal and confirmed the said order on July 26, 1949.
He held that the subsequent decision of the Privy Council in the case of Kamakshya Narain Singh (supra) (1) was information within the meaning of cls.
(a) and (b) of section 34(1) and that the Income tax Officer bad reason to believe that a part of the assessee 's income had escaped assessment.
The assessee then moved the Income tax Appellate Tribunal; but on August 21, (1) 14 1950, the tribunal confirmed the order passed by the appellate authority and dismissed the assessee 's appeal.
It was held that the provisions of a. 34 as amended in 1948 applied to the case and that the decision of the Privy Council brought it within the purview of sub section
(1)(b) of section 34.
Meanwhile the assessee died and the appellant succeeded to the estate of his deceased father.
He then filed an application under section 66(1) of the Act requiring the tribunal to refer the question of law raised in the case to the Patna High Court for its opinion.
The tribunal rejected this application on February 27, 1951.
Thereupon the appellant moved the Patna High Court under section 66(2) of the Act; his application was allowed and the tribunal was directed by the High Court on December 15, 1951, to state the case and refer the question of law for its opinion.
In compliance with the requisition of the High Court the tribunal by its order passed on July 23, 1952, submitted a statement of the case and referred to the High Court for its opinion the question of law raised by the appellant.
The question thus raised is: " Whether in the circumstances of the case the assessment order under section 34 of the Act of the interest on arrears of rent is legal ?" On April 7, 1954, this reference was heard by V. Ramaswamy and C. P. Sinha JJ.
of the Patna High Court and the question was answered by them in favour of the department.
The appellant then applied for and obtained a certificate from the Patna High Court on September 13, 1954.
The High Court has certified under section 66A, sub section
(2), of the Act that the case raises a question of law of a substantial kind and is otherwise a fit case for appeal to this court.
That is how the present appeal has come before us; and the question which it raises for our decision is about the true construction of section 34(1)(b) of the Act.
Section 34 of the Act has been amended in 1939 and in 1948.
It is conceded by Mr. Viswanatha Sastri, for the appellant, that the present case is governed by the section as it was amended in 1948.
This amended section 34, sub section
(1), deals with cases of income escaping assessment in two clauses.
Clause (a) covers cases 15 where income has escaped assessment by reason of the omission or failure on the part of the assessee to make a return of his income under section 22.
We are not concerned with this clause.
Clause (b) of section 34(1) provides inter alia that " notwithstanding that there has been no omission or failure as mentioned in cl.
(a) on the part of the assessee, if the Income tax Officer has, in consequence of information in his possession, reason to believe that income, profits or gains chargeable to income tax have escaped assessment for any year, or have been under assessed, or assessed at too low a rate, or have been made the subject of excessive relief under the Act, or that excessive loss or depreciation allowance have been computed, he may, at any time within four years of the end of that year serve on the assessee a notice containing all or any of the requirements, which may be included in a notice under sub section
(2) of section 22, and may proceed to assess or reassess such income, profits or gains or recompute the loss or depreciation allowance, 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 ".
It is clear that two conditions must be satisfied before the Income tax Officer can act under section 34(1)(b).
He must have information in his possession, which, in the context, means that the relevant information must have come into his possession subsequent to the making of the assessment order in question and this information must lead to his belief that income chargeable to income tax has escaped assessment for any year, or that it has been under assessed or assessed at too low a rate or has been made the subject of excessive relief under the Act.
Two questions are raised by Mr. Sastri under this sub section in the present appeal.
He contends that the relevant information means information as to facts and cannot include the decision of the Privy Council on a point of law; and he argues that, where income has been duly returned for assessment and an assessment order has been passed by the Income tax Officer, it cannot be said that any income has escaped assessment within section 34(1)(b).
Thus the appellant 's case is that both the conditions required by section 34(1)(b) 16 have not been satisfied and so the order of revised assessment passed against the appellant is illegal.
It is not disputed that, according to its strict literal ' meaning, the word " information " may include knowledge even about a state of tile law or a decision on a point of law.
The argument, however, is that the context requires that the word " information " should receive a narrower construction limiting it to facts or factual material as distinguished from information as to the true state of the law.
In support of this argument Mr. Sastri referred to the marginal notes of sections 19A and 20A as well as the province, s of section 22(3) and section 28 and urged that the information contemplated by these provisions is information as to facts or parti culars and has no reference to the state of law or to any question of law; and so the said word in section 34(1)(b) should be construed to mean only factual information.
We are not impressed by this arguments If the word " information" used in any other provision of the Act denotes information as to facts or particulars, that would not necessarily determine the meaning of the said word in section 34(1)(b).
The denotation of the said word would naturally depend on the context of the particular provisions in which it is used.
It is then contended that sections 33B and 35 confer ample powers on the specified authorities to revise Income tax Officer 's orders and to rectify mistakes respectively and so it would be legitimate to construe the word "information " in section 34(1)(b) strictly and to confine it to information in regard to facts or particulars.
This argument also is not valid.
If the word "information " in its plain grammatical meaning includes information as to facts as well as information as to the state of the law, it would be unreasonable to limit it to information as to the facts on the extraneous consideration that some cases of assessment which need to be revised or rectified on the ground of mistake of law may conceivably be covered by sections 33B and 35.
Besides, the application of these two sections is subject to the limi tations prescribed by them; and so the fact that the said sections confer powers for revision or rectification would not be relevant and material in construing 17 section 34(1)(b).
The explanation to section 34 also does not assist the appellant.
It is true that under the explanation production before the Income tax Officer of account books or other evidence from which material facts could with due diligence have been discovered by the Income tax Officer would not necessarily amount to disclosures within the meaning of the said section; but we do not see how this can have any bearing oil the construction of cl.
(b) in section 34(1).
On the other hand, one of the cases specifically mentioned in section 34(1)(b) necessarily postulates that the word "information" must have reference to information as to law.
Where, in consequence of information in his possession, the Income tax Officer has reason to believe that income has been assessed at too low a rate, he is empowered to revise the assessment; and there can be no doubt that the belief of the Income tax Officer that any given income has been assessed at too low a rate may in many cases be due to information about the true legal position in the matter of the relevant rates.
If the word " information " in reference to this class of cases must necessarily include information as to law, it is impossible to accept the argument that, in regard to the other cases falling under the same provision, the same word should have a narrower and a more limited meaning.
We would accordingly hold that the word " information " in section 34(1)(b) includes information as to the true and correct state of the law and so would cover information as to relevant judicial decisions.
If that be the true position, the argument that the Income tax Officer was not justified in treating the Privy Council decision in question as information within section 34(1)(b) cannot be accepted.
in regard to the other condition prescribed by section 34(1)(b).
When can income be said to have escaped assessment? Mr. Sastri argued that the word "assessment " does not mean only the order of assessment, but it includes all steps taken for the purpose of levying the tax and during the process of taxation.
That no doubt is true; but the wide denotation of the word 3 18 " assessment" does not really assist the appellant; it only shows that along with the order of assessment which is an important act in the process of taxation, other acts and steps adopted in the course of taxation are also included in the word ; but it is with this " most critical act in the process of taxation " with which we are concerned in the present appeal.
Then it is urged that the word "escaped " according to the Oxford English Dictionary means "to elude (observations, search, etc.); to elude the notice of a person " ; and the contention is that it is only where income has not been returned for assessment that it can be reasonably said that income has escaped assessment.
The dictionary meaning of the word does not support Mr. Sastri 's contention.
According to the same dictionary the word " escape " also means " to get clear away from (pursuit or pursuer); to succeed in avoiding (anything painful or unwelcome)"; so that judging by +,he dictionary meaning alone it would be difficult to ( confine the meaning of the word " escape " only to cases where no return has been submitted by the assessee.
Even if the assessee has submitted a return of his income, cases may well occur where the whole of the income has not been assessed and such part of the income as has not been assessed can well be regarded as having escaped assessment.
In the present case, interest on arrears of rent received by the assessee from his agricultural lands were brought to the notice of the Income tax Officer; the question as to whether the said amount can be assessed in law was considered and it was ultimately held that the relevant decision of the Patna High Court which was binding on the department justified the assessee 's claim that the said income was not liable to be assessed to tax.
There is no doubt that a part of the assessee 's income had not been assessed and, in that sense, it has clearly escaped assessment.
Can it be said that, because the matter was considered and decided on the merits in the light of the binding authority of the decision of the Patna High Court, no income has escaped assessment when the said Patna High Court decision has been subsequently reversed by the Privy Council ? We see no 19 justification for holding that cases of income escaping assessment must always be cases where income has not been assessed owing to inadvertence or oversight or owing to the fact that no return has been submitted.
In our opinion, even in a case where a return has been submitted, if the Income tax Officer erroneously fails to tax a part of assessable income, it is a case where the said part of the income has escaped assessment.
The appellant 's attempt to put a very narrow and artificial limitation on the meaning of the word escape " in section 34(1)(b) cannot therefore succeed.
Mr. Sastri, however, argues that the narrow construction of the expression "has escaped assessment " for which he contends has been approved by the Privy Council in Rajendranath Mukherjee vs Income tax Commissioner (1).
He relies more particularly on the observation made in the judgment in this case that "the fact that section 34 requires a notice to be served calling for a return of income which has escaped assessment ,strongly suggests that income which has already been duly returned for assessment cannot be said to have escaped 'assessment within the statutory meaning".
In order to appreciate the effect of this observation it would be necessary to examine the material facts in the case and the specific points raised for the decision of the Privy Council.
It appears that, in 1930 the Income tax Officer had made an assessment order on Burn & Co., which was an unregistered firm, assessing them ' to income tax and super tax for the year 192728 under the Act.
The individual partners of Burn & Co., who were the appellants before the Board, contended that it was not competent to the officer to make the impugned assessment on the firm after the expiry on March 31, 1928, of the year in respect of which the assessment was made.
The Commissioner of Income tax met this plea by referring to the other relevant facts which explained the delay in making the assessment order.
Towards the end of 1926 27, the partners of the registered firm of Martin & Co., had purchased the business and assets of Burn & Co. This transaction was effected not on behalf of the firm (1) (1933) 61 I.A. IO, 16.
20 of Martin & Co., but by the partners of the firm as individuals.
In April 1927, the Income tax Officer of District I issued a notice to Burn & Co., under section 22(2) calling for a return of their total income for the year ending March 31, 1927, with a view to assessing them for the year 1927 28.
A similar notice was issued by the Income tax Officer of District 11.
When these notices were issued both the officers did not know that the business of Burn & Co., had been bought by the partners of Martin & Co. Subsequently this transaction was brought to the knowledge of the income tax authorities whereupon Burn & Co. 's file was transferred by the officer dealing with District 11, and in February 1928, an assessment order was made on Martin & Co., in respect of the combined incomes returned by Martin & Co., and Burn & Co., on the footing that the business of Burn & Co., had become a branch of Martin & Co. Martin & Co., appealed against this assessment and their appeal was allowed by the High Court in May 1930.
It was held that an income of a registered firm cannot, for the purpose of the Act., be aggregated with the income of an unregistered firm but that the income of each must be separately assessed irrespective of the fact that the persons interested in the profits of both concerns are the same.
In consequence of this decision, the assessment made on Martin & Co., was amended by the elimination therefrom of the income returned by Burn & Co., and in November 1930, an assessment was made on Burn & Co., on their income as returned by them in Janu ary 1928.
It was this assessment which was the subject matter of the appeal before the Privy Council.
It would thus be noticed that the principal question which the appellants raised before the Privy Council was: Whether the assessment made under section 23(1) on the appellants in November 1930 for the year 1927 28 was a legal assessment ? The argument was that, on a true construction of the Income tax Act, it was obligatory on the Income tax Officer to complete the assessment proceedings within the year of assessment, and in the event of such assessment not being so completed the only remedy open to the income tax 21 authorities was to proceed under section 34.
This argument was repelled by the Privy Council.
Their Lordships held that neither section 23 nor any other express provision of the Act limited the time within which an assessment must be made.
They then examined the other argument urged by the appellants that section 34 implied a prohibition against the making of an assessment after the expiry of the tax year.
In dealing with this argument, section 34 was construed and it was observed that the argument sought to put upon the word "assessment " too narrow a meaning, and upon the word " escaped " too wide a meaning.
It was in this connection that their Lordships approved of the observation made by Rankin C. J. in Re: Lachhiram Basantlal (1) that I. . income has not escaped assessment if there are pending at the time proceedings for the assessment of the assessee 's income which have not yet terminated in a final assessment thereof ".
In other words, the conclusion of the Privy Council was that so long as assessment proceedings are pending against an assessee and no final order has been passed thereon, it would be premature to suggest that any income of the assessee has escaped assessment.
It is only after the final order levying the tax has been passed by the Income tax Officer that it would be possible to predicate that any part of the assessee 's income has escaped assessment.
In the result their Lordships held that " since proceedings pursuant to the notice issued against the appellants under section 22(2) had been pending and no order had been passed against the appellants in the said proceedings, it would not be possible to accept their argument that the Income tax Officer should have taken action against them in respect of the income for the relevant year under section 34 of the Act ".
If this decision is considered in the light of the relevant facts and the nature of the argument raised before the Privy Council by the appellants, it would be difficult to accept the contention that, according to the Privy Council, section 34 would be inapplicable wherever notice under section 22(2) has been issued against an assessee, a return has been submitted by him and (1) (1030) I.L.R. , 912.
22 a final order has been passed by the Income tax Officer in the said assessment proceedings.
To say that, so long as the assessment proceedings are pending, it is impossible to assume that any income has escaped assessment is very much different from saying that income cannot be said to have escaped assessment wherever assessment proceedings have been taken and a final order has been passed on them.
We must, therefore, hold that this decision does not support Mr. Sastri 's contention about the inapplicability of section 34 in the present case.
In this connection it may be relevant to refer to the decision of the Calcutta High Court in Be: Lachhiram Basantlal (supra) (1) because, as we have already pointed out, the statement of the law made by Rankin C. J. in regard to the effect of section 34 of the Act in this case has been expressly approved by the Privy Council in the case of Rajendra Nath Mukherjee (supra) (2).
While dealing with the assessees ' argument that the order of assessment was invalid Since it had been passed more than one year after the expiry of the relevant financial year and that the Income tax Officer might have acted under section 34, Rankin C. J. stated that income cannot be said to have escaped assessment except in the case where an assessment has been made which does not include the income.
It is true that this observation is obiter but it is fully consistent with the subsequent statement of the law made by the learned Chief Justice which has received the approval of the Privy Council.
Mr. Sastri has also relied on the decision of this Court in Messrs. Chatturam Horliram Ltd. vs Commissioner of Income tax, Bihar & Orissa (1) in support of his construction of section 34.
In Chatturam 's case (supra) (3) the assessee had been assessed to income tax which was reduced on appeal and was set aside by the Income tax Appellate Tribunal on the ground that the Indian Finance Act of 1939 was not in force during the assessment year in Chota Nagpur.
On a reference the decision of the tribunal was upheld by the High (1) Cal.
909, 912.
(2) (1933) 61 I.A.10, 16.
(3) ; 23 Court.
Subsequently the Governor of Bihar promulgated the Bihar Regulation IV of 1942 and thereby brought into force the Indian Finance Act of 1939 in Chota Nagpur retrospectively as from March 30, 1939.
This ordinance was assented to by the Governor General.
On February 8,1944, the Income tax Officer passed an order in pursuance of which proceedings were taken against the assessee under the provisions of section 34 and they resulted in the assessment of the assessee to income tax.
The contention which was raised by the assessee in his appeal to this Court was that the notice issued against him under section 34 was invalid.
This Court held that the income, profits or gains sought to be assessed were chargeable to income tax and that it was a case of chargeable income escaping assessment within the meaning of section 34 and was not a case of mere non assessment of income tax.
So far as the decision is concerned, it is in substance inconsistent with the argument raised IVY Mr. Sastri.
He, however, relies on the observations made by Jagannadhadas J. that " the contention of the learned counsel for the appellant that the escapement from assessment is not to be equated to non assessment simpliciter is not without force " and he points out that the reason given by the learned judge in support of the final decision was that though earlier assessment proceedings had been taken they had failed to result in a valid assessment owing to some lacuna other than that attributable to the assessing authorities notwithstanding the chargeability of income to the tax.
Mr. Sastri says that it is only in cases where income can be shown to have escaped assessment owing to some lacuna other than that attributable to the assessing authorities that section 34 can be invoked.
We do not think that a fair reading of the judgment can lead to this conclusion.
The observations on which reliance is placed by Mr. Sastri have naturally been made in reference to the facts with which the Court was dealing and they must obviously be read in the context of those facts.
It would be unreasonable to suggest that these observations were intended to confine the application of section 34 only to cases where 24 income escapes assessment owing to reasons other than those attributable to the assessing authorities.
Indeed Jagannadhadas J. has taken the precaution of adding that it was unnecessary to lay down what exactly constitutes escapement from assessment and that it would be sufficient to place their decision on the narrow ground to which we have just, referred.
We are satisfied that this decision is of no assistance to the appellant 's case.
It appears that the construction of section 34 has led to a divergence of judicial opinion in the High Courts of this country, and so it would be necessary to refer briefly to the decisions to which our attention was invited in this appeal.
In Madan Lal vs Commissioner of I. T., Punjab (1), the majority decision of the Full Bench of the Lahore High Court held that section 34 of the Act, as it stood then, was not confined to cases where income had not been returned at all.
It applied also to cases where an item of income is included in the return made by the assessee but is left unassessed by the Income tax Officer, or, if assessed in the first in stance, the assessment is cancelled by any appellate or revisional authority.
Din Mohammad J. who delivered the majority judgment has expressed his agreement with the opinion of Coutts Trotter C. J. in The Commissioner of Income tax vs Raja of Parlakimedi (2) that the words " escaped assessment " apply even " to cases where the Income tax Officer has deliberately adopted an erroneous construction of the Act as much as to a case where an officer has not considered the matter at all, but simply omitted the assessable property from his view and from his assessment ".
The next case which has been cited before us is the decision of the Bombay High Court in The Commissioner of Income tax, Bombay vs Sir Mahomed Yusuf Ismail (3).
In this case Beaumont C. J. construed the word " definite information " in section 34 and held that in order to take action under the said section, there must be some information as to a fact which leads the Income tax Officer to discover that income (1) (2) , 28.
(3) [1944] 12 I.T.R. B. 26 has escaped assessment or has been under assessed.
The learned Chief Justice, however, added that the fact may be as to the state of the law, for instance, that a case has been overruled or that a statute has been passed which has not been brought to the attention of the Income tax Officer.
Chagla J. who delivered a concurring judgment was inclined, to hold that the word " information " in the section must be confined only to information as to facts or particulars and cannot include information as to law.
In his opinion, " a mistake of law or misunderstanding of the provisions of the law is not covered by the language of the section as amended in 1939 ".
It may be pointed out that in coming to this conclusion the learned judge appears to have relied on the observations of Rowlatt J. in Anderton and Halstead Ltd. vs Birrell (1) that "the word I discover ' in section 125 of the English Act does not include a mere change of opinion on the same facts and figures upon the same question of account ancy, being a question of opinion ".
Incidentally, we may observe that this statement of the law by Mr. Justice Rowlatt appears to have been overruled by the Court of Appeal in Commercial Structures Ltd. vs R. A. Briggs (2).
Soon after the decision of the Bombay High Court was reported the same question was raised before the Madras High Court in Raghavalu Naidu & Sons vs Commissioner of Income tax, Madras (3).
Leach C. J. who delivered the judgment of the court agreed with the construction which had been put on the expression "definite information " by the Bombay High Court on the ground that "it is very desirable to avoid conflict on such a question ".
He, however, added that in view of the opening words of the amended section as it was amended in 1939, the word " discovers " means something more than 'has reason to believe ' or ' satisfies himself ' and that consequently it would not be right to regard the English decisions on the meaning of the word " discovers " in section 125 of (1) [1932] I. K. B. 271.
(2) [1949] 117 I.T.R. Supplement 30.
(3) , 197.
4 26 the English Act as being in point.
He also made it clear that in following the Bombay, decision they did not imply that the definite information must relate to a pure question of fact because it was impossible to lay down a rule to cover all cases in which this section can be invoked.
In the Calcutta High Court, conflicting views have been expressed on this point.
In Maharaja Bikram Kishore of Tripura vs Province.
of Assam (1), Harries C. J. and Mukherjea J. had to deal with the construction of section 30 of the Assam Agricultural Income tax Act (Assam IX of 1939) which corresponds to section 34 of the Act.
They held that where a certain income has been included in his return by the assessee but was not assessed on the ground that it was not assessable, it cannot be treated as income which has escaped assessment and reassessed under section 30 of the Assam Agricultural Income tax Act.
In his judgment the learned Chief Justice has mentioned that the earlier decisions of the Calcutta High Court were no doubt against the contentions of the appellant but he took the view that the question was really concluded by the decision of the Privy Council in Rajendra Nath Mukherjee 's case (supra) (2).
The Privy Council decision was read by the learned Chief Justice as supporting the view that section 34 would be inapplicable to cases where income has been returned, assessment proceedings have been taken and a final order of assessment has been passed by the Income tax Officer against the assessee.
We have already pointed out that the decision of the Privy Council does not support this view.
In Raja Benoy Kumar Sahas Roy vs Commissioner of 1.
T., West Bengal(1), Chakravartti C. J. and Lahiri J. have taken a contrary view.
They have held that information as to the true state or meaning of the law derived freshly from an external source of authoritative character is definite information within the meaning of section 34.
It appears that, in construing the scope and effect of the provisions of section 34, the High Courts have had (1) (2) (1933) 61 1,A. 10, 16.
(3) 27 occasion to decide whether it would be open to the Income tax Officer to take action under section 34 on the ground that he thinks that his original decision in making the order of assessment was wrong without any fresh information from an external source or whether the successor of the Income tax Officer can act under section 34 on the ground that the order of assessment passed by his predecessor was erroneous, and divergent views have been expressed on this point.
Mr. Rajagopala Sastri, for the respondent, suggested that under the provisions of section 34 as amended in 1948, it would be open to the Income tax Officer to act under the said section even if he merely changed his mind without any information from an external source and came to the conclusion that, in a particular case, he had erroneously allowed an assessee 's income to escape assessment.
We do not propose to express any opinion on this point in the present appeal.
In the result we hold that the Patna High Court was right in coming to the conclusion that the decision of the Privy Council was information within the meaning of section 34 (1)(b) and that the said decision justified the belief of the Income tax Officer that part of the appellant 's income had escaped assessment for the relevant year.
The appeal accordingly fails and must be dismissed with costs.
Appeal dismissed.
| In respect of the assessment of the appellant to income tax the Income tax Officer excluded the amount of interest on arrears of rent received by him, in view of the decision of the Patna High Court in Kamakshya Narain Singh vs Commissioner of Income tax, [1946] 14 , that this amount was not liable to be taxed, though an appeal against the said decision to the Privy Council at the instance of the Income tax Department was then pending.
Subsequently on July 6, 1948, the Privy Council allowed the appeal and held that interest on arrears of rent payable in respect of agricultural land was not agricultural income as it was neither rent nor revenue derived from land.
As a result of this decision the Income tax Officer took proceedings under section 34 Of the Indian Income tax Act, 1922, as amended, and revised the assessment order by adding the aforesaid amount, on the footing that the subsequent decision of the Privy Council was information within the meaning of section 34(1)(b) of the Act and that the Income tax Officer had reason to believe that a part Of the assessee 's income, had escaped assessment.
It was contended for the appellant that section 34(1)(b) was not applicable to the case because (1) the information referred to in the section means information as to facts and cannot include the decision of the Privy Council on a point of law, 11 and (2) where income has been duly returned for assessment and an assessment order has been passed by the Income tax Officer, it cannot be said that any income has escaped assessment within section 34(1)(b).
Held, (1) that the word " information " in section 34(1)(b) of the Act includes information as to the true and correct state of the law and so would cover information as to relevant judicial decisions; and, (2) that the expression "has escaped assessment" in to cases where no return has been submitted by the assessee.
The section is applicable not only where income has not been assessed owing to inadvertence or oversight or owing to the fact that no return has been submitted, but also where are turn has been submitted, but the Income tax Officer erroneously fails to tax a part of assessable income.
Rajendra Nath Mukherjee vs Income tax Commissioner, (1933) L.R. 61 I. A. 10 and Messrs. Chatturam Horliram Ltd. vs Commissioner of Income tax, Bihar and Orissa, [1955] 2S.C.R. 290, distinguished.
Raja Benoy Kumar Sahas Roy vs Commissioner of Income tax, West Bengal, , Madan Lal vs Commissioner of Income tax, Punjab, and The Commissioner of Income tax vs Raja of Parlakimedi, Mad. 22, approved.
, Maharaja Bikram Kishore of Tripura vs Province of Assam, , disapproved.
|
Summarize this legal judgement text concisely | Appeal No. 108 of 1954.
Appeal from the judgment and decree dated March 21, 1952, of the Calcutta High Court in Appeal from Appellate Decree No. 971 of 1950, arising out of the judgment and decree dated August 29, 1950, of the Court of District Judge of Zillah Burdwan in Title Appeal No. 247/16 of 1948 against judgment and decree dated September 25, 1948, of the Court of Additional Sub Judge, 1st Court, Burdwan, in Title Suit No. 7 of 1946/27 of 1947.
1311 N. C. Chatterjee and Sukumar Ghose, for the appellant.
J. N. Banerjee and P. K. Ghose, for the respondents.
September 18.
The Judgment of the Court was delivered by VENKATARAMA AIYAR J.
This is an appeal by the plaintiff against the judgment of the High Court of Calcutta in a second appeal which, in reversal of the judgments of the Courts below dismissed his suit, which was one in ejectment.
The suit property is a Mahal of the extent of 84 Bighas 18 Cottas situated within lot Ahiyapur village, which is one of the villages forming part of the permanently settled estate of Burdwan Zamindari.
This village was granted by the Maharaja of Burdwan in Patni settlement to the predecessors in title of defendants I to 7.
The exact date of this grant does not appear, but it is stated that it was sometime prior to the enactment of the Bengal Patni Taluks Regulation, 1819 (Bengal Regulation VIII of 1819), hereinafter referred to as the Regulation, and nothing turns on it.
The Mahal with which this litigation is concerned, had been at or prior to the permanent settlement set apart as Chaukidari Chakaran lands; that is to say, they were to be held by the Chaukidars for rendering service in the village as watchmen.
In 1870, the Village Chaukidari Act, 1870 (Ben.
VI of 1870), hereinafter referred to as the Act, was passed, and section 48 of that Act provides that all Chaukidari Chakaran lands assigned for the benefit of any village shall be transferred to the zamindar of the estate in the manner and subject to the provisions contained in the Act.
Under section 50, the Collector is authorized to make an order transferring those lands to the Zamindar after determining the assessment payable thereon, and section 51 enacts that: " Such order shall operate to transfer to such zamindar the land therein mentioned subject to the amount of assessment therein mentioned, and subject 1312 to all contracts theretofore made, in respect of, under, or by virtue of, which any person other than the zamindar may have any right to any land, portion of his estate, or tenure, in the place in which such land may be situate.
" In accordance with the provisions aforesaid, the suit properties were transferred to the Maharaja of Burdwan, and on June 3,1899, he granted the same to the predecessors in title of defendants I to 7, who at that time held the Patni interest in respect of lot Ahiyapur.
Under the grant which has been marked as exhibit B, the yearly rental for the area was fixed at Rs. 126 8 as., out of which Rs. 84 4 as., had to be paid to the Panchayat within the 7th of Baisakh for being credited to the Chaukidari Fund and the balance of Rs. 42 4 as., was to be paid to the Zamindar within the month of Chaitra.
Exhibit B also provides that in default of payment of kist the lands are liable to be sold in proceedings taken under the Bengal Regulation VIII of 1819.
Acting under this clause, the Maharaja applied under section 8 of the Regulation to bring the suit lands to sale for realisation of arrears, and at the auction held on May 15, 1937, himself became the purchaser.
On February 13, 1941, he granted the lands again on Patni to the appellant, who filed the suit, out of which the present appeal arises, in the Court of the Subordinate Judge, Burdwan, to recover possession thereof from the defendants alleging that they had trespassed thereon.
The respondents contested the suit on the ground that, in fact, there were no arrears of rent due under Exhibit B, and that the sale was therefore void.
The Subordinate Judge held that there were arrears of rent due from the respondents, and that further as they had not sued to set aside the sale under section 14 of the Regulation within the time limited by law, they could not set up its invalidity as a defence to the action in ejectment.
The defendants preferred an appeal against this judgment to the District Court of Burdwan, and there raised a new contention that under the grant, Exhibit B, the suit lands became part of lot Ahiyapur, and that a sale of those lands was 1313 illegal as being a sale of a portion of the Patni.
The District Judge after observing that the point was taken for the first time, held on a construction of Exhibit B that it created a new Patni, and that it could therefore be brought to sale, and he also held that section 14 of the Regulation operated as a bar to the validity of the sale being questioned on the ground that the rent claimed was not, in fact, due.
He accordingly dismissed the appeal.
The respondents took the matter in second appeal to the High Court, and that was heard by a Bench consisting of Das Gupta and Lahiri JJ.
who differed from the District Judge both on the construction of Exhibit B and on the bar of limitation based on section 14 of the Regulation.
They held that the effect of Exhibit B was merely to make the suit lands part and parcel of the Patni lot Ahiyapur, and that, therefore, the sale of those lands only was bad, as being a sale of a part of the Patni.
They further held that as such a sale was void, section 14 of the Regulation had no application.
They accordingly allowed the appeal, and dismissed the suit.
It is against this judgment that the present appeal has been brought on a certificate granted by the High Court under article 133(1)(a).
Mr. N. C. Chatterjee for the appellant urged the following contentions in support of the appeal: (1) The defendants did not raise either in the written statement or during the trial, the plea that under the sanad, Exhibit B, the Chaukidari Chakaran lands comprised therein became part of the Patni settlement of lot Ahiyapur, and, in consequence, their sale was bad as being of a part of the Patni, and the learned Judges should not have allowed that point to be raised in appeal.
(2) Exhibit B properly construed must be held to create a new Patni distinct from lot Ahiyapur, and its sale is therefore valid.
(3) Assuming that the sale is invalid as being of a part of a tenure, the only right of the defendants was to sue to have it set aside, as provided in section 14 of the Regulation, and that not having been done, it is not open to them to attack it collaterally in these proceedings.
We see no substance in the first contention.
It is 1314 true that the defendants did not put forward in the trial Court the plea that the effect of Exhibit B was to incorporate the suit lands in lot Ahiyapur Patni, and that, in consequence, the sale was illegal as being of a part of the Patni.
On the other hand, the written statement proceeds on the view that Exhibit B created a new Patni unconnected with lot Ahiyapur, and the only defence raised on that basis was that no arrears of rent were due under Exhibit B, and that the sale was therefore invalid.
But the true nature of the grant under Exhibit B is a matter to be decided on a construction of the terms of the document, and that is a question of law.
It is argued for the appellant that it would be proper in determining the true character of the grant under Exhibit B to take into account surrounding circumstances, that to ascertain what those circumstances are, it will be necessary to take evidence, and that, in consequence, a question of that kind could not be permitted to be agitated for the first time in appeal.
But it is well settled that no evidence is admissible on a question of construction of a contract or grant, which must be based solely on the terms of the document, there being no suggestion before us that there is any dispute as to how the contents of the document are related to existing facts.
Vide Balkishen Das vs Legge (1) and Maung Kyin vs Ma Shwe La (2).
It should, moreover, be mentioned that when the defendants sought to raise this contention in their appeal in the District Court, no objection was taken by the plaintiff thereto.
Under the circumstances, the learned Judges were right in allowing this point to be taken.
This contention must therefore be rejected.
The next point for determination is as to the true character of the grant under Exhibit B, whether it amounts to a new Patni with reference to the Chaukidari Chakaran lands as contended for by the appellant, or whether it incorporates those lands in the Patni of lot Ahiyapur, so as to make them part and parcel of the lands comprised therein, as is maintained by the respondents.
To appreciate the (1) (1899) L.R. 27 I.A. 58, 65.
(2) (1917) L.R 44 I.A. 236, 243.
1315 true position, it is necessary to examine what the rights of the Zamindar and of the Patnidar were with respect to Chaukidari Chakardan lands at the time of the grant, Exhibit B.
These lands had been originally set apart as remuneration for the performance of services by the village chaukidars as watchmen, and for that reason when the village was granted to the Zamindar in permanent settlement, the income therefrom was not taken into account in fixing the jama payable by him, though they passed to him under the permanent settlement.
Then came the Village Chaukidari Act, and under that Act the Government put an end to the services of the Chaukidars as village watchmen, resumed the lands and imposed assessment thereon, and, subject to it, transferred them to the Zamindar; and where the Zamindar had already parted with the village in which the lands were situate, by granting Patni, it became necessary to define the rights of the Zamindar and the Patnidar with reference to those lands.
Dealing with this matter, section 51 of the Act provides that the title of the Zamindar on resumption and transfer by the Government shall be subject to " all contracts theretofore made ".
Under this section, the Patnidar would be entitled to the Chaukidari Chakaran lands in the same right and on the same terms on which lie held the village in which they are situate.
The nature of this right has been the subject of consideration in numerous authorities, and the law on the subject is well settled.
In Ranjit Singh vs Maharaj Bahadur Singh (1), it was held by the Privy Council that though the reservation under section 51 is of rights under contracts made by the Zamindar and the word " contract " primarily means a transaction which creates personal obligations, it might also refer to transactions which create real rights, and that it was in that sense the word was used in section 51, and that accordingly the Patnidar was entitled to institute a suit against the Zamindar for possession of those lands and was not obliged to suit for specific performance.
But this does not mean that the Patnidar is (1) (1918) L.R. 45 I.A. 162.
167 1316 entitled to hold the lands free of all obligations.
He is under a liability to pay to the Zamindar the assessment due thereon, when it is fixed under section 50, and also a share of profits.
Vide Bhupendra Narayan Singh vs Narapat Singh (1), where it was held by the Privy Council that when Chaukidari Chakaran lands included in a Patni settlement had been resumed and transferred to the Zamindar under section 51 of the Act, he is entitled to the payment of a fair and equitable rent in respect thereof, and that the fixing of the rent is a condition to the Patnidar being put in possession.
Vide also Rajendra Nath Mukherjee vs Hiralal Mukherjee (2) and Gopendra Chandra vs Taraprasanna (3).
These being the rights and obligations of the Zamindar and the Patnidar under section 51 of the Act, a grant of the Chaukidari Chakaran lands by the former to the latter serves, in fact, two purposes.
It recognises that the grantee is entitled to hold those lands by virtue of his title as Patnidar of the village of which they form part, and it fixes the amount payable by him on account of assessment and share of profits.
The question then arises as to what the exact relationship is in which the new grant stands to the original Patni grant.
Now, when section 51 of the Act recognises and saves rights which had been acquired under contract with the Zamindar, its reasonable implication is that the rights so recognised are the same as under the contract, and that, in consequence, the settlement of the Chaukidari Chakaran lands in Patni must be taken to be a continuance of the Patni of the village in which they are included.
But it is open to the parties to agree that the Chaukidari Chakaran lands should form a new and distinct Patni, and the result of such an agreement will be that while the grantee will hold those lands in Patni right, that is to say, the tenure will be permanent, heritable and alienable so far as his liability to pay jama and the corresponding right of the Zamindar to sell it under the Regulation if there is any default in the (1) (1925) L.R. 52 I.A. 355.
(2) (3) Cal.
1317 payment thereof are concerned, the now grant will be an entity by itself independent of the original Patni.
That that could be done by agreement of parties is well settled, and is not disputed before us.
If that is the true position, then the real question to be considered is, what is the agreement of parties with reference to the Chaukidari Chakaran lands, whether they are to be constituted as an independent Patni or whether they should be treated as a continuation of the original Patni or an accretion thereto, and the answer to it must depend on the interpretation to be put on the grant.
It is now necessary to refer to the material terms of Exhibit B under which the Chaukidari Chakaran lands were granted to the predecessors of respondents I to 7.
It begins by stating that the Patnidars of lot Ahiyapur appeared before the Zamindar and ,prayed for taking Patni settlement of the said 84 Bighas 18 Cottas of land at a yearly rental of Rs. 126/8 as.", and then provides how the amount is to be paid.
Then there is the following clause, which is important: "You will pay the rent etc., Kist after Kist according to the Kistbandi in accordance with law, and if you do not pay the same, I will realise the arrears together with interest and costs by causing the aforesaid lands to be sold by auction by instituting proceedings under Regulation VIII of 1819 and other laws which are in force or will come into force. " Then follow provisions relating to the transfer by the Patnidars of " the aforesaid lands ", succession by inheritance or by will to " the aforesaid lands " and the registration of the name of the transferee or successor in the Sherista, and it is expressly stated that "so long as the name of the new Patnidar is not recorded in the Sherista, the former Patnidar whose name is recorded in the Sherista will remain liable for the rent, and on a sale of the Mahal by auction on institution of proceedings against him under Regulation VIII of 1819 or any other law that will be in force for realisation of arrears of rent, no objection thereto on the Part of the new Patnidar can be entertained." 1318 Then ,there are two clause on which on the respondents rely, and they are in these terms: " If in future it transpires that any other persons besides yourselves have Patni rights in the Patni interest of the, said lot Ahiyapur, such persons shall have Patni rights in these Chakaran lands also to the same extent and in the same manner as they will be found to have interests in the Patni of the aforesaid lot, and if for the said reason any person puts forward any claim against the Raj Estate and the Raj Estate has to suffer any loss therefor, you will make good the said claim and the loss without any objection.
If in future the Patni interest in the said lot Ahiyapur be transferred for liability for arrears of rent or if the same comes to an end for any reason, then your Patni interest in these Chakaran lands also will be transferred or will come to an end alongwith the original Patni ,simultaneously.
" It is on these two clauses that the learned Judges in the Court below have based their decision that the intention of the par ties was to treat the suit lands as part of the Patni of lot Ahiyapur.
Now, it cannot be disputed that the two clauses aforesaid afford considerable support to the conclusion to which the learned Judges have come.
The first clause provides that if besides the grantee under Exhibit B there were other persons entitled to Patni rights in lot Ahiyapur, those persons also shall have Patni rights in Chaukidari Chakaran lands to the same extent as in Patni Ahiyapur.
That clearly means that the rights conferred on the grantees under Exhibit B have their roots in the Patni lot of Ahiyapur.
Likewise, the provision in the last clause that the grantees will lose their rights to the Chaukidari Chakaran lands if their interest in Ahiyapur Patni was sold clearly suggests that the grant under Exhibit B is to be an annexe to the grant of Ahiyapur.
As against this, the appellant argues that the other clauses in Exhibit B quoted above strongly support his contention, and that when the document is read as a whole, it unmistakably reveals an intention to treat the suit lands as a distinct Patni.
We must now 1319 refer to these clauses.
Exhibit B begins by reciting that the grantees desired to take a Patni settlement of 84 Bighas 18 Cottas, which is some indication, though not very strong, that it is to be held as a distinct entity.
We have then the clause which provides that when there is default in the payment of kist, the lands are liable to be sold in proceedings instituted under the Regulation.
Now, the law had long been settled that a sale of a portion of a Patni is bad, but that if by agreement of all the parties interested different portions thereof are held under different sadads, which provide for sale of those portions for default in pay ment of kist payable respectively thereon, then each of those sanads might be held to have created a separate Patni in respect of the portion comprised therein.
Vide Mohadeb Mundul vs Mr. H. Cowell(1) and Monomothonath Dev and another vs Mr. G. Glascott (2).
When, therefore, the Zamindar and the Patnidar agreed under Exhibit B that the lands comprised therein could be sold under the Regulation when there was default in payment of kist fixed therefor, they must clearly have intended that those lands should be constituted into a distinct Patni.
Otherwise, the clause will be inoperative and void, and indeed, the learned Judges in the Court below have, on that ground, declined to give any effect to it.
Now, it is a settled rule of interpretation that if there be admissible two constructions of a document, one of which will give effect to all the clauses therein while the other will render one or more of them nugatory, it is the former that should be adopted on the principle expressed in the maxim " ut res magis valeat quam per eat ".
What has to be considered therefore is whether it is possible to give effect to the clause in question, which can only be by construing Exhibit B as creating a separate Patni, and at the same time reconcile the last two clauses with that construction.
Taking first the provision that if there be other persons entitled to the Patni of lot Ahiyapur they are to have the same rights in the land comprised in Exhibit B, (2) (1873) 20 Weekly Reporter 275.
1320 that no doubt posits the continuance in those persons of the title under the original Patni.
But the true purpose of this clause is, in our opinion, not so much to declare the rights of those other persons which rest on statutory recognition, but to provide that the grantees tinder the document should take subject to those rights.
That that is the purpose of the clause is clear from the provision for indemnity which is contained therein.
Moreover, if on an interpretation of the other clauses in the grant, the correct conclusion to come to is that it creates a new Patni in favour of the grantees thereunder, it is difficult to see how the reservation of the rights of the other Patnidars of lot Ahiyapur, should such there be, affects that conclusion.
We are unable to see anything in the clause under discussion, which militates against the conclusion that Exhibit B creates a new Patni.
Then there is the clause as to the cesser of interest of the grantees in the Chaukidari Chakaran lands when their title to lot Ahiyapur comes to an end, and according to the respondents, this shows that under Exhibit B the Chaukidari Chakaran lands are treated as part and parcel of the Ahiyapur Patni.
If that were so, a sale of lot Ahiyapur must carry with it the Chaukidari Chakaran lands, they being ex hypothesi, part and parcel thereof, and there was no need for a provision such is is made in the last clause.
But that clause would serve a real purpose if the Patni under Exhibit B is construed as separate from that of lot Ahiyapur.
In that view, when the major Patni of lot Ahiyapur is sold, the intention obviously is that the minor Patni under Exhibit B, should not stand out but be extinguished, a result which could be achieved only by a special provision.
We should finally refer to the clauses in Exhibit B providing for transfer of or succession to the Chaukidari Chakaran lands and for the recognition of such transferee or successor as a Patnidar of those lands.
It is clear from these provision,s that such a transferee or successor is to hold the lands as a Patnidar, different from the Patnidar of lot Ahiyapur.
Reading these clauses along with the last clause, it seems clear that the intention of the parties 1321 was that while a transfer of the Ahiyapur Patni by sale should extinguish the title of the holders of the Chaukidari Chakaran lands a transfer of these lands would have no effect on the title to the lot Ahiyapur Patni.
Construing Exhibit B, as a whole, we are of opinion that the intention of the parties as expressed therein was that the Chaukidari Chakaran lands should be held as a distinct Patni.
We must now refer to the decision on which the learned Judges in the Court below have relied in support of their conclusion.
In Kanchan Barani Debi vs Umesh Chandra (1), the facts were that the Maharaja of Burdwan had created a Patni of lot Kooly in 1820.
The Chaukidari Chakaran lands situated within that village were resumed under the Act and transferred to the Zamindar who granted them in 1899 to one Syamlal Chatterjee in Patni on terms similar to those in Exhibit B.
In 1914 the Patni lot Kooly was sold under the Regulation, and purchased by Sint.
Kanchan Barani Debi.
She then sued as such purchaser to recover possession of the Chaukidari Chakaran lands.
The defendants who represented the grantees under the Patni settlement of 1899 resisted the suit on the ground that the sale of Patni Kooly did not operate to vest in the purchaser the title in the Chaukidari Chakaran lands, as they formed a distinct Patni.
Dealing with this contention, B. B. Ghose J. who delivered the judgment of the Court, observed : concerned to alter the terms of the original patni if they chose to do so; and what we have to see is whether that was done.
In order to do that, we have to examine the terms of the pattah by which the Chaukidari Chakaran lands were granted to Syamlal Chatterjee." The learned Judge then refers to the two clauses cor responding to the last two clauses in Exhibit B, and comes to the conclusion that their effect was merely to, restore the position as it was when the original Patni was created, and that, in consequence, the purchaser was entitled to the Patni as it was created in 1820, (1) A.I.R. 1925 Cal.
807, 1322 and that the plaintiff was entitled to the possession of the Chaukidari Chakaran lands as being part of the Patni.
Now, it is to be observed that in deciding that the Chaukidari Chakaran lands granted in 1899 became merged is lot Kooly, as it was in 1820, the learned Judge did not consider the effect of the clause providing for sale of those lands as a distinct entity under the provisions of the Regulation when there was default in the payment of ret payable thereon under the deed, and that, in our opinion, deprives the deci sion of much of its value.
In the result, we are unable to hold that the two clauses on which the learned Judges base their conclusion are really inconsistent with the earlier clauses which support the view that the grant under Exhibit B is of a distinct Patni.
Nor do we agree with them that the earlier clause providing for the sale of the Chaukidari Chakaran lands in default of the payment of jama, should be construed so as not to override the later clauses.
If, in fact, there is a conflict between the earlier clause and the later clauses and it is not possible to give effect to all of them, then the rule of construction is well established that it is the earlier clause that must override the later clauses and not vice versa.
In Forbes vs Git (1), Lord Wrenbury stated the rule in the following terms : " If in a deed an earlier clause is followed by a later clause which destroys altogether the obligation created by the earlier clause, the later clause is to be rejected as repugnant and the earlier clause prevails.
In this case the two clauses cannot be reconciled and the earlier provision in the deed prevails over the later.
" We accordingly hold that Exhibit B created a new Patni and that the sale of the lands comprised therein is not bad as of a portion of a, Patni.
We are conscious that we are differing from the learned Judges of the Court below on a question relating to a local tenure on which their opinion is, by reason of the special knowledge and experience which they have of it, entitled to the greatest weight.
It is also true that the decision in Kanchan Barani Debi vs (1) ,259.
1323 Umesh.
Chandra (1) has stood now for over three decades, though it is pertinent to add that its correctness does not appear to have come up for consideration in any subsequent decision of the Calcutta High Court, prior to this litigation.
But then, the question is one of construction of a deed, and our decision that the effect of an agreement of the kind in Exhibit B was to constitute the Chaukidari Chakaran lands into a distinct Patni will not result in any injustice to the parties.
On the other hand, the rule that a portion of a Patni should not be sold being one intended for the benefit of the Patnidars, there is no reason why an agreement entered into by them with the Zamindars providing for the sale of a portion, thereof which is really to their advantage, should not be given effect to.
Having anxiously considered the matter, we have come to the conclusion that Exhibit B creates a distinct Patni, that the sale thereof on May 15, 1937, is valid, and that the plaintiff has therefore acquired a good title to the suit lands under the grant dated February 13, 1941.
In this view, it is unnecessary to express any opinion on the point that was the subject of considerable argument before us as to whether it is open to the defendants to raise the invalidity of the sale held on May 15, 1937, in answer to this action, they not having taken steps to have set it aside, as provided in section 14 of the Regulation.
In the result, the appeal is allowed, the judgment of the lower Court reversed and that of the District Judge restored, with costs throughout.
Appeal allowed.
(1) A.I.R. 1925 Cal.
| The lands in question are situate in lot Ahiyapur which is one of the villages forming part of the permanently settled estate of Burdwan and had been set apart as Chaukidari Chakaran lands to be held by the Chaukidars for rendering service in the village as watchmen.
At the time of the permanent settlement the income from these lands was not taken into account in fixing the jama payable on the estate.
Some time before the enactment of the Bengal Patni Taluks Regulation, 1819, the entire village of Ahiyapur was granted by the then 1310 Zamindar of Burdwan, to the predecessors in title of the defendants on Patni settlement.
In 1870 the Village Chaukidari Act came into force and acting under the provisions of that Act the Government put an end to the services of the Chaukidars resumed the lands and imposed an assessment thereon, and, subject to it, transferred the lands to the Zamindar.
On June 3, 899, the Zamindar granted the suit lands on Patni to the predecessors in title of the defendants who were the then holders of the village in Patni.
In proceedings taken by the Zamindar under the provisions of the Bengal Patni Taluks Regulation, 1819, the suit lands were brought to sale for arrears of rent and purchased by him.
On February I3, 1941, the Zamindar sold the lands to the appellant who sued to recover possession thereof from the defendants.
The defendants resisted the suit on the ground, inter alia, that the effect of the grant of the Chaukidari Chakaran lands on June 3, 1899, was to make them part and parcel of the Patni settlement of the village of Ahiyapur and that, in consequence, the sale of those lands, apart from the village of Ahiyapur, was bad as being a sale of a portion of the Patni.
Held, that when the Zamindar made a grant of the Chaukidari Chakaran lands which formed part of a village which had previously been settled in Patni, it was open to the parties to agree that those lands should form a new and distinct Patni and the result of such an agreement would be that while the grantee would hold those lands in Patni right, that is to say, that the tenure would be permanent, heritable and alienable, so far as his liability to pay jama and the corresponding right of the Zamindar to sell it under the Regulation if there was a default in the payment thereof were concerned, the new grant would be a distinct Patni, independent of the original Patni.
Held, further, that construing the grant dated June 3, 899, as a whole, the intention of the parties as expressed therein was that the Chaukidari Chakaran lands were to be treated as a distinct Patni and that, therefore, the sale of the lands for arrears of rent was valid.
|
Summarize this legal judgement text concisely | Appeal No. 233 of 1954.
Appeal from the judgment and decree dated August 22, 1950, of the Bombay High Court in Appeal No. 80 of 1946 from original decree, arising out of the judgment and decree dated October 19, 1945, of the Court of Civil Judge, Senior Division, Dharwar, in Special Suit No. 64 of 1943.
A. V. Viswanatha Sastri and M. section K. Sastri, for the appellants.
A. section R. Chari, Bawa Shivcharan Singh and Govindsaran Singh, for respondents Nos. 2 4. 1958.
September 24.
The judgment of Imam and Kapur JJ. was delivered by Kapur J. Sinha J. agreed to the order proposed.
KAPUR J. This is an appeal against the judgment and decree of the High Court of Bombay varying the decree of the trial Court decreeing the plaintiff 's suit for possession by partition of joint family property.
The facts of the case lie in a narrow compass.
M. B. Jakati, defendant No. 1, was the Managing Director of Dharwar Urban Co operative Bank Limited which went into liquidation, and in that capacity he was receiving a yearly remuneration of Rs. 1,000.
As a result of certain proceedings taken against defendant No. 1, M. B. Jakati, by the liquidator of the Bank, a payment order for Rs. 15,100 was made by the Deputy Registrar of Co operative Societies on April 21, 1942.
In execution of this payment order a bungalow belonging to M. B. Jakati, defendant No. 1, was attached by the Collector under the Bombay Land Revenue Code on July 27, 1942.
Notice for sale was issued on November 24, 1942, and the proclamation on December 24, 1942.
The sale was fixed for February 2, 1943.
On January 16, 1943, M. B. Jakati defendant No. 1 applied for postponing the sale which was rejected.
The auction sale was held on February 2, 1943, and was confirmed on June 23, 1943, the purchaser was section N. Borkar, defendant No. 7, now respondent No. 1.
On February 10, 1944, respondent No. 1 sold the property to defendants 8 to 10 who are respondents 2 to 4.
1387 The following pedigree table will assist in understanding the case: Madhavarao Balakrishan Jakati Deft. 1 Bhimabai 2 Krishnaji Shriniwas Shantibai Indumati Plff.
1 Plff.
1(a) daughter daughter Deft.
No. 3 Deft.
No. 4 On January 15, 1943, Krishnaji a son of defendant No. 1 brought a suit for partition of the joint family property and possession of his separate share alleging inter alia that the purchase by respondent No. 1 of the bungalow was not binding on the joint family as "it was not liable to be sold for the illegal and immoral acts on the part of defendant No. 1 which were characterised as misfeasance "; that the auction sale was under section 155 of the Bombay Land Revenue Code under which only " the right, title and interest of the defaulter " could be sold and therefore the right, title and interest of only the father, defendant No. 1 was sold and not that of the other members.
The plaintiff claimed 1/4 share of the property and also alleged that he was not on good terms with his father who had neglected his interest; that he was staying with his mother 's sister and was not being maintained by his father and mother.
On January 12, 1944, appellant No. 1 filed his written statement supporting the claim for partition and claiming his own share.
He supported the claim of the then plaintiff that the sale in favour of respondent No. 1 was not binding on the joint family.
Defendant No. 2, now appellant No. 2, the mother, also supported the plaintiff 's claim and on the death of Krishnaji, she claimed his i share as his heir.
After the death of the original plaintiff Krishnaji, Shriniwas appellant No. 1 was substituted as plaintiff on June 28, 1944.
The suit was mainly contested by respondents 1 to 4.
Respondent No. 1 pleaded that plaintiff 's suit for partition was collusive having been brought at the instance of the defendant No. 1, M. B. Jakati, and it was not bona fide; that defendant No. 1 was made 1388 liable at the instance of the liquidator of the Dharwar Urban Co operative Bank Ltd., for misfeasance because he acted negligently in the discharge of his duties as managing director of the Bank; that the debt was binding on the family as defendant No. 1, M. B. Jakati, had been receiving a yearly remuneration from the Bank and the properties were sold in payment of a debt binding on the family and therefore the sale in execution of the payment order could not be challenged as the sons were under a pious obligation under the Hindu law to discharge the debts of their father; that the sale could only be challenged on proof of the debt of defendant No. 1 being for an " immoral or illegal purpose.
These pleadings gave rise to several issues.
The learned Civil Judge, held that the suit was collusive; that the liability which defendant No. 1 incurred was avyavaharika and was therefore not binding on the sons and thus appellant No. 1 would have 1/3 share in the joint family property, defendant NO.
1 1/3 and appellant No. 2 also 1/3.
He therefore declared the shares as above in the whole of the joint family property including the bungalow which is the only property in which the respondents are interested and which is in dispute in this appeal.
On appeal the High Court held that the debt was not avyavaharika as there was no evidence to support the finding of the trial Court, the order of the Deputy Registrar being in the nature of a judgment to which neither the sons nor the auction purchasers were parties and therefore it was not " evidence of anything except the historical fact that it was delivered".
In regard to the question as to what interest passed to the auction purchaser on a sale under section 155 of the Bombay Land Revenue Code, it held that the whole estate including the share of the sons was sold in execution of the payment order and therefore qua that property the sons had no interest left.
The High Court varied the decree to this extent and the plaintiffs have come up in appeal to this Court by certificate of the High Court of Bombay.
The case of the appellants is (1) that the debt was avyavaharika and therefore in an auction sale the S.C.R. SUPREME COURT REPORTS 1389 interest of the sons and other members of the joint family did not pass to the auction purchaser; (2) that even if the debt was not avyavaharika the institution of the suit for partition operated as severance of status between the members of the family and therefore the father 's power of disposition over the son 's share had come to an end and consequently in the auction sale the share of the sons did not pass to the auction purchaser; and (3) that what could legally be sold under section 155 of the Bombay Land Revenue Code was the right, title and interest of the defaulter i. e. of the father alone which could not include the share of the other members of the joint family.
The first question for decision is whether the debt of the father was avyavaharika.
This term has been variously translated as being that which is not lawful or what is not just or what is not admissible under the law or under normal conditions.
Colebrooke translated it as " a debt for a cause repugnant to good morals ".
There is another track of decision which has translated it as meaning " a debt which is not supported as valid by legal arguments ".
The Judicial Committee of the Privy Council in Hem Raj alias Babu Lal vs Khem Chand (1) held that the translation of the term as given by Colebrooke makes the nearest approach to the true conception of the term used in the Smrithis texts and may well be taken to represent its correct meaning and that it did not admit of a more precise definition.
In Toshanpal Singh vs District Judge of Agra (2) the Judicial Committee held that drawings of monies for unauthorised purposes, which amounted to criminal breach of trust under section 405 of the Indian Penal Code, were not binding on the sons, but a civil debt arising on account of the receipt of monies by the father which were not accounted for could not be termed avyavaharika.
In the case now before us the appellants have empted to prove that the debt fell within the term avyavaharika by relying upon the payment order and (1)(1943) L.R. 70 I.A. 171, 176.
(2) (1934) L.R. 61 I.A. 350.
1390 the findings given by the Deputy Registrar in thepayment order where the liabity was inter alia based on a breach of trust.
Any opinion given in the order of the Deputy Registrar as to the nature of the liability of defendant No.1, M. B. Jakati, cannot be used as evidence in the present case to determine whether the debt was avyavaharika or otherwise.
The order is not admissible to prove the truth of the facts therein stated and except that it may be relevant to prove the existence of the judgment itself, it will not be admissible in evidence.
Section 43 of the Indian Evidence Act, the principle of which is, that judgments excepting those upon questions of public and general interest, judgment in rem or when necessary to prove the existence of a judgment, order or decree, which may be a fact in issue, are irrelevant.
It was then submitted that the pleadings of respondent No. 1 himself show that the debt was of an immoral or illegal nature.
In his written statement, respondent No. 1 had pleaded that the liquidator of the Bank had charged defendant No. 1 with misfeasance because he was grossly negligent in the discharge of his duty and responsibility as managing director and that after a thorough enquiry the Deputy Registrar held misfeasance proved and ordered a contribution of Rs. 15,100 by him.
As we have said above the translation given by Colebrooke of the term avyavaharika is the nearest approach to its true concept i. e. " any debt for a cause repugnant to good morals ".
The managing director of a Bank of the position of defendant No. 1 who should have been more vigilant in investing the monies of the Bank cannot be said to have incurred the liability for a cause " repugnant to good morals ".
We are unable to subscribe to the proposition that in the modern age with its complex institutions of Banks and Joint Stock Companies governed by many technicalities and complex system of laws the liability such as has arisen in the present case could be called avyavaharika.
The debt was therefore binding on the sons.
The effect of severance of status brought aboutthe filing of the suit on January 25, 1943, made the basis of the argument that only the share of the father could be seized in execution of the payment order made against him.
This would necessitate an examination into the rights and liabilities of Hindu sons in a Mitakshara coparcenary family where the father is the karta.
In Hindu law there are two mutually destructive principles, one the principle of independent coparceiiary rights in the sons which is an incident of birth, giving to the sons vested right in the coparcenary property, and the other the pious duty of the sons to discharge their father 's debts not tainted with immorality or illegality, which lays open the whole estate to be seized for the payment of such debts.
According to the Hindu law givers this pious duty to pay off the ancestors ' debts and to relieve him of the death torments consequent on nonpayment was irrespective of their inheriting any property, but the courts rejected this liability arising irrespective of inheriting any property and gave to this religious duty a legal character.
Masit Ullah vs Damodar Prasad (1).
For the payment of his debts it is open to, the father to alienate the whole coparconary estate including the share of the sons and it is equally open to his creditors to proceed against it; but this is subject to the sons having a right to challenge the alienation or protest against a creditor proceeding against their shares on proof of illegal or immoral purpose of the debt.
These propositions are well settled and are not within the realm of controversy.
(Panna Lal vs Mst.
Naraini (2); Girdharee Lal vs Kantoo Lal and Mudhan Thakoor vs Kantoo Lal (3) ; Suraj Bansi Koer vs Sheo Prasad Singh (4); Brij Narain vs Mangla Prasad (5).
In the last mentioned case the Privy Council said: " Nothing clearer could be said than what was said by Lord Hobhouse delivering the judgment of the Board in Nanomi Babusin vs Modun Mohan (6) already quoted: " Destructive as it may be of the principle of (1) (1926) L.R. 53 I.A. 204.
(2) ; , 552, 553, 556, 5 59.
(3) (1874) L.R. 1 I.A. 321, 333.
(4) (1878) L.R. 6 I.A. 88, 101.
(5) (1923) L.R. 51 I.A. 129, 136.
(6) (1885) L.R. 13 I.A. 1, 17, 18.
177 1392 independent coparcenary rights in the sons, the decisions have for sometime established the principle that the sons cannot set up their rights against their father 's alienation for an antecedent debt, or against his creditor 's remedies for their debts, if not tainted with immorality.
On this important question of the liability of the joint estate, their Lordships think that there is no conflict of authority ".
There is no discrepancy of judicial opinion as to the pious duty of Hindu sons.
In Panna Lal vs Mst.
Naraini (1) this Court approved the following dictum of Suleman A. C. J. in Bankeylal vs Durga Prasad (2): The Hindu Law texts based the liability on the pious obligation itself and not on the father 's power to sell the sons ' share ".
So great was the importance attached to the payment of debts that Hindu law givers gave the non payment of a debt the status of sinfulness and such non payment was wholly repugnant to Hindu concept of son 's rights and liabilities.
In Bankeylal vs Durga Prasad (2) Lal Gopal Mukherji J. said at p. 896: " A perusal of text books of Smriti dealing with debts will show that under the Hindu Law the nonpayment of a just debt was regarded as a very heinous sill.
" The liability of the Hindu son based on his pious obligation again received the approval of this Court in Sudheshwar Mukherji vs Bhubneshwar Prasad Narain Singh (3), where the following observation made in Panna Lal 's case (1) (at p. 184): " The father 's power of alienating the family property for payment of his just debts may be one of the consequences of the pious obligation which the Hindu law imposed upon the sons; or it may be one of the means of enforcing it, but it is certainly not the measure of the entire obligation was reiterated.
And again at p. 183 Mukherjea J. (as he then was) said:., " It is a special liability created on purely religious (1) ; , 552, 553, 556, 559.
(2) All. 868, 896.
(3) ; , 183, 184.
1393 grounds and can be enforced only against the sons of the father and no other coparcener.
The liability, therefore, has its basis entirely on the relationship between the father and the son ".
Therefore unless the son succeeds in proving that the decree was based on a debt which was for an immoral or illegal purpose the creditor 's right of seizing in execution of his decree the whole coparcenary property including the son 's share remains unaffected because except where the debt is for an illegal or immoral purpose it is open to the execution creditor to sell the whole estate in satisfaction of the judgment obtained against the father alone.
Sripat Singh vs Tagore (1).
The necessary corollary which flows from the pious obligation imposed on Hindu sons is that it is not ended by the partition of the family estate unless a provision has been made for the payment of the just debts of the father.
This again is supported by the authority, of this Court in Pannatal 's case (2) where Mukherjea J. said at p. 559: " Thus, in our opinion, a son is liable, even after partition for the pre partition debts of his father which are not immoral or illegal and for the payment of which no arrangement was made at the date of the partition ".
The liability of the sons is thus unaffected by partition because the pious duty of the sons to pay the debt of the father, unless it is for an immoral or illegal purpose, continues till the debt is paid off and the pious obligation incumbent on the sons to see that their father 's debts are paid, prevents the sons from asserting that the family estate so far as their interest is concerned is not liable to purge that debt.
Therefore even though the father 's power to discharge his debt by selling the share of his sons in the property may no longer exist as a result of partition ' the right of the judgment creditor to seize the erstwhile coparcenary property remains unaffected and undiminished because of the pious obligation of the sons.
There does not seem to be any divergence of judicial opinion in regard (1) (1916) L.R. 44 I.A.1.
(2) ; , 552, 553, 556, 559. 1394 to the Hindu son 's liability to pay the debts of his father after partition, and by the mere device of entering into partition with their father, the sons cannot get rid of this pious obligation.
It has received the approval of this Court in Panna Lal vs Mst.
Naraini (1) and Sidheshwar Mukherji vs Bubneshwar Prasad Narain Singh (2) where Mukherjea J. observed in the latter case at p. 184: " It is settled law that even after partition the sons could be made liable for the pre partition debts of the father if there was no proper arrangement for the payment of such debts at the time when the partition was effected, although the father could have no longer any right of alienation in regard to the separated share of the sons The question then arises how the liability of the sons is to be enforced.
Another principle of Hindu law is that in a coparcenary family the decree obtained against the father is binding on the sons as they would be deemed to have been represented by the father in the suit: Kishan Sarup vs Brijraj Singh (3).
As was pointed out in Sidheshwar Mukherji 's case (2), the sons are not necessary parties to a money suit against the father who is the karta, but they may be joined as defendants.
The result of the partition in a joint family is nothing more than a change in the mode of enjoyment and what was held jointly is by the partition held in severalty and therefore attachment of the whole coparcenary estate would not be affected by the change in the mode of enjoyment, because the liability of the share which the sons got on partition remains unaffected as also the attachment itself which is not ended by partition (section 64 C. P. C. is a useful guide in such circumstances.
Dealing with the question as to how the interest of the sons in joint family property can be attached and sold, Mukherjea J. as he then was, observed at p. 185 in Sidheshwar Mukherji 's case (2): Be that as it may, the money decree passed against the father certainly created a debt payable by (1) ; , 552, 553, 556, 559.
(2) ; , 183, i84.
(3) All. 932.
1395 him.
If the debt was not tainted with immorality, it was open to the creditor to realise the dues by attachment and sale of the sons ' coparcenary interest in the joint property on the principles discussed above.
As has been laid down by the Judicial Committee in a series of cases, of which the case of Nanomi Babuasin vs Modun Mohun (1) may be taken as a type, the creditor has an option in such cases.
He can, if he likes, proceed against the father 's interest alone but he can, if he so chooses, put up to sale the sons ' interest also and it is a question of fact to be determined with reference to the circumstances of each individual case whether the smaller or the larger interest was actually sold in execution ".
But it has contended that a partition after the decree but before the auction sale limited the efficacy of the sale to the share of the father even though the sale in fact was of the whole estate, including the interest of the sons, because after the partition the father no longer possessed the right of alienation of the whole coparcenary estate to discharge his debts.
But this contention ignores the doctrine of pious obligation of the sons.
The right of the pre partition creditor to seize the property of the erstwhile joint family in execution of his decree is not dependent upon the father 's power to alienate the share of his sons but on the principle of pious obligation on the part of the sons to discharge the debt of the father.
The pious obligation continues to exist even though the power of the father to alienate may come to an end as a result of partition.
The consequence is that as between the sons ' right to take a vested interest ' jointly with their father in their ancestral estate and the remedy of the father 's creditor to seize the whole of the estate for payment of his debt not contracted for immoral or illegal purpose, the latter will prevail and the sons are precluded from setting tip their right and this will apply even to the divided property which, under the doctrine of pious obligation continues to be liable.
for the debts of the father.
Therefore where the joint ancestral property including the share of the sons has (1) (1885) L.R. 13 I. A. 1, 17, 18.
1396 passed out of the family in execution of the decree on the father 's debt the remedy of the sons would be to prove in appropriate proceedings taken by them the illegal or immoral purpose of the debt and in the absence of any such proof the sale will be screened from the sons ' attack, because even after the partition their share remains liable.
Girdhareelal vs Kantoolal (1), Suraj Bansi Koer vs Sheo Prasad Narain Singh(2) Mussamat Nanomi Babuasin vs Modwn Mohun (3) Chandra Deo Singh vs Mata Prasad (4) which was approved by the Privy Council in Sahu Ram Chander vs Bhup Singh (5), Pannalal vs Naraini (6) and Sidheshwar Mukherji 's case (7).
Our attention was drawn to two decisions, one by the High Court of Bombay in Ganpatrao vs Bhimrao (8) that in order to make the share of the sons liable after partition they should be brought on the record and the other of the Madras High Court in Kameshwaramma vs Venkatasubba Row(9) that the creditor has to bring another suit against the sons, obtain a decree against them limited to the shares allotted to them on partition and then attach and sell their share unless the partition was not bona fide in which case the decree could be executed against the joint family property.
But the decision in these cases must be confined to their own facts.
It is true that the right of the father to alienate for payment of personal debt is ended by the partition, but as we have said above, it does not affect the pious duty of the sons to discharge the debt of their father.
Therefore where after attachment and a proper notice of sale the whole estate including the sons ' share, which was attached, is sold and the purchaser buys it intending it to be the whole coparcenary estate, the presence of the sons eonomine is not necessary because they still have the right to challenge the sale on showing the immoral or illegal purpose of the debt.
In our opinion where the pious obligation exists and partition takes place after the decree and (1) (1874) L.R. i I.A. 321.
(2) (1878) L.R. 6 I.A. 88, 101.
(3) (1885) L.R. 13 I.A. Y. (4) All. 176, 196.
(5) (1916) L.R. 44 I.A. 1.
(6) ; , 552, 553, 556, 559.
(7) ; , 183, Bom.
(9) Mad.
1397 pending execution proceedings as in the present case, the sale of the whole estate in execution of the decree cannot be challenged except on proof by the sons of the immoral or illegal purpose of the debt and partition cannot relieve the sons of their pious obligation or their shares of their liability to be sold or be a means of reducing the efficacy of tile attachment or impair the rights of the creditor.
Reliance is placed on the judgment in Khiarajmal vs Daim (1) where the Privy Council held that the sale cannot be treated as void on the ground of mere irregularity but the Court has no jurisdiction to sell the property of persons " not parties to the proceedings or properly represented on the record ".
There two such persons were Alibux and Naurex.
As against Alibux there was no decree.
He was not a party to the suit, and it was held by the Privy Council that his interest in the property " seems to have been ignored altogether ".
He was not even mentioned as a debtor in the award on the basis of which the decree, which was executed was made.
Similarly Naurez was not represented in either of the suits and therefore there was no decree against him and the sale of his property also was therefore without jurisdiction and null and void.
This case cannot apply to sons in a joint Hindu family where a father represents the family and the decree is executable against the shares of the sons while the coparcenary continues and the liability of their shares continues after partition.
Sat Narain vs Das (2) is equally inapplicable to the present case.
There the Privy Council was dealing with the father 's power of disposal of property before and after partition which power vests in the Official Assignee on his bankruptcy, the question of the right of the judgment creditor to proceed in execution against the divided shares of sons which had been attached before partition was not a point in controversy.
There was no decision on the powers of an executing court to proceed against the shares of the sons but the question related to voluntary alienations by a father for payment of his debts not incurred for an immoral or illegal purpose.
(1) (1904) L.R. 32 I.A. 23.
(2) (1936) L.R. 63 I.A. 384.
1398 In cases where the sons do not challenge the liability of their interest in the execution of the decree against the father and the Court after attachment and proper notice of sale sells the whole estate and the auction purchaser purchases and pays for the whole estate, the mere fact that the sons were eo nomine not brought on the record would not be sufficient to defeat the rights of the auction purchaser or put an end to the pious obligation of the sons.
As was pointed out by Lord Hobhouse in Malkarjun Bin Shidramappa Pasare vs Narhari Bin Shivappa (1): " Their Lordships agree with the view of the learned Chief Justice that a purchaser cannot possibly judge of such matters, even if lie knows the facts; and that if he is to be held bound to enquire into the accuracy of the Court 's conduct of its own business, no purchaser at a Court sale would be safe.
Strancers to a suit are justified in believing that the Court has done that which by the directions of the Court it ought to do.
" In Mussamat Nanomi Babuasia vs Modun Mohun Lord Hobhouse said at p. 18: " But if the fact be that the purchaser has bargained and paid for the entirely, he may clearly defend his title to it upon any ground which would have justified a sale if the sons had been brought in to oppose the executing proceedings.
" The question which assumes importance in an auction sale of this kind therefore is what did the court intend to sell and did sell and what did the auction purchaser purport to buy and did buy and what did he pay for.
One track of decision of which Shambu Nath Pandey vs Golab Singh(3) is an instance, shows when the father 's share alone passes.
In that case the father alone was made a party to the proceedings.
The mortgage, the suit of the creditor and the decree and the sale certificate all purported to affect the rights of the father and his interest alone.
It was therefore held that whatever the nature of the debt, only the father 's (1) (1900) L.R. 27 I.A. 216, 225.
(2) (1885) L.R. 13 I.A. i. (3) (1887) L.R. 14 I.A. 77.
1399 right and interest was intended to pass to the auction purchaser.
In Meenakshi Naidu vs Immudi Kanaka Rammaya Kounden(1) which represents the other track of decision, the Privy Council held that upon the documents the court intended to sell and did sell the whole of the coparcenary interest and not any partial interest.
The query in decided cases has been as to what was put up for sale and was sold and what the purchaser had reason to think he was buying in execution of the decree.
Mussamat Nanomi Babuasin vs Modun Mohun (2) (supra), Bhagbut Persad vs Mussamat Girja Koer (3), Meenakshi Naidu vs Immudi Rammaya Kounden (1) and Rai Babu Mahabir Persad vs Rai Markunda Nath Sahai (4) and Daulat Ram vs Mehr Chand (5).
In the present case the payment order was made by the Deputy Registrar on April 21, 1942, and after the order had been sent to the Collector for recovery, the property was attached on April 24, 1942, and notice of sale was issued on November 24, 1942, and was published under sections 165 and 166 of the Bombay Land Revenue Code.
The proclamation of sale was dated December 12, 1942.
The property put up for sale was plot No. 36 D measuring 6 acres and one guntha and its value was specified as 13,000 rupees.
There was a note added : " No guarantee is given of the title of the said defendant or of the validity of any of the rights, charges or interests claimed by third parties ".
The order confirming the sale also shows that the whole bungalow was sold.
It was valued at Rs. 16,000 and there was a mortgage of Rs. 2,000 against it and what was sold and confirmed by this order was the whole bungalow.
The sale certificate was in regard to the whole bungalow i. e. City Survey No. 67 D measuring 6 acres and one guntha the sale price being Rs. 13,025.
There is little doubt therefore that what was put up for auction sale was the whole bungalow 2,0.6 (1) (1888) L.R. 16 I.A. i. (3) (1888) L.R. 15 I.A. 99.
(5) (1889) L.R. 14 I.A. 187.
178 (2) (1885) L.R. 13 I.A. i. (4) (1889) L.R. 17 I.A. 11, 16.
1400 and what the auction purchaser purported to buy and paid for was also the whole bungalow and not any fractional share in it.
It is a case where not only was the payment order passed before the partition but the attachment was made and the sale proclamation was issued before the suit for partition was filed and the sale took place of the whole property without any protest or challenge by the sons and without any notice to the Collector or the judgment creditor of the filing of the suit for partition.
In such a case respondent No. 1 is entitled to defend his title upon the grounds which would have justified the sale had the appellants been brought on record in execution proceedings.
The binding nature of the decree passed on the father 's debts not tainted with immorality or illegality, and the pious obligation imposed on the sons under the Mitakshara law would be sufficient to sustain the sale and defeat the sons ' suit in the same way and on the same grounds as in the case of execution proceedings.
Nanomi Babuasin vs Modun Mohun (1).
Consequently whether the sons were made parties to the execution proceedings or brought a suit challenging the sale of their shares the points for decision are the same the nature of the debts and liability of the sons under Hindu law, and these are the determining factors in both the cases i.e. the sons being parties to the execution proceedings or their suit challenging the sale of their shares.
The effect of attachment on the severance of status by the filing of a suit by one of the members of the coparcenary whose share was liable in execution of the decree has not been debated at the bar and how exactly it would affect the rights of the parties need not therefore be decided in this case.
As a consequence it would not be necessary to discuss the pronouncements of the Privy Council in Suraj Bansi Koer vs Sheo Prasad Singh (2) ; Moti Lal vs Karrabuldin (3) Ragunath Das vs Sundar Das Khetri (4); Ananta Padmanabha Swami vs Official Receiver, Secunderabad (5).
(1) (1885) L.R. 13 I.A. i. (3) (1897) L.R. 24 I.A. 170.
(2) (1878) L.R. 6 I.A. 88, 101.
(4) (1914) L.R. 41 I.A. 251.
(5) (1933) L.R. 60 I.A. 167, 174 5.
1401 The argument based on the interpretation of the words I right, title and interest of the defaulter ' in section 155 of the Bombay Land Revenue Code was that it was only the share of the defaulter himself which was and could be put up for auction sale.
That the whole of the property was put up for sale, was sold and was purchased as such is shown by the documents to which reference has already been made viz., the notice of November 24, 1942, proclamation of sale of Decem ber 24, 1,942, the order of confirmation of sale dated June 28, 1943, and the sale certificate issued by the Collector.
The Civil Procedure Code at the time of the enactment of the Bombay Land Revenue Code required that the property sold in execution should be described as " right, title and interest of the judgment debtor " and the same words have been used in section 155 of the Bombay Land Revenue Code.
It is a question of fact in each case as to what was sold in execution of the decree.
In Rai Babu Mahabir Prasad vs Markunda Nath Sahai (1) Lord Hobhouse observed as follows at p. 16 : " It is a question of fact in each case, and in this case their Lordships think that the transactions of the 4th and 5th of January, 1875, and the description of the property in the sale certificate, are conclusive to shew that the entire corpus of the estate was sold.
" Similarly in Meenakshi Naidu vs Immudi Kanaka Rammaya Kounden (2) the whole interest of the coparcenary was held to be sold taking into consideration the evidence which had been placed on the record.
Lord FitzGerald at p. 5 pointed out the difference where only the father 's interest was intended to pass: "In Hurdey Narain 's case" (Hurdey Narain vs Rooder Perkash (3)) " all the documents shewed that the Court intended to sell and that it did sell nothing but the father 's share the share and interest that he would take on partition, and nothing beyond it and this tribunal in that case puts it entirely upon the ground (1) (1889) L.R. 17 I.A. 11, 16.
(2) (1888) L.R. 16 I.A. i. (3) (1883) L. R. 11 I. A. 26, 29. 1402 that everything shewed that the thing sold was "whatever rights and interests, the said judgment debtor had in the property " and nothing else ".
In Sripat Singh vs Tagore (1) the "right, title and interest of the judgment debtor" were sold and there also it was held to convey the whole coparcenary estate and it was remarked that it was of the utmost importance that the substance and not merely the technicality of the transaction should be regarded.
What is to be seen is what was put up for sale what the court intended to sell and what the purchaser was intending to buy and what he purported to buy.
Counsel for the appellants relied on Shambu Nath Panday vs Golab Singh(2) where it was held that right and interest of the father meant personal interest but in that case as we have pointed out, the documents produced all showed that the father 's interest alone was intended to pass.
In Mulgund Co operative Credit Society vs Shidlingappa Ishwarappa (3) it was held that the sale under the Bombay Land Revenue Code has the same effect as the sale by the Civil Court.
The language used in the Bombay Land Revenue Code and the then existing Civil Procedure Code is similar i.e. " the right, title and interest of the defaulter " in one case and " of the judgment debtor " in the other.
This is supported by the observation of the Privy Council in Rai Babu Mahabir Prasad vs Markunda Nath Sahai (4) and as to what passed under the sale does not become any different merely because the sale is held under section 155 of the Bombay Land Revenue Code rather than the Code of Civil Procedure.
The effect in both cases is the same.
We hold therefore (1) that the liability of the sons to discharge the debts of the father which are not tainted with immorality or illegality is based on the pious obligation of the sons which continues to exist in the lifetime and after the death of the father and which does not come to an end as a result of partition of the joint family property.
All that results from partition is that the right of the father to make an (i) (1916) L.R. 44 I.A. i. (3) A.I.R. 194i Bom.
(2) (1887) L.R. 14 I.A. 77.
(4) (1880) L.R. 17 I.A. 11, 16.
1403 alienation comes to an end.
(2) Where the right, title and interest of a judgment debtor are set up for sale as to what passes to the auction purchaser is a question of fact in each case dependent upon what was the estate put up for sale, what the Court intended to sell and what the purchaser intended to buy and did buy and what he paid for.
(3) The words di right, title and interest " occurring in section 155 of the Bombay Land Revenue Code have the same connotation as they had in the corresponding words used in the Code of Civil Procedure existing at the time the Bombay Land Revenue Code was enacted.
(4) In execution proceedings it is not necessary to implead the sons or to bring another suit if severance of status takes place pending the execution proceedings because the pious duty of the sons continues and consequently there is merely a difference in the mode of enjoyment of the property.
(5) The liability of a father, who is a managing director and who draws a salary or a remuneration, incurred as a result of negligence in the discharge of his duties is not an avyavaharika debt as it cannot be termed as " repugnant to good morals ".
In the result the appeal fails and is dismissed with costs.
SINHA J.
I agree to the order proposed.
Appeal dismissed.
| j was the managing director of a Co operative Bank getting a yearly remuneration of Rs. 1,000.
The Bank went into liquidation and an examination of the affairs having showed that the monies of the Bank were not properly invested and that J was negligent in the discharge of his duties, a payment order for Rs. 15,100 was made by the Deputy Registrar of Co operative Societies against him.
On July 27, 1942, for the realisation of the amount, an item of property belonging to the joint family of J was attached by the Collector and brought to sale under section 155 of the Bombay Land Revenue Code, and purchased at auction by the first respondent.
This sale was held on February 2, 1943, and confirmed on June 23, 1943.
In the meantime on January 15, 1943, one of the sons of J instituted a suit for partition and separate possession of his share in the joint family properties, and contended, inter alia, that the sale in favour of the first respondent was not binding on the joint family.
The sale was challenged on the grounds (1) that the liability which J incurred was avyavaharika and therefore the interest of his sons could not be sold for the realisation of the debt, (2) that even if the debt was not avyavaharika, the institution of the suit for partition operated as severance of status between the members of the family and, therefore, the father 's power of disposition over the son 's share had come to an end and, consequently, at the auction sale the share of the ' sons did not pass to the auction purchaser, and (3) that what could legally be sold under section I55 1385 of the Bombay Land Revenue Code was the right, title and interest of the defaulter, i. e., the father alone, which could not include the share of the other members of the joint family.
The evidence consisting of the notice for sale, the proclamation of sale and the sale certificate showed that the whole of the property was sold, and not the share of the father alone.
Held, that the liability which J incurred was not avyava harika and that the sale of the joint family property, including the share of the sons, for the discharge of the debt, was valid.
Held, also, that, Colebrooke 's translation of the term avyavaharika as "any debt for a cause repugnant to good morals,", was the nearest approach to the true concept of the term as used in the Smrithi texts.
Hem Raj alias Babu Lal vs Khem Chand, (1943) L. R. 70 I. A. 171, relied on.
Per Imam and Kapur jj. (1) The liability of the sons to discharge the debts of the father which are not tainted with immorality or illegality is based on the pious obligation of the sons which continues to exist in the lifetime and after the death of the father and which does not come to an end as a result of partition of the joint family property.
All that results from partition is that the right of the father to make an alienation comes to an end.
(2) Where the right, title and interest of a judgment debtor are set up for sale, as to what passes to the auction purchaser is a question of fact in each case dependent upon what was the estate put up for sale, what the Court intended to sell and what the purchaser intended to buy and did buy and what he paid for.
(3) The words "right, title and interest " occurring in section I55 of the Bombay Land Revenue Code have the same connotation as they had in the corresponding words used in the Code of Civil Procedure existing at the time the Bombay Land Revenue Code was enacted.
(4) In execution proceedings it is not necessary to implead the sons or to bring another suit if severance of status takes place pending the execution proceedings because the pious duty of the sons continues and consequently there is merely a difference in the mode of enjoyment of the property.
(5) The liability of a father, who is a managing director and who draws a salary or a remuneration, incurred as a result of negligence in the discharge of his duties is not an avyavaharika debt as it cannot be termed as " repugnant to good morals Case Law discussed.
Panna Lal vs Mst.
Naraini, ; and Sudhashway Mukherjee vs Bhubneshwar Prasad Narain Singh, [1954] S.C.R. 177, followed.
Khiarajmal vs Daim, (1904) L.R. 32 I.A. 23 and Sat Narain vs Das, (1936) L.R. 63 I.A. 384, distinguished.
Mulgund Co operative Credit Society vs Shidlingappa Ishwa rappa, A.I.R. 1941 Bom.
381, approved. 1386
|
Summarize this legal judgement text concisely | Appeals Nos. 278 and 279 of 1956.
Appeal from the judgment and order dated November 14, 1950, of the Allahabad High Court in Incometax Miscellaneous Case No. 12 of 1950.
47 A. V. Viswanatha Sastri and A. N. Kirpal for the appellant.
C. K. Daphtary, Solicitor General of India, Rajagopala Sastri, R. H. Dhebar and D. Gupta, for the respondent.
October 3.
The Judgment of the Court was delivered by GAJENDRAGADKAR J.
These are appeals by special leave and they arise from the assessment proceedings taken against the appellant 's husband Seth Ganga Sagar Jatia in respect of his income for the assessment years 1943 44 and 1944 45.
The said Seth Ganga Sagar died on September 22, 1944, leaving behind him his widow the appellant Shrimati Indermani Jatia.
After the death of her husband, the appellant continued the assessment proceedings as his representative and administrator of his estate.
The appellant as well as her husband were residents and ordinarily residents in British India for the relevant years.
The sources of the assessee 's income for the purposes of income.tax assessment were his business, his house property and the dividends earned by him.
This business was carried on by the appellant after his death at Khurja and Aligarh which are part of India and at Chistian in the Indian State of Bahawalpur now a part of Pakistan.
The central set of accounts of the assessee,s business were kept at Khurja.
In this set of accounts income received by the assessee from all sources were incorporated.
For the accounting year relevant to 1943 44 assessment, the interest account in the said books showed credit entries of Rs. 17,132/ as interest received on capital invested in the shop at Cliistian).
Similarly for the accounting period relevant to 1944 45 assessment Rs. 47,029/ had been credited in the said books.
The Income Tax Officer took the view that these two amounts represented the assessee 's taxable income in India and accordingly he levied tax on them.
The appellant filed appeals before the Appellate Assistant Commissioner against the said assessment orders for the assessment years 1943 44 and 1944 45; 48 and on her behalf the Income Tax Officer 's decision about the chargeability to tax of the aforesaid two amounts was challenged.
The appellate authority, however, rejected the appellant 's contention and confirmed the order under appeal.
The appellant then filed appeals before the Income Tax Appellate Tribunal.
The tribunal agreed with the view taken by the income tax authorities, confirmed their conclusion and dismissed the appeals preferred by the appellant.
In the assessment for 1943 44, the appellant had claimed that Rs. 7,512/ , which had been spent in litigation, was an admissible expenditure but this claim was disallowed by the Income Tax Officer and his decision was confirmed by the appellate authority and by the tribunal.
At the instance of the appellant, the tribunal stated the case and referred the following two questions to the High Court at Allahabad under section 66(1): (1) Whether, in the circumstances of the case, the sum of Rs. 17,132/ for 1943 44 and Rs. 47,029/for 1944 45 could be legally deemed to have been received in British India and were liable to tax under section 4(1) of the Act ; (2) Whether, in the circumstances of the, case, the expenditure of Rs. 7,5121 incurred in connection with a criminal litigation was admissible expenditure within the meaning of section 10(2)(xv) of the Act ? The reference was heard by Malik C. J. and V. Bhargava J. on November 14, 1950, and both the questions were answered against the appellant.
The application made by the appellant under section 66A of the Act for leave to appeal to the Supreme Court was dismissed by the High Court on April 23, 1954.
Thereupon the appellant applied for and obtained special leave on December 10, 1954.
That is how these appeals have come to this Court.
Mr. Viswanatha Sastri, for the appellant, did not challenge before us the correctness of the view taken by the High Court on the second question in respect of the expenditure of Rs. 7,512/ .
He conceded that the finding recorded by the income tax authorities 49.
against the appellant on this point is a finding of fact.
and, having regard to the material on the record, the correctness of the said finding cannot be effectively challenged.
He, however, urged that the answer, given by the High Court on the first question referred to it was erroneous in law.
The High Court has held that the two amounts of interest credited in the books of the appellant were liable to tax under section 4(1) of the Act as they must be deemed to have been received by the appellant in British India.
Mr. Sastri argues that the expression " deemed to be received " means, deemed by the relevant provisions of the Act to be received.
It is not disputed that though income may not have been received by the assessee in reality, it can be deemed to be received under the relevant provisions of the Act; and this constructive receipt can be con veniently described as statutory receipt under the Act.
Taxes deducted at source or annual accretion to an employee participating in a recognized firm, for instance, are deemed to be received under section 18(4) and section 58(e) of the Act respectively.
The argument is that there is no relevant provision of the Act under which the two amounts in question can be properly deemed to have been received by the appellant.
No provision has been mentioned in the judgment of the High Court nor has any such provision been cited by the income tax authorities either.
In our opinion, this argument is technically correct.
It must be conceded that the present Proceedings disclose some confusion in the mind of the appellant in the presentation of her case at all stages hereto, in the findings recorded by the income tax authorities, in the form of the question raised by the tribunal, and in the answer given to it by the High Court.
In law and in substance, what the department has done is to tax the said two amounts not because they are deemed to have been received by the appellant during the relevant years, but because they have been actually received by her or treated by her as so received.
In other words, the case against the appellant under section 4(1)(a) is that the amounts of interest constitute her income which is received or treated as received by her.
7 50 Dealing with the question on this basis, Mr. Sastri contends that the inference about the receipt of income by the appellant drawn from her books of account is not valid and should be rejected.
He does not dispute the fact that the books of account are kept by the appellant on mercantile basis.
It was conceded by the appellant 's lawyer in the proceedings before the tribunal that the appellant as the creditor had a right to enforce the payment of interest in British India, and that the liability of the Chistian shop had been extinguished to the extent of the interest paid by it to the head office.
The concessions made by the appellant before the tribunal clearly show that the sum advanced by the appellant 's head office in British India to her shop at Chistian was liable to pay interest and that the credit entry in respect of the two amounts had been made according to the mercantile method of keeping accounts.
It is well known that the mercantile system of accounting differs substantially from the cash system of book keeping.
Under the cash system, it is only actual cash receipts and actual cash payments that are recorded as credits and debits; whereas, under the mercantile system, credit entries are made in respect of amounts due immediately they become legally due and before they are actually received; similarly, the expenditure items for which legal liability has been incurred are immediately debited even before the amounts in question are actually disbursed.
Where accounts are kept on mercantile basis, the profits or gains are credited though they are not actually realised and the entries thus made really show nothing more than an accrual or arising of the said profits at the material time.
The same is the position with regard to debits made.
This position is not disputed by Mr. Sastri.
He,, however, contends that the entries in respect of the receipt Of interest are nevertheless merely book entries and it would not be reasonable to infer actual receipt of the said amount merely from these entries.
In support of this argument, Mr. Sastri invited our attention to the decision of the House of Lords in Gresham Life Assurance Society Ltd. vs Bishop (Surveyor of 51 Taxes)(1).
This was a case of life assurance society which carried on business at home and abroad with its head office in London.
At the head office accounts and balance sheets were made.
up, the profits ascertained and the dividends paid.
The interest upon the society 's foreign securities paid abroad was received by the agents and part of it was applied abroad for the purposes of the society.
All the interest on foreign securities was, however, taken into account in the balance sheets upon which the profits were ascertained.
It was held that taking the interest into account was not equivalent to a receipt in the United Kingdom and that income tax was not chargeable upon that part of the interest which was not remitted to the United Kingdom.
The Fourth Case falling under Schedule I which fell to be considered in this case referred to sums " which have been or will be received in Great Britain during the year for which the duty is payable ".
Under this provision, the locality of the receipt is naturally very important.
As Lord Lindley has observed that " what has been done, and all that has been done, is that the Gresham Company, in making up its account with a view to ascertain what profits it could divide in a particular year, entered on its asset side the sum of pound 43,483/ as money received during the year.
This was obviously right; for the object was not to ascertain the profit made in any particular country but the profit made by the company on all its transactions all over the world ".
In fact no account was forthcoming to show that the sum had ever been treated as remitted to the United Kingdom so as to justify the inference that in any commercial sense the same had been received in the United Kingdom as distinguished from other countries.
It is thus clear that the decision turned upon the special features of accounting which is usually adopted in preparing and presenting balance sheets of companies and it shows that an entry in a balance sheet is not receipt of money at the place where the balance sheet is prepared.
In our opinion, there is no analogy between the balance sheet of a (1) ; 52 company and the accounts 'kept by the appellant in respect of her individual business activities.
The principle laid down by the House of Lords in the case of Gresham Life Assurance Society Ltd. (1), appears to have been substantially reproduced in explanation (1) to section 4(1).
The argument that the principle thus statutorily recognized in respect of balance sheets should be extended to private books of account kept according to mercantile system cannot, in our opinion, be accepted.
Mr. Sastri has also invited our attention to the decision of Keshav Mills Ltd. vs Commissioner Income tax, Bombay (2).
In this case a non resident company manufactured textile goods in Petlad outside British India and sold the goods ex mills.
The firm of R. & Co., guaranteed the sale price of goods sold ex mills by the assessee company to purchasers at Ahmedabad within British India.
The assessee maintained its accounts according to the mercantile system and so debited R. & Co. with the price of goods sold and credited the sales account of the bills.
R. & Co. collected the amounts of the bills from the purchasers on behalf of the assessee and credited the sums realised in the assessee 's account with banks at Ahmedabad and also disbursed them to creditors of the assessee in British India.
During the relevant accounting year, the assessee thus received Rs. 12,68,418/ .
The asses.
see also received Rs. 4,40,878/ from sales to purchasers in British India.
The question which arose for decision was whether these two sums were sale proceeds of goods sold by the assessee to merchants in British India and whether they were received in British India and could be included in the assessable income of the assessee in British India.
It was held by this Court that the said amounts were not received by the assessee nor could be deemed to have been received by it when the entries were made in the books of account at Petlad but that they had merely accrued or arisen to the assessee there; that they were first received by R. & Co. and by the banks through whom the railway receipts were negotiated on behalf (1) ; (2) ; 53 of the company in British India and as such were liable to tax under section 4(1)(a) of the Act as having been received in British India on its behalf.
We do not see how this decision can assist the appellant 's case before us.
We are dealing with the appellant who is a resident in British India and the argument that the credit entries made in his books of account should not be treated as income received or treated by her as, received cannot be supported by the decision in Keshav Mills Ltd. (1) or even by any of the observations made by Bhagwati J. who delivered the majority judgment.
Reliance was also placed by Mr. Sastri on the decision of the Full Bench of the Punjab High Court in Sunder Das vs The Collector of Gujrat (2).
This case merely decided that, where the assessee had earned and received income in British Baluchistan (which Province was exempt from the operation of the Act except as to salaries) and had subsequently brought it into Punjab, it was not liable to income tax for the reason that the said income had not been received in the Punjab within the meaning of section 3, sub section
(1) of the Income tax Act.
In other words, this decision shows that the assessee cannot receive the same income twice in two different places but this principle has no application to the present case.
The decision of the Full Bench of the Madras ']High Court in Commissioner of Income tax, Madras vs A. T. K.P.L.S.P.
Subramaniam Chettiyar (3), on the other hand, supports the contention of the department.
In this case the Madras High Court has held that credit entries made on account of interest due by debtor in foreign places to the assessee must be treated as payments though that interest was not actually paid %in British India.
The assessee had a business of his own in Rangoon carried on by an agent and lie was also interested with another or others in a money lending business in Penang in which he was a chief partner.
From the Rangoon business a sum of Rs. 78,768/ and odd was transferred in cash to the Penang business (1) (2) Lah.
(3) Mad.
54 under the orders of the assessee.
In the books of the Rangoon business a sum of Rs. 12,174/. was entered as interest on that money from Penang and the assessee had been assessed in respect of this interest under section 4, sub section
(1) of the Act as income accruing, arising or received in British India.
It was admitted that the assessee kept his books according to the mercantile method of book keeping.
What the assessee sought to do was to treat the relevant entries of interest on cash basis though he adopted the mercantile basis in regard to other entries in the interest account.
This attempt did not succeed because the High Court held that the assessee 's own accounts were " dead against his contention " and they precluded him from arguing that the interest in question is income arising outside British India and not received in British India because in law the transfer called in the assessee 's books an advance to the Penang firm cannot be a loan.
The court came to the conclusion that once the assessee had adopted the mercantile basis of accountancy it was upon that basis and that basis alone that lie had to be assessed.
Thus this decision would show that the effect of making a credit entry in the interest account would be to treat that amount as income or profits received by the assessee or treated by him as received for the purposes of the tax provided the assessee keeps the accounts according to the mercantile method of book keeping.
We are, therefore, not prepared to accept Mr. Sastri 's argument that, despite the concessions made by his client before the tribunal, it would still be open to her to contend that the relevant entries in her books of account did not justify the inference that the appellant has received the amounts in question by way of interest during the relevant period.
Realising the infirmity in his argument on this point, Mr. Sastri contended that the main objection which he wanted to urge before us against the validity of the conclusion reached by the income tax authorities was fundamental and it went to the root of the matter.
Indeed, it was this aspect of the matter which Mr. Sastri seriously sought to press before us.
He contends 55 that the view taken by the Madras High Court in the case of Subramaniam Chettiyar (1), like the conclusion of the income tax authorities against the appellant in the present case, is based on the erroneous assumption that a person can trade with himself.
He urges that it is a rule of universal application that no person can trade with himself and make profit out of dealings with himself; and so his case is that, whatever may be the effect of the other entries made in the appellant 's books in the interest account, the relevant entries in respect of the interest alleged to have been received from the appellant 's own shop at Chistian in law cannot mean the receipt of any income by the appellant.
How can the appellant be tier own creditor and how can she receive interest in respect of the advance made by her to her own shop at Chistian, asks Mr. Sastri.
He concedes that this point bad not been raised by the appellant at any stage in the proceedings so far but, according to him, it is a Pure question of law and he should be allowed to argue it before us.
It was as early as 1887 that Palles C. B. observed in Dublin Corporation vs M 'Adam (Surveyor of Taxes) (2) that " no man, in my opinion, make, in what is its true sense or meaning, taxable profit by dealing with himself ".
In this case, a city corporation had been empowered by its Water works Act to supply waters beyond the city boundaries.
Any income thus arising had to be put into a consolidated account of the corporation for all the purposes of the Act.
It was held that the excess of receipts over expenditure in respect of the extra municipal supply constitutes profits chargeable to income tax.
Distinction was made between the extra municipal supply of water and supply within the limits of the municipality; and it was held that it was only the excess of receipts over expenditure in respect of the former that constitutes profits chargeable to income tax.
The argument that the income received from the rate payers residing within the limits of Dublin Municipality should be taken into account was repelled on the ground that (1) Mad. 765.
(2) 56 the corporation cannot be treated as in any sense a body distinct from the inhabitants of Dublin.
It was also observed that what was intended to be raised from the citizens was what is enough to pay for the expenses of the water supply and no more and that there was no intention that the corporation should in any sense make a profit from those rate payers.
The said principle has been enunciated very succinctly by Viscount Simon in Ostime (H. M. Inspector of Taxes) vs Pontypridd and Rhondda Joint Water Board (1) when he said that "if the undertaker is a rating authority and the subsidy is the proceeds of rates imposed by it or comes from a fund belonging to the authority, the identity of the source with the recipient prevents any question of profits arising ".
In The Carlisle and Silloth Golf Club vs Smith (Surveyor of Taxes) (2), Buckley L. J. has adverted to the same rule and has observed that a man cannot make profits or loss out of himself and that was the ground of the decision in New York Life Insurance Company vs Styles (Surveyor of Taxes) (3).
In support of the same proposition Mr. Sastri has also relied upon the decision of this Court in Sir Kikabhai Premchand V. Commissioner of Income tax (Central), Bombay (4).
In this case, the assessee carried on business in bullion and shares and kept his accounts in the mercantile system; the method adopted by him for ascertaining his profit,,; was to value stock at the beginning and close of each year at cost price.
In the accounting year he withdrew some silver bars and shares from the business and settled them in trusts, and in the accounts of the business he valued them at the close of the year at cost price.
According to the majority decision, the assessee was entitled to value the silver bars and shares in question at cost price and he was not bound to credit the business with the market price at the close of the year for ascertaining his assessable profits for the year.
Bhagwati J., however, dissented from this view and held that the assessee 's business was entitled to be credited (1) , 278.
(3) (2) (4) 57 with the market value of the assets withdrawn as on the date it was withdrawn whatever be the method employed by the assessee for the valuation of the stock in trade on hand at the close of the year.
Mr. Sastri placed reliance on the observations made by Bose J., who delivered the judgment for the majority view that " disregarding technicalities it is impossible to get away from the fact that the business was owned and run by the assessee himself.
In such circum stances it would be unreal and artificial to separate the business from its owner and treat them as if they were separate entities trading with each other and then by means of a fictional sale introduce a fictional profit which in truth and in fact is non existent ".
Mr. Sastri also contended that the decision of the Allahabad High Court in Ram Lal Bechairam vs Commissioner of Income tax (1) supported the same view.
On the other hand, the Solicitor General contends that the principle on which Mr. sastri relies can no longer be regarded as inflexible and universal; and according to him, permissible invasion of this principle has been recently recognized by the House of Lords in Sharkey (Inspector of Taxes) vs Wernher (2).
In this case Lady Zia carried on a stud farm, an activity which was admittedly husbandry and taxable under Schedule ' D '; she also carried on a separate activity, racing stables, which gave rise to no liability to tax being a " recreational " enterprise.
Horses were bred at the stud farm for the racing stables.
On the transfer of five horses in the relevant year of assessment from the stud to the stables it was held by the House of Lords (Lord Oaksey dissenting) that " where a person carrying on a trade disposes of part of his stock in trade not by way of sale in the course of trade but for his own use, enjoyment, or recreation, he must bring into his trading account for income tax purposes the market value of that stock in trade at the time of such disposition, and that, accordingly, the amount to be credited to the stud farm accounts on the transfer of the horses was their market value and not the (1) A.I.R. 1946 All. 8.
(2) 8 58 cost of breeding them ".
It would be noticed that this decision proceeds on the fictional or notional assumption that the transfer of the five horses from the stud farm of the assessee to her racing stables was a commercial transaction; and that, according to the Solicitor General, is a clear case where an exception is recognized to the general rule that a person cannot trade with himself.
In his speech, Viscount Simonds observed that " if there are commodities which are the subject of a man 's trade but may also be the subject of his use and enjoyment, I do not know how his account as a trader can properly be made up so as to ascertain his annual profits and gains unless his trading account is credited with a receipt in respect of those goods which he has diverted to his own use and enjoyment ".
Then Viscount Simonds referred to the change in law which made the farmer liable to tax under Scheduled ' instead of under Schedule 'B ' and to section 10 of the Finance Act of 1941 and observed that " these provisions emphasize the artificial dichotomy which the scheme of income tax law in many instances imposes.
Lord Radcliffe, dealt with the question at length.
He cited the proposition stated by Palles C. B. and observed that later decisions have shown that this simple proposition may cover what are to be regarded as two separate questions, whether a man can trade or deal with himself, whether a man can make taxable profit by so doing.
In his opinion, " it must now be said that people can carry on trade or business with themselves, as by way of mutual insurance, but that, if they do, a resulting surplus from the operations is not a profit from a trade for the purposes of income tax, or, put another way, their operations do not for the same purposes constitute a trade from which a profit can result ".
Lord Radcliffe referred to the case of Watson Brothers vs Hornby (1) which explicitly decided that it must be necessary for a proper assessment of trade profits under Case I of Schedule d ' to treat a man who supplies himself in his own trade as trading with himself on ordinary commercial (1) 59 terms and stated that the said decision which was given in 1942 laid down a principle that must continuously affect a great many taxpayers and it was only in 1955 that it was said that the case was wrongly decided.
The learned law Lord also considered the decision in Back (Inspector of Taxes) vs Daniels (1) and referred to the observations of Mr. Justice Rowlatt about the assessees ' admission that " in addition to their liability to income tax under Schedule ' B ' the assessees may be liable to income tax on a sum in the nature of a commission to themselves for selling their own potatoes, in the same way as they sell other people 's potatoes in London on the market ".
The assessees in the case before Rowlatt J. were a firm of wholesale potato merchants who carried on business in London where they sold all the potatoes raised by them on land in Fen District.
The effect of the decision was that Schedule ' B ' assessment on the profits of occupation prevented any assessment under Schedule ' D ' in respect of the profit the firm made when they sold the potatoes as wholesale merchants in London.
The assessees admitted their liability, to pay the tax on the commission in question ; but the admission did not seem, a strange one to Mr. Justice Rowlatt whose only comment was "but that, on the whole, is the limit of their liability ".
In regard to this decision, Lord Radcliffe has remarked that the limit mentioned by Rowlatt J. required the assessees to include in the receipts of their London business a commission from themselves which of course they never paid for selling themselves their own potatoes.
From the decisions examined by him, Lord Radcliffe drew the inference that they afford instances of the disintegration for tax purpose of a profitable business carried on by a taxpayer in two departments.
The respondent 's argument is that having regard to the decision of the House of Lords in the case of Sharkey vs Wernher (2) it would be necessary for a larger Bench of this Court to reconsider the view expressed by the majority decision in the case of Anglo French (1) (2) 60 Textile Co., Ltd. vs Commissioner of Income tax, Madras (1).
It is urged that the minority view expressed by Bhagwati J. appears to be more consistent with the decision of the House of Lords.
Besides, the Solicitor General has argued that though he is prepared to meet on the merits the new point raised by Mr. Sastri for the first time in appeal before us, he would be entitled to contend that, having regard to the special circumstances of this case, Mr. Sastri should not be permitted to raise the said point.
We are inclined to accept this contention raised by the Solicitor General and so we do not propose to decide the interesting point raised by Mr. Sastri.
We have already indicated that the appellant 's contention throughout has been that the relevant entries do not justify the inference that the amounts in question have been received by her during the years in question as income or profit; and this contention naturally raised the short and simple question as to the effect of the said entries made in the books of account which are admittedly kept on the mercantile basis of bookkeeping.
It is true that the confusion introduced by the appellant 's contention was shared b y the income tax authorities and it persisted throughout the present proceedings until they reached this Court.
That is why even the material question framed by the tribunal and answered by the High Court does not properly disclose the real controversy between the parties.
The reference to the deeming provisions of the Act which is presumably implied in the question as framed by the tribunal and answered by the High Court is clearly out of place; but the fact still remains that the appellant never raised the contention that the two entries in the interest.
account cannot in law show profits received by her because the appellant could not trade with herself.
If the appellant wanted to rely upon this principle the point should have been urged at the earlier stage of the proceedings.
Besides, there are some other factors which would introduce complications in case the point raised by Mr. Sastri were to be upheld.
The business con (1) , 61 ducted by the appellant in the shop at Chistian attracted the provisions of section 14(2)(c) of the Act which was then in force; and so no tax was payable by the appellant in respect of the income, profits or gains accruing or arising to her from the said shop unless such income, profits or gains were received or deemed to be received in or brought into British India in the previous year by or on behalf of the appellant.
In other words, though the appellant is a resident in the taxable territories and her income wherever received would be normally taxable, she would be entitled to the benefit of the exception prescribed by the pro visions of section 14 (2)(c).
Nevertheless the appellant 's profits from her shop at Chistian would be relevant for the purpose of determining the rates at which income tax was payable by the appellant.
They would also be relevant in deciding which part of the profits were received or could be deemed to be received within the meaning of section 14(2)(c).
If it is held that the entries in respect of the two items of interest in question do not represent in law any profits received by the appellant, then appropriate changes would have to be made in the appellant 's account books kept at Khurja as well as at Chistian.
The appellant has been keeping accounts on the mercantile basis for all the years; and it is very unlikely that the two entries before us are the only ones which may be affected if it is held that the appellant could not have traded with herself.
It is clear that the profits made by the appellant in her shop at Chistian have been determined all these years on the basis of credit and debit entries by the appellant according to the mercantile system; and so the question as to the amounts remitted by the appellant from Chistian to herself at Khurja would be affected by making necessary adjustments of all relevant entries, and that would mean reopening the whole enquiry into the appellant 's liability to pay the tax.
In this connection we may refer to the fact that for the assessment year 1943 44 the Income Tax Officer had determined the assessee 's income at Chistian at Rs. 74,982.
He had also held that out of the said profits the appellant had remitted Rs. 51,879 to 62 British India; and so, in the assessment, he added this amount as income in British India on remittance basis and, after giving the statutory allowance of Rs. 4,500, took the balance of Rs. 18,603 as income on accrual basis to be considered for rate purposes only.
On this question the ultimate decision was that no amount could be taxed on remittance basis.
In the supplementary assessment proceedings the appellant proved that a sum of Rs. 7,19,660 was sent to Chistian shop and Rs. 4,17,636 was received from the Chistian shop.
That is why, in the result, the entire income in Bahawalpur State was taken on an accrual basis for income tax.
Having regard to the method adopted by the appellant in keeping her books of account, it seems clear that, if the appellant 's present contention is accepted, the decision as to remittances from Chistian to Khurja as well as the decision as to the rates at which the tax were to be levied on the appellant may have to be reopened.
That is why we think, in the special circumstances of this case, we should not, allow Mr. Sastri to raise the point that the appellant cannot trade with herself and so the relevant entries cannot justify the inference that the appellant has received income even though the entries are made in the accounts kept on mercantile basis.
In the result the appeals fail and must be dismissed with costs.
Appeals dismissed.
| The assessee, who was ordinarily resident in British India, carried on business at Khurja and Aligarh in India and at Chistian in the Indian State of Bahawalpur.
He kept a central set of accounts of the business at Khurja, which were maintained on the mercantile system.
Under the said system credit entries are made in respect of amounts due immediately they become legally due and even before they are actually received.
In his account books the income received by the assessee from all sources was shown, and the interest account showed credit entries of amounts received as interest on capital invested in the shop at Chistian.
The assessee conceded that as creditor he had the right to enforce the payment of, interest in British India and that liability of the Chistian shop had been extinguished to the 46 extent of the interest paid by it to the head office.
The Income Tax Authorities included these amounts in the assessee 's taxable income in India and levied tax on them.
The assessee contended that the entries in respect of the receipt of interest were merely book entries and that the authorities had wrongly treated these amounts as having been actually received.
Held, that the relevant entries in the books of account did justify the inference that the assessee had actually received the amounts by way of interest.
Where an assessee Keeps accounts according to the mercantile method of book keeping the effect of making a credit entry in the interest account would be to treat that amount as income or profits received by the assessee or treated by him as received for the purposes of the tax.
Commissioner of Income tax vs A.T.K.P.L.S.P. Subramaniam Chettiar, Mad. 765, approved.
Gresham Life Assurance Society Ltd. vs Bishop, (1902) A.C. 287; Keshav Mills Ltd. vs Commissioner of Income tax, Bombay, ; ; Sunder Das vs The Collector of Gujrat, Lah. 349, referred to.
The assessee sought to raise a new point that it was a rule of universal application that no person could trade with himself and that accordingly the interest alleged to have been received from his own shop at Chistian could not amount to receipt of any income by him, and referred to: Dublin Corporation vs M 'Adam, ; Ostime vs Pontypridd and Rhondda joint Water Board, (1944) 28 Tax Cas. 261 ; Caylisle and Silloth Golf Club vs Smith, ; New York Life Insurance Company vs Styles, ; ; Sir Kikabhai Premchand vs Commissioner of Income tax (Central) Bombay, and Ram Lal Bechairam vs Commissioner of Income tax, A.I.R. (1946) All.
The respondent contended that the principle was not inflexible or universal and that the new point having been raised for the first time in appeal ought not to be permitted to be raised.
Sharkey vs Wernher, (1956) A. C. 58, referred to.
Held that, the new point could not be allowed to be raised as that would mean the re opening of the whole enquiry into the question as to the remittances from Chistian to Khurja as well as the rates at which the tax were to be levied on the assessee.
If the assessee wanted to rely upon this principle the point ought to have been urged at the earlier stage of the proceedings.
|
Summarize this legal judgement text concisely | Appeal No. 222 of 1956.
40 Appeal by special leave from the judgment and decree dated December 8, 1953, of the former Nagpur High Court in Misc.
Civil Case No. 55 of 1950.
C. K. Daphtary, Solicitor General of India, K. K. Rajagopala Sastri, R. H. Dhebar and D. Gupta, for the appellant.
The respondent did not appear.
October 3.
The Judgment of the Court was delivered by SARKAR J.
This is an appeal brought by special leave against the judgment of the High Court at Nagpur, delivered on a reference under section 66(1) of the Income tax Act.
The appeal is by the Commissioner of Income tax, Madhya Pradesh and Bhopal.
The respondents are the assessees Vyas & Dotiwala.
The respondents have not appeared in this appeal.
We shall presently set out the facts but before we do that, we wish to state that the assessment years concerned were 1945 46 and 1946 47.
Though there were two separate assessment orders in respect of these years, ultimately when they came up before the Appellate Tribunal they were consolidated into one appeal.
The appeal before us likewise concerns both these assessment years.
It appears that in or about July 1943 when considerable difficulty was being felt about cloth, the Deputy Commissioner, Amraoti, evolved a scheme to solve that difficulty.
Under that scheme Kisanlal Vyas and a firm called Edulji Framji Dotiwala who have in these proceedings been referred to as Dotiwala, undertook to finance the scheme without charging any interest or profit and were appointed as financiers and also distributors of a variety of cloth called standard cloth for the town and camp of Amraoti and certain areas in the interior It is not necessary to set out the various details of the scheme and it will be sufficient to state that Vyas and Dotiwala, who as an association of persons are the assessees concerned, agreed to open an account in the Imperial Bank of India to be operated by them out of which the purchases 41 of the cloth were to be financed.
The orders for the cloth were to be placed by the Government with the mills and on the arrival of a consignment of cloth, the assessees were to pay to the Deputy Commissioner, Amraoti, the value of the consignment together with 6 1/4 per cent.
of the ex mill price.
The consignment was thereupon to be opened and its contents checked by the assessees and the officials and delivered to the assessees on their granting a receipt for the same.
The Deputy Commissioner would pay 4 1/2 per cent.
of the ex mill price to the assessees out of the amount paid by the latter as aforesaid for contingent expenses of working the scheme.
The scheme provided that the contingent expenses were not to exceed 3 percent.
of the ex mill price.
The cloth coming to the hands of the assessees was to be distributed in Amraoti town and camp through a shop to be opened by the assessees and in the interiors of the area concerned through Tehsildars with Patils under them.
The substance of the arrangement of distribution appears to have been that it would be entirely under the control of the Deputy Commissioner who made himself responsible to the assessees for the sale proceeds receivable from the Tehsildars.
The Deputy Commissioner was to decide the price for which the cloth was to be sold to the consumers and also the persons entitled to buy the cloth.
Out of the sale proceeds the Deputy Commissioner was to pay to the assessees whatever they had advanced on account of the cloth.
The most important provision in this scheme is para.
14 which is set out below.
Profits resulting from the scheme shall be utilised for such charitable purposes as may be decided on by the Deputy Commissioner in consultation with the advisory committee appointed to supervise the scheme.
It appears that the books of the assessees showed Rs. 34,737/ for the assessment year 1945 46 and Rs. 17,682/ for the assessment year 1946 47 as profits earned in working the scheme.
The Income tax Officer assessed the assessees to tax on the profits so earned.
6 42 The assessment orders made by this officer would appear to show that the only point urged by the assessees before him against the assessment was that the income was exempt from taxation under section 4(3)(i a) of the Indian Income tax Act, 1922.
The officer rejected this contention.
The assessees went up in appeal to the Appellate Assistant Commissioner, before whom the same contention appears to have been repeated.
The Appellate Commissioner confirmed the order of the Income tax Officer.
The assessees then appealed to the Appellate Tribunal.
The Tribunal held that the assessees had objected to the assessment before the Income tax Officer on two grounds, namely, that the income was Dot the income of the assessees and that the income was exempt from taxation under section 4(3)(i a), as appeared from their letter dated January 22, 1947.
One of these alone had been dealt with by that officer, as appears from his order earlier referred to.
The Appellate Tribunal agreed with the conten tion of the assessees that they were not liable to be taxed on the profits because these did not form their income.
The Tribunal was of the view that the scheme was the scheme of the Deputy Commissioner and completely under his control; that the assessees were merely the financiers and also managers under the Deputy Commissioner to carry out the scheme and that the assessees only helped to work the scheme.
The Tribunal held that the profits that may have resulted from such working were not therefore theirs nor represented their income and the assessees could not be assessed to income tax thereon.
In this view of the matter the Tribunal set aside the orders of assessment.
Thereafter, on the application of the revenue authorities the Tribunal referred the following question to the High Court under section 66(1) of the Act: Whether on the facts of this case any income accrued to Messrs. Vyas and Dotiwala as the result of their associating themselves as financiers in the scheme for the distribution of standard cloth; and, if so whether such income was assessable in their hands.
43 On that reference the High Court held that under the charging section in the Indian Income tax Act, 1922, namely, section 4, it was necessary for the revenue authorities to prove that the assessees received or should be deemed to have received income or profit from the scheme during the relevant period.
It held that the asseess had not actually received any such income and further that the expression " deemed to be received " in that section only meant deemed by the provision of the Act to be received, and no such provisions of the Act had been relied upon on behalf of the revenue authorities.
In this view of the matter the High Court answered the question framed, in the negative.
The learned Solicitor General contends that the High Court failed to appreciate the real question.
He says that the question was not whether income was received or deemed to be received but whether income had accrued and the point for decision was, as appeared from the judgment of the Tribunal, whether the profits formed the income of the assesses.
We agree with this criticism of the judgment of the High Court.
On the point that arises from the question framed, we think that the Tribunal went wrong.
It is not disputed that the assessees worked the scheme and such working produced the profits as found in the assessment orders.
The Tribunal thought that since the scheme was completely under the control of the Deputy Commissioner, the assessees could not be said to have carried on business by working the scheme.
We are unable to see that the fact of the control of the Deputy Commissioner can prevent the working of the scheme by the assessees from being a business carried on by them.
In our view, it only comes to this that the assessees had agreed to do business in a certain manner.
The fact that the Deputy Commissioner guaranteed the payment by the Tehsildars of the price due from them, to the assessees would indicate that the assessees were treated as the owners of the business.
It would indicate that if there had been no such guarantee, the loss due to the failure of the Tehsildars to pay their dues would have to be borne 44 by the assessees.
Again the claim, may be in the alternative, by the assessees for exemption under section 4(3)(i a) would not arise unless the assessees were carrying on a business.
Lastly, para.
14 of the scheme which we, have earlier set out, clearly contemplates profits resulting from the scheme.
The provision that the profits would be devoted to charity to be decided by the Deputy Commissioner, would indicate that without it the profits would have been utilisable by the assessees.
The profits belonged to the assessees and hence the necessity for this agreement so that the assessees might be made to spend them on charity.
If, as the Tribunal thought, the profits were of the Government, there was no necessity for the Government providing for the profits being expended on charity, for the Government if minded to do so, could have done it without such a provision.
The fact remains that the working of the scheme produced profits and apart from para.
14 such profits undoubtedly belonged to the assessees.
If they chose to agree by para.
14 to devote the profits to charity, that was their business; the profits made by them would not change their character and cease to be the assessees ' income because they agreed to devote their income to charity.
We might also say that there is nothing in the scheme which shows that the assessees had undertaken not to make any profits on the distribution work under the scheme; they had only agreed to finance the scheme without receiving any interest or profit.
Furthermore, since the assessees actually made the profits, they are liable to pay tax thereon whether they agreed not to make any profits or not.
We wish also to point out that it is not the assessees ' case that they have been made to pay out the profits for any charity.
For these reasons we think that the profits were the profits of the assessees and they are liable to pay tax on them.
With regard to the assessees ' claim for exemption under section 4(3)(i a), they are clearly not entitled to any.
That claim of the assessees has not been accepted by any of the Courts below.
Section 4(3)(i a) applies to income derived from business carried on on behalf of a religious and charitable institution when the income 45 is applied solely to the purpose of the institution and the business is carried on in the manner provided.
It is enough to say that the scheme, considered as a business, was not carried on on behalf of any religious or charitable institution.
Once it is held that the assessees made the profit, how they use it would not matter.
In the result, we would answer both parts of the question framed, in the affirmative.
We hold that the profits were the income which accrued to the assessees and such income is assessable to income tax and is not exempt from taxation under section 4(3)(i a).
The appeal is allowed with costs here and below.
Appeal allowed.
| The Deputy Commissioner of Amraoti, evolved a scheme for the distribution of standard cloth.
The assessees agreed to finance the scheme without charging any interest and were appointed financiers and distributors.
The orders for the cloth were placed by the Government with the mills and the cloth was delivered to the assessees upon their paying the value of the cloth together with 6 1/4% of the ex mill price.
The Deputy Commissioner paid 4 1/2% of the ex mill price to the asses sees for contingent expenses of working the scheme.
The assessees distributed the cloth at prices fixed by the Deputy Commissioner through the Tehsildars and the Deputy Commissioner was responsible to the assessees for the sale proceeds receivable from the Tehsildars.
Out of the sale proceeds the Deputy Commissioner paid to the assessees whatever they had advanced on the cloth.
The profits from the scheme were agreed to be utilised for such charitable purposes as might be decided by the Deputy Commissioner.
The assessees contended that the income was not their income and that it was exempt from taxation under section 4(3) (i a) of the Income tax Act.
Held, that the profits were income which accrued to the assessees.
The assessees worked the scheme and such working produced the profits.
The fact of the control of the Deputy Commissioner could not prevent the working of the scheme by the assessees from being a business carried on by them.
The provisions in the agreement that the Deputy Commissioner guaranteed the payment by the Tehsildars of the price due from them, and that the profits would be devoted to charity decided by the Deputy Commissioner and the claim for exemption under section 4(3) (i a) all indicated that the assessees were the owners of the business.
Held further, that the profits were not exempt from taxation under section 4(3) (i a), as the business was not carried on behalf of any religious or charitable institution.
|
Summarize this legal judgement text concisely | iminal Appeal No. 103 of 1956.
H. J. Umrigar and R. H. Dhebar, for the appellant.
The sole question arising for determination is whether on the facts and circumstances of the case the High Court was correct in holding that the act of the respondent complained of constituted an offence under section 228 of the Indian Penal Code, and the jurisdiction of the High Court was, therefore, ousted by reason of the provision of section 3(2) of the .
The High Court in coming to this conclusion appears to have relied on two decisions of the Supreme Court [1952] S.C.R. 425 and The facts in the two Supreme Court cases were quite different and they do not, in any way justify the view taken by the High Court.
It will be my submission that the allegations made in the so called transfer application as also the affidavit are of such a serious nature that they are not a mere personal insult to the Magistrate, but go far beyond; they scandalise the Court in such a manner as to create distrust in the minds of the public, and pollute the stream of justice, and in such cases the jurisdiction of the High Court is not ousted (Reads out portions of the transfer application and the affidavit in support).
From a perusal of the extracts which have been read, it will be seen that the aspersions made against the Magistrate are of a very serious nature alleging criminal conspiracy, and also that he had taken a bribe of Rs. 500 from the opposite side.
So far as the offence under section 228 of the Indian Penal Code is concerned, the first essential ingredient is that there must be an " intention " to insult.
In the affidavit filed in the High Court in reply to the 1370 show cause notice the respondent had stated that there was no intention to insult or show disrespect to the Magistrate.
[Imam J. I cannot agree with that, the language used in the application and affidavit is such that intention to insult was clearly there.] That may be true, but there are several earlier decisions of the Allahabad High Court which have been referred to in the case relied upon by the High Court Narotam Das vs The Emperor, A.I.R 1943 All.
97, wherein it was held that where scandalous allegations were incorporated in a transfer application, there was not necessarily an intention to insult, as the primary object was to seek a transfer and not to insult the Court.
So far as the decisions are concerned, they support my contention that when scandalous allegations are made against a Magistrate in a transfer application they would not necessarily constitute an offence under section 228 of the Indian Penal Code and could be punished by the High Court.
In I.L.R. 1941 Nagpur 304, the Judge, who was seized of the case, made a complaint to the High Court about a letter sent to him by one of the parties, and it was there held that the sender of the letter could be punished for Contempt of Court by the High Court.
It is true that there is no discussion about.
228 of the Indian Penal Code but in the course of the judgment the case of Emperor vs Jagnath Prasad Swadhiry, I.L.R. 1938 All.
548, was mentioned.
In the Allahabad case a person during the pendency of a suit sent communications by post to the Judge containing scandalous allegations.
It appears that it was urged that section 228 of the Indian Penal Code would bar the jurisdiction of the High Court under section 3(2) of the Contempt of Courts Act, 1926, but this contention was repelled and the High Court stated that its jurisdiction to punish for contempt was not ousted.
[Reference was also made to I.L.R. 12 Patna I and I.L.R. 12 Patna 172].
I submit that where the allegations made go beyond 1371 mere personal insult and tend to bring the whole administration of justice, into disrepute, then the juris diction of the High Court would not be ousted by section 3(2) of the Act.
In a case where there is only an insult to the Judge by using vulgar abuse such as " rogue or rascal " and this abuse was made " ex facie curiae ", then it may be said that the jurisdiction of the High Court is ousted as the offence falls within the purview of section 228 of the Indian Penal Code.
[Das J. Also if the abuse relates to the private life of the Judge, such as, calling him a drunkard or imputing some immorality to him, unconnected with his judicial duties.] I agree.
In the instant case the Magistrate must have been fully conscious of the powers possessed by him under section 228 of the Indian Penal Code as also the relevant provisions in the Criminal Procedure Code which permit him to punish for Contempt of Court, yet he presumably must have felt that the aspersions made in the present case were so grave as to transcend mere personal insult and as such it was a fit case to be referred to the High Court for taking necessary action.
In conclusion, it is submitted that the view taken by the High Court is much too narrow.
and cannot be supported either in principle or by the, authorities cited.
J. B. Dadachanji and section N. Andley, for the respondent.
The view taken by the High Court is correct and is in accordance with the judgments of the Supreme Court in the cases reported in [1952] S.C.R. and [1953] S.C.R.
If the act complained of intentionally offers a personal insult to the Magistrate concerned, it may tend to undermine the administration of justice thereby, but it will nevertheless amount to an offence under section 228 of the Indian Penal Code and as such the jurisdiction of the High Court will be ousted by section 3(2) of the Act.
It is unsound to say that there are two kinds of contempt, and the lesser kind of contempt will come under section 228 of the Indian Penal Code and the grosser kind will not come under section 228 ; every insult to a Court, whatever its nature, is contempt and punishable under section 228 of the Indian Penal Code.
1372 [Kapur J.
Every insult to a Judge will not necessarily be a contempt.
A libel attacking the integrity of a Judge may not, in the circumstances of a particular case, amount to a contempt at all, although it may be the subject matter of a libel proceeding.] [Das J.
It appears that there is a further difficulty in your way, that is, whether the Magistrate was sitting in any stage of a judicial proceeding when the application and the affidavit were filed; if he was not, then one of the essential ingredients of section 228 of the Indian Penal Code was not satisfied.] The High Court has assumed that the Magistrate was sitting as a Court at that time and this was also borne out by the facts stated in the petition for special leave to appeal filed by the appellant wherein it is stated " the application having been presented during the sitting of the Court was clearly calculated to lower the dignity of the Court in the public mind ".
Section 480 of the Code of Criminal Procedure specifically mentions section 228 of the Indian Penal Code and treats it as a form of contempt, therefore, it will be an offence of contempt punishable under the Indian Penal Code and as such the jurisdiction of the High Court would be ousted under section 3(2) of the Act.
I submit that the view taken by the High Court is the correct view and is supported by the two decisions of the Supreme Court as also the judgment of the Bombay High Court in Bom.
Umrigar in reply.
During the course of discussion, doubts have arisen whether there was any intention to insult, or whether what was said was an insult, or whether the insult was offered in any stage of a judicial proceeding.
If any one of these three essentials is lacking, then, obviously, there is no offence under section 228 of the Indian Penal Code.
Where there is so much doubt as to whether an offence under section 228 of the Indian Penal Code has been committed or not, and there is no doubt that " prima facie " a Contempt of Court apart from the provisions of section 228 has been committed, it is wrong to say that the jurisdiction of the High Court is ousted.
1373 I submit that the case relied upon by the High Court, Narotam Das vs Emperor, A. 1.
R. 1943 All. 97, correctly lays down the law so far as the question of intention " is concerned.
September 24.
The Judgment of the Court was delivered by section K. DAS, J.
This is an appeal by special leave from the judgment and order of the then Madhya Bharat High Court, dated February 9, 1955, in Criminal Miscellaneous Application No. 2 of 1954.
Originally, the appeal was filed on behalf of the State of Madhya Bharat, now substituted by the State of Madhya Pradesh.
The appeal raises an important question with regard to the interpretation of section 3(2) of the (XXXII of 1952), hereinafter referred to as the Act, which repealed the earlier Contempt of Courts Act, 1926 (XII of 1926), as also the Indore Contempt of Courts Act (V of 1930) which was earlier in force in the State of Madhya Bharat.
The facts so far as they are relevant to this appeal are these.
One Ganga Ram, stated to be the landlord of the respondent Revashankar, instituted a suit, which was numbered as 1383 of 1952 in the court of the Additional City Civil Judge, Indore, for ejectment and arrears of rent against Revashankar.
It was stated that the suit was filed in the name of Ganga Ram and his wife Chandra Mukhi Bai.
It was further alleged that one Mr. Uma Shankar Chaturvedi, a lawyer acting on behalf of Ganga Ram, advised the latter to sign the name of his wife Chandra Mukhi Bai though Chandra Mukhi Bai herself did not sign the plaint or the vakalatnama.
In this suit Chandra Mukhi Bai filed an application for permission to prosecute her husband for forgery.
Another application was filed by certain other persons said to be other tenants of Ganga Ram in which some allegations were made against Revashankar.
On June 29, 1953, Revashankar filed a complaint against five persons for an alleged offence under section 500, Indian Penal Code.
This complaint was verified on July 13, 1953, and was registered as Criminal Case No. 637 of 1953 in the court of one 1374 Mr. N. K. Acharya, Additional District Magistrate, Indore.
In that case one Mr. Kulkarni appeared on behalf of the complainant Revashankar.
The accused persons appeared on August 8, 1953, through Messrs. Mohan Singh and Uma Shankar Chaturvedi.
An objection was raised on behalf of the accused persons to the appearance of Mr. Kulkarni as the latter 's name appeared in the list of witnesses.
This was followed by a spate of applications and counter applications and on October 12, 1953, the learned Additional District Magistrate passed an order to the effect that the copies of the applications as well as of the affidavits filed by both parties should be sent to the District Judge for necessary action against the lawyers concerned.
In the meantime a criminal case was started against Revashankar in the court of the Additional City Magistrate, Circle No. 2, for an alleged offence under section 497, Indian Penal Code.
The case was started on the complaint of Ganga Ram.
That case was numbered as 644 of 1953.
We then come to the crucial date, namely, December 17, 1953.
On that date Revashankar filed an application in the court of the Additional District Magistrate who was in seizin of Criminal Case No. 637 of 1953.
The application purported to be one under section 528, Code of Criminal Procedure.
This application contained some serious aspersions against the Magistrate, Mr. N. K. Acharya.
The aspersions were summarised by the learned Judges of the High Court under the following four categories.
The first aspersion was that from the order dated October 12, 1953 it appeared that Mr. N. K. Acharya wanted to favour Mr. Uma Shankar Chaturvedi.
The second aspersion was that from certain opinions expressed by the Magistrate, Revashankar asserted that he was sure that he would not get impartial and legal justice from the Magistrate.
The third aspersion was of a more serious character and it was that the Magistrate had a hand in a conspiracy hatched by Messrs. Mohan Singh and Uma Shankar Chaturvedi regarding certain ornaments of Chandra Mukhi Bai with the object of involving, Revashankar and his brother Sushil Kumar in a false case of theft of ornaments.
The fourth aspersion was that Mr. Uma 1375 Shankar Chaturvedi had declared that he had paid Rs. 500 to the Magistrate through Ganga Ram.
These aspersions were later repeated in an affidavit on December 21, 1953.
On January 11, 1954, the learned Magistrate reported the aforesaid facts to the Registrar of the Madhya Bharat High Court, and prayed for necessary action against Revashankar for contempt of court.
On this report the High Court directed the issue of notice to Revashankar to show cause why action should not be taken against him under the and Criminal Miscellaneous Application No. 2 of 1954 was accordingly started against Revashankar.
On March 3, 1954, Revashankar showed cause.
The case was then heard by a Division Bench consisting of V. R. Newaskar and section M. Samvatsar, JJ.
and by an order dated February 9, 1955, the learned Judges held that by reason of the provisions in section 3(2) of the Act the jurisdiction of the High Court was ousted inasmuch as the act complained of constituted an offence under section 228 of the Indian Penal Code.
The question for consideration in the present appeal is if the aforesaid view of the High Court is correct.
Mr. H. J. Umrigar, who has appeared on behalf of the appellant, has very strongly submitted before us that the High Court has erred in holding that the act of the respondent complained of constituted an offence under section 228, Indian Penal Code, and the jurisdiction of the High Court was, therefore, ousted by reason of the provisions in section 3(2) of the Act.
It is necessary to read first section :3(2) of the Act.
We may state here that the corresponding section in the earlier Contempt of Courts Act, 1926 was section 2(3) and in the judgment under consideration there is some confusion as to the correct number of the sub section.
Section 3(2) of the Act is in these terms : " No High Court shall take cognizance of a contempt alleged to have been committed in respect of a Court subordinate to it where such contempt is an offence punishable under the Indian Penal Code (Act XLV of 1860).
" 175 1376 The sub section was considered in two decisions of this Court, Bathina Ramakrishna Reddy vs The State of Madras (1) and Brahma Prakash Sharma vs The State of Uttar Pradesh (2).
In the earlier case of Ramakrishna Reddy (1) the appellant was the publisher and managing editor of a Telugu Weekly known as " Praja Rajyam ".
In an issue of the said paper dated February 10, 1949, an article appeared which contained defamatory statements about the stationary sub Magistrate, Kovvur, and the point for consideration was if the jurisdiction of the High Court to take cognisance of such a case was expressly barred under section 2(3) of the earlier Contempt of Courts Act, when the allegations made in the article in question constituted an offence under section 499, Indian Penal Code.
On behalf of the appellant it was argued that what the subsection meant was that if the act by which the party was alleged to have committed contempt of a s subordinate court constituted offence of any description whatsoever punishable under the Indian Penal Code, the High Court was precluded from taking cognizance of it.
This argument was repelled and this Court said (at page 429): " In our opinion, the sub section referred to above excludes the jurisdiction of High Court only in cases where the acts alleged to constitute contempt of a subordinate court are punishable as contempt under specific provisions of the Indian Penal Code but not where these acts merely amount to offences of other description for which punishment has been provided for in the Indian Penal Code.
This would be clear from the language of the sub section which uses the words " where such contempt is an offence " and does not say " where the act alleged to constitute such contempt is an offence ".
On an examination of the decisions of several High Courts in India it was laid down that the High Court had the right to protect subordinate courts against contempt but subject to this restriction, that cases of contempt which have already been provided for in the Indian Penal Code should not be taken cognizance of (1) ; (2) 1377 by the High Court.
This, it was stated, was the principle underlying section 2(3) of the Contempt of Courts Act, 1926.
This Court then observed that it was not necessary to determine exhaustively what were the cases of contempt which had been already provided for in the Indian Penal Code; it was pointed out, however, that some light was thrown on the matter by the provision of section 480 of the Code of Criminal Procedure which empowers any civil, criminal or revenue court to punish summarily a person who is found guilty of committing any offence under sections 175, 178, 179, 180 or section 228 of the Indian Penal Code in the view or presence of the court.
The later decision of Brahma Prakash Sharma (1) explained the true object of contempt proceedings.
Mukherjea J. who delivered the judgment of the Court said (at page 1 176) : " It would be only repeating what has been said so often by various Judges that the object of contempt proceedings is not to afford protection to Judges personally from imputations to which they may be exposed as individuals; it is intended to be a protection to the public whose interests would be very much affected if by the act or conduct of any party, the authority of the court is lowered and the sense of confidence which people have in the administration of justice by it is weakened ".
It was also pointed out that there were innumerable ways by which attempts could be made to hinder or obstruct the due administration of justice in courts and one type of such interference was found in cases where there was an act which amounted to " scandalising the court itself ": this scandalising might manifest itself in various ways but in substance it was an attack on individual Judges or the court as a whole with or without reference to particular cases, causing unwarranted and defamatory aspersions upon the character and ability of the Judges.
Such conduct is punished as contempt for the reason that it tends to create distrust in the popular mind and impair the confidence of the people in the courts which are of prime importance to the litigants in the protection of their rights and liberties.
(1) 1378 Bearing the aforesaid principles in mind, let us now examine the case under consideration.
The High Court expressed the view that the act of the respondent complained of merely amounted to an offence under section 228, Indian Penal Code.
Nevaskar J. said: " It appears to me that the application, though it was stated to be an application for transfer, was intended to offend and insult the Magistrate.
A man 's intention can be judged by the nature of the act he commits.
The application directly and in face attributes partiality and corruption to the Magistrate.
It was not an application made bona fide to a court having jurisdiction to transfer the case from that Court to some other Court.
It was an application thrown in the face of the Magistrate himself.
The action is no better than telling the Magistrate in face that he was partial and corrupt.
The allegations in the application no doubt are insulting to the Magistrate and he felt them to be so and at the time the application was submitted on 17th December, 1953, when he was sitting as a Court and dealing with the case of the opponent." " Thus, since I hold that the opponent intended to offer insult to the Magistrate concerned there is no doubt that the act would fall within the purview of section 228, Indian Penal Code, and this Court will be precluded from taking action for the contempt committed before the Court of the Magistrate by reason of section 2(3) of the Contempt of Courts Act ".
The other learned Judge also expressed the same view in the following words: " The subordinate Courts can sufficiently vindicate their dignity by proceeding against the offenders under the provisions of criminal law in such cases.
Legislature has deemed it proper to exclude such cases from the jurisdiction of the High Court under section 2(3) of the Contempt of Courts Act.
This, however, does not mean that High Court 's jurisdiction is excluded even in cases where the act complained of, which is alleged to constitute contempt, is otherwise an offence under the Indian Penal Code." "The question to be considered in this case is 1379 whether the act complained of is punishable as contempt under any one of the specific provisions of the Indian Penal Code.
In other words whether it falls under any one of the sections 175, 178, 179, 180 or 228 of the Indian Penal Code." " If the act complained of constitutes an offence under any of these sections, it can be dealt with by the subordinate Court itself under section 480 of the Criminal Procedure Code and the High Court will have no power to take cognizance of it under the Contempt of Courts Act.
" We are of the opinion that the learned Judges were wrong in their view that prima facie the act complained of amounted to an offence under section 228, Indian Penal Code, and no more.
We are advisedly saying prima facie, because the High Court did not go into the merits and we have no desire to make any final pronouncement at this stage on the merits of the case.
Section 228, Indian Penal Code, is in these terms: " Whoever intentionally offers any insult, or causes any interruption to any public servant, while such public servant is sitting in any stage of a judicial proceeding, shall be punished with simple imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both." The essential ingredients of the offence are (1) intention, (2) insult or interruption to a public servant and (3) the public servant insulted or interrupted must be sitting in any stage of a judicial proceeding.
In the present case there is an initial difficulty which has been pointed out to us.
The respondent was sought to be proceeded against by reason of the aspersions he made in the application dated December 17, 1953, and the affidavit dated December 21, 1953.
It is not very clear from the record if the learned Magistrate was sitting in any stage of a judicial proceeding when the application and the affidavit were filed.
The High Court no doubt says that the Magistrate was sitting as a court at the time; but there is no reference to the particular work, judicial or otherwise, which the 1380 Magistrate was doing at the time.
The practice as to the filing of applications and affidavits varies from court to court and in some courts applications and affidavits are filed within stated hours before the reader or the bench clerk; they are so filed even when the Judge or Magistrate is in chamber or preoccupied with some administrative duties.
So far as the present case is concerned, it is not at all clear, from the record as placed before us, as to what was the judicial work which the learned Magistrate was doing when the application and affidavit were filed.
If he was not doing any judicial work at the relevant time, then the third essential ingredient mentioned above was not fulfilled and the act complained of would not amount to an offence under section 228, Indian Penal Code.
We are not, however, basing our decision on the mere absence of materials to show what particular judicial work the learned Magistrate was doing when the application dated December 17, 1953, and the affidavit dated December 21, 1953, were filed.
If that were the only infirmity, the proper order would be to ask for a finding on the question.
Our decision is based on a more fundamental ground.
Learned counsel for the parties have taken us through the applica tion dated December 17, 1953, and the affidavit dated December 21, 1953.
The aspersions made therein prima facie showed that they were much more than a mere insult to the learned Magistrate ; in effect, they scandalised the Court in such a way as to create distrust in the popular mind and impair the confidence of people in Courts.
Two of the aspersions made, taken at their face value, were (1) that the learned Magistrate had joined in a conspiracy to implicate the respondent in a false case of theft.
In the affidavit it was stated that the learned Magistrate had sent for the respondent and his brother and had asked them to make a false report to the police that the ornaments of Chandra Mukhi Bai had been stolen.
The learned Magistrate characterised the aspersion as totally false and said that he neither knew the respondent nor his brother and had no acquaintance with them.
Another aspersion was that the Magistrate had taken a bribe 1381 of Rs. 500.
This aspersion was also stoutly denied.
We must make it clear here that at this stage we are expressing no opinion on merits, nor on the correctness or otherwise of the aspersions made.
All that we are saying is that the aspersions taken at their face value amounted to what is called scandalising the court itself, manifesting itself in such an attack on the Magistrate as tended to create distrust in the popular mind and impair the confidence of the people in the courts.
We are aware that confidence in courts cannot be created by stifling criticism, but there are criticisms and criticisms.
" The path of criticism ", said Lord Atkin in Ambard vs Attorney General for Trinidad and Tobago (1), " is a public way: The wrongheaded are permitted to err therein: provided that members of the public abstain from imputing improper motives to those taking part in the administration of justice, and are genuinely exercising a right of criticism, and not acting in malice or attempting to impair the administration of justice, they are immune ".
If, therefore, the respondent had merely criticised the Magistrate, no notice need have been taken of such criticism as contempt of court whatever action it might have been open to the Magistrate to take as an aggrieved individual; but if the respondent acted in malice and attempted to impair the administration of justice, the offence committed would be something more than an offence under section 228, Indian Penal Code.
Learned counsel for the respondent has contended before us that as soon as there is an element of insult in the act complained of, section 228, Indian Penal Code, is attracted and the jurisdiction of the High Court to take cognizance of the contempt is ousted.
We are unable to accept this contention as correct.
Section 228 deals with an intentional insult to a public servant in certain circumstances.
The punishment for the offence is simple imprisonment for a term which may extend to six months or with fine which may extend to one thousand rupees or with both.
Our attention has been drawn to the circumstance that under section 4 of (1) [1936] A. C.322, 335.
1382 the Act the sentence for contempt of court is more or less the same, namely, simple imprisonment for a term which may extend to six months.
The fine is a little more and may extend to two thousand rupees.
Section 4 of the Act contains a proviso that the accused person may be discharged or the punishment awarded may be remitted on apology being made to the satisfaction of the court.
We do not, however, think that a similarity of the sentence in the two sections referred to above is a real test.
The true test is: is the act complained of an offence under section 228, Indian Penal Code, or is it something more than that ? If in its true nature and effect, the act complained of is really " scandalising the court " rather than a mere insult, then it is clear that on the ratio of our decision in Ramakrishna Reddy 's case(1) the jurisdiction of the High Court is not ousted by reason of the provision in section 3(2) of the Act.
Mr. Umrigar has urged a further point in this connection and has contended that for an offence under section 228, Indian Penal Code, the insult must be an intentional insult.
The first essential requirement of the offence, according to him, is that the insult must be offered intentionally.
He has pointed out that the application which the respondent filed purported to be an application under section 528, Criminal Procedure Code, and though it is difficult to see how that section applied in the present case, the intention of the respondent was not to insult the Magistrate, but merely to state the 'Circumstances in which the respondent was praying for a transfer of the case.
Mr. Umrigar has pointed out that in the reply which the repondent gave to the notice issued from the High Court, he said that he had no intention to insult or show disrespect to the learned Magistrate.
Mr. Umrigar has further submitted that the decision in Narotam Das vs Emperor (2) (on which the learned Judges of the High Court relied) where in somewhat similiar circumstances it was held that section 228, Indian Penal Code, applied, does not correctly lay down the law.
In that case Yorke J. observed that it would be a matter for (1) ; (2) A.I.R. 1943 All. 97.
1383 consideration in each individual case how, insulting the expressions used were and whether there was any necessity for the applicant to make use of those expressions in the application which he was actually making to the court.
While we agree that the question of intention must depend on the facts and circumstances of each case, we are unable to accept as correct the other tests laid down by the learned Judge as finally determinative of the question of intention.
In two earlier decisions of the same High Court, in Queen Empress vs Abdullah Khan(1) and Emperor vs Murli Dhar (2), it was held that where an accused person made an application for transfer of the case pending against him and inserted in such application assertions of a defamatory nature concerning the Magistrate who was trying the case, there was no intention on the part of the applicant to insult the court, but the intention was merely to procure a transfer of the case.
We do not think that any hard and fast rule can be laid down with regard to this matter.
Whether there is an intention to offer insult to the Magistrate trying the case or not must depend on the facts and circumstances of each case and we do not consider it necessary, nor advisable, to lay down any inflexible rule thereto.
Taking the aspersions made by the respondent in the application dated December 17, 1953, and the affidavit dated December 21, 1953, at their face value, we have already expressed the view that they amounted to something more than a mere intentional, personal insult to the Magistrate; they scandalised the court itself and impaired the administration of justice.
In that view of the matter section 3(2) of the Act did not stand in the way and the learned Judges of the High Court were wrong in their view that the jurisdiction of the High Court was ousted.
We accordingly allow the appeal and set aside the order of the High Court dated February 9, 1955.
In our view, the High Court had jurisdiction to take cognizance of the act complained of and the case must (1) 176 (2) (1916) 38 All.
1384 now be decided by the High Court on merits in accordance with law.
It is only necessary to add that the act complained of was committed as far back as 1953 and it is desirable that the case should be dealt with as expeditiously as possible.
Appeal allowed.
| The respondent, who had filed a complaint in respect of an alleged offence under section 500 of the Indian Penal Code in the Court of the Additional District Magistrate of Indore, made a number of aspersions against the Magistrate in an application I74 1368 made to him under section 528 of the Code of Criminal Procedure, two of which were of a serious character.
It was alleged that the Magistrate was a party to a conspiracy with certain others the object of which was two implicate the complainant in a false case of theft and that a lawyer appearing for the accused persons, to whom the Magistrate was favourably inclined, had declared that he had paid a sum of Rs. 500 to the Magistrate.
Those allegations were later on repeated in an affidavit.
The Magistrate reported the matter to the Registrar of the High Court for necessary action.
The High Court called upon the respondent to show cause why he should not be proceeded against in contempt under the .
The judges of the Division Bench who heard the matter, without going into the merits of the case, held that, Prima facie, the offence was one of intentional insult under section 228 of the lndian Penal Code and, consequently, the jurisdiction of the High Court was ousted under section 3(2) Of the .
Held, that the High Court had taken an erroneous view of the matter and its order must be set aside.
The mere existence of an element of insult in the alleged act of contempt was not conclusive as to the applicability of section 228 Of the Indian Penal Code so as to oust the jurisdiction of the High Court under section 3(2) of the .
While Judges and Courts are not beyond criticism, and there are well recognised limits to such criticism, and contempt proceedings are not meant to shield judges from personal insults, there can be no question that where defamatory aspersions are cast upon the character and ability of individual judges or of Courts in general, which in substance scandalise the Court itself and have the effect of undermining the confidence of the public in it and thus hinder due administration of justice, the contempt is of a kind which exceeds the limits of section 228 of the Indian Penal Code.
The true test, therefore, is: is the act complained of an offence under section 228 of the Indian Penal Code, or something more than that ? If it is something more, the jurisdiction of the High Court is not ousted by section 3(2) Of the .
So judged, there could be no doubt that the aspersions cast in the present case amounted to scandalising the court itself, and were no mere personal insults, and the High Court had jurisdiction to take cognizance of the same.
Bathina Ramkrishna Reddy vs The State of Madras, [1952] section C. R. 425 and Brahma Prakash Shayma vs The State of Uttar Pradesh, , relied on.
Ambard vs Attorney Geneyal for Trinidad and Tobago, , referred to.
1369 The question whether an insult offered to a public servant is intentional so as to attract section 228 of the Indian Penal Code has to be decided on the facts of each particular case and it is neither necessary nor advisable to Jay down any hard and fast rule.
Narotam Das vs Emperor, A.I.R. 1943 All. 97, Queen Empress vs Abdullah Khan, and Emperor vs Murli Dhar, All. 284, considered.
|
Summarize this legal judgement text concisely | Appeal No. 301 of 1958.
Appeal by special leave from the judgment and order dated February 21, 1958, of the Madhya Pradesh High Court at Jabalpur in Letters Patent Appeal No. 22 of 1958, against the order dated February 20, 1958, of the said High Court in Misc.
Petition No. 266 of 1957.
M.K. Nambiyar, section N. Andley, J. B. Dadachanji and Rameshwar Nath, for the appellants.
M. Adhikari, Advocate General, Madhya Pradesh and 1.
N. Shroff, for the respondents.
1443 1958.
September 30.
The following Judgments were delivered: DAS C.J.
There are two appellants in this appeal.
The second appellant is the Municipal Committee of Dhamtari constituted under the C. P. and Berar Municipalities Act, 1922 (Act 11 of 1922) and the first appellant is its President having been elected as such on July 10, 1956.
He assumed charge of his office as President on July 27, 1956.
It may be mentioned that he was returned as a Congress candidate but has since been expelled from that party for having contested the last general election as an independent candidate against the Congress candidate.
It appears that there are two factions in the Municipal Committee.
The first appellant alleges that one Dhurmal Daga, a member of the committee belonging to the Congress party was on August 7, 1956, deflected importing within the municipal limits certain cloth without paying the octroi duty.
Dhurmal Daga, on the other hand, alleged that the first appellant was guilty of grave mismanagement of the affairs of the Municipal Committee and went on hunger strike for securing the appointment of a committee to enquire into the misconduct of the first appellant.
Copies of the leaflets containing the demands and charges which are said to have been widely distributed are annexures I and 11 to the present petition.
It appears that several persons and firms also preferred charges against the first appellant, the President of the Municipal Committee.
The Collector, Raipur, personally intervened and persuaded the said Dhurmal Daga to abandon the fast on an assurance that he would look into the matter.
The Collector deputed one Shri N. R. Rana the Additional Deputy Collector to enquire into the complaints of maladministration of the affairs of the Municipal Committee.
By a Memorandum No. K/J N. P. Dhamtari dated August 24, 1956, the said N. R. Rana called upon the first appellant as tile President of the second appellant to give detailed explanation of each complaint, a list of which was enclosed therewith.
A copy of that memorandum along with its 22 enclosures 1444 is annexed to the petition and marked 111.
Annexures IV and V to the petition are copies of the detailed report on the objections and the reply to the charges made against the Municipal Committee submitted from the office of the Municipal Committee by the first appellant as the President of the Municipal Committee.
The Additional Deputy Collector thereafter held the enquiry.
The High Court states that it had " gone through the materials on which the State Government based its action on enquiry into the charges levelled against the Municipal Committee and that the records of the enquiry showed thaton some occasions the petitioner was present duringthe enquiry ".
Thereis no suggestion that the appellants wanted an opportunity to adduce any evidence or were prevented from doing so or that they were in any way hampered in their defence.
Presumably the Additional Deputy Collector had made a report which in due course must have been forwarded to the State Government.
On November 18, 1957, a notification was published in the Official Gazette whereby the State Government, in exercise of the powers conferred on it by section 53 A of the C. P. & Berar Municipalities Act, 1922, appointed one Shri B. P. Jain, the second respondent before us, as the Executive Officer of the Municipal Committee, Dhamtari, for a period of 18 months with certain powers as therein mentioned.
A copy of that notification has been annexed to the petition and marked VIII but as the major part of the arguments can vassed before us turns on the contents of that notification the same is reproduced below in extenso: " Dated, Bhopal, the 18th November, 1957, No. 9262/11538 U XVIII Whereas it appears to the State Government that the Municipal Committee, Dhamtari, has proved itself incompetent to perform the duties imposed on it by or under the Central Provinces and Berar Municipalities Act, 1922 (11 of 1922), inasmuch as it (a)granted grain and building advances to the employees without prior sanction and no efforts were made for their recovery, (b) showed carelessness in cases of embezzlement 1445 of the employees and did not report such cases to Government, (c)failed to control the President who issued orders in cases in which he had no authority (d)spent thousands of rupees on sanitation and other works although there was no provision in the budget, (e)allowed unconcerned persons to interfere in its working, (f)showed partiality in the appointments and dismissals of the employees, further such appointments and dismissals were made against rules, (g)delayed the constitution of the committee and the framing of budget, (h) misused the trucks of the municipality, (i) failed to recover the lease money, (j) shown partiality in the issue of transit passes to certain traders, further excess octroi duty was charged on certain articles and in certain cases where octroi duty is not leviable it was levied just to harass the people, (k)distributed municipal manure to certain persons without any charge, similarly distributed the manure free of cost and used the truck of the municipality for this purpose, (1)failed to control its president who spent the money of the Municipal Committee without any authority, (m)spent huge amount on the maintenance of the roads and drainage but their condition has remained unsatisfactory, (n)failed to give.
copies of the documents as allowed under rules, also failed to allow its members to inspect the records as is permissible under rules, (o)failed to invite tenders of purchase of articles, and whereas, the State Government considers that a general improvement in the administration of the Municipality is likely to be secured by the appointment of a servant of the Government as Executive Officer of the Committee.
Now, therefore, in exercise of the powers conferred by section 53 A of the Central Provinces and Berar 1446 Municipalities Act, 1922 (11 of 1922), the State Government are pleased to appoint Shri B. P. Jain, Deputy Collector, as executive Officer of the Municipal Committee, Dhamtari, for a period of eighteen months from the date of his taking overcharge and with reference to sub section (3) thereof are further pleased to direct that the Executive Officer shall exercise and perform the following powers and duties of the Committee to the exclusion of the Committee, President, Vice President or Secretary, under the provisions of the Central Provinces and Berar Municipalities Act, 1922 (11 of 1922), namely: Chapter 111.
Appointment of Officers and servants Sections 25, 26 and 28.
Chapter IV.
Procedure in Committee meeting Section 31.
Chapter V. Property, contract and liabilities Sections 37 to 45.
Chapter VI.
Duties of Committee Sections 50 and 51.
Chapter VIII.
The municipal fund whole.
Chapter IX.
Imposition, assessment and collection of taxes whole.
Chapter X. Municipal Budgets and accounts whole.
Chapter XI.
Powers to regulate streets and buildings Sections 90 to 94, 96, 98, 99, 103 and 104.
Chapter XII.
Powers to prevent disease and public nuisance Sections 117, 118(1), 119 and 132.
Chapter XVIII.
Offences, practice and procedure Sections 218 223.
Chapter XIX.
Special provisions for recovery of taxes whole.
The Executive officer shall exercise general supervising powers in respect of all matters covered by the Central Provinces and Berar Municipalities Act, 1922 (11 of 1922).
In Hindi (By order of the Governor of Madhya Pradesh) section section Joshi, Deputy Secretary." 1447 On December 21, 1957, the two appellants before us presented before the Madhya Pradesh High Court the writ petition out of which the present appeal has arisen and on January 11, 1958, obtained an order staying the operation of the order of appointment of the Executive Officer.
The writ petition was dismissed on February 20, 1958.
There was a Letters Patent Appeal which was dismissed in limine on February 21, 1958.
The application for certificate under articles 132 and 133 was refused on March 21, 1958.
The present appellants applied for and on April 1, 1958, obtained from this Court special leave to appeal from the judgment of the Madhya Pradesh High Court.
The interim stay order made by this Court was eventually vacated on May 13, 1958.
The appeal has now come up before us for final disposal.
Shri M. K. Nambiar, appearing in support of this appeal, urged three points, namely (i)that though the Notification purports to have been made in exercise of the power,,; conferred on the State Government by section 53 A, in substance and in reality it has been made under section 57 of the Act; (ii)that if the Notification is held to be one made under section 57 it is ultra vires and bad since the statutory requirements of affording reasonable opportunity to explain has not been complied with; (iii)that even if the impugned Notification be held to come within section 53 A it is still ultra vires since before promulgating it the State Government has committed a breach of the rules of natural justice in not giving any opportunity to the appellants to defend themselves.
There was a charge of mala fide made against the State Government founded on the fact that the first appellant 's leaving the Congress party had resulted in ill will towards the first appellant of that party which was the ruling party in the State Government, but as that charge has not been pressed before us nothing further need be said about it.
I now proceed to deal with the three points formulated above by learned counsel for the appellants.
184 1448 Re.
(i) and (ii): These two points are correlated and may be conveniedtly dealt with together.
The argument in support of them is developed in two ways.
In the first place it is said that the grounds set forth in the impugned notification clearly indicate that in substance and in reality it has been issued rather under section 57 of the Act than under section 53 A. In order to appreciate this argument it is necessary to set out the two sections of the C. P. and Berar Municipalities Act, 1922 in extenso: " 53 A. (1) If a committee is not competent to perform the duties imposed on it or undertaken by it by or under this Act or any other enactment for the time being in force and the State Government considers that a general improvement in the administration of the municipality is likely to be secured by the appointment of a servant of the Government as the executive officer of the committee, the State Government may, by an order stating the reasons therefor published in the Gazette, appoint such servant as the executive officer of the committee for such period not exceeding eighteen months as may be specified in such order.
(2)Any executive officer appointed under subsection (1) shall be deemed to be an officer lent to the committee by Government under sub section (3) of section 25.
(3)When under subsection (1) an executive officer is appointed for any committee, the State Government shall determine from time to time which powers, duties and functions of the committee, president, vice president or secretary under this Act or any rule or byelaw made thereunder shall be exercised and performed by such officer, in addition to, or to the exclusion of, their exercise and performance by the said committee, president, vice president or secretary.
(4) The secretary of the committee shall be subordinate to the executive officer.
(5) The executive officer shall have the right to attend all meetings of the committee and any joint committee or sub committee and to take part in the discussion so as to make an explanation in regard to 1449 the subject under discusion, but shall not move, second, or vote on any resolution or other motion. " " 57.
(1) If a committee is not competent to perform, or persistently makes default in the performance of, the duties imposed on it or undertaken by it under this Act or any other enactment for the time being in force, or exceeds or abuses its powers to a grave extent, the State Government may, by an order stating the reasons therefor published in the Official Gazette, dissolve such committee and may order a fresh election to take place.
(2)If after fresh election the new committee continues to be incompetent to perform, or to make default in the performance of, such duties or exceeds or abuses its powers to a grave extent, the State Government may, by an order stating the reasons therefor published in the Official Gazette, declare the committee to be incompetent or in default, or to have exceeded or abused its powers, as the case may be, and supersede it for a period to be specified in the order.
(3)If a committee is so dissolved or superseded, the following consequences shall ensue : (a)all members of the committee shall, as from the date of the order, vacate their offices as such members; (b)all powers and duties of the committee may, until the committee is reconstituted, be exercised and performed by such person or persons as the State (Government may appoint in that behalf; (c) all property vested in it shall until the commitee is reconstituted vest in the State Government.
(4)On the expiration of the period of supersession specified in the order, the committee shall be reconsti tuted, and the persons who vacated their offices under sub section (3), clause (a), shall not, by reason solely of such supersession be deemed disqualified for being members.
(5) No order under sub section (1) or subsection (2) shall be passed until reasonable opportunity has been given to the committee to furnish an explanation.
(6) Any person or persons appointed by the State 1450 Government to exercise and perform the powers and duties of a dissolved or superseded committee may receive payment, if the State Government so directs, for his or their services from the municipal fund.
" Learned counsel for the appellants points out that action may be taken under section 53 A " if a committee is not competent to perform the duties imposed on it . . . and the State Government considers that a general improvement in the administration of the municipality is likely to be secured Whereas under section 57 action can be taken not only " if a committee is not competent to perform or persistently makes default in the performance of the duties imposed on it or but also if the committee exceeds or abuses its powers to a grave extent It is pointed out that in case of incompetency action can be taken either under section 53 A or section 57 but in case of abuse of power action can be taken only under section 57.
Reference is then made to the grounds enumerated in the notification itself and it is argued that except perhaps grounds a, b, c and g which may be indicative of incompetency, the other grounds, which are, by far, greater in number, obviously constitute abuse of powers and from this circumstance the conclusion is sought to be drawn that in substance and in reality the impugned notification must have been made under section 57 and that that being so the notification cannot be sustained because of the non compliance with the provisions of sub section
(5) of section 57 which expressly lay down that no order tinder sub section
(1) or (2) shall be passed until reasonable opportunity has been given to the committee to furnish an explanation.
I am not persuaded to uphold this argument.
In the first place it has to be remembered that, the sections under consideration only confer certain powers on the State Government but that the latter is not bound to take any action under either of them.
In the next place it should be noted that the two sections differ materially in their scope and effect.
Under section 53 A the State Government may only appoint a servant of the Government as the Executive Officer of the committee and may determine, from time to time, 1451 which powers and duties and functions of the committee, its president, vice president or secretary shall be exercised and performed by such officer and indicate whether they should be exercised and performed in addition to, or to the exclusion of, their exercise and performance by the said committee, president, vice president or secretary.
The wording of section 53 A makes it quite clear that the action that may be taken thereunder is to be effective for a temporary duration not exceeding 18 months and the purpose of taking such action is to ensure the proper performance and discharge of only certain powers, duties and functions under the Act.
The section does not, in terms, affect, either legally or factually, the existence of the committee, its president, vice president or the secretary.
Section 57, however, authorises the State Government, in the circumstances mentioned in the opening part of that section, to dissolve the committee itself and order a fresh election to take place so that the committee as a legal entity ceases to exist and all the sitting members of the committee become functi officio.
If after such fresh election the same situation prevails, then that section further authorises the State Government to declare the committee to be incompetent or in default or to have exceeded or abused its power as the case may be and to supersede it for such period (not limited by the section) as may be specified in the order.
The effect of an order made under section 57 is, therefore, extremely drastic and puts an end to the very existence of the committee itself and, in view of the grave nature of the consequences that will ensue, the legislature presumably thought that some protection should be given to the committee before such a drastic action was taken and accordingly it provided, by sub section
(5) of that section, that no order should be passed until reasonable opportunity had been given to the committee to furnish an explanation a provision which clearly indicates that action under section 57 can only be taken after bearing and considering all the explanations furnished by or on behalf of the committee.
The legislature did not think fit to provide a similar safeguard in section 53A presumably because 1452 the order under the last mentioned section was of a temporary duration, was not very drastic and did not threaten the very existence of the committee.
A cursory reading of the two sections will also indicate that the conditions precedent to the exercise of the powers under both sections overlap to some extent, namely, that action can be taken under both if the committee "is not competent to perform the duties imposed on it. .
To the extent that the requirements of the two sections overlap the State Government has the option of taking steps under one section or the other according to its own assessment of the exigencies of the situation.
The position, therefore, is that if a committee is not competent to perform the duties imposed on it the State Government has to make up its mind as to whether it should take any action all and, if it thinks that action should be taken, then it has further to decide for itself as to which of the two sections it would act under.
If the State Government considers that the incompetency does not run to a grave extent and the exigencies of the situation may be adequately met by appointing an Executive Officer for a short period not exceeding 18 months with certain powers to be exercised by him, either in addition to or in exclusion of their exercise by the committee, the president, vice president or the secretary, the State Government may properly take action under section 53 A.
On the other hand if the State Government considers, having regard to all the circumstances of the case, that the incompetency is much too grave to permit the committee, its president, vice president or the secretary to function at all, it may take action under section 57 and dissolve the committee and direct fresh election to take place.
In other words incompetency on the part of the committee gives to the State Government an option to apply one of two reme dies under the Act, if, that is to say, it considers it necessary to take action at all.
What, then, is the position here ? Certain charges had been made in writing against the committee and its president which were forwarded to the president with a request to submit explanations in detail.
The 1453 president, acting in his official capacity, gave detailed explanations in writing and sent the same officially from the office of the municipal committee to the Additional Deputy Collector who was deputed by the Collector to hold the enquiry.
The Additional Deputy Collector held the enquiry during which the president appeared in person on several days and came to certain findings and presumably made his report which in due course must have reached the ;State Government.
The State Government apparently accepted such of those findings as have been set out in the notification it self Even according to learned counsel for the appellants some of those findings amount only to incompetency and the rest, he contends, amount to abuse of power.
I need not pause to Consider whether the abuse of power thus found was of a grave nature so as to fall within section 57 as such or was of a minor character so as to be evidence of mere incompetency Taking the position to be as contended by learned counsel for the appellants the position was that, as a result of the enquiry, the State Government found two things against, the appellant committee, namely, (i) that it was guilty of incompetency and (ii) that it was also guilty of certain abuses of power.
I have already stated that the State Government was not obliged to take any action at all either under section 53 A or under section 57.
If the State Government considered that it was necessary to take action, it was entirely for the State Government to consider whether it would take action for incompetency or for abuse of power.
In the present case the State Government might have thought that the abuse of power so found was not of a very grave nature but evidenced only incompetency.
Surely a committee which abused its power might also have been reasonably regarded as incompetent to perform the duties imposed on it That apart, supposing the committee was guilty of incompetency as well as of some abuses, what was there to prevent the State Government, as a matter of policy, to take action for incompetency under section 53 A ? The mere inclusion of the findings of abuse of power in the catalogue of the Committee 's 1454 misdeeds does not obliterate the findings on incompetency.
I see nothing wrong in the State Government telling the committee: " You have been guilty of incompetency as well as of abuse of power; but I shall not, just at this moment, take drastic action of ' dissolving you outright, but shall be content to take action and appoint an Executive officer for 18 months and confer some power on him under section 53 A".
In my judgment the State Government was well within its tights, in exercise of its option, to take action, under section 53 A as it has in terms purported to do.
To say that because some of the findings amount to abuse of power the State Government must act under section 57 is to deprive it of its discretion which the Act undoubtedly confers on it.
In my view the fact that the impugned notification records, apart from the findings of incompetency, certain findings of abuse of power, does not lead to the conclusion, as contended for the appellants, that the State Government had taken action under section 57 and not under section 53 A although, in terms, it says it acted under the last mentioned section.
Learned counsel for the appellants in support of his contention that the impugned notification was really made under section 57 of the Act, refers us to the, powers and duties conferred on the executive Officer thereby appointed to be exercised and performed by him to the exclusion of the committee, its president, vicepresident, or the secretary.
His argument is that although the municipal committee is not ostensibly dissolved, it is in effect and in reality so dissolved, for the substance of the powers of the committee, its president, vice president or the secretary has been taken away from them leaving only a semblance of power which is nothing but mere husk and the conclusion urged by learned counsel is that the impugned notification must be regarded as having been made under section 57.
In the first place, section 57 does not contemplate the appointment of any executive Officer or the conferment of any power on him, while such appointment and conferment of power is directly contemplated by section 53 A.
In the second place the legal 1455 existence of the municipal committee and the status of its members and its president, vice president or the secretary have not been impaired at all.
In the eye of the law the municipal committee still exists and along with it the members of the committee, the president, vice president and the secretary still hold their respective offices.
These features clearly militate against the suggestion that action has been taken under section 57.
Learned counsel says that we must look beyond mere form and get to the substance of the matter.
There can be no doubt that most of the important powers have been taken away from the committee, its president, vice president and the secretary, but that may well be due to the degree of gravity of the incompetency found or inferred from the other findings.
Further, a cursory perusal of the Act and of the notification will show that various other powers and duties have not been taken away from the committee or conferred on the Executive Officer.
Thus the powers of the committee under sections 128, 130, 131, 133 to 141 and 144, 145 arid 147 to 149 are still vested in and are exercisable by the committee.
Likewise the powers under sections 120, 121, 122, 123 to 127, 129, 150, 152 to 160 to 162, 163, 163A and 168 are still vested in and exercisable by the president.
These powers that are still left with the committee or the president can hardly or with propriety be described as mere husks.
It should not be overlooked that the suggestion that the real power has been taken away leaving only a semblance of it, is really ail argument in aid of a charge of mala fides, but, as here in before stated, the charge of mala fides or fraud on the part of the State Government has not been persisted in or pressed before us.
In my judgment, therefore, there is no warrant for contending that the impugned notification, judged by its eftect, must be regarded as having been made under section 57 of the Act.
In this view of the matter the argument of invalidity of the action founded on non compliance with the requirements of sub section
(5) of section 57 does not arise for consideration at all.
I85 1456 Re.
(iii): In the writ application, out of which this appeal arises, the principal prayer of the appellants is for a writ in the nature of certiorari for quashing the order passed by the State Government on November 18, 1957.
Tile next prayer which is for a writ of mandamus restraining the respondents from giving effect to the impugned order is clearly conse quential on or ancillary to the main prayer.
The last prayer is in the nature of the usual prayer for further or other reliefs.
Therefore the present petition is essentially one for the issue of a writ of certiorari.
The writ of certiorari is a well known ancient high prerogative writ that used to be issued by the Courts of the King 's Bench to correct the errors of the inferior Courts strictly so called.
Gradually the scope of these writs came to be enlarged so as to enable the Superior Courts to exercise control over various bodies which were not, strictly speaking, Courts at all but which were, by statute, vested with powers and duties that resembles those that were vested in the ordinary inferior Courts.
The law is now well settled that a writ of certiorari will lie to control such a statutory body if it purports to act without jurisdiction or in excess of it or in violation of the principles of natural justice, or commits any error apparent on the face of the records, provided that, on a true construction of the statute creating such body, it can be said to be a quasi judicial body entrusted with quasi judicial functions.
It is equally ",well settled that certiorari will not lie to correct the errors of a statutory body which is entrusted with purely administrative functions.
It is, therefore, necessary to ascertain the true nature of the functions entrusted to and exercised by the State Government under section 53 A of the Act.
In Province of Bombay vs Kusaldas section Advani this Court has discussed at considerable length the nature of the two kinds of act, judicial and administrative, and has laid down certain tests for ascertaining whether the act of a statutory body is a quasijudicial actor an administrative act.
It will, therefore, (1) ; 1457 suffice to refer to the celebrated definition of a quasi judicial body given by Atkin L. J. as he then was, in Rex vs Electricity Commissioners and which now holds the field.
It runs as follows " Whenever any body of persons having legal authority to determine questions affecting rights of subjects, and having the duty to act judicially act in excess of their legal authority they are subject to the controlling jurisdiction of the King 's Beneh Division exercised in these writs.
" This definition was accepted as correct in Rex vs London Count?/ Council (2 ) and many subsequent cases both in England and in this country.
It will be noticed that this definition insists on three requisites each of which must be fulfilled in order that the act of the body may be said to be quasi judicial act, namely, that the body of persons (1) must have legal authority, (2) to determine questions affecting the rights of parties, and (3) must have the duty to act judicially.
Since a writ of certiorari can be issued only to correct the errors of a court or a quasi judicial body, it would follow that the real and determining test for ascertaining whether an act authorised by a statute is a quasi judicial act or an administrative act is whether the statute has expressly or impliedly imposed upon the statutory body the duty to act judicially as required by the third condition in the definition given by Atkin L. J. Therefore in considering whether in taking action under section 53 A the State Government is to be regarded as functioning as a quasi judicial body or a mere administrative body it has to be ascertained whether the statute has expressly or impliedly imposed upon the State Government a duty to act judicially.
Relying on paragraphs 114 and 115 of Halsbury 's Laws of England, 3rd Edition, Volume 11, at pages 5558 and citing the case of R. vs Manchester Legal Aid Committee (1), learned counsel for the appellants contends that where a statute requires a decision to be arrived at purely from the point of view of policy or (1) (3) [1952] 2 (2) 413.
1458 expediency the authority is under no duty to act judicially.
He urges that where, on the other hand, the order has to be passed on evidence either under an express provision of the statute or by implication and determination of particular facts on which its jurisdiction to exercise its power depends or if there is a proposal and an opposition the authority is under a duty to act judicially.
As stated in paragraph 115 of Halsbury 's Laws of England, Volume 1 1, at page 57, the duty to act judicially may arise in widely differing circumstances which it would be impossible to attempt to define exbaustively.
The question whether or not there is a duty to act judicially must be decided 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 laid down in the judicial decisions.
The principles deducible from the various judicial decisions considered by this Court in the Province of Bombay vs K. section Advani (1) at page 725 were thus formulated, namely: " (i) that if a statute empowers an authority, not being a Court in the ordinary sense, to decide disputes arising out of a claim made by one party under the statute which claim is opposed by another party and to determine the respective rights of the contesting parties who are opposed to each other, there is a lis and prima facie and in the absence of anything in the statute to the contrary it is the duty of the authority to act judicially and the decision of the authority is a quasijudicial act; and (ii)that if a statutory authority has power to do any act which will prejudicially affect the subject, then, although there are not two parties apart from the authority and the contest is between the authority proposing to do the act and the subject opposing it, the final determination of the authority will yet be a quasi judicial act provided the authority is required by the statute to act judicially.
" It is clear that in the present case there is no question of any contest between two contending parties which the State Government is, under section 53 A, to decide and, (1)[1950] S.C.R. 621.
1459 therefore, there is no " lis " in the sense in which that word is understood generally, and the principle referred to under the first heading has no application.
We have, therefore, to consider whether the case comes within the principle enunciated under the second head, namely, whether the C. P. and Berar Municipalities Act, 1922, requires the State Government to act judicially when taking action under section 53 A. Learned counsel for the appellant draws our attention to the language in which section 53 A is couched.
He concedes that the ultimate order under that section is purely discretionary, that is to say the State Government is not obliged to take any action tinder the section.
It may make an order Tender the section or it may not according as it thinks fit.
But in case the State Government chooses to act under the section, it can only do so if the conditions therein laid down are fulfilled.
A cursory reading of section 53 A will show that there are two prerequisites to be satisfied before the State Government can take action under section 53 A, namely, (1) that the municipal committee is not competent to perform the duties imposed on it and (2) that the State Government considers that a general improvement in the administration of the municipality is likely to be secured by the appointment of a servant of the Government as the Executive Officer of the committee.
When both these conditions are fulfilled, then and then only may the State Government take action and make an order under section 53 A. Of the two conditions the second one, by the very language in which it is expressed, is left entirely a matter for the State Government to consider, for it depends entirely on the view of its own duty and responsibility that the State Government may take on a consideration of the situation arising before it.
In other words, the statute has left that matter to the subjective determination of the State Government.
The first requisite, however, is an objective fact, namely, whether the committee is or is not competent to perform the duties imposed on it.
The determination of that fact, it is pointed out, has not been left to the subjective determination by 1460 the State Government.
Learned counsel for the appellants urges that if it were intended to leave the determination of this fact of incompetency also to the subjective opinion of the State Government, the section would have been framed otherwise.
It would have said something like this: " If the State Government considers that a committee is not competent to perform the duties and that the general improvement in the administration of the municipalities is likely to be secured by This the Legislature has not done and has, thus, clearly evinced an intention not to leave it to the ipse dixit of State Government.
Section 53 A, it is pointed out, differs materially in this respect from section 3 of the Bombay Land Requisition Ordinance (V of 1947) which was considered by this Court in Kusaldas Advani 's casc (1).
That section of the Bombay ordinance opened with the words: " If in the opinion of the Provincial Government which were taken as indicative of the Legislature 's intention to leave the determination of the existence of all the conditions precedent entirely to the subjective opinion of the Provincial Government so as to make the action a purely administrative one.
The argument is that the first requirement is the finding of a fact which may be called a jurisdictional fact, so that the power under section 53 A can only be exercised when that jurisdictional fact is established to exist.
The determination of the existence of that jurisdictional fact, it is contended, is not left to the subjective opinion of the State Government and that although the ultimate act is an administrative one the State Government must at the preliminary stage of determining the jurisdictional fact act judicially and determine it objectively, that is to say, in a quasi judicialay.
It is assumed that whenever there has to be a determination of a fact which affects the rights of the parties, the decision must be a quasijudicial decision, so as to be liable to be corrected by a writ of certiorari.
In Advani 's case (1) Kania C. J. with A hom Patanjali Sastri J. agreed, said at page 632 : " The respondent 's argument that whenever there (1) ; 1461 is a determination of a fact which affects the rights of parties, the decision is quasi judicial, does not appear to be sound." Further down the learned Chief Justice said determined by an objective test and when that decision affects rights of someone, the decision or act is quasi judicial.
This last statement overlooks the aspect that every decision of the executive generally is a decision of fact and in most cases affects the rights of someone or the other.
Because an executive authority has to determine certain objective facts as a preliminary step in the discharge of an executive function, it does not follow that it must determine those facts judicially.
When the executive authority has to form an opinion about an objective matter as a preliminary step to the exercise of a certain power conferred on it, the determination of the objective fact and the exercise of the power based thereon are alike matters of an administrative character and are not amenable to the writ of certiorari.
" To the like effect is the following observation of Fazl Ali J. in the same case at page 642: " The mere fact that an executive authority has to decide something does not make the decision judicial.
It is the manner in which the decision has to be arrived at which makes the difference, and the real test is: Is there any duty to decide judicially ? As I have already said, there is nothing in the Ordinance to show that the Provincial Government has to decide the existence of a public purpose judicially or quasi judicially.
" Dealing with the essential characteristics of a quasi judicial act as opposed to an administrative act, I said at page 719: features.
Thus a person entrusted to do an administrative act has often to determine questions of fact to enable him to exercise his power.
He has to consider facts and circumstances and to weigh pros and cons in his mind before he makes up his mind to exercise his power just as a person exercising a judicial or 1462 quasi judicial function has to do.
Both have to act in good faith.
A good and valid administrative or executive act binds the subject and affects his rights or imposes liability on him just as effectively as a quasijudicial act does.
The exercise of an administrative or executive act may well be and is frequently made dependent by the Legislature upon a condition or contingency which may involve a question of fact, but the question of fulfilment of which may, nevertheless, be left to the subjective opinion or satisfaction of the executive authority, as was done in the several Ordinances, regulations and enactments considered and construed in the several cases referred to above.
The first two items of the definition given by Atkin L. J. may be equally applicable to an administrative act.
The real test which distinguishes a quasi judicial act from an administrative act is the third item in Atkin L. J. 's definition, namely, the duty to act judicially.
" I found support for my opinion on the following passage occurring in the judgment of Lord Hewart C. J. in B. vs Legislative Committee of the Church Assembly (1): " In order that a body may satisfy the required test it is not enough that it should have legal authority to determine questions affecting the rights of subjects; there must be super added to that characteristic the further characteristic that the body has the duty to act judicially.
" The above passage was quoted with approval by Lord Radcliffe in delivering the judgment of the Privy Council in Nakkuda Ali 's case I now proceed to apply the principles discussed above to the facts of the present case.
The simple fact that the incompetency of the committee goes to the root of the jurisdiction of the State Government to exercise its power under section 53 A does not require that that fact must be determined judicially.
The sole question is, does the statute require the State Government to act judicially.
There need not be any express provision that the State Government must act judicially.
It will be sufficient if this duty may be (1) , 415.
(2) 1463 implied from the provisions of the statute.
The mere fact that a question of fact has to be determined as a preliminary condition before action can be taken under the statute by itself does not carry that implication.
There must be some indication in the statute as to the manner or mode in which the preliminary fact is to be determined.
I find nothing in section 53 A which in terms imposes any duty on the State Government to act judicially.
No form of procedure is laid down or even referred to from which such a duty could be inferred.
On the contrary, one finds a signi ficant omission of any provision like that embodied in sub section (5) of section 57 which requires that no order under that section shall be passed until reasonable opportunity has been given to the committee to furnish an explanation.
It is also material to note that whereas an order under section 57 is of a permanent character the one to be made under section 53 A is to be of a limited duration, i.e., for such period not exceeding IS months as may be specified in such order.
Further, section 53 A contemplates swift action and a judicial hearing may easily frustrate the very purpose contemplated by section 53 A, for a judicial act will be subject to the powers of superintendence of the superior courts and the operation of the order under section 53 A may be postponed, as it has been done in this very case, by taking, the matter from court to court until it is set at rest by this Court.
In this connection reference may also be made to section 25 A of the Act which authorises the State Government to require the committee to appoint, inter alia, a Chief Executive Officer.
If such committee fails to comply with the requisition within the period specified, the State Government may, under sub section
(3), if it thinks fit, appoint such officer and fix his pay and allowance.
Sub section (4) authorises the State Government to require the committee to delegate to the officer so appointed such powers, duties and functions of the committee, its president, vice president or the secretary under this Act or any rule or bye law made thereunder as may be specified in such requisition and if the committee fails to comply with such requisition within a reasonable time, the State Government 186 1464 may determine the powers, duties and functions which shall be exercised and performed by such officer in addition to or to the exclusion of their exercise or performance by committee, its president, vice president or secretary.
Nobody will say that the State Government must exercise the powers under section 25 A after holding any judicial enquiry.
The only difference in the language of section 25 A and section 53 A both of which were inserted in the Act in 1947 is that action can be taken under section 53 A only when the committee is incompetent to perform the duties imposed on it a fact the determination of which is not in so many words left to the subjective opinion of the State Government, whereas action can be taken under section 25 A on the satisfaction of the State Government as to certain facts which is, in terms, left to the subjective determination of the State Government.
If, as I have said, the determination of a jurisdictional fact is not by itself sufficient to indicate that, it has to be done judicially, there is nothing else in section 53 A or in any other section of the Act which will lead to the conclusion that the State Government must act judicially.
The only other thing strongly relied on by learned counsel for the appellants is that the State Government may exercise its power under section 53 A " by an order stating reasons therefor published in the Gazette ".
The requirement that the State Government must give reasons for the order it makes does not necessarily require it to record a judgment judicially arrived at.
The legislature might well have thought that public policy required that the State Government entrusted with large administrative power should record its reasons for exercising the same so as to allay any misgivings that may arise in the mind of the public.
In my judgment, the action taken by the State Government under section 53 A is not a judicial or quasi judicial act but is an administrative act.
Learned counsel for the appellants relied on the case of Capel vs Child (1).
That decision clearly went upon the construction of the statute that came up for consideration.
The fact that action could be taken under that statute on affidavits (1) 2 Cr. & Jr, 558; 37 R. R. 761.
1465 was construed as a clear indication that the Bishop had to arrive at a decision as to the negligence of the Vicar on hearing evidence adduced before it by affidavit which led to the next conclusion that the Vicar must be given an opportunity of being heard and of adducing evidence in his own defence.
From this circumstance it was inferred that even when the Bishop acted on his knowledge of fact he must also proceed, judicially, for the two modes of procedure were treated on the same footing by the section itself.
As I have said, there is nothing in section 53 A or any other sec tion which may lead us to infer a duty to proceed judicially as was done in that case.
On the contrary there are indications leading to a different conclusion.
To say that action to be taken under section 53 A is an administrative action is not to say that the State Government has not to observe the ordinary rules of fair play.
Reference to the observation made by Fortesque J. in Dr. Bentley 's case about God asking Adam and Eve whether they had eaten the forbidden fruit appearing in the judgment of Byles J. in Cooper vs The Wandsworth Board of Works (1) is apposite.
The decision in the last mentioned case clearly establishes that in some cases it may be necessary to give an opportunity to a party to have his say before at) administrative action is taken against him.
But that is quite different from the well ordered procedure involving notice and opportunity of hearing necessary to be followed before a quasi judicial action, open to correction by a superior court by means of a writ, of certiorari, can be taken.
The difference lies in the manner and mode of the two procedures.
For the breach of the rules of fair play in taking administrative action a writ of certiorari will not lie.
I have already recounted the events and proceedings that preceded the actual passing of the order under section 53 A.
If the action taken tinder that section is to be regarded as an administrative action, as I hold it should be, then I have no doubt that the appellants have had more than fair play.
It is said that the State Government did not hold any enquiry before (1) ; ; 1466 making the order and that, therefore, it can not be said that the appellants had an opportunity to defend themselves against an order of this kind.
I do not consider that there is any substance in this contention.
If the State Government wanted to hold any enquiry it would do so through some of its officers.
Who would be more appropriate and competent to hold the enquiry except the officers on the spot ? The Additional Deputy Collector is obviously the person to whom the duty of enquiry could properly be entrusted.
All the charges levelled against the appellants were forwarded to them, and they submitted explanation.
The first appellant, who is the President, personally attended many of the sittings.
There is no suggestion that they had been prevented from adducing evidence in their own defence, The enquiry was held into what had been alleged against their conduct.
It was surely not a purposeless enquiry.
As a result of the enquiry certain findings were arrived at which were accepted by the State Government and an order was made under section 53 A.
I do not see what grievance the appellants can possibly have.
In my judgment there has been no remissness on the part of the State Government.
For reasons stated above I would dismiss this appeal.
BHAGWATI J. .I also agree that the appeal should be dismissed with costs but would like to add a few words of my own.
I have had the benefit of reading the judgments prepared by my Lord the Chief Justice, Kapur J. and Subba Rao J.
I agree with the reasoning and the conclusions reached in those judgments in regard to points Nos.
(i) & (ii), viz., (i)that though the Notification purports to have been made in exercise of the powers conferred on the State Government by section 53 A, in substance and in reality it has been made under section 57 of the Act; and, (ii)that if the Notification is held to be one made under section 57 it is ultra vires and bad since the statutory requirement of affording reasonable opportunity to explain has not been complied with.
1467 In regard to point No. (iii), viz., (iii)that even if the impugned Notification be held to come within section 53 A it is still ultra vires since before promulgating it the State Government has committed a breach of the rules of natural justice in not giving any opportunity to the appellants to defend themselves, however, there is a difference of opinion between my Lord the Chief Justice and Kapur J. on the one hand, and Subba Rao J. on the other, as to the character of the act performed by the State Government while arriving at the conclusion that the Committee is not competent to perform the duties imposed on it or undertaken by it.
Whereas the former are of the view that in arriving at such conclusion the State Government performs only an administrative function, the latter is of the view that the fact whether the committee is not competent to perform the duties imposed on it or undertaken by it is a jurisdictional fact and in arriving at that conclusion the State Government performs a quasi judicial function.
In my opinion, the determination of the question whether the State Government performs an administrative or a quasi judicial function in the matter of arriving at such conclusion is immaterial for the purposes of this appeal, inasmuch as an inquiry had been instituted by the State Government in the matter of the charges levelled against the appellants and full opportunity had been given to them to defend themselves.
I need not add anything in this regard to what has been said by my Lord the Chief Justice in the judgment just delivered by him.
I only wish to say that the circumstances adverted to therein amply demonstrate that the appellants had notice of the charges which had been levelled against them and had rendered full explanation in regard to the same, and, in the matter of the inquiry in regard to those charges the principles of natural justice had been complied with and the conclusion reached by the State Government in the matter of the incompetence of the committee was unassailable.
That being so, I would prefer not to express any opinion on the vexed question as to whether the act 1468 performed by the State Government is quasi judicial or administrative in character.
The result, however, is the same and I agree with the order proposed dismissing the appeal with costs.
S.K. DAS J. I agree generally with the conclusions reached by my Lord the Chief Justice and the reasons on which those conclusions are founded.
But I wish to add a few words with regard to the third question, namely, if in making the impugned notification, the State Government violated the principles of natural justice.
The answer to that question depends on whether on a true construction of the relevant statute, the State Government performed an administrative function or what has been called a quasi judicial function in making the impugned notification.
I am of the view that the action taken by the State Government under section 53 A of the Act is in its true nature an administrative act.
It is said that where there is ' a duty to act judicially ', the function is quasijudicial: that however does not help us very much in understanding the distinction between an administrative function and a quasi judicial function.
Where the statute clearly indicates that the function is judicial, there is little difficulty.
The difficulty arises in cases where the point taken is that by necessary implication the statute requires an administrative body or executive authority to act judicially.
It is indeed Generally correct to say that where an administrative body or authority is under a duty to act judicially, its function is judicial or quasi judicial.
But it is, to some extent, a tautology to say that the function is judicial or quasi judicial if it is to be done judicially.
To get to the bottom of the distinction, we must go a little deeper into the content of the expression 'duty to act judicially '.
As has been repeated so often, the question may arise in widely differing circumstances and a precise, clear cut or exhaustive definition of the expression is not possible.
But in decisions dealing with the question several tests have been laid down; for example 1469 (i) whether there is a lis inter partes (ii) whether there is a claim (or proposition) and an opposition; (iii)whether the decision is to be founded on the taking of evidence or on affidavits; (iv)whether the decision is actuated in whole or in part by questions of policy or expediency, and if so, whether in arriving at the decision, the statutory body has to consider proposals and objections and evidence; and (v)whether in arriving at its decision, the statutory body has only to consider policy and expediency and at no stage has before it any form of lis.
The last two tests were discussed and considered in R. vs Manchester Legal Aid Committee (1).
It is fairly clear to me that tests (i) to (iv) are inappropriate in the present case by reason of the provisions in section 53 A ,is contrasted with section 57 and other sections of the Act.
The test which is fulfilled in the present case is test (v), and that makes the function under section 53 A a purely administrative function in spite of the requirement of an initial determination of a jurisdictional fact and the recording of reasons for the decision.
I am content to rest my decision on the aforesaid ground, as I am not satisfied that the enquiry held by the Deputy Collector was a proper enquiry if it be held that section 53 A entrusts a quasi judicial function to the State Government and therefore requires compliance with the principles of natural justice.
That enquiry was for a different purpose altogether, the charges were not the same, and in my view the Municipal Committee had no real opportunity of meeting the charges on which the State Government ultimately took action.
I prefer, therefore, to base my decision on the third question on the short ground that the function which the State Government exercised under section 53 A was administrative in nature and it is settled law that such action is not amenable to a writ of certiorari.
On the first two questions I am in entire agreement (1)[1952] 2 Q.B. 4I3.
1470 with my Lord the Chief Justice and have nothing useful to add.
KAPUR J.
This appeal pursuant to special leave of this Court is directed against the judgment and order of the Madhya Pradesh High Court.
The appellants are the Municipal Committee of Dhamtari and its President Radheshyam Khare who are challenging the order of the State Government of Madhya Pradesh appointing an Executive Officer of the Municipal Committee under section 53 A of the C. P. & Berar Municipalities Act (Act 11 of 1922) to be termed in this judgment, the Act.
The facts leading to this appeal are that one Dhurmal Daga who was a member of the Dhamtari Municipal Committee (appellant No. 2) was found importing cotton into the municipal area without paying octroi duty.
He then went on hunger strike and also distributed pamphlets making allegations against both the appellants.
At this stage the Collector of Raipur district personally intervened and persuaded Dhurmal Daga to break his fast on an assurance that he (the Collector) would look into his allegations.
In pursuance of that assurance Mr. Rana, Deputy Collector held an enquiry and called the explanation of tile Municipal Committee and its President and submitted his report on November 22, 1956, which was forwarded to the State Government on April 24, 1957.
The State Government thereupon took action under section 53 A of the Act and by a notification dated November 18, 1957, appointed a Deputy Collector B. P. Jain respondent No. 3 as Executive Officer of the Dhamtari Municipal Committee for a period of 18 months on the ground that the Municipal Committee was incompetent in the performance of its duties under the Act.
The relevant part of the notification was as follows: " Whereas it appears to the State Government that the Municipal Committee, Dhamtari, has proved itself incompetent to perform the duties imposed on it by or under the Central Provinces and Berar Municipalities Act, 1922 (11 of 1922), inasmuch as it (a) granted grain and building advances to the I 1471 employees without prior sanction and no efforts were made for their recovery, (b)showed carelessness in cases of embezzlements of the employees and did not report such cases to Government, (c)failed to control the President who issued orders in cases in which he had no authority, (d)spent thousands of rupees on sanitation and other works although there was no provision in the budget, (e)allowed unconcerned persons to interfere in its working, (f)showed partiality in the appointment and dismissals of the employees, further such appointments and dismissals were made against rules, (g)delayed the constitution of the committee and the framing of budget, (h) misused the trucks of the municipality, (i) failed to recover the lease money, (j) shown partiality in the issue of transit passes to certain traders, further excess octroi duty was charged on certain articles and in certain cases where octroi duty is not leviable it was levied just to harass the people, (k)distributed municipal manure to certain persons without any charge, similarly distributed the manure free of cost and used the truck of the municipality for this purpose, (1)failed to control its president who spent the money of the municipal Committee without any authority, (m)spent huge amount on the maintenance of the roads and drainage but their condition has remained unsatisfactory, (n)failed to give copies of the documents as allowed under rules, also failed to allow its members to inspect the records as is permissible under rules, (o) failed to invite tenders of purchase of articles.
" This order of the State Government was challenged under article 226 in the Madhya Pradesh High Court on the allegation that the order passed by the State Government constituted 187 1472 " a flagrant abuse of the powers conferred under section 53 A of the Municipalities Act.
The charges enumerated in the notification were never framed.
The State Government did not serve any notice on the Municipal Committee or its President to show cause against the charges nor were they afforded any opportunity to have their say in the matter.
" The appellants submitted that the finding about the incompetency of the committee was vitiated because no enquiry was held and there was no evidence in support thereof and the order was void and inoperative because (1)" there is non observance of the mandatory provisions.
The power has not been exercised within the limits prescribed.
(2) there is no determination of the basic facts.
(3) there is a violation of the rules of natural justice.
(4) the action is mala fide.
" The respondents denied the allegations and submitted that the State Government made the order under section 53 A of the Act on the report of Mr. Rana, Deputy Collector who held an enquiry into the allegations made against the appellant under the orders of the Collector of Raipur; that proper notice was given to the Secretary of the Municipal Committee which filed its Written Statement through its President appellant No. 1 who appeared personally during the proceedings of the enquiry, but no opportunity for " leading any evidence" was demanded by the appellant nor was it denied.
They also pleaded that no formal enquiry was required under the law and that the Court could not go into the sufficiency or otherwise of the reasons for taking action " and the same will not be enquired into by the Court objectively.
" A learned Single Judge of the High Court dismissed the petition holding that whatever be the position under section 57, under section 53 A no explanation was required to be called from the municipal committee and the State Government was authorised under the law to act promptly.
The High Court negatived the allegation that the State Government had proceeded against 1473 the Municipal Committee, appellant No. 2, at the instance of Dhurmal Daga.
The learned Judge said: " I have gone through the material on which the State Government based its action on enquiry into the charges levelled against the municipal committee and find that there were several other complaints besides those made by Dhurmal Daga.
The record of the enquiry shows that on some occasions the petitioner was present during the enquiry.
I am satisfied that the invocation of the power of this Court under article 226 of the Constitution is not open to the present petitioner ".
A Letters Patent appeal against this judgment was dismissed on February 21, 1958.
The appellants have come in appeal to this Court by special leave and have raised four points before us: (1)That the notification though it purports to be under section 53 A of the Act is really under section 57 which is shown by the grounds given in the notification, the powers vested in the Executive Officer and by the effect of the order ; (2)and if it is a notification under section 57 it is ultra vires because the statutory requirements of the section had not been complied with; (3) even if the notification be held to be under s.53 A of the Act it was still null and void and inoperative as it violated the principles of natural justice and (4)that the order made was mala fide inasmuch as it had been passed with an ulterior object of taking away the control of the municipality from the lndependent Party which was in a majority and that this was in accordance with the policy adopted by the State Government of superseding or suspending municipalities which were not controlled by the Congress Party.
As further proof of the mala fides of Res pondent No. 1, the State Government, it was alleged that Radheshyam Khare appellant No. 1 was expelled from the Congress Part for six years in about March 1957 because he stood as an Independent 1474 candidate for election to the Lower House of Parliament in the 1957 elections.
The allegation of mala fides was not seriously pressed nor is there any material to sustain it.
In order to decide the other questions raised in this appeal it is necessary to examine the scheme of the Act and its provisions relating to the powers of the State Government in regard to municipal committees.
Chapter I of the Act makes provisions for the constitution of municipalities.
Section 4 empowers the State Government to signify by notification it, , intention to declare a local area to be a municipality, to alter its limits or to withdraw the whole of it from a municipality.
Section 5 gives the right to the inhabitants of such local area to file objections against anything contained in the notification within a period of 6 weeks and after consideration of such objections if any, the State Government can confirm, vary or reverse its notification under section 4.
Sections 6 to 8 deal with consequential orders on inclusion and exclusion of local areas: Section 9 authorises the State Government to give such powers to a municipality as in its opinion it is suited for.
It provides: " If the circumstances of any municipality are such that, in the opinion of the State Government, any provision of this Act is unsuited thereto, the State Government may, by notification: (a)withdraw the operation of that provision from the municipality; (b)apply that provision to the Municipality in a modified form to be specified in such notification ; (c)make any additional provision for the municipality in respect of the matter mentioned in the provision which has been withdrawn from, or applied in a modified form to, the municipality." Chapter II deals with the membership of committees and chapter III with Subordinate Agencies.
Under this chapter fall Sub Committees, Presidents and other officers of Municipal Committees.
Section 25 A which deals with the appointment of a Chief Executive Officer, Health Officer or Supervisor is as under: 1475 (1)" The State Government may, if in its opinion the appointment of (a)a Chief Executive Officer is necessary for general improvement in the administration of the municipality. . . and it is satisfied that the state of the municipal fund justifies expenditure on such appointment, require the committee to appoint any such officer.
(2)A requisition under sub section (1) shall state the period within which the committee shall comply therewith.
(3)If the committee fails to comply with the requisition within the stated period, the State Government may, if it thinks fit, appoint such officer at the cost of the committee and fix his pay and allowances, the rate of his contribution to the provident fund or to.
his pension and other conditions of service.
(4)The State Government may require the committee to delegate to the Chief Executive Officer . . . appointed under this section such powers, duties and functions of the committee, president, vicepresident, or secretary under this Act or any rule or bye law made thereunder as may be specified in such requisition, and if the committee fails to comply with such requisition within a reasonable time, the State Government may determine which powers, duties and functions shall be exercised and performed by such officer in addition to, or to the exclusion of, their exercise and performance by the committee, president, vice president or secretary.
(5)The secretary of the committee shall be subordinate to the Chief Executive Officer.
(6)The provisions of subsection (5) of section 53 A shall apply to the Chief Executive Officer or Health Officer or Supervisor appointed under this section ".
Chapter IV deals with the procedure to be followed in Committee Meetings, chapter V with property, contracts and liabilities and chapter VI with duties of committees.
Chapter VIII is headed " Control ".
It prescribes the authorities which have the power to control the acts of committees and also lays down the 1476 extent of such control and the method of its exercise.
Section 52 gives to the Deputy Commissioner the power to examine the proceedings of committees or subcommittees.
Section 53 empowers a Deputy Commissioner to suspend the execution of any order or resolution of a committee or a subcommittee and prescribes the circumstances in which this power can be exercised.
Then comes section 53 A which empowers the appointment of an Executive Officer by the State Government.
Section 54 provides that in the case of emergency the.
State Government, on the receipt of the report under section 52 or otherwise may require a municipality to execute any work or perform any act which in its opinion is necessary for the service of the public.
Under section 55 the State Government if satisfied after receiving a report under section 52 or after enquiry if any that a municipal committee has made default in performing its duties may appoint " some person to perform " the duty and can direct the municipal committee to pay reasonable remuneration to the person so appointed.
If default is made in any such payment the State Government can under section 56 direct a person having custody of municipal funds to make such payment.
Section 57 empowers the State Government to dissolve and/or to supersede the municipal committee.
Section 58 gives to the State Government the power of revision and an overall control over the actions of officers acting or taking any action under the Act.
But it cannot reverse any order unless notice is given to the parties interested and they are allowed to appear and be heard.
Section 58 A authorises the State Government to enforce its orders.
Section 58 B gives to the State Government the power of review of orders passed by itself and Commissioners and Deputy Commissioners have similar powers of reviewing their own orders provided that no order shall be varied unless notice is given to the parties interested to appear and be heard in support of the order.
Under section 59 certain officers appointed by general or special orders of the State Government are entitled to attend any meeting of the committee and address 1477 it on any matter affecting the work of their departments.
Section 60 provides for the settlement of disputes between the committees and other local bodies.
As sections 53 A and 57 are the subject matter of controversy in this case it is necessary to quote them in full : Section 53 A " (1) If a committee is not competent to perform the duties imposed on it or undertaken by it by or under this Act or any other enactment for the time being in force and the State Government considers that a general improvement in the administration of the municipality is likely to be secured by the appointment of a servant of the Government as the executive officer of the Committee, the State Government may, by an order stating the reasons therefor published in the Gazette, appoint such servant as the executive officer of the committee for such period not exceeding eighteen months as may be specified in such order.
(2)Any executive officer appointed under subsection (1) shall be deemed to be an officer lent to the committee by Government under sub section (3) of section 25.
(3)When under subsection (1) an executive officer is appointed for any committee, the State Government shall determine from time to time which powers, duties and functions of the committee, president, vice president or secretary under this Act or any rule or bye law made thereunder shall be exercised and performed by such officer, in addition to, or to the exclusion of, their exercise and performance by the said committee.
president, vice president or secretary.
(4)The Secretary of the committee shall be subordinate to the executive officer.
(5)The executive officer shall have the right to attendall meetings of the committee and any joint committeeand to take part in the discussion so as to make an explanation in regard to the subject under discussion, but shall not move, second, or vote on any resolution or other motion ".
Section 57 which gives power to the Government 1478 to dissolve or supersede the municipality is as follows: " (1) If a committee is not competent to perform, or persistently makes default in the performance of, the duties imposed on it or undertaken by it under this Act or any other enactment for the time being in force, or exceeds or abuses its powers to a grave extent, the State Government may, by an order stating the reasons therefor published in the Official Gazette, dissolve such committee and may order a fresh election to take place.
(2)If after fresh elections the new committee continues to be incompetent to perform, or to make default in the performance of, such duties or exceeds or abuse.
,; its powers to a grave extent, the State Government may, by an order stating the reasons therefor published in the Official Gazette, declare the committee to be incompetent or in default, or to have exceeded or abused its powers, as the case may be, and supersede it for a period to be specified in the order.
(3)If a committee is so dissolved or superseded, the following consequences shall ensue: (a)all members of the committee shall, as from the date of the order, vacate their offices as such members; (b)all powers and duties of the committee may, until the committee is reconstituted, be exercised and performed by such person or persons as the State Government may appoint in that behalf; (c)all property vested in it shall until the committee is reconstituted vest in the State Government.
(4)On the expiration of the period of supersession specified in the order, the committee shall be reconsti tuted, and the persons who vacated their offices under subsection (3), clause (a), shall not, by reason solely of such supersession be deemed disqualified for being members.
(5)No order under subsection (1) or subsection (2) shall be passed.
until reasonable opportunity has been given to the committee to furnish an explanation.
(6) Any person or persons appointed by the State 1479 Government to exercise and perform the powers and duties of a dissolved or superseded committee may receive payment, if the state Government so directs for his or their services from the municipal fund.
" A review of all these provisions shows that under the Act the municipalities are not independent corporations exercising powers unregulated by Governmental control.
They confer regulatory authority on the State Government to keep control over municipalities, the extent of control and the mode of its exercise being dependent on circumstances and expediency varying with the exigencies of every case.
The Statute leaves the discretion to the State Government to choose the action to be taken and the provision under which it is to be taken.
Wherever the legislature intended an enquiry to be held before taking any action provision is made for it and wherever it intended a person to be allowed to appear and be heard it has specifically provided for it.
Generally speaking excepting where all order is to be reversed qua a particular person, there is no provision for a hearing.
The nature and extent of regulatory powers of the State Government and the mode of their exercise are matters of policy and expediency and indicate the taking of administrative action by the State Government and not the exercise of any judicial power and would therefore be excluded from judicial review.
Counsel for the appellants firstly submitted that although the State Government has purported to act under section 53 A, in fact and in reality the order falls under section 57 and because the provisions of sub section (5) have not been complied with, the order of the State Government is illegal, null and void.
A comparison of the two sections 53 A and 57 shows the difference in the powers exercisable by the State Government under the two sections and the consequences that result therefrom.
Under section 53 A all that the State Government does is to appoint for a period of not more than eighteen months an Executive Officer who exercises such powers under the Act as are men tioned in the order which may be in addition to or to 188 1480 the exclusion of their exercise by the municipality, etc., a power also exercisable under section 25 A or to a limited degree under section 9.
Under section 57 the municipal committee itself is dissolved and may be superseded in which case its members cease to exist and vacate their offices and the powers and duties of the municipal committee then become vested in the person or persons appointed for the purpose by the State Government and its property also vests in the State Government.
These consequences do not follow an order Under section 53 A.
But it is submitted that in reality the result is the same because of the powers which under the notification have been given to the Executive Officer and what is left with the Committee is only "husk".
If this were so then whenever any action is taken whether under section 9 of the Act or under section 25 A in conceivable cases it would amount to supersession of the municipal committee and would therefore fall under section 57 which argurment was neither submitted nor is tenable.
According to the language of the two sections, 53 A and 57 of the Act the two classes of actions contemplated are quite different and different consequences follow; one should not be confused with the other.
The contention that the action taken under section 53 A is colourable and the matter really falls under section 57 is an allegation of mala fides which has not been made out.
If the statute gives to the state Government powers under its various provisions and the State Government chooses in its discretion to use one rather than the other it is beyond the power of any court to contest that discretion unless a case of abuse is made out (per Lord Halsbury L. C. in the West minster Corporation vs London and North Western Railway Co. (1)).
And it cannot on that ground alone be held to be a mala fide act.
A great deal of stress was laid by the appellants ' counsel on the withdrawal of the powers of the municipality and particularly under section 31 and it was contended that the Committee would not be able to hold its monthly meetings as required under that section.
It is difficult to interpret the notification in this manner, (1)[1905] A.C. 426.
1481 because ,so interpreted it would mean that the Executive Officer alone will meet for the transaction of business at least once a month which would amount to an absurdity.
The reference in the notification must be to sub section (2) of section 31 which deals with the power of the President, etc., to call a meeting suo motu or on the requisition of a fifth of the members.
Similarly the mention of Chapter V in the notification cannot vest the property of the committee in the Executive Officer.
The notification deals with powers and duties and not with the vesting of property.
It may however be mentioned that even where no Executive Officer is appointed by the State Government it can direct that any property vested in the municipality shall cease to be so vested and it can make such orders as it thinks fit regarding the disposal and management of such property (section 38).
No doubt the powers under section 39, which deals with the management of public institutions, powers and duties of the municipality, are taken away and are vested in the Executive Officer but these powers in any case are subject to rules made by Government and these rules are always subject to change by the State Government.
The powers of the municipal committee under section 40 to request the State Government for acquisition under the Land Acquisition Act have also been withdrawn.
Section 41 deals with transfers of municipal property to the Government and section 42 with power of the municipality to transfer municipal property but under that section the control of the State is not excluded even when there is no Executive Officer.
Section 44 deals with the ' 'Making of contracts and the other sections in that chapter do not deal with the powers and duties.
of a municipal committee excepting section 49.
Chapter VI prescribes the duties of a municipal committee and some of those also have been vested in the Executive Officer.
There is no doubt that some very important powers have by the notification been taken away from the municipal committee and have been vested in the Executive Officer but that is a far step from saying that the committee has thereby been suspended.
This exercise of its functions by the State Government is of 1482 no different quality leading to different results than what would have happened had action been taken under section 25 A or under B. 9 of the Act.
It cannot there.
fore be, said under the circumstances of this case that the action of the State Government is cobweb varnish or that it is merely a colourable order or a device to avoid the requirements of sub section
5 of a. 57.
, It was then contended that the notification enumerates acts of the municipality some of which axe instances of mismanagement and others of abuse of power.
It cannot be said that the allegations in regard to the spending of money without a provision in the budget or showing partiality in the matter of appointment and dismissal or in the matter of issuing of transport passes or distribution of municipal manure or the charge of spending huge amounts on maintenance of roads and drainage without improving their condition are nothing short of gross mismanagement or abuse of power and cannot fall under the charge of incompetency in the performance of duties or in the exercise of powers by the municipality.
Assuming that they can only be instances of abuse, there is nothing wrong in the State Government enumerating all the misdeeds and wrongs done by the committee and then saying that it prefers to take action under section 53 A as it has done and not under section 57.
If the acts and omissions are instances of abuse the State Government could if it thought fit, take action under section 57.
If having two courses open to it the State Government took the lesser of the two actions, its discretion cannot be questioned, in the absence of proof of bad faith.
It cannot therefore be said that the State Government has only pretended to act under section 53 A but in reality it was acting under section 57 of the Act.
It was lastly contended that the State Government when it acts under section 53 A has a duty to act judicially and the rules of natural justice required that ]the appellants should have been given an opportunity to show cause against action being taken under that section.
As said above under section 9 of the Act the State Government has, on the ground of unsuitability, the power to withdraw from the municipality any of the 1483 powers conferred under the Act either wholly or partially and under section 25 A it has the power of appointing a Chief Executive Officer if it is necessary for the general improvement in the administration of the municipality and exactly the same consequences would follow as they do when an Executive Officer is appointed.
under section 53 A.
There are also sections 52, 53, 54, 55 and 56 which place regulatory control in certain Government agencies.
If action taken under those provisions is an exercise of executive functions of the State Government can it be said that the exercise of similar power under section 53 A and for similar object i.e. improving the general administration in case of incompetency of the municipality will change an administrative decision into a judicial or quasijudicial decision ? The real test to distinguish between a quasi judicial and an administrative act of ail authority is based on the duty 'of that authority having power to determine a question ' to act judicially.
Lord Hewart, C. J. in R. vs Legislative Committee of the Church Assembly (1) said: In order that a body may satisfy the required test it is not enough that it should have legal authority to determine question affecting the rights of subjects; there must be superadded to that Characteristic the further characteristic that the body has the duty to act judicially ".
And thus the authority taking a decision should not merely determine a question it should also be under a duty to act judicially.
It is that essential characteristic which the State Government lacks in the present case.
When it considers something likely to result from its action it is merely taking executive action and not determining a question or acting judicially.
This dictum of Lord Hewart was quoted with approval by Das J. (as he then was) in Kusaldas Advani 's case (2).
He said, " Therefore, in considering whether a particular statutory authority is a quasi judicial body or a mere administrative body it has to be ascertained whether, the statutory authority has the duty to act judicially".
There is no indication (1) , 415.
(2) ; , 720.
1484 in the statute itself that the State Government has a duty to act judicially when it appoints an Executive Officer under section 53 A. nor has any procedure been prescribed as to the manner in which the power under this section is to be exercised by the State Government which may give an indication as to nature of the decision, taken.
The municipal committee is a creation of the Act and therefore it has all the powers and is subject to all the controls under the Act which are to be exercised as provided there under.
The Act gives different modes of regulatory control to the State Government and the powers of the State Government extend from revision of the actions, orders and resolutions of the municipal committee to the exclusion of local areas from its jurisdiction, taking away powers given under the Act, the appointment of Executive Officers, suspension and supersession of municipalities.
In certain sections e. g. section 57 dealing with this regulatory control the statute requires that the explanation of the committee be called for before a particular action is taken by the State Government and in others no such requirement is prescribed.
That is a clear indication of the intention of the legislature that an opportunity was to be given in one case and not in the other.
In other words a kind of quasijudicial approach was intended in one case and administrative in the other.
The Privy Council in Nakkuda Ali 's case (1) (a case under a Ceylon Regulation) said : " But, that apart, no procedure is laid down by the regulation for securing that the license holder is to have notice of the Controller 's intention to revoke the license, or that there must be any enquiry, public or private, before the Controller acts ".
In Advani 's case (2) Fazl Ali J. examining the ditty of authorities to act judicially said at p. 641 : There are no express words in section 3 or any other section, to impose such a duty (to determine judicially); nor is there anything to compel us to hold that such a duty is implied (1) ,78.
(2) ; 1485 The learned judge took into consideration the fact that certain sections specifically provided an enquiry and others did not, and observed: " the fact remains that there is nothing in the Ordinance to suggest that the public purpose is to be determined in a judicial way ".
Therefore where in a statute like the present one some sections prescribe the calling for the explanation of the municipality before any action is taken by the State Government and others do not, it is an indication of the intention of the legislature to exclude the application of principles of audi alteram partem in the latter case.
The section (section 53 A) has to be read as one whole and not in compartments.
The relevant words are: " If the committee is not competent to perform the duties imposed upon it and the State considers that a general improvement in the administration of the municipality is likely to be secured by " The latter portion i. e. " the State Government considers is likely to be secured " indicates a purely subjective determination and taking a policy decision.
The use of the words " considers " and " is likely relate to a subjective and not an objective process.
" To consider " means to think, to contemplate mentally, to regard and " likely " means probably; such as might well happen; apparently suitable for.
These words cannot have any reference to objectivity but suggest subjectiveness.
The opening words of the section " If the committee is not competent cannot be read separately from the latter part.
When under section 53 A the State Government appoints an Executive Officer which act it considers likely to im.
prove the general administration of the municipality it does not take two decisions, one objective as to the incompetency of the administration of the municipality and the other subjective as to the action likely to improve the administration.
The decision is only one.
The State Government is the sole judge of both matters, namely, of the incompetency and the remedy needed.
Both are parts of one integrated whole a decision taken in the exercise of the administrative 1486 functions of the State Government and admits of no element of judicial process.
(Vide The Province of ,Bombay vs Kusaldas Advani (1) (per Kania C.J. at p. 633 635) and per Das J. (as he then was) at p. 703).
The State Government must necessarily be the sole judge of the state of incompetency of the municipality otherwise it would not be able to take its administrative decision as to the action which it should take and which it considers is likely to improve the administration.
Both the decisions as to the incompetency of the municipality and the exercise of the executive function as to the action to be ' taken thereon are matters of like character i. e. administrative matters.
(Kusaldas Advani 's case at p. 633).
If that were not so then on the question of incompetency the State Government procedure will be analogous to a judicial process subject to review of Courts and the action it will take will be an administrative decision not subject to judicial review which will not only lead to inconvenience but to confusion.
The Privy Council pointed out in Venkatarao vs Secretary of State (2) that " inconvenience is not a final consideration in a matter of construction, but it is at least worthy of consideration, and it can hardly be doubted that the suggested procedure of control by the Courts over Government in the most detailed work of managing its services would cause not merely inconvenience but confusion ".
The very fact that an order under section 53 A is in the nature of an emergency action to protect the interests of the rate payer and has a limited duration not exceeding 18 months also negatives the order being founded on an objective determination as to the incompetency of the committee.
Such a construction will defeat the very purpose of a., 53 A. Further action under section 57 is of a permanent nature and has accordingly been expressly made subject to an explanation by the municipal committee.
The absence of such a provision from section 53 A clearly shows that the legislature did not intend that there should be an elaborate hearing but intended that the State should under section 53 A take a swift administrative decision.
The (1) ; (2) (1936) L.R. 64 I.A. 55.
1487 correct position, as indicated above, is that the decision of the State Government as to incompetency and the decision as to the action to be taken were really one decision, one integrated whole a subjective decision of the State Government that it considered that by the appointment of an executive officer a general improvement in the hitherto general administration was likely to be secured.
Merely because the fact of incompetency is a preliminary step to the exercise of an administrative function by the State Government, under & 53 A it is not necessary that the fact is to be determined judicially.
Where the exercise of the administrative functions of an Executive authority like the State Government are subject to a decision as to the existence of a fact, there is no duty cast on the State Government to act judicially.
Both the decision as to the fact and as to the action to be taken are really one and not two decisions, the determination being for the purpose of taking an appropriate administrative decision.
As has been said above it is one integrated whole and cannot be separated into parts with different legal qualities.
This was the view of Kania C. J. in the Province of Bombay vs Kusaldas Advani (1) where it was observed at p. 633: " Because an executive authority has to determine certain objective facts as a preliminary step to the discharge of an executive function, it does not follow that it must determine those facts judicially.
When the executive authority has to form an opinion about an objective matter as a preliminary step to the exercise of a power conferred on it, the determination of the objective fact and the exercise of the executive power based thereon are alike matters of an administrative character Fazl Ali J. in that case said at p. 642: For prompt action the executive authorities have often to take quick decisions and it will be going too far to say that in doing so they are discharging any judicial or quasi judicial functions.
The word I decision ' in common parlance is more or less a natural (3) ; 1488 expression and it can be used with reference to purely executive as well as judicial orders.
The mere fact that an executive authority has to decide something does not make the decision judicial.
It is the manner in which the decision has to be arrived at which makes the difference, and the Teal test is: Is there any duty to act judicially ? The language of sub section (1) of section 63 A indicates that the question whether the State Government considers that the action taken under the section i. e., the appointment of an Executive Officer is likely to secure an improvement in the general administration of the municipality is one of expediency, opinion and policy, matters which are peculiarly for the State Government to decide and of which, always assuming that it is acting bona fide, it is the sole judge.
No objective test is possible.
Therefore the use of these words "considers " and " is likely " negatives any objective approach or judicial or quasi judicial process.
The State Government is not essentially a judicial or a quasi judicial body but its essential function is administrative.
The various provisions of the Act show that it takes its decisions as to the mode and extent of control of municipalities in pursuance of its opinion and policy and on grounds of expediency.
In arriving at its decision it at no stage has any form of lis or quasi lis before it nor can it be said that there are two parties before it.
The Municipal Committee and itself cannot be termed quasi litigants or parties to a proposition and opposition.
It is not bound to take action under section 53 A or any other section of the Act.
It has to consider the question from the point of view of policy and expediency and the exigencies of the case which shows that it is not under a duty at any stage to act judicially to determine a question.
This further supports the view that a correct interpretation of the words " considers " and Is is likely to be secured " indicates a subjective decision and these words make the order of the State Government administrative and not judicial or quasi judicial.
The argument that the order is quasi judicial because it affects the rights of I the Municipal 1489 Committee is vacuous because all that the order complained of does is that it restricts the exercise of certain powers by the municipal committee and vests some powers in another authority contemplated by the statute.
Besides every decision of the Executive generally affects the rights of one citizen or another.
In Advani 's case (1) Kania C. J. said at page 632: ". . it is broadly stated that when the fact has to be determined by an objective test and when that decision affects rights of some one, the decision or act is quasi judicial.
This last statement overlooks the aspect that every decision of the executive generally is a decision of fact and in most cases affects the rights of some one or the other.
" But it was contended that in its order the State Government has to state reasons for taking action under section 53 A.
In a democratic system of government there is always the other party, the electors and citizens, who must know why the State Government takes one particular action rather than another.
Besides the mere requirement of giving reasons would not change what was an administrative body into a judicial body or an administrative decision into a judicial or quasi judicial determination.
The following passage from Halsbury 's Laws of England, Vol.
II, p. 56 (3rd Edition) aptly states the law and may usefully be quoted: " 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 R. vs Manchester Legal Aid Committee In B. Johnson & Co. (Builders) Ltd. vs Minister of Health (3) it was also held that the Minister was entitled to inform his mind by informal machinery of an enquiry and merely because in order to inform his mind the enquiry had to be held it could not be said that the Minister was not performing his administrative (1) ; (2) (3) (I947) 2 A.E.R. 395.
1490 function.
At p. 405 Cohen L. J. went further and said: " His duty as regards information received by him in his executive capacity is to use that information fairly and impartially.
This may involve that he should give an opportunity to the authority or to the objector, as the case may be, of dealing with some allegation in a communication he has received before the quasi lis started, but, if he fails to do so, he is responsible only to Parliament for the discharge of his executive duties, and cannot be made responsible in these courts.
" Appellants ' counsel relied on some English cases, the first of which was Cooper vs Wandsworth Board of Works (1) where Byles J. said at p. 420: ". although there are no positive words in a statute requiring that the party shall be heard, yet the justice of the common law will supply the omission of the legislature.
" This view is not in accord with the modern exposition of the law in Nakkuda Ali 's case (2) or Franklin 's case (3).
Lord Shaw in Arlidge '3 case (4 ) rejected the concept of natural justice in the following language : ". . in so far as it attempts to reflect the old jus naturale it is a confused and unwarranted transfer into the ethical sphere of a term employed for other distinctions; and, in so far it is resorted to for other purposes, it is vacuous." In R. vs Manchester Legal Aid Committee (5) the court observed : " 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 (1) [1863]14 C.B. (N.S.) 180; ; , 420. 2,0.7 (2) ,78.
(4) ,138.
(3) ; (5) [I952] 2 Q.B. 413, 431.
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.
" But at page 431 it was said: " If, on the other hand, an administrative body in arriving at its decision at no stage I 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.
" That was a case of a debtor who applied for and obtained a certificate of legal aid under the Legal Aid and Advice Act, 1949, in connection with his claim for damages against a company but was thereafter adjudicated bankrupt and at his instance the certificate was cancelled as his claim vested in the trustee in bankruptcy.
The trustee then applied for and obtained a certificate of legal aid.
The National Assistance Board and the local Committee considered only the financial circumstances of the bankrupt and not of the trustee whose disposable income was in excess of the lowest limit entitling a certificate of legal aid.
The debtor company applied for an order of certiorari to quash the certificate alleging that the Committee had exceeded its jurisdiction.
Under the Legal Aid (General) Regulation, 1950, reg.
4(1), it was a condition precedent to the grant of a certificate that there should have been a determination by the National Assistance Board of the disposable income of the trustee who was personally liable vis a vis his opponent.
It was held that the Board having legal authority to determine questions affecting rights of subjects had a duty to act judicially and that it had exceeded its jurisdiction.
The case has some distinguishing features, wanting in the case before us.
The statute there prescribed the limit of income of applicant for a certificate of legal aid and the regulations required the determination by the National Assistance Board of the disposable income and disposable capital of such applicant which was a condition precedent to the 1492 grant of the certificate.
Clearly without such deter mination the grant of the certificate was not within the jurisdiction of the Board and therefore the Board had to determine a question and was required to act judicially within the rule laid down in the majority judgment in Kusaldas Advani 's case (1).
The Board under that statute was bound to give aid, if certain conditions were fulfilled and was quite unconcerned with questions of policy.
" They have to decide the matter solely on the facts of a particular case, solely on the evidence before them and apart from any extraneous considerations.
In other words, they must act judicially, not judiciously." In Capel vs Child (2) the words " Whenever it shall appear to the satisfaction of the Bishop " were held to imply a duty to act judicially and therefore the principles of natural justice applied.
This rule is inconsistent with the decision of the Privy Council in Nakkuda Ali 's case (3) or the decision of the House of Lords in Franklin 's case (4) or the interpretation placed upon the word " satisfied " in some of the later English cases, Robinson vs Minister of Town and Country Planning (5) and B. Johnson & Co. (Builders) Ltd. vs Minister of Health (6).
This Court in Kusaldas Advani 's case (1) also held this word to indicate a subjective approach.
See also Wijeysekra vs Festing (7) where the words of the Statute were " whenever it shall appear to the Governor See also R. vs Metropolitan Police Commissioner (8) where also the words were " if he is so satisfied and it was held that these words did not imply " a judge or a quasi judge ".
The decision in these cases laying down the rule of application of natural justice must be confined to their own facts and the language of the particular statute they interpreted.
No general rule can be deduced therefrom nor can they be applied to other statutes and other circumstances.
The case before us is not one where no enquiry has (1) ; , 720.
(2) [1832] 2 Cr. & Jr. 558; 37 R.R. 761.
(3) [1951] A.C66,78.(4) ; (5) (7) 1493 been hold.
There was an enquiry against the appellants in regard to specific allegations made against them and after hearing them a report was made by a Deputy Collector which was forwarded to the State Government before it took action.
One Dhurmal Daga made a number of allegations Annexures I and II and those allegations were supported by others like Dear & Co., Poonam Chand Somraj, Dhamtari Traders and Shilaram and the affidavit of the State Government in the High Court shows that the notice was issued to both the appellants to reply to the allega appellant No. 1 appeared before a long explanation denyDhurmal Daga and others.
It was after this that the Enquiry Officer made his report which was sent to the State Government and it took action which it considered apposite and that is the action complained of But it was submitted that no notice was given to the appellants as to the nature of the complaint against them and the various charges which have been enumerated in the notification were never specifically brought to their notice and they were not called upon to show cause why action should not be taken under section 53 A.
In the first place the word,% of the section as explained above do not contemplate any such notice and the argument based on the opening words of the section that the municipality was guilty of incompetence was an objective fact cannot be accepted.
It cannot be said in this case that in point of fact the appellants did not know what the complaint against them was or that they had no opportunity of giving their explanation in regard to the charges.
All the acts which are enumerated in the notification are contained in the various allegations which were made against the appellants by Dburmal and others.
The appellants put a long explanation giving their version of the facts contained in the complaint and the Enquiry Officer sent his report after hearing the appellants and on the consideration of this report the State Government passed its order under section 53 A.
The High Court after going through 1494 the record of the enquiry was satisfied as to the propriety and legality of the enquiry and that portion of its judgment has been quoted above.
Then it was submitted that the enquiry by Mr. Rana was unautborised by the State Government and was no substitute for the enquiry required by the statute.
But the statute has prescribed no procedure for enquiries under section 53 A even if it were to be said that the section contemplates an enquiry.
And it is no defect affecting the final decision of the State Government whether the enquiry originates in the manner it did or the State Government ordered it.
In these circumstances the third point raised by the appellants cannot be sustained and the submission of the appellants is without substance.
The appeal therefore fails and is dismissed with costs throughout.
SUBBA RAO J. I have had the advantage of reading the judgment prepared by my Lord, the Chief Justice and my learned brother, Kapur J.
I regret my inability to agree with them in their views on the follwing two questions: (1) Whether under section 53 A of the C. P. & Berar Municipalities Act (Act II of 1922), hereinafter called the Act, the Government performs a judicial act; and (2) whether in fact the Government complied with the principles of natural justice in making the, Order dated November 8, 1956, under section 53 A of the Act.
As the facts have been fully narrated by my Lord, the Chief Justice, it would suffice if the facts relevant to the aforesaid questions are briefly stated here.
The second appellant is the Municipal Committee, Dhamtari, and the first appellant is its President.
He was elected as President on July 10, 1956, and took charge of his office on July 27, 1956.
On August 8,1956, one Dhurmal Daga went on a hunger strike for the redress of his grievances against the appellants.
The Collector, Raipur, intervened and persuaded him to break his fast and ordered an inquiry into the charge of maladministration.
The Deputy Collector, who made the inquiry, gave notice of the said inquiry to the Secretary to the Committee and the first appellant 1495 filed a written reply on September 7, 1956, and personally appeared at the inquiry.
Presumably, the result of the inquiry was forwarded to the Government.
On November 18, 1957, the Government issued an Order, A under a. 53 A of the Act, enumerating fifteen charges involving acts of nonfeasance, misfeasance, gross negligence and fraud, and stating that, by reason of the said act,%, it appeared to the Government that the Committee had proved itself incompetent to perform the duties imposed on it by or under the said Act.
The order further proceeded to state that the Government considered that a general improvement in the administration of the Municipality was likely to be secured by appointing a servant of the Government as the Executive Officer of the Committee.
The said Order also appointed Shri B. P. Jain as Executive Officer and entrusted to him most of the important powers and duties of the Committee and the President.
Before the drastic action was taken, no opportunity was given either to the President or to, the Committee to explain their conduct in regard to any one of the charges.
The previous inquiry made by the Deputy Collector was to attempt to persuade Dhurmal Daga to give up his fast and that inquiry by the Deputy Collector could not, in any sense of the term, be regarded as an inquiry for taking action under section 53 A of the Act.
Records also do not disclose whether that inquiry related to the same charges which were the foundation for the Government taking action under the Act.
1, therefore, proceed on the footing that the Government acted under section 53 A of the Act without giving any opportunity to the appellants to explain their conduct in regard to the grave charges levelled against them, on the basis of which they were held to be incompetent Within the meaning of section 53 A of the Act.
The material part of section 53 A reads: " If a committee is not competent to perform the duties imposed on it or undertaken by it by or under this Act or any, other enactment for the time being in force and the State Government considers that a general improvement in the administration of the 190 1496 municipality is likely to be secured by the appointment of a servant of the Government as the executive officer of the committee, the State Government may, by an other Order stating the reasons therefor published in the Gazette, appoint such servant as the executive officer of the committee for such period not exceeding eighteen months as may be specified in such order.
" The learned Advocate General, appearing for the State, contended broadly that under this section the Government performs only an administrative act by appointing an Executive Officer for a short period and therefore no opportunity need be given to the affected parties before action is taken thereunder.
Mr. M. K. Nambiar, counsel for the appellants, argued that under this section the Government is empowered to deprive the Municipal Committee, duly elected, under the Act, of its powers, though for eighteen months, on the basis of its incompetency and it is against all principles of natural justice to stigmatize such a body as incompetent without giving it an opportunity to explain its conduct.
He would say that whether the Committee is competent or not is an objective and jurisdictional fact to be decided judicially by the State Government and, therefore, the act of the Government is a judicial act, which can only be discharged by following the principles of natural justice.
Before considering the validity of the arguments based upon the provisions of the section, it would be convenient at this stage to notice briefly the distinction between a judicial and an administrative act and the criteria laid down by decisions for ascertaining whether a particular act is a judicial act or an administrative one.
The said criteria have been laid down with clarity by Lord Justice Atkin in Rex vs The, Electricity Commissioners (1), elaborated by Lord Justice Scrutton in Rex vs London County Council (2) and authoritatively restated in Province of Bombay vs Kusaldas section Advani (3).
The aforesaid decisions lay down the following conditions to be complied with: (1) The body of persons must have legal authority; (2) the authority should (1) (2) (3) ; 1497 be given to determine questions affecting the rights of subjects; and (3) they should have a duty to act judicially.
So far there is no dispute.
The question raised in this case is what do the words " a duty to act judicially " mean.
If the statute in express terms says that the decision should be arrived at judicially, then it is an obvious case.
If it does not expressly say so, can the intention of the Legislature be gathered or implied from the terms of the statute ? If it can be so gathered, what are the guiding factors for implying such a duty on the part of a tribunal or authority ? In this context a brief discussion of some of the 'relevant cases will be helpful.
This Court, as I have already stated, restated the law laying down the criteria for ascertaining whether an act is a judicial act or not in Kusaldas 's case (1).
There the question was whether the Provincial Government was acting judicially in making the order of requisition under a. 3 of the Bombay Land Requisition Ordinance (Bom.
Ordinance V of 1947).
The material part of the section under discussion read as follows: " If in the opinion of the Provincial Government it is necessary or expedient to do so, the Provincial Government may, by order in writing requisition any land for any public purpose.
" To ascertain the nature of the act of the Government under that section, this Court reviewed the law on the subject and held, by a majority, that on a proper construction of section 3 of the Ordinance, the decision of the Bombay Government that the property was required for a public purpose was not a judicial or a quasijudicial decision but an administrative act and the Bombay High Court had, therefore, no jurisdiction to issue a writ of Certiorari in respect of the order of requisition.
Das J. as he then was, after considering the law on the subject summarized the principles at page 725 thus: " (i) that if a statute empowers an authority, not being a Court in the ordinary sense, to decide disputes arising out of a claim made by one party under the statute which claim is opposed by another party and (1) [I950] S.C.R. 621.
1498 to determine the respective rights of the contesting parties who are opposed to each other, there is a lis and prima facie and in the absence of anything in the statute to the contrary it is the duty of the authority to act judicially and the decision of the authority is a quasi judicial act; and (ii) that if a statutory authority has power to do any act which will prejudicially affect the subject, then, although there are not two parties apart from the authority and the contest is between the authority proposing to do the act and the subject opposing it, the final determination of the authority will yet be a quasijudicial act provided the authority is required by the statute to act judicially.
" The propositions so stated appear to me to be unexceptional.
But the further difficulty is whether the duty to act judicially should be expressly so stated in the statute or whether it can be gathered or implied from the provisions of the statute.
I do not think that Das J. as he then was,, meant to lay down as a condition that the duty to act judicially should be expressly stated in the statute, for rarely any statute would describe the character of disposal of a particular proceeding.
If it was intended to insist upon an express condition in the statute, the learned Judge would not have scrutinized the provisions of the Ordinance to ascertain whether the order thereunder was intended to be a judicial act or not.
A useful discussion bringing out in bold relief the difference between a judicial and an administrative act is found in R. vs Manchester Legal Aid Committee (1).
There a debtor applied to a local aid committee, set up under the Legal Aid and Advice Act, 1949, for a certificate for legal aid to pursue a claim for alleged breach of contract against a limited company.
As he was adjudicated insolvent, the certificate was revoked and on application made by his trustee, it was granted to him again.
One of the questions raised was whether the legal aid committee in issuing the certificate was acting judicially and therefore subject to an order of certiorari.
The court held that the said body was under a duty to act (1) [I952] 2 Q.B. 413.
1499 judicially.
Parker J. delivering the judgment of the Court, summarized the law on the subject at page 428 thus: " 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. .
Further, 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 with the practice of a court of law. . . .
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.
" On the basis of the aforesaid principles, the learned Judge held that the local committee, though an administrative body, was acting judicially in issuing the certificates as in ascertaining the facts for issuing the certificate it was quite unconcerned with any question of policy.
I respectfully agree with the principles enunciated by the learned Judge and they are not in any way inconsistent with the principles laid down by this Court.
The law has been neatly summarised in Halsbury 's Laws of England, Third Edition, Volume 11, at pages 55 and 56 and it is as follows: 1500 " 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 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 lis 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. . . .
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.
" It is not necessary to multiply citations.
The concept of a ,judicial act", has been conceived and developed by the English Judges with a view to keep the administrative tribunals and authorities within bounds.
Unless the said concept is broadly and liberally interpreted, the object itself will be defeated, that is, the power of judicial review will become innocuous and ineffective.
The comprehensive phraseology of article 226 of the Constitution supports rather than negatives the liberal interpretation of that concept.
The argument that the Court shall not obstruct the smooth working of the administrative machinery does not.
appeal to me, for the simple reason that the exercise of the power of judicial review or, to be more precise, the existence of such power in courts for hardly one act in thousands come before courts eliminates arbitrary action and enables the 1501 administrative machinery to function without bias or discrimination.
With this background, the principles, as I apprehend them, may be concisely stated thus: Every act of an administrative authority is not an administrative or ministerial act.
The provisions of a statute may enjoin on an administrative authority to act administratively or to act judicially or to act in part administratively and in part judicially.
If policy and expediency are the guiding factors in part or in whole throughout the entire process culminating in the final decision,, it is an obvious case of administrative act.
On the other hand, if the statute expressly imposes a duty on the administrative body to act judicially, it is again a clear case of a judicial act.
Between the two there are many acts, the determination of whose character creates difficult problems for the court.
There may be cases where at one stage of the process the said body may have to act judicially and at another stage ministerially.
The rule can be broadly stated thus: The duty to act judicially may not be expressly conferred but may be inferred from the provisions of the statute.
It may be gathered from the cumulative effect of the nature of the rights affected, the manner of the disposal provided, the objective criterion to be adopted, the phraseology used, the nature of the power conferred or the duty imposed on the authority and other indicia afforded by the statute.
In short, a duty to act judicially may arise in widely different circumstances and it is not possible or advisable to lay down a hard and fast rule or an inexorable rule of guidance.
In the present case, section 53 A of the Act itself provides the necessary criteria to answer the question.
Before the Government can take action under the section, three preliminary conditions for the exercise of the power are laid down: (1) The Committee is not competent to perform the duties imposed on it; (2) the State Government considers that a general improvement in the administration of the municipality is likely to be secured by the appointment of a servant of the Government; (3) an order stating the reasons therefor.
The first condition depends upon the determination of 1502 an objective fact, namely, whether the committee is competent to perform the duties imposed upon it.
It is a jurisdictional fact that confers jurisdiction on the Government to take further action.
The determination of this fact is not left to the subjective satisfaction of the Government.
Indeed, the different phraseology used in regard to the second condition, namely, " the State Government considers ", brings out in bold relief the distinction between the two; while in the former an objective fact has to be determined, in the latter the fact is left to the subjective satisfaction of the Government.
If the facts covered by both the conditions are left to the subjective satisfaction of the Government, the phraseology would have been different and the clause would have run thus: ".If the Government considers that, the committee is not competent to perform the duties imposed on it or under taken by it by or under this Act or any other enactment for the time being in force and that a general improvement in the administration of the municipality is likely to be secured by the appointment of a servant of the Government as the Executive Officer of the Committee. .
To accept the argument of the Counsel for the respondents will be to rewrite the section in the above manner which is not permissible.
There is also a good reason and a justification for the difference in the phraseology used in the section.
The municipality is an elected corporate body and is entrusted with responsible statutory functions.
While it may be necessary, in public interest, to deprive the committee of some powers for a short period when it is proved to be demonstrably incompetent, such a body cannot easily be relegated to a subordinate position on the mere will and pleasure of the Government.
The section reconciles the public good and the committee 's rights and prestige, by conditioning the exercise of the power of the Government to depend upon the objective determination of the jurisdictional fact.
Whatever ambiguity there may be in the section, it is dispelled by the third condition, namely, that which enjoins on the Government to give reasons.
What is the object of the Legislature in imposing the said condition, if 1503 the matter is left to the subjective satisfaction of the Government ? The concept of subjective satisfaction of the Government does not involve any attempt to satisfy the mind or appeal to the good sense of another.
The working of the mind need not be disclosed and the validity of the section need not depend upon any objective standard.
The condition to pass a speaking order is destructive of any idea of invulnerability, for the said condition implies that the order should satisfy the mind of a reasonable man.
It is contended that a comparative study of the provisions of sections 53 A and 57 shows that the Government has to give notice before taking action under section 57, whereas no such duty is cast upon it under section 53 A and that would indicate the intention of the Legislature that the Government is not expected to act judicially under section 53 A. There.
is some force in this contention, buy that is not decisive of the question to be decided in this case.
If the provisions of a particular section necessarily imply a duty to act judicially, the mere fact that there is no express provision to issue a notice to the affected parties cannot convert a judicial act into an administrative one.
Nor does the argument that the order of appointment of an Executive Officer is only for a temporary period indicate the administrative character of the act.
The finding of incompetency carries a stigma with it and what is more derogatory to the reputation of the members of the committee than to be stigmatized as incompetent to discharge their statutory duties ? Would it be reasonable to assume that public men in a democratic country are allowed to be condemned unheard ? What is material is not the period of the tenure of the executive officer, but the ground for the appointment of the officer, namely, the incompetency of the committee.
Shortly stated, the position is this: The committee is comprised of elected representatives of the respective constituencies; they are presumably competent men in whom the electorate has confidence.
The Government has to arrive at the finding of their incompetency on the basis of objective facts to be ascertained and to 191 1504 give reasons for its finding.
It is against all canons of natural justice that a tribunal should arrive at a finding of far reaching consequence without giving an opportunity to explain to the persons who would be affected by such a finding.
For the aforesaid reasons, I have no doubt that the section imposes a duty on the Government to act judicially in ascertaining the objective and jurisdictional fact, namely, whether the committee is incompetent.
It is a necessary condition of such a duty to give an opportunity to the committee to explain the grave charges levelled against it.
Admittedly, no such opportunity was given to the committee and I cannot agree with the learned Advocate General that the inquiry by the Deputy Collector at an earlier stage for a different purpose had in effect given an opportunity to the committee.
It is not known what were the charges for which that inquiry was held.
The record discloses that the inquiry was held by a subordinate officer there is nothing on record to show that the Government authorised either the Collector or the Deputy Collector to make the inquiry in connection with the fast of Dhurmal Daga.
In my view, the inquiry cannot presumably take the place of reasonable opportunity to be given by the Government for the proposed action under section 53 A of the Act.
In the result, it follows that the Order of the High Court should be set aside and that of the Government appointing the Executive Officer quashed.
I do it accordingly.
ORDER PER CURIAM: This appeal is dismissed with costs, in this court and the courts below.
Appeal dismissed.
| The main point for decision in this appeal by the Municipal Committee of Dhamtari and its President was, whether in appointing an Executive Officer in exercise of its powers under section 53A of the C. P. and Berar Municipalities Act, 1922, the State Government acted in a judicial capacity or in an administrative one Complaints having been made against the appellants, the additional Deputy Collector was directed to hold an enquiry and on his report the State Government, by a notification under that section, appointed an Executive Officer of the Municipal Committee for 18 months with specified powers and duties.
The appellants were given notice of the said enquiry, filed objections 1441 and the President was personally present on some occasions during the enquiry.
The notification charged the appellants with incompetency as well as abuse of power.
Against that notification the appellants moved the High Court under article 226, of the Constitution for a writ of certiorari quashing the same, but their application was rejected by the judge sitting singly.
An appeal under the Letters Patent against his decision was summarily dismissed.
It was contended before this Court on behalf of the appellants that, (1) although the notification purported to be one under section 53A of the Act, it was in effect and reality one under section 57 Of the Act, that (2) it was, therefore, incumbent on the Government under section 57(5) of the Act to afford the appellants an opportunity to furnish explanation and that (3) even if the notification was one under section 53A of the Act, the Government was bound by the rules of natural justice to give the appellants an opportunity to defend themselves.
Held (per curiam), that sections 53A and 57 of the C. P. and Berar Municipalities Act, 1922, differed materially in their scope and effect, but it was not obligatory under either of them for the Government to take any action at all.
Although a finding of incompetency of the Municipal Committee was a condition precedent to action under both the sections, the Government was free to choose its remedy as the occasion demanded and it could not be contended that because a notification made under section 53A of the Act, along with a finding of incompetency, contained some instances of abuse of power as well, it must be held to have been made under section 57 of the Act.
Nor could the vesting of power in the Executive Officer by the notification, however substantial in character, be said, in effect and reality, to amount to a dissolution of the Municipal Committee under section 57 Of the Act.
Per Das C. T. and Kapur J.
The real test whether the State Government functioned in a quasi judicial capacity or in an administrative capacity in exercising its powers under section 53A of the Act was whether the statute required it to act judicially either expressly or by implication.
The Act contained no express provision to that effect, nor could the determination of the fact of incompetency as a condition precedent to any action under that section, by itself, carry such an implication.
In making the notification under section 53A of the Act, therefore, the Government functioned in an administrative capacity and not in a quasi judicial one.
Even so, by the enquiry held, the State Government afforded the appellants ample opportunity to defend themselves and there could hardly be any ground for complaint.
Province Of Bombay vs Kusaldas section Advani, [1950] S.C.R. 621, Rex vs Electricity Commissioners, , Rex vs London County Council, , R. vs Legislative Committee Of the Church Assembly, (1928) 1 K.B. 411 and Nakkuda Ali 's Case, , referred to.
1442 Per Bhagwati J.
Since the enquiry held in this case fully satisfied the requirements of natural justice, it was unnecessary to determine for the purpose of this case whether the State r Government in acting under section 53A of the Act did so in a quasi judicial capacity or in an administrative one.
Per section K. Das J.
If the question was one of compliance with the rules of natural justice, the enquiry held in the present case could hardly be said to have complied with such rules; but since the State Government in acting under section 53A of the Act had only to consider policy and expediency and did at no stage have any form of lis before it, its action thereunder was purley of an administrative character not amenable to a writ of certiorari.
Manchester Legal Aid Committee, , applied.
Per Subba Rao J. On a proper appreciation of the criteria laid down by section 53A of the Act itself, there could be no doubt that it imposed a duty on the State Government to act judicially in ascertaining the fact of the incompetency of the Municipal Committee to perform its duties.
It is clear that the determination of such a jurisdictional fact could not have been left to the subjective satisfaction of the Government but was intended to be arrived at objectively and, therefore, it was incumbent upon the Government to give a reasonable opportunity to the appellants to explain the charge levelled against them.
Such enquiry as was held in the instant case could hardly take the place of reasonable opportunity to be given by the Government for the proposed action under section 53A of the Act.
Rex vs The Electricity Commissioners, (1924) i K. B. 171, Province of Bombay vs Kusaldas section Advani, ; and R. vs Manchester Legal Aid Committee, , referred to.
|
Summarize this legal judgement text concisely | Appeal No. 401 of 1956.
Appeal by special leave from the judgment and order dated March 8, 1956, of the Travancore Cochin High Court at Ernakulam in I.T.R. No. 24 of 1954.
A. V. Viswanatha Sastri, section R. Ganapathy Iyer, J. B. Dadachanji and G. Gopalakrishna, for the appellant.
K. N. Rajagopala Sastri, R. H. Dhebar and D. Gupta, for the respondent.
October 7.
The Judgment of the Court was delivered by SARKAR J.
The appellant who was a Superintendent of Police in the service of the former Travancore State, retired sometime in 1940.
After retirement he was spending his time in studying Vedanta philosophy and expounding the same to such persons as were keen on understanding it.
He soon gathered about him a number of disciples, one of whom was J. H. Levy of London, U.K. Levy along with others used to receive instructions in Vedanta from the appellant.
He used to come to Travancore from England at regular intervals and stay there for a few months at a time and attend the discourses given by the appellant and so had the benefit of his teachings on Vedanta.
Levy had an account in Lloyd 's Bank at Bombay.
On December 13, 1941, Levy transferred the entire balance standing to his credit in this account amounting to Rs. 2,41,103 11 3, to the credit of an account which he got the appellant to open in his name in the 135 same bank.
Thereafter, from time to time Levy put in further sums into the appellant 's aforesaid account in Lloyds Bank, Bombay.
It appears that the payments so made up to August 19, 1951, amounted to about Rs. 4,50,000/ .
From time to time the appellant got moneys transferred from his account at the Lloyd 's Bank, Bombay, to his account in a bank at Trivandrum in Travancore.
This appeal arises out of orders for assessment to income tax passed against the appellant for the assessment years 1122, 1123 and 1124, all according to the Malayalam era.
The respective accounting periods according to the Gregorian calendar were from August 17, 1945, to August 16, 1946, August 17, 1946, to August 16, 1947, and August 17, 1947, to August 16, 1948.
It appears that during these periods Levy bad deposited in the appellant 's account at Lloyd 's Bank in Bombay the following respective sums: Rs. 13,304/ , Rs. 29,948/ and Rs. 19,983/ .
During the same periods the appellant had obtained transfers of the following respective sums from his Bombay account to his Trivandrum account: Rs. 81,200/ , Rs. 47,000/ and Rs. 37,251/ .
The Income tax Officer, Trivandrum, assessed the appellant to tax on the latter amounts as foreign income, i.e., income arising in India, and brought into Travancore State in the relevant periods.
We are not concerned in this case with the assessment made on other income of the appellant.
Tile appellant appealed from these assessment orders to the Appellate Assistant Commissioner who consolidated them into one appeal.
The Appellate Assistant Commissioner dismissed the appeal and confirmed the orders of the Income tax Officer.
The appellant then went up in appeal to the Appellate Tribunal but that appeal also failed.
The appellant thereafter obtained an order from the Tribunal referring the following Questions to the High Court of Travancore Cochin for decision: (i) Whether the aforesaid receipts from John H. Levy constitute income taxable under the Travancore Income tax Act, 1121 ? and 136 (ii) Whether there are materials for the Tribunal to hold that the deposits into the assessee 's bank.
account in Bombay by John H. Levy from 1941 as aforesaid represented income that accrued to the assessee outside Travancore State ? " The High Court answered the first question in the affirmative.
It however answered the second question in favour of the appellant, holding that he was carrying on a vocation or occupation in that State and the income derived therefrom should be considered as having arisen in Travancore, and that therefore the appellant was liable to be taxed not on the amounts which he brought into Travancore but on the amounts which had been paid to the credit of his account at Bombay by Levy during the relevant periods.
The appellant has now come up to this Court in appeal by special leave against the answer given by the High Court to the first question.
We are not concerned in this appeal with the answer given to the second question as it had been decided in favour of the appellant and there has been no appeal against it by the revenue authorities.
We do not think that the case presents any difficulty.
It has to be decided on the terms of the Travancore Income tax Act, 1121 (Malayalam Era), but as the provisions of that Act are, for.
the present purpose, identical with those of the Indian Income tax Act, 1922 , it would be more convenient to refer to the provisions of the latter.
Mr. Sastri, appearing for the appellant, has stated that the case involves really two points.
First, was the appellant carrying on a vocation ? And secondly, if he was, can the amounts with which we are concerned, be said to be profits or gains of the vocation ? We agree with his view of the case and proceed to discuss these points.
The first question is, whether the appellant was carrying on a vocation.
Under section 10 of the Income tax Act, 1922, tax is payable by an assessee in respect of the profit or gains of any profession or vocation carried on by him.
The facts found are that the appellant was studying Vedanta philosophy himself and 137 imparting the knowledge acquired by him as a result of his studies to such as cared to come and imbibe it.
There is no evidence to show, that the appellant had made it a condition that he would impart such knowledge only to those who were prepared to pay for it.
We have therefore to proceed on the basis that the appellant was teaching his, disciples Vedanta without any motive or, intention of making a profit out of such activity.
We find no difficulty in thinking that teaching is a vocation if not a, profession.
It is plainly so and it is not necessary to discuss the various meanings of the word. 'vocation ' for the purpose or to cite authorities to support this view.
Nor do we find any reason why, if teaching is a vocation, teaching of Vedanta is not.
It is just as much teaching, and therefore, a vocation, as any other teaching.
It is said that in teaching Vedanta the appellant was only practicing religion.
We are unable to see why teaching of Vedanta as a matter of religion is not carrying, on of a vocation.
In any case the question does not really arise, for, Whether the appellant was, in teaching Vedanta, practicing religion, is of course a finding of fact.
It may be that Vedanta could be taught as a practice of religion but it could of course also be taught as any other philo sophy or school of thought.
The statement of case in this.
case does not contain any finding that in teaching Vedanta the appellant was practicing religion.
It is said that in order that an activity may be called a vocation for the purposes of the Act, it has to be shown that it was an organised activity and that it was indulged in with a motive of making profit ; that as the appellant 's activity in teaching Vedanta was neither organised nor performed with a view to making profit, he could not be said to.
be carrying on a vocation.
It is said that as the word 'vocation ' has been used along with the words 'business and profession ' and the object of a business and a profession is to make a profit, only such activities can be included in the word 'vocation ' the object of which likewise is to make a profit.
We think that these contentions 18 138 lack substance.
We do not appreciate the significance of saying that in order to become a vocation an activity must be organised.
If by that a continuous, or as was said, a systematic activity, is meant, we have to point out that it is well known that a single act may amount to the carrying on of a business or profession.
It is unnecessary to discuss this question further as we find no want of system or continuity in the activity of the appellant.
He had gathered a large number of disciples around him and was instructing them in Vedanta regularly.
Levy came all the way from England at regular intervals to obtain such instructions.
All this clearly indicates Organisation and system.
Again, it is well established that it is not the motive of the person doing an act which decides whether the act done by him is the carrying on of a business, profession or vocation.
If any business, profession or vocation in fact produces an income, that is taxable income and none the less because it was carried on without the motive of producing any income.
This, we believe, is too well established on the authorities now to be questioned.
It was decided as early as 1888 in the case of the Commissioner of Inland Revenue vs Incorporated Council of Law Reporting(1) and followed ever since, that " it is not essential to the carrying on of a trade that the people carrying it on should make a profit, nor is it even necessary to the carrying on of the trade that the people carrying it on should desire or wish to make a profit".
If that were not so, a person carrying on what otherwise would be a business, may say that he did not carry on a business because it was not his intention to make any income out of it.
That would, of course, be absurd.
The question is, whether the activity has actually produced an income and it matters not whether that activity is called by the name of business, profession, vocation or by any other name or with what intention it was carried on.
The observation of Rowlatt, J., in Stedeford vs Beloe (2) to which we were referred by Mr. Sastri, that there could be no tax on pension granted to a retired (1) (1888)3 Tax Cas. 105, 113.
(2) 139 headmaster as "there is no background of business in it ", was clearly not intended to lay down that without a profit motive there could be no business, profession or vocation.
The pension could be taxed only if it had arisen out of the office and the only point decided was that it had not so arisen as the headmaster held no office, having retired earlier, at the date the pension had been granted: see the same case in the House of Lords(1).
We think therefore that the teaching of Vedanta by the appellant in this case can properly be called the carrying on of a vocation by him.
Then the other point to be decided is, whether the payments made by Levy were income received by the appellant from his vocation of teaching Vedanta.
A very large number of authorities, both Indian and English, have been pressed upon us in tile course of the argument.
These cases illustrate the application of the well settled principle that in the case of a voluntary payment, no tax can be levied on it if it bad been made for reasons purely personal to the donee and unconnected with his office or vocation while it will be taxable if it was made because of the office or vocation of the donee.
We do not consider it profitable to discuss them in this case.
Also it seems to us that the present case is too plain to require any authority.
The only point is, whether the moneys were received by the appellant by virtue of his vocation.
Mr. Sastri contended that the facts showed that the payments were purely personal gifts.
He drew our attention to the affidavit of Levy where it is stated " all sums of money paid into his account by me have been gifts to mark my esteem and affection for him and for no other reason".
But Levy also there said, " I have had the benefit of his teachings on Vedanta ".
It is important to remember however that the point is not what the donor thought he was doing but why the donee received it.
So Collins M. R. in Herbert vs McQuade referring to Inland Revenue vs Strong said at p. 649: " Now that judgment,.
whether or not the (1) (2) (3) 140 particular facts justified it, is certainly an affirmation of a principle of law that a payment may be liable to income tax although it is voluntary on the part of the persons who made it, and that the test is whether, from the standpoint of the person who receives it, it accrues to him in virtue of his office ; if it does, it does not matter whether it was voluntary or whether it was compulsory on the part of the persons who paid it.
That seems to me to be the test; and if we once get to this that the money has come to or accrued to, a person by virtue of his office it seems to me that the liability to income tax is not negatived merely by reason of the fact that there was no legal obligation on the part of the persons who contributed the money to pay it.
" It is well established that in cases of this kind the real question is, as Rowlatt J. put it in Reed vs Seymour (1), " But is it in the nature of a personal gift or is it a remuneration?", an observation which was quoted with approval by Viscount Cave, L. C. when the case went up to the House of Lords with the addition " If the latter, it is subject to the tax ; if the former, it is not ": see Seymour vs Reed (2).
We find it impossible to hold in this case that the payments to the appellant had not been made in consideration of the teaching imparted by him.
Levy admitted that he had received benefit from the teaching of the appellant.
It is plain to us that it was because of the teaching that the gift had been made.
It is true that Levy said that he made the gifts to mark his esteem and affection for the appellant.
But such emotions and therefore the gifts, were clearly the result of the teaching imparted by the appellant.
Mr. Sastri contends that that may be so, but we have no right to follow the successive causes and as a result thereof link the gift with the teaching.
An argument of this kind seems to have been advanced in Blakiston vs Cooper (3) and dealt with by Lord Ashbourne in the following words: "It was suggested that the offerings, were made as personal gifts to the Vicar as marks of esteem and (1) (2) (3) (1909) A.C. 104.
141 respect.
Such reasons no doubt played their part in obtaining and increasing the amount of the offerings, but I cannot doubt that they were given to the vicar as vicar.
and that they formed part of the profits accruing by reason of his office.
" We have no doubt in this case that the imparting of the teaching was the causa causans of the making of the gift; it was not merely a causa sine qua non.
The payments were repeated and came with the same regularity as Levy 's visits to the appellant for receiving instructions in Vedanta.
We do not feel impressed by Mr. Sastri 's contention that the first payment of Rs. 2,41,103 11 3 was too large a sum to be paid as consideration.
In any case we are not concerned in this case with that payment.
We are concerned with payments which are of much smaller amounts and as to which it has not been said that they were too large to be a consideration for the teaching.
And one must not forget, that these are cases of voluntary payments and the question of the appraisement of the value of the teaching received in terms of money is not very material.
If the first payment was too big to have been paid for the teaching received, it was too big to; have been given purely by way of gift.
In the view that we take, namely, that the payments with which we are concerned, were income, arising from the vocation of the appellants a teacher of Vedanta, no question of exemption under section 4(3)(vii) of the Act arises.
In order that a payment may be, exempted under that section, it has to be shown that it did not arise from the exercise of a vocation.
In the result, we have come to the conclusion that this appeal fails and it is dismissed with costs in this Court.
Appeal dismissed.
| The assessee was teaching his disciples Vedanta philosophy without any motive or intention of making a profit out of such activity.
One of his disciples made gifts of money to him on several occasions.
It was contended by the assessee that he was not liable to tax on the amounts received as he was not carrying on any vocation and as the receipts were not profits or gains.
Held that, in teaching Vedanta the assessee was carrying on a vocation.
It is not necessary for an activity to be a vocation 134 that it should be an organised activity or that it should be practiced with a motive for making profit.
Commissioner of Inland Revenue vs Incorporated Council of Law Reporting, , 113, followed.
Held, further, that the payments made by the disciple, were income received by the assessee from his vocation.
In the case of a voluntary payment, no tax can be levied on it if it had been made for reasons purely personal to the donee and unconnected with his office or vocation but it will be taxable if it was made because of the office or the vocation of the donee.
The question is not what the donor thought he was doing but why the donee received it.
In the present case it is plain that it was because of the teaching that the gift had been made.
|
Summarize this legal judgement text concisely | Appeal No. 91 of 1957.
Appeal from the judgment and order dated March 29, 1956, of the Saurashtra High Court at Rajkot in Civil Reference No. I of 1955.
Shankarlal G. Bajaj and P. C. Aggarwal, for the appellant.
K. N. Rajagopala Sastri, R. H. Dhebar and D. Gupta, for the respondent.
October 9.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J.
This appeal arises from the assessment proceedings taken against the appellant, Rajputana Agencies Ltd., Lavanpur, for its income for the assessment year 1952 53, the accounting period being the corresponding Marwadi Year ending in October, 1951.
The appellant is a ' private limited company and it was assessed to income tax and super tax by the Income tax Officer, Morvi Circle, Morvi, on a total income of Rs. 26,385.
The appellant had declared dividend of Rs. 30,000.
The Income tax Officer held that out of the said amount of dividend, Rs. 15,159 was excess dividend.
On this basis the Income tax Officer determined the additional income tax payable by the appellant at the rate of forty four pies in a rupee on the said excess dividend.
The additional income tax payable by the appellant in that behalf was computed at Rs. 3,473 15 0.
This order was passed on November 25, 1952.
The appellant filed an appeal against this order before the Appellate Assistant Commissioner of Income tax at Rajkot.
The appellate authority determined the additional income tax payable by the appellant at Rs. 2,084 12 0 on August 29, 1953.
An appeal was preferred by the appellant against the appellate order before the Income tax Appellate Tribunal, Bombay, but the appellate tribunal confirmed the order under appeal on November 27, 1954.
The 144 appellant then moved the appellate tribunal under section 66(1) of the Income tax Act and the appellate tribunal, by its order passed on April 25, 1955, referred two questions to the High Court at Saurashtra for its opinion.
In the present appeal, we are concerned with ,the second of the said two questions.
This question as framed by the tribunal was: Whether the expression " at the rate applicable to the total income of the company " as appearing in sub cl.
(b) of el.
(ii) to the second explanation to proviso to paragraph B of Part I of the First Schedule to the Indian Finance Act, 1952, means the rate at which a company 's total income is actually assessed or the rate prescribed by the respective Finance Act without taking into consideration the rebate allowed in the respective years in accordance with the provisions of the Part ' B ' States (Taxation Concessions) Order, 1950 (hereinafter called the Order).
Section 2 of the Finance Act, 1952, provides that the provisions of section 2 of, and the First Schedule to the Finance Act, 1951, shall apply in relation to income tax and super tax for the financial year 1952 53 as they apply in relation to the income tax and super tax for the financial year 1951 52 with the modification that, in the said provisions for the figures 1950, 1951 and 1952 wherever they occur, the figures 1951, 1952 and 1953 shall be respectively substituted ; and so in the present case we are really concerned with the material provisions of the Finance Act, 1951 (herein.
after called the Act).
By its judgment delivered on March 29, 1956, the High Court answered this question against the appellant and held that the expression " at the rate applicable to the total income of the company " means the rate at which the company 's total income is actually assessed.
The appellant then applied for and obtained a certificate from the High Court under article 133(1)(c) of the Constitution read with section 66A(2) of the Income tax Act that the case is a fit one for appeal to this Court.
It is with this certificate that the present appeal has been brought to this Court; and the only point which it raises for our decision relates to the construction of the expression " at the rate applicable 145 to the total income of the company " appearing in the relevant provision of the Act.
The appellant does not dispute its liability to pay additional income tax under cl.
(ii) of the proviso to paragraph B of Part I of the First Schedule to the Act.
The dispute between the parties is in regard to the rate at which the additional income tax has to be charged.
I The appellant has paid income tax on its total income in the relevant assessment year at the rate of sixteen pies in a rupee in accordance with the computation prescribed by para.
6 of the Order; and it is urged on its behalf, that the rebate to which it is entitled under the provisions of the said Order is irrelevant in determining the rate at which the additional income tax can be computed against it.
On the other hand, the respondent contends that the additional income tax has to be computed at the rate at which the appellant 's income has been actually assessed and so the rebate granted to the appellant under the said Order must be taken into account in determining the said rate of the additional tax.
It would be relevant, at this stage, to refer to the provisions of the Order under which the appellant has admittedly obtained rebate as a company carrying on its business in Saurashtra.
By the Order, the Central Government made exemptions, reductions in the rate of tax and modifications specified in the Order in exercise of the powers conferred by section 60A of the Income tax Act.
This Order applied to Part 'B ' states which included all Part 'B ' States other than the State of Jammu and Kashmir.
Paragraph 5 of the Order deals with income of a previous year chargeable in the Part 'B ' States in 1949 50.
Sub clause (3) of paragraph 5 shows that the State assessment year 1949 50 means the assessment year which commences on any date between April 1, 1949 and December 31, 1949.
We are not concerned with the provisions of this paragraph.
Paragraph 6(iii) applies to the present case.
The effect of para.
6(1), (ii) and (iii) is that in respect of so much of the income, profits and gains included in the total income as accrue or arise in any State other 19 146 than the States of Patiala and East Punjab States Union and Travancore Cochin (i) the tax shall be computed (a) at the Indian rate of tax; and (b) at the State rate of tax in force immediately before the appointed day; (ii) where the amount of tax computed under subclause (a) of clause, (1) is less than or is equal to the amount of tax computed under sub clause (b) of clause (1) the amount of the first mentioned tax shall be the tax payable; (iii) where the amount of tax computed under subclause (a) of clause (1) exceeds the tax computed.
under sub clause (b) of clause (1), the excess shall be allowed as a rebate from the first mentioned tax and the amount of the first mentioned tax as so reduced shall be the tax payable.
Thus under el.
(iii) the amount of income tax levied against the appellant is not the amount computed at the Indian rate; it represents the difference between the amounts calculated at the Indian rate of tax and that calculated at the State rate of tax.
The excess of the first amount over the second is allowed as a rebate.
In other words, the Indian rate of tax prescribed by the relevant provisions of the Act does not by itself determine the amount of tax payable by the appellant for the relevant year.
It is well known that when different Part ' B ' States merged with the adjoining States or Provinces and were made taxable territories under the Income tax Act, the operation of the Indian rate of tax was introduced by phases and rebates on a graduated scale were allowed to the assessees under the provisions of this Order.
As we have already mentioned, it is common ground that the appellant was entitled to and has obtained rebate under sub cl.
(iii) of paragraph 6 of 'the Order, with the result that his total income has been taxed to income tax at the rate of sixteen pies in a rupee.
The point for determination is whether this rebate is relevant in determining the rate at which the additional income tax has to ' be levied against the appellant under the relevant provisions of the Act.
147 Let us now consider the relevant provisions of the Act.
Section 3 of the Income tax Act which is the charging section provides that " 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 the ' assessee ".
Thus, when levying income tax against the total income of the assessee, the rate at which the tax has to be levied is prescribed by the Act for the relevant year.
Section 2 of the Act provides that, subject to the provisions of sub sections
(3), (4) and (5), income tax shall be charged at the rates specified in Part I of the First Schedule; and sub section
(7) provides that " for the purpose of this section, and of the rates of tax imposed thereby, the expression " total income " means total income as determined for the purposes of income tax or super tax, as the case may be, in accordance with the provisions of the Act ".
So we must turn to the First Schedule to the Act to find the rate at which the appellant can be assessed.
Paragraph B of the said Schedule deals with companies and it provides that, in the case of every company, on the whole of total income the tax is leviable at the rate of four annas in the rupee.
There is a proviso to this paragraph and the clause which calls for our construction in the present appeal occurs in the explanation to el.
(ii) of this proviso.
This proviso deals with the case of a company which in respect of its profits liable to tax under the Act for the relevant year has made the prescribed arrangements for the declaration and payment within the territory of India excluding the State of Jammu and Kashmir of the dividends payable out of such profits and has deducted the super tax from the dividends in accordance with the provisions of sub section
(3D) or (3E) of section 18 of that Act; and in that connection, it provides: (1) where the total income, as reduced by seven annas in the rupee and by the amount, if any, exempt from income tax exceeds the amount of any dividends (including dividends payable at a fixed rate) declared 148 in respect of the whole or, part of the previous year for the assessment for the year ending on the 31st day of March, 1951, and no order has been made under subsection (1) of section 23A of the Income tax Act,, a rebate shall be allowed, at the rate of one anna per rupee on the amount of such excess (ii) where the amount of dividends referred to in clause (1i) above exceeds the total income as reduced by seven annas in the rupee and by the amount, if, any, exempt from income tax, there shall be charged on the total income an additional income tax equal to the sum, if any, by which the aggregate amount of income tax actually borne by such excess (hereinafter referred to as " the excess dividend ") falls short of the amount calculated at the rate of five annas per rupee on the excess dividend.
It would thus be seen that the object of the legislature in enacting this proviso is to encourage companies to plough back some of their profits into the industry not to distribute unduly large portions of their.
profits to their shareholders by declaring unreasonably high or excessive dividends.
In order to give effect to this intention the legislature has offered an inducement to the companies by giving them a certain rebate.
If a company does not distribute as dividends more than roughly nine annas of its profits which is specified as distributable, then the rebate of one anna is given to the company to the extent that the dividend paid by it was less than the distributable dividend.
If the company pays more than the distributable amount of dividend then it was not entitled to claim any rebate; but, on the contrary, it becomes liable to pay an additional income tax as provided in cl.
(ii) of the proviso.
In other words, the intention of the legislature appears to be that companies should no doubt declare reason able dividend and thereby invite the investment of capital in business; but they should not declare an excessive dividend and should plough back part of their profits into the industry.
It is with this object that the provision for rebate has been made.
It would be noticed that,, in addition to the rebate received by the appellant under the relevant provisions of the 149 Order, it would have been entitled to receive the rebate under el.
(1) of the proviso to paragraph B if the dividend declared by it had not exceeded the specified distributable amount.
In fact the dividend declared by the appellant has exceeded the said amount and the appellant has thus become liable to pay additional income tax in respect of the excess dividend under cl, (ii) of the proviso to paragraph B.
Under this clause, " the appellant shall be charged on the total income an additional income tax equal to the sum, if any, by which the aggregate amount of income tax actually borne by such excess (hereinafter referred to as " the excess dividend ") falls short of the amount calculated at the rate of five annas per rupee on the excess dividend ".
This provision raises the problem of determining the aggregate amount of income tax actually borne by the excess dividend; and it is to help the solution of this problem that an explanation has been added which says, inter alia, that " for the purposes of cl.
(ii) of the above proviso the aggre gate amount of income tax actually borne by the excess dividend shall be determined as follows: (i) the excess dividend shall be deemed to be out of the whole or such portion of the undistributed profit,% of one or more years immediately preceding the previous year as would be just sufficient to cover the amount of the excess dividend and as have not likewise been taken into account to cover an excess dividend of a preceding year; (ii) such portion of the excess dividend as is deemed to be out of the undistributed profits of each of the said years shall be deemed to have borne tax(a) if an order has been made under sub section (1) of section 23A of the Income tax Act, in respect of the undistributed profits of that year, at the rate of five annas in the rupee, and (b) in respect of any other year, at the rate applicable to the total income of the company for that year reduced by the rate at which rebate, if any, was allowed on the undistributed profits.
" Clause (1). explains what shall be deemed to be the 150 excess dividend and how it, should be ascertained.
Clause (ii) lays down how the portion of the excess dividend as is deemed to be out of the undistributed profits of each of the years mentioned in cl.
(ii) of the proviso shall be deemed to have borne tax.
clause (a) of cl.
(ii) is concerned with cases where an order has been made under section 23A (1) in respect of the undistributed profits of that year at the rate of five annas in a rupee.
We are not concerned with this clause in the present appeal.
It is sub cl.
(b) of el.
(ii) of the explanation to the proviso to paragraph B that falls for consideration in the present appeal.
The appellant 's case is that the expression " at the rate applicable to the total income " means the rate prescribed by paragraph B of the Act and not the rate at which income tax has actually and in fact been levied.
This contention has been rejected by the High Court and the appellant urges that the High Court was in error in rejecting its case.
The argument is that the words " at the rate applicable to the total income of the company " must be strictly and literally construed and reliance is placed on the principle that fiscal statutes must be strictly construed.
On the other hand, as observed by Maxwell " the tendency of modern decisions upon the whole is to narrow materially the difference between what is called a strict and beneficial construction (1) ".
Now the words " the rate applicable " may mean either the rate prescribed by paragraph B or the rate actually applied in the light of the relevant statutory provisions.
"Applicable", according to its plain grammatical meaning, means capable of being applied or appropriate; and appropriateness of the rate can be determined only after considering all the relevant statutory provisions.
In this sense it would mean the rate actually applied.
In the present case, if sub cl.
(b) is read as a whole, and all the material words used are given their plain grammatical meaning, its construction would present no serious difficulty.
When the clause refers to the rate applicable, it is necessary to remember that it refers to the rate applicable to the total income of the company for (1) Maxwell on " Interpretation of Statutes ", 10th Ed.
p. 284.
151 that year.
In other words, the clause clearly refers to the specific or definite rate which is determined to be applicable to the taxable income of the company for the specific year; and it is not the rate prescribed by the Act for the relevant year generally in reference to incomes of companies.
The result is that, for determining the aggregate amount of income tax actually borne by the excess dividend, the department must take into account the rate at which the income of the company for the specific year has in fact been applied or levied.
Besides, in construing the words "I the rate applicable " we must bear in mind the context in which they are used.
The context shows that the said words are intended to explain what should.
be taken to be " the tax actually borne ".
If the legislation had intended that the tax actually borne should in all, cases be determined merely by the application of the rate prescribed for companies in general, the explanation given by the material clause would really not have been necessary.
That is why in our opinion, the context justifies the construction which we are inclined to place on the words " the rate applicable ".
The same position is made clear by the further provision in sub cl.
(b) itself which requires that the relevant rate has to be reduced by the rate at which the rebate, if any, has been allowed on the undistributed profits; which means that, for determining the rate in sub cl.
(b), it is necessary to take into account the rebate which may have been allowed to the company under el.
(1) of the proviso to paragraph B, so that in such a case the rate applicable cannot be the rate prescribed in paragraph B of the Act; it must be the rate so prescribed reduced by the rate at which the rebate has been granted under cl.
(1) of the proviso to paragraph B.
It is thus clear that the words " rate applicable in such cases mean the rate determined after deducting from the rate prescribed by paragraph B the rate of rebate allowed by el.
(1) of the proviso to the said paragraph.
Therefore, at least in these cases, the material words mean the rate actually applied.
If that be the true position, the rate applicable must in 152 all cases mean the rate actually applied.
The same words cannot have two different meaning,% in the same clause.
Incidentally we may point out that the provision of the Act in regard to the payment of additional income tax appears to be intended to impose a penalty for distributing dividends beyond the distributable.limit mentioned by the statute.
The method prescribed for determining the amount of this additional income tax is this.
Calculate the amount at the rate of five annas per rupee on the excess dividend and deduct from the amount so determined the aggregate amount of income tax actually borne by such excess dividend; the balance is the amount of additional income tax leviable against the company.
In adopting this method, if rebate admissible under cl.
(1) of the proviso to para.
graph B has to be deducted from the rate prescribed, it is difficult to understand why a rebate granted under paragraph 6(iii) of the Order should not likewise be deducted.
We accordingly hold that the rate applicable in sub cl.
(b) of cl.
(ii) of the explanation read with cl.
(ii) of the proviso to paragraph B of Schedule I of the Act means the, rate actually applied in a given case.
On, this construction the rate at which the appellant is liable to pay the additional income tax would be the difference between the rate of five annas and the rate of sixteen pies in a rupee at which the appellant has in fact paid income tax in the relevant year.
That is to say, the additional income tax is leviable at the rate of forty four pies in a rupee.
In its judgment, the High Court of Saurashtra has referred with approval to the decision of the Bombay High Court in Elphinstone Spinning and Weaving Mills Co., Ltd. vs Commissioner of Income tax, Bombay City(1).
In this case, Chagla C. J. and Tendolkar J. have held that if a company has no taxable income at all for the assessment year 1951 52 and in that year it pays dividends out of the profits earned in the preceding year or years, additional income tax cannot be levied on the company by reason of the fact that it has paid an excess dividend within the meaning of that 153 expression in, the proviso to paragraph B of Part I of the Act.
We are not concerned with this aspect of the matter in the present appeal.
However, in dealing with the question raised before them, the learned judges have incidentally construed the relevant words " rate applicable" as meaning the rate actually applied; and their observations do support the view taken by the Saurashtra High Court in the present case.
The result is the appeal fails and is dismissed with costs.
Appeal dismissed.
| The assessee, a private limited company in Saurashtra, was assessed for the assessment year 1952 53 on a total income of Rs. 26,385.
It was assessable at the rate of four annas per rupee but in view of the provisions of the Part B States (Taxation Concession) Order, 1950, it was actually assessed at the rate of sixteen pies per rupee.
The assessee had declared dividend of Rs. 30,000 out of which Rs. 15,159 was found to be excess dividend.
On this excess dividend the assessee was liable to pay additional income tax and the dispute was regarding the rate at which tax was to be computed.
Clause (ii) of the proviso to para.
B of Part.
I of the First Schedule to the Finance Act, 1951, which applied to the case, provided that the additional income tax was to be equal to the sum by which the aggregate amount of income tax actually borne by the excess amount fell short of the amount Calculated at the rate of five annas per rupee on the excess dividend.
Sub clause (b) of cl.
(ii) to the second explanation to proviso to para.
B provided that the aggregate amount of income tax actually borne by the excess dividend was to be determined at the rate applicable to the total income of the company.
The assessee contended that the words 'at the rate applicable to the total income of the company ' meant the rate prescribed by para.
8 of the Act, i.e. four annas per rupee, and not the rate as reduced by the Order at which the income tax had actually and in fact been levied and that consequently it was liable to pay additional income tax on the excess dividend at the rate of one anna per rupee only.
Held, that the expression 'rate applicable to the total income of the company ' meant the rate actually applied and that the assessee was rightly charged at the rate of forty four pies per rupee being the rate by which the rate at which the assessee was actually assessed fell short of the rate of five annas per rupee.
The clause referred to the specific or definite rate which was determined to be applicable to the taxable income of the company for that specific year and not to the rate prescribed by the Act for the relevant year generally in reference to incomes of companies.
143 Elphinstone Spinning and Weaving Mills Co. Ltd. vs Commis sioner of Income tax, Bombay City, , con sidered.
|
Summarize this legal judgement text concisely | Appeal No. 91 of 1954.
Appeal from the judgment and decree dated December 10, 1948, of the Madras High Court in Regular First Appeal No. 609 of 1946, arising out of the judgment and decree dated March 30, 1946, of the Court of the Subordinate Judge of Chicacole in Original Suit No. 1 of 1943.
A. V. Viswanatha Sastri and R. Ganapathy Iyer, for the appellant.
K. M. Rajagopala Sastri and section K. Sastri, for respondents Nos. 1, 2, 3, 5 7, 13 and 24 27.
October 6.
The Judgment of the Court was delivered by SINHA J.
The only question for determination in this appeal by the first defendant, on a certificate granted by the High Court of Madras, is whether the renewal of a lease for running a salt factory, granted by the Government in favour of the appellant and others (defendants 1 to 7), could be treated as an asset of the dissolved partnership between the contesting parties.
The trial court decided this question in favour of the contesting defendants.
On appeal by the plaintiffs and some defendants on the side of the plaintiffs, the High Court of Madras determined this controversy in favour of those appellants.
Hence, this appeal by the first defendant whose interest is identical with that of defendants 2 to 7.
The reference in this judgment to I appellant ' will, thus, include the interest of the other non appealing defendants also.
The relevant facts of this case, upon which the appeal depends, may shortly be stated as follows: The contesting parties used to carry on the business of salt manufacture in accordance with the rules laid down by the Government under the Madras Salt Act 76 (Mad. 4 of 1889) (which will, hereinafter, be referred to as the Act).
It is not permissible to manufacture salt otherwise than tinder the provisions of the Act.
The land and the factory where salt used to be manufactured by the parties, are Government property.
It appears that the first plaintiff, the father of plaintiffs 2 to 4, plaintiff 5, the first defendant and the deceased father of defendants 2 to 7, had made bids for the lease of the land and the factory, and the highest bid of the defendants aforesaid, was accepted; and in pursuance thereof, a lease for 17 years from January 1926, to December, 1942, was granted by the Government in favour of the first defendant and the father of defendants 2 to 7. 'By a deed of partnership dated March 18, 1926, the first plaintiff with a two anna share, the father of plaintiffs 2 to 4, having a similar share, and plaintiff 5 with another two anna share, on the one hand, and the first defendant, having a five anna share, and the father of defendants 2 to 7, with the remaining five anna share, entered into a partnership for running the salt factory.
The terms of the partnership will have to be discussed in detail hereinafter.
They contributed a sum of Rs. 30,000 for paying the premium for the lease and for other incidental expenses in running the factory, in proportion to the shares just indicated.
The father of defendants 2 to 7, who had a five anna share in the business, died in August, 1935, and the defendants 2 to 7 were admitted as partners in place of their father.
In accordance with the rules of the salt department, the requisite licence for the manufacture of salt, was granted to the first defendant and the father of the defendants 2 to 7, in, whose name, the lease also stood.
In or about the year 1939, differences arose between the parties, but the business continued to be carried on by the defendants 1 to 7.
In August 1941, in accordance with the changed policy of the Government, which substituted the practice of settling salt leases by renewal of the lease in favour of those lease holders whose conduct had been satisfactory in the opinion of the Department, for the old practice of settling salt leases to highest bidders, the Collector enquired from the old 77 lease holders whose record had been satisfactory from the point of view of the salt department, whether they would take renewal for a period of 25 years.
The appellant as also.
the other defendants aforesaid, their conduct having been satisfactory, were amongst those lessees who had been 2invited to make applications for the renewal of their leases.
Accordingly, they made their application in July, 1942, and a fresh lease for 25 years, was granted to them on April 15, 1943, for the period January, 1943 to December, 1967, in pursuance of the Collector 's order passed in November, 1942 (exhibit P 15(a)).
The terms of the new lease will have to be discussed later in the course of this judg ment.
As the term of the previous lease and of the licence to manufacture and sell salt which 'was the partnership business was to expire at the end of December, 1942, one of the contesting defendants, served a notice upon one of the plaintiffs to the effect that as.
the partnership was expiring at the end of the month, the partners should settle their accounts, and make arrangements for the disposal of the unsold stock of 82102 maunds of salt.
The reply to the notice was given on December 28, 1942, through an advocate, alleging inter alia that the application for the renewal of the lease for a period of 25 years had been made on behalf and with the consent of all the partners, and that, thus, the partnership business was agreed to be continued even after the expiry of the term of the previous partnership.
The answer further attributed fraud and "evil intention " to the other party.
The answer also called upon the defendants to pay a penalty of Rs. 2,500 per head, and to hand over the entire partnership lease property to the plaintiffs ' party.
Thus, the exchange of the notices aforesaid was a prelude to the institution of the suit on January 5, 1943, that is to say, even before the fresh lease had been executed by the Government in favour of the contesting defendants 1 to 7.
The suit was instituted on the footing that the original partnership continued even after December, 1942, inasmuch as the fresh lease had been obtained in pursuance of a unanimous resolution of all the partners 78 to obtain the new lease for the partnership business.
But an alternative case also was sought to be made out that even if the partnership did not continue after December, 1942, as a result of.
the acts of the defendants, the benefit of the fresh lease for 25 years should be treated as an asset of the dissolved partnership business, and should be taken into account in the process of dissolution of the partnership.
The plaint as framed contained a large number of reliefs to which, the plaintiffs claimed, they were entitled, for example, a declaration that the partnership was continuing, and that the defendants 1 to 7 had forfeited their rights in the partnership as a result of their fraudulent acts, an injunction restraining defendants 1 to 7 from carrying on the salt works independently of the partnership and on their own account, and the declaration that the renewal of the lease in the name of the defendants 1 to 7, for a further period of 25 years, was for the benefit of the partnership.
But at the trial, the plaintiffs, perhaps, realizing the weakness of their position, elected to put in a memorandum in the trial court on February 8, 1946, confining their prayers to reliefs on the basis of a dissolved partnership, and giving up other reliefs, which they claimed on the footing of the partnership still continuing.
Thus, at the trial, the reliefs claimed were confined to taking accounts between the parties of the dissolved partnership, and treating the fresh lease for 25 years, as part of the assets of the dissolved firm.
It is, therefore, not necessary to refer to the defendants ' written statement, except with reference to the plaintiffs ' claim to have the renewed lease for 25 years treated as an asset of the dissolved partnership.
The contesting defendants 1 to 7 stoutly denied that the plaintiffs ' claim in respect of the fresh lease for 25 years, was well founded.
They asserted that they only were entitled to run the business on the fresh lease and licence meant only for their benefit and not for the benefit of the dissolved partnership.
The trial court passed a preliminary decree, declaring that the partnership stood dissolved on December 31, 1942, and for taking accounts.
As regards the 79 benefit of the renewed lease for 25 years, the trial court negatived the plaintiffs ' claim that the dissolved partnership carried any firm or trade name, which(, could be said to have any tangible goodwill, and that the defendants could not be restrained from carrying on the business in their own names as they had been doing in the past.
After expressing a doubt as to whether there was any goodwill of a particular firm name, the court directed that "the Commissioner is authorized to sell the goodwill of the old firm for what it is worth by way of realization of the assets of the dissolved firm as amongst the partners.
" In effect, therefore, the trial court decided that the plaintiffs were not entitled to the benefit of the new lease.
On appeal to the High Court, the learned Chief Justice, delivering the judgment of the Division Bench, came to the conclusion that the plaintiffs ' case that the fresh lease had been obtained as a result of the resolution of the partners to carry on the business after the lapse of the specific period of the partnership which came to an end in December 1942, had not been made out.
But on the alternative plea of the plaintiffs, the Court, after an elaborate discussion of English and Indian Law on the subject, held that the plaintiffs were entitled to treat the new lease as an asset of the dissolved partnership.
The conclusion of the High Court may better be stated in its own words, as follows: "In conclusion, we hold that the new lease obtained by Defendants 1 to 7 in renewal of the old lease which formed the subject matter of the partnership, must be held by them for the benefit of the other members of the partnership, who are entitled to share in the advantage gained by Defendants 1 to 7.
As the lease itself was executed after the termination of the partnership and as it is not the case of the Appellants that any one other than defendants 1 to 7 had furnished the consideration for the new lease, the benefit of the renewal alone 'will be treated as an asset of the partnership which terminated on 31st December, 1942, and a value placed on it.
The Commissioner appointed 80 by the lower Court may, after taking such evidence as may be necessary, be directed to fix the value in the first instance.
In arriving at a value, the liability of defendants 1 to 7 to furnish capital and incur the necessary expenses for carrying on the new business with its attendant risks and also possibilities of profits, are factors to be taken into account.
" In those words, the High Court set aside the judgment and decree of the trial court, and allowed the appeal in terms which the Commissioner appointed to take accounts of the dissolved partnership, may not find it easy to implement.
In support of this appeal, the learned counsel for the appellant, has contended that the High Court has misdirected itself in construing the provisions of the Indian Trusts Act, in holding that a constructive trust had been made out in favour of the plaintiffs; that there is no absolute rule that the renewal of a lease which was the subject matter of a partnership, must always enure to the benefit of the old partners; and that the essential ingredients of section 88 of the Trusts Act, had not been made out in this case.
He also contended that the lease by itself, did not create a right to manufacture salt and to sell it, and that a licence is a necessary pre requisite to carry on the business of manufacture and sale of salt in accordance with the rules of the Department, and that it is open to the Department not to recognise any partners in the business.
In this case, it was further contended, the licence to sell salt had been granted only in 1945.
Under the English law, there may be a presumption that the renewal of a lease which formed the subject matter of a partnership, will enure for the benefit of the partners, but he contended that in the circumstances of this case, such a presumption could not arise, and even if it did, it was rebutted by the following facts.
The term of the original partnership was a fixed one, terminating with the term of the lease and of the licence to manufacture salt, which came to an end with the year 1942; the partnership deed did not contemplate that this business would be extended beyond the fixed term in the event of a fresh lease 81 being obtained from the Government.
It was highly significant that the term of the partnership to carry on the salt business was deliberately fixed as conterminous with the terms of the lease and the licence.
The plaintiffs never took any steps to obtain a renewal of the lease, nor was there any evidence that they asked the defendants to take a renewal for the benefit of all the partners.
On the other hand, when the defendants applied on their own behalf for a fresh lease for 25 years, the plaintiffs put in a petition of protest, and prayed to the Government for being included in the category of lessees in the lease to be granted for 25 years, as co lessees, but without any success.
There is no allegation in the plaint of any attempt at concealment on the part of the appellants to the effect that they were taking the lease for their own benefit.
Nor was there any evidence that the defendants had taken any advantage of their position as partners, or had utilized any funds of the partnership for obtaining the fresh lease.
Lastly, it was contended that differences having cropped up between the parties during the years 1939 to 1942, it could not be said that the plaintiffs placed such a confidence in the defendants as to place them in the position of constructive trustees within the meaning of section 88 of the Trusts Act.
On the other hand, it was contended on behalf of the respondents that the fresh lease for 25 years, was granted to the appellants as a result of the changed policy of the Government, by which they substituted the renewal to approved parties in place of the old practice of settling the terms of the lease by open competition and by holding auction sales.
The contesting defendants obtained the lease in their names because they were entered in the Government records as the original lessees, and as the original lease was admittedly for the benefit of all the partners, the new lease also must be treated as being founded on the old lease.
It was also contended that section 88 of the Trust Act, was not exhaustive, and that even if the present case did not come strictly within the terms of that 11 82 section, the rule of English law relating to constructive trusts, applied to the case, and that, therefore, the High Court was quite justified in coming to the conclusion that the lessees were in the position of trustees when they obtained the renewed lease.
The plaintiffs failed in their attempt to be included in the category of joint lessees along with those defendants because of the changed policy and the rules of the Department.
Hence, the plaintiffs were in a position of disadvantage as compared to the defendants in whose name, the original lease and the licence stood.
In view of those facts, it was further contended, the plaintiffs could not either get the lease independently for themselves, or succeed in getting their names included in the category of joint lessees.
Lastly, it was contended that in the circumstances of the present case, the presumption of law that the defendants were constructive trustees, had not been rebutted.
Before dealing with the arguments advanced on be.
half of the parties, it is convenient to set out, in brief outline, the system of working salt factories under the Act (Mad. 4 of 1889), which was enacted to " consolidate and amend the law relating to the salt revenue in the Presidency ".
Under the Act, a " salt factory " includes any place used or intended to be used for the manufacture of salt or for the storage or keeping of the same, as defined from time to time by the Collector of salt revenue.
" Licensee ", under the Act, means a person to whom a licence to manufacture salt or saltpeter, is issued, and includes any person registered as the transferee of such licence under the provisions of the Act.
Under section 8, only licensees or public servants under the Central Government, are authorized to manufacture salt.
Section 9 of the Act, authorizes the Collector of salt revenue to grant licences for the manufacture of salt in respect of specified salt works, containing such particulars and conditions as the Central Government may prescribe from time to time.
Such a licence may be for the manufacture of salt for sale to the Central Government or for general sale; and may be transferred or relinquished in accordance with the prescribed rules.
Section 12 lays down that? 83 a licensee shall be taken to be the owner of the licence and of the salt works specified therein.
It is open to the Central Board of Revenue to establish a new salt, factory, and, subject to the payment of compensation, to close any salt factory or a portion thereof, and thus, cancel or amend the licence.
A provision has also been made by section 17 for the grant of a temporary licence for the manufacture of salt in certain contingencies.
Section 25 authorizes the Collector of salt revenue to impose upon a licensee a fine according to the prescribed scale, or to suspend a licence or even to cancel a licence for want of due diligence or default by a licensee.
Section 43 contains a prohibition against the removal of salt from a salt factory otherwise than on account of the Central Government or for transport to a place of storage authorized by the Collector of salt revenue, except under a permit and upon payment of duty at the fixed rate.
The Central Government is authorized to make rules generally for carrying out the provisions of the Act, and specially for regulating certain matters set out in section 85.
Such rules, on publication in the official gazette, have the force of law, and have to be read as part of the Act.
It is common ground that elaborate rules have been laid down by the Government, for regulating the manufacture and sale of salt, so as to safeguard public revenue and to prevent the manufacture of contraband salt.
It is, thus, clear that the business of manufacture of salt, which the parties to the agreement of partnership carried on, was not an ordinary occupation, which, is free from such strict rules and regulation as have been laid down by and under the Act.
The licensee owes a special responsibility to the Government, and, therefore, the transfer or relinquishment of licences under the Act, has to be regulated according to the rules laid down by the Government.
It is true that there is no absolute prohibition against such transfer or relinquishment, but the Government through its public officers, has the determining voice in such matters.
It is in the background of the law laid down by or under the Act, that we have to discuss the rights and 84 lease.
The first lease, a draft copy of which is on the record as ex.
P 16 at pp.
101 to 105, is an indenture between the Secretary of State for India in Council as the lessor, and the first defendant and the father of defendants 2 to 7, as the lessees.
The consideration for the lease is the sum of Rs. 25,000/ .
The lease is for a period of 17 years from January 1, 1926, subject to either party having the right to determine the lease by a notice in writing at the close of the salt manufacturing season.
It provides that on the expiry of the lease or its sooner determination as aforesaid by notice on either side, the lessees shall leave the demised premises which had been leased out exclusively for the manufacture, storage and sale of salt and for the works connected therewith, without any right to erect any dwelling houses, etc.
It also provides that the lessees shall be granted a modified excise licence in Form E 1(d).
It also contains the condition that the lessees shall not, except with the written consent of the lessor, first had and obtained, assign, underlet, or part with the possession of the leased land or any portion thereof.
The lessees may take a partner or partners, who may be approved by the Collector in the business.
The lease also contains detailed provisions as to how the business of manufacture has to be carried on under the supervision of the public authorities like the Collector.
The renewed lease, exh.
D 18, dated April 15, 1943, is between His Excellency the Governor General in Council, as the lessor and the contesting defendants as the lessees, for a period of 25 years commencing from January 1, 1943.
There is no payment of any premium for the lease.
The other terms and conditions of the lease are similar to the previous one.
Though temporary licences were granted from time to time, it was only on April 17, 1945, that a " revised permanent licence " was granted, and the temporary licence granted for 1945, was cancelled.
The " co partnership deed " as it is called, which is dated March 18, 1926, is between five individuals, and provides that those five persons should enjoy the profit 85 or bear the loss thereof, according to the shares indicated above; " that as the licence in the salt stands in the names of Chennuru Appala Narasayya Chetty and Guruswamy Chetty out of us, the said individuals only shall be responsible thereto "; and that " In case the said Appala Narasayya Chetty and Guruswamy Chetty or their heirs fail to render proper accounts whenever demanded according to the aforesaid terms to the remaining three sharers or their heirs during the salt lease period of seventeen years and commit defaults or any kind of frauds, Appala Narasayya Chetty Garu and Guruswamy Chetty Garu shall pay by way of penalty to the said three sharers at the rate of Rs. 2,500/ (two thousand five hundred) per share for the year when fraud is committed, without having anything to do with the other profits and losses.
" It is, thus, clear that the partnership was for the fixed term of 17 years, ending with the period of the lease, and the parties did not, in terms, contemplate the continuance of the partnership after the expiry of that period.
Their rights and liabilities are entirely with reference to the said period of 17 years, there being no provision for the continuance of the business by the partnership after the expiry of the said term.
If there bad been a specific stipulation in the partnership deed, or even an indication that the partnership business would continue even after the expiration of the 17 years, which was the term of the partnership, different considerations may have arisen.
It could then have justly been said that the managing partner owed a duty to the other partners to obtain a renewal of the previous lease.
It is, therefore, not without significance that in para.
12 of the plaint, the plaintiffs specifically alleged that it had been unanimously resolved by the partners that a renewal of the lease should be obtained for a further period for the benefit of the partnership, and that as a matter of fact, the renewal was obtained in pursuance of that resolution and by using the goodwill of the partnership.
This specific case has failed in both the courts below, but the High Court, in disagreement with the trial court, has accepted the alternative case as made 'out, 86 in para.
17 of the plaint, that the renewal of the lease should be treated as an asset of the partnership in ,settling the accounts and dividing the assets of the dissolved partnership.
But even in para.
17, there is no specific case made out under section 88 of the Indian Trusts Act (II of 1882).
It is not alleged, in terms, that the contesting defendants filled a fiduciary character, and were, thus, bound to protect the interest.% of all the partners in obtaining the renewal of the lease, or that, in so doing, their interests were adverse to those of the other partners, and they had, this gained a pecuniary advantage to the detriment of the other partners.
Though the plaintiffs had suggested that the contesting defendants had large funds, amounting to about Rs. 90,000, of the partnership, portion of which had been set apart for Payment of premium and for other expenses incidental to the renewal of the lease, it had been found, and there cannot be the least doubt about it, that no funds of the partnership had been utilized for obtaining the new lease.
As already indicated, no premium had to be paid for the fresh lease obtained by the contesting defendants.
Though no foundation was laid in the pleadings, strictly construed, for a case tinder section 88 of the Indian Trusts Act, we have still to examine the question ' whether the High Court was right in holding that either under that section or under the general law, apart from the statutory law, the contesting defendants bad placed themselves in such a position as to render themselves accountable as constructive trustees.
Section 88 is in these terms: " 88.
Where a trustee, executor, partner, agent, director of a company, legal adviser or other person bound in a fiduciary character to protect the interests of another person, by availing himself of his character, gains for himself any pecuniary advantage, ' or where any person so bound enters into any dealings under circumstances in which his own interests are, or may be, adverse to those of such other persons and thereby gains for himself a pecuniary advantage, he must hold for the benefit of such other person the advantage so gained.
" 87 The section is in two parts.
In order to bring the case within the first part, it has to be shown that the contesting defendants had a fiduciary character, and were thus, in duty bound to protect the interests of the other partners in the matter of obtaining the lease; and that they obtained the lease for themselves instead, by availing themselves of that character.
As already pointed out, it was not within the scope of the partnership in accordance with the terms of the deed, to obtain a renewal of the lease.
At the time of entering into the partnership, the parties were fully cognizant of the rules of the Department then in force, according to which a fresh lease could be granted to the highest bidder irrespective of any other con siderations as to whether any one of the bidders war, a previous lessee.
The renewal of the lease without payment of any premium, was the result of the changed policy of the Government, according to which the personal conduct of the lessees, and not the amount of premium, was the determining factor in the grant of a fresh lease.
Because the contesting defendants bad managed the factory well and to the satisfaction of the Revenue Authorities, they were able to obtain the fresh lease, and it cannot be said that they had availed themselves of their character as partners in obtaining the renewal of the lease.
The plaintiffs ' allegation that the goodwill of the firm had been utilized for obtaining the renewal, has also not been found by the courts below to be true, because the basic allegation that there was a partnership firm with a goodwill, had not been established as a fact.
In our opinion, therefore, the plaintiffs have failed to bring the case within the first part of section 88.
We shall now examine the position whether the plaintiffs have made out a case in terms of the second part of the section.
In order to do so, it bad to be shown that the contesting defendants, while obtaining renewal of the lease, had placed themselves in such a position as to render their interests adverse to those of the other partners, and had thereby obtained a pecuniary advantage, which they.
must hold for the benefit 88 of the other partners as well.
In this connection, illustrations (d) and (e) under the section, are instruc tive.
If the plaintiffs had succeeded in proving, as they had attempted to do, that any funds or any goodwill of the alleged firm name, had been utilized for obtaining the renewal of the lease, the case would have directly come under illustration (d).
illustration (e), on the face of it, does not apply, because on the findings, the defendants were not negotiating for the renewal of the lease on behalf of the entire body of partners, nor is there any allegation that they had clandestinely stipulated for themselves a benefit to the detriment of the partnership business or funds.
In this connection, it has to be noted that the suit was instituted months before the renewed lease was actually granted, and years before a permanent licence for the manufacture and sale of salt, was issued to the contesting defendants.
It has also to be noted that the grant of the lease by itself does confer on the grantee the right to manufacture and sell salt.
The lease has to be followed by a permanent licence in order to enable the grantee to carry on the business of manufacturing, storing and selling salt.
Hence, the lease by itself has no value unless it is followed by a licence to manufacture and sell salt, which was granted only on April 17, 1945, about two years and four months after the expiry of the previous lease and licence, which, as already indicated, were conterminous with the term of the partnership.
That is the reason why the High Court granted the decree in favour of the plaintiffs in terms which are rather amorphous and which do not easily lend themselves to conversion in terms of money.
This is a business in which the personal factor of the persons in charge of managing the business, is more important than anything else.
Another important matter which has a bearing on the case, has also to be adverted to.
Between the years 1939 and 1942, that is to say, during the last three years of the term of the partnership, the partners Were not on cordial terms, and there does not appear to have been much of confidence between them.
The" had already started quarreling and attributing 89 unworthy motives.
There is, therefore, hardly any room for importing the idea of such confidence amongst partners as would render the contesting(, defendants occupying a fiduciary position, apart from the fact that they were partners.
As already indicated, the partnership stood automatically terminated at the end of the year 1942.
The actual grant of the lease in question was made in April 1943, and the permanent licence to manufacture and sell salt, was granted only in 1945.
Hence, strictly speaking, when the suit was instituted in January, 1943, legally, there was no lease in existence, nor could the business of manufacture and sale of salt be effectively carried on until the grant of the permanent licence.
The plaintiffs could have a cause of action in respect of the renewed lease if their substantive case of continuing partnership had been established.
But that case having failed, it is a little difficult to appre ciate how they could claim any interest in the renewed lease as an asset of the partnership business.
The fiduciary character as between the partners had ceased on the termination of the original lease and of the partnership business.
On such a termination, there was no interest of the partners, which the contesting defendants were bound to protect.
For the same reasons, the defendants ' character as partners had ceased, and they could not, therefore, be said to have availed themselves of their character as partners in obtaining the fresh lease.
For all these reasons, it must be held that the plaintiffs have failed to bring the case strictly within the terms of section 88 of the Indian Trusts Act.
A passing reference was made by the learned counsel for the respondents to the terms of section 90 of the Trusts Act.
But it will be noticed that whereas section 88, quoted above, makes a specific reference to partners and agents, etc., section 90, in terms, applies to a tenant for life, a co owner, a mortgagee, or any other qualified owner of any property.
Section 90, therefore, in terms, could not apply to the case.
Even if it did, it does not carry the case any further in favour of the plaintiff respondents.
12 90 that even though the provisions of the Trusts Act, did not, in terms, apply to the case, the general principles of law as applied in the English courts, support the plaintiffs ' case.
In this connection, reliance was placed upon the cases of Featherstonhaugh vs Fenwick (1), Clegg vs Fishwick (2), Clements vs Hall (3), Clegg vs Edmondson (4), In re Biss, Biss vs Biss (5), Griffith vs Owen (6) .
The law in England has been summarized in Halsbury 's Laws of England, 2nd Ed., Vol. 24 (Lord Hailsham 's Edition) in article 863 at p. 450, as follows: " The renewal of a lease of the partnership property by one or more of the partners without the privity of the others enures for the benefit of all.
The rule is the same when the intention to renew is communicated to the others if the latter are prompt to assert their rights; and it is immaterial whether the term of the partnership is definite or indefinite, or whether the lessors would have refused to renew to the partners who are not privy to the renewal.
The representatives of a deceased partner may have a right to share in the profits derived from a renewal of the lease by the surviving partner.
" Most of the cases relied upon on behalf of the respondents, form the basis of the statement of the law in England, quoted above.
On a close examination of the English precedents aforesaid, it will be found that there is no absolute rule of law or equity that a renewal of a lease by one partner, must necessarily enure for the benefit of all the partners.
There is a presumption of fact, as distinguished from a presumption of law, that there is an equity in favour of the renewal of the lease enuring for the benefit of all the partners.
But such a presumption being one of fact, is rebuttable, and must, therefore, depend upon the facts and circumstances of each case.
The Indian Legislature has substantially adopted the English law quoted above, while enacting (1) ; (3) ; (5) (2) ; (4) ; (6) [1907] I. ch.
91 the rules laid down in the Indian Trusts Act, particularly, sections 88 and 90 of the Trusts Act.
In the instant case, the facts that.
the parties deliberately chose to fix the term of the partnership as conterminous with the term of the lease and licence ending with the year 1942; that they did not, in express terms, or by necessary implication, make any provision for extending the period of the partnership or for obtaining renewal of the lease and the necessary licence; that there was no averment or proof of any clandestine acts on the part of the contesting defendants in the matter of obtaining the renewal of the lease; that the plaintiffs themselves made attempts, though unsuccessful, to get themselves included in the category of grantees at the time of the renewal of the lease ; that the special nature of the business required personal efficiency and good conduct on the part of the actual managing agents; that no funds of the expiring partnership or any goodwill of the partnership was utilized for obtaining the fresh lease; that the fresh lease and licence were granted to the contesting defendants in consideration of their personal qualities of good management and good conduct; that the parties were not on the best of terms during the last few years of the partnership, and finally, that the lease and the permanent licence were actually granted after the partnership stood automatically dissolved at the end of 1942, are all facts and circumstances which point to only one conclusion, namely, that the renewal of the lease was not intended to be for the benefit of all the quondam partners.
Those facts and circumstances amply rebut any presumption of fact that the lease should enure to the benefit of all the parties.
For the reasons given above, it must be held that the judgment and decree passed by the High Court, in so far as they reverse those of the trial court, are erroneous, and must be set aside.
The appeal is, accordingly, allowed with costs throughout, which are attributable to the single issue which has been decided in this Court.
Appeal allowed.
| The appellant, defendant No. 1 in the suit, from which the appeal arises, and the father of defendants 2 to 7, as the highest bidders, obtained a seventeen years ' lease of a salt factory from the Government and the license to manufacture and sell salt under the Madras Salt Act, 1889.
They entered into a partnership with the plaintiffs to carry on their business for the period of the lease.
On the death of their father, defendants 2 to 7 were admitted into the partnership.
The partnership agreement made no provision for the continuation of the partnership on expiry of the lease or for the acquisition of a fresh lease on behalf of the partnership.
The lease expired, the license came to an end and the partnership stood automatically dissolved.
The Government changed its old policy of granting leases to the highest bidders and adopted one of renewing them in favour of previous lessees in whom they had confidence.
The appellant 10 74 and defendants 2 to 7 applied for the renewal of the lease that stood in their names.
The plaintiffs also applied for a grant of it to them.
No premium was called for and none had to be paid.
The Revenue Authorities chose to renew the lease in favour of the appellant and the said defendants f or a further period of 25 years.
The plaintiffs filed the suit claiming that the renewal of the lease was an asset of the dissolved partnership.
The trial Court found against them but the High Court on appeal reversed that finding.
The suit was instituted months before the renewal of the lease and years before the renewal of the license, which alone could enable the licensee to manufacture and sell salt.
The Courts below found that the allegation of the plaintiffs that the goodwill and assets of the firm had been utilised for obtaining the renewal of the lease was unfounded, as they had failed to prove that a partnership firmatall existed.
It was also found that during the last three years of the existence of the partnership, the parties had fallen apart and lost mutual confidence.
The question for decision was whether section 88 of the Indian Trusts Act applied and the renewal of the lease in favour of the appellant and the said defendants for running the salt factory could be treated as an asset of the dissolved partnership between the contesting parties.
Held, that in order that a case might be brought within the purview of section 88 of the Indian Trusts Act, it must be shown either that (1) a person had a fiduciary character and was thus in duty bound to protect the interests of others or that (2) he had placed himself in such a position as to render his interest adverse to those of the others and had thereby obtained a pecuniary interest which he must hold for their benefit as well.
As in the instant case the fiduciary character of the partners came to an end with the termination of the original lease and of the partnership business along with it, there could no longer be any subsisting interest in a partner which another was bound to protect nor could one partner be said to have availed of his character as a partner when he obtained the fresh lease.
Section 88 of the Indian Trusts Act or the illustrations (d) or (e) thereto could, therefore, have no application, nor could section go of the Act, which in terms had no application even if applied, improve the position of the plaintiffs.
No question of a constructive trust could also arise under the general law apart from the statute.
There is no absolute rule of law or equity in England that renewal of a lease by one partner must necessarily enure to the benefit of all the partners.
There is, however, a presumption of fact that there is an equity in favour of the renewal of the lease enuring to the benefit of all the partners.
Such a presumption may be rebutted by the facts of a particular case.
The Indian law as enacted in the Indian Trusts Act, and particularly sections 88 and go of that Act, is substantially the same.
In the instant case, the facts and circumstances amply rebut that presumption.
75 Featherstonhaugh vs Fenwick, ; , Clegg vs Fishwick; , , Clements vs Hall, ; , Clegg vs Edmondson, ; , In Ye Biss, Biss vs Biss, and Griffith vs Owen, [1907] I Ch. 195, G considered.
|
Summarize this legal judgement text concisely | Appeals nos.
317 to 320 of 1957.
Appeal from the judgment and order dated March 5, 1954, of the Madras High Court, in Writ Petitions Nos. 613 and 629 of 1952 and 201 and 202 of 1953.
A. V. Viswanatha Sastri and B. K. B. Naidu, for the appellants.
191 A. N. Kripal, R. H. Dhebar and D. Gupta, for respondent No. 1. 1958.
October 15.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J.
These four appeals arise from four petitions filed against the Income tax Officer , Nellore Circle, Nellore, respondent 1, in respect of the proceedings taken by him against three firms under section 34 of the Indian Income tax Act (hereinafter called the Act).
The firm M/s. Bellapu Audeyya and Chilla Pitchayya was formed on April 20, 1936, and it was dissolved on March 31, 1948.
It consisted of two partners, Chilla Pitchayya and Bellapu Audeyya.
Chilla Pitchayya had started another firm in the name and style of G. Pitchayya & Co. with another partner R. Subba Rao.
This firm was formed on July 30, 1941, and it was dissolved on March 31, 1949.
Bellapu Audeyya and.
Chilla Pitchayya had also formed another firm along with five other partners which carried on its business in the name and style of Prabbat Textiles.
This firm was formed on December 1, 1941, and it " as dissolved by a decree of the civil court Passed oil December 22, 1949, the dissolution having taken effect from January 1, 1949.
All the three firms were carrying on business in yarn and cloth and all of them were registered under section 26A of the Act.
It appears that for the purpose of assessing the income of these firms for the years 1943 44 and 1944 45, respondent 1 was satisfied on making enquiries that each of the three firms was a separate entity and so separate assessment orders were passed in respect of the income of each one of them for the said two years.
Subsequently on August 14, 1951, respondent I issued notice against the firm of Prabliat Textiles under s.34 of the Act.
In the proceedings thus commenced, respondent I hold that the firm of Prabhat Textiles was a fictitious tirm and that the real partners ",ere C. Pitchayya and B. Audeyya.
As a result of this finding, respondent I cancelled the registration of the said firm under r. 6B of the Income tax Rules and passed fresh orders of assessment against the said firm on the 192 basis that it was an unregistered firm for the assessment years 1943 44 and 1944 45 on August 14, 1952, and February 25, 1953, respectively.
Similar action was taken by respondent I in respect of the two other firms on the same dates.
Thereupon Y. Narayana Chetty, one of the partners of the Prabhat Textiles filed a writ petition in the High Court of Madras, No. 613 of 1952, against respondent I under article 226 of the Constitution and prayed that the High Court, should issue a writ of prohibition or any other appropriate writ, order or direction prohibiting the first respondent from continuing the proceedings as per his notice of August 14, 1951, and from enforcing the order of fresh assessment passed in the said proceedings oil August 14, 1952, in regard to the assessment year 1943 1944.
In respect of the same firm Chilla Pitchayya sought for a similar relief by Writ Petition No. 201 of 1953 in regard to the proceedings and assessment order for the assessment year 1944 45.
The same Chilla Pitchayya also filed Writ Petitions Nos.
629 of 1952 and 202 of 1953 in respect of the proceedings taken and fresh assessment orders passed against the two remaining firms for the assessment years 1943 44 and 1944 45 respectively.
The four petitions were heard together by the High Court and were dismissed on March 5, 1954.
The petitioners then applied for and obtained from the High Court a certificate under article 133 read with 0.
XLV, r. 1, 2, 3 and 8 that the value of the subject matter in the peti tions before the High Court as well as of the appeals before this Court was more than Rs. 20,000.
It is with this certificate that the four appeals have come before this Court.
Y. Narayana Chetty is the appellant in Civil Appeal No. 317 of 1957 whereas Chilia Pitchayya is the appellant in Civil Appeals Nos. 318, 319 and 320 of 1957.
In the High Court it was urged by the appellants that the proceedings taken under section 34 against each of the said firms were without jurisdiction and void.
It was also contended that the cancellation of the registration of each of the firms was similarly void and without jurisdiction inasmuch as r. 6B under which the said order of cancellation was passed was ultra vires the Central Board of Revenue which promulgated the rules under the powers conferred on it by the Act.
Besides the appellants attacked the validity of the orders passed against them under section 31 on the ground that it was illegal to assess escaped income under section 34 on the basis that the firms were unregistered firms while maintaining the original assessment for the said firms on the basis that they had been duty registered under section 26A of the Act.
The High Court has held against the appellants on all these points.
Besides the high Court has stated in its judgment that it was admitted by the appellants before it that appeals had been filed against each one of the orders challenged in the writ proceedings and the High Court thought that that itself would suffice to justify its refusal to exercise its jurisdiction under article 226 of the Constitution.
However, since the primary relief asked for by the appellants in their respective petitions was the issue of writ of prohibition the If High Court felt that it may as well deal with the merits of the contentions raised by the appellants.
That is why the High Court examined the merits of the said contentions.
On behalf of the appellants, Mr. Viswanatha Sastri has raised the same three points before us.
The first point raised by Mr. Sastri is that the proceedings taken by respondent I under section 34 of the Act are invalid because the notice required to be issued under the said section has not been issued against the assessees contemplated therein.
In the, present case the Income tax Officer has purported to act under section 34(I)(a) against the three firms.
The said sub section provides inter alia that " if the Income tax Officer has reason to believe that by reason of the omission or failure on the part of the assessee to make a return of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable to income tax has been under .assessed", he may, within the nine prescribed, " serve on the assessee a notice containing all or any of the requirements which may 194 be included in the notice under sub section
(2) of section 22 and may proceed to reassess such income, profits or gains.
" The argument is that the service of the requisite notice on the assessee is a condition precedent to the validity Of any reassessment made under section 34; and if a valid notice is not issued as required, proceedings taken by the Income tax Officer in pursuance of an invalid notice and consequent orders of reassessment passed 'by him would be void and inoperative.
In our opinion, this contention is well founded.
The notice prescribed by section 34 cannot be regarded as a more procedural requirement; it is only if the said notice is served on the assessee as required that the lncome tax Officer would be justified in taking proceedings against him.
If no notice is issued or if the notice issued is shown to be invalid then the validity of the proceedings taken by the Income tax Officer without a notice or in pursuance of an invalid notice would be illegal and void.
That is the view taken by the Bombay and Calcutta High Courts in the Commissioner of Incometax, Bombay City vs Ramsukh Motilal (1) and B. K. Das & Co. vs Commissioner of Income tax, West Bengal (2) and we think that that view is right.
Let us then consider the nature of the notice issued by the Income tax Officer in the present proceedings.
It is conceded by Mr. Sastri that the notice issued by the Income tax Officer was served on the appellant C. Pitchayya on behalf of the firms in question and that in each case the notice specifically averred that the Income tax Officer had reason to believe that the income of the assessee had been under assersed in the relevant years of assessment.
The notice further required the assessee to deliver to the officer within thirty five days of the receipt of the notice a return in the attached form of the total income and total world income of the assessee assessable for the relevant period.
In pursuance of this notice the appellant Pitchayya in fact appeared before the officer during the course of the proceedings commenced under s.34.
Mr. Sastri contends that this notice is defective be cause it purports to be issued Against the firm and no (1) [1955] '27 I.T.R. 54.
(2) 195 notice has been issued against the respective partners of the firm.
According to Mr. Sastri the assessee who is entitled to a notice under section 34(1)(a) is not the firm but each individual partner of the firm.
He also suggests that each individual partner should have been called upon to make a return of his total income assessable for the relevant year; inasmuch as the notice is issued against the firm and not against individual partners it is invalid.
In support of this argument Mr. Sastri has referred us to the definition of the word " assessee" under section 2, cl.
(2) as it stood prior to the amendment of 1953.
Under the said clause, assessee meant " person by whom income tax is clearly payable".
In the case of a registered firm income tax is clearly payable by the individual partners of the firm under section 23(5) of the Act, savs Mr. Sastri; and so, if the Income tax Officer intended to take action under section 34 it was his duty to issue the requisite notice against individual partners in respect of their respective incomes for which they were liable to pay the tax.
This argument purports to derive support from the provisions of section 23(5) as they stood before the amendment introduced in 1956.
The effect of the said provisions was that "the sum payable by the firm itself shall not be determined but the total income of each partner of the firm including therein his share of its income, profits and gains in the previous year shall be assessed and the sum payable by him on the basis of such assessment shall be determined "; so that what the Income tax Officer had to do in assessment proceedings against a registered firm was to determine the total income of each partner of the firm and not to determine the sum payable by the firm itself.
The argument is that this provision shows that the person liable to pay the tax was each individual partner of the firm and so it is the individual partners of the firm who are entitled to the statutory notice under section 34(1)(a).
In our opinion, this argument is not well founded.
Section 3 of the Act which is the charging section provides inter alia that "where any Central Act enacts that income tax can be charged for any year at any rate or rates, tax at that rate or those rates shall be 196 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 firm ; " in other words, a firm is specifically treated as an assessee by section 3.
Besides, the word "person" used by section 2, sub section (2) of the Act while defining the assessee, would obviously include a firm under section 3(42) of the General Clauses Act since it provides that a person includes "any company or association or body of individuals whether incorporated.
or not ".
Therefore, it would not be correct to say that an assessee under section 2, sub section
(2) of the Act necessarily means an individual partner and does not include a firm.
The argument based upon the relevant provisions of section 23(5) is also not valid be.
cause it is obvious that for the purposes of assessment at all relevant and material stages under sections 22 and 23 it is the firm that is treated as an assessee.
When a return of the income is made for the relevant year, it is a return with regard to the total income of the firm that has to be submitted under section 22; and when assessment is levied under section 23, the Income tax Officer determines and can determine the total income of each partner of the firm only after ascertaining the total income of the firm itself It is true that section 23(5) as it then stood required the Income tax Officer to determine the total income of each partner of the firm including his share of the firm 's income and to assess each partner in respect of such income, and in that sense individual partners of the firm undoubtedly became liable to pay income tax ; but it is clear that in determining the total income of each partner his share in the firm 's income has to be included and so the firm does not cease to be an assessee for the purpose of section 23(5).
This position is now clarified by the provisions of section 23(5)(a)(i) and (ii) as amended in 1956.
The present section 23(5)(a)(i) and (ii) provides: section 23(5)(a)(i) and (ii): (5) Notwithstanding anything contained in the foregoing sub sections, when the assessee is a firm and the total income of the firm has been assessed under subsection (1), sub section (3) or sub section (4), as the case may be 197 (a) in the case of a registered firm (1) the income tax payable by the firm itself shall be determined; and (ii) the total, income of each.
partner of the firm, including therein his share of its income, profits and gains of the previous year, shall be assessed and the sum payable by him on the basis of such assessment shall be determined: and so it is clear that the registered firm does not at all cease to be an assessee under this provision.
In this connection it would be relevant to refer to section 23(4).
This subsection provides: " If any person fails to make the return required by any notice given under subsection (2) of section 22 and has not made a. return or a revised return under sub section (3) of the same section or fails to comply with all the terms of a notice issued under sub section (4) of the same section or, having made a return, fails to comply with all the terms of a notice issued under subsection (2) of this section, the Income tax Officer shall make the assessment to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment and, in the case of a firm, may refuse to register it or may cancel its registration if it is already registered: Provided that the registration of a firm shall not be cancelled until fourteen days have elapsed from the issue of a, notice by the Income tax Officer.to the firm intimatiiig his intention to cancel its registration" This provision clearly shows that the person to whom the first part of the provision refers includes a firm and it lays down that if a firm commits a default as indicated the Income tax Officer may refuse to register it or may cancel its registration if it is already registered.
Thus there can be no doubt that section 23(4) treats the fit in as an assessee and provides for the imposition of penalty against the firm in case the firm commits any of the defaults indicated in the sub section.
The effect of the relevant provisions of section 23 therefore is that for the assessment of the total taxable income it is the affairs of the assessee firm that are investigated and 198 examined and when the total income of the firm is ascertained, it is allocated to its individual partners in proportion to their respective shares.
The result of such allocation undoubtedly is to make the partners liable to pay tax in respect of their taxable income thus allocated ; but that cannot justify the inference that the firm is not an assessee in the relevant proceedings.
Even when the notice is issued under section 34(1)(a) the Income tax Officer proceeds to act on the ground that the income, profits and gains of the firm which are chargeable to an income tax have been under assessed; it is the income of the firm which is initially ascertained in the assessment proceedings under section 23 and it is in respect of the said income of the firm that the Income tax Officer finds that a part of it has escaped assessment.
We do not, therefore, think that the appellant 's argument that the notice issued against the firm and served on the appellant was invalid under section 34(1)(a) can be accepted.
It is then urged that the Income tax Officer was bound to issue notices to individual partners of the firms because at the material time all the firms had been dissolved.
Mr. Sastri concedes that under section 63 (2) a notice or requisition under the Act may in the case of a firm be addressed to any member of the firm but his contention is that this applies to a firm in existence and not to a firm dissolved.
If the, appellants ' case is that as a result of dissolution of the firms the firms had discontinued their business as from the respective dates of dissolution they ought to have given notices of such discontinuance of their business under section 25(2) of the Act.
Besides, in the present case, the main appellant has in fact been served personally and the other partners who may not have been served have made no grievance in the matter.
We are, therefore, satisfied that it is not open to the appellants to contend that the proceedings taken by the Income tax Officer under section 34(1)(a) are invalid in that notices of these proceedings have not been served on the other alleged partners of the firms.
Incidentally it may be pointed out that the finding of 199 the Income tax Officer in respect of all the three firms is that the only persons who had interest in the business carried on by the said firms were B. Audeyya and C. Pitchayya.
It is remarkable that B. Audeyya has not cared to challenge the proceedings or to question the validity of the fresh assessment orders passed by the Income tax Officer in the present proceedings.
Mr. Sastri then challenges the validity of the cancellation of the registration of the three firms on the ground that r. 6B under which the Income tax Officer purported to act is ultra vires.
Rule 6B provides that in the event of the Income tax Officer being satisfied that the certificate granted under r. 4 or under r. 6A has been obtained without there being a genuine firm in existence he may cancel the certificate so granted.
The material rules of which r. 6B is a part have been framed by the Central Board of Revenue under the authority conferred by section 59 of the Act.
This section empowers the Central Board of Revenue, subject to the control of the Central Government, to make rules inter alia for carrying out the purposes of the Act.
Section 59 (2)(e) lays down that such rules may provide for any matter which by this Act is to be prescribed and the rules preceding r. 6B deal with the procedure to be followed, and prescribe the application to be made, for the registration of firms under section 26A of the Act.
Section 59(5) provides that the rules made under the said section shall be published in the official gazette and shall thereupon have effect as if enacted in this Act.
Thus there is no doubt that the rules are statutory rules and once they are published in the official gazette they are operative as if they were a part of the Act.
Mr. Sastri concedes this position; but he argues that r. 6B is inconsistent with the material provisions in the Act and is therefore ultra vires the Central Board of Revenue.
This argument is based substantially on the provisions of section 23(4).
We have already referred to the provisions of this subsection.
Mr. Sastri contends that it is only where the requirements of section 23(4) are satisfied that the registration of a firm can be cancelled.
The procedure for registration of firms is laid down in section 26A of 200 the Act.
An application has to be made to the Incometax Officer on behalf of any firm constituted Linder the instrument of partnership specifying the individual shares of the partners for registration for the purposes of the Act and of any other enactment for the time being in force and relating, to income tax and supertax.
Sub section (2) requires that the said application ,,hall be made by such person or persons and, at such times and shall contain such particulars and shall be in such form and be verified in such manner as may be prescribed and it shall be dealt with by the Incometax Officer in such manner as may be prescribed.
It is in pursuance of the requirements of section 26(2) that the relevant rules for the registration of the firms have been made.
The question which arises for our decision in this connection is: if a firm has been registered Linder section 26A, when can such registration be cancelled ? The appellant suggests that the only cases in which such registration can be cancelled are those prescribed in section 23(4).
We have no doubt that this argument is fallacious.
The cancellation of registration under section 23(4) is in the nature of a penalty and the penalty can be imposed against a firm if it is guilty of any of the defaults mentioned in the said subsection.
It would be noticed that where registration is cancelled under section 23(4), there is no doubt that the application for registration had been properly granted.
The basis of an order under section 23(4) is not that the firm which had been registered was a fictitious one, but that, though the registered firm was geniuine, by its failure to comply with the requirements of law it had incurred the penalty of having its registration cancelled.
That is the effect of the provisions of section 23(4).
On the other hand, r. 6B deals with cases where the Income tax Officer is satisfied that a certificate of registration has been granted under r. 4 or under r. 6A without there being a genuine firm in existence ; that is to gay an application for registration had been made in the name of a firm which really did not exist; and on that ground the Income tax Officer proposes to set right the matter by cancelling the certificate which should never have been granted to the 201 alleged firm.
That being the effect of r. 6B it is im possible to accede to the argument that the provisions of this rule are inconsistent with the provisions of section 23(4) of the Act.
If the Income tax Officer is empowered under section 26A read with the relevant rules to grant or refuse the request of the firm for registration, it would normally be open to him to cancel such registration if he discovers that registration had been erroneously granted to a firm which did not exist.
Rule 6B has been made to clarify this position and to confer on the Income tax Officer in express and specific terms such authority to review his own decision in the matter of the registration of the firm when he dis covers that his earlier decision proceeded on a wrong assumption about the existence of the firm.
In our opinion, there is no difficulty in holding that r. 6B is obviously intended to carry out the purpose of the Act and since it is not inconsistent with any of the provisions of the Act its validity is not open to doubt.
It is, however, urged that whereas the firm aggrieved by the order passed by the Income tax Officer under section 23(4) can challenge the correctness or propriety of the order in an appeal against the final assessment order passed under section 23, no such remedy is available to the firm whose registration is cancelled under r. 6B.
We are not impressed by this argument.
The validity of the rule cannot, in our opinion, be challenged merely on the ground that no appeal has been provided against the order passed under the impugned rule.
It is also true that whereas before taking action under section 23(4) the Income tax Officer is required to issue a notice to the firm, no such provision is made under r. 6B.
Mr. Sastri has, however, conceded that the appellant before us had notice and was given an opportunity to satisfy the Income tax Officer that the respective firms were genuine and not fictitious.
Thai being so we do not think that it would be open to the appellant to contend that the order passed against him under r. 6B is invalid on the purely academic ground that r. 6 B does not require notice to be issued before the registration of a firm is cancelled.
If the power 26 202 under r. 6B is exercised by the Income tax Officer against a firm without giving it a notice in that behalf and without affording it an opportunity to satisfy the officer that it is a genuine firm, it may be open to the firm to question the validity of the order on that ground.
We are, however, not called upon to deal with such a case in the present appeals.
In this connection we may incidentally refer to the decision of this Court in Ravula Subba Rao vs Commissioner of 1.
T., Madras (1) where this Court has held that rules (2) and (6) of the rules framed under section 59 of the Indian Income tax Act are not ultra vires the rule making authority.
The last argument which Mr. Sastri sought to raise before us was that the revised assessment is completely illogical, and therefore illegal, in each case inasmuch as the original assessment for the two assessment years still remains as on the basis that the firms in question are registered and the fresh assessment in respect of the escaped income for the same years is made on the basis that the said firms are not registered.
Mr. Sastri says that it is not open to the Income tax Officer to adopt such a course.
If registration has been cancelled the whole of the assessment should be made on that footing; the department cannot treat the firm as registered for part of the income, and unregistered for the balance, during the same assessment years; that is Mr. Sastri 's grievance.
We do not propose to deal with the merits of this contention.
There can be no doubt that it would be open to the appellants to raise this contention in the appeals which they have filed against the fresh orders of assessment.
We understand that applications have been made by the appellants in respect of the said orders of assessment under section 27 of the Act.
If that be so, the appellants may, if it is open to them to do so, ventilate their grievance in the said proceedings also.
We hold that this contention cannot be urged in petitions for writs of prohibition under article 226 of the Constitution, since they do not raise any question of jurisdiction.
All that the appellants would be able to argue on this ground (1) [1956] S.C.R. 577.
203 would be that the course adopted by the Income tax Officer in making orders of fresh assessment is irregular and illogical and should be corrected.
That is a matter concerning the merits of the orders of assessment and by no stretch of imagination can it be said to raise any question of jurisdiction under article 226.
That is why we express no opinion ' on this point.
Before we part with this case we would like to, observe that Mr. Kripal for the respondent sought to raise three preliminary objections.
He urged that the issue of a writ is a discretionary matter and since the High Court has refused to exercise its discretion in favour of the appellants the appeals would be virtually incompetent inasmuch as this Court would be slow to interfere with the exercise of discretion by the High Court.
He also argued that the original petitions to the High Court are incompetent under article 226 since under the Act the appellants had an alternative effective remedy available to them in the form of appeals against the impugned orders and in fact they had filed such appeals and had also made applications under section 27 of the Act.
Mr. Kripal also contended that the High Court would have no jurisdiction to issue a writ of prohibition against the tax authorities.
We do not propose to consider these objections because, as we have already indicated, we are satisfied that the view taken by the High Court on the points raised before it is right.
These objections may have to be considered in future on a suitable occasion.
The result is the appeals fail and must be dismissed with costs.
Appeals dismissed.
| Two persons, B and C, formed a partnership firm on April 20, 1936, and the firm was dissolved on March 31, 1948.
I and C along with R formed a second firm on July 30, 1941, and it was dissolved on March 31, 1949.
B and C along with five others formed a third firm on December 1, 1941, and it was dissolved on January 1, 1949.
All the three firms were carrying on business in yarn and cloth and all of them were registered under section 26 A of the Income tax Act.
For the years 1943 44 and 1944 45 tile said firms were treated as separate entities and separate assessment orders were passed in respect of the income of each one of them for the said years.
Subsequently, the Income tax Officer served notices under section 34 Of the Act on C on behalf of the firms and after hearing the parties he held that the firms were fictitious and so cancelled their registration under r. 6B of the Income tax Rules and passed fresh orders of assessment against them on the basis that they were unregistered firms.
One Y who was a partner in the third firm and C filed four writ petitions under article 226 of the Constitution in the High Court challenging the validity of the orders passed.
The High Court dismissed the petitions but granted certificates of fitness to appeal 190 under article 133.
The appellants contended that r. 6B was inconsistent with section 23(4) of the Act and was ultra vires, that consequently the cancellation of registration of the firms was without jurisdiction and was void and that the proceedings taken under section 34 Of the Act were invalid as the required notice was not issued against the individual partners who were the assesses.
Held, that r. 6B of the Income tax Rules was not inconsis tent with section 23(4) Of the Act and was not ultra vires.
Rule 6B dealt with cancellation of registration in cases where the certificate of registration had been granted without there being a genuine firm in existence, while section 23(4) dealt with cancellation of registration on account of failure to comply with the requirements of law, though the registered firm was genuine.
Rule 6B was obviously intended to carry out the purpose of the Act and was valid.
The fact that no appeal had been provided against an order made under r. 6B was no ground for challenging its validity.
It was also not open to the appellants to contend that the orders passed under section 6B were invalid on the ground that the rule did not require the giving of any notice before the can cellation of registration as in the present case notice had actually been given and the appellants had been afforded an opportunity of being heard.
Held, further, that in the cases of registered firms, the firms themselves were the assessees and as such the notices issued under section 34 against the firms and served upon C were valid and proper notices, :and it was not necessary to serve notices upon the individual partners of the firms.
The notice prescribed by section 34 was not a mere procedural requirement.
If no notice was issued or if the notice issued was shown to be invalid then the proceedings taken by the Income tax Officer would be illegal and void.
Commissioner of Income tax, Bombay City vs Ramsukh Motilal, and R. K. Das & Co. vs Commissioncy of Income tax, West Bengal, , approved.
The contention that the assessments were completely illogical and therefore illegal could not be urged in a petition under article 226 of the Constitution since it did not raise any question of jurisdiction.
|
Summarize this legal judgement text concisely | Appeal No. 410 of 1958.
Appeal by special leave from the judgment and order dated July 31, 1958, of the Judicial Commissioner 's Court, Himachal Pradesh at Simla in Civil Misc.
First Appeal No. 2 of 1958.
K.L. Misra, Advocate General for the State of U. P. and section section Shukla, for the appellant.
Achhru Ram and Ganpat Rai for respodent No. 1. 1958.
October 17.
The Judgment of the Court was delivered by SARKAR, J.
This appeal arises out of an election petition filed by the respondent No. 1, Hira Singh Paul, whom we shall hereinafter refer to as the respondent.
The other respondent to this appeal is the Election Commission, but it has not appeared presumably because it is not interested in the result of the appeal which involves no claim against it.
The only question that it involves is whether the appellant was guilty of a corrupt practice, the details of which will be set out later, within the meaning of section 123(7) of the Representation of the People Act, 1951.
In the 1957 General Elections, ten candidates filed their nomination papers to contest the election from the Mahasu double member constituency in Himachal Pradesh.
One of the two seats for this constituency 215 was reserved for a scheduled caste candidate.
Two of the candidates withdrew from the contest and the remaining eight went to the poll.
These eight included the appellant, the respondent and one Nek Ram.
Nek Ram was declared elected to the reserved seat and the appellant to the general seat.
The respondent polled the next largest number of votes to the appellant.
After the results had been declared the respondent filed the election petition on August 3, 1957, challenging the validity of the election of the appellant on the ground that he had committed various corrupt practices.
The Election Tribunal framed 18 issues in respect of the various corrupt practices alleged in the petition but answered all the issues excepting issues Nos.
8(1), 8(ii) and 11 against the respondent.
Issue No. 8(1) raised the question whether one Amar Singh, said to be a member of the armed forces of the Union of India, worked and canvassed for the appellant.
Issue No. 8(ii) was whether Amar Singh was appointed his polling agent by the appellant.
Issue No. 11 was in the following terms: In case one or more of Issues Nos.
(8) to 10 is or are decided in the affirmative, whether the respondent No. 1 obtained, procured or abetted or attempted to obtain, procure by himself, by his agents and by his supporters the assistance of the Government servants as specified under the said issues for the furtherance of the prospects of his election ? The Tribunal found against the appellant on Issues Nos.
8(1), 8(ii) and 11 and thereupon declared his election void.
The appellant then went up in appeal to the judicial Commissioner, Himachal Pradesh, who by his judgment dated July 31, 1958, set aside the finding of the Tribunal on Issue No. 8(1) but maintained its findings on the other two issues and confirmed the declaration that the appellant 's election was void.
The appellant has come up to this Court by special leave in appeal against that judgment.
As will have been seen from what has been earlier stated the only questions 216 that survive are those raised by Issues Nos. 8(ii) and 1 1.
The facts are not now in dispute and may be stated as follows: The constituency was divided into 606 polling stations and for each polling station three polling agents could be appointed.
The appellant was thus entitled to appoint 1818 polling agents.
On April 28, 1957, he signed a very large number of the forms prescribed by the rules framed under the Act for appointing polling agents, in blank and without 'setting out therein the name of any polling agent, as he had not then been able to make up his mind in view of the large number of polling stations as to who would be his polling agents at the various polling stations.
He made over these forms to Kalyan Singh, who passed on three of them to Kashmira Singh having inserted therein the words " polling station No. 13, Sheopur ".
Kashmira Singh filled in the name of Amar Singh as the polling agent in one of these forms on May 25, 1957, the day of polling, and made it over to the latter to enable him to act as the appellant 's polling agent at polling station No. 13, Sheopur.
Amar Singh then duly signed the form as required by the rules and filed it with the presiding officer at polling station No. 13, Sheopur, and on the strength of it, acted as the polling agent of the appellant at that station for about two hours when objection having been taken to him on the ground that he was a member of the armed forces, he withdrew and left the polling station.
Amar Singh was on the polling day in fact a member of the armed forces, though this was not then known to the appellant.
Kalyan Singh and Kashmira Singh acted in all that they did, under the authority of the appellant.
These facts may be taken to have been established on the evidence adduced.
The learned Advocate General of Uttar Pradesh who appeared for the appellant, first sought to contend that Amar Singh had not really been appointed the appellant 's polling agent.
He said that under section 46 of the Act a polling agent can be appointed only by the candidate himself or by his election agent and Amar Singh could not on the facts found, for reasons to 217 be stated presently, be said to have been appointed a polling agent either by the appellant or his election agent.
Therefore, according to him, Amar Singh had not been appointed the appellant 's polling agent at all and hence the charge of corrupt practice against him for having so appointed Amar Singh must fail.
First, it seems to us that this argument is not open to the learned Advocate General.
He himself appeared for the appellant before the learned Judicial Commissioner and there conceded that the factum or the validity of the appointment of Amar Singh as the appellant 's polling agent could not be questioned by him.
We do not think that we should permit the appellant to withdraw a concession expressly made by his counsel in the Court below in a matter of this kind.
This is all the more so as the present argument does not seem to have been raised when the matter was before the Tribunal, either.
Secondly, it seems to us that the contention is without substance.
We will assume that the learned Advocate General is right in his contention that under the Act a polling agent can be appointed only by the candidate himself or by his election agent and not by the candidate acting through any other agent.
The learned Advocate General 's contention is that on the facts found, the only possible conclusion is that Amar Singh had not been appointed polling agent by the appellant himself but by one or other of his agents, namely, Kalyan Singh or Kashmira Singh and as none of them was his election agent, the appointment was invalid.
It is not in dispute that neither Kalyan Singh nor Kashmira Singh was his election agent.
In fact it appears that the appellant had no election agent at all.
In our view, however, this does not matter as the present is not the case of an appointment by any agent but by the appellant himself.
We have come to this view because here, the appointment was made by the document signed per sonally by the appellant.
The fact that the name of the polling agent was written in the document by another person after the appellant had signed it, does not make the appointment of the polling agent under 28 218 that document an appointment by some other person acting as the agent of the appellant.
On the language of the document and the appointment was not purported to have been made in any other.
way than by the document it was an appointment made by the appellant himself.
The other person only wrote the name in the document which he had authority to do.
He did not purport to make any appointment at all.
It is impossible to read the document as the making of the appointment by an agent of the appellant acting for him.
The true view of the matter plainly is that the appellant himself appointed by the document as his polling agent, a person whose name had been written therein by another with his authority.
We, therefore, hold that Amar Singh had been appointed his polling agent by the appellant himself.
It was thus even on the learned Advocate General 's construction of section 46, a proper appointment.
We then come to this that the appellant appointed Amar Singh, a member of the armed forces, his polling agent and the latter acted as such.
The question is, Did this amount to a corrupt practice by the appellant ? The respondent 's contention which has been accepted by the Courts below, is that it is a corrupt practice within section 123(7) of the Act.
That provision so far as is relevant and the explanation to it, are in these terms.
Section 123.
The following shall be deemed to be corrupt practices for the purposes of this Act : (7) The obtaining or procuring or abetting or attempting to obtain or procure by a candidate or his agent or, by any other person, any assistance (other than the giving of vote) for the furtherance of the prospects of that candidate 's election, from any person in the service of the Government and belonging to any of the following classes, namely : (c) members of the armed forces of the Union; Explanation. (1) (2) For the purposes of clause (7), a person shall be 219 deemed to assist in the furtherance of the prospects of a candidate 's election if he acts as an election agent, or a polling agent or a counting agent of that candidate.
" The learned Advocate General contends that the procuring or obtaining by a candidate of any assistance for the furtherance of the prospects of his election from a person in the service of the Government as a member of the armed forces, would not amount to a corrupt practice unless that candidate knew that the person was in such Government service.
He says that the words 'procuring orobtaining ' import such knowledge and that this view of the matter receives great strength from the word I for ' in the phrase " for the furtherance of the prospects of that candidate 's election ".
According to him, without such knowledge the candidate cannot be said to have procured or obtained any assistance, for no one can obtain or procure a thing unless he knows that he is doing so.
He then points out that there is evidence that neither the appellant nor Kalyan Singh nor even Kashmira Singh knew that Amar Singh was a member of the armed forces.
He, therefore, says that the appellant cannot in the absence of such knowledge be said to have procured or obtained the assistance of a member of the armed forces for furthering the prospects of his election.
,It is true that neither the appellant nor Kalyan Singh, nor even Kashmira Singh knew at the date of the appointment of Amar Singh that he was a member of the armed forces but the point now raised by the learned Advocate General is, in our view, none the less unsustainable.
It overlooks the provisions of the second explanation to the section which we have already set out.
Under that explanation if a person acts as the polling agent of a candidate it must be held without more, that, he assisted in furtherance of the prospects of that candidate 's election.
In the present case therefore it has to be held that Amar Singh who acted as the appellant 's polling agent, thereby assisted in the furtherance of the prospect. , of his election.
Now under the provisions of the Act, no one can act as the polling agent of a candidate unless he has been appointed as such and we have already held that the appellant 220 himself had appointed Amar Singh as his polling agent.
It follows in view of the explanation that the appellant procured and obtained the assistance of Amar Singh for the furtherance of the prospects of his election.
All the requirements of the section are thus satisfied and the appellant must therefore be held to have committed the corrupt practice thereby constituted.
All that the section requires is that assistance shall be procured for furthering the election.
Where the explanation applies as it does in the present case, if a candidate has appointed a person to act as his polling agent and he accordingly does so act, a statutory presumption arises that the candidate thereby procured that person 's assistance in furtherance of the prospects of his election, and this irrespective of whether he intended to procure such assistance or not.
Indeed, as Mr. Achhru Ram appearing for the respondent pointed out, the explanation clearly shows that the candidate 's intention is irrelevant, for, such presumption arises even when a candidate has procured another person to act as his counting agent and it is very difficult to imagine that the appointment of a counting agent can further the prospects of any election, for the counting agent acts after the polling is over and only when the votes already polled, are counted.
Therefore it seems to us that in the case of the appointment of a polling agent which comes within the explanation as the present case does, the intention of the candidate in procuring the assistance is irrelevant.
If that is so, it is clear that the knowledge of the candidate whether the person, whose service as his polling agent he has procured, is a member of the armed forces or any of the other specified class of Government servants or not, is equally irrelevant.
We think therefore that the learned Advocate General 's contention must fail.
What we have said just now also disposes of the other argument of the learned Advocate General, namely, that a corrupt practice is in the nature of a criminal act and cannot therefore be established unless mens rea, or criminal intention, is established, and that the appellant cannot be said to have committed 221 a corrupt practice for he had no mens rea in appointing Amar Singh his polling agent since he did not know that Amar Singh was a member of the armed forces.
On this point we were referred to certain passages from English text books on election law of which it will be enough to refer to one, for all state the law in substantially the same terms.
In Schofield 's Parliamentary Elections, 2nd Edn. which is one of the text books to which we were referred, it is stated at p. 402: There is an elementary distinction between a corrupt and an illegal practice.
To establish the former it is essential to show that a corrupt intention is present.
A corrupt practice is a thing the mind goes along with, whereas an illegal practice is a thing the legislature is determined to prevent, whether it is done honestly or dishonestly.
The view thus formulated is founded on the English law of election and is clearly of no assistance to us.
It is based on particular English statutes and the language employed therein.
We have already shown that our statute in the case at least of a corrupt practice of the kind in hand does not concern itself with any question of intention.
Mr. Achhru Ram with his usual industry made available to us the English statutes on which the statement of law set out in the text books referred to by counsel for the appellant had been based and pointed out that under these statutes the acts therein made corrupt practices had to be done corruptly and that corrupt practices were always made offences punishable as crimes.
It may be of use here to point out that the relevant provisions in our statute were amended in 1956 and that has done away with the distinction between illegal and corrupt practices.
In fact, we have now only corrupt practices and no illegal practices.
The present case, it may be pointed out, is governed by the amended statute.
No question of mens rea or intention or knowledge of the candidate arises in this case.
We, therefore, come to the conclusion that the appellant was guilty of a corrupt practice by appointing Amar Singh, a member of the armed forces, his polling 222 agent whereby the latter was enabled to and did act as such.
The appellant 's election was consequently in our opinion rightly declared void.
The appeal is therefore dismissed with costs.
| The appellant, who was a candidate for election to Parlia ment, signed a very large number of blank forms for the appointment of polling agents and made them over to one Kalyan Singh.
Kalyan Singh passed on three of the forms to Kashmira Singh after inserting therein the name of a particular polling station.
Kashmira Singh filled in the name of Amar Singh as the polling agent in one of these three forms and gave it to Amar Singh, who, duly signed the form, filed it before the presiding officer of the polling station and acted as the appellant 's polling agent.
Amar Singh was a member of the armed forces but this fact was not known to the appellant or to Kashmira Singh or Kalyan Singh.
After the poll the appellant was declared elected but on an election petition being filed his election was set aside on the ground that he had committed the corrupt practice of procuring the assistance of a person in the service of the Government.
The appellant contended that Amar Singh had not been duly appointed as the appellant 's polling agent as neither the appellant nor his election agent had made the appointment, and that the appellant could not be held guilty of the corrupt practice for he did not know that Amar Singh was in the service of the Government and consequently did not have the necessary mens Yea.
214 Held, that the appellant did appoint Amar Singh as his polling agent by personally signing the appointment form.
The fact that the name of the polling agent was written in the form by another person after the appellant had signed it does not make it an appointment by the other person.
Held, further, that the appellant was guilty of the corrupt practice inasmuch as he appointed Amar Singh as his polling agent and Amar Singh by acting as the polling agent assisted in the furtherance of the prospects of the appellant 's election.
A presumption arises under section 123(7) Explanation (2) that the appellant by so doing procured Amar Singh 's assistance in furtherance of the prospects of his election, irrespective of whether he intended to procure such assistance or not.
The knowledge of the appellant whether the person whose assistance he procured was a person in the service of the Government or not was irrelevant.
Mens rea was not a necessary ingredient of the corrupt practice.
|
Summarize this legal judgement text concisely | Appeal No. 433 of 1957.
Appeal from the judgment and order dated August 24, 1956, of the Rajasthan High Court at Jodhpur in Civil Misc.
Case No. 17 of 1955.
B. D. Sharma, for the appellant.
A. N. Kripal, R. H. Dhebar and D. Gupta, for the respondent 1958.
October 17.
The Judgment of the Court was delivered by VENKATARAMA AIYAR J.
This is an appeal against the judgment of the High Court of Rajasthan in a reference under section 66(1) of the Indian Income tax Act, 1922, hereinafter referred to as the Act.
The facts, so far as they are material, are these The appellant is a resident of what was once the independent State of Udaipur.
There was in that State a Company called the Mewar Industries, Ltd., registered under the provisions of the law in force in that State, and the appellant held 266 shares in that Company.
On January 18, 1950, the Company went into liquidation, and on April 22, 1950, the liquidator distributed a portion of the assets among the shareholders, and the appellant was paid a sum of Rs. 26,000 under this distribution.
It is common ground that this sum represents the undistributed profits of the Company which had accrued during the six accounting years preceding the liquidation.
It should be mentioned that there was in the State of Udaipur no law imposing tax on income, and that it was only under the Indian Finance Act, 1950 that the residents of the State of Rajasthan, in which the State of Udaipur had merged, became liable for the first time to pay tax on their income.
That Act came into force on April 1, 1950.
We are concerned in these proceedings with the assessment of tax for the year 1951 52, and that, under section 3 of the Act, has to be on the income of the previous year, i.e., 1950 51.
Now, the dispute in the present case relates to the sum of Rs. 26,000 paid by the liquidator to the appellant on April 22, 1950.
By his order dated July 3, 1952, the Income tax Officer held 206 that this was dividend as defined in section 2(6A)(c) of the Act and included it in the taxable income of the appellant in the year of account.
The appellant took this order in appeal to the Appellate Assistant Commissioner who by his order dated January 12, 1953, confirmed the assessment.
There was a further appeal by the appellant to the Appellate Tribunal, who also dismissed it on November 10, 1953.
On the application of the appellant, the Appellate Tribunal referred the following question for the decision of the High Court: " Whether on the facts and in the circumstances of this case, the aforesaid sum of Rs. 26,000 was liable to be taxed in the assessee 's hands as dividend within the meaning of that term in section 2(6A)(c) of the Indian Income tax Act.
" The reference was heard by Wanchoo, C. J. and Modi, J. who by their judgment dated August 24, 1956, answered it in the affirmative.
It is against this judgment that the present appeal has been preferred on a certificate granted by the High Court under section 66A(2) of the Act.
The sole point for determination in this appeal is whether the sum of Rs. 26,000 received by the appellant on April 22, 1950, is dividend as defined in.
section 2(6A)(c) of the Act.
That definition, as it stood on the relevant date and omitting what is not material, was in these terms: " 6(A) 'dividend ' includes (a) any distribution by a company of accumulated profits whether capitalised or not if such distribution entails the release by the company to its shareholders of all or any part of the assets of the company ; (c) any distribution made to the shareholders of a company out of accumulated profits of the company on the liquidation of the company: Provided that only the accumulated profits so distributed which arose during the six previous years of the company preceding the date of liquidation shall be so included;".
207 The definition of " previous year " as given in section 2(l 1), omitting what is not material, is as follows: " Previous year " means in respect of any separate source of income, profits and gains (a) the twelve months ending on the 31st day of March next preceding the year for which the assessment is to be made. " On these provisions, the contention of the appellant is that under the definition in section 2(6A)(c) the assets of a company distributed after it has gone into liquidation will be dividend only if they represented the profits thereof accumulated during the six previous years preceding the date of the liquidation, and that, in the present case, though the amounts distributed came out of the accumulated profits of the Company, those profits had not been accumulated within the six previous years of the liquidation of the Company.
It is not in dispute that the profits which were distributed had been accumulated during the years 1943 44 to 1948 49, i.e., during the six years preceding the liquida tion.
The point in controversy is whether those years can be said to be " previous years " within section 2(6A)(c) of the Act.
The appellant contends that " previous year " as defined in section 2(l 1) of the Act means the year which is previous to the assessment year, that accordingly when there is no year of assessment, there can be no previous year, that construing the words " six previous years " in section 2(6A)(c) in the light of the definition of "previous year" in section 2(l 1) of the Act, the years 1943 44 to 1948 49 cannot be held to be previous years, because the Indian Income tax Act came into force in the State of Rajasthan only on April 1, 1950, and prior to that date there was at no time any law imposing tax on income in the State of Udaipur, that there was therefore no year of assessment, and that, in consequ ence, the sum of Rs. 26,000 received by the appellant on April 22, 1950, is not a dividend as defined in section 2(6A)(c).
The contention of the respondent which has been accepted by the Income tax authorities and by the learned Judges in the Court below is that the expression " six previous years" is used in section 2(6A)(c) not in the technical and restricted sense in which the 208 words " previous year " are used in section 2(11) of the Act, and that, in the context, it means six consecutive accounting years preceding the liquidation of the company.
The question is which of these two interpretations is the right one to be put on the language of section 2(6A)(c).
The argument of Mr. Sharma for the appellant is that section 2(11) having defined the meaning which the expression 'previous year" has to bear in the Act, that meaning should, according to the well settled rules of construction, be given to those words wherever they might occur in the statute, and that that is the meaning which must be given to the words " six previous years " in section 2(6A)(c).
It is to be noticed that the definitions given in section 2 of the Act are, as provided therein, to govern " unless there is anything repugnant in the subject or context ".
Now, the appellant contends that the words " unless there is anything repugnant " are much more emphatic than words such as " unless the subject or context otherwise requires ", and that before the definition in the interpretation clause is rejected as repugnant to the subject or context, it must be clearly shown that if that is adopted, it will lead to absurd or anomalous results.
And our attention was invited to authorities in which the above rules of construction have been laid down.
It is unnecessary to refer to these decisions as the rules themselves are established beyond all controversy, and the point to be decided ultimately is whether the application of the definition ins.
2(l 1) is repelled in the context of section 2(6A)(c).
Turning to the language of section 2(II), we have this that according to the definition contained therein, " previous year " is the year which is previous to the year of assessment, and that means that there can be only one previous year to a given year of assessment.
When section 2(6A) (c) speaks of six previous years, it is obvious that it uses the expression " previous year " in a sense different from that which is given to it in section 2(l 1), because it would be a contradiction in terms to speak of six previous years in relation to any specific assessment year.
It was argued that under section 13(2) of 209 the , words in the singular should be read as including the plural, and that, therefore, the definition of "previous year" in section 2(l 1) could be read as meaning " previous years ".
But section 13 only enacts a rule of construction which is to apply " unless there is anything repugnant in the and to read a " previous year " in section 2(l 1) would be to nullify the previous year " enacted therein, and such a construction must therefore be rejected as repugnant to the context.
It was then suggested that all the six previous years might be regarded as previous each to the next following year if that was itself a year of assessment, and that such a construction would, consistently with the contention of the appellant, give full effect to the definition in section 2(11) of the Act.
But this argument overlooks that while there may be several preceding years to a given year of assessment there can be only one previous year in relation to it, and that it would make no sense to speak of six previous years with reference to a year of assessment.
We are satisfied that it would be repugnant to the definition of " dividend " in section 2(6A)(c) to import into the words " six previous years " the definition of previous year" in section 2(l 1) of the Act.
An examination of the policy underlying section 2(6A)(c) also leads to the same conclusion.
When a company makes profits and instead of distributing them as dividend accumulates them from year to year and at a later date distributes them to the shareholders, the amounts so distributed would be dividend under section 2(6A) (a), but when a company which has so accumulated the profits goes into liquidation before declaring a dividend and the liquidator distributes those profits to the shareholders, it was held in Commissioners o Inland Revenue vs Burrell (1) that such distribution was not a dividend because when once liquidation intervenes, there was no question of distribution of dividends, and all the assets of the company remaining after the discharge of its obligations were surplus divisible among (1) 210 the shareholders as capital.
It was to remove this anomaly that the Indian legislature, following similar legislation by British Parliament in the year 1927, enacted section 2(6A) (1) in 1939.
The effect of this provision is to assimilate the distribution of accumulated profits by a liquidator to a similar distribution by a company which is working; but subject to this limitation that while in the latter the profits distributed will be dividend whenever they might have been accumulated, in the former such profits would be dividend only in so far as they came out of profits accumulated within six years prior to liquidation.
Now, the reason of it requires that those years must be a cycle of six years preceding the liquidation, arid that is what is meant by the words " previous years ".
It was argued for the appellant that if that was what was intended by the legislature, that was sufficiently expressed by the words " preceding the liquidation ", and that the words previous years " would be redundant.
But the words preceding years " would have meant calendar years, whereas the accounting years of the company for ascertainment of profits and loss might be different from the calendar years, and the words " previous year " would be more appropriate to connote the financial year of a company.
Now, it should be mentioned that when a company in liquidation distributes its current profits,, that would also be not dividend as held in Burrell 's case (1), and the law to that extent has been left untouched by section 2(6A)(c).
And it has accordingly been held by the High Courts that the current profits of a company in liquidation which are distributed to the shareholders are not dividend within section 2(6A)(c), Vide Appavu Chettiar vs Commissioner of Income tax (2) and Girdhardas & Co. Ltd. vs Commissioner of Incometax (3).
Therefore, accumulated profits which are sought to be caught in section 2(6A) (c) would be the profits accumulated in the financial years preceding the year in which the liquidation takes place, and it is this that is sought to be expressed by the words " previous years " in section 2(6A) (c).
In the present case, as the Company went into liquidation on January 18, 1950, (1) (2) (3) 211 excluding the current year which commenced on April 1, 1949, the six previous years will be the years 1943 44 to 1948 49.
So far, we have considered the question on the language of section 2(6A)(c) and the policy underlying it.
On behalf of the respondent, certain authorities were cited as supporting his contention that the expression it previous years " in section 2(6A) (c) is not to be interpreted in the sense in which the expression " previous year" is defined in section 2(l 1) of the Act.
It is sufficient to refer to one of them, and that is the decision of this Court in Commissioner of Income tax, Madras vs K. Srinivasan and K. Gopalan (1).
There, the point for decision was as to the interpretation to be put on the words " end of the previous year " in section 25, sub sections
(3) and (4) of the Act which dealt with discontinuance of or succession to a business, and it was held that the expression " previous year " in those provisions meant an accounting year expiring immediately preceding the date of discontinuance or succession.
The decision is not itself relevant to the present discussion, but certain observations therein are relied on as bearing on the point now under consideration.
Mahajan, J. delivering the judgment of the Court observed: " The expression 'previous year ' substantially means an accounting year comprised of a full period of twelve months and usually corresponding to a financial year preceding the financial year of assessment.
It also means an accounting year comprised of a full period of twelve months adopted by the assessee for maintaining his accounts but different from the financial year and preceding a financial year.
For purposes of the charging sections of the Act unless otherwise provided for it is co related to a year of assessment immediately following, but it is not necessarily wedded to an assessment year in all cases and it cannot be said that the expression 'previous year ' has no meaning unless it is used in relation to a financial year.
In a certain context it may well mean a completed accounting year immediately preceding the happening of a contingency." (I) , 501 212 The learned Judges in the Court below have relied on these observations, and quite rightly, as supporting their conclusion that the expression " six previous years " in.
section 2(6A) (c) means only the six accounting years of a company preceding the date of liquidation.
The appellant sought to raise one other contention, and that is that the Indian Companies Act came into operation in the Udaipur territory on April 1, 1951, only by force of the Part B Stater, Laws Act (111 of 1951), that during the relevant period the Mewar Industries Ltd. was not a company as defined in section 2(5A) of the Act, and that therefore the distribution of assets made by that Company on April 22, 1950, could not be held to be a dividend as defined in section 2 (6A) (c).
But that is not a question which was referred for the opinion of the High Court under section 66(1) of the Act; nor is it even dealt with by the Tribunal and therefore cannot be said to arise out of its order.
Moreover, whether the Mewar Industries Ltd., is a Company as defined in the Indian Income tax Act is itself a question over which the parties are in controversy.
The definition of " Company " under the Indian Income tax Act has undergone several changes from time to time, and on the relevant date it stood as follows: " 2(6) 'Company ' means (i) any Indian Company or (ii) any association, whether incorporated or not and whether Indian or non Indian, which is or was assessable or was assessed as a company for the assessment for the year ending on the 31st day of March, 1948, or which is declared by general or special order of the Central Board of Revenue to be a company for the purposes of this Act.
" It is contended for the respondent that the Mewar Industries Ltd., was an association which was assessable as a Company for the year ending March 31, 1948, and that it was, in fact, assessed; but the appellant disputes this.
As the point turns on disputed question of fact.
, it cannot be allowed to be raised at this stage.
213 In the result, we hold that the sum of Rs. 26,000 received by the appellant on April 22, 1950, ",as dividend as defined in section 2(6A) (c) of the Act and is chargeable to tax.
The appeal fails, and is dismissed with costs.
Appeal dismissed.
| The appellant, a resident of the once independent State of Udaipur, held 266 shares in the Mewar Industries Ltd., a company registered in that State.
There was no law in the State of Udaipur imposing tax on income and it was on April 1, 1950that for the first time the residents of Rajasthan, in which the State had merged, became liable to pay such a tax.
On January 18, 1950, the Company went into liquidation and on April 22, 1950, the liquidator distributed a portion of the assets among the shareholders, the appellant receiving a sum of Rs. 26,000.
This sum represented the undistributed profits of the company which had accrued during the six accounting years preceding the liquidation.
The income tax authorities included this sum in the taxable income of the appellant for the assessment year 1051 52 holding that it was dividend as defined in section 2(6A)(c) of the Indian Income tax Act.
Under section 2(6A)(c) the distribution of accumulated profits which arose during the " six previous years " preceding the date of liquidation would be dividend.
Section 2(1) defined " previous year " to mean the year which was previous to.the assessment year.
The appellant contended that " previous years " in section 2(6A)(c) must be read in the light of the definition is section 2(1) and as in the present case there had been no law imposing a tax prior to April 1, 1950, the profit for the years 1943 44 to 1948 49 cannot be held to be profits which " arose during the six previous years ", and consequently could not be taxed as dividend as defined in section 2(6A)(c) of the Indian Income tax Act.
Held, that the said sum was dividend within the meaning of section 2(6A)(c) of the Act and was liable to tax.
The definitions given in section 2 Of the Act applied unless there was anything repugnant in the subject or context.
It would be repugnant to the definition of " dividend " in section 2(6A)(c) to import into the expression " six previous years " the definition of " previous year " in section 2(ii) of the Act.
By the expression "previous years " in section 2(6A)(c) of the Act was meant the financial years preceding the year in which liquidation took place.
Commissioner of Income tax, Madras vs K. Srisivasan and Gopalan, , referred to. 205
|
Summarize this legal judgement text concisely | Appeal No. 117 of 1955.
Appeal by special leave from the judgment and order dated the 25th March, 1953, of the Madras High Court, in Civil Misc.
Petition No. 6577 of 1952.
R. Ganapathy Iyer, for the appellant.
Sardar Bahadur, for the respondent.
October 31.
The Judgment of the Court was ,delivered by S.K. DAS, J.
In this appeal, pursuant to special leave against the judgment and order of the High Court of Madras, the question for decision is whether the appellant who claims to be an agriculturist debtor is entitled to apply for scaling down of his decretal debt under the provisions of the Madras Agriculturists ' Relief Act (Mad. IV of 1938), hereinafter called the Act, as amended by the Madras Agriculturists ' Relief (Amendment) Act (Mad. XXIII of 1948), hereinafter called the amending Act.
The facts which have led to this appeal are that a partnership firm, briefly described as M.A.R. Firm, whose partners were Arunachalam Chetty, his two sisters and Subramaniam Chetty, was carrying on the business of money lending.
On the death of Arunachalam Chetty on July 6, 1916, Subramaniam Chetty, one of the surviving partners, took over the assets of the dissolved partnership firm at a valuation of Rs. 25,000 and carried on the business under the name and style 240 of P.L. section Firm of which the partners were Subramaniam Chetty, Vellachi Achi, and his two daughters, and in 1919 Palaniappa Chetty, father of the appellant, joined the partnership.
The amount of Rs. 25,000 was credited in the accounts of the new partnership.
On April 19, 1919, the accounts showed a balance of Rs. 16,369 12 as being due to the share of the deceased Arunachalam Chetty which by the year 1935 swelled up to a figure of Rs. 55,933 15.
Subramaniam Chetty died in 1924 and the business was carried on after his death by his widow Lakshmi Achi and her daughter and Palaniappa Chetty.
In 1930 Palaniappa Chetty died and his sons joined the business in his place.
Disputes arose between the partners in 1935 which were referred to arbitration and under an award given on July 31, 1935, Arunachalam Chetty and his sister were directed to pay to the estate of M.A.R. Rs. 34,958 11 6 and the defendants, now appellant and his brother, a sum of Rs. 20,975 3 and corresponding entries were made in the account books of P.L.S. Firm.
In 1944 the plaintiff, now respondent, as the adopted son of Arunacbalam Chetty filed a suit for recovery of the amount which the award had directed the defendants to pay.
The defendants were the two sons of Palaniappa Chetty.
They denied the adoption of the respondent to Arunachalam Chetty and also pleaded the bar of limitation.
The trial Court held the adoption to be invalid and upheld the plea of limitation.
The plaintiff took an appeal to the High Court which held the adoption to be valid and also held the suit to be within limitation.
It remitted the case to the trial Court for determining certain issues and after the findings were received, the suit was decreed on March 9, 1951, for a sum of Rs. 26,839 15 9.
The appellant applied to the High Court for leave to appeal to this Court and also applied for stay.
Leave was granted but stay was refused as, no security was furnished under the rules, the High Court later revoked the certificate granting leave.
During the pendency of the appeal in the High Court, the Act of 1938 was amended by the amending Act by which new reliefs were given to agriculturist,, debtors.
On October 5, 1951, the appellant made an 241 application to the Trial Court for scaling down the decretal debt under section 19 (2) of the Act which was added by the amending Act.
The trial Court held that the decree could be scaled down under section 19 (2) of the Act, but it had no jurisdiction to grant that relief as, the decree sought to be scaled down had been passed by the High Court.
Against this order the appellant took an appeal to the High Court on July 4, 1952, and also made a separate application in the High Court for scaling down the decretal debt under section 19 (2) of the Act.
The High Court dismissed the application on March 25, 1953.
The appellant then applied for leave to appeal under article 133 of the Constitution but this was refused on October 6, 1953, and this Court granted special leave on April 19, 1954.
The ground on which the High Court refused relief under section 19 (2) of the Act was that "the retrospective operation of section 19 (2) was controlled by section 16 of the Act XXIII of 1948 " and that cl.
(ii) of section 16 applied and as the appellant whose appeal was pending at the commencement of the amending Act did not apply for scaling down before the decree was passed although he had the opportunity to do so, his application subsequent to the decree was barred by the principle of res Judicata.
The provisions of section 19 (2) of the Act which gave the right to obtain relief of scaling down notwithstanding the provisions of the Code of Civil Procedure to the contrary were held inapplicable, because a. 19(2) of the Act was itself " limited by the provisions of section 16 of Act XXIII of 1948 ".
The High Court observed that although the appellant had filed an additional written statement claiming relief under the Burma Debt Laws, no prayer was made for any relief under the Act.
The High Court said : " A party who had an opportunity to raise a plea but did not raise the Plea is precluded by principles of res judicata from 'raising the plea over again at a subsequent stage.
But it is said that the principle of res judicata has no application to the present case as section 19 (1) which is incorporated by reference in section 19 (2) says that a petitioner would be entitled to the relief given to him under that section 244 order has been passed, or in which the decree or order has not become final, before such commencement; (iii) all suits and proceedings in which the decree or order passed has not been executed or satisfied in ,full before the commencement of this Act: Provided that no creditor shall be required to refund any sum which has been paid to or realised by him before the commencement of this Act Unfortunately, the language of section 16 is not very clear and lends itself to difficulties of interpretation.
We agree with the High Court that section 16 of the amending Act controls the amendments made by that Act in the sense that those amendments apply to the suits and proceedings described in the three clauses of section 16.
Sub section (2) of section 19 was one of the amendments which was inserted by the ammending Act and therefore the appellant debtor must establish that he is entitled to relief under sub section (2) of section 19, because his case comes under one of the three clauses of section 16.
The High Court held that cl.
(ii) of section 16 applied in the present case; but the appellant debtor could and should have raised the plea for relief under the Act when the appeal was pending in the High Court and as he did not do so, he was barred from claiming relief under section 19(2) on the principle of res judicata.
We do not think that this view is correct and our reasons are the following.
The three clauses of section 16 are independent of each other and el.
(i) refers to suits and proceedings instituted after the commencement of the amending Act, the relevant date being January 25, 1949.
Clause (1) has no application in the present case and need not be further considered.
Clause (iii), it seems clear to us, applies to suits and proceedings in which the decree or order passed had become final, but had not been executed or satisfied in full before January 25, 1949: this means that though a final decree or order for repayment of the debt had been passed before January 25, 1949, yet an agriculturist debtor can claim relief under the Act provided the decree has not been executed or satisfied in full before the aforesaid date.
It should be remembered in this connection 241 application to the Trial Court for scaling down the decretal debt under section 19 (2) of the Act which was added by the amending Act.
The trial Court held that the decree could be scaled down under section 19 (2) of the Act, but it had no jurisdiction to grant that relief as,, the decree sought to be scaled down had been passed by the High Court.
Against this order the appellant took an appeal to the High Court on July 4, 1952, and also made a separate application in the High Court for scaling down the decretal debt under section 19 (2) of the Act.
The High Court dismissed the application on March 25, 1953.
The appellant then applied for leave to appeal under article 133 of the Constitution but this was refused on October 6, 1953, and this Court granted special leave on April 19, 1954.
The ground on which the High Court refused relief under section 19 (2) of the Act was that "the retrospective operation of section 19 (2) was controlled by section 16 of the Act XXIII of 1948 " and that cl.
(ii) of section 16 applied and as the appellant whose appeal was pending at the commencement of the amending Act did not apply for scaling down before the decree was passed although he had the opportunity to do so, his application subsequent to the decree was barred by the principle of res judicata.
The provisions of section 19 (2) of the Act which gave the right to obtain relief of scaling down notwithstanding the provisions of the Code of Civil Procedure to the contrary were held inapplicable, because section 19 (2) of the Act was itself " limited by the provisions of section 16 of Act XXIII of 1948 ".
The High Court observed that although the appellant had filed an additional written statement claiming relief under the Burma Debt Laws, no prayer was made for any relief under the Act.
The High Court said : " A party who had an opportunity to raise a plea but did not raise the Plea is precluded by principles of res judicata from raising the plea over again at a subsequent stage.
But it is said that the principle of res judicata has no application to the present case as section 19 (1) which is incorporated by reference in section 19 (2) says that a petitioner would be entitled to the relief given to him under that section 244 ,order has been passed, or in which the decree or order has not become final, before such commencement; (iii) all suits and proceedings in which the decree or order passed has not been executed or satisfied in ,,full before the commencement of this Act: Provided that no creditor shall be required to refund any sum which has been paid to or realised by him before the commencement of this Act ".
Unfortunately, the language of section 16 is not very clear and lends itself to difficulties of interpretation.
We agree with the High Court that section 16 of the amending Act controls the amendments made by that Act in the sense that those amendments apply to the suits and proceedings described in the three clauses of section 16.
Sub section (2) of section 19 was one of the amendments which was inserted by the ammending Act and therefore the appellant debtor must establish that be is entitled to relief under sub section
(2) of section 19, because his case comes under one of the three clauses of section 16.
The High Court held that cl.
(ii) of section 16 applied in the present case; but the appellant debtor could and should have raised the plea for relief under the Act when the appeal was pending in the High Court and as he did not do so, he was barred from claiming relief under section 19(2) on the principle of res judicata.
We do not think that this view is correct and our reasons are the following.
The three clauses of section 16 are independent of each other and cl.
(1) refers to suits and proceedings instituted after the commencement of the amending Act, the relevant date being January 25, 1949.
Clause (1) has no application in the present case and need not be further considered.
Clause (iii), it seems clear to us, applies to suits and proceedings in which the decree or order passed had become final, but had not been executed or satisfied in full before January 25, 1949: this means that though a final decree or order for repayment of the debt, had been passed before January 25, 1949, yet an agriculturist debtor can claim relief under the Act provided the decree has not been executed or satisfied in full before the aforesaid date.
It should be remembered in this connection 245 that the word I debt ' in the Act has a very comprehensive connotation.
It means any liability in cash or kind, whether secured or unsecured, due from an agriculturist, whether payable under a decree or order of a civil or revenue court or otherwise etc.
It is, therefore, clear that the word I debt ' includes a decretal debt.
On the view that cl.
(iii) applies in those cases only where a final decree or order for repayment of the debt had been made before January 25, 1949, it has no application.
in the present case; because the decree for repayment of the debt was passed on March 9, 1951 which was after January 25, 1949.
We then go to el.
This clause is in two parts and talks of two different situations; one is when no decree or order has been passed and the other is when the decree or order passed has not become final.
There is, however, a common element, and the common element is that el.
(ii) refers to suits and proceedings instituted before January 25, 1949.
Now, the argument which learned counsel for the appellant has presented is this.
He says that the common element referred to above is satisfied in the present case, because the suit was instituted long before January 25, 1949.
He then says that no decree or order for repayment of the debt having been passed before March 9, 1951, the first situation envisaged by el.
(ii) arose in the present case and the appellant debtor was entitled to avail himself of all or any of the amendments made by the amending Act, including the amendment made in section 19 by the insertion of sub section
(2) thereof.
In the alternative, he says that if, the word 'decree or 'order ' means any decree or any order, even then cl.
(ii) applies, because the decree of dismissal passed in the suit had not become final on January 25, 1949, for an appeal was then pending.
We do not think it necessary to consider the alternative argument of learnd counsel for the appellant; because we are of the view that having regard to the other provisions of the Act, the words " decree or order occurring in el.
(ii) must mean decree or order for repayment of a debt.
What then is the position before 248 passed, but did not do so.
The legislature may not have realised that this would be so; but as the amendments stand, it is clear that in cases covered by cl.
(ii) of section 16 of the amending Act, a party is entitled to ask for relief under the Act at two stages, before a decree for repayment of the debt has been passed and also after such a decree has been passed.
Different considerations will, however, arise if a party asks for relief under the Act at the pre decree stage and that relief is refused on the ground that the Act does not entitle him to any relief under it.
If a party, even after such refusal, makes a second application, then the principle laid down in Narayanan Chettiar vs Rathinaswami Padayachi (1), will apply and the second application must fail on the ground that it has already been decided in his presence that he is not entitled to any relief under the Act.
One other point has to be referred to in this connection.
On behalf of the respondent creditor it has been pointed out to as that on the date the application for relief under section 19(2) was made in the High Court, no suit or proceeding was actually pending, the High Court having passed a decree much earlier, namely, on March 9, 1951.
Asa matter of fact, the application for relief under section 19(2) for scaling down the decree was made in the High Court sometime in 1952.
We are of the view that cl.
(ii) of section 16 describes the nature of suits or proceedings in which the amendments shall apply and the pendency of a suit or proceeding on a particular date after January 25, 1949, is not the true test.
The true test is whether the suit or proceeding was instituted before January 25, 1949, and whether in that suit or proceeding no decree or order for repayment of a debt had been passed before that date.
That test having been fulfilled in the present case, el.
(ii) of section 16 of the amending Act did not stand in the way of the appellant when he asked for relief under section 19(2) of the Act.
We now turn to such authorities as have been placed before us.
The authorities are not all consistent, and the language of cls.
(ii) and (iii) of section 16 of the amending (1) A.I.R. 1953 Mad.
421. 245 that the word I debt ' in the Act has a very comprehensive connotation.
It means any liability in cash or kind, whether secured or unsecured, due from an agriculturist, whether payable under a decree or order of a civil or revenue court or otherwise etc.
It is, A, therefore, clear that the word I debt ' includes a decretal debt.
On the view that cl.
(iii) applies in those cases only where a final decree or order for repayment of the debt had been made before January 25, 1949, it has no application in the present case; because the decree for repayment of the debt was passed on March 9, 1951, which was after January 25, 1949.
We then go to cl.
This clause is in two parts and talks of two different situations; one is when no decree or order has been passed and the other is when the decree or order passed has not become final.
There is, however, a common element, and the common element is that cl.
(ii) refers to suits and proceedings instituted before January 25, 1949.
Now, the argument which learned counsel for the appellant has presented is this.
He says that the common element referred to above is satisfied in the present case, because the suit was instituted long before January 25, 1949.
He then says that no decree or order for repayment of the debt having been passed before March 9, 1951, the first situation envisaged by cl.
(ii) arose in the present case and the appellant debtor was entitled to avail himself of all or any of the amendments made by the amending Act, including the amendment made in section 19 by the insertion of sub section
(2) thereof.
In the alternative, he says that if the word 'decree ' or 'order ' means any decree or any order, even then cl.
(ii) applies, because the decree of dismissal passed in the suit had not become final on January 25, 1949, for an appeal was then pending.
We do not think it necessary to consider the alternative argument of learned counsel for the appellant; because we are of the view that having regard to the other provisions of the Act, the words " decree or order occurring in cl.
(ii) must I mean decree or order for repayment of a debt.
What then is the position before 248 passed, but did not do So.
The legislature 'may not have realized that this would be so; but as the amendments stand, it.
is clear that in cases covered by cl.
(ii) of a. 16 of the amending Act, a party is entitled to ask ,,for relief under the Act at two stages, before a decree for repayment of the debt has been passed and also after such a decree has been passed.
Different considerations will, however, arise if a party asks for relief under the Act at the pre decree stage and that relief is refused on the ground that the Act does not entitle him to any relief under it.
If a party, even after such refusal, makes a second application, then the principle laid down in Narayanan Chettiar vs Rathinaswami Padayachi (1), *ill apply and the second application must fail on the ground that it has already been decided in his presence that he is not entitled to any relief under the Act.
One other point has to be referred to in this connection.
On behalf of the respondent creditor it has been pointed out to.
as that on the date the application for relief under section 19(2) was made in the High Court, no suit or proceeding was actually pending, the High Court having passed a decree much earlier, namely, on March 9, 1951.
As a matter of fact, the application for relief under section 19(2) for scaling down the decree was made in the High Court some time in 1952.
We are of the view that el.
(ii) of section 16 describes the nature of suits or proceedings in which the amendments shall apply and the pendency of a suit or proceeding on a particular date after January 25, 1949, is not the true test.
The true test is whether the suit or proceeding was instituted before January 25, 1949, and whether in that ,suit or proceeding no decree or order for repayment of a debt had been passed before that date.
That test having been fulfilled in tile present case, cl.
(ii) of section 16 of the amending Act did not stand in the way of the appellant when he asked for relief under section 19(2) of the Act.
We now turn to such authorities as have been placed before us.
The authorities are not all consistent, and the language of cls.
(ii) and (iii) of section 16 of the amending (1) A.I.R. 1953 Mad.
249 Act has perhaps led to some of the difficulties of inter pretation referred to therein.
The earliest decision brought to our notice is the decision in Velagala Sriramareddi and others vs Karri Sriramareddi (1).
This is a full bench decision of the Madras High Court.
to which we have already referred in an earlier part of this judgment.
The next decision is that of Venkataratnam vs Sesharma (2), which is also a Full Bench decision of the Madras High Court.
It deals with the construction of clauses (ii) and (iii) of section 16 of the amending Act with particular reference to the view expressed in certain earlier cases of the same High Court with regard to cl.
(iii) of section 16.
The view expressed in the earlier cases, to which the learned Judges who decided the case out of which the present appeal has arisen were parties, was that el.
(iii) of section 16 had no application to proceedings in which the decrees and orders had become final before January 25, 1949.
The Full Bench did not accept that view as correct.
Satyanarayana Rao, J., who delivered the judgment of the Court said: ,It cannot be doubted that the two clauses (ii) and (iii) are entirely independent and are intended to provide for different situations. . "The view taken by the learned Judges in the Civil Miscellaneous Appeals, already referred to, was that, while the two clauses are independent, clause (iii) has no application to proceedings in which the decrees and orders have become final before the commencement of the Act.
It is this view which is also pressed now before us by the learned Advocate for the respondent.
While we agree with the learned Judges in holding that the two clauses are independent, we are unable, with great respect, to accept the view that clause (iii) applied only to cases in which the decrees and orders have not become final.
If the decree or order has not become final before the commencement of this Act, clause (iii), in our opinion, seems to be un necessary and as such the case would be covered by clause (ii).
Further, it would be difficult to imagine (1) I.L R. [1042] Mad.
32 (2) I.L.R. , 498.
499. 250 that a decree or order which has not become final can ,be finally executed or can be finally satisfied.
No doubt it is true that, even when an appeal is pending, a decree may be executed and satisfaction may be entered.
But all that is only subject to the result of the appeal.
If the appeal succeeds or the amount due by the defendant to the plaintiff is increased by the Appellate Court, fresh execution has to be started, the satisfaction must be reopened and the execution must proceed.
The Legislature, in our opinion, when it enacted these two provisions, must have intended that, even in the case of decrees or orders which have become final, having regard_ to the provisions of the new Act, relief should be had by the judgment debtor so long as the decree or order was not executed or was not satisfied in full before the commencement of the Act.
If, however, a decree was executed in part and, before it was fully satisfied, the debt was scaled down under the provisions of the Act, as a result of which the creditor was found to have received more than what he was entitled to, the proviso enacts that, in such a situation, the creditor should not be required to refund any sum which has been paid to or realised by him before the commencement of this Act.
The question is asked, and legitimately, as to which are the kinds of decrees or orders which have become final and which are sought to be excluded by implication in clause (ii) of section 16.
It is of course not easy to grive an exhaustive list of such decrees and orders.
It may be that the legislature contemplated that decrees and orders of a declaratory nature, and which are not executable and which have become final before the commencement of the Act, need not be reopened.
A reading of the two clauses together would suggest that clause (iii) would apply exclusively to executable decrees or orders which, though they have become final before the commencement of the Act, are still in the stage of unfinished execution and at the stage at which satisfaction was not fully received.
The view which we take, in our opinion, reconciles both the clauses and does not make any of the clauses unnecessary.
We concur in the view expressed above that cl.
(iii) of 251 section 16 applies to decrees or orders which, though they had become final before January 25, 1949, are still in the stage of unfinished execution and at the stage at which satisfaction has not been fully received, and cl.
(ii) applies to suits and proceedings which were instituted before January 25, 1949, but in which no decree or order had been passed or the decree or order passed had not become final before that date.
We consider it unnecessary in the present case to go into the further question whether cl.
(ii) refers to decrees and orders of a declaratory nature, which are not executable but which have become final before January 25, 1949.
That is a question which does not fall for decision in the present case and we express no opinion thereon.
In Kanakammal vs Muhammad Kathija Beevi (1) it was observed: " The mere fact that the judgment debtor raised an objection to the executability of the whole decree on the ground that it has to be scaled down is no ground for scaling down the decree and the court will not be justified in so scaling down without a separate application.
This is also another ground for holding that the judgment debtor is not barred from filing the application to scale down the decree even though he had not raised the question at an earlier stage of the execution proceedings.
We are therefore definitely of opinion that an application under section 19 of the Act is not one which comes under section 47, Civil Procedure Code, and therefore the principle of res judicata in execution cannot apply to the facts of the present case.
" The decision in Narayanan Chettiar vs Rathinasami Padayachi (2), related to a different point altogether, namely, successive applications under section 19 or section 20 of the Act.
In that case the question was whether the judgment debtor not having filed an application under section 19 within the prescribed time from the date of the stay order under section 20 passed on his prior application was precluded from again filing another application under section 20 followed by an appli cation under section 19.
It was held that he was not so entitled.
In Jagannatham Chetty vs Parthasarathy (1) A.I.R. 1953 Mad. 188, 189.
(2) A.I.R. 1953 Mad.
421. 252 Iyengar(1) the question as to the meaning of the word proceedings ' in section 16 ",as considered and it was observed that the word I proceedings ' ins.
16 must relate to proceedings instituted for repayment of a debt and not to execution proceedings which are for enforcement of a decree or order.
We greatly doubt whether that is the correct view to take, particularly when the expression 'debt ' includes a decretal debt; but as the question does Dot arise in the present case we refrain from making any final pronouncement.
In Hemavathi vs Padmavathi (2) it was held that the amending Act was retrospective so as even to apply to a debt which had already been scaled down once by the application of the Act and even where the rights of the parties had been finally adjudicated by decree or order of a court, provided that the decree or order had not been executed or fully satisfied.
That was held to be the effect of el.
(iii) of section 16 of the amending Act.
In Lingappa Chettiar vs Chinnaswami Naidu (3), the view taken by Subba Rao and Somasundaram, JJ.
(the same Judges who decided the present case) in an earlier decision that a party who had an opportunity of getting the beneficent provisions of the Act applied to him before the amendment, but did not avail him self of the same, is disentitled to invoke the provisions of sub section
(2) of section 19, ",as dissented from and Govinda Menon, J., who gave the judgment of the Court, said: " We do not find any difficulty in holding that sub section
(2) of section 19 is applicable to cases like the present, and the retrospective nature of that sub section as contemplated by clause (iii) of section 16 of Act XXIII of 1948 cannot be restricted or circumscribed by any other clause in that section.
" In T. N. Krishna Iyer vs Nallathambi Mudaliar and others (4) Krishnaswami Nayudu, J., said that the object of section 16 of the amending Act was to render the application of the amendments to a wide range of suits, both to suits instituted before and after the commencement of the amending Act and to such suits in which the decrees have not only become final but have (1) A.I.R. 1953 Mad.
(3) (1955) i M.L.J. i, 5.
(2) I.L.R. (4) (1955) i M.L.J. 215.
253 not been executed or satisfied and so loin(, as something remains to be done out of the decree, the Act could be made applicable.
It seems to us that both on authority and principle, the correct view is that the appeallant was entitled to the benefit of section 19(2) of the Act,, read with section 16, cl.
(ii) of the amending Act.
These are our reasons for holding that the view taken by the High Court is not correct and the appeal must, therefore, be allowed and the case sent back to the High Court for consideration on merits in accordance with law.
The appellant will get his costs of this Court ; costs incurred in the High Court before and hereafter will be dealt with by the High Court at the time of the final decision.
There were two applications filed by the appellant debtor for the relief which be claimed.
One AN as filed in the trial court and the other in the High Court.
The trial court dismissed the application on the ground that the High Court alone had jurisdiction to give such relief The appellant preferred an appeal to the High Court and also filed an application there.
The question which is the proper court to give relief to the appellant is a matter on which we are making no pronouncement.
That is a matter which will be dealt with by the High Court.
Appeal allowed.
Case remanded.
| In 1944 the respondent instituted a suit for the recovery of money due under an award dated July 31, 1935, whereby the appellant and his brother were directed to pay a certain amount to the respondent.
The suit was dismissed by the trial Court 238 but on appeal the High Court passed a decree on March 9, 1951.
During the pendency of the appeal in the High Court the Madras Agriculturists Relief Act, 1938, was amended by Act XXIII of 1948, which inter alia by adding sub section (2) to section 19 of the main Act enabled decrees passed after the commencement of the Act to be scaled down under the provisions of the Act.
By cl.
(ii) to section 16 of the amending Act, which came into force on January 25, 1949, it was provided that " that the amendments made by this Act shall apply to. . all suits and proceedings instituted before the commencement of the Act, in which no decree or order has been passed before such commencement ".
On October 5, 1951, the appellant made an application to the trial court for scaling down the decremental debt under section 19(2) Of the Madras Agriculturists Relief Act, 1938, as amended, but the application was dismissed on the ground that the trial court had no jurisdiction to act under that sub section as the decree sought to be scaled down had been passed by the High Court.
The appellant preferred an appeal to the High Court and also made a separate application for scaling down the decretal debt under section 19(2) Of the Act.
The High Court took the view that section 19(2) was controlled by section 16 of the amending Act and that cl.
(ii) of section 16 was applicable to the case, but that as the appellant whose appeal was pending at the commencement of the amending Act did not apply for scaling down before the decree was passed although he had the opportunity to do so, his application subsequent to the decree was barred by the principle of Yes judicature.
Held, that the High Court erred in its view that in order to get relief under section 19(2) Of the Act, read with cl.
(ii) of section 16 of the amending Act, the appellant must have made the application when the appeal was pending and before a decree had been passed.
For the application of cl.
(ii) of section 16 of the amending Act, the true test is whether the suit or proceeding was instituted before January 25, 1949, and whether no decree or order for repayment of a debt had been passed before that date, and it is not necessary that the suit or proceeding should be pending on the date of the application under section 19(2) Of the Act.
In cases covered by that clause a party can ask for relief under the Act at two stages before a decree for repayment of the debt bad been passed, and also after such a decree had been passed, and since section 19(2) of the Act in express terms enables a debtor to claim a relief under the provisions of the Act after a decree had been passed, the appellant is entitled to the benefit of section 19(2) of the Act read with section i6, cl.
(ii), of the amending Act.
While cl.
(ii) of section i6 applies to suits and proceedings which were instituted before January 25, 1949, but in which no decree or order had been passed, or the decree or final order passed had not become final, before that date, cl.
(iii) applies to decrees or orders, which, though they had become final before January 25, 239 1949, were still in the state of unfinished execution and at the stage at which satisfaction had not been fully received.
Venkataratnam vs Seshatnma, 1.
L. R. , approved.
The question whether cl.
(ii) refers to decrees and orders of a declaratory nature, which are not executable but which have become final before January 25, 1949, left open.
The opinion expressed in jagannatham Chetty vs Parthasarathy Iyengar, A.I.R. 1953 Mad. 777, that the word 'proceedings ' in section i6 of the amending Act must relate to proceedings instituted for repayment of a debt and not to execution proceedings which are for enforcement of a decree or order, doubted and the question left open.
|
Summarize this legal judgement text concisely | Appeal No. 122 of 1957.
Appeal from the order dated November 4, 1954, of the Punjab High Court (Circuit Bench) at Delhi in Civil Reference No. 15 of 1953.
R. Ganapathy Iyer, R. H. Dhebar and D. Gupta, for the appellant.
P. M. Mukhi, Gopal Singh for Udhai Bhan Choudhry, for the respondent.
P. M. Mukhi and Ganpat Rai, for Dalmia Jain Aviation Ltd. (now Asia Udyog Ltd.) (Intervener).
November 5.
The Judgment of the Court was delivered by VENKATARAMA AIYAR, J.
This is an appeal against the judgment of the High Court of Punjab in a reference under section 66(1) of the Indian Income tax Act, 1922, hereinafter referred to as the Act.
The facts are that the respondent, had not been assessed to income tax prior to the assessment year 1948 49.
On July 4, 1949, he made suo motu returns showing an income of Rs. 4,494 for the accounting year 1947 48 being the previous year for the assessment year 1948 49 and an income of Rs. 31,646 for 396 the accounting year 1948 49 being the previous year for the assessment year 1949 50.
By orders dated August 25, 1949, the Income tax Officer assessed the income for the assessment year 1948 49 at Rs. 6,277 and for the assessment year 1949 50 at Rs. 36,281.
The correctness of these orders is not in question before us.
We are concerned in these proceedings with the vires of an order, which the Income tax Officer made on October 9, 1950, under section 28 read with sections 18A(3) and 18A(9) of the Act.
It will be convenient to set out these provisions, so far as they are material for the purpose of this appeal.
Section 18A(3) provides that : " Any person who has not hitherto been assessed shall, before the 15th day of March in each financial year, if his total income of the period which would be the previous year for an assessment for the financial year next following is likely to exceed six thousand rupees, send to the Income tax Officer an estimate of the tax payable by him on that part of his income to which the provisions of section 18 do not apply of the said previous year calculated in the manner laid down in sub section (1), and shall pay the amount, on such of the dates specified in that sub section as have not expired, by instalments which may be revised according to the proviso to sub section (2)." Section 18A(9) is as follows: " If the Income tax Officer, in the course of any proceedings in connection with the regular assessment, is satisfied that any assessee (a) has furnished under sub section (2) or sub section(3) estimates of the tax payable by him which he knew or had reason to believe to be untrue, or (b) has without reasonable cause failed to comply with the provisions of subsection (3), the assessee shall be deemed, in the case referred to in clause (a), to have deliberately furnished inaccurate particulars of his income, and in the case referred to in clause (b), to have failed to furnish the return of his total income; and the provisions of section 28, so far ' as may be, shall apply accordingly:".
397 Then, there is a proviso which imposes a limit on the amount of penalty, which can be levied.
Section 28 of the Act runs as follows: (1) " If the Income tax Officer. . in the course of any proceedings under this Act, is satisfied that any person (a)has without reasonable cause failed to furnish the return of his total income which he was required to furnish by notice given under sub section (1) or subsection (2) of section 22 or section 34 or has without reasonable cause failed to furnish it within the time allowed and in the manner required by such notice, or (b)has without reasonable cause failed to comply with a notice under subsection (4) of section 22 or subsection (2) of section 23, or (c)has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, he. . may direct that such person shall pay by way of penalty, in the case referred to in clause (a), in addition to the amount of the income tax and supertax, if any, payable by him a sum not exceeding one and a half times that amount, and in the cases referred to in clauses (b) and (c), in addition to any tax payable by him, a sum not exceeding one and a half times the amount of the income tax and super tax, if any, which would have been avoided if the income as returned by such person had been accepted as the correct income:".
The Income tax Officer held that as the respondent had failed to send an estimate of the tax on his income as provided in section 18A(3) he became liable to be proceeded against under section 28, and accordingly imposed a penalty of Rs. 40 for the year 1948 49 and Rs. 1,000 for the year 1949 50.
On appeal, the Appellate Assistant Commissioner confirmed the order in so far as it imposed a penalty for the year 1948 49 but set it aside as regards the year 1949 50 on the ground that by reason of the assessment for the year 1948 49 the respondent ceased to be a new assessee for 1949 50, and that, in consequence, section 18A(3) had no application.
Against the order cancelling the penalty for 1949 50, 398 the Income tax Officer preferred an appeal to the Appellate Tribunal, which disagreed with the view of the Appellate Assistant Commissioner that the respondent was no longer a new assessee within section 18A(3) of the Act, but held that the order of the lncome tax Officer imposing a penalty under section 28 was ultra vires, because that section would, in terms, apply only when a person failed to furnish the return when he was required so to do by notice under section 22 or section 34 of the Act, and that there could be Do such notices with reference to estimates of tax on income to be sent under section 18A(3).
In the result, the appeal was dismissed.
On the application of the appellant, the Tribunal referred the following question for the opinion of the High Court: " Whether on a true construction of Section 18A(9) (b) read with section 28 of the Indian Income tax Act,1922, a penalty may be imposed for a total failure to comply with the provisions of Section 18A(3) of the said Act ?" The reference was heard by Bhandari, C. J., and Falshaw, J., who agreed with the Tribunal that the conditions as to notice laid down in section 22(1) or section 22(2) must be satisfied even when action was sought to be taken under section 28 in respect of a failure to comply with section 18A(3), and that as those conditions had not been satisfied, the order imposing penalty was bad.
The appellant applied for a certificate under section 66A(2) of the Act, and the same was granted, and that is how the appeal comes before us.
The sole question that arises for our determination in this appeal is whether under section 28(1) read with section 18A(9) of the Act, it is competent to the Income tax authorities to impose a penalty on a person who has failed to comply with section 18A(3) of the Act.
In answering it in the negative, the learned Judges in the court below were influenced almost exclusively by the terms of section 28 which they held did not cover failure to comply with section 18A(3).
Now, section 28(1) provides for penalty being imposed in three classes of cases which are mentioned respectively in cls.
(a), (b).
and (c).
Clause (b) deals with cases where there has been failure 399 to produce documents or accounts or other evidence which the assessee had been required to produce under section 22(4) or section 23(2) of the Act, and that is not relevant for the purpose of the present discussion.
Then, there are cls.
(a) and (c), and they have reference, stating it in plain language, cl.
(a) to failure to make a return and cl.
(c) to making false return.
Now, the learned Judges observe that if an estimate of the tax is furnished under section 18A(3) and that is deliberately inaccurate, that will fall under section 28(1)(c) read with section 18A (9)(a) and penalty could be imposed under that section, but that that could not be done when there is failure to furnish an estimate as required by section 18A(3), be cause sub section
(1) of section 28 would apply only when a person failed to furnish the return when he had been required to do so by notice under section 22(1) or section 22(2) or section 34, or had failed to furnish it within the time allowed and in the manner required by the notice, and that there could be no such notice with reference to section 18A(3).
Say the learned Judges: " In the first place, a person who fails to send an estimate under section 18A(3) cannot be said to have failed to furnish the return of his total income which he was required to furnish in response to a notice issued under section 22 or section 34; secondly, the said person cannot be said to have failed to furnish it.
within the time allowed and in the manner required by such notice, for, estimates under section 18A(3) must be furnished before the 15th March in the financial year immediately preceding the year of assessment whereas the returns required by the notices under sections 22 and 34 can be furnished at later dates." With respect, the error in this reasoning lies in this that it fails to give due effect to the fiction contained in section 18A(9)(b) of the Act.
Under that provision, when an assessee has failed to comply with section 18A(3) he " shall be deemed to have failed to furnish the return of his total income and the provisions of section 28, so far as may be, shall 'apply accordingly." In other words ' by a legal fiction the failure to send an estimate of the tax under section 18A(3) is treated as a 400 failure to furnish return of income under section 22.
It is a necessary implication of this fiction that the estimate of tax on the income to be submitted under section 18A(3) is, in fact, different from the return to be furnished under section 22, and to appreciate the full significance of this fiction, it is necessary to examine what the distinction is.
Under section 3 of the Act, the tax is payable on the income of the previous year.
A statement of that income can be furnished only after that year ends, and section 22 enacts provisions as to when it is to be furnished in the assessment year.
Sub sections (1) and (2) provide for notices being given and the assessee is required to file his statement of income within the period provided therein, and it is this statement that is termed " return ".
Section 18A(3), however, relates to the sending of a statement of tax on the income of the accounting year before the 15th day of March of that year itself, and that statement is termed not a return but an estimate, and quite rightly, because in the very nature of it, it can only be that.
A person who sends an estimate under section 18A(3) has also to send a return of his income for the accounting year under section 22, and sub sections
(4) and (5) of section 18A provide for adjustment of advance tax paid under section 18A(3) towards the tax as finally computed under section 23.
Thus, there is a clear distinction between a return of income under section 22, which can only be during the year of assessment and an estimate of tax on income under section 18A(3), which can only be in the year of account.
It is in the light of this distinction that the effect of the legal fiction enacted ins.
18A(9) (b) that when a person fails to send an estimate of tax on his income under section 18A(3) he shall be deemed to have failed to furnish return of his income, will have to be judged.
The respondent contends that its effect is only to place the estimate to be sent under section 18A(3) on the same footing as the return under section 22 for purposes of section 28, and that that does not abrogate the other conditions laid down in that section on which alone action could be taken thereunder and penalty imposed, and one of those conditions is the issue of notice under section 22(1) or section 22(2).
But it must be noted that section 18A(9) (b) does 401 not merely say that an estimate under section 18A(3) shall be deemed to be a return.
It enacts that the failure to send an estimate in accordance with section 18A(3) is to be deemed to be a failure to make a return.
Now, there can be no failure to make a return, unless notice had been issued under section 22(1) or section 22(2) and there has been a default in complying with that notice.
Therefore, the fiction that the failure to send an estimate is to be deemed to be a failure to send a return necessarily involves the fiction that notice had been issued under section 22, and that had not been complied with.
It is a rule of interpretation well settled that in construing the scope of a legal fiction it would be proper and even necessary to assume all those facts on which alone the fiction can operate.
The following off quoted observations of Lord Asquith in East End Dwellings Co. Ltd. vs Finsbury Borough Council (1) may appropriately be referred to: " 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 these 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.
" The fiction under section 18A(9) (b) therefore that failure to send an estimate under section 18A(3) is to be deemed to be a failure to send a return must mean that all those facts on which alone there could be a failure to send the return must be deemed to exist, and it must accordingly be taken that by reason of this fiction, the notices required to be given under section 22 must be deemed to have been given, and in that view, section 28 would apply on its own terms.
Some argument was addressed to us based on the use of the definite article "the" qualifying the word (1) , 132.
51 402 "return" in section 18 A(9)(b).
It was said that that expression meant the return which is to be furnished under of section 22, and that that requires that there must have been a notice issued under section 22(1) or section 22(2), before action could be taken under section 28.
In the view expressed above that the fiction enacted in section 18 A(9)(b) involves the fiction that notices had been issued under section 22(1) or section 22(2), this contention does not call for further consideration.
It was finally argued that a fiscal statute and especially one imposing a penalty, should be strictly construed and that if the words of the enactment be not sufficiently explicit to reach the subject, the Revenue must fail, and the following observations in Vestey 's (Lord) Executors vs Inland Revenue Commissioners (1) were relied on in support of this position : "Parliament in its attempts to keep pace with the ingenuity devoted to tax avoidance may fall short of its purpose.
That is a misfortune for the taxpayers who do not try to avoid their share of the burden and it is disappointing to the Inland Revenue.
But the court.
will not stretch the terms of taxing Acts in order to: improve on the efforts of Parliament and to stop gaps which are left open by the statutes.
Tax avoidance is an evil, but it would be the beginning of much greater evils if the courts were to overstretch the language of the statute in order to subject to taxation people of whom they disapproved.
" These observations would be in, point if the language of the enactment left us in any doubt as to what the legislature meant.
But can that be said of section 18 A(9)(b)? Its object avowedly is to assimilate the position of a person who has failed to send the estimate under section 18 A 3) to that of a person who has failed to furnish the return. under section 22, and that object is sought to.
be achieved by enacting the fiction which is contained in section 18 A(9)(b).
And 'if, on the principles laid down in East End Dwellings Co. Ltd. vs Finsbury Boorough Council (2), the true effect of that fiction is that it imports that notice had been issued under section 22, then the conditions prescribed in section 28 of the Act are satisfied and (1) [1949] 1 All E.R. 1108, 1120.
(2) , 132.
403 penalty could be imposed under that section for failure to comply with section 18 A(3), on the clear language of that enactment itself without straining or overstretching it.
We must now refer to an aspect of the question, which strongly reinforces the conclusion stated above.
On the construction contended for by the respondent, section 18 A(9)(b) would become wholly nugatory, as sections 22(1) and 22(2) can have no application to advance estimates to be furnished under section 18 A(3), and if we accede to this contention, we must hold that though the legislature enacted section 18 A(9)(b) with the very object of bringing the failure to send estimates under section 18 A(3) within the operation of section 28, it signally failed to achieve its object.
A construction which leads to such a result must, if that is possible, be avoided,, on the principle expressed in the maxim, "ut res magis valeat quam pereat".
Vide Curtis vs Stovin (1) and in particular the following observations of Fry, L. J., at page 519 : I "The only alternative construction offered to us would lead to this result, that the plain intention of the legislature has entirely failed by reason of a slight inexactitude in the language of the section.
If we were to adopt this construction, we should be construing the Act in order to defeat its object rather than with a view to carry its object into effect".
Vide also Craies on Statute Law, p. 90 and Maxwell on The Interpretation of Statutes, Tenth Edn., pp. 236 237.
"A statute is designed", observed Lord Dunedin in Whitney vs Commissioners of Inland Revenue (2), "to be workable, and the interpretation thereof by a court should be to secure that object, unless crucial omission or clear direction makes that end unattainable".
We are accordingly of opinion that it was competent to the Income tax authorities to impose a penalty under section 28 read with section 18 A(9)(b) where there has been a failure to comply with section 18 A(3).
in the result.
, we set aside the order of the court below and answer the reference in the affirmative.
(1) (2) , 110.
404 The appellant will have his costs here and in the court If below.
Appeal allowed.
| The respondent who bad not been assessed to income tax prior to the assessment year 1948 49 made suo motu returns on July 4, 1949, showing an income of Rs. 4,494 and Rs. 31,646 respectively, for the assessment years 1948 49 and 1949 5o, but failed to send an estimate of the tax on his income as provided in section 18A(3) of the Indian Income tax Act, 1922.
The Incometax Officer took action under section 28 read with section 18A(9) of the Act and imposed a penalty on him for the years 1948 49 and 1949 50. 395 The Appellate Tribunal held that the order imposing the penalty was ultra vires on the ground that section 28 would, in terms, apply only when a person failed to furnish the return when he was required so to do by notice under section 22 or section 34 of the Act, and that there could be no such notices with reference to estimates of tax on income to be sent under section 18A(3).
The High Court, on reference, agreed with the view of the Tribunal.
Held, that in view of the legal fiction contained in section 18A(9) of the Act that when an assessee has failed to comply with section 18A(3) he "shall be deemed to have failed to furnish the return of his total income and the provisions of section 28, so far as may be, shall apply accordingly ", the failure to send an estimate of the tax under section 18A(3) should be treated as failure to furnish return of income under section 22.
Accordingly, it was competent to the Income tax authorities to impose a penalty under section 28 read with section 18A(9)(b) where there has been a failure to comply with section 18A(3).
The relevant provisions of the Indian Income tax Act, 1922, are set out in the judgment.
|
Summarize this legal judgement text concisely | os. 120 122, 164, 199, 213, 255, 260, 363, 378, 402 & 407 of 1955, 6, 7, 43, 120, 126, 142, 153, 154, 198, 216 & 223 of 1956, 32, 49, 60, 61, 141 & 143 of 1957, 3, 7 & 104 of 1958.
Petitions under Article 32 of the Constitution for the enforcement of fundamental rights.
Achhru Ram and Ganpat Rai, for the petitioners in Petition No. 120/55.
D.R. Prem and Ganpat Rai, for the petitioners in Petitions Nos. 120, 121, 122, 164, 199, 213, 255, 260, 363, 402 & 407 of 1955, 6, 7, 43, 125, 142, 154, 198, 216 & 223 of 1956, 32, 60 & 143 of 1957, 7 & 104 of 1958.
D.R. Prem and section D. Sekhri, for the petitioner in Petition No. 378 of 1955.
D.R. Prem and P. C. Aggarwal, for the petitioner in Petition No. 120/56.
D.R. Prem and Raghu Nath, for the petitioner in Petition No. 49/57.
D.R. Prem and K. L. Mehta, for the petitioner in Petition No. 153/56.
Y.Kumar, for the petitioner in Petitions Nos.
61 & 141 of 1957 & 3 of 1958.
H. N. Sanyal, Additional Solicitor General of India, H. J. Umrigar and T. M. Sen, for the respondent.
October 10.
The Judgment of the Court was delivered by DAS, C. J.
By each of these 32 petitions under article 32 of our Constitution, which have been heard together, the respective petitioners challenge the constitutional validity of the Himachal Pradesh Abolition of Big Landed Estates and Land Reforms Act, 1953.
(Himachal 15 of 1954) which is said, to have been passed by the,.
Legislative Assembly of the State of Himachal Pradesh created by the Himachal Pradesh and Bilaspur (New State) Act (32 of 1954).
On November 23, 1954, the President of India gave his assent to the Bill which on being so assented to 21 162 became the Himachal Pradesh Abolition of Big Landed Estates and Land Reforms Act, 1953, (Himachal 15 of 1954) (hereinafter called the Abolition Act).
On January 26, 1955, this Abolition Act was brought into force by a notification issued under section 1(3) thereof.
It will be convenient at this stage to refer to some of the relevant sections of the Abolition Act.
Section 11 confers a new right on the tenants to acquire the interests of the land owners.
According to this section notwithstanding any law, custom, or contract to the contrary a tenant other than a sub tenant shall, on application made to the compensation officer at any time after the commencement of the Act, be entitled to acquire, on payment of compensation, the right, title and interest of the land owner in the land of the tenancy held by him under the landowner subject to certain terms and conditions therein mentioned.
Section 14 permits the acquisition by the tenant of the rights of the landowner in a portion of the lands of the tenancy in certain specified circumstances on the surrender of the rest of the lands.
Section 15 sanctions the acquisition by the State Government of the rights of the landowners by notification in the Gazette declaring that, as from such date and in respect of such area as may be specified in the notification, the right, title and interest of the landowner in the lands of any tenancy held under him by a tenant shall stand transferred to and vest in the State Government free from all encumbrances created in such lands by the landowner.
Section 16 provides for the payment to the landowner, whose right, title and interest in lands, would be acquired by the State Government under section 15, of compensation to be calculated, as far as practicable, according to the provisions of sections 12 and 13.
Section 27 provides that notwithstanding anything contained in the provisions of the foregoing sections of that Chapter, a landowner who holds land, the annual land revenue of which exceeds Rs. 125 per year, the right, title and interest of such owner in such land shall be deemed to have been transferred and vested in the State Government free from all encumbrances.
Sub section (3) of this section lays down 163 that the landowner whose right is acquired under subs.
(1) by the State Government, shall be entitled to receive compensation which shall be determined by the Compensation Officer having regard to sections 17 and 18 of this Act, in accordance with the provisions of Schedule II, but in the case of such occupancy tenant who is liable to pay rent in terms of land revenue or the multiple of land revenue, the compensation payable to his landowner shall be computed in accordance with Schedule I.
The compensation provided in Schedule II to the Abolition Act may in certain cases work out to no more than twice the land revenue.
Section 39 fixes the maximum rent at one fourth of the crop which, it is apprehended, may not even cover the land revenue and the local rates and cesses.
Section 80 provides for the State management of lands in certain cases therein mentioned.
It is not necessary for our present purpose to refer to any of the other provisions of the Abolition Act.
On a cursory perusal of the foregoing sections one may well understand the natural apprehension of the landowners that the provisions thereof are much too drastic and are inconsistent with and take away or at any rate substantially abridge the right to their respective properties conferred on and guaranteed to them by Part III of our Constitution and thereby infringe the provisions of articles 14, 19 or 31.
It is, therefore, not surprising that the petitioners in all these petitions, all of whom are landowners, have moved this Court by separate petitions under article 32 for the enforcement of their fundamental rights to their respective properties.
In each of the several petitions which have been heard together two broad points have been taken, namely: (i)That the Abolition Act is entirely void by reason of its not having been passed by a duly constituted legislature; and (ii)That, in any event, the provisions of Ch.
III and of Ch.
VIII are repugnant to the Constitution.
Re (i) : In the First Schedule to the Constitution, as it was originally passed, were set out under the heading Part C States " the names of 10 States.
In that 164 list of Part C States Bilaspur was shown as item 3 and Himachal Pradesh as item 7.
The two States were quite separate, having separate territories respectively described at the foot of the said list in that Schedule as "territories which, by virtue of an order made under section 290A of the Government of India Act, 1935, were immediately before the commencement of this Constitution being administered as if they were a Chief Commissioner 's Province of the same name.
" The (49 of 1951), hereinafter referred to as " the States Act ", provides for Legislative Assemblies, Councils of Ministers and Councils of Advisers for Part C States.
By section 2(1)(g), however, " State " is defined to mean any State specified in Part C of the First Schedule to the Constitution other than Bilaspur.
Therefore, the Part C State of Bilaspur was excluded from the operation of that Act and was dealt with separately.
The Part C State of Himachal Pradesh, as it then was, which is hereinafter called the old Himachal Pradesh was, however, governed by the Part C States Act.
Section 3 of that Act provides that there shall be a Legis lative Assembly for each State and that the allocation of the seats in the Legislative Assemblies of the 6 States therein mentioned shall be as set out in the Third Schedule.
According to the Third Schedule, 'as it stood originally, the total number of seats allocated to the old Himachal Pradesh was 36 including 8 seats reserved for scheduled castes.
Section 4 authorises the President to determine by order the constituencies into which such State shall be divided, the extent of such constituencies, the number of seats allotted to each such constituency and the number of seats reserved for the scheduled castes or scheduled tribes.
Section 5 prescribes the duration of the Legislative Assemblies.
According to that section the Legislative Assembly, unless sooner dissolved, is to continue for five years from the date appointed for the first meeting and no longer.
Section 8 makes the provisions of Part I and Parts III to XI of the Representation of the People Act, 1951 and of any rules and orders made thereunder applicable in relation to an election to the 165 Legislative Assembly of a Part C State as they applied in relation to an election to the Legislative Assembly of a Part A State, subject to such modification as the President may, after consultation with the Election Commission, by order direct.
Section 9 authorises the Chief Commissioner to summon the Legislative Assembly from time to time but provides that six months shall not intervene between its last sitting in one session and the date appointed for its first sitting in the next session.
Under section 10 the Legislative Assembly must, as soon as may be, choose two of its members to be respectively the Speakers and the Deputy Speaker thereof.
Section 14 enjoins that every member of the Legislative Assembly shall, before taking his seat, make and subscribe before the Chief Commissioner or some person appointed in that behalf by him an oath or affirmation 'according to the form set out for the purpose in the Fourth Schedule.
The form set out in the, Fourth Schedule ends by affirming that such member " will faithfully discharge the duty upon which I am about to enter ", which is in consonance with the provision of the section that oath is to be taken " before taking his seat ".
Section 16 provides for 'vacation of seats on the happening of certain events therein mentioned.
Section 18 provides penalty for sitting, and voting before making and subscribing the oath or affirmation which may extend to Rs. 500 for each day.
According to section 35 the validity of any proceedings in the Legislative Assembly of a State cannot be called in question on the ground of any alleged irregularity of procedure.
It is not necessary, for our present purpose, to refer to any other section of the Part C States Act.
In exercise of the powers conferred on him by section 4 of the Part C States Act, the President duly made an order, determining the constituencies into which the old Himachal Pradesh would be divided and thereafter in 1952 elections were duly held and 36 members were elected by the voters of the different constituencies so delimited.
Presumably the results of the general elections to the Legislative Assembly of the old Himachal Pradesh and the names of the members 166 elected for the various constituencies at the said election were duly published under section 74 of the Representation of the People Act, 1951, in the official gazette by the proper authority as soon after the date or the last of the dates fixed for the completion of the said elections as was possible.
There is no dispute that, in exercise of the powers conferred on him by section 9 of the Part C States Act, the Chief Commissioner summoned the Legislative Assembly of the old Himachal Pradesh thus constituted to meet at the appointed time and place.
There is also no dispute that every member of that Legislative Assembly before taking his seat made and subscribed the usual oath or affirmation under section 14 of the Part C States Act and elected one of the members Shri Jaiwant Ram as the Speaker and that the first session of the Assembly so constituted commenced functioning as the Legislative Assembly.
of the old Himachal Pradesh.
It was in this first session of this Legislative Assembly of the old Himachal Pradesh that in 1953 a Bill (Himachal 15 of 1953) which became the Abolition Act was introduced.
Pending the passage of that bill into an Act Parliament, on May 8, 1954, enacted an Act called the Himachal Pradesh and Bilaspur (New State) Act (32 of 1954), hereinafter I referred to as "the New State Act ".
This Act received the assent of the President on May 28, 1954, and was brought into force by a notification, dated July 1, 1954, issued by the Government of India in the official gazette under section 1(2) of the Act.
It will be convenient at this stage to set out the relevant provisions of this Act on which our decision on this point largely depends.
Section 3 of the New State Act says: " 3.
As from the commencement of this Act there shall be formed by uniting the existing States a new Part C State to be known as the State of Himachal Pradesh (hereafter in this Act referred to as the " new State) ".
Section 12 provides as follows: " 12.
(1) There shall be a Legislative Assembly for the new State.
167 (2)The total number of seats in that Legislative Assembly which shall be filled by direct election shall be 41.
" Section 14, which is very important, is expressed in the following terms: " 14.
(1) The new State shall, until other provision is made by law, consist of the following Assembly constituencies, namely : (i)the constituencies shown at the commencement of this Act in the Delimitation of Assembly Constituencies (Himachal Pradesh) Order, 1951 ; and (ii)the constituencies into which the part of the new State comprising the existing State of Bilaspur shall be divided.
(2)The President shall, as soon as may be after the commencement of this Act, after consulting the Election Commission of India, amend the Delimitation of Assembly Constituencies (Himachal Pradesh) Order, 1951, so as to include therein the constituencies into which the part of the new State comprising the existing State of Bilaspur, shall be divided and the said Order as so amended, shall, until superseded, be the Order relating to the delimitation of constituencies of the new State Sections 15 and 16 may also be set out: " 15.
(1) Every sitting member of the Legislative Assembly of the existing State of Himachal Pradesh representing a constituency of the said State shall, on and from the commencement of this Act, represent the constituency of the same name in the new State and shall be deemed to have been elected to the Legislative Assembly of the new State by that constituency.
(2)As soon as may be after the commencement of this Act, there shall be held elections to fill those seats of the Legislative Assembly which have been allotted to the constituencies into which the part of the new State comprising the existing State of Bilaspur shall be divided. . "16.
The period of five years referred to in section 5 of the (XLIX of 1951) shall, in the case of the Legislative 168 Assembly of the new State, be deemed to have commenced on the date on which the said period in the case of the Legislative Assembly of the existing State of Himachal Pradesh actually commenced.
" Subsequently, in exercise of powers conferred on him by section 14(2) the President made an order for the delimitation of the constituencies for the area that previously formed the territories of the then State of Bilaspur and which after the commencement of the New State Act formed a part of the new Part C State of Himachal Pradesh created thereby and hereinafter called the new Himachal Pradesh.
Thereafter, on May 13, 1955, five members were elected by the voters of the constituencies of that area so delimited so as to bring up the total number of members of the new Legislative Assembly of the new Himachal Pradesh to 41 as prescribed by section 12 of the New State Act.
In the meantime, on July 7, 1954, to be precise, the following notification was issued in the official Gazette: "Legislative Assembly NOTIFICATION Simla 4, the 7th July, 1954.
No. L.A. 109 28/54 The Lieutenant Governor, in exercise of the powers conferred by.
section 9 of the (XLIX of 1951), has been pleased to direct that the Second Session, 1954, of the Himachal Pradesh Legislative Assembly will commerce from Monday, the 16th August, 1954, at 9.30 a.m. in the Council Chamber,, Simla 4.
By order, of the Lieut.
Governor Mahesh Chandra (Judicial) Secretary" It is worthy of note.
that the notification, ex facie con vened the second session of the Legislative Assembly 0.PO1 169 of Himachal Pradesh.
It is not in dispute that, prior to the date of the aforesaid notification summoning the Legislative Assembly, no notification was issued by the appropriate authority declaring the 36 persons who had been the members of the old Legislative Assembly of the old Himachal Pradesh as members of the new Legislative Assembly of the New Himachal Pradesh or formally constituting and bringing into being the new Legislative Assembly of the new Himachal Pradesh created by and under the New State Act.
Nor is it in dispute that the 36 members of the old Legislative Assembly of the old Himachal Pradesh did not, in point of fact, make or subscribe any fresh oath or affirmation as members of the new Legislative Assembly of the new Himachal Pradesh as required by section 14 of the Part C States Act, which is on the same lines as articles 99 and 108 of the Constitution or that they elected a Speaker under section 10 of that Act.
There can be no getting away from the fact that the New State Act did create and bring into being a new State, also called the Himachal Pradesh.
It is not the case of the respondent that some additional territory which formerly belonged to the Part C State of Bilaspur was added to or merged into the territories of the old Himachal Pradesh and that the old Himachal Pradesh continued to exist.
The true legal position admittedly is that as a result of the New State Act the old Himachal Pradesh as well as the old State of Bilaspur both ceased to exist and there sprang to life a new Himachal Pradesh having for its territory the aggregate of the separate territories of the two defunct States, namely, the old Himachal Pradesh and the old Bilaspur.
Under section 12(1) of the New State Act, as under section 3(1) of the Part C States Act, this new Himachal Pradesh has to have a Legislative Assembly of its own the total number of members whereof, under section 12(2) of the New State Act shall consist of 41 to be filled by direct election.
The learned Additional Solicitor General takes his stand on section 15 of the New State Act which has already been quoted in full.
According to sub section
(1) of that section every sitting member of the 22 170 Legislative Assembly of the existing State of Himachal Pradesh (that is to say, the old Himachal Pradesh) that existed immediately prior to the commencement of the New State Act representing a constituency of ,,the said State shall, on and from the commencement of this Act, represent the constituency of the same name in the new Himachal Pradesh and shall be deemed to have been elected to the Legislative Assembly of the now Himachal Pradesh by that constituency.
Sub section (2) of that section provides for the holding of elections, as soon as may be after the commencement of that Act, to fill those seats of the Legislative Assembly which would under section 14(2) be allotted to the constituencies into which that part of the new Himachal Pradesh which was formerly comprised in the old State of Bilaspur would be divided.
The learned Additional Solicitor General also relies on section 16 of the New State Act which prescribes the life of the Legislative Assembly by making the period of five years mentioned in section 5 of the Part C States Act, for the purposes of computation, to run from the date when the old Legislative Assembly of the old Himachal Pradesh came into being.
His contention is that the result of these sections clearly is that the 36 members who had been elected previously as members of the old Legislative Assembly of the old Himachal Pradesh were, by the New State Act itself, constituted the new Legislative Assembly of the new Himachal Pradesh and that provision was made for the addition to this new Legislative Assembly of five members as and when elected by the voters of the constituencies into which the area formerly comprised in the territory of the old State of Bilaspur shall be divided.
In other words, his argument is that immediately on the com mencement of the New State Act the Legislative Assembly of the new Himachal Pradesh was duly constituted and came into being with 36 members as persona designate and that only five more members had to be brought in as and when elected so as to bring the total strength to 41.
According to the learned Additional, Solicitor General, the position in law is that there was a Legislative Assembly of the 171 new Himachal Pradesh then consisting of 36 members and that it was that Legislative Assembly that had been summoned by the Lieutenant Governor.
The learned Additional Solicitor General maintains that the fact that five members had not been elected from ' the constituencies of the area which was formerly comprised in the territories of the State of Bilaspur did not vitiate tile proceedings, for the Legislative Assembly had, under section 15(3) of the Part C States Act, power to act notwithstanding any vacancy in the membership thereof.
He has referred us to Webster 's Dictionary and Oxford Dictionary for the meaning of the words " vacant " and " vacancy ".
He has also referred us to section 147(2) of the Representation of the People Act, 1951 and section 25 of the , in support of his proposition that a post or place may be as appropriately said to be vacant when after its creation it had never been filled as it can be said to be vacant in the case of a post or place which after its creation had been filled and had then been vacated.
The learned Additional Solicitor General concedes that strictly speaking the 36 members of the old Legislative Assembly of the old Himachal Pradesh who, by the fiction created by section 15(1) of the New State Act had become members of the new Legislative Assembly of the new Himachal Pradesh, should have made and subscribed a fresh oath or affirmation but that the absence of that formality is a mere irregularity which, by virtue of section 15(3) of the Part C States Act corresponding to articles 100(2) and 189(2) of the Constitution, did not vitiate the proceedings of the Legislative Assembly which had passed the Abolition Act, which is under challenge in these petitions.
Section 15(1) of the New State Act only provides that each of the 36 sitting members of the old Legislative Assembly of the old Himachal Pradesh shall on and from the commencement of the Act represent the constituency of the same name in the new Himachal Pradesh and shall be deemed to have been elected by that constituency.
The purpose of this section is to obviate the necessity for going through the entire process of a fresh election so far as these 36 members 172 were concerned.
In other words, these 36 members were exempted from seeking election or from being elected and were, by a statutory fiction, taken as having been elected to the Legislative Assembly of the I new Himachal Pradesh.
By the operation of the deeming provision embodied in section 15(1) the 36 members have been placed in the same position as they would have been placed in had they gone through the entire process of election and had been returned elected.
The requirements of law to be followed after the election is completed have yet to be followed.
For the section to say that these 36 members shall represent the constituencies of the same name in the new Himachal Pradesh and shall be deemed to have been elected to the Legislative Assembly of the new Himachal Pradesh by the same constituencies is not to say that these 36 persons alone constitute the Legislative Assembly of the new Himachal Pradesh.
It only lays down that these 36 persons shall be deemed to have been elected without going through the actual process of election.
Apart from providing that these 36 persons shall represent the several constituencies and shall be deemed to have been elected by the voters of those constituencies, section 15(1) does not go further and say that these 36 persons shall, without more, constitute the Legislative Assembly.
Therefore, the requirements of Law applicable to the further stages after the election is over have still to be complied with.
In other words the purpose of section 15(1) is not to Constitute and bring into being the Legislative Assembly.
For that a notification under section 74 of the Representation of the People Act, 1951, has to be issued.
That notification gives life to the Legislative Assembly as section 73 of the amended section clearly indicates.
What did the Lieutenant Governor do or intend to do by issuing the notification dated July 7, 1954, quoted above ? The fact that the Lieutenant Governor did not intend to summon a meeting of the new Legislative Assembly of the new Himachal Pradesh is made clear by the fact that by the notification in question he convened what he described as the second ,session of the Legislative Assembly.
After the creation 173 of the new Himachal Pradesh there had been no previous session of its Legislative Assembly at all and the session convened, if it was to be a session of the new Legislative Assembly of the new Himachal Pradesh, was to be its very first session.
It was, there , fore, wholly inappropriate and utterly incorrect to describe the session thus convened as the second session.
The provision of section 16 of the new State Act which computes the period of five years duration from the date of the commencement of the old Legislative Assembly of the old Himachal Pradesh cannot affect the fact that the old Legislative Assembly as well as the old Himachal Pradesh had ceased to exist and that the meeting of the new Legislative Assembly of the new State after the commencement of the New State Act must be its first session and not the second.
It may well be that the Lieutenant Governor took the view that the new Legislative Assembly of the new Himachal Pradesh would not be constituted and brought into being until five members from the Bilaspur area had been elected so as to bring the total number of members to 41 as prescribed by section 12 and that until then the old Himachal Pradesh and the old Legislative Assembly would remain alive and that, therefore, the Bill which had been introduced in the first session of the old Legislative Assembly of old Himachal Pradesh had not lapsed under section 25 of Part C States Act.
The Lieutenant Governor in such a situation may well have thought that as under section 9 of the Part C States Act more than six months must not intervene between its last sitting in one session and ,the date appointed for its first sitting in the next session, and accordingly may have thought fit to convene the second session of the old Assembly.
This conclusion is further reinforced by the fact that no oath or affirmation was administered to the 36 persons when they assembled in pursuance of the summons as required by section 14 of the Part C States Act as well as by the further fact that the Legislative Assembly which was summoned by the Lieutenant Governor under section 9 of the Part C States Act did not choose any of the members to be the Speaker of that Legislative 174 Assembly.
Indeed the printed resume of the work done by the Himachal Pradesh Legislative Assembly during the second session 1954, as published by its Secretary, shows that the house granted leave of ,absence from the House to Sri Jaiwant Ram, Speaker, for the duration of that session.
Sri Jaiwant Ram is no other than the person who had been elected the Speaker of the old Legislative Assembly of the old Himachal Pradesh.
The discussion whether these irregularities can or cannot be cured under section 15(3) and section 35 of Part C States Act is not relevant at this stage.
Assuming that the word " vacancy " as used in the section has the wide connotation contended for by the learned Additional Solicitor General and without, for our present purpose, adverting to the obviously possible abuse such a wide meaning may lead to, it must be noted that the section clearly contemplates that there is a Legislative Assembly duly constituted and brought into existence and that it is subsequently discovered that "some persons" have sat and voted without making and subscribing an oath or affirmation.
The section postulates the existence of a duly constituted Legislative Assembly.
It does not apply to a case where the Legislative Assembly has not at all been constituted and brought into being by a notification issued by the appropriate authority and then duly summoned by the Lieutenant Governor.
Whether absence of such a notification will vitiate the proceedings even if all the members properly elected to the Legislative Assembly are summoned and they take part in the proceedings after taking the oath and electing a Speaker need not be considered on this occasion.
The present discussion is for the purpose of ascertaining as to what was in the mind of the Lieutenant Governor when he issued the notification convening the second session of the Legislative Assembly and what he purported to do.
The fact that he summoned the Legislative Assembly to a second session signifies that he bad in mind the Legislative Assembly of the old Himachal Pradesh which already bad a sitting before and summoned it to a second session.
The fact that no oath or affirmation 175 was administered to any member and that there was no election of a Speaker also quite clearly indicates that the Lieutenant Governor was not summoning the new Legislative Assembly of the new Himachal Pradesh.
This is made further clear by the fact that the Lieutenant Governor must have known that the old Himachal Pradesh having ceased to exist its Legislative Assembly had also gone with it, and that a bill pending in the Legislative Assembly thus dissolved would have lapsed under section 25 and the first sitting of the new Legislative Assembly of the., new State of Himachal Pradesh could not proceed with the lapsed Bill.
In this context the question whether the irregularity can be cured under section 15(3) of the Part C States Act or is made immune from challenge under section 35 does not arise at all.
The problem before us is to determine which Assembly the Lieutenant Governor had convened.
In our opinion the so called Legislative Assembly which was convened and which purported to pass the Abolition Act was not the Legislative Assembly of the new Himachal Pradesh created by the New State Act, therefore, the impugned Act cannot be regarded as a piece of validity enacted legislation.
That being the position the interference with the rights of the petitioners in and.
to their respective properties cannot be for a moment be justified or permitted and the first question raised on behalf of the petitioners must be answered in their favour.
In the view we have taken it is not necessary for us to go into the second question sought to be raised before its.
The result, therefore, is that we issue in each of the petitions a mandamus directing the respondent to forbear from giving effect to or acting in any manner under or on the basis of the said impugned Act and also restraining the respondent, its servants and agents, from taking any action on the basis of the said Act or interfering in any way with the petitioners ' properties or their rights in respect of their properties or from disturbing or affecting the petitioners ' possession thereof The petitioners will be entitled to the general costs of each of these petitions, but the respondent will 176 pay only three sets of costs for the hearing, namely, one set each to the petitioners represented by Shri Achhru Ram, Shri D. R. Prem and Shri Y. Kumar respectively and also one set of hearing fees for each of the advocates on record.
Petitions allowed.
| The petitioners, who were land owners of Himachal Pradesh, challenged the constitutional validity of the Himachal Pradesh Abolition of Big Landed Estates and Land Reforms Act, 1953 (Himachal 15 of 1954), said to have been passed by the Legislative Assembly of the State of Himachal Pradesh functioning under the Himachal Pradesh and Bilaspur (New State) Act (32 Of 1954).
The impugned Act was introduced as a bill in the first session of the Legislative Assembly of the Old Himachal Pradesh elected under the Government of Part C States Act (49 Of 1951).
Before the bill could be passed, the Himachal Pradesh and Bilaspur (New State) Act (32 Of 1954) came into force on July 1, 1954, abolishing the old Act and uniting the two States into one.
While the Legislative Assembly for the New State was yet to be constituted, on July 7, 1954, the Governor issued the following notification, " The Lieutenant Governor, in exercise of.
the powers conferred by Section 9 of the (49 Of 1951), has been pleased to direct that the Second Session, 1954, Of the Himachal Pradesh Legislative Assembly will commence from Monday, the 16th August, 1954, at 9 30 a.m. in the Council Chamber, Simla 4.
" It was at this session that the impugned Act was passed.
Its provisions were said to be drastic and to infringe articles 14, 19 and 31 Of the Constitution.
It was contended on behalf of the petitioners that apart from violating those Articles, the impugned Act was void as it had not been passed by a duly constituted legislature.
It was sought to be contended on behalf of the respondent that under the new Act the members of the Old Legislative Assembly must be deemed to constitute the legislature for the New State and it was as such called by the Governor.
Held, that the contention raised by the respondent was with out substance and must be negatived.
It was apparent that the so called Assembly which the Governor had convened and which purported to pass the impugned Act was not the Legislative Assembly of the New State constituted under the Himachal Pradesh and Bilaspur (New State) Act (32 Of 1954) and as such the Act could not be regarded as a valid piece of legislation.
|
Summarize this legal judgement text concisely | Appeal No.426 of 1957.
Appeal from the judgment and order dated April 21, 1955, of the Orissa High Court at Cuttack in Special Jurisdiction Case No. 179 of 1951.
A. N. Kripal, R. H. Dhebar and D. Gupta, for the appellant.
A. V. Viswanatha Sastri, M. section K. Sastri and R. Jagannatha Rao, for the respondent.
October 14.
The Judgment of the Court was delivered by VENKATARAMA AIYAR, J.
This is an appeal against the judgment of the High Court of Orrissa in a reference under section 66(1) of the Indian Income tax Act, 1922, hereinafter referred to as the Act, and the point for decision is whether income received by the respondent by the sale of trees growing in his forests is agricultural income exempt from taxation under section 4(3)(viii) of the Act.
The respondent is the proprietor of the impartable zamin of Jaipur in Koraput District.
The estate is of the area of 12,000 sq.
miles of which 1540 sq.
miles are reserve forest and 100 sq. miles, protected forest.
The respondent derives income from the forests by the sale of timber such as teak, salwood, lac, myrabolam, tamarind, cashewnuts and firewood.
There is no 23 178 dispute either as to the receipt of such income or as to its quantum.
All tat appears in the account books of the respondent.
The point in controversy is as to whether this income is chargeable to tax.
It is the contention of the respondent that this is agricultural income as defined ins.
2(1) of the Act, and that it is, in consequence, exempt under section 4(3)(viii).
By his 31, 1943, the Income tax order dated January Officer held that the forests in question had not been proved to have been planted by the respondent, that the trees were of spontaneous growth, and that the income therefrom was not within the exemption under section 4(3)(viii); and this order was confirmed on appeal by the Appellate Assistant Commissioner.
The respondent took the matter in further appeal to the Appellate Tribunal, and there put forward the contention that the Incometax Officer had failed to take into account a letter of the Dewan dated June 3, 1942, which gave a detailed account of the operations carried on by the estate in the rearing and maintenance of forests and that on the facts mentioned in that letter, his finding that there had been no plantation of trees was errolieous.
By its order dated April 9, 1946, the Tribunal accepted this contention, and directed a fresh enquiry into the facts mentioned in the said letter.
Pursuant to this order, the Income tax Officer again enquired into the matter.
He observed that though he gave ample opportunities to the respondent to prove that there was plantation of trees by the estate, no materials were placed in proof of that fact and that neither plantation books nor any working plans for timber plantation had been produced.
He accordingly held that the forests had grown naturally, and that the income therefrom was assessable to tax.
On this report, the appeal again came up for hearing before the Tribunal.
The main contention urged by the respondent at the hearing was that the facts showed that the forests which had yielded income during the year, ' of account could not have been the virgin forests which had originally grown spontaneously on the hills, because they had been periodically denuded by the hill tribes in the process of Podu cultivation carried on by 179 them.
What this Podu cultivation means is thus stated in the ]District Gazetteer, Vishakapatnam, 1907: " This consists in felling a piece of jungle, burning the felled trees and undergrowth, sowing dry grain broadcast in the ashes (without any kind of tilling) for two years in succession, and then abandoning the plot for another elsewhere.
" The argument of the respondent was that as a result of the Podu cultivation, the original forests should have disappeared and that the trees that had subsequently grown into forest and sold as timber must have been planted by human agency and their sale proceeds must accordingly be agricultural income.
Dealing with this contention, the Tribunal observed that though there had been extensive destruction of forests in the process of Podu cultivation, nevertheless, considerable areas of virgin forests still survived, that the evidence of actual cultivation and plantation by the zamin authorities was meagre and unsubstantial, that no expenses were shown to have been incurred on this account prior to 1904, that the amount shown as spent during that year was negligible, that the trees planted then could not have been the trees sold as timber during the assessment years, and that the respondent bad failed to establish facts on which he could claim exemption.
It should be mentioned that this order covered the assessments for five years from 1942 43 to 1946 47, the facts relating to the character of the income being the same for all the years.
On the application of the respondent, the Tribunal referred the following question for the decision of the High Court : " Whether on the facts and in the circumstances the income derived from forest in this case is taxable under the Indian Income tax Act.
" The reference was heard by Panigrahi, C. J., and Misra, J., who answered it in the negative.
They observed : " It appears to us that the cases as set out by both parties have been put too high.
The department takes the view that unless there is actual cultivation of the 180 soil the income from the forest trees cannot be regard.
,led as agricultural income.
The fact that the assessee has spent some money and planted valuable trees in some areas is not sufficient to free the income out of the extensive forests which owe their existence to spontaneous growth, from its liability to taxation.
The assessee on the other hand seeks to create an impression that there is not a single tree of spontaneous growth, in these forests, and such trees as now constitute forests have sprung up out of the stumps left by the hillmen as a result of the system of I Podu ' cultivation adopted by them.
It appears to us that neither of these claims can be regarded as precise or correct." The learned Judges then observed that the forests in the Koraput area had been under Podu cultivation for a long period, and that as the result of that cultivation they had practically disappeared even by the year 1870, that the trees had subsequently grown into forests and they had also been destroyed by about the year 1901, and that therefore there could not have been any virgin forest left surviving.
Then they referred to the fact that the respondent had been maintaining a large establishment for the preservation of the forests, and that there had been organised activities (1) " in fostering the growth of the trees and preserving them from destruction by man and cattle; (2) in cultivation of the soil by felling and burning trees from time to time; (3) in planned exploitation of trees by marking out the areas into blocks; (4) in systematic cutting down of trees of particular girth and at particular heights; (5) in planting new trees where patches occur; and (6) in watering, pruning, dibbling and digging operations carried on from time to time ".
And they stated their conclusion thus: " All these and similar operations which have been undertaken by the assessee through his huge forest establishment, show that there has been both cultivation of the soil as well as application of human skill and labour, both upon the land and on the trees themselves.
It cannot be assumed therefore that all the trees are of spontaneous growth.
The indications, on 181 the other hand, appear to be that most of them are sprouts springing from burnt stumps.
There is no basis for the assumption made by the Income tax Department that all the trees are forty years old and that they owe their existence to spontaneous growth.
Apart from that it will be noticed that what distinguishes the present case from all the reported decisions is that practically the whole of the forest area has been subjected to process of 'Podu ' cultivation spreading over several decades so that it is impossible to say that there is any virgin forest left.
The onus was certainly upon the department to prove that the income derived from the forest was chargeable, to tax and fell outside the scope of the exemption mentioned in Section 4(3)(viii).
" In this view, they held that the Department had failed to establish that the income derived from the sale of trees was not agricultural income, and answered the reference in favour of the respondent.
The learned Judges, however, granted a certificate to the appellant under section 66(A)(2) of the Act, and that is how the appeal comes before us.
At the very outset, we should dissent from the view expressed by the learned Judges that the burden is on the Department to prove that the income sought to be taxed is not agricultural income.
The law is well settled that it is for a person who claims exemption to establish it, and there is no reason why it should be otherwise when the exemption claimed is under the Income tax Act.
The learned Judges were of the opinion that their conclusion followed on the principle of the law of Income tax that " where an exemption is conferred by a statute, the State must not get the tax either directly or indirectly ", and support for this view was sought in the following observations of Lord Somervell, L. J., in Australian Mutual Provident Society vs Inland Revenue Commissioners (1): " The rule must be construed together with the exempting provisions which, in our opinion, must be regarded as paramount.
So far as the rule, if taken (I) 182 in isolation, would have the effect of indirectly depriving the company of any part of the benefit of the exemption, its operation must be cut down, so as to prevent any such result, and to allow the exemption to operate to its full extent.
" These observations have, in our opinion, no bearing on the question of burden of proof.
They merely lay down a rule of construction that in determining the scope of a rule, regard must be had to the exemptions engrafted thereon, and that the rule must be so construed as not to nullify those exemptions.
No such question arises here.
There is ample authority for the view that the principle that a person who claims the benefit of an exemption has to establish it, applies when the exemption claimed is under the provisions of the Income tax Act.
Vide the observations of the Lord President and of Lord Adam in Maughan vs Free Church of Scotland (1) and the observations of Lord Hanworth, M. R., in Keren Kayemeth Le Jisroel Ltd. vs The Commissioners of Inland Revenue (2) at p. 36 that " the right to exemption under Section 37 must be established by those who seek it.
The onus therefore lies upon the Appellants ", and of Lord Macmillian at p. 58 that, " In my opinion, the Appellants, have failed to bring it within any one of these categories and consequently have failed in what was essential for them to make out, namely, that this Company is a body of persons established for charitable purposes only.
" The decisions of Indian Courts have likewise ruled and quite rightly that it is for those who seek exemption under section 4 of the Act to establish it.
Vide Amritsar Produce Exchange Ltd. In re (3) and Sm.
Charusila Dassi and others, In re (4).
So far as exemption under section 4(3) (viii) is concerned, the matter is concluded by a decision of this Court given subsequent to the decision now under appeal.
In Commissioner of Income tax vs Venkataswamy Naidu (5), this Court held, reversing the judgment of the High Court of Madras, that it (1) , 21 O. (2) (3) , 327.
(4) , 370.
(5) , 534. 183 was for the assessee to prove that the income sought to be taxed was agricultural income exempt from taxation under section 4(3)(viii).
Bhacgwati, J., delivering the ' judgment of the Court observed: " . the High Court erroneously framed the question in the negative form and placed the burden on the Income tax Authorities of proving that the income from the sale of milk received by the assessee during the accounting year was not agricultural income.
In order to claim an exemption from payment of incometax in respect of what the assessee considered agricultural income, the assessee had to put before the Income tax Authorities proper materials which would enable them to come to a conclusion that the income which was sought to be assessed was agricultural income.
It was not for the Income tax Authorities to prove that it was not agricultural income.
It was this wrong approach to the question which vitiated the judgment of the High Court and led it to an erroneous conclusion.
" On the inerits, the question what is agricultural income within section 2(1) of the Act is the subject of a recent decision of this Court in The Commissioner of Income tax, West Bengal, Calcutta vs Raja Benoy Kumar Sahas Roy (1).
There, it was held that before an income could be held to be agricultural income, it must be shown to have been derived from land by agriculture or by one or the other of the operations described in cls.
(i) and (ii) of section 2(1)(b) of the Act, that the term St agriculture " meant, in its ordinary sense, cultivation of the field, that in that sense it would connote such basic operations as tilling of the land, sowing of trees, plantation and the like, and that though subsequent operations such as weeding, pruning, watering, digging the soil around the growth and removing undergrowths could be regarded as agricultural operations when they are taken in conjunction with and as continuation of the basic operations mentioned before, they could not, apart from those operations, be regarded as bearing the character of agricultural operations.
(1) ; , 155, 158, 160.
184 It is only " observed Bhagwati, J., delivering the judgment of the Court, " 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. " " But if these basic operations are wanting the subsequent operations do not acquire the characteristic of agricultural operations.
" Dealing with trees which grow wild, Bhagwati, J., observed : " 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 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.
" The law being thus settled, in order to decide whether the income received by the respondent by the sale of trees in his forests was agricultural income or not, the crucial question to be answered is, were those trees planted by the proprietors of the estate, or did they grow spontaneously ? If it is the latter, it would be wholly immaterial that the respondent has maintained a large establishment for the purpose of preserving the forests and assisting in the growth of the trees, because ex hypothes, he performed no basic operations for bringing the forests into being.
Now, the Tribunal has clearly found that there were no plantations of trees by the estate authorities worth the name, and that the trees, the income from which is the subject matter of the assessments, must have been of sponta neous growth.
That is a finding of fact which is binding on the Court in a reference under section 66(1) of the Act.
The learned Judges declined to accept this finding, because they considered that the Tribunal had not appreciated the true significance of Podu cultivation.
That, in our opinion, is a misdirection.
If the point for decision had been whether the forest was a virgin forest or whether it had subsequently sprung up, the evidence relating to Podu cultivation would have 185 been very material.
But the point for decision is not whether the forests were ancient and primeval, but whether they had been planted by the estate authorities, and on that, the Podu cultivation would have no bearing.
As a result of the Podu cultivation, the original forests would have disappeared.
But the question would still remain whether the forest which again sprang up was of spontaneous growth, or was the result of plantation.
Now, there is no evidence that as and when the jungle had disappeared under Podu cultivation, the estate intervened and planted trees on the areas thus denuded.
On the other hand, the learned Judges themselves found that after the destruction of the original forests in the process of Podu cultivation, there was a fresh growth of forests from the stumps of the trees which had been burnt.
If that is the fact, then the new growth is also spontaneous and is not the result of any plantation.
In fairness to the learned Judges, it must be observed that at the time when they heard the reference there was a conflict of judicial opinion on the question whether subsequent operations alone directed to the preservation and improvement of forests would be agricultural operations within section 2(1) of the Act; and the view they took was that such operations when conducted on a large scale as in the present case would be within section 2(1) of the Act.
It was in that view that they observed that "it is therefore idle to regard tilling as the sole and indispensable test of agriculture ".
The decision of the learned Judges was really based on the view that though trees in the forest had not been planted by the estate authorities, the latter had performed subequent operations of a substantial character for the maintenance and improvement of the forest, and that, in consequence, the income was agricultural income.
This view is no longer tenable in view of the decision of this Court in The Commissioner of Income tax, West Bengal, Calcutta vs Raja Benoy Kumar Sahas Roy (1).
It is contended by Mr. Viswanatha Sastri for the (1) ; , 155, 158, 160.
24 186 respondent that on the facts established in the evidence, the proper conclusion to come to is that the trees sold by the respondent had been planted by the estate authorities, and that the decision of the High Court that the income thus realised is within the exemption under section 4(3)(viii) could be supported even on the view of law taken in The Commissioner of Income tax, West Bengal, Calcutta vs Raja Benoy Kumar Sahas Roy (1).
The argument was that there was unimpeachable evidence that the old forests had disappeared under Podu cultivation, that the estate had been regularly engaged in planting trees at least from the year 1904 as is shown by the accounts of the zamin, that it was a reasonable inference to make that there had been similar plantations even during the years prior to 1904 notwithstanding that no accounts were produced for those years, because it would not be reasonable to expect that such accounts would now be available, that though the amount shown as spent for plantation might not be considerable, that was understandable when regard is bad to the fact that the agricultural operations were conducted on the hills and not on the plains, that, on these facts, it would be proper to conclude that the forests were in their entirety the result of plantation.
It would be ail erroneous approach, it was argued, to call upon the assessee to prove tree by tree that it was planted.
Now, these are matters of appreciation of evidence on what is essentially a question of fact, viz., whether the trees were of spontaneous growth or were products of plantation.
On this, the Tribunal has given a clear finding on a consideration of all the material evidence, and its finding is final and not open to challenge in a reference under section 66 (1) of the Act.
Even the learned Judges of the High Court who considered themselves free to review that finding and, as already pointed out, without justification, could only observe that the trees must have mostly grown from the slumps left when the forests were burnt for purposes of Podu cultivations finding which is fatal to the contention now urged for the respondent that they (I) ; , 155, 158, 160.
187 were the result of plantation.
We are of opinion that there are no grounds on which the finding of the Tribunal could be attacked in these proceedings.
It remains to deal with one other contention urged on behalf of the respondent, and that is based on the fact that the amounts spent in the upkeep of the forrests were large in comparison with the receipts therefrom.
The following are the figures relating to the forest receipts and expenses for the years with which the present assessments are concerned: Years Receipts Expenses 1942 43 Rs. 438,894 Rs. 174,437 1943 44 Rs. 407,447 Rs. 209,895 1944 45 Rs. 552,122 Rs. 228,830 1945 46 Rs. 372,971 Rs. 247,216 1946 47 Rs. 689,366 Rs. 460,369 The argument is that from the high proportion of the expenses in relation to the receipts it could be inferred that the income from trees planted by the estate formed a substantial portion of the income derived from the forests.
And support for this conclusion is sought in the following observations in The Commissioner of Income tax, West Bengal, Calcutta vs Raja Benoy Kumar Sahas Roy (1): " 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.
" To appreciate the true import of these observations, we must have regard to the context in which they occur.
The facts found in that case were that portions of the forest which was originally of spontaneous growth had gradually been denuded, that the propritor had planted trees in the areas so denuded, that this had gone on for a period of over 150 years, and that therefore " the whole of the income derived from (1) ; , 155, 158, 160.
188 the forest cannot be treated as non agricultural income ".
It was then observed that " 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 a spontaneous growth and how much to trees Planted by the proprietors ", but that, in view of the long lapse of time, it was not desirable to remand the case for enquiry into the matter.
Then follow the observations on which the respondent relies, and when read in the light of the findings that the plantations made by the proprietors were not negligible, they mean nothing more than that out of the total income a substantial portion was likely to be agricultural income, and that it was therefore not a fit case for ordering fresh enquiry These observations do not lay down that if considerable amounts are expended in the maintenance of forests, then it must be held that the trees were planted by the proprietors.
They only mean that if a considerable portion of the forests is found to have been planted, a substantial portion of the forest income may be taken to have been derived therefrom.
And this too, it must be remarked, is only a presumption of fact, the strength of which must depend on all the facts found.
In the face of the clear finding in the present case that the forests with which the assessment years are concerned were of spontaneous growth, the observations quoted above can be of no assistance to the respondent.
It is scarcely necessary to add that the observations " If the enquiry bad 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 " quoted above cannot be read, as was sought to be done for the respondent, as throwing on the Department the burden of showing that the income sought to be taxed was not agricultural income.
That, in their context, is not the true meaning of the observations, and the law is as laid down in Commissioner of Income tax vs Venkataswamy Naidu (1) , 534. 189 In the result, this appeal is allowed, the order of the Court below is set aside and the reference is answered in the affirmative.
The respondent will pay the costs of the appellant here and in the Court below.
Appeal allowed.
| The respondent, the proprietor of an estate, derived income from the sale of trees growing in his forests and claimed that it was agricultural income as defined in section 2(1) of the Indian Income tax Act, 1922, and that it was exempt from payment of income tax under section 4(3)(viii).
The Appellate Tribunal found that the evidence to show that there was plantation by the estate authorities was meagre and unsubstantial, that the trees in question must have been of spontaneous growth and that the respondent had failed to establish facts on which he could claim exemption.
On reference, the High Court took the view that though trees in the forest had not been planted by the estate authorities, the latter had performed subsequent operations of a substantial character for the maintenance and improvement of the forest, and that the income was, therefore, agricultural income.
It also held that the onus was on the income tax authorities to prove that the income derived from the sale of trees was not agricultural income and that they had failed to show that the income fell outside the scope of the exemption mentioned in section 4(3)(viii) Of the Act.
Held, that the High Court erred in placing the burden on the income tax authorities to prove that the income sought to be taxed was not agricultural income.
The principle has been well established that where a person claims the benefit of an exemption under the provisions of the Act, he has to establish it.
177 Commissioner of Income tax vs Venkataswamy Naidu, [1956] 291.T.R. 529, followed.
The question whether the trees were of spontaneous growth or were products of plantation was essentially a question of fact and the finding of the Tribunal on this point was binding on the High Court in a reference under section 66(1) of the Act.
Held, further, that the income received by the respondent by the sale of trees in his forests was not agricultural income as the trees had not been planted by him, and that it was immaterial that he had maintained a large establishment for the purpose of preserving the forests and assisting in the growth of the trees.
The Commissioner of Income tax, West Bengal, Calcutta vs Raja Benoy Kumar Sahas Roy; , , explained and followed.
|
Summarize this legal judgement text concisely | Appeal No.793 of 1957.
Appeal by special leave from the judgment and order dated September 20, of the Patna High Court in M.J.C. No. 392 of 1955.
C. K. Daphtary, Solicitor General of India, A. B. N. Sinha and B. P. Maheshwari, for the appellant.
section P. Varma, for respondents Nos.
1,2,6 8 and 10 23. 1958.
November 4.
The Judgment of the Court was delivered by BHAGWATI, J.
This appeal with special leave is directed against the judgment of the High Court of Judicature at Patna dismissing the writ application of the appellant seeking to quash the proceedings in Miscellaneous Cases Nos. 26 and 27 of 1955 before the Industrial Tribunal, Bihar, Patna.
Gaya Sugar Mills Ltd., a Company incorporated in 1934 owned a Sugar Factory at Guraru, District Gaya.
An order for the compulsory winding up of the Company was passed on November 4,1951, and by a subsequent order dated February 1, 1952, one Dhansukh Lal Mehta was appointed liquidator of the Company.
In order to preserve the aforesaid Sugar Mills at Guraru in proper running order and also for the beneficial 256 winding up of the Company the liquidator obtained under section III (b) of the Indian Companies Act sanction of the Court to lease out the said Mills with all the lands, factory and residential buildings and machineries etc.
The Guraru Cane Development and Cane Marketing Union Ltd., were the former lessees of the said mills but on the expiration of their lease, the liquidator obtained from the Court an order on December 3, 1954, sanctioning the lease in favour of Shri Krishna Gyanody sugar Ltd .; the appellant herein, for the period December 5,1954 up to and inclusive of November 14,1955.
The liquidator executed in favour of the appellant lease of the said Mills on December 6, 1954, and handed over possession of the same to the appellant the same day.
The terms and conditions of the lease, in so far as they are material for our purposes provided that the appellant would be put into possession of the leasehold properties in a proper working order and would work and run the factory without any interference or obstruction by or on behalf of the lessor and would appropriate the entire income and profit thereof and the lessor would have no concern with profit or loss made by the lessee in running the said factory and would not be entitled to any sum or amount over and above the rent therein reserved.
The appellant was not to be in any way liable or responsible for any of the liabi lities of the Company or of the liquidator or of the out going lessees incurred whether before or after the appellant entered into possession except those mentioned therein.
The appellant was at its own cost entitled always to install 'any additional or other machinery or machineries and erect god owns or structures for the Purposes of and in connection with the running of the said Mills after intimation to the lessor.
The appellant was not bound to engage any or all of the employees of the lessor or of the" Outgoing lessees or any of the persons who had been working from before except the 18 employees who were mentioned in Cl. 11 of the lease and the appellant also agreed not to retrench any staff already employed at that date in the Factory at Guraru (vide cl.
13(v),of the lease).
The 257 properties demised by the said lease were deemed to be in the control of the Patna High Court and any dispute between the lessor and the appellant in respect of the said lease was to be placed before the said Court for decision and the decision made by the said Court was to be binding on all the parties.
It appears that on December 2, 1954, i.e., 4 (lays before, the execution of the said lease and delivery of possession of the said Mills by the liquidator to the appellant, the; Government of Bihar issued a notification referring certain disputes between the Managements of the, Sugar factories specified in Appendix I thereto and their workmen represented by the Unions specified in Appendix It for adjudication to an Industrial Tribunal of which Shri Ali Hassan, the respondent No. 1 herein, was to be tile sole member.
The terms of the reference stated : " Whereas the State Government is of opinion that ail Industrial dispute exists or is apprehended between the Management of the Sugar factories as specified in Appendix I and their workmen represented by the Unions as specified in Appendix 11 regarding the matters specified in Annexure A ; Now, therefore, in exercise of the powers conferred by section 7 read with sub section (1) of section 10 of the (XIV of 1947) and in supersession of Notification No. III/ DI 14020/54L15146 dated the 1st October, 1954, the Governor of Bihar is pleased to constitute an Industrial Tribunal of which Mr. Ali Hussan shall be the sole member and to refer the said dispute to the said Tribunal for adjudication.
Annexure "A" 1.
Retaining allowance to seasonal employees in Sugar factories in Bihar.
Leave and holidays to the employees including seasonal employees in Sugar factories.
Whether the deduction made in leave and holidays of the employees of the Management of the Sugar factories is unjustified and if so what compensation or relief, the workmen are entitled to 33 258 There were as many as 28 Sugar factories specified in Appendix I and as many as 38 Labour Unions specified in Appendix 11.
The Gaya Sugar Mills Ltd., Guraru was the second item in Appendix I and the Chini Mazdoor Sangh Guraru was mentioned at the third item in Appendix 11.
The respondent No. 1 entered upon the said reference.
Even though Gaya Sugar Mills Ltd., Guraru which was then in liquidation was not specifically described as such in Appendix 1, notice was given to the, liquidator by the respondent No. 1 for January 11, 1955, which was the date fixed for hearing before him.
The said letter however reached the liquidator on January 13, 1955, whereupon by his letter dated January 14, 1955, he informed respondent No.1 about it.
Respondent No. 1 however satisfied himself by merely endorsing on the letter of the liquidator that the hearing had already concluded and nothing further than inquiring of the post office as to the reason of the delay in the delivery of the letter could be done.
Respondent No.1 made his award on February 17, 1955, and it was published in the Official Gazette on February 23, 1955.
The adjudication proceedings which had thus commenced on the date of the reference viz., December 2, 1954, came to a conclusion on the expiry of 30 days of the publication of the award viz., on March 25, 1955, under section 20(3) of the .
It appears that an appeal was taken to the Labour Appellate Tribunal against this award and the appeal was decided on August 31, 1956.
Even though the appellant was in possession of the said Mills under the terms of the lease dated December 6, 1954, no notice was given by respondent No. 1 to the appellant and the appellant therefore could not and did not appear before respondent No. 1.
So far as the appellant was concerned the proceedings before respondent No. 1 were ex parte.
Two applications were, however, made on March 23, 1955, under section 33A of the , one by 15 persons alleging that the appellant had without any reason and without any notice discharged them from employ one by one during the months of January and February 259 1955 and the other by 5 persons alleging that the appellant had changed their conditions of service without any reason, contending that the said discharges and the change in conditions of service had been effected by the appellant during the pendency of the disputes before the Industrial Tribunal aforesaid without the permission of the Industrial Tribunal having been obtained under section 33 of the Act.
These applications were numbered as Miscellaneous Cases Nos. 26 and 27 of 1955 and the appellant received on April 7, 1955, two notices from respondent No. 1, both dated March 25, 1955, informing the appellant about the filing of the two miscellaneous cases and calling upon the appellant to file statements showing cause by April 19, 1955.
The appellant accordingly filed before respondent No. 1 two applications or statements contending inter alia that the application under section 33 A of the , filed by those persons (respondents Nos. 4 to 23 herein) were not maintain.
able and were otherwise fit to be rejected.
It was asserted on behalf of the appellant that the appellant as lessee of the said Mills had strictly complied with the terms and conditions of the lease and there had been no contravention on its part of section 33 of the Act, in regard to any of the workmen concerned in the aforesaid two miscellaneous cases.
It was pointed out that none of the persons who had filed the said applications was comprised in the 18 persons who were specifically mentioned in Cl. 11 of the lease and who were specifically exempted from the operation of the said clause nor were they comprised in the category of members of the staff whom the appellant as lessee, was not entitled to retrench under Cl.
13(v) of the lease, with the result that none of the said clauses of the lease could be said to have been violated by the appellant.
On July 13, 1955, the appellant filed in the High Court of Judicature at Patna a writ application under articles 226 and 227 of the Constitution being Miscellaneous Judicial Case No. 392 of 1955 impleading the Chairman, Industrial Tribunal, Bihar as respondent No. 1, the State of Bihar as respondent No. 2, the liquidator as respondent No. 3 and the applicants in 260 the said miscellaneous cases Nos. 26 and 27 of 1955 pending before the Industrial Tribunal as respondents 'Nos. 4 to 23 for a writ of certiorari quashing the said Miscellaneous Cases Nos. 26 and 27 of 1955, a writ of Mandamus restraining the respondent No. 1 from proceeding with or otherwise dealing with the said miscellaneous cases costs and further and other reliefs.
The main Contentions urged by the appellant in the said petition were: (1) that under each one of the points referred for adjudication, considerable burden was sought to be imposed on the sugar factories concerned ; that all the properties and effects of the Gay Sugar Mills Ltd., were in the custody of the Court as from the date of the order for Winding up viz., November 14,1951 ; that ,the said notification did not purport to include Gaya Sugar Mills Ltd., in that light and did not describe the company as having already gone into liquidation ; that no leave of the Court was obtained before commencing or continuing the proceedings before the Tribunal and in fact the liquidator was neither named as a party nor was any notice given to him of the commencement of the proceedings and that therefore go far as the Gava Stugar Mills Ltd., (In Liquidation) was concerned there was no proceedingly in the eye of the law before respondent No. 1 and as such the Miscellaneous Cases Nos. 26 and 27 of 1955 of which notices had been sent to the appellant were not maintainable; and (2) that no notice of the adjudication proceedings arising out of the aforesaid Notification dated December 2, 1954, " as at any stage given to the appellant who was in possession under the terms of the lease granted by the Court ; that the appellant being lessee under orders and under terms of the lease approved by the Court was liable for breach of the terms of the lease, if any, and that also to the Court alone; that there was no violation of section 33 of the , if the appellant bona fide acted up to the terms of the lease and being itself no party to any adjudication proceedings before any Tribunal or before respondent No. 1 there could be no breach of section 33 of 261 the Act and as such no application under section 33A.of the, Act could be maintained against the appellant.
No affidavit in reply was filed by or on behalf of any of the respondents and the application came up for hearing before Ramaswami, C. J. and Raj Kishore Prasad, J. who delivered the judgment of the Court on September 20, 1956, dismissing the application with costs.
Assuming but without, expressing any opinion that the reference made by the State Government under section 10(1) of the Industrial Disputes Act was a legal proceeding within the meaning of section 171 of the Indian Companies Act the High Court held that section 10(1) of the Industrial , Disputes Act, was not controlled by section 171 of the Indian Companies Act and therefore no leave of the Court was necessary before making a reference of the Industrial Disputes under section 10 (1) of the Industrial Disputes, Act.
It was also of opinion that even though the reference under section 10(1) of the Industrial Dispute Act was made by the State Government on December 2, 1954, and the applicant had taken the lease of the said Mills subsequently i. e., on December 6, 1954, the applicant was an " employer " within the meaning of the term used in sections 33 and 33A of the Act, and that it was not necessary for the application of either of those sections that the employer who discharges or punishes the workmen or who alters the conditions of service of the workmen should be the identical employer concerned in the industrial dispute which is the subject matter of adjudication.
It was sufficient for invoking the provisions of either of those sections that there is the relationship of employer and employee at the time the workman is discharged or punished or at the time his conditions of service are altered to his prejudice.
It was further of opinion that even though the liquidator was not made a party to the reference made by the State Government under section 10(1) of the , the Gaya Sugar Mills Ltd., Guraru was specifically mentioned as one.
of the parties in Appendix I, that the Gaya Sugar Mills Ltd., continued to be a legal personality though an order for winding up had been made and that there 262 fore the Company was properly made a party to the reference under section 10(1) of the Act.
The fact that the notice given to the liquidator on January 11, 1955, might have been received late by the liquidator did not, in the opinion of the Court, make any difference to the position inasmuch as the award of the Industrial Tribunal was made on February 17, 1955, i. e., long after the date of the notice and there was no lack of jurisdiction in the Industrial Tribunal to make the award valid and binding on the Gaya Sugar Mills Ltd., Guraru.
The High Court accordingly rejected the application as stated above.
The applicant applied for leave to appeal to this Court on November 9, 1956, but the High Court refused to grant the certificate on the ground that the proceeding for grant of a writ of certiorari under article 226 is not a civil proceeding within the meaning of article 133 of the Constitution.
The applicant thereupon applied for and obtained from this Court on April 1, 1957, special leave to appeal and the appeal has now come up for hearing and final disposal before us.
The two main contentions which were urged before us by the learned Counsel for the appellant were: (1) that the Gaya Sugar Mills Ltd., Guraru had been taken into liquidation and respondent No. 3 had been appointed the liquidator thereof; that the reference made by the State Government to the Industrial Tribunal on December 2, 1954, involved considerable financial burden on the said Mills and the State Government ought to have obtained the sanction of the Court under section 171 of the Indian Companies Act before making a reference of the industrial disputes to the Industrial Tribunal under section 10(1) of the , qua the said Mills and that not having been done, the reference was bad in law and there was no question of the applicability of either section 33 or section 33A of the Act, and (2) that on a true construction of sections 33 and 33A of the Act, the " employer " therein mentioned could only be the " employer " concerned in the industrial dispute which was the subject matter of reference, that the applicant had taken the lease of the said: 263 sugar Mills on December 6, 1954, 4 days after the date of reference made by the State Government under, section 10(1) of the Act, and that therefore the applicant was not an " employer " within the meaning of the terms as used in section 33 or section 33A of the Act, and even if the allegations made by the applicants in Miscellaneous Cases Nos. 26 and 27 of 1955 before respondent No. 1 were correct, it was not necessary for the applicant to have obtained the permission of the Industrial Tribunal under a. 33 of the Act, and therefore the said applications under section 33A of the Act, filed by res pondents 4 to 23 were not maintainable.
It will be appropriate at this stage to set out the relevant sections of the Indian Companies Act and the (as they then stood) which fall to be considered by us in this appeal.
section 171 (Indian Companies Act): " Suits stayed on winding up order: When a winding up order has been made or a provisional liquidator has been appointed no suit or other legal proceeding shall be proceeded with or commenced against the company except by leave of the Court, and subject to such terms as the Court may impose.
" S.10(1) (Industrial Disputes Act, 1947):Reference of disputes to Boards, Courts or Tribunals: Where the appropriate Government is of opinion that any industrial dispute exists or is apprehended, it may at any time, by order in writing (a) refer the dispute to a Board for promoting a settlement thereof; (b) refer any matter appearing to be connected with or relevant to the dispute to a Court for inquiry or (c) refer the.
dispute or any matter appearing to be connected with or relevant to, the dispute to a Tribunal for adjudication: Provided that where the dispute relates to a public utility service and a notice under section 22 has been given, the appropriate Government shall, unless it considers that the notice has been frivolously or vexatiously given or that it would be inexpedient so 264 to do, make a reference under this subsection not withstanding that any other proceedings under this Act in respect of the dispute may have commenced," section 33 (Ibid): Conditions of service etc., to remain unchanged during pendency of proceedings During the pendency of any conciliation proceedings or proceedings before a Tribunal in respect of any industrial dispute, no employer shall (a) alter, to the prejudice of the workmen concerned in such dispute, the conditions of service applicable, to them immediately before the commencement of such proceedings; or (b) discharge or punish, whether by dismissal or otherwise, any workman concerned in such dispute, save with the express permission in writing of the conciliation officer, Board or Tribunal, as the case may be." 33 A (Ibid): Special provisions for adjudication as to whether conditions of service etc., changed during pendency of proceedings: " Where an employer contravenes the provisions of section 33 during the pendency of proceedings before a Tribunal, any employee aggrieved by such contravention, may make a complaint in writing, in the prescribed manner to such Tribunal and on receipt of such complaint that Tribunal shall adjudicate upon the complaint as if it were a dispute referred to or pending before it, in accordance with the provisions of this Act and shall submit its award to the appropriate Government and the provision of this Act shall apply accordingly.
" As to (1): Section 171 of the Indian Companies Act occurs in Part V which relates to the winding up of companies and prescribes that once a winding up order has been made no suit or other legal proceedings shall be proceeded with or commenced against the Company except by leave.of the winding up Court and subject to such terms as the Court may impose.
The Court is in custody of all.
the properties and assets of the Company through the liquidator and is in control of the winding up proceedings with a view to the proper realization of the assets: and, the equitable, 265 distribution thereof amongst the creditors of the Company.
No suit or other legal proceeding can therefore be proceeded with or, commenced against the ' Company except by leave of the Court and such leave is a necessary prerequisite of the prosecution of such legal proceeding.
In order to decide the question of the applicability of section 171 of the Indian Companies Act it has to be ascertained (a) whether the reference in question is a proceeding against the Company, and, if So (b) whether such reference can be said to be a legal proceeding within the meaning of section 171 of the Indian Companies Act.
There has been unfortunately a considerable confusion of thought in the court below and the facts have not been properly appreciated.
The first question to determine was who was the party to the reference.
It appears to have been assumed that the Gay a Sugar Mills Ltd., was a party to the reference and that the only defect in the order of reference was that the liquidator was not made a party to the refer ence.
This difficulty was sought to be got over by holding that the Gaya Sugar Mills Ltd., continued to be a legal personality though an order for winding up had been made, that the Company had not ceased to exist as a legal.
entity, and, therefore, the Company was properly made a party to the reference under section 10(1) of the .
This was, however, not the correct position on a true interpretation of the terms of reference.
The reference was between the managements of the Sugar factories specified in Appendix I and their workmen represented by the Unions specified in Appendix 11.
Gaya Sugar Mills Ltd., Guraru was mentioned as item 2 in Appendix I but it is quite clear that what was intended to be made a party to the reference under this item was the: management of the Sugar factory which belonged to the Company called the Gaya Sugar Mills Ltd., whoever.
that management may be.
The mention of the Company was to indicate and to point out the particular factory whose management for the time being was to be one of the parties to the reference and 34 266 it required to be ascertained who was comprised within the " management " of the Mills.
The State Government could not have been oblivious of the fact that the Company had gone into liquidation and a liquidator of the Company had been appointed by the court and was leasing out the factory to different lessees.
If the Company itself were a party to the reference the liquidator ought to have been mentioned there as such but that apparently was not done for the simple reason that the factory was being worked by the lessees under the terms of the leases duly sanctioned by the court.
The liquidator was therefore not in management of the factory and the only persons who were in management were the then lessees to whom leases were granted by the liquidator with the sanction of the court.
The Industrial Tribunal was obviously in error when it gave notice of the proceedings to the liquidator.
The liquidator was no more in management of the factory and was therefore not entitled to be served with any notice; the then lessees were in management and they were the only parties to whom notice of the proceedings should have been given.
The liquidator no doubt wrote to the Industrial Tribunal that he had received the notice too late for him to attend.
This letter of the liquidator was treated with scant courtesy by the Industrial Tribunal who merely endorsed at the foot of the letter that the hearing had already concluded and nothing further than enquiring of the Post Office as to the reason of the delay in the delivery of the letter could be done.
The Industrial Tribunal proceeded to make its award on February 17, 1955, without having before it the management of the factory, viz., the lessees who had obtained the lease of the said Mills from the liquidator and for all practical purposes the said award was ex parte so far as the lessees who were at the date of the reference in management of the factory and were obviously intended to be a party to the reference were concerned.
The appellant came into management of the factory after the reference and could not at the date of the reference be in contemplation of the State Government as a party and in any 267 event, no notice whatever was given to the appellant ' of the proceedings before the Tribunal.
By no stretch of imagination could it be said that the Company (In Liquidation) was a party to the reference, the said Mills having been given on lease to the lessees who worked the Mills thereafter not for and on behalf of the Company but on their own account, they being responsible for the profit and loss in the working of the Mills.
The Company thus not being a party to the reference the proceedings which were commenced on December 2, 1954, before the Tribunal were not proceedings against the Company (In Liquidation).
This being the position on a true construction of the terms of the notification by which the reference was made the question whether the reference was a legal proceeding within the meaning of section 171 Of the Indian Companies Act does not arise for our decision and we prefer not to express any opinion on that part of the question.
As to (2): The next question to consider is the connotation of the term " employer " as used in sections 33 and 33A of the .
These sections postulate the pendency of a proceeding of an industrial dispute.
It requires two to raise a dispute.
An Industrial Dispute is thus defined in section 2(k) of the Act:,, 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 conditions of labour, of any person.
If this definition is bodily lifted from section 2 (k) and substituted for the expression " industrial dispute " ,occurring in section 33 and sections 33 and 33A of the Act are then read, it will at once become clear that the employer can be no other than the employer with whom the workers had the industrial dispute and cannot mean merely an employ who discharges or punishes or who alters the conditions of service of the workmen concerned.
If the interpretation adopted by the High Court was correct it would mean that the Industrial 668 dispute which is referred for adjudication to the Industrial Tribunal may have arisen between employer A and his workmen but during the pendency of those proceedings employer B who had nothing to do with employer A would be prevented from discharging or punishing the workmen or altering their conditions of service, provided only that the workmen concerned happened to be interested in the industrial dispute which was pending before the Industrial Tribunal.
If there is no connection at all between the employer A and the employer B in the illustration given above, one fails to see how a mere identity of the establishments or the identity of the workmen could be enough to bring the employer B within the purview of these sections.
The very purpose of the enactment of as.
33 and 33A of the is, as observed by this Court in the Automobile Products of India Ltd. vs Bukmaji Bala (1). " to ensure that proceedings in connection with industrial disputes already pending should be brought to a termination in a peaceful atmosphere and that no employer should during the pendency of those proceedings take any action of the kind mentioned in the sections which may give rise to fresh disputes likely to further exacerbate the already strained relation between the employer and the workmen.
To achieve this object a ban has been imposed upon the ordinary right which the employer has under the ordinary law governing a contract of employment.
Section 22 of the 1950 Act and section 33 of the 1947 Act which impose the ban also provide for the removal of that ban by the granting of express permission in writing in appropriate cases by the authority mentioned therein.
" The scope of the enquiry under section 33 of the has also been the subject matter of adjudication by this Court and it was held in Atherton West & Co., Ltd. vs Suti Mill Mazdoor Union (2) that the authority: " concerned would institute an enquiry and come to the conclusion whether there was a prima facie case (1) [1955] i S.C.R. 1241, 1256.
(2) ; , 787. 269 made out for the discharge or dismissal of the workman and the employer, his agent or manager was not actuated by any improper motives or did not resort to any unfair practice or victimisation in the matter of the proposed discharge or dismissal of the workman.
" A similar ratio would apply where an employer changes the conditions of service of the workmen concerned.
If this be the criterion for determining whether an employer was entitled to discharge or punish the workmen or alter their conditions of service without the permission in writing of the authority concerned that employer cannot be any other than the one who is concerned in the industrial dispute which is the subject matter of adjudication.
If employer B has nothing to do at all with employer A who is really the party concerned in such industrial dispute which is the subject matter of adjudication, there will be no question of attributing any improper motives or unfair practice or victimization to the employer B in regard to the action which he proposed to take against the workmen.
Whether the employer B would be entitled to such action or not would have to be determined in other proceedings which may be taken in the matter of industrial disputes which may subsequently arise between himself and his workmen after such action was taken.
But he would certainly not be bound before taking such action to seek the permission in writing of the Industrial Tribunal before which an industrial dispute was pending as between those workmen and another employer with whom he had no concern.
The latter interpretation is therefore more in consonance with the principle underlying the enactment of section 33 of the and it must be held that the employer contemplated by sections 33 and 33A of the must be the identical employer concerned in the industrial dispute which is the subject matter of adjudication.
In other words, the employer contemplated by sections 33 and 33A of the must be the employer with whom the workmen mentioned as aggrieved under section 33 had a subsisting relationship of employer 270 and employees at the commencement of the proceedings referred to in those sections.
The identity of the employer at the commencement of the reference with the employer who intends to take proceedings within the ban of section 33 of the Act must be established and if the latter has no concern with or relationship with the former sections 33 and 33A of the Act do not dome into operation at all.
Such identity could in the event of change in the employers be established by showing that the latter employer was merely a nominee or Benamidar of the former or that on the analogy of section 18(3)(c) of the he came with in the description of " his heirs, successors or assigns in respect of the establishment to which the dispute relates, in which event the award made by the Indus.
trial Tribunal would be binding on him just as much as on the former employer of the workmen concerned.
These are, however, the only cases in which according to the provisions of the the identity of the employers at the commencement of the proceedings and the intended discharge or punishment or change in the conditions of service of the workmen concerned could be established and unless the employer who intended to discharge or punish or change the conditions of service of the workmen was in this sense identical with the employer who was concerned in the industrial dispute which is the subject matter of adjudication no question could arise of the operation of section 33 or section 33A of the .
What then was the position of the appellant under the reference in question ? It does not appear from the record as to who was the management of the said Mills on December 2, 1954.
The lease in favour of the old lessees, Guraru Cane Development and Cane Marketing Union Ltd., had apparently come to an end by efflux of time, the period of the lease presumably being up to the end of the crushing season which would end some time in the month of November, 1954.
An application had been made by the liquidator to grant a lease in favour of the appellant and this application was granted by the Court on December 3, 1954, so that in any event before December 3, 1954, the appellant could 271 not be said to be in management of 'the said Mills.
As a matter of fact, the lease was executed in favour of the appellant on December 6, 1954, and the possession of the said Mills was also given to the appellant by the liquidator on the same day.
It could not, therefore, be said that the appellant was comprised within the description of the management of the Gaya Sugar Mills Ltd., at the date when the reference was made by the State Government.
If that was so, a reference Of a previous date, without anything more, could not comprise the appellant within its scope and that appears to have been the position as understood even by the Industrial Tribunal which gave no notice to the appellant but gave notice of the proceedings erroneously as we hold to the liquidator of the Company.
The appellant was not in management of the said Mills and it could not be bound by the reference because at no stage was any attempt made either to amend the terms of the reference or even to serve on the appellant a notice of the proceedings which were to take place before the Industrial Tribunal.
Under the Industrial Disputes (Central) Rules, 1947, enacted by the Central Government in exercise of the powers conferred upon it by section 38 of the , intimation of the place and time of hearing had got to be given to the parties to the reference (Rule 10); and the Industrial Tribunal was enjoined to call upon the parties at the first sitting to state their case (Rule 11) the only power given to the Industrial Tribunal to proceed ex parte was when a party to the proceedings failed to attend or to be represented without good cause shown (Rule 19) ; and the representatives of the parties appearing before an Industrial Tribunal were to have the right of examination, cross examination and of addressing the Tribunal when evidence had been called (Rule 24) : The 'whole of this procedure envisaged the parties to the reference being properly notified of the proceedings before the Industrial Tribunal and taking part therein either by themselves or through, their authorised representatives.
The fact that no such notice was given to the appellant by the Industrial Tribunal goes to show that in the circum 272 stances that obtained the appellant was certainly not understood by the Tribunal as having been a party to the reference and it could not be said on the terms of the reference itself which was made on December 2, 1954, that the appellant, which came into existence as the lessees of the said Mills on December 6, 1954, was a party to the said reference.
If the old lessees were in management of the said Mills on December 2 1954, there was no identity of employers as between them and the appellant, the appellant certainly did not claim under the old lessees nor could it be described as their " heirs, successors or assigns " in respect of the establishment to which the dispute related within the meaning of section 18(3) (c) of the , There is no suggestion whatever that the appellant was or is a benamidar of the previous lessees.
In no event could the appellant therefore be held to be, bound either by the reference or the award made by the Industrial Tribunal, the identity of the employers at the date of the reference with the employers at the time when the acts complained of in the applications under section 33 A of the were purported to be done by them not having been established.
If that is the true position, no question of the appellant obtaining written permission of the Industrial Tribunal under section 33 of the Act for discharging or punishing or for effecting a change in the conditions of service of the workmen concerned could arise.
If no such permission were needed, section 33A of the Act also could not come into operation and the applications in Miscellaneous Cases Nos. 26 and 27 of 1955 we 're not maintainable.
The result is no doubt unfortunate ; because the Industrial disputes which were referred to the Industrial Tribunal by the reference in question were general in their nature and would comprise within their scope the workmen who were working in the Gaya Sugar Mills Ltd., at all relevant times.
The appellant came in management of the said Mills from and after December 6, 1954, and it was certainly intended that these, disputes which had either existed or were apprehended between the appellant on the one hand and the workmen 273 working in the said Mills on the other should be adjudicated upon under the terms of that reference.
If the appellant could be comprised within the description of the " management " of the said Mills at the date of the reference, viz., December 2, 1954, the object and the purpose of the reference qua the workmen of the said Mills would be accomplished.
The difficulty, however, is that the several managements which would come into existence on successive leases being granted by the Court in the present case cannot be said to have been comprised within the term "managements of the Sugar factories specified in Appendix I" even though the Gaya Sugar Mills Ltd., Guraru is mentioned as item 2 therein.
Such a construction would make the several successive lessees who came into existence during the whole of the period when the reference was pending before the Industrial Tribunal parties to the reference involving fresh notices to be issued, fresh statements of case to be furnished, fresh hearing to be granted, to each of the successive lessees under the Industrial Disputes (Central) Rules, 1947, a result which certainly could not have been contemplated by the State Government when the reference was made.
It, therefore, follows that the appellant was not by any count a party to the reference dated December 2, 1954, and not being such a party was not an "employer" within the meaning of sections 33 and 33 A of the qua the workmen who filed the applications in Miscellaneous Cases Nos. 26 and 27 of 1955.
If the workmen felt that they have been victimised or that there had been an unfair labour practice, they could perhaps raise fresh industrial disputes and press the State Government to make a fresh reference of their industrial disputes under section 10(1) of the Act, as to which we say nothing, but it is quite clear to us that the workmen cannot in the circumstances of this case raise an industrial dispute indirectly by having recourse to an application under section 33 A of the Act.
In the premises if the appellant was not bound, as we hold it was not, to ask for the written permission of the 35 274 Industrial Tribunal before discharging, punishing or effecting a change in the conditions of service of the workmen concerned no application under section 33 A of the Act could be maintained against it even on the assumption that the allegations made in the said applications were correct.
The result, therefore, is that the proceedings in Mis cellaneous Cases Nos. 26 and 27 of 1955 before the res pondent No. 1, Industrial Tribunal, Bihar, Patna are without jurisdiction and liable to be quashed.
The appeal of the appellant will therefore be allowed, the order made by the High Court on September 20, 1956, will be set aside and a writ of certiorari will issue against respondent No. 1 quashing the proceedings in the said Miscellaneous Cases Nos. 26 and 27 of 1955.
The appellant will be entitled to its costs throughout against the contesting respondents.
Appeal allowed.
| Gaya Sugar Mills Ltd. went into liquidation and the sugar factory owned by it was leased out to the appellant by the liquidator with the permission of the Court on December 6, 1954, to be worked in terms of the lease which provided, inter alia, that the lessee would neither be liable for any of the liabilities of the company, or of the liquidator or the outgoing lessees nor bound to engage any of their employees or those working from before except those specifically mentioned in the lease.
On December 2, 1954, i.e. four days before the appellant came into possession of the sugar factory, the Bihar Government issued a notification referring a dispute between the managements of certain specified sugar factories, including Gaya Sugar Mills Ltd., and their workmen represented by their Unions, for adjudication to the Industrial Tribunal constituted by the respondent No. i. No notice was given to the appellant and proceedings against it were all exparte.
Complaints, however, were made before the Industrial Tribunal by two batches of workmen against the appellant under section 33A of the Industrial Disputes Act alleging in one case that they had been discharged and in the other that the conditions of their service had been changed by the appellant without first obtaining the permission of the Tribunal under section 33 Of the Act.
It was asserted on behalf of the appellant that there was no breach of the terms of the lease and no contravention of section 33 Of the Act.
After unsuccessfully moving the High Court under articles 226 and 227 Of the Constitution for a writ of certiorari quashing the said proceedings, the appellant came up to this Court by special leave and it was contended on its behalf that (1) no leave of the Court having been obtained under section 171 Of the Indian Companies Act by the State Government before it made the reference under section 10(1) of the Industrial Disputes Act, the reference was bad in law and that (2) the word 'employer ' in sections 33 and 33A of the Industrial Disputes Act meant only such employer as was actually concerned with the industrial dispute which was the subject matter of the reference and the appellant having come into possession of the Mills after the reference, could not be an employer within the meaning of those sections.
255 Held, that the terms of the notification properly construed clearly showed that what was sought to be made a party to the reference was not the company itself but its management at the date of the reference and, therefore, no question of leave of the court under section 171 Of the Indian Companies Act could arise.
The word 'employer ' occurring in sections 33 and 33A of the Industrial Disputes Act meant the identical employer concerned with the industrial dispute, which was the subject matter of the adjudication, and could not include an employer who merely happened to discharge or punish or alter the conditions of service of workmen unless such employer could be shown to be a mere nominee or bentamiday of the former or fell within the category of his heirs, successors or assigns within the meaning Of section 18(3)(c) of the Act.
Since, in the instant case, the appellant satisfied none of these tests, it was not bound to seek the permission of the Tribunal under section 33 Of the Act and the proceedings under section 33A of the Act against it must be quashed.
|
Summarize this legal judgement text concisely | 65 of 1958.
Petition under Article 32 of the Constitution of India for enforcement of fundamental rights.
AND CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 112 of 1958.
277 Appeal by special leave from the judgment and order dated February 28, 1958, of the Punjab High Court in Criminal Revision No. 145 of 1958.
N. C. Chatterjee and Nanak Chand, for the petitioner and the appellant.
H. N. Sanyal, Additional Solicitor General of India, H J. Umrigar, R. H. Dhebar and T. M. Sen, for the respondent in both the matters.
November 4.
The Judgment of Das, C. J., Bhagwati, Sinha and Wanchoo, JJ. was delivered by Sinha J., Subba Rao, J., delivered a separate judgment.
SINHA, J. Petition Nos.
65 of 1958, under article 32 of the Constitution, on behalf of one Thomas Dana, and Criminal Appeal No. 112 of 1958, by special leave to appeal granted to one Leo Roy Frey (appellant), raise substantially the same question of some constitutional importance, and have, therefore, been heard together, and will be covered by this judgment.
The main question for determination in these two cases, is whether there has been an infringement of the constitutional protection granted under article 20(2) of the Constitution.
For the sake of brevity and convenience, we shall refer to Thomas Dana as the first petitioner, and Leo Roy Frey, as the second petitioner, in the course of this Judgment.
The relevant facts are these : The first petitioner is a Cuban national.
He came to India on a special Cuban passport No. 11822, dated November 16, 1954, issued by the Government of the Republic of Cuba.
The second petitioner is a citizen of the United States of America, and holds a U.S.A. passport No. 45252, dated July 1, 1955.
In May, 1957, both the petitioners were in Paris.
There, the second petitioner purchased a motor car from an officer of the American Embassy.
He is said to have sold that car to the first petitioner on May 14, 1957, and the same month, it was registered in the first petitioner 's name.
The two petitioners sailed by the same steamer at the end of May. The car was also shipped by the same steamer.
They reached Karachi on June 11, 1957, and from there, flew to Bombay.
From June 11 to 19, 1957, they 278 stayed together in Hotel Ambassador in Bombay.
The car was delivered to the first petitioner in Bombay on June 13, and on June 19, both of them flew from Bombay to Delhi.
In Delhi also, they stayed together at Hotel Janpath.
The first petitioner received the car at Delhi by rail on June 22, and the same night, the two petitioners left by the said car for Amritsar, where they reached after mid night, and stayed in Mrs. Bhandari 's Lodge.
On the morning of June 23, they reached Attari Road Land Customs Station by the same car (No. CD On arrival at Attari, the petitioners presented themselves for completing customs formalities for crossing over to Pakistan.
The Customs officers at Attari Road Land Customs Station, handed over to them the Baggage Declaration forms, to declare the articles that they had in their possession, including any goods which were subject to the Export Trade Control and/or Foreign Exchange Restrictions, and/or were dutiable.
Both the petitioners completed the forms aforesaid, and handed those completed statements over to the Customs officers.
The first petitioner declared the under noted articles: Indian currency Rs. 40 Pakistan currency Rs. 50 U. section Dollars $. 30.00 Gold ring I (valued at Rs. 100) Personal effects Valued at $ 100.00 Car Valued at Rs. 15,000 On suspicion, the Customs officers searched his baggage which was being carried in the car aforesaid.
His person was also searched, and as a result of the search, the under noted articles which had not been declared by him, were recovered : Indian currency Rs. 900 Pakistan currency Rs. 250 U. section Dollars $ 1.00 Hong Kong Dollars $ 1100 Thailand currency 78 Pocket radio 1 Time piece 1 279 The second petitioner, in his statement, had declared the following articles: Indian currency Rs. 40 U. section Dollars $ 500.00 U. section Coins $ 1.23 Belgian coins BF 26.00 French coins BF 205.00 Italian coins L. 400.00 Wrist watch I Personal effects Rs. 1,00,000 On suspicion, the Customs staff searched the person of the second petitioner also.
They recovered from him one pistol of 22 bore with 48 live cartridges of the same bore.
As he could not produce a valid licence under the Indian law, the pistol and the cartridges were handed over to the police, for taking appropriate action under the Indian Arms Act.
The car was thoroughly searched, and as a result of the intensive search and minute examination on June 30, 1957, a secret chamber above the petrol tank, behind the hind seat of the car, was discovered.
The chamber was opened, and the following things which had not been declared by the petitioners, were recovered from inside the secret chamber: Indian currency Rs. 8,50,000 U. section Dollars $ 10,000.00 Empty tin containers 10(The containers bore (rectangular) marks to indicate that they were used for carrying gold bars) Mirror 1.
besides other insignificant things.
Under the Indian law, Indian currency over Rs. 50, Pakistan currency over Rs. 100 and any foreign currency, could not be exported out of India, without the permission of the Reserve Bank of India.
The export of a pocket radio also required a valid licence under the Imports and Exports (Control) Act, 1947.
The petitioners could not produce, on demand the requisite permission from the Reserve Bank of India. ' or the licence for the export of the pocket radio, or a permit for exporting 280 a time piece, as required by the .
The car also was handed over to the police for necessary action.
The offending articles, namely Indian currency Rs.8,50,900 Pakistan currency Rs.250 U. section Dollars $ 10,001.00 Hong Kong Dollar $.1.00
Thailand currency T.78.00 pocket radio, and the time piece, etc., were seized under section 178 of the .
Both the petitioners were taken into custody for infringement of the law.
On July 7, both the petitioners were called upon to show cause before the Collector of Central Excise and Land Customs, New Delhi, why a penalty should not be imposed upon them under section 167(8) of the , and why the seized articles aforesaid, should not be confiscated under section 167(8) and section 168 of the Act.
Both the petitioners objected to making any statements in answer to the show cause notice, on the ground that the matter was.
subjudice and any statement made by them, might prejudice them in their defence.
But at the same time, the second petitioner disclaimed any connection with the car in which the two petitioners were travelling, and which had been seized.
After some adjournments granted to the petitioners to avail themselves of the opportunity of showing cause, the Collector of Central Excise and Land Customs, New Delhi, passed orders on July 24, 1957.
He came to the conclusion that the petitioners had planned to smuggle Indian and foreign currency out of India, in contravention of the law.
They had been acting in concert with each other, and had, throughout the different stages of their journey from France to India, been acting together, and while leaving India for Pakistan, were travelling together by the same car, until they reached the Attari Road Land Customs Station, on their way to Pakistan.
He directed that the different kinds of currency which had been seized, as aforesaid, from the possession of the petitioners, be " absolutely confiscated " for contravention of section 8(2) of the Foreign Exchange Regulation Act, 1947, read with sections 23 A 281 and 23 B of the Act.
He also directed the confiscation of the car aforesaid, which could be redeemed on payment of a " redemption fine " of Rs. 50,000.
He also ordered the confiscation of the pocket radio and the time piece and other articles seized, as aforesaid, under section 167(8) of the , read with section 5 of the Imports and Exports (Control) Act, 1947, and section 7 of the .
He further imposed a personal penalty of Rs. 25,00,000 on each of the petitioners, under section 167(8) of the .
After making further inquiry, on August 12, 1957, the Assistant Collector of Customs and Central Excise, Amritsar, under authority from the Chief Customs Officer, Delhi, filed a complaint against the petitioners and a third person, named Moshe Baruk of Bombay, (since acquitted), under section 23, read with section 8, of the Foreign Exchange Regulation Act, 1947, and section 167 (81) of the .
The petition of complaint, after stating the facts stated above, charged the accused persons with offences of attempt ing to take out of India Indian and foreign currency, in contravention of the provisions of the Acts referred to above.
After recording considerable oral and documentary evidence, the learned Additional District Magistrate, Amritsar, by his judgment dated November 13, 1957, convicted the petitioners, and sentenced them each to two years ' rigorous imprisonment under section 23, read with section 23 B, of the Foreign Exchange Regulation Act, six month 's rigorous imprisonment under section 120 B(2) of the Indian Penal Code, the sentences to run con currently.
It is not necessary to set out the convictions and sentences in respect of the third accused Moshe, who was subsequently acquitted by the High Court of Punjab, in exercise of its revisional jurisdiction.
The learned Magistrate also, perhaps, out of abundant caution, directed that " The entire amount of currency and foreign exchange and the car in which the currency had been smuggled as well as the sleeveless shirt exhibit P. 39 and belt exhibit P. 40 shall be 36 282 confiscated to Government ".
This order of confiscation was passed by the criminal court, notwithstanding the fact, as already stated, that the Collector of Central Excise and Land Customs, New Delhi, had ordered the confiscation of the offending articles under section 167(8) of the and the other related Acts referred to above.
On appeal by the convicted persons, the learned Additional Sessions Judge, Amritsar, by his judgment and order dated.
December 13, 1957, dismissed the appeal after a very elaborate examination of the facts and circumstances brought out in the large volume of evidence adduced on behalf of the prosecution.
It is riot necessary, for the purposes of these cases, to set out in detail the findings arrived at by the appellate court, or the evidence on which those conclusions were based.
It is enough to state that both the courts of fact agreed in coming to the conclusion that the accused persons had entered into a conspiracy to smuggle contraband property out of this country.
The petitioners moved the High Court of Judicature for the State of Punjab, separately, against their convictions and sentences passed by the courts below, as aforesaid.
Both the revisional applications were dismissed summarily by the learned Chief Justice.
By his order dated February 28, 1958, the learned Chief Justice refused to certify that the case was a fit one for appeal to this Court.
The petitioners then moved this Court for, and obtained, special leave to appeal from the judgment and orders of the courts below, convicting and sentencing them, as stated above.
They also moved this Court for writs of habeas corpus.
The petition of the first petitioner for a writ of habeas carp= was admitted, and was numbered as petition No. 65 of 1958, and a rule issued.
The writ petition on behalf of the second petitioner was dismissed in limited.
All these orders were passed on April 28, 1958.
Subsequently, the first petitioner moved this Court for revocation of the special leave granted to him, and for an early hearing of his writ petition No. 65 of 1958, as the points for consideration were common to both the cases.
This 283 Court granted the prayers by its order dated May 13,1958.
Before dealing with the arguments advanced on behalf of the petitioners, in order to complete the narrative of events leading up to the filing of the cases in this Court, it is necessary to state that the petitioners had moved this Court separately under article 32 of the Constitution, against their prosecution in the Magistrate 's court, after the aforesaid orders of confiscation and penalty, passed by the Collector of Customs.
They prayed for a writ of certiorari and/or prohibition, and for quashing the proceedings.
There was also a prayer for a writ in the nature of habeas corpus.
On that occasion also, the protection afforded by article 20(2) of the Constitution, was pressed in aid of the petitioners ' writ applications.
This Court, after hearing the parties, dismissed those writ petitions, holding that the charge against the petitioners included an offence under s.120B of the Indian Penal Code, which certainly was not one of the heads of charge against them before the Collector of Customs.
This Court, therefore, without deciding the applicability of the provisions of article 20(2) of the Constitution, to the facts and circumstances of the present case, refused to quash the prosecution.
The question whether article 20(2) of the Constitution, barred the pro secution of the petitioners under the provisions of the and the Foreign Exchange Regulation Act, was apparently left open for future determination, if and when the occasion arose.
In view of the events that have happened since after the passing of the order of this Court, dated October 31, 1957, (reported in ; , it has now become necessary to determine that controversy.
It was vehemently argued on behalf of the petitioners that the prosecution of the petitioners under the provisions of the Acts aforesaid, and their convictions and imposition of sentences by the courts below, infringe the protection against double jeopardy enshrined in article 20(2) of the Constitution, which is in these terms 284 " No person shall be prosecuted and punished, for the same offence more than once.
" It is manifest that in order to bring the petitioners ' case within the prohibition of article 20(2), it must be shown that they had been " prosecuted " before the Collector of Customs, and " punished " by him for the " same offence " for which they have been convicted and punished as a result of the judgment and orders of the courts below, now impugned.
If any one of these three essential conditions, is not fulfilled, that is to say, if it is not shown that the petitioners had been it prosecuted " before the Collector of Customs, or that they had been " punished " by him in the proceedings before him, resulting in the confiscation of the properties aforesaid, and the imposition of a heavy penalty of Rs. 25,00,000, each, or that they had been convicted and " sentenced" for the " same offence ", the petitioners will have failed to bring their case within the prohibition of article 20(2).
It has been argued, in the first instance, on behalf of the petitioners that they had been " prosecuted " within the meaning of the article.
On the other hand, the learned Additional Solicitor General has countered that argument by the contention that the previous adjudication by the Collector of Customs, was by an administrative body which has to act judicially, as held by this Court in F. N. Roy vs Collector of Customs(1), and reiterated in Leo Roy Frey vs Superintendent, District Jail, Amritsar (2); but the Collector was not a criminal court which could in law, be said to have tried the petitioner for an offence under the Indian Penal Code, or under the penal provisions of the other Acts mentioned above.
It is, therefore, necessary first to consider whether the petitioners had really been prosecuted before the Collector of Customs, within the meaning of article 20(2).
To " prosecute ", in the special sense of law, means, according to Webster 's Dictionary, " (a) to seek to obtain, enforce, or the like, by legal process; as, to prosecute a right or a claim in a court of law.
(b) to pursue (a person) by legal proceedings for redress or (1) ; (2) ; 285 punishment; to proceed against judicially; espy., to accuse of some crime or breach of law, or to pursue for redress or punishment of a crime or violation of law, in due legal form before a legal tribunal; as, to prosecute a man for trespass, or for a riot." According to Wharton 's Law Lexicon, 14th edn., p. 810, " prosecution " means " a proceeding either by way of indictment or information,, in the criminal courts, in order to put an offender upon his trial.
In all criminal prosecutions the King is nominally the prosecutor.
" This very question was discussed by this Court in the case of Maqbool Hussain vs The State of Bombay (1), with of reference to the context in which the word " prosecution " occurred in article 20.
In the course of the judgment, the following observations, which apply with full force to the present case, were made: ". . and the prosecution in this context would mean an initiation or starting of proceedings of a criminal nature before a court of law or a judicial tribunal in accordance with the procedure prescribed in the statute which creates the offence and regulates the procedure.
" In that case, this Court discussed in detail the provisions of the , with particular reference to Chapter XVI, headed " Offences and Penalties ".
After examining those provisions, this Court came to the following conclusion: "We are of the opinion that the Sea Customs Authorities are not a judicial tribunal and the adjudgeing of confiscation, increased rate of duty or penalty under the provisions of the do not constitute a judgment or order of a court or judicial tribunal necessary for the purpose of supporting a plea of double jeopardy." The learned counsel for the petitioners, did not categorically attack the correctness of that decision, but suggested that that case could be distinguished on the ground that in the present case, unlike the case then before this Court, a heavy penalty of Rs. 25,00,000 on each of the petitioners, was imposed by the Collector of Central Excise and Land Customs, (1) ; , 738, 739, 743. 286 besides ordering confiscation of properties and currency worth over 81 lacs.
But that circumstance alone cannot be sufficient in law to distinguish the previous decision of this Court, which is otherwise directly in point.
Simply because the Revenue Authorities took a very serious view of the smuggling activities of the petitioners, and imposed very heavy penalties under item 8 of the Schedule to section 167 of the , would not convert the Revenue Authorities into a court of law, if the Act did not contemplate their functioning as such.
That the did not envisage the Chief Customs Officer or the other officers under him in the hierarchy of the Revenue Authorities under the Act, to function as a Court, is made absolutely clear by certain provisions of that Act.
The most important of those is the new section 187A, which was inserted by the Sea Customs (Amendment) Act, (21 of 1955).
That section is in these terms:" 187A. No Court shall take cognizance of any offence relating to Smuggling of goods punishable under item 81 of the Schedule to section 167, except upon complaint in writing, made by the Chief Customs officer or any other officer of Customs not lower in rank than an Assistant Collector of Customs authorized in this behalf by the Chief Customs officer.
" This section makes it clear that the Chief Customs Officer or any other officer lower in rank than him, in the Customs department, is not a " court ", and that the offence punishable under item 81 of the Schedule to section 167, cannot be taken cognizance of by any court, except upon a complaint in writing, made, as prescribed in that section.
This section, in our opinion, sets at rest the controversy, which has been raised in the past upon certain expressions, like " offences " and " penalties used in Chapter XVI.
These words have been used in that Chapter in their generic sense and not in their specific sense under the penal law.
When a proceeding by the Revenue Officers is meant, as is the case in most of the items in the Schedule to section 167, those officers have been empowered to deal with the offending articles by way of confiscation, or with the person 287 infringing those rules, by way of imposition of penalties in contradistinction to a sentence of imprisonment or fine or both.
When a criminal prosecution and punishment of the criminal, in the sense of the Penal law, is intended, the section makes a specific reference to a trial by a Magistrate, a conviction by such Magistrate, and on such conviction, to imprisonment or to fine or both.
In this connection, reference may be made to the penalties mentioned in the third column against items 72, 74, 75, 76, 76A, 76B, 77, 78 and 81, which illustrate the latter class of the penalty in column 3.
The penalties mentioned in the third column of most of the items of the Schedule to section 167 of the Act, do not make any reference to a conviction by a Magistrate and punishment by him in terms of imprisonment or of fine or of both.
For example, item 76C, which was inserted by the Sea Customs Amendment Act X of 1957, in the third column meant for penalties, has only this " such vessel shall be liable to confiscation and the master of such vessel shall be liable to a penalty not exceeding one thousand rupees".
Item 76A, on the other hand, specifically mentioning conviction, imprisonment and fine, was inserted by XXI of 1955.
Both the amending Acts, by which the aforesaid additional offences were created, and penalties prescribed, were enacted after the coming into force of the Constitution.
The Legislature was, therefore, aware of the distinction made throughout the Schedule to section 167, between a proceeding before Revenue authorities by way of enforcing the preventive and penal provisions of the Schedule and a criminal trial before a Magistrate, with a view to punishing offenders under the provisions of the same section.
It is, therefore, in the teeth of these provisions to contend that the imposition of a penalty by the Revenue officers in the hierarchy created by the Act, is the same thing as a punishment imposed by a criminal court by way of punishment for a criminal offence.
This distinction has been very clearly brought out in the recent judgment of this Court in the case of Sewpujanrai Indrasanrai Ltd. vs The Collector of 288 Customs(2).
In that case, though the question of double jeopardy under article 20(2) of the Constitution, had not been raised, this Court has pointed out the difference in the nature of proceedings against offending articles and offending persons.
A proceeding under the and the corresponding provisions of the Foreign Exchange Regulation Act, in respect of goods which have been the subject matter of the proceeding, has been held to be of the nature of a proceeding in rem whereas, a proceeding against a person concerned in smuggling goods within the purview of those Acts, is a proceeding in personam, resulting in the imposition of a punishment by way of imprisonment or fine on him, where the offender is known.
In the former case, the offender may not have been known, but still the offending goods seized may be confiscated as a result of the proceedings in rem.
That case was not concerned with the further question whether, besides the liability to the penalty as contemplated by section 23(1)(a), namely, a penalty not exceeding three times the value of the foreign exchange in respect of which the contravention had taken place, the person contravening the provisions of the Foreign Exchange Regulation Act, 1947, upon conviction by a court, is also punishable with imprisonment which section 23(1)(b) prescribes, namely, imprisonment for a term which may extend to 2 years, or with fine, or with both.
The decision of this Court (supra) is also an authority for the proposition that in imposing confiscation and penalty under the , the Collector acts judicially.
But that is not the same thing as holding that the Authority under section 167 of the Act, functions as a Judicial Tribunal or as a Court.
An Administra.
five Tribunal, like the Collector and other officers in the hierarchy, may have to act judicially in the sense of having to consider evidence and hear arguments in an informal way, but the Act does not contemplate that in so doing, it is functioning as a court.
As already pointed out, section 187A, which was inserted by the Amending Act of 1955 (21 of 1955), brings out, in bold relief, the legal position that the Chief Customs (I) ; 289 Officer or any other officer of Customs, does not function as a court or as a Judicial Tribunal.
All criminal offences are offences, but all offences in the sense of infringement of a law, are not criminal offences.
Likewise, the other expressions have been used in their generic sense and not as they are understood in the Indian Penal Code or other laws relating to criminal offences.
Section 167 speaks of offences mentioned in the first column in the Schedule, and the third column in that Schedule lays down the penalties in respect of each of the contravention of the rules or of the sections in the Act.
There are as many as 81 entries in the Schedule to section 167, besides those added later, but each one of those 81 and more entries, though an offence, being an act infringing certain provisions of the section is and rules under the Act, is not a criminal offence.
Out of the more than 81 entries in the Schedule to section 167, it is only about a dozen entries, which contemplate prosecution in the criminal sense, the remaining entries contemplate penalties other than punishments for a criminal offence.
The provisions of Chapter XVII of the Act, headed " Procedure relating to offences, Appeals, etc.", also make it clear that the hierarchy of the Customs Officers under the Act have not been empowered to try criminal offences.
They have been only given limited powers of search.
Similarly, they have been given limited powers to summon persons to give evidence or to produce documents.
It is true that the Customs Authorities have been empowered to start proceedings in respect of suspected infringements of the provisions of the Act, and to impose penalties upon persons concerned with those infringements, or to order confiscation of goods or property which are found to have been the subjectmatter of the infringements, but when a trial on a charge of a criminal offence is intended under any one of the entries of the Schedule aforesaid, it is only the Magistrate having jurisdiction, who is empowered to impose a sentence of imprisonment or fine or both.
it was also suggested in the course of the argument that the use of a particular phraseology in the Act, 37 290 should not stand in the way of looking at the substance of the matter.
It may be that the Act has drawn a distinction between confiscation of property and goods, and imposition of penalties on persons concerned with the infringement, on the one hand, and the imposition of a sentence of imprisonment or fine or both by a Magistrate, on the other hand; but, it is further contended, the Customs Authorities, who impose a penalty or who order confiscation of goods of very large value, are in substance imposing punishments within the meaning of the criminal law.
In this connection, our particular attention was drawn to para.
24 of the order dated July 24, 1957, passed by the Collector of Central Excise and Land Customs, New Delhi, which is in these terms: " 24.
Having regard to all the circumstances of the case, I find that both Sarvshri Thomas Dana and Leo Roy Frey are equally guilty of the offence.
They attempted to smuggle Indian and foreign currency out of India.
I hold both of them as the persons concerned in the offence committed under section 167(8) of the .
The foregoing facts prove beyond doubt that the offence was the result of the most deliberate and calculated conspiracy to smuggle this huge amount of currency out of the country.
The offenders, therefore, deserve deterrent punishment.
1, therefore, impose a personal penalty of Rs. 25,00,000 (Rupees twenty five lakhs only) each on Shri Thomas Dana and Shri Leo Roy Frey which should be paid within two months from the date of this order or such extended period as the adjudicating officer may allow.
" The expressions " equally guilty of the offence the offence was the result of the most deliberate and calculated conspiracy to smuggle ", and " deserve deterrent punishment ", have been greatly emphasized in aid of the argument that the Collector had really intended to punish the petitioners in respect of the " offence", and found them ',guilty".
It is true that these expressions are commonly used in judgments given in criminal trials, but the same argument can be used 291 against the petitioners by saying that mere nomenclature does not matter.
What really matters is whether there has been a " prosecution ".
It is true that the petitioners were dealt with by the Collector of Central Excise and Land Customs, for the" offence " of smuggling; were found " guilty ", and a deterrent " punishment " was imposed upon them, but as he had not been vested with the powers of a Magistrate or a criminal court, his proceedings against the petitioners were in the nature of Revenue proceedings, with a view to detecting the infringement of the provisions of the , and imposing penalties when it was found that they had been guilty of those infringements.
Those penalties, the Collector had been empowered to impose in order not only to prevent a recurrence of such infringements, but also to recoup the loss of revenue resulting from such infringe ments.
A person may be guilty of certain acts which expose him to a criminal prosecution for a criminal offence, to a penalty under the law intended to collect the maximum revenue under the Taxing law, and/or, at the same time, make him liable to damages in torts.
For example, an assessee under the Income tax law, may have submitted a false return with a view to defrauding the Revenue.
His fraud being detected, the Taxing Officer may realise from him an amount which may be some multiple of the amount of tax sought to be evaded.
But the fact that he has been subjected to such a penalty by the Taxing Authorities, may not avail him against a criminal prosecution for the offence of having submitted a return containing false statements to his knowledge.
Similarly, a person may use defamatory language against another person who may recover damages in tort against the maker of such a defamatory statement.
But the fact that a decree for damages has been passed against him by the civil court, would not stand in the way of his being prosecuted for defamation.
In such cases, the law does not allow him the plea of double jeopardy.
That this is the law in America also, is borne out by the following quotation from the " Constitution 292 of the United States of America " revised and annotated in 1952 by Edward section Corwin at p. 840: "A plea of former jeopardy must be upon a prosecution for the same identical offense.
The test of identity of offenses is whether the same evidence is required to sustain them; if not, the fact that both charges relate to one transaction does not make a single offense where two are defined by the statutes.
Where a person is convicted of a crime which includes several incidents, a second trial for one of those incidents puts him twice in jeopardy.
Congress may impose both criminal and civil sanctions with respect to the same act or omission, and may separate a conspiracy to commit a substantive offense from the commission of the offense and affix to each a different penalty.
A conviction for the conspiracy may be had though the subsequent offense was not completed.
Separate convictions under different counts charging a monopolization and a conspiracy to monopolize trade, in an indictment under the Sherman Antitrust Act, do not amount to double jeopardy. ".
A forfeiture proceeding for defrauding the Government of a tax on alcohol diverted to beverage uses is a proceeding in rem, rather than a punishment for a criminal offense, and may be prosecuted after a conviction of conspiracy to violate the statute imposing the tax.
" To the same effect is the following placitum tinder article 240 in Vol.
22 of 'Corpus Juris Secundum ', headed " Offenses and Proceedings in Which Former Jeopardy Is a Defense ": " The doctrine applies to criminal prosecution only and generally to misdemeanours as well as felonies.
A former conviction or acquittal does not ordinarily preclude subsequent in rem proceedings, civil actions to recover statutory penalties or exemplary damages, or proceedings to abate a nuisance.
" On behalf of the petitioners, their learned counsel placed reliance upon the two American decisions in Morgan vs Zevine (1) and United States of America vs (1) ; ; 293 Anthony La Franca (,).
The former decision is really against the contention of double jeopardy, raised in this case.
That case lays down that persons who steal postage stamps and postal funds from a post office of the United States, after having committed burglary, and thus, having effected their entry into the premises, committed two distinct offences which may be separately charged and punished under the United States ' Penal Code.
Two separate convictions and Sentences as for two distinct offences in those circumstances were not held to be within double jeopardy within the meaning of the United States ' Constitutional 5th Amendment.
The reason given for the decision against the contention of double jeopardy was that though the offences had been committed in the same transaction, they had been constituted separate and distinct offences by the United States ' Penal Code articles 190 and 192.
In the latter case, the plea of double jeopardy was given effect to because the special statutes, infringements of which formed the subjectmatter of the controversy, namely, for unlawfully selling intoxicating liquor, had made a specific provision that if any act is a violation of earlier laws in regard to the manufacture and taxation of and traffic in intoxicating liquor, and also of the National Prohibition Act, a conviction for such act or offence under one statute, shall be a bar to prosecution therefor under the other.
It is clear, therefore, that where there is a specific statutory provision creating a bar to a second prosecution, the court is bound to give effect to the plea of double jeopardy.
It is not necessary to refer to certain decisions of the English courts, relied upon by the learned counsel for the petitioners, because those cases had reference to the question whether certain orders passed by certain courts were or were not made in a criminal case or matter within the meaning of the statutes then under consideration before the court.
Those are observations made with reference to the terms of those statutes, and are of no assistance in the present controversy.
The learned counsel for the petitioners was not able to produce before us any (1) ; ; 294 authority in support of the proposition that once a person has been dealt with by the Revenue Authorities for an infringement of the law against smuggling, he cannot also be prosecuted in a criminal court for a criminal offence.
In view of these considerations, and particularly in view of the decision of this Court in the case of Maqbool Hussain vs The State of Bombay (1), there is no escape from the conclusion that the proceedings before the Sea Customs Authorities under section 167(8) were not " prosecution " within the meaning of article 20 (2) of the Constitution.
In that view of the matter, it is not necessary to pronounce upon the other points which were argued at the Bar, namely, whether there was a " punishment " and whether " the same offence " was involved in the proceedings before the Revenue Authorities and the criminal court.
Unless all the three essential conditions laid down in el.
(2) of article 20, are fulfilled, the protection does not become effective.
The prohibition against double jeopardy would not become operative if any one of those elements is wanting.
It remains to consider a short point raised particularly on behalf of the second petitioner (Leo Roy Frey).
It was argued that the letter exhibit P. DD/2, admittedly written by him to his father in German, had not been specifically put to him with a view to eliciting his explanation as to the circumstances and the sense in which it had been written.
The learned Magistrate in the trial court put the following question (No. 20) to him : " It is in evidence that exhibit P. FF/I is the translation of the letter exhibit P. DD/2.
What have you to say about it The answer given by the accused to this question was " The translation of exhibit P. FF/I is mostly correct except for few variations which could have been due to misinterpretation of handwriting ".
It is clear from the question and answer quoted above, that the learned Magistrate did afford an opportunity to this petitioner to explain the circumstances appearing in the (1) ; , 738, 739, 743 295 evidence against him with particular reference to the letter.
If the court had persisted in putting more questions with reference to that letter, perhaps, it may have been argued that the examination under section 342 of the Code of Criminal Procedure, was in the nature of a cross examination of the accused person, which is not permitted.
In our opinion, there is no substance in the contention that the petitioner had not been properly examined under section 342, Criminal Procedure Code, to explain the circumstances appearing in the evidence against him.
It follows from what has been said above, that there is no merit either in the appeal or in the petition.
They are, accordingly dismissed.
SUBBA RAO, J.
I have had the advantage of reading the judgment prepared by Sinha J., but I cannot persuade myself to agree with my learned brother.
The facts are fully stated in the judgment of my learned brother and therefore it would suffice if I restate briefly the facts strictly relevant to the question raised.
On June 11, 1957, the petitioner arrived at Bombay, later came to Delhi and from there he travelled to Amritsar by car in company with Mr. Leo Roy Frey.
On June 23, 1957, he reached Attari Road Land Customs Station and was arrested under section 173 of the (Act VIII of 1878) on suspicion of having committed an offence thereunder.
He was served with a notice by the Collector of Central Excise and Land Customs, New Delhi, on July 7, 1957, to show cause why penalty should not be imposed on him under section 167(8) of the (hereinafter called the Act) and section 7(2) of the , and why the goods should not be confiscated.
By order dated July 24, 1957, the petitioner was adjudged guilty under section 167(8) of the Act and currency of the value of over 9 lakhs, car worth Rs. 50,000, and other things were confiscated, and he was punished with personal penalty of Rs. 25,00,000.
The petitioner was again prosecuted on the same facts before the Additional District Magistrate, Amritsar, on charges under section 167(81) of the Act and sections 23 and 23B of the 296 Foreign Exchange Regulation Act. 'He was convicted on charges under section 23 read with section 23B of the Foreign Exchange Regulation Act, section 167(81) of the Act and section 120B of the Indian Penal Code and sentenced to imprisonments of 2 years, 6 months and 6 months respectively by 'the Additional District Magistrate, Amritsar.
The conviction and sentences were confirmed on appeal by the Additional Sessions Judge, and the revision filed in the High Court was dismissed.
The learned counsel for the petitioner contends that the Courts in punishing him violated the fundamental right conferred on him under article 20(2) of the Constitution as he hag been prosecuted and punished for the same offence by the Collector of Customs.
The learned Additional Solicitor General counters this argument by stating that the petitioner was not prosecuted earlier before a judicial tribunal and punished by such tribunal, and, in any view, the prosecution was not for the same offence with which he was charged before the Magistrate, and therefore this case does not fall within the Constitutional protection given under article 20(2).
Before addressing myself to the arguments advanced it would be convenient at this stage to steer clear of two decisions of this Court.
The first is Maqbool Hussain vs The State of Bombay (1).
There proceedings had been taken by the Sea Customs Authorities under section 167(8) of the Act and an order for confiscation of goods had been passed.
The person concerned was subsequently prosecuted before the Presidency Magistrate for an offence under section 23 of the Foreign Exchange Regulation Act in respect of the same act.
This Court held that the proceeding before the Sea Customs Authorities was not a prosecution and the order for confiscation was not a punishment inflicted by a Court or a judicial tribunal within the meaning of article 20(2) of the Constitution and the prosecution was not barred.
The important factor to be noticed in that case is that the Sea Customs Authorities did not proceed against the person concerned but only confiscated the goods found in his possession.
At page (1) ; 297 742 Bhagwati J. says " Confiscation is no doubt one of the penalties which the Customs Authorities can impose.
But that is more in the nature of proceedings in rem than proceedings in personal, the object being to confiscate the offending goods which have been dealt with contrary to the provisions of the law. .
Though the observations in the judgment cover a wider field.
I shall deal with them at a later stage the decision could be sustained on the simple ground that the previous proceedings were not against the person concerned and therefore he was not prosecuted and punished for the same offence for which he was subsequently proceeded against in the Criminal Court.
The second decision is Sewpujanrai Indrasanrai Ltd. vs The Collector of Customs (1).
There also the Customs Authorities confiscated the goods found in the possession of the appellant.
Under section 8(3) of the Foreign Exchange Act, a restriction imposed by notification made under that section is deemed to have been imposed under section 19 of the , and all the provisions of the shall have effect accordingly.
But the said deeming provision is subject to an important qualification contained in the words ' without prejudice to the provisions of section 23 of the former Act '.
It was argued that by reason of the provisions of section 8(3) of the Foreign Exchange Regulations Act, the appellant should have been proceeded against under section 23 of that Act and it was not open to the Customs Authorities to take action against the offender under section 167(8) of the .
This Court negatived that contention accepting the principle that confiscation of the goods under section 167(8) of the was an action in rem and not a proceeding in personal.
Das, J., who delivered the judgment of the Court made the following observations in repelling the said argument: The penalty provided is that the goods shall be liable to confiscation.
There is a further provision in the penalty column that any person concerned in any such offence shall be liable to a penalty not exceeding (1) 298 three times the value of the goods etc.
The point to note is that so far as the confiscation of the goods is concerned, it is a proceeding in rem and the penalty is enforced against the goods whether the offender is known or not known; the order of confiscation under section 182, , operates directly upon the status of the property, and under section 184 transfers an absolute title to Government.
Therefore, in a case where the Customs authorities can proceed only against the goods, there can be no question of applying section 23 of the Foreign Exchange Act and even on the construction put forward on behalf of the appellant company as respects section 8(3), the remedy under the against the smuggled goods cannot be barred.
" This decision also indicates that the confiscation of the goods is an action in rem and is not a proceeding in personam.
A combined effect of the aforesaid two decisions may be stated thus: Section 167(8) of the Act provides for the following two kinds of penalties when contraband goods are imported into or exported from India: (1) such goods shall be liable to confiscation; (2) any person concerned in any such offence shall be liable to a penalty.
If the authority concerned makes an.
order of confiscation it is only a proceeding in rem and the penalty is enforced against the goods.
On the other hand, if it imposes a penalty against the person concerned, it is a proceeding against the person and he is punished for committing the offence.
It follows that in the case of confiscation there is no prosecution against the person or imposition of a penalty on him.
If the premises be correct, the subsequent prosecution of the person con cerned cannot be affected by the principle of double jeopardy, as he was not prosecuted or punished in the earlier proceedings.
But the question that arises in this case is whether, when there was a proceeding in personam and a penalty was imposed upon the person concerned under section 167(8) of the Act, he could be prosecuted and punished in regard to the same act before another tribunal.
On the facts of this case it is manifest that the 299 petitioner was prosecuted before the Magistrate for the same act in respect of which a penalty of Rs. 25,00,000 had been imposed on him by the Collector of Customs under section 167(8) of the Act.
The question is whether the prosecution and punishment of the petitioner infringed his fundamental right under article 20(2) of the Constitution.
It reads: " No person shall be prosecuted and punished for the same offence more than once.
" The words of this Article are clear and unambiguous and their plain meaning is that there cannot be a second prosecution where the accused has been prosecuted and punished for the same offence previously.
The clause uses the three words of well known connotation: (1) Prosecution; (2) punishment; and (3) offence.
The word offence ' is defined in section 3(38) of the , to mean any act or omission made punishable by any law for the time being in force.
Under section 4 of the Code of Criminal Procedure, it means any act or omission made punishable by any law for the time being in force.
An offence is therefore an act committed against law or omitted where the law requires it.
Punishment is the penalty for the transgression of law.
The terms 'punishment ' and 'penalty ' are frequently used as synonyms of each other; and, indeed under cl.
(I)of article 20 of the Constitution the word penalty issued in the sense of punishment.
The punishments to which offenders are liable under the provisions of the Indian Penal Code are: (1) death; (2) imprisonment for life; (3) imprisonment, which is of two descriptions, viz., (1) rigorous, i.e., with hard labour; and (ii) simple; (4) for feature of property ; and (6) fine.
The word 'prosecuted ' is comprehensive enough to take in a prosecution before an authority other than a magisterial or a criminal Court.
Having regard to the historical background, a restricted meaning has been placed upon it by this Court in Maqbool Hussain vs The State of Bombay (1).
Bhagwati, J., in delivering the Judgment of the Court observed at page 742 thus: (I) ; 300 Even though the customs officers are invested with the power of adjudging confiscation, increased rates of duty or penalty, the highest penalty which can be inflicted is Rs. 1,000.
Confiscation is no doubt one of the penalties which the Customs Authorities can impose, but that is more in the nature of proceedings in rem than proceedings in personam, the object being to confiscate the offending goods which have been dealt with contrary to the provisions of the law and in respect of the confiscation also an option is given to the owner of the goods to pay in lieu of confiscation such fine as the officer thinks fit.
All this is for the enforcement of the levy of and safeguarding the recovery of the sea customs duties.
There is no procedure prescribed to be followed by the Customs Officer in the matter of such adjudication and the proceedings before the Customs Officers are not assimilated in any manner to the provisions of the Civil or the Criminal Procedure Code.
The Customs Officers are not required to act judicially on legal evidence tendered on oath and they are not authorised to administer oath to any witness.
The appeals, if any, lie before the Chief Customs Authority which is the Central Board of Revenue and the power of revision is given to the Central Government which certainly is not a judicial authority.
In the matter of the enforcement of the payment of penalty or increased rate of duty also the Customs Officer can only proceed against other goods of the party in the possession of the Customs Authorities.
But if such penalty or increased rate of duty cannot be realised therefrom the only thing which he can do is to notify the matter to the appropriate Magistrate who is the only person empowered to enforce payment as if such penalty or increased rate of duty had been a fine inflicted by himself.
The process of recovery can be issued only by the Magistrate and not by the Customs Authority.
All these provisions go to show that far from being authorities bound by any rules of evidence or procedure established by law and invested with power to enforce their own judgments or orders the Sea Customs Authorities are merely constituted administrative machinery for the purpose of 301 adjudging confiscation, increased rates of duty and Penalty prescribed in the Act.
" This Court therefore accepted the view that the earlier prosecution should have been before a Court of law or a judicial Tribunal, and that the Sea Customs Authorities when they entertained proceedings for the confiscation of gold did not act as a judicial Tribunal.
In my view the said decision unduly restricted the scope of the comprehensive terms in which the fundamental right is couched.
If res integral I would be inclined to hold that the prosecution before the Customs Authority for an offence created by the Act is prosecution within the meaning of Article 20, even though the Customs Authority is not a judicial Tribunal.
But I am bound by the decision of this Court in so far as it held that the earlier prosecution should have been held before a Court of law or a judicial Tribunal, and that the Customs Authority adjudging confiscation was not such a tribunal.
But the said observations must be confined to the adjudication of confiscation by the Customs Authority.
The outstanding question therefore is whether a Collector of Customs in adjudging on the question whether any person concerned in the importation or exportation of the prohibited goods committed an offence, and in imposing a penalty on him, acts as a judicial Tribunal.
There is a current of judicial opinion in support of the contention that under a particular Act an authority may act as a judicial Tribunal in discharge of certain duties and as an executive or administrative authority in discharge of other duties.
The question whether a particular authority in dis charging specified duties is a judicial tribunal or not falls to be decided on the facts of each case, having regard to the well settled characteristics of a judicial tribunal.
In 'Words and Phrases ', permanent edition, Vol. 23, Judicial Tribunal " has been defined thus: " It is a body who has the power and whose duty it is to ascertain and determine the rights and enforce the relative duties of contending parties.
" In I The Encyclopedia of Words and Phrases Legal Maxims ', 302 by Sanagan and Drynan, much to the same effect it is stated thus: " A 'judicial tribunal ' is one that dispenses justice, is concerned with legal rights and liabilities, which means rights and liabilities conferred or imposed by I law '.
These legal rights and liabilities are treated by a judicial tribunal as preexisting; such a tribunal professes merely to ascertain and give effect to them; it investigates the facts by hearing the 'evidence ' (as tested by long settled rules), and it investigates the law by consulting precedents.
A judicial tribunal looks for some law to guide it.
An administrative tribunal, within its province, is a law unto itself.
" In Cooper vs Wilson (1) the characteristics of a judicial decision are given as follows, at page 340: " A true judicial decision presupposes an existing dispute between two or more parties, and then involves four requisites: (1) The presentation (not necessarily orally) of their case by the parties to the dispute; (2) If the dispute between them is a question of fact, the ascertainment of the fact by means of evidence adduced by the parties to the dispute and often with the assistance of argument by or on behalf of the parties on the evidence ; (3) If the dispute be.
tween them is a question of law, the submission of legal argument by the parties; and (4) A decision which disposes of the whole matter by a finding upon the facts in dispute and application of the law of the land to the facts so found, including where required a ruling upon any disputed question of law.
" This passage has been approved by this Court in Maqbool Hussain 's Case (2).
In Venkataraman vs The Union of India (3) this Court considered the question whether article 20 protects an Officer against whom an enquiry was held under Public Servants Enquiries Act, 1850 (Act XXXVII of 1850) from being prosecuted again on the same facts before a Criminal (Court.
This Court held on a consideration of the provisions of that Act that the appellant was neither prosecuted nor punished (1) , 340, 341 (2) [1953] S C.R. 730.
(3) ; 303 for the same offence before a judicial tribunal.
But in coming to that conclusion the following criteria were applied to ascertain the character of the proceedings: (1) duty to investigate an offence and impose a punishment; (ii) prosecution must be in reference to the law which creates the offence and punishment must also be in accordance with what the law proscribes; (iii) there must be the trappings of a judicial tribunal and (iv) the decision must have both finality and authoritativeness, which are the essential tests of a judicial pronouncement.
Having regard to the aforesaid tests, I shall now proceed to consider the applicability of Article 20 to the present prosecution.
A fundamental right is transcendental in nature and it controls both the legislative and the executive acts.
Article 13 explicitly prohibits the State from making any law which takes away or abridges any fundamental right and declares the law to the extent of the contravention as void.
The law therefore must be carefully scrutinized to ascertain whether a fundamental right is infringed.
It is not the form but the substance that matters.
If the legislature in effect constitutes a judicial tribunal, but calls it ail authority, the tribunal does not become any the less a judicial tribunal.
Therefore the correct approach is first to ascertain with exactitude the content and scope of the fundamental right and then to scrutinize the provisions of the Act to decide whether in effect and substance, though not in form, the said right is violated or curtailed.
Otherwise the fundamental right will be lost or unduly restricted in our adherence to the form to the exclusion of the content.
The question therefore is whether the petitioner was in effect and in substance prosecuted and punished by a judicial tribunal for the same offence for which he is now prosecuted.
Section 167 of the Act opens with the following words: " The offences mentioned in the first column of the following schedule shall be punishable to the extent mentioned in the third column of the same with reference to such offences respectively." Chapter XVI of the Act deals with 'Offences and 304 Penalties '.
Section 167 provides for offences and penalties in a tabular form.
The first column gives the particulars of the offences; the second column gives the sections of the Act to which the offence has reference ; and the third column gives the penalties in respect of the relevant offences.
Apart from the fact that the statute itself, in clear terms, describes the acts detailed in the first column of section 167 as offences against particular laws, the acts described therein clearly fall within the definition of 'offences ' in the and the Indian Penal Code.
There cannot therefore be the slightest doubt in this case that the contravention of any of the provisions of the Act mentioned in section 167 is an offence.
The next question is whether the penalties prescribed for the various offences in the third column of section 167 are punishments within the meaning of article 20 of the Constitution.
A glance at the third column shows that the penalties mentioned therein include direction of payment of money, confiscation of goods and the receptacles wherein they are found, and imprisonment.
The penalties may be imposed by the Customs Officers or Magistrates as the case may be.
Where a person is convicted by a Magistrate and sentenced to imprisonment or payment of fine or where a penalty is imposed by a Customs Officer, in either case, the punishment is described as penalty in the third column of section 167.
Section 167 clearly indicates that penalty is punishment inflicted by law for its violation for doing or failing to do something that is the duty of the party to do.
Section 167 therefore defines a criminal act and fixes a penaltv or punishment for that act.
The two words penalty ' and 'punishment ' are interchangeable and they convey the same idea.
The more difficult question is whether a Customs Authority, when it functions under section 167 of the Act, is a judicial tribunal.
It is not, and cannot be, disputed that a magistrate, who convicts and punishes a person for the infringement of some of the provisions of section 167 of the Act, is a judicial tribunal.
Is it reasonable to assume that when another authority adjudges on similar offences under the same section, it is 305 functioning in a different capacity ? Section 182 defines the jurisdiction of the Customs Authority in respect of the offences mentioned in section 167 of the Act.
It says: " In every case, except the cases mentioned in Section 167, Nos. 26, 72 and 74 to 76, both inclusive, in which under this Act, anything is liable to confiscation or to increased rates of duty or any person is liable to a penalty, such confiscation, increased rate of duty or penalty may be adjudged (a) without limit, by a Deputy Commissioner or Deputy Collector of Customs, or a Customs collector; (b) up to confiscation of goods not exceeding two hundred and fifty rupees in value, and imposition of penalty or increased duty, not exceeding one hundred rupees, by an Assistant Commissioner or Assistant Collector of Customs ; (c) up to confiscation of goods not exceeding fifty rupees in value, and imposition of penalty or increased duty not exceeding ten rupees, by such other subordinate officers of Customs as the Chief Customs authority may, from time to time, empower in that behalf in virtue of their office : ".
Section 187 : " All offences against this Act, other than those cognizable under section 182 by officers of Customs, may be tried summarily by a Magistrate.
" It is therefore clear that some offences under section 167 are cognizable by the Customs Authorities and some offences by Magistrates.
Section 171A, inserted by the Sea Customs (Amendment) Act, 1955 (Act 21 of 1955), confers power on officers of Customs to summon any person to give evidence and produce documents; it reads: " 171A. (1) Any officer of Customs duly employed in the prevention of smuggling shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry which such officer is making in connection with the smuggling of any goods.
39 306 (2) A summons to produce documents or other things may be for the production of certain specified documents or things or for the production of all documents or things of a certain description in the possession or under the control of the person summoned.
(3) All persons so summoned shall be bound to attend either in person or by an authorised agent, as such officer may direct;.
and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and to produce such documents and other things as may be required: Provided that the exemption under section 132 of the Code of Civil Procedure, 1908, shall be applicable to any requisition for attendance under this section.
(4) Every such inquiry as aforesaid shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code.
" Under this section, the Customs Authority, who makes an inquiry, is empowered in connection with that inquiry, to summon persons to give evidence and produce documents and the witnesses summoned are under a statutory duty to speak the truth.
The cir cumstance that under el.
(4) of the said section, an inquiry is deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code, viz., for the purpose of punishment for giving false evidence and for contempt of Court, does not detract from the judicial characteristics conferred upon the authority by the other clauses of the section.
Clause (4) must have been enacted only by way of abundant caution to guard against the contention that the authority is not a Court ; and to bring in the inquiry made by the Customs Officer in regard to administrative matters other than those conferred upon him under section 167, within the fold of section 193 and section 228 of the Indian Penal Code.
Sections 188, 189, 190A and 191 provide a hierarchy of tribunals for deciding appeals and revisions.
The Chief Customs authority May, suo motu or otherwise exercise revisional powers in regard to the orders of the subordinate officers.
Power is also conferred on Government to 307 inter in matters in regard whereof no appeal is provided for.
It is true that no rules have been framed providing the manner in which the Customs collector should proceed with the inquiry in regard to offences committed under the Act of which he is authorized to take cognizance.
But the record discloses that a procedure analogous to that obtaining in criminal Courts is followed in regard to the said offences.
Charges are framed, evidence is taken, advocates are heard, decision is given on the question whether an offence is committed or not; and, if the offence is held to have been committed, the person concerned is con victed and a penalty is imposed.
When the statute empowers the officer to take cognizance of an offence, to adjudge upon the question whether the offence is committed or not and to impose a penalty for the offence, it is implied in the statute that the judicial procedure is to be followed.
The entire scheme of the Act as disclosed in the leaves no doubt in my mind that so far as offences mentioned in section 167 are concerned, the Customs Authority has to function as a Judicial Tribunal.
I have therefore no hesitation to hold that the Customs Officers in so far as they are adjudicating upon the offences mentioned under section 167 of the Act are functioning as judicial tribunals.
If the other view, viz., that an authority is not a judicial tribunal, be accepted, it will lead to an anomalous position, which could not have been contemplated by the legislature.
To illustrate, a Customs Collector may impose a penalty of Rs. 25,00,000 as in this case on his finding that a person has committed an offence under section 167 (8) of the Act, and the accused can be prosecuted again for the same offence before a Magistrate.
On the other hand, if the prosecution is first laid before a Magistrate for an offence under section 167(81) and he is convicted and sentenced to a fine of a few rupees, he cannot be prosecuted and punished again before a Magistrate.
Unless the provisions of the Constitution are clear, a construction which will lead to such an anomalous position should not be accepted, for, by accepting such a construction, the right itself is defeated.
308 It is then contended that the offence for which the petitioner was prosecuted by the Magistrate is different from that in regard whereof he was sentenced by the Customs Officer.
The petitioner was convicted under section 167(8) of the Act, whereas he was subsequently prosecuted and punished under section 167(81) of the Act.
Section 167(81) of the Act reads as follows : "If any person knowingly, and with intent to defraud the Government of any duty payable thereon, or to evade any prohibition or restriction for the time being in force under or by virtue of this Act with respect thereto acquires possession of, or is in any way concerned in carrying, removing, depositing, harboring, keeping or concealing or in any manner dealing with any goods which have been unlawfully removed from a warehouse or which are chargeable with a duty which has not been paid or with respect to the importation or exportation of which any prohibition or restriction is for the time being in force as aforesaid ; or if any person is in relation to any goods in any way knowingly concerned in any fraudulent evasion or attempt at evasion of any duty chargeable thereon or of any such prohibition or restriction as aforesaid or of any provision of this Act applicable to those goods, such person shall on conviction before a Magistrate be liable to imprisonment for any term not exceeding two years, or to fine, or to both.
" It is contended that under section 167(81) knowledge or intention to defraud is an ingredient of the offence, whereas under section 167(8) they are not part of the offence, that offences under sections 167(8) and 167(81) are different, and that therefore the prosecution and punishment for an offence under the former sub section would not be a bar for prosecution and punishment under the latter sub section.
It is not necessary to consider the decisions cited in support of the contention that for the application of the principle of double ' jeopardy the offence for which a person is prosecuted and punished in a second proceeding should be the same in respect of which he has been prosecuted and 309 punished at an earlier stage.
That fact is self evident from article 20(2) of the Constitution itself.
If so, the only question is whether the petitioner was prosecuted before the Magistrate for the same offence in regard to which he was prosecuted before the Collector of customs.
It is true that the phraseology in section 167(8) is more comprehensive than that in sub section
(81) in that the offences under the former sub section take in acts committed without knowledge or intent to defraud.
But it does not exclude from its scope acts committed with knowledge or with intent to defraud.
For, a person who imports or exports prohibited goods with intent to defraud is also concerned in the offence of such importation or exportation.
The question of identity of offence is one to be determined on the facts and circumstances of a particular case.
One of the tests is whether an offence for which a person was earlier prosecuted takes in all the ingredients of the offence, the subject matter of the second prosecution.
The fact that he might have been prosecuted for a lesser offence is not a material circumstance.
The question therefore is not whether under section 167(8) a person can be found guilty of an offence even if there is no fraudulent intent or knowledge, but the question is whether the petitioner was prosecuted and punished on the same facts in regard to which he was subsequently prosecuted and punished before the Magistrate.
The record discloses that the petitioner was prosecuted before the Customs Authority as well as the Magistrate on the same facts, viz., that he, along with others, attempted to take out of India, Indian currency (as detailed in paragraphs 14 and 17 of the complaint of the Assistant Collector of Customs and Central Excise, Amritsar), in contravention of the law prohibiting such export.
It is not the case that the knowledge on the part of the petitioner of his illegal act is excluded from the first prosecution and included in the subsequent one.
In the circumstances, I cannot hold that the offence for which he was prosecuted by the Magistrate is different from that in regard to which he was prosecuted and punished by the Customs Authority.
In this view, the prosecution and punishment by the Magistrate 310 directly infringes the fundamental right under article 20 (2) of the Constitution.
No attempt has been made by the learned Solicitor General to contend that the offence under sections 23 and 23B of the Foreign Exchange Regulations Act for which the petitioner is convicted is an offence different from that for which he was prosecuted earlier under section 167(8) of the Act.
It is conceded that the decision in the writ petition covers the decision in the connected appeal also.
In the result, the writ petition and the appeal are allowed.
ORDER In view of the opinion of the majority, the Petition and the Appeal are dismissed.
| The two petitioners were apprehended while attempting to smuggle a huge amount of Indian and foreign currency and other contraband goods out of India and the Collector of Central Excise and Land Customs passed orders confiscating the seized goods and imposing heavy personal penalties on both of them under 275 section 167(8) of the Sea Customs Act.
On a subsequent complaint made by the Customs Authorities on the same facts, the petitioners were convicted and sentenced by the Additional District Magistrate to various terms of imprisonment under section 23, read with section 23B, of the Foreign Exchange Regulation Act, section i67(8I) of the Sea Customs Act and section 120B of the Indian Penal Code.
The Additional Sessions judge in appeal affirmed the said orders of conviction and sentences and the High Court refused to interfere in revision.
It was contended on behalf of the petitioners, who had, at an earlier stage, made an unsuccessful attempt to move this Court under article 32 and have the prosecutions quashed, that the orders of conviction and sentences passed on them by the Courts below infringed the constitutional protection against double jeopardy afforded by article 20(2) Of the Constitution.
Held, (Per Das, C. J., Bhagwati, B. P. Sinha and Wanchoo, Jj., Subba Rao, J., dissenting) that the contention was without substance and must be negatived.
In order to sustain a plea of double jeopardy and to avail of the protection of article 20(2) of the Constitution it was incumbent to show that (1) there was a previous prosecution, (2) a punishment and (3) that for the same offence, and unless all the three conditions were fulfilled the Article did not come into operation.
The word 'prosecution ' as used in that Article contemplated a proceeding of a criminal nature either before a court or a judicial tribunal.
Maqbool Hussain vs The State of Bombay, ; , relied on.
The insertion of section 187A into the Sea Customs Act by the amending Act of 1955, left no scope for doubt that the hierarchy of Authorities under that Act functioned not as Courts or judicial tribunals but as administrative bodies, even though in recording evidence or hearing arguments they acted judicially.
The words " offences " and " penalties " used by the Act could not have the same meaning as in Criminal Law and a penalty or confiscation ordered under section 167(8) of the Act could not be a punishment such as is inflicted by a Criminal Court for a criminal offence.
Sewpujanrai Indrasanrai Ltd. vs The Collector of Customs and others; , , referred to.
Nor were the Customs Authorities invested with the powers of a Criminal Court under the Schedule to section 167 and the procedure laid down by Ch.
XVII of the Act, and any orders passed by them either in rem or in personal, by way of confiscation of the goods or imposition of penalties on the person, could only be in the nature of administrative ones made in the interest of revenue and could not bar a criminal prosecution.
Morgan vs Devine, ; and United States of America vs Anthony La Franca, ; , considered.
276 The proceedings against the petitioners before the Collector of Customs under section 167(8) of the Sea Customs Act could.
not therefore, be a prosecution within the meaning of article 20(2) Of the Constitution and the petitioners were not put to double jeopardy.
Per Subba Rao, J.
The prosecution of 'the petitioners before the Magistrate and the punishment inflicted on them directly infringed article 20(2) of the Constitution.
There can be no inconsistency in an authority under an Act functioning in an administrative capacity in respect of certain specified duties while it acts as a judicial tribunal in respect of others, and the question as to which of them it discharges in a judicial capacity has to be decided on the facts of each case and in the light of well settled characteristics of a judicial tribunal.
Cooper vs Wilson, and Venkataraman vs Union of India; , , relied on.
Although this Court has held that the Sea Customs Autho rities in adjudging confiscation do not function as judicial tribunals but as mere administrative authorities, the question as to whether imposing personal penalties they act as judicial tribunals still remains open.
Maqbool Hussain vs The State.
of Bombay, ; and Sewpujanrai Indrasanrai Ltd. vs The Collector of Customs, ; , explained.
An examination of the entire scheme of the Sea Customs Act leaves no manner of doubt that the Customs Authorities act as judicial tribunals so far as offences under section 167 Of the Act are concerned.
The word 'prosecuted ' used in article 20(2) of the Constitution is comprehensive enough to include a prosecution before an authority other than a Magistrate or a Criminal Court, and the offences described in section 167 Of the Sea Customs Act are offences within the meaning of the General Clauses Act and the Indian Penal Code and the penalties prescribed therefor are nothing but punishments inflicted for those offences either by the Customs Authorities or the Magistrate.
The question of the identity of an offence has to be deter mined on the facts of each particular case and the real test is whether the previous prosecution and punishment were based on the same facts on which rested the subsequent prosecution and punishments
|
Summarize this legal judgement text concisely | ivil Appeal No 138 of 1955.
Appeal from the judgment and decree dated October 15, 1953, of the Mysore High Court at Bangalore in Regular Appeal No. 255 of 1950 51, arising out of the order dated September 18, 1950, of the Court of the District Judge, Bangalore, in Misc.
Case No. 39 of 1947 48.
G. Channappa, Assistant Advocate General, Mysore R. Gopala Krishnan and T. M. Sen, for the appellant ' A. V. Viswanatha Sastri, M. A. Rangaswami, K. R. Sarma and K. R. Choudhury, for the respondent.
November 7.
The Judgment of the Court was delivered by section K. DAS, J.
This appeal by the Special Land Acquisition Officer, Bangalore, has been brought to this Court on a certificate granted by the High Court of Mysore, and is from the decision of the said High Court dated October 5, 1953, in a regular appeal from an order made by the 2nd Additional District Judge, Bangalore, on September 18, 1950, on a reference under section 18 of the Land Acquisition Act (herein.
after referred to as the Act).
The facts so far as they are relevant to the appeal before us are these.
An area of about 51,243 squard 406 yards of land was acquired by Government under Notification No. M. 11054 Med.
80 45 25 dated April 16, 1946, for development of the Appiah Naidu Maternity Home at Malleswaram, Bangalore City, into a Maternity Hospital.
There were eight owners interested in the property acquired, out of whom two objected to the award made by the Special Land Acquisition Officer, now appellant before us.
One of these two was T. Adinarayana Shetty, a diamond merchant of Mysore City.
Originally, he was the respondent before us, and on his death his son and legal representative has been brought into the record as the sole respondent to this appeal.
The deceased respondent Adinarayana Setty (hereinafter called the respondent) was interested in 48,404 sq.
yards out of the total area, and it may be stated here that there is no dispute before us that out of the said 48,404 sq.
yards an area of about 3,000 sq.
yards consists of land which has been variously characterised as a depression or a pit or low lying land (called 'halla ' in the local vernacular language).
Out of the total amount of compensation awarded by the Special Land Acquisition Officer, a sum of Rs. 1,41,169/was awarded to the respondent.
The Special Land Acquisition Officer proceeded on the following basis for his award.
Firstly, he found that the land value in and around Bangalore City had increased in recent years owing to the war and the respondent had paid to the Deputy Commissioner, Bangalore District, a sum of money called a conversion fine for sanctioning a scheme of converting the land into non agricultural land.
Thereafter, a layout for building sites was prepared and approved by the Municipality and the res pondent sold a few of the sites shown in the layout to some purchasers.
This was done before the publication of the preliminary notification of acquisition; but the sale of further building sites was stopped after the said publication.
Secondly, the Special Land Acquisition Officer took into consideration the value of the sites sold by the respondent and came to the conclusion that Rs. 10/ per sq.
yard was the market value of the land in question.
He awarded to the respondent compensation for approximately 48,404 sq. yards at the 407 rate of Rs. 10/ per sq. yard, but after deducting therefrom an area of 26,248 sq. yards which, according to the Special Land Acquisition Officer, was required for making roads and drains as per the layout scheme.
The total amount thus calculated came to Rs. 2,21,563.
and odd and from this a sum of Rs. 98,807 was again deducted as representing the expenditure which would be required for making roads and drains.
The net amount was thus found to be Rs. 1,22,756 and odd and adding 15% as the statutory compensation payable to the respondent the total amount awarded by, the Special Land Acquisition Officer to the respondent, came to Rs. 1,41,169/ .
Against this award, the respondent raised an objection, and a reference was accordingly made to the District Judge of Bangalore under section 18 of the Act.
This reference was heard by the 2nd Additional District Judge who, by his order dated September 18, 1950, came to the following conclusions: (i) that the rate awarded by the Land Acquisition Officer at Rs. 10/ per sq.
yard was fair and should be,upheld; (ii) that a sum of Rs. 10,000/ for providing electric installation out of the sum of Rs. 98,807/ deducted by the Land Acquisition Officer from the compensation payable to the respondent should not be deducted; and (iii) that with regard to the area of the low lying.
land which I was completely excluded by the Land Acquisition Officer, the respondent should get at the rate of Rs. 3/ per sq. yard or approximately a sum of I Rs. 10,000/ .
In other words, the learned Additional District Judge increased the compensation in favour of the respondent by a sum of about Rs. 20,000/ .
Not being satisfied, the respondent preferred an appeal to the High Court of, Mysore.
The learned Judges of the High Court found that the proper compensation for the land,.
except the portion characterised as low lying, should be Rs. 13/8/per sq. yard and as to the low lying portion it should be reduced by Rs. 51 per sq.
yard inasmuch as a sum of Rs. 15,000/ was necessary, according to the 408 evidence given in the case, for filling it up; in other words, the High Court awarded compensation at the rate of Rs. 8/8/ per sq. yard for the low lying land.
The High Court also reduced the area which had to be deducted for making roads, etc., according to the layout scheme from 26,248 sq.
yards to 12,101 sq.
yards.
It also reduced the layout charges to Rs. 64,432/ .
The High Court added to the compensation a sum of Rs. 7,000/ as the value of a building which the respondent had constructed on one of the sites on the finding that the construction was made prior to the preliminary notification.
In this respect the High Court departed from the finding of the Land Acquisition Officer that the building was put up after the publicaion of the preliminary notification.
The total amount of compensation which the High Court awarded came to about Rs. 4,80,000 and odd.
As the judgment of the High Court was a judgment of reversal and the appellant felt dissatisfied with it, a certificate of fitness was asked for and was granted by the High Court on July 6, 1954.
The present appeal has been brought to this Court in pursuance of that certificate.
The appellant has confined his appeal to the following three points: (1) payment of compensation of a sum of Rs. 7,000/ for the building said to have been constructed before the publication of the preliminary notification; (2) payment of compensation at Rs.
,8/8/per sq. yard for the low lying land (halla); and (3) payment of compensation at Rs. 13/8/ for the remaining land after deducting the area for making roads and buildings.
We may state that there is no dispute before us now as to the area which should be so deducted and also as to the amount of layout charges, as the findings of the High Court on these two points nave not been challenged before us.
On behalf of the respondent our attention has been ' drawn to the decisions of the Privy Council in Charan Das vs Amir Khan (1), Narsingh Das vs Secretary of State for India (2) and Nowroji Bustomji Wadia vs (1) (1920) 47 I.A. 255.
(2) (1924) 52 I.A. 133.
409 Bombay Government (1).
On these decisions it is submitted by learned counsel that though section 26 of the Act was amended in 1921 by insertion of sub section
(2) which says that every award shall be deemed to be a decree ' and thus an appeal therefrom must be considered and determined in the same manner as if it is a judgment from a decree in an ordinary suit the established practice of the Privy Council has been not to interfere with a finding on the question of valuation, unless there is some fundamental principle affecting the valuation which renders it unsound.
The practice, it is stated, was based on two considerations: first, that the courts in India were more familiar with local conditions and circumstances on which the valuation depended and, secondly, the Privy Council found it necessary to limit the extent of the enquiry in order to spare the parties costly and fruitless litigation.
On behalf of the appellant it is submitted that this Court has no doubt adopted the practice that it will not ordinarily interfere with concurrent findings of fact, but this Court has no such established practice as was adopted by the Privy Council in valuation cases even where a difference of opinion has occurred between two courts upon the number of rupees per yard to be allowed for a plot of land.
He has further submitted that the reasons for the practice adopted by the Privy Council do not apply with equal force to this Court.
In view of the facts of this case and the opinion which we have formed after hearing learned counsel for both parties, we do not think it necessary to make any final pronouncement as to the practice which this Court should adopt in a valuation case where two courts have differed.
We are content to proceed in this case on the footing that we should not interfere unless there is something to show, not merely that on the balance of evidence it is possible to reach a different conclusion, but that the judgment cannot be supported by reason of a wrong application of principle or because some important point affecting valuation has been overlooked or misapplied.
(1) (1925) 52 I.A. 367.
52 410 We are satisfied that there is no error of principle or otherwise in the findings of the High Court as to the first two points urged in support of the appeal.
As to the construction of the building for which a compensation of Rs. 7,000 has been awarded, the clear finding of the High Court is that it was constructed prior to the preliminary notification.
It has been further stated before us that the building is in actual occupation of the medical department.
Learned counsel for the appellant has taken us through the evidence on the question of construction of the house and the application for a licence for building the said ' house which was made by the respondent to the Bangalore Munici pality.
We are unable to hold that that evidence has the effect of displacing the clear finding of the High Court.
As to the low lying land, we consider that the High Court has given very good reasons for its finding.
Admittedly, the area of the low lying land (halla) is about 3,000 sq.
yards.
The Land Acquisition Officer valued it at Rs. 3 per sq. yard.
A sum of Rs. 15,000 has been deducted from the compensation payable to the respondent on the ground that that amount will be required for filling up the low lying land and converting it into building sites.
Therefore, the position is that the respondent has not only been made to part with 3,000 sq.
yards of land at 3 per sq. yard, but he has also been made to pay Rs. 15,000 for filling up the land.
If these two figures are added, even then the market value of the land comes to about Rs. 8 per sq. yard.
This is so even if we do not follow the method adopted by the High Court that the sum of Rs. 15,000 for 3,000 sq.
yards gives an average of Rs. 5 per sq. yard and that amount should be deducted from the rate of Rs. 13 8 0 per sq. yard fixed as the proper compensation for the remaining land.
We are of the opinion that on the materials before us the value per sq. yard fixed by the High Court for the low lying land is fully justified even on adoption of the method suggested by learned counsel for the appellant.
Learned counsel for the respondent has referred us to the circumstance that some of the sales 411 of building sites which the respondent had made appertained to the low lying land and he has further emphasised the circumstance that just opposite the low lying land which is at the eastern end of the entire area, some houses had been built.
We have taken these circumstances into consideration, but do not think that the conclusion which learned counsel for the respondent wishes us to draw follows therefrom.
First of all, it is by no means clear that the sales of the building sites at the low rate of Rs. 6 8 0 or thereabout appertained to the low lying land only, and, secondly, the mere circumstance that some buildings have been made on land opposite the low lying lands but on the other side of the road, does not necessarily mean that the low lying lands are as valuable as the other land in the area.
We are therefore of the view that the compensation fixed by the High Court for the low lying land is not vitiated by any error of the kind which will justify our interference with it.
We now proceed to consider the third and main point urged on behalf of the appellant, namely, the rate of 13/8 per sq. yard for the other land in the area.
Learned counsel for the appellant has submitted before us that the High Court has committed two fundamental errors in arriving at this finding.
Furthermore, the High Court has been influenced by extraneous considerations such as the purpose for which the land was acquired, the report of certain medical authorities as to the unsuitability of the land for the purpose for which it was acquired, and the delay in putting the land to the use for which it was acquired.
We agree with learned counsel for the appellant that these were extraneous considerations which had no bearing on the question of valuation and the learned Judges of the High Court misdirected themselves as to the scope of the enquiry before them when they imported these considerations into the question of valuation.
We further think that the High Court committed an error of principle in arriving at the figure Rs. 13/8 and the error was committed by adopting a wrong method in ascertaining the market value of the land at the 412 relevant time.
It is not disputed that the function of the court in awarding compensation under the Act is to ascertain the market value of the land at the date of the notification under section 4(1) and the methods of valuation may be (1) opinion of experts, (2) the price paid within a reasonable time in bonafide transactions of purchase of the lands acquired or the lands adjacent to the lands acquired and possessing similar advantages and (3) a number of years ' purchase of the actual or immediately prospective profits of the lands acquired.
In the case under our consideration the High Court adopted the second method, but in doing so committed two serious errors.
There were altogether seven transactions of alienation made by the respondent.
One was a gift which must necessarily be excluded.
The earliest of the sales was in favour of Muniratham which was made on May 15, 1945.
Another was made on July 18, 1945.
This was in favour of Venugopal who was the husband of a grand daughter of the respondent.
Four other transactions in favour of Kapinapathy, Puttananjappa, Shamanna and Rajagopal Naidu were made in August, 1945.
The notification under section 4 of the Land Acquisition Act was made on October 4, 1945.
What the learned Judges of the High Court did was to take only four out of the aforesaid six transactions into consideration and then to draw an average price therefrom.
The learned Judges gave no sufficient reason why two of the transactions were left out.
In one part of their judgment they said : " The evidence discloses that the appellant has effected four sales about a couple of months prior to the date of preliminary notification and the rates secured by him are Rs. 12, 15, 14 and 7/8 which on calculation give an average of Rs. 12/2 per sq. yard ".
Why the transaction of May 15, 1945, which was at a rate of Rs. 6/8 per sq. yard only was left out it is difficult to understand.
Similarly, the transaction of July 18, 1945, was at the rate of Rs. 10 per sq. yard.
That also was left out.
We are of the view that this arbitrary selection of four transactions only out of six has vitiated the finding of the High Court.
If all the six transactions of sale are taken into consideration, the average rate comes to about Rs. 10/13 per sq. yard only.
Having arbitrarily discarded two of the transactions, the learned Judges of the High Court committed another error in taking a second average.
Having arrived at an average of Rs. 12/2 per sq. yard from the four transactions referred to above, they again took a second average between Rs. 15, which was the maximum price obtained by the respondent, and Rs. 12/2.
Having struck this second average, the learned Judges of the High Court arrived at the figure of Rs. 13/8.
No sound reasons have been given why this second average was struck except the extraneous reasons to which we have already made a reference.
It is obvious that the maximum price Rs. 15 per sq. yard had already gone into the average when an average was drawn from the four transactions.
It is difficult to understand why it should be utilised again for arriving at the market value of the land in question.
We are of the view that if the aforesaid two errors are eliminated, then the proper market value of the land in question is Rs. 11 only.
Learned counsel for the appellant has drawn our attention to the claim made by the respondent himself before the Land Acquisition Officer (exhibit 11).
The respondent had therein said: Hence, under the standing orders compensation has to be paid at rates for building land in the neighbourhood.
This rate ranges from Rs. 10 to Rs. 12, an average of Rs. 10 a sq. yard, as could be verified from entries in the local Sub Registrar 's Office and Bangalore City Municipal Office.
At any rate, I myself have sold in the course of this year some six sites out of the land proposed to be acquired for rates ranging from Rs. 7 to Rs. 15 or on an average of Rs. 10 per sq. yard.
At this rate the compensation amount will be Rs. 5,12,430 and adding the statutory allowance of Rs. 76,860 at 15 per cent.
on the compensation amount on account of the compulsory nature of the acquisition, the total cost of the land will be Rs. 5,89,290 or nearly six lakhs of rupees.
" 414 The learned Judges of the High Court took the aforesaid claim to mean that the average rate was Rs. 10 ,per sq.
yard, only if the entire area was taken into consideration; but the rate would be different if small building sites were sold according to a layout scheme.
It is worthy of note, however, that in his claim the respondent clearly stated that even as building land the average rate in the neighbourhood ranged from Rs. 10 to Rs. 12 per sq. yard and he had himself sold six building sites at an average rate of about Rs. 10 per sq. yard.
It is worthy of note that the six transactions to which the respondent referred were sales of small building sites.
It appears to us, therefore, that the High Court had in effect given the respondent a rate more favourable than what he had himself claimed.
We consider, therefore, that on a proper consideration of the materials in the record and after eliminating the two errors which the High Court had committed, the proper value of the land in question should be Rs. 11 per sq. yard.
The result, therefore, is that we allow this appeal to this limited extent only, namely, the order of the High Court will be modified by substituting the figure Rs. 11 per sq. yard for the figure Rs. 13/8 awarded by the High Court as compensation to the respondent for land other than the low lying land.
We maintain the order of the High Court that the parties will receive and pay costs in proportion to their success and failure, as now determined, in the courts below; but so far as the costs of this Court are concerned, the parties must bear their own costs in view of their divided success here.
Appeal partly allowed.
| Certain land belonging to the respondent was compulsorily acquired by the Government for a maternity hospital.
Most of the land consisted of building sites but there was a building on a small portion of the land and a portion was low lying land.
The Special Land Acquisition Officer held on the basis of the value of sites previously sold by the respondent, that the market value of the land was Rs. 10/ per sq. yard and awarded a sum of Rs. 1,41,169/ to the respondent as compensation.
He did not give any compensation for the low lying land or for the building.
Against this award the respondent raised an objection and a reference was made to the District judge.
The District judge accepted the rate of Rs. 10/ per sq. yard as fair, reduced the amount of deductions for providing electric installations by Rs. 10,000/ and allowed a sum of Rs. 10,000/ for the low lying area at the rate of Rs. 3/ per sq.
yard, thereby increasing the amount of compensation by Rs. 20,000/ .
Not being satisfied the respondent appealed to the High Court.
The High Court held that the rate of compensation for the land except the low lying portion, should be Rs. 13/8/ per sq yard and for the low lying portion it should be Rs. 8/8/ per sqyard.
It further awarded a sum of Rs. 7,000/ for the building.
In arriving at the figure of Rs. 13/8/ the High Court took into account only four sale transactions which had been made by the respondent at the rates of Rs. 12, I5, 14 and 7/8/ per sq. yard but did not take into consideration two other transactions which had been made by the respondent at the rates of Rs. 6/8/ and Rs. 10 per sq. yard.
It calculated the average of the four transactions to be Rs. 12/2/per sq. yard and then took a second average between Rs. 15/ , 405 which was the maximum price obtained by the respondent and RS.
12/2/ and arrived at the figure of Rs. 13/8/ .
The High Court was also influenced by considerations such as the purpose for which the land was acquired.
, the report of certain medical authorities as to the unsuitability of the land for the maternity hospital and the delay in putting the land to the use for which it was acquired.
Held, that with regard to the valuation of the land, other than the low lying portion, the High Court misdirected itself by taking into account extraneous considerations and had committed an error of principle in arriving at the figure of Rs. 13/8/ by adopting a wrong method of ascertaining the market value.
The High Court ought to have taken the average of all the six sale transactions and arrived at the proper valuation of Rs. 11/. per sq. yard.
There was no justification for ignoring two of the sale transactions or for taking a second average.
With respect to the compensation for the low lying land and the building there was no error of principle or otherwise in the findings of the High Court and no interference was called for.
|
Summarize this legal judgement text concisely | Appeals Nos. 271 272 of 1955.
Appeal by special leave from the judgment and order dated June 19, 1953, of the Calcutta High Court in Income tax Reference Nos. 6 & 7 of 1950.
A.V. Viswanatha Sastri, A. K. Dutt, section K. Kapur and Sukumar Ghose, for the appellant.
C.K. Daphtary, Solicitor General of India, R. Ganapathy Iyer, R. H. Dhebar and D. Gupta, for the respondent.
November 13.
The Judgment of the Court was delivered by VENKATARAMA AIYAR, J.
The appellant was a Hindu undivided family carrying on business as piecegoods merchants in the city of Calcutta.
The present proceedings relate to the assessment of its income for the year 1946 47, the previous year thereto being June 12, 1944, to April 24, 1945.
In the course of the assessment, the appellant filed a petition under section 25 A of the Incometax Act, 1922, claiming that there had been a partition in the family on April 24,1945.
On May 27,1945, the In.
come tax Officer enquired into both these matters, the factum of partition and the quantum of income charge.
able to tax, and pronounced orders thereon on June 30, 1945.
On the petition under section 25 A, he held that the partition was true, and that the family had become divided into five groups.
As regards the income assessable under section 23, the dispute related to six sums aggregating to Rs. 2,30,346 shown in the accounts as the sale proceeds of ornaments.
The case of the appellant with reference to these sums was that at the partition the jewels of the family were sold in six lots, that the price realised therefrom was invested in the business, and that the credits in question related thereto.
The Income tax Officer declined to accept this explanation.
He observed that while the books of the appellant 417 showed that what was sold was ornaments, the accounts of Chunilal Damani to whom they were stated to have been sold, showed sale of gold.
He also pointed out that while the weight of the ornaments according to the partition agreement, exhibit A, was 3422 tolas, the weight of gold which was actually sold to the purchaser was 3133 tolas.
The explanation given by the appellant for this discrepancy was that the jewels in question had come down to the family through several generations, and were not pure.
The Income tax Officer rejected this explanation, because he held that the weight which was actually deducted for impurities in the accounts of the purchaser was almost negligible, and that what was sold was thus pure gold and not gold in old family jewels.
He also remarked that the sales were in round figures of 500 tolas, and that "if the assessee had been taking old ornaments broken or unbroken for sale it is inconceivable that on three occasions out of six he took gold weighing 500 tolas in round figure." He also referred to the fact that there was no list of the family jewels, and that there was nothing in the family accounts to show what jewels were held by the family.
He accordingly held that the story of sale of family jewels was not true, and that the sum of Rs. 2,30,346 represented concealed profits of the business, and he included the said amount in the taxable income.
He also followed it up by an order imposing tax on the appellant under the Excess Profits Tax Act.
The appellant took both these orders in appeal to the Appellate Assistant Commissioner who again went into the matter fully, and observed that the appellant had been changing his version as to the true character of the sales from time to time.
Dealing with the discrepancy of 289 tolas between the weight shown in the partition agreement, exhibit A, and that appearing in the accounts books of Chunilal Damani, he remarked that while the explanation of the appellant before the Income tax Officer was that it was due to alloy and brass in the jewels, before him the position taken up was that it was due to pearls and stones which 53 418 had been removed from the jewels, and that the gold contained in the jewels was pure gold.
He did not accept this explanation as, in his opinion, the jewels which were stated to have been in existence for three or four generations should have contained much more of alloy than was shown in the accounts of the purchaser.
He also considered that the sale of gold in round figures of 250 or 500 tolas was a circumstance which threw considerable doubt as to the truth of the appellant 's version.
In the result, he confirmed the findings of the Income tax Officer, and dismissed the appeals.
Against these orders, the appellant appealed to the Appellate Tribunal.
There, he sought to rely on a certain proceedings book as showing that the family jewels were really broken up, and that what was sold to Chunilal Damani was the gold thus separated.
As this proceedings book forms the real sheet anchor of the appellant 's contention before us, it is necessary to refer to the facts relating thereto in some detail.
On February 20, 1945, the members of the family entered into an agreement, exhibit A, to divide their joint proper.
ties among the five branches, of which it was constituted.
In sch.
B to this document are set out the jewels to be divided, and their total weight is, in round figure, 3422 tolas.
Then we have the proceedings book, and that purports to be a record of the decisions taken by the members of the family from time to time for implementing exhibit A.
The minutes of the meeting held on February 23, 1945, show that the pearls and stones imbedded in the jewels were to be removed and divided among the members, and that a goldsmith called Inderban was engaged for the purpose of breaking up the jewels.
Then we have the minutes of a meeting held on February 28, 1945, and therein, it is recited that the weight of the pearls, stones and copper removed was, again in round figure, 289 tolas, and deducting this out of 3422 tolas being the weight of the jewels set out in exhibit A, the gold which was available for partition was 3133 tolas.
It is recorded that this quantity should be sold in the market and the sale proceeds credited in the capital accounts of the business.
And then we have the last of the proceedings dated April 21, 419 1945, which record that gold weighing 3133 tolas was sold and the price credited in the accounts.
Now, if these minutes are genuine and give a correct picture as to what really took place, they would go a long way to support the version given by the appellant as to how he came by the sums making up a total Rs. 2,30,346.
Quite naturally, therefore, the appellant applied to the Tribunal to receive the proceedings book in evidence, and the ground given in support of the application was that it had been filed before the Income tax Officer but had not been considered by him.
Then the question was raised as to whether the proceedings book was, in fact, produced before the Incometax Officer.
The argument of the appellant was that the decision taken at the meeting dated April 21, 1945, which forms the concluding portion of the book had been translated into English at the instance of the Income tax Officer, the original being in Hindi, that the said translation was marked exhibit B and contained the endorsement of the Officer " Original produced ", and that accordingly the book must have been produced before the Officer.
But the Tribunal was not impressed by this argument.
It observed that the book iselft had not been initialled by the Officer, and that though the minutes of the meeting dated April 21, 1945, were genuine, there was no certainty that when it was shown to the Income tax Officer it was contained in the book now produced, that such minutes could have found a place in another book as well, and that, therefore, the book which was sought to be admitted before it in evidence was not proved to be the book which was produced before the Officer.
It was also of the opinion that the minutes of the previous meetings could not have been shown to the Officer.
It accordingly refused to receive the book in evidence, and relying on the other circumstances mentioned in the order of the Income tax Officer and the Appellate Assistant Commissioner, it held that the sum of Rs. 2,30,346 was not the proceeds of the family jewels sold but secret profits made by the appellant in business.
Another contention raised by the appellant before 420 the Tribunal was that in the proceedings under section 25A, the Income tax Officer had held, after making enquiry, that the partition set up by it was true, and that as according to the appellant, the partition consisted in the division, inter alia, of family jewels weighing 3422 tolas, the Income tax Officer must be held to have decided that the family was in possession of the jewels mentioned in exhibit A and had divided them in the manner set out in exhibit B, and that as that order had become final, it must conclude the present question in favour of the appellant.
The Tribunal repelled this contention on the ground that the order under section 25A only decided that there was partition in the family, and that it had no bearing on the issues which arose for decision in the assessment proceedings.
In the result, both the appeals were dismissed.
Pursuant to an order of the High Court of Calcutta dated December 7, 1950, passed under section 66(2) of the Act, the Tribunal referred the following questions for its Opinion: (1)" Whether the Income tax Appellate Tribunal was bound by the findings of fact of the Income tax Officer relating to the nature and division of the assets of the joint family in question which he arrived at in his enquiry under Section 25A(l) of the Indian Income tax Act ? (2)Whether there was any material or evidence upon which the taxing authorities could legally hold that the amount of Rs. 2,30,346 (Rupees two lakhs thirty thousand three hundred and forty six) represented undisclosed profits of the accounting year in question ? " The reference was heard by Chakravarti, C. J., and Lahiri, J., who by their judgment dated June 19, 1953, answered the first question in the negative and the second in the affirmative.
The appellant then filed an application under section 66A(2) for leave to appeal to this Court, and that having been dismissed, has preferred the present appeals on leave granted by this Court under article 136.
Mr. Viswanatha Sastri, learned counsel for the appellant, raised the following contentions: 421 (1) In view of the order of the Income tax Officer under section 25A, it was not open to the Department to contend that the sum of Rs. 2,30,346 does not represent the value of family jewels.
(2)The finding of the Income tax authorities that the said amount represents concealed profits of business is not supported by legal evidence and is, in any event, perverse.
(3)There is no evidence that the amount in question represents profits of business, and it was therefore not chargeable to tax under the provisions of the Excess Profits Tax Act.
(1)On the first question, the appellant relied on certain observations in the order of the Income tax Officer passed under section 25A as amounting to a decision that the family had the jewels mentioned in exhibit A, and that what was actually divided was only the price received therefor.
Now, when a claim is made under section 25A, the points to be decided by the Income tax Officer are whether there has been a partition in the family, and if so, what the definite portions are in which the division had been made among the members or groups of members.
The question as to what the income of the family assessable to tax under section 23(3) was, would be foreign to the scope of an enquiry under section 25A.
That section was, it should be noted, introduced by the Indian Income tax (Amendment) Act, 1928 (3 of 1928), for removing a defect which the working of the Act as enacted in 1922 had disclosed.
Under the provisions of the Act as they stood prior to the amendment, when the assessee was an undivided family, no assessment could be made thereon if at the time of the assessment it had become divided, because at that point of time, there was no undivided family in existence which could be taxed, though when the income was received in the year of account the family was joint.
Nor could the individual members of the family be taxed in respect of such income as the same is exempt from tax under section 14(1) of the Act.
The result of these provisions was that a joint family which had become divided at the time of the assessment escaped tax altogether.
To 422 remove this defect, section 25A enacted that until an order is made under that section, the family should be deemed to continue as an undivided family.
When an order is made under that section, its effect is that while the tax payable on the total income is apportioned among the divided members or groups, all of them are liable for the tax payable on the total income of the family.
What that tax is would depend on the assessment of income in proceedings taken under section 23, and an order under section 25A would have no effect on that assessment.
It is in this context that we must read the observations in the order under section 25A relied on for the appellant.
In fact, that order does not expressly decide that the family had the jewels mentioned in exhibit A, and that they were converted into cash as claimed by the appellant.
Nor could such a finding be implied therein, when regard is had to the scope of the proceedings under section 25A and to the fact that the order under section 23(3) holding that the sum of Rs. 2,30,346 did not represent the value of the family jewels sold was passed on the same date as the order under section 25A and by the very same officer.
(2)The next question is and that is what was really pressed before us whether the sum of Rs. 2,30,346 represents the price of family jewels sold or whether it is concealed business profits.
That clearly is a question of fact the finding on which is open to attack in a reference under section 66 only if it could be shown that there is no evidence to support it or that it is perverse.
Now, the contention of Mr. Viswanatha Sastri for the appellant is that the finding that it is concealed profits was reached by the Income tax Officer and by the Appellate Assistant Commissioner by ignoring the very material evidence furnished by the proceedings book, and that the Appellate Tribunal had erroneously refused to receive the book in evidence.
This contention raises two controversies: (i) Was the proceedings book which was produced before the Tribunal the book which was produced before the Income tax Officer ? (ii) If it was, were the minutes of the meeting prior to April 21, 1945, relied on by the appellant before the Income tax Officer ? Whatever 423 view one might be inclined to take on the former question, so far as the latter is concerned, it is perfectly plain that they were not.
On May 27, 1947, the enquiry was held on both the petitions under s, 25A and on the quantum of income assessable to tax under section 23(3).
Exhibit D is an extract from the order sheet of the Income tax Officer, and it runs as follows: "Regarding credits amounting to Rs. 2,30,346 6 3 in the a/c.
Udoyaram Bhaniram the representatives state that besides the evidence produced, which are noted below, they are not in a position to produce any further evidence, (i) Account books of the assessee containing the details of the amounts aggregating the aforesaid sum.
(ii) Sale statements rendered by Chunilal Damani,copies of which have been filed.
(iii)Roker of Chunilal Damani containing entries for purchase of gold, sold by the assessee family along with Surajrattan Bagri the accountant of Chunilal Damani.
(iv) Statement of Lakhmichand Bhiwaniwalla and Pannalal Bhiwaniwalla, member of the assessee family.
" This statement is signed by the counsel for the appellant.
It is clear from the above that the proceedings book was not relied on as evidence on the character of the receipts making up the sum of Rs. 2,30,346.
The fact appears to be that the appellant produced the proceedings book in support of his petition under section 25A for the purpose of establishing that there was a completed partition, and relied only on the minutes of the meeting held on April 21, 1945, in proof thereof, and that is why that alone was translated in English and marked as exhibit B. It is also to be noted that there is no reference in the order of assessment by the Income tax Officer under section 23(3) to the minutes of the meetings prior to April 21, 1945, and that they were not even translated, as was the record of the meeting dated April 21, 1945.
The obvious inference is that they were not relied on by the appellant, and were therefore not considered by the Officer.
It is also 424 significant that the order of the Income tax Officer refers to sale of ornaments broken or unbroken.
The story that the gold which was separated from the jewels after removing the pearls and stones was melted and sold in quantities of 250 or 500 tolas, which was the argument pressed before us, was not put forward before him.
It is argued that in the appeal against the order of the Income tax Officer the ground was definitely taken that the proceedings book had been produced before him, and that it was also prominently mentioned in a petition supported by affidavit filed by the appellant.
But the order of the Appellate Assistant Commissioner does not deal with this matter either, and it is inconceivable that he would have failed to consider it if it had been pressed before him.
It is also to be noted that the appellant who had obtained a return of the proceedings book from the Income tax Officer did not file it before the Appellate Assistant Commissioner, nor did he move for its admission in evidence.
Apart from taking the grounds to which we were referred, the appellant appears to have presented his case before the Appellate Assistant Commissioner precisely on the same lines on which lie pressed it before the Income tax Officer.
In view of these facts, we are unable to hold that in refusing to admit the proceedings book as evidence in the appeal, the Appellate Tribunal acted perversely or unreasonably.
Indeed, counsel for the appellant did not contend in the High Court that the Tribunal had acted illegally or unreasonably in refusing to admit the proceedings book in evidence.
That being so, it cannot be said that the finding given by the Tribunal on an appreciation of the facts and circumstances already set out is unsupported by evidence or is perverse.
The position may thus be summed up: In the business accounts of the appellant we find certain sums credited.
The explanation given by the appellant as to how the amounts came to be received is rejected by all the Income tax authorities as untenable.
The credits are accordingly treated as business receipts which are chargeable to tax.
In V. Govindarajulu 425 Mudaliar vs The Commissioner of Income tax, Hyderabad (1), this Court observed: " There is ample authority for the position that where an assessee fails to prove satisfactorily the source and nature of certain amounts of cash received during the accounting year, the Income tax Officer is entitled to draw the inference that the receipts are of an assessable nature.
" That is precisely what the Income tax authorities have done in the present case, and we do not find any grounds for holding that their finding is open to attack as erroneous in law.
(3)Lastly, the question was sought to be raised that even if the credits aggregating to Rs. 2,30,346 are held to be concealed income, no levy of excess profits tax can be made on them without a further finding that they represented business income, and that there is no such finding.
When an amount is credited in business books, it is not an unreasonable inference to draw that it is a receipt from business.
It is unnecessary to pursue this matter further, as this is not one of the questions referred under section 66(2).
In the result, the appeals fail and are dismissed with costs.
Appeals dismissed.
(1) , 810.
| For the assessment year 1946 47 the appellant, a Hindu undivided family carrying on business, filed a petition before the income tax Officer, under section 25A of the Indian Income tax Act, 1922, claiming that there had been a partition in the family on April 24,1945.
As regards the income assessable under section 23 Of the Act, the appellant 's case regarding six sums aggregating to Rs. 2,30,346 shown in the accounts as the sale proceeds of ornaments, was that at the partition the jewels of the family were sold and that the price realised therefrom was invested in the business.
The Income tax Officer held that the partition was true and that the family had become divided into five groups, but as regards the amount of Rs. 2,30,346 aforesaid he rejected the explanation given by the appellant as to how the amount came to be received and held that the amount was not the proceeds of the family jewels sold but represented concealed profits of the business.
He accordingly included the said amount in the taxable income.
The appellant 's contentions, inter alia, before the Appellate Tribunal were (1) that the order passed under section 25A of the Act by the Income tax Officer must be held to have decided the factum of a partition in the family as well as the 'possession and division of the jewels, as set up by the appellant, and that it was not open to the Department to contend that the amount in question did not represent the value of the family jewels; and (2) that, in any case, there was no evidence to show that the amount represented undisclosed profits.
Held, that when a claim is made under section 25A of the Indian Income tax Act, 1922, the points to be decided by the Incometax Officer are whether there has been a partition in the family, and, if so, what the definite portions are in which the division had been made among the members or groups of members.
The question as to what the income of the family assessable to tax under section 23(3) was, would be foreign to the scope of an enquiry under section 25A, and any finding thereon would not be conclusive in assessment proceedings under section 23.
416 Held, further, that the assessee in the present case having failed to explain satisfactorily the truth of what is a credit in business accounts, the Income tax Officer was entitled to draw the inference that the amount credited represents in reality a receipt of an assessable nature.
|
Summarize this legal judgement text concisely | 230 239, 241, 249 251, 256, 257, 290, 303, 306 349, 351, 352, 355 357 of 1955 and Nos. 33 & 36 of 1956.
Petitions under Article 32 of the Constitution of India.
480 Achhru Ram and Naunit Lal, for the petitioners in Petitions Nos. 239, 241 & 251 of 1955.
Naunit Lal, for the petitioners in Petitions Nos. 249 & 250 of 1955.
B.D. Sharma and K. L. Mehta, for the petitioners in Petitions Nos. 290, 303, 306 349, 351, 355 357 of 1955 and 36 of 1956.
B. D. Sharma, for the petitioner in Petition No. 33 of 1956.
K. L. Mehta, for the petitioner in Petition No. 352 of 1955.
I. N. Shroff, for the petitioners in Petitions Nos.
230 238, 256 257 of 1955.
H. N. Sanyal, Additional Solicitor General of India, M. N. Kaul and T. M. Sen, for the respondents.
November 14.
The Judgment of the Court was delivered by WANCHOO, J.
These sixty nine petitions under article 32 of the Constitution by various land owners in the former State of Ajmer attack the validity of the Ajmer Abolition of Intermediaries and Land Reforms Act, 1955 (Ajmer III of 1955) (hereinafter called the Act).
The petitions disclose a large number of grounds on which the validity of the Act is impugned; but learned counsel, Mr. Achhru Ram and Mr. B. D. Sharma, appearing for various petitioners, have confined their arguments only to certain grounds raised in the peti tions.
We propose, therefore, to consider only the grounds urged before us.
The Act was passed by the Ajmer Legislative Assembly and received the assent of the President on May 29, 1955.
Section 4 of the Act provided for vesting of all estates held by intermediaries, as defined in the Act, in the State Government from a date to be notified.
The Act came into force on June 23, 1955, and August 1, 1955, was notified as the date on which the estates held by intermediaries would vest in the State Government.
The present petitions followed on the fixing of this date.
It is not disputed that the Act is protected under article 31 A(l)(a) of the Constitution inasmuch as it is a 481 piece of legislation for acquisition by the State of any estate or of any rights therein.
The argument is that in spite of this protection, either the whole Act or certain provisions of it are invalid, for reasons urged by learned counsel on behalf of the petitioners.
Mr. Achhru Ram attacks only sections 8 and 38 of the Act.
Mr. Sharma attacks the competency of the Ajmer legislature to pass the Act and also urges that in any case it does not apply to the case of jagirdars, one of whom is a petitioner before us in Petition No. 33 of 1956.
These four are the only grounds that have been urged before us, and we shall deal with them seriatim.
Re. section 8.
Section 8 is in these terms " Where an intermediary has on or after the 1st day of June, 1950, (a) granted a lease of any land in the estate or any part thereof for any non agricultural purposes other than mining for a period of three years or more; or (b) granted a lease or 'entered into a contract relating to any forest, fishery or quarry in his estate for a period of three years or more ; Or (c)granted a lease for the cultivation of any area of bir or pasture or waste land ; and the Collector is satisfied that such lease or contract was not made or entered into in the normal course of management but in anticipation of legislation for the Abolition of Intermediaries, the Collector may, subject to any rules made under this Act, by order in writing, cancel the lease or the contract as the case may be." It provides for cancellation of certain leases granted on or after June 1, 1950, where the lease is for a period of three years or more with respect to matters dealt with in cls.
(a) and (b) and where the lease is for any period in respect of matters dealt with in cl.
The Collector has been given the power to cancel such leases if they are not, made in the normal course of management but in " anticipation of legislation for abolition of intermediaries.
The argument is that 61 482 there can be no retrospective cancellation of leases granted at a time when the land owner had a right to dispose of his property as he liked under article 19(1)(f) and there was no restriction on such right.
It is said that in certain contingencies the cancellation of a lease might expose the land owner to the risk of paying compensation to the lessee, particularly in cases where the land owner might have realised the entire lease money in one lump sum for a lease of more than three years ' duration.
We are of opinion that there is no force in this contention.
The legislature was certainly competent, under entry 18 of List 11 of the Seventh Schedule to the Constitution relating to Land, to make this provision.
It cannot be disputed that the legislature has power in appropriate cases to pass even retrospective legislation.
Provisions for cancellation of instruments already executed are not unknown to law; for example, the Insolvency Acts provide for setting aside transfers made by insolvents under certain circumstances.
Therefore, the Ajmer Legislature certainly had the power to enact such a provision, and in the circumstances in which this provision has been made in the Act, it cannot be said that it is not protected under article 31 A.
The provision is not an independent provision; it is merely ancillary in character enacted for carrying out the objects of the Act more effectively.
The intention of the legislature was to give power to the Collector after the estates vested in the State Government to scrutinise leases of this kind made after June 1, 1950, which was apparently the date from which such legislation was under contemplation and to see whether the leases were such as a prudent land owner would enter into in the normal course of management.
Such leases would be immune from cancellation ; but if the Collector found that the leases were entered into, not in the normal course of management but designedly to make whatever the land owners could before the estate came to be transferred to the State Government, he 'Was given the power to cancel the same, as they would obviously be a fraud upon the Act.
Such, cancellation would subserve the purposes of the Act, and 483 the provision for it would therefore be an integral part of the Act, though ancillary to its main object, and would thus be protected under article 31 A (1)(a) of the Constitution.
Re. section 38.
Section 38 reads as follows Notwithstanding any agreement, usage, decree or order of a court or any law for the time being in force, the maximum rent payable by a tenant in respect of the land leased to him shall not exceed one and half times the revenue payable in respect of such land.
" This section provides for fixing the maximum rent at fifty per cent.
above the land revenue, and it is urged that this is an unreasonable restriction on the right of the land owner to let his holding.
The object of this legislation is to do away with intermediaries, and for that reason the estates held by intermediaries have been ' made to vest in the State Government tinder section 4.
Chapter VI of the Act, however, provides for allotment of lands for personal cultivation to intermediaries whose estates have been taken over upto a certain limit and the intermediaries who have been allotted lands under section 29 of the Act are called Bhuswamis or Kashtkars according to the nature of the lands allotted to them; (see section 30).
Bhuswamis and Kashtkars hold land directly from the Government and pay revenue to the Government; (see section 32).
The intention of the Act, therefore, is that intermediaries who have been allotted lands should cultivate them personally.
But section 37 permits Bhuswamis to let the whole or any part of the land allotted to them, while Kashtkars are forbidden from letting any part of their land except in certain circumstances when they are suffering from some disability.
In order, however, that the main object of the Act (namely, that the land should be cultivated by the person to whom it is allotted and that there should be no rackrenting) is attained, section 38 has been provided fixing the maximum rent at 50 per cent.
above the land revenue.
Thus the profit which a Bhuswami 484 can make by letting his land is so reduced compared to what he would earn if he cultivated it himself as to discourage him from letting the land and becoming a. new kind of intermediary.
Section 38, therefore, is another ancillary section, like section 8, and is meant to subserve the purposes of the Act, namely, the abolition of all intermediaries and encouragement of self cultivation of the land.
We are, therefore, of opinion that section 38 is also protected under article 31 A(l)(a) of the Constitution as an ancillary provision necessary for the purposes of carrying out the objects of the Act.
The competency of the Ajmer Legislation.
The argument in this behalf is put in this way.
The Act is a piece of legislation for the acquisition of estates.
Before the Constitution (Seventh Amendment) Act, 1956, came into force on November 1, 1956, there were two entries relating to acquisition of property in the Seventh Schedule, namely, entry 33 of List 1 (acquisition or requisitioning of property for the purpose of the Union) and entry 36 of List II(acquisition or requisitioning of property, except for the purposes of the Union, subject to the provisions of entry 42 of List 111).
The argument continues that the Act was passed by the Ajmer legislature under the power it was supposed to have under entry 36 of List 11 read with section 21 of the Government of part C States Act, 1951 (XLIX of 1951).
But entry 36 of List 11 only gives power to the State legislature to acquire property for purposes other than the purposes of the Union.
As, however, the property aquired under the Act vested in the President and therefore the Union after its acquisition, the Act was really for the acquisition of property for the purposes of the Union and could not have been passed by the Ajmer legislature.
In support of this argument Mr. Sharma referred us to various Articles of the Constitution in Part XII thereof relating to Finance, Property, Contracts and Suits, and also articles 73 and 239.
He contends that these provisions show that before the Government of Part C States Act was passed, the legislative power with respect to the areas comprised in Part C States 485 was in the Union which also through the President had executive power over the subjects over which the Parliament could legislate with respect to what were Part C States.
After the passing of the Government of Part C States Act, by virtue of the power conferred on Parliament by article 240, there was no change so far as the executive power in Part C States was concerned and it is still vested in the President.
Any property acquired for the purposes of Part C States vests in the President or the Union.
Therefore, according to him, the Ajmer legislature would have no power to enact a law for acquiring estates under entry 36 of, List 11; for the property so acquired would really be for the purposes of the Union and no law under that, entry could be made for acquiring property for the purposes of the Union.
We are of opinion that the argument, though plausible, must be rejected.
Assuming, without deciding.
that even after the passing of the Government of.
Part C States Act, any property acquired for a Part C State vested in the Union Government by virtue of the provisions of Part XII of the Constitution, the question still remains whether the Ajmer legislature could make a law under entry 36 of List II acquiring estates even though the estates when acquired may legally vest in the Union Government.
Now, entry 33 of List I refers to acquiring of property for the purposes of the Union.
It does not lay down in whom the property should vest after it has been acquired.
Similarly, entry 36 of List 11 speaks of acquisition of property, except for the purposes of the Union, and makes no mention in whom the property should vest after it has been acquired.
Entry 42 of List II which deals with compensation for such acquisition as well as for acquisition for any other public purpose, also does not speak where the property should vest after acquisition.
It is not necessary, therefore, to consider where the property should vest after acquisition in deciding the ambit of the competence of the legislature under those two entries.
The key to the interpretation of these two entries is not in whom the property would vest after it has been acquired 'but whether the 486 property is being acquired for the purposes of the Union in one case or for purposes other than the purposes of the Union in the other.
It is in this context that the competency of the Ajmer legislature to enact this law under entry 36 of List 11 is to be judged.
Section 21 of the Government of Part C States Act created a Legislative Assembly for Ajmer and gave that legislative assembly power to make laws for the whole or any part of the State with respect to any of the matters enumerated in List II or List III of the seventh Schedule to the Constitution.
Ajmer legislature was thus given power to pass laws with respect to acquisition of property for purposes other than those of the Union.
In other words, it bad the power to make law to acquire property for the purposes of the State of Ajmer or for any other public purpose.
The question then is whether the Act was passed acquiring estates in the State of Ajmer for the purposes of the State of Active of where the title may vest.
The answer to this question to our mind can only be one; the Act was passed by the State legislature for acquiring estates within the State and it could only have been for the purposes of the State.
There is no reason to limit the meaning of these general words, namely, 'the purposes of the State ', by importing in them the idea of where the property would vest after its acquisition.
That the purposes for which the estates were acquired were purposes of the State of Ajmer would be quite clear from the fact that now that the State of Ajmer is part of the State of Rajasthan, the estates acquired under the Act have gone to Rajasthan and have not been kept by the Union on the ground that the title vested in the Union.
Therefore, as the estates were acquired in this case for the purposes of the State of Ajmer the Act would be within the competency of the Ajmer legislature as it falls within the plain words of entry 36 of List 11.
Jagirdars.
The contention on behalf of the petitioner in petition No. 33 of 1956 is that under the Act the word intermediary includes a jagirdar.
The Act also provides that the definitions in the Ajmer Tenancy and Land 487 Records Act, 1950 (Ajmer XLII of 1950), will be imported where the words used in it are not defined.
The word I jagirdar is defined in the Ajmer Tenancy and Land Records Act as a person to whom the revenue of any land has been assigned under a sanad issued by the Chief Commissioner before the commencement of the Ajmer Land and Revenue Regulation, l877 ; (see section 2 (15) ).
It is not in dispute that a sanad was issued to a predecessor of the petitioner before 1877 ; but it is urged that a jagirdar is merely the assignee of land revenue and so far as that assignment is concerned it may be said to have been acquired under the Act.
But the petitioner besides being an assignee of land revenue is also owner of land and that interest of his has not been acquired under the Act.
We are of opinion that there is no force in this argument.
The word I estate ' is defined in section 2(v) of the Act as having the same meaning as assigned to it in the Ajmer Land and Revenue Regulation, 1877.
The Ajmer Regulation does not define the word 'estate ' as such, but it has defined the word ' Malguzar ' as a person liable under section 64 for payment of the revenue assessed upon an estate, under section 2(d).
Further, section 64 provides that all persons who are bound by the agreement prescribed by section 61 and their successors ininterest shall, while they continue to be owners of land in the Estate to which such agreement relates, be jointly and severally liable for the payment of the whole amount of revenue assessed upon such estate.
The Ajmer Regulation also defines particular types of estates like ' Istimrari Estate ' and 'Bhum ' but the general meaning of the word 'estate ' under the Ajmer Regulation is an area of land separately assessed to revenue, which is payable by the holder of the estate.
I Intermediary ' as defined in section 2 (viii) of the Act is a holder of an estate and includes a jagirdar.
Under section 4 all the estates held by intermediaries Vest in the State Government on the issue of a notification.
Therefore, if the jagirdars are intermediaries, that is holders of estates, their estates will vest in the State Government under section 4 of the Act.
The distinction which the learned counsel for this petitioner draws between the 488 interest of the jagirdar as jagirdar and as land owner is in our opinion wholly unfounded.
A perusal of annexures B, C and D, filed by the.
petitioner himself, would make this clear.
Anexures B and C are sanads with respect to the jagirs held by the petitioner.
Entry in the remarks column of annexure IS begins with the words " Grant of this estate lasts. ".
Similarly, in annexure C the opening words in the remarks column are " The Grant is to the Dudhadhari for the time being.
No part of the estate is transferable by sale or mortgage. ".
Therefore, the grants themselves designated these jagirs as estates.
They were assessed to revenue, which was, however, remitted and the estates thus came to be known as revenue free jagirs and the estate holder was designated as jagirdar.
It was because of this remission of the land revenue that the word I jagirdar ' was defined in the Ajmer Tenancy and Land Records Act, 1950, as assignee of land revenue.
Annexures B and C also show that when the grants were made before 1877 a large part of the area covered by the grant was uncultivated.
Annexure D shows that disputes arose between the jagirdars and the Biswedars in these jagirs about these uncultivated lands, and one such dispute was decided as late as 1954.
In that judgment (annexure D) history of jagir tenure was traced and it was held that the jagirdar was the owner of uncultivated land in his jagir and not the Biswedar.
Therefore, the distinction which has been drawn by the learned counsel between the jagirdar as an assignee of land revenue based on the definition in the Ajmer Tenancy and Land Records Act, 1950, and the same person as the land owner is unfounded.
It appears that though the jagirdar may have been defined as assignee of land revenue because of the peculiar fact that in the case of a jagirdar there had been remission of land revenue by sanads granted before 1877, he was the proprietor of his jagir and the grantee of the estate given to him as jagir There is no question, therefore, of separating the interest of jagirdar as the assignee of land revenue from, his interest as the holder of jagir estate by virtue of a grant before 1877.
The petitioner therefore in petition 489 No. 33 of 1956 is the holder of the jagir estate and therefore his entire interest in the estate is liable to resumption under the Act.
In the Ajmer Regulations, (Vol.
H to L) at pp.
564 6, these two estates have been considered and their history is given, and they are called jagirs.
The history of jagirs in Rajasthan was considered by this Court in Thakur Amarsinghji vs State of Rajasthan (1), at p. 330 onwards, and the word I jagir ' was hold to connote all grants which conferred on the grantees rights in respect of land revenue.
In the case of these two jagirs also, as annexures B and C show, land revenue was remitted and they were granted as estates for particular purposes.
They are, therefore, clearly estates in view of the origin of the title of the holder of these estates who is called a jagirdar and therefore the State could take them over under section 4 of the Act.
There is no force in any of the points raised on behalf of the petitioners, and the petitions fail and are hereby dismissed with one set of costs to the contesting respondent.
Petitions dismissed.
| Section 4 Of the Ajmer Abolition of Intermediaries and Land Reforms Act, 955, provided for vesting of all estates held by intermediaries, as defined in the Act, in the State from a date to be notified, and the petitioners who were affected thereby filed petitions under article 32 Of the Constitution of India challenging the validity of the Act and, in particular sections 8 and 38 of the Act on the grounds that (1) entry 36 of List 11 of the 479 Seventh Schedule to the Constitution gave power to the State legislature to acquire property for purposes other than the purposes of the Union, while the property acquired under the Act vested in the President and therefore the Union after its acquisition, and the Act was really for the acquisition of property for the purposes of the Union and could not have been passed by the, Ajmer legislature, (2) section 8 provided for retrospective cancellation of leases granted at a time when the land owner had a right to dispose of his property as he liked under article 19(1)(f) of the Constitution and there was no restriction on such right, and (3) section 38 which fixed a maximum rent was an unreasonable.restriction on the right of the land owner to let his holding.
It was also contended for some of the petitioners who were assignees of land revenue as also owners of land that, under the Act, an intermediary included a jagir and that as a jagirdar was merely an assignee of land revenue, only that assignment could be said to have been acquired under the Act.
Held, (1) that the purposes for which the estates were acquired were purposes of the State of Ajmer and, consequently, the Act was within the competency of the Ajmer legislature as it fell within entry 36 of List II of the Seventh Schedule to the Constitution, and it was not necessary to consider where the property should vest after acquisition in deciding the ambit of the competence of the legislature under the entry ; (2) that the provisions in section 8 of the Act which gave power to the Collector to cancel leases which were found to have been made in anticipation of legislation for abolition of intermediaries and which were, consequently, a fraud upon the Act, subserve the purposes of the Act and would, therefore, be an integral part of the Act, though ancillary to its main object, and were protected under article 31 A(1)(a) of the Constitution ; (3)that the intention of the Act was that the intermediaries who were allotted lands should cultivate them personally and the object of section 38 was to discourage them from letting the land and becoming a new kind of intermediaries, and, consequently, the section being an ancillary provision necessary for the purposes of carrying out the objects of the Act, was protected under article 31 A(1)(a) of the Constitution; and (4)that in view of the origin of the title of the holders of these estates who were called jagirdars, a distinction could not be made between jagirdars as assignees of land revenue and the same persons as land owners, and therefore, the State could take over the entire interest in the estate under section 4 Of the Act.
|
Summarize this legal judgement text concisely | 100 of 1958.
Petition under Article 32 of the Constitution for enforcement of fundamental rights.
M. K. Nambyar, K. Mangachari, G. Suryanarayana and P. V. R. Patachari, for the petitioners and intervener.
M. C. Setalvad, Attorney General for India, R. Ganapathi lyer, P. R. Ramachandra Rao and T. M. Sen, for the respondents.
November 5.
The Judgment of Das, C. J., Bhagwati and Subba Rao, JJ., was delivered by Subba Rao, J. Sinha and Wanchoo, JJ., delivered separate judgments.
SUBBA RAO, J. This is an application under article 32 of the Constitution for the enforcement of the petitioners fundamental right to carry on the business of motor transport in Krishna District in Andhra Pradesh, and for prohibiting the respondents from taking over the routes on which the petitioners have been plying their stage carriages.
41 322 The petitioners have been carrying on motor transport business in Krishna District for several years past by obtaining permits under the (IV of 1939), as amended by Act 100 of 1956, hereinafter called the Act, in respect of various routes.
They estimate the value of their investment in the business at a sum of Rs. 20,00,000.
The amending Act inserted a new Chapter IV A in the Act providing for the State Transport Undertaking running the business to the exclusion, complete or partial, of all other persons doing business in the State.
Chapter IV A provided for a machinery called the State Transport Undertaking, defined under section 68 A(b) as an undertaking providing road transport service, to run the transport business in the State.
In exercise of the powers conferred by section 68 C of the Act, one Shri Guru Pershad, styled as the General Manager of the State Transport Undertaking of the Andhra Pradesh Road Transport, published a scheme for the purpose of providing an efficient, adequate, economical and properly coordinated transport service in public interest to operate the transport service mentioned therein with effect from the date notified by the State Government.
Objections were in vited within 30 days from the date of the publication of the proposal in the Official Gazette, viz., November 14, 1957.
138 objections were received.
Individual notices were issued by the State Government by registered post to all the objectors.
On December 26, 1957, the Secretary to Government, Home Department, in charge of transport, heard the objections.
88 of the objectors represented their cases through their advocates ; three of them represented their cases personally and the rest were not present at the time of hearing.
After considering all the objections and after giving an opportunity to the objectors, their representatives and the representatives of the State Transport Undertaking the State Government found that the objections to the scheme were devoid of substance.
On that finding, the State Government approved of the scheme in G.O. Ms. 58, Home (Transport IV), dated January 7, 1958, and the approved scheme was published in the 323 Andhra Pradesh Gazette dated January 9, 1958.
The scheme was ordered to come into force with effect from January 10, 1958.
The Government of Andhra Pradesh also established a Road Transport Corporation under the (LXIV of 1950), called the Andhra Pradesh Road Transport Corporation, with effect from January I I, ' 1958, and by its order dated January 11, 1958, the said Corporation was empowered to take over the management of the erstwhile Road Transport Department.
The said Transport Corporation is now implementing the scheme of nationalisation of bus transport under a phased programme.
The petitioners, who are plying their buses on various routes in Krishna District, apprehending that their routes would be taken over by the Corporation pursuant to the aforesaid scheme, seek the aid of this Court to protect their fundamental right to carry on their business against the action of the State Corporation on various grounds.
Mr. M.K. Nambiar, appearing for the petitioners, contends that the scheme, in pursuance of which the bus routes operated by the petitioners are sought to be taken over by the State Road Transport Corporation, is ultra vires and illegal on two grounds, viz., (a) that the provisions of Chapter IV A of the Act violates the fundamental rights secured to the citizens by the Constitution and (b) that the scheme frained under the, Act is ultra vires the Act.
The first ground is sought to be supported by the contention that Chapter IV A of the Act, in substance and effect, authorizes the State to acquire the undertakings of citizens without providing for compensation for the entire undertakings and therefore it is a fraud on the Constitution, particularly on article 31 thereof.
Shortly stated, his argument is that under article 31 of the Constitution no law shall be made for the transfer of ownership or right to possession of any property to the State or to a Corporation without fixing the amount of compensation or specifying the principles on which compensation is to be determined and given, and that Chapter IV A of the Act is a colourable legislation enabling such a transfer of ownership without providing 324 for compensation for the property transferred, under the guise of cancellation of a permit.
To appreciate this argument it would be convenient, at this stage, to read the relevant provisions of the Articles of the Constitution, omitting the words unnecessary for the purpose of this case.
article 191 : All citizens shall have the right (g) to practise any profession, or to carry on any occupation, trade or business.
(6) Nothing in sub clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevents 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, and, in particular, nothing in the said sub clause, shall affect the operation of any existing law in so far as it relates to, or prevent the State from making any law relating to (i). . . . . . . . . . (ii) the carrying on by the State, or by a Corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise.
article 311: No person shall be deprived of his property save by authority of law.
(2) No property shall be compulsorily acquired or requisitioned save for a public purpose and save by authority of a law which provides for compensation for the property so acquired or requisitioned and either fixes the amount of the compensation or specifies the principles on which, and the manner in which, the compensation is to be determined and given; and no such law shall be called in question in any 'Court on the ground that the compensation provided by that law is not adequate.
(2A) 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 325 provide for the compulsory acquisition or requisitioning of property, notwithstanding that it deprives any person of his property.
" The Constitution (First) Amendment Act of 1951, which came into force on June 18, 1951, amended cl.
(6) of article 19 by adding sub cl.
(ii) to that clause, along with other amendments.
Clause (2) of article 31 has been amended, and cl.
(2A) has been inserted by the Constitution (Fourth) Amendment Act, 1955.
Clause (2A) has been inserted with a view to supersede the majority decisions of this Court in the cases of State of West Bengal vs Subodh Gopal Bose (1), Dwarkadas Shriniwas of Bombay vs Sholapur Spinning and Weaving Co. Ltd. (2) and Saghir Ahmed vs State of U.P. (3).
In Subodh Gopal 's case, a majority of a Bench of this Court held: Clauses (1) and (2) of article 31 are thus not mutually exclusive in scope and content, but should in my view, be read together and understood as dealing with the same subject, namely, the protection of the right to property by means of the limitations on the State power referred to above, the deprivation contemplated in clause (1) being no other than the acquisition or taking possession of property referred to in clause (2).
" In Dwarkadas 's case (1),this Court, while confirming the aforesaid principle, held that the word 'acquisition ' has quite a wide concept, meaning the procuring of property or the taking of it permanently or temporarily and need not be confined to the acquisition of legal title by the State in the property taken possession of In Saghir Ahmed 's case (3) applying the said principles, this Court held (at p. 728): " If the effect of prohibition of the trade or business of the appellants (citizens) by the impugned legislation amounts to deprivation of their property or interest in a commercial undertaking within the meaning of article 31 (2) of the Constitution, does not the legislation offend against the provision of that clause inasmuch as no provision for compensation has been made in the Act? " (1) ; , 608.
(2) ; (3) ; , 728.
326 It may be noted that though the said decision was given after the Constitution (First) Amendment Act 195 1, amending article 19 (6), it dealt with a matter that arose before the said amendment came into force.
In the aforesaid decisions, this Court by a majority broadly laid down the two principles: (a) that both cls.
(1) and (2) of article 31 dealt with the doctrine of 'eminent domain '; they dealt with the topic of 'compulsory acquisition of property '; and (b) that the word `acquisition ' does not necessarily imply acquisition of legal title by the State in the property taken possession of, but may comprehend cases where the citizen has been 'substantially dispossessed ' of the right to onion the property, with the result that the right to enjoy property has been seriously ' impaired or the value of the property has been 'materially ' reduced by the impugned State legislation.
The Constitution (Fourth) Amendment Act, 1955, amended cl.
(2) of article 31 and inserted cl.
(2A) in that Article.
The amendments, in so far as they are relevant to the present purpose, substitute in place of the words 'taken possession of or acquired ' the words 'compulsorily acquired or requisitioned ' and provide an explanation of the words `acquired and requisitioned ' in cl.
The result is that unless the law depriving any person of his property provides for the transfer of the ownership or right to the possession of any property to the State, the law does not relate to 'acqtuisition or requisition ' of property and therefore the limitations placed upon the legislature under cl.
(2) will not apply to such law.
While realising this legal position brought about by the amendment to the Con stitution, the learned counsel contends that the right to do business is property as held in Saghir Ahmad 's case(1) and that Chapter IV A of the Act in effect transfers ownership of that business to the Corporation, owned or controlled by the State, though not directly but by the dual process of preventing the citizen from doing the business and enabling the Corporation to do the same business in his place and that that result is effected by a device with a view to avoid payment of (1) [1955] i S.C.R. 707, 728.
327 compensation for the entire business so transferred.
The colourable nature of the legislation, the argument proceeds, lies in its device or contrivance to evade limitations imposed under article 31 (2).
To solve the problem presented, it is necessary to have a correct appreciation of the phrase `colourable legislation '.
This Court considered this question in The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of Darbhanga(l).
In that case the constitutional validity of the Bihar Land Reforms Act, 1950 (Bihar 30 of 1950), was questioned.
In the context of the Bihar Land Reforms Act, 1950 (Bihar 30 of 1950), it was contended that the impugned Act was a fraud on the Constitu tion and therefore void.
It was stated that the Act, while pretending to comply with the Constitutional provisions when it provided for the payment of compensation, in effect produced a scheme for non payment of compensation by shift or contrivance.
Mahajan, J., as he then was, in rejecting the argument observed at p. 947, thus: " All these principles are well settled.
But the question is whether they have any application to the present case.
It is by no means easy to impute a dishonest motive to the legislature of a State and hold that it acted mala fide and maliciously in passing the Bihar Land Reforms Act or that it perpetrated a fraud on the Constitution by enacting this law.
It may be that some of the provisions of the Act may operate harshly on certain persons or a few of the zamindars and may be bad if they are in excess of the legislative power of the Bihar Legislature but from that circumstance it does not follow that the whole enactment is a fraud on the Constitution.
From the premises that the estates of half a dozen zamindars may be expropriated without payment of compensation, one cannot jump to the conclusion that the whole of the enactment is a, fraud on the Constitution or that all the provisions as to payment of compensation are illusory." The aforesaid observations lend support to the argument that the doctrine of colourable legislation imputes dishonest motive or mala fides to the State (1) 328 making the law.
But, Mukherjea, J., as he then was, clarified the legal position in K. C. Gajapati Narayan Deo vs The State of Orissa (1).
It was contended in that case that the Orissa Estates Abolition Act, 1952, was a colourable legislation and as such void.
Adverting to that argument, Mukherjea, J., as he then was, says at p. 10 thus: " It may be made clear at the outset that the doctrine of colourable legislation does not involve any question of bona fides or mala fides on the part of the legislature.
The whole doctrine resolves itself into the question of competency of a particular legislature to enact a particular law.
If the legislature is competent to pass a particular law, the motives which impelled it to act are really irrelevant.
On the other hand, if the legislature lacks competency, the question of motive does not arise at all.
Whether a statute is constitutional or not is thus always a question of power. . .
If the Constitution of a State distributes the legislative powers amongst different bodies, which have to act within their respective spheres marked out by specific legislative entries, or if there are limitations on the legislative authority in the shape of fundamedtal rights, questions do arise as to whether the legislature in a particular case has or has not, in respect to the subject matter of the statute or in the method of enacting it, transgressed the limits of its constitutional powers.
Such transgression may be patent, manifest or direct, but it may also be disguised, covert and indirect and it is to this latter class of cases that the expression 'colourable legislation ' has been applied in certain judicial pronouncements.
The idea conveyed by the expression is that although apparently a legislature in passing a statute purported to act within the limits of its powers, yet in substance and in reality it transgressed these powers, the transgression being veiled by what appears on proper examination, to be a mere presence or disguise.
As was said by Duff, J., in Attorney General for Ontario vs Reciprocal Insurers at p. 337): " Where the law making authority is of a limited or qualified character it may be necessary to examine (1) [1954] S.C.R. i. 329 with some strictness the substance of the legislation for the purpose of determining what is that the legislature is really doing. ' In other words, it is the substance of the Act that is material and not merely the form or outward appearance, and if the subject matter in substance is, something which is beyond the powers of that legislature to legislate upon, the form in which the law is clothed would not save it from condemnation.
The legislature cannot violate the constitutional prohibitions by employing an indirect method.
" We have quoted the observations in extensor as they neatly summarise the law on the subject.
The legal position may be briefly stated thus: The legislature can only make laws within it legislative competence.
Its legislative field may be circumscribed by specific legislative entries or limited by fundamental rights created by the Constitution.
The legislature cannot over step the field of its competency, directly or indirectly.
The Court will scrutinize the law to ascertain whether the legislature by device put ports to make a law which, though in form appears to be within its sphere, in effect and substance, reaches beyond it.
If, in fact, it has power to make the law, its motives in making the law are irrelevant.
The learned counsel for the petitioners can only succeed if he can establish ' that the provisions of Chapter IV A constitute colourable legislation within the meaning of the aforesaid definition.
To test the validity of the argument, it may be summarised thus : Business is I property ' within the meaning of article 191 (g) of the Constitution.
Chapter IV A of the Act transfers the business to the Corporation controlled.
by the State Government.
Such a law should have provided for payment of compensation for the business transferred to the State Corporation ; instead, it adopted the device of cancelling the permit of the citizen and giving it to the Corporation and providing compensation to the citizen only for tile unexpired period of the permit.
42 330 We shall now proceed to ascertain whether any of the aforesaid ingredients of device or contrivance are established in this case.
Does Chapter IV A, in effect and substance, authorize, in law or fact, the transfer of the business of the citizens to the State or a Corporation, owned or controlled by the State ? Under article 191 of the Constitution, every citizen has a fundamental right to carry on any business subject to reasonable restrictions imposed by the State under cl.
(6) of article 19 in the interest of the general public.
The Constitution (First) Amendment Act, 1951, reserved to the State the right to make law for carrying on by the State or by a Corporation, owned or controlled by the State, any business to the exclusion, complete or partial, of the citizens or otherwise.
The Constitution, therefore, enables the State to make a law placing reasonable restrictions on the right of a citizen to do business or to create a monopoly or to make a law empowering the State to carry on business to the exclusion of a citizen.
The right to carry on business in transport vehicles on public pathways is certainly one of the fundamental rights recognized under article 19 of the Constitution.
The (IV of 1939), regulates the right of a citizen to carry on the said business for protecting the rights of the public generally. 'Permit ' is defined under cl.
(20) of section 2 of the Act to mean the document issued by the Commission or a State or Regional Transport Authority authorising the use of a transport vehicle as a contract carriage or stage carriage, or authorising the owner as a private carrier or public carrier to use such vehicle.
Section 57 of the Act prescribes the procedure for applying for and granting permits to carry on the business in transport vehicles on public highways.
Section 47 lays down the matters to be considered by the Regional Transport Authority in the disposal of applications for such transport carriers.
Section 59 gives the conditions of every permit and also prohibits the transfer of permit.
from one person to another except with the permission of the Transport Authority.
Under section 60, the Transport Authority which granted permit may cancel the permit or may suspend it for 331 such period as it thinks fit for any of the reasons mentioned therein.
Section 61 provides for cases where, a permit holder dies.
That section enables the success .
sor to use the permit for a period of three months and to get the permit transferred to him subject to the conditions laid down therein.
Section 68 F authorises the Regional Transport Authority, for the purpose of giving effect to an approved scheme in respect of a notified area or notified route, to refuse to entertain any application for the renewal of any other permit, to cancel any existing permit, to modify the terms of any existing permit so as to render the permit ineffective beyond a specified date, and to reduce the number of vehicles authorised to be used under the permit.
It is manifest from the aforesaid provisions that the Regional Transport Authority can, in exercise of its regulatory power conferred on it in the interest of the public, issue a permit to a 'person in regard to a stage carriage authorising him to use the same in a particular route for a particular period subject to the conditions laid down in the permit, suspend or cancel the same under specified conditions, and renew or refuse to renew the same after the expiry of the period subject to the conditions laid down in the Act.
Under Ch.
IV A, if a scheme has been promulgated empowering the State Transport Undertaking to take on hand the transport service in relation to any area, route or portion thereof to the exclusion of any person, who has been carrying on the business in that route, the Transport Authority is empowered to cancel the existing permit and issue a permit to the State Transport Undertaking.
It cannot be said that if the Transport Authority cancels the permit of a person carrying on his transport business in a route and gives it to another, the process in.
volves a transfer of business or undertaking of the quondam permit holder to the new entrant.
Indeed the process does not involve even a transfer of the permit from one to another.
The true position is that one permit comes to an end and another permit comes into being.
The power of cancellation of a permit in favour of one and issuing a new permit to another are 332 necessary steps in the regulatory jurisdiction entrusted to the Regional Transport Authority.
The business of one has nothing to do with the business of another; they are two independent businesses carried on under two different licences.
If that be the true legal position in the case of issue of permits before Chapter IV A was inserted in the Act, we cannot see that the power of cancellation of an existing permit and issuing one to the State Transport Undertaking should involve a transfer of the previous permit holder 's business to the State Transport Undertaking.
The argument that the process contemplated by section 68 F of the Act involves two integrated steps, viz., cancelling the existing permit and preventing the previous permit holder from doing the business and then issuing a permit to a nominee of the State to enable it to do the same business and thereby, in effect and substance, transferring the business of the existing permit holder to the State or its nominee, appears to be attractive, but, in our view, it is fallacious.
It may be that by the said process the existing permit holder is precluded from doing his business and it may also be that the State Transport Undertaking carries on a similar business; but by no stretch of language or extension of legal fiction can it be said that the State Transport Undertaking is doing the same business which the previous permit holder was doing.
If there is no transfer in the case of cancellation of a permit in favour of one and issue of a new permit to another, equally there cannot be any such transfer in the case of issue of a permit to the State Transport Undertaking.
Looking at the business not simply from the standpoint of the right to do it or the activity involved in it, but also from the standpoint of its assets, it becomes clear that no assets pertaining to the business of the quondam permit holder are transferred to the State Transport Undertaking.
Though the cancellation of the permit has the effect of crippling his business, none of the assets of the business is taken over by the State Transport Undertaking; he is left in the possession of the entire assets of the business.
It is no doubt true that in the context of the scheme of nationalisation he may not be able to make 333 use of his assets in other routes or dispose of them at a great advantage to himself; but, it cannot be said that by cancelling the permit, what is left with him is only the ' husk '.
In fact the entire assets of the business are left with him and the State Transport Undertaking has not taken over the same.
Lastly it is said that sections 68 G of the Act which provides for payment of compensation to the holder of the permit, indicates that the legislature proceeded on the basis that the cancellation of a permit involved a transfer of property ' from the previous permit holder to the State.
In our view, no such irresistible conclusion flows from the said provision; as the permit is cancelled before the expiry of the term fixed therein, the legislature thought it fit and proper to give some compensation to the permit holder who is prevented from doing his business for the unexpired period of the permit.
Whether it is enacted by way of abundant caution, as the learned Attorney General says, or the provision is made by the legislature to mitigate the hardship that is caused to the permit holder by the premature cancellation of the permit, we find it difficult to draw the inference from the said provision that the legislature assumed that a transfer of the business is involved in the process laid down in Chapter IV A.
We therefore bold that Chapter IV A of the Act does not provide for the transfer of ownership or the right to possession of any property to the State or to a Corporation, Owned or controlled by the State.
Under article 31 of the Constitution unless there is such a transfer, the law shall be deemed not to provide for compulsory acquisition or requisition of property ; and therefore, in such a case, no compensation need be provided for under article 31(2) of the Constitution.
We therefore hold that Chapter IV A of the Act does not infringe the fundamental right of the petitioners under article 31 of the Constitution of India.
The next argument of the learned counsel for the petitioners is that even if Chapter 1V A of the Act is constitutionally valid, the petitioners could be deprived of their rights only in accordance with the law enacted for the purpose and in the manner provided 334 therein, and that in the present case, the scheme was promulgated in derogation of the provision of the said Chapter.
The learned counsel contends that the provisions of Bs.
68 C and 68 D have not been complied with in framing the scheme.
The learned counsel 's contentions in this regard fall under different sub heads, and we shall proceed to consider them seriatim.
The first contention is that no State Transport Undertaking is constituted under the Central Act and therefore the scheme initiated by the said Transport Undertaking constituted under the Motor Vehicles (Hyderabad Amendment) Act, 1956, ",as bad.
To appreciate this argument some of the facts may be stated.
Before the State of Andhra Pradesh was formed in November 1956, eight districts, popularly called the Telengana, which are now in the Andhra Pradesh State, were formerly part of the Hyderabad State.
On September 29, 1956, the Motor Vehicles (Hyderabad Amendment) Act, 1956, became law, whereunder Chapter IV A was inserted in the Central Act in its application to the State of Hyderabad.
Under section 68_ A of Chapter IV A of that Act, the State Transport Undertaking was defined to mean the Road Transport Department of the State providing road service.
Under that Act, therefore, the Road Transport Department of the Hyderabad State was functioning as a statutory authority.
After the States Reorganisation Act came into force, the said eight districts of the Hyderabad State became part of the State of Andhra Pradesh; with the result that the Road Transport Department of the Hyderabad State became the Road Transport Department of the State of Andhra Pradesh, though it was exercising its powers only in respect of that part of the Andhra Pradesh State, popularly known as Telengana.
After the Andhra Pradesh State was formed, Sri Guru Pershad, styled as the General Manager of the Andhra Pradesh Road Transport Undertaking, published the scheme under section 68 C of the Act.
The argument is that the State Transport Authority constituted under Chapter IV A of the Hyderabad (Amendment) Act was not legally 335 constituted as the State Transport Undertaking under the Central Act and, therefore, the initiation of the scheme by the Hyderabad State Transport Undertaking, which has no legal status under the Central Act was bad.
It is also pointed out that the State Transport Authority under the Hyderabad Act differs from that under the Central Act in the following three, respects: (1) statutory parentage; (2) character and constitution ; and (3) territorial jurisdiction; and therefore the authority constituted under the Hyderabad Act cannot function under the Central Act.
This argument has no relevancy to the facts of the present case.
We are not concerned in this case with a statutory authority created under one Act and pressed into service for the purpose of another Act, when the latter has adopted the said statutory authority as one constituted under that Act.
Here there is the Andhra Pradesh Road Transport Department providing road transport service in Telengana, which is a part of that State, and that Department, when it was a part of the Hyderabad State was functioning as part of the Hyderabad State Secretariat.
The mere fact that the Road Transport Department of the Andhra Pradesh State was originally part of a department of another State and came under the definition of the State Transport Undertaking of the Hyderabad Act could not make the said department any the less the Road Transport Department of the Andhra Pradesh State.
Assuming.
for a moment that the Hyderabad Act is still in force in the Telengatia area, there is nothing in law which prevents a department coming under the definition of two statutes.
Under the Act, the State Transport Undertaking means an Undertaking providing road trasport service where such undertaking is carried on by a State Government.
This section does not prescribe the parentage of the undertaking or impose a condition that the undertaking should be providing transport service throughout the State.
The State Government maintained the department for providing road transport service and therefore the department clearly falls within the definition of State Transport Undertaking.
The citation from Salmond on, 336 Jurisprudence to the. effect that the law in creating legal persons always does so by personifying some real thing does not touch the question that falls to be decided in this case; for, the real thing, viz., the department, falls under the definition of both the Acts and therefore it can function as a statutory authority under both the Acts.
We therefore hold that the Road Transport Department of the Andhra Pradesh Government is a State Transport Undertaking under the Central Act and therefore it was within its legal competence to initiate the scheme.
The next objection raised is that the scheme was published by Sri Guru Pershad, the General Manager of the State Transport Undertaking and that it has not been established that he had been legally authorized to represent the State Transport Undertaking, the statutory authority constituted under the Act.
We have already held that the Transport Department of the disintegrated Hyderabad State continued to function as the Transport Department of the Andhra Pradesh State after the merger of Telengana areas with the Andhra State.
In the affidavit filed by the petitioners, it is stated that Sri Guru Pershad was the General Manager of the Road Transport Department of the erstwhile Hyderabad State, that he was never appointed as the General Manager of the State Transport Undertaking of the Andhra Pradesh State and that, therefore, he had no legal authority whatever to publish the scheme.
In the counter affidavit filed on behalf of the first respondent, it is averred that the General Manager of the Andhra Pradesh Road Transport, which was a State Transport Undertaking within the meaning of section 68 B of the Act, prepared a scheme and that was published in the Andhra Pradesh Gazette on November 14, 1957.
It is therefore a common case that Sri Guru Pershad was the General Manager of the Road Transport Undertaking of the erstwhile Hyderabad State.
It is not denied that Sri Guru Pershad continued to be the General Manager of that Department functioning in Andhra Pradesh.
We have already held that the same department was the statutory authority functioning under 337 the Central Act.
Sri Guru Pershad was also the General Manager of that undertaking.
In the circumstances, there is no substance in the contention that Sri Guru Pershad should have been appointed as the General Manager of the Undertaking under the Central Act.
This is the first argument under a different garb.
The preexisting Road Transport Department of the erstwhile Hyderabad State, with its General Manager, Sri Guru Pershad, continued to function as a statutory authority under the Central Act and therefore he had the legal authority to represent the State Transport Undertaking, which was a statutory authority.
lie published the scheme and subscribed it as Guru Pershad, the General Manager of the State Transport Undertaking (Andhra Pradesh State Road Transport).
The notification, therefore, must be held to have been issued by the State Transport Undertaking functioning under the Central Act.
The learned counsel then contends that the scheme published does not disclose that the State Transport Undertaking was of the opinion that the scheme was necessary in the interests of the public and, therefore, is the necessary condition for the initiation of the scheme was not complied with, the scheme could not be enforced.
Section 68 C says that where any State Transport Undertaking is of opinion that for specified reasons it is necessary in the public interest that road port service should be run or operated by the Transport Undertaking, it may prepare a scheme giving particulars of the scheme and publish it in the Official Gazette.
An express recital of the formation of the opinion by the Undertaking in the scheme is not made a condition of the validity of the scheme.
The scheme published in terms of the section shall give particulars of the nature of the service proposed to be rendered, the area or route proposed to be covered and such other particulars respecting thereto.
It is true that the preparation of the scheme is made to depend upon the subjective opinion of the State Undertaking as regards the necessity for such a scheme.
The 43 338 only question, therefore, is whether the State Transport Undertaking formed the opinion before preparing the scheme and causing it to be published in the Official Gazette.
The scheme published, as already noticed, was signed by Guru Pershad, General Manager, State Transport Undertaking, Andhra Pradesh Road Transport.
The preamble to the scheme reads : " In exercise of the powers conferred by section 68 C of the , it is hereby proposed, for the purpose of providing an efficient, adequate, economical and properly coordinated road transport service in public interest, to operate the following transport services as per the particulars given below with effect from a date to be notified by the Government.
" We have already held that Guru Pershad represented the State Transport Undertaking.
The scheme was proposed by the said Undertaking in exercise of the powers under section 68 C of the Act for the purpose of providing an efficient, adequate, economical and properly coordinated road transport service in public interest.
Except for the fact that the word 'opinion ' is omitted, the first part of the section 68 C is incorporated in the preamble of the scheme ; and, in addition, it also discloses that the scheme is proposed in exercise of the powers conferred on the State Transport Undertaking under section 68 C of the Act.
The State Transport Authority can frame a scheme only if it is of opinion that it is necessary in public interest that the road transport service should be run or operated by the Road Transport Un dertaking.
When it proposes, for the reasons mentioned in the section, a scheme providing for such a transport undertaking, it is a manifest expression of its opinion in that regard.
We gather from a reading of the scheme that the State Transport Undertaking formed the necessary opinion before preparing the scheme and publishing it.
The argument of the learned counsel carries technicality to a breaking point and for the aforesaid reasons, we reject it.
The next attack of the learned counsel centres round the provisions of section 68 D (2) of the Act.
It would be convenient, before adverting to his argument, to read 339 section 68 D and the relevant rules made under the Act.
They read : Sec.
68 D : (1) Any person affected by the scheme published under section 68 C may, within thirty days from the date of the publication of the scheme in the Official Gazette, file objections thereto before the State Government.
(2) The State Government may, after considering the objections and after giving an opportunity to the objector or his representatives and the representatives of the State Transport Undertaking to be heard in the matter, if they so desire, approve or modify the scheme.
(3) The scheme as approved or modified under sub section (2) shall then be published in the Official Gazette by the State Government and the same shall thereupon become final and shall be called the approved scheme and the area or route to which it relates shall be called the notified area or notified route.
Provided that no such scheme which relates to any inter State route shall be deemed to be an approved scheme unless it has been published in the Official Gazette with previous approval of the Central Government.
Rule 8 : Filing of objections (procedure) Any person, concern or authority aggrieved by the scheme published under section 68 C may, within the specified period, file before the Secretary to Government in charge of Transport Department, objections and representations in writing setting forth concisely the reasons in support thereof Rule 9 : Conditions for submission of objections No representation or objection in respect of any scheme published in the Official Gazette shall be considered by the Government unless it is made in accordance with rule 8.
Rule 10 : Consideration of scheme (Procedure regarding) : After the receipt of the objections referred to above, the Government may, after fixing the date, time and place for holding an enquiry and after giving if they so desire, at least seven clear days ' notice of 340 such time and place to the persons who filed objections under rule 8, proceed to consider the objections and pass such orders as they may deem fit after giving an Opportunity to the person of,being heard in person or through authorised representatives.
" Under the section, the procedure prescribed for the approval of a scheme may be summarized thus : The State Transport Undertaking prepares a scheme providing for road transport service in relation to an area, to be run or operated by the State Transport Undertaking, whether to the exclusion, complete or partial, of other persons, and publishes it in the Official Gazette.
Any person affected by the scheme may, within thirty days from the date of its publication, file before the Secretary to Government in charge of Transport Department objections and representations in writing with reasons in support thereof.
After receiving the objections and representations, the Government fixes a date for the hearing and after giving an opportunity to the persons of being heard in person or by authorized representatives, considers the objections and then modifies or approves of the scheme.
The following procedure was in fact followed by the Government in this case: After the scheme was prepared and published in the Official Gazette, the petitioners and others filed objections before the Secretary to Government Transport Department, within the time prescribed.
138 objections were received and individual notices were issued by the Government by registered post to all.
the objectors fixing the date of the hearing for December 26, 1957.
The Secretary to Government, Home Department, in charge of Transport, heard the representations made by the objectors, some in person and others through their advocates, and also the representation is made by the General Manager of the Road Transport Undertaking.
The Secretary, after hearing the objections, prepared notes and placed the entire matter, with his notes, before the Chief Minister, who considered the matter and passed orders rejecting the objections and approving the scheme; and the approved scheme was thereafter issued in the name of the Governor.
341 On the aforesaid facts, the first contention raised is that the State Government in approving the scheme was discharging a quasi judicial act and therefore the Government should have given a personal hearing to the objectors instead of entrusting that duty to its Secretary.
Secondly, it is stated that a judicial hearing implies that the same person hears and gives the decision.
But in this case the hearing is given by the Secretary and the decision by the Chief Minister.
Thirdly, it is contended on the same hypothesis, that even if the hearing given by the Secretary be deemed to be a hearing given by the State Government, the hearing is vitiated by the fact that the Secretary who gave the hearing is the Secretary in charge of the Transport Department.
The Transport Department, it is stated, in effect was made the judge of its own cause, and this offends one of the fundamental principles of judicial procedure.
Lastly, it was pointed out that though the enquiry was posted for hearing on December 26, 1957, even before the enquiry was commenced, the Chief Secretary to the Government gave an interview to the 'Deccan Chronicle ' and the I Golconda Patrika ' to the effect that the Government bad already taken a decision to nationalize the road transport in Krishna District and some routes had been chosen, including the Guntur Vijayawada route, thereby indicating that the Government has prejudged the case before holding the enquiry.
The learned Attorney General counters the said argument by stating that the State Government strictly followed the procedure prescribed under section 68 C of the Act, that the said Government, being an impersonal body, (gave the hearing through the machinery prescribed by law, that the said Government was discharging only an administrative act and not a judicial act in the matter of approving the scheme, that even if it did perform a judicial act, the Home Secretary in charge of Transport Department had only collected the material and the final orders were made only by the Chief Minister and that the Secretary 's press interview was nothing more than a mere indication of the factum of the proposed scheme.
342 At the outset it would be convenient to consider the question whether the State Government acts quasijudicially in discharging its functions under section 68 C of the Act.
The criteria to ascertain whether a particular act is a judicial act or an administrative one, have been laid down with clarity by Lord Justice Atkin 'in Rex vs Electricity Commissioners, Ex Parte London Electricity Joint Committee Co. (1) elaborated by Lord Justice Scrutton in Rex vs London County Council, Ex Parte Entertainments Protection Association Ltd. (2) and authoritatively re stated by this Court in Province of Bombay vs Khusaldas section Advani (3) .
They laid down the following conditions: (a) the body of persons must have legal authority; (b) the authority should be given to determine questions affecting the rights of subjects and (c) they should have a duty to act judicially.
In the last of the cases cited supra, Das, J., as he then was, analysed the scope of the third condition thus at page 725: " (i) that if a statute empowers an authority not being a Court in the ordinary sense, to decide disputes arising out of a claim made by one party under the statute which claim is opposed by another party and to determine the respective rights of the contesting parties who are opposed to each other, there is a lis and prima facie and in the absence of anything in the statute to the contrary it is the duty of the authority to act judicially and the decision of the authority is a quasi judicial act; and (ii)that if a statutory authority has power to do any act which will prejudicially affect the subject, then, although there are not two parties apart from the authority and the contest is between the authority proposing to the act and the subject opposing it, the final determination of the authority will yet be a quasi.
judicial act provided the authority is required by the statute to act judicially.
" In the case In re Banwarilal Roy (4) Das, J., as he then was, said much to the same effect at page 800: " A judicial or quasi judicial act, on the other hand, implies more than mere application of the mind (1) (3) ; (2) (4) 343 or the formation of the opinion.
It has reference to the mode or manner in which that opinion is formed.
It implies a proposal and an opposition ' and a decision on the issue.
It vaguely connotes 'hearing evidence and opposition ' as Scrutton, L. J., expressed it.
The degree of formality of the procedure as to receiving or hearing evidence may be more or less according to the requirements of the particular statute, but there is an indefinable yet an appreciable difference between the method of doing an administrative or executive act and a judicial or quasi judicial act.
" This statement is practically in accord with the first proposition extracted above.
This Court again, in Nagendra Nath Bora vs Commissioner of Hills Division (1) in the context of the provisions of Eastern Bengal and Assam Excise Act, 1910 (I of 1910), considered the scope of the concept of 'judicial act '.
Sinha, J., who delivered the.
judgment of the Court, made the following observations at page 408: " Whether or not an administrative body or 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 rules framed thereunder." In Express Newspapers Ltd. vs The Union of India (2) this Court again reviewed the law on the subject to ascertain whether the Wage Board functioning under the Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955 (45 of 1955) was only discharging administrative functions or quasijudicial functions.
Bhagwati, J., made the following observation at page 613: " 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 (1) ; (2) 344 performed by the Wage Board would be quasi judicial in character.
" The aforesaid three decisions lay down that whether an administrative tribunal has a duty to act judicially should be gathered from the provisions of the particular statute and the rules made thereunder, and they clearly express the view that if an authority is called upon to decide respective rights of contesting parties or, to put it in other words, if there is a lis, ordinarily there will be a duty on the part of the said authority to act judicially.
Applying the aforesaid test, let us scrutinize the provisions of sections 68 C and 68 D and the relevant rules made under the Act to ascertain whether under the said provisions the State Government performs a judicial act or an administrative one.
Section 68 C may be divided into three parts: (1) The State Transport Undertaking should come to an opinion that it is necessary in public interest that the road transport service in general or any particular.
class of such service in relation to any area or route or portion thereof should be run or operated by the State Transport Undertaking, whether to the exclusion, complete or partial, of other persons or otherwise ; (ii) it forms that opinion for the purpose of providing an efficient, adequate, economical and properly co ordinated road transport service; and (iii) after it comes to that opinion, it prepares a scheme giving particulars of the nature of the services proposed to be rendered, area or route proposed to be covered and such other particulars respecting thereto as may be prescribed and causes it to be published in the Official Gazette.
The section, therefore, makes a clear distinction between the purpose for which a scheme is framed and the particulars of the scheme.
To state it differently, though the purpose is to provide an efficient, adequate, economical and coordinated road transport service in public interest, the scheme proposed may affect individual rights such as the exclusion, complete or partial, of other persons or otherwise, from the business in any particular route or routes.
Under section 68 C, therefore, the State Transport Undertaking may propose a scheme affecting the proprietary rights 345 of individual permit holders doing transport business in a particular route or routes.
The said proposal threatens the proprietary right of that individual or individuals.
Under section 68 D read with Rules 8 and 10 made under the Act, any person affected by the aforesaid proposed, scheme may file objections within the prescribed time before the Secretary of the Transport ' Department.
Under the said provisions,.
the State Government is enjoined to approve or modify the scheme after holding an enquiry and after giving an opportunity to the objectors or their representatives and the representatives of the State Transport Undertaking to be heard in the matter in person or through authorised representatives.
Therefore, the, proceeding prescribed is closely approximated to that obtaining in courts of justice.
There are two parties to the dispute.
The State Transport Undertaking, which is a statutory authority under the Act, threatens to infringe the rights of a, citizen.
The citizen may object to the scheme on public grounds or on personal grounds.
He may oppose the scheme, on the ground that it is not in the interest of the public or on the ground that the route which he is exploiting should be excluded from the scheme for various reasons.
, There is, therefore, a proposal and an opposition and the third party, the State Government is to decide that lis and prima facie it must do so judicially.
The position is put beyond any doubt by the provision in the Act and the Rules which expressly require that the State Government must decide the dispute according to the procedure prescribed by the Act and the Rules framed thereunder, viz., after considering the objections and after hearing.
both the parties.
It therefore appears to us that this is an obvious case where the Act imposes a duty on the State Government to decide the act judicially in approving or modifying the scheme proposed by the Transport Undertaking.
The learned Attorney General argues that sections 68 C and 68 D do not contemplate the enquiry in regard to the rights of any parties, that the scheme proposed is 44 346 only for the purpose of an efficient, adequate, economical and properly coordinated bus transport service and should relate only to that purpose and that, therefore, the enquiry contemplated under section 68 D, though assimilated to a judicial procedure, does not make the approval of the scheme any the less an administrative act.
To put it shortly, his contention is that the Government is discharging only an administrative duty in approving the scheme in public interest and no rights of the parties are involved in the process.
There is some plausibility and attraction in the argument, but we cannot accept either the premises or the conclusions.
The scheme proposed may exclude persons, who have proprietary rights in a route or routes.
As we have pointed out, the purpose must be distinguished from the particulars in the scheme.
The scheme propounded may exclude persons from a route or routes and the affected party is given a remedy to apply to the Government and the Government is enjoined to decide the dispute between the contesting parties.
The statute clearly, therefore, imposes a duty upon the Government to act judicially.
Even if the grounds of attack against the scheme are confined only to the purpose mentioned in section 68 C we cannot agree with this contention the position will not be different, for, even in that case there is a dispute between the State Transport Undertaking and the person excluded in respect of the scheme, though the objections are limited to the purpose of the scheme.
In either view the said two provisions, sections 68 C and 68 D, comply with the three criteria of a judicial act laid down by this Court.
Support is sought to be drawn for this contention from the decision of the House of Lords in Franklin vs Minister of Town and Country Planning (1).
As strong reliance is placed on this decision, it is necessary to consider the same in some detail.
The facts of that case are: On August 3, 1946, the respondent, Lewis Silkin, as Minister of Town and Country Planning, prepared the draft Stevenage New Town (Designation) Order, 1946, under para.
1 of Schedule 1 to the New (1) ; 347 Towns Act, 1946, and on or about August 6, 1946, he caused the same to be published and notices to be given as prescribed by paragraph 2 of Schedule I to the Act.
Thereafter objections were received from a number of persons, including the appellants.
Accordingly, the respondent instructed Mr. Arnold Morris, an Inspector of the Ministry of Town and Country Planning, to hold a public local inquiry as prescribed by paragraph 3 of the said Schedule.
Mr. Morris held the inquiry at the Town Hall, Stevenage, on October 7 and 8, 1946, and on October 25, made a report to the respondent in which he set out a summary of the sub.
missions made and the evidence given by and on behalf of the objectors and attached thereto a complete transcript of the proceedings, which began with an opening statement by Mr. Morris giving a brief recapitulation of the reasons that had led to the designation of Stevenage as the site of a New Town.
On November 11, 1946, the respondent made the order in terms of paragraph 4 of Schedule I to the Act.
The appellants applied to the High Court to have the order quashed.
It was contended, inter alia, that the said order was not within the powers of the New Towns Act, 1946, or alternatively, that the requirements of the said Act have not been complied with; that the Minister who made the order had stated, before the Bill was made into law, that he would make the said order, and therefore he was biassed in any consideration of the said objections.
The House of Lords held that the respondent 's functions under the Act were only administrative and that he had complied with the provisions of the statute.
In that view, the order of the Court of Appeal dismissing the applications filed by the appellants was confirmed.
Lord Thankerton in his speech at page 102, observed thus: "In my opinion, no judicial, or quasi judicial, pinion, no duty was imposed on the respondent, and any reference to judicial duty, or bias, is irrelevant in the present case.
The respondent 's duties under section 1 of the Act and sch.
1 thereto are, in my opinion, purely administrative, but the Act prescribes certain methods of or steps in, discharge of that duty. . . . it 348 seems clear also, that the purpose of inviting objections, and, where they are not Withdrawn I of having a public inquiry, to be held by someone other than the respondent, to whom that person reports, was for the further information of the respondent in order to the final consideration of the Soundness of the scheme ' of the designation. . . .
I am of opinion that no judicial duty is laid on the respondent in discharge of these statutory duties, and that the only question is whether he has complied With the Statutory directions to appoint a person to hold the public inquiry, and to consider that person 's report.
At first sight the facts of this case may appear to have some analogy to those in the present case, but on "a deeper scrutiny of the facts and the provisions of the New Towns Act, 1946, and Chapter IV A of the Act, they disclose essential differences in fundamentals.
Under the New Towns Act, 1946, the following steps for developing a new town have been laid down: (1) It is left to the Minister 's Subjective satisfaction, after consulting local authorities, who appear to him to be concerned, to make an order designating.
a particular area as the site of the proposed new town ; (2) when he proposes to make an order, he prepares a draft of that order giving the necessary parti culars and publishes it in the London Gazette calling for objections to the, proposed order within a prescribed time; (3) if any objection is made to the proposed order, he shall cause a public local enquiry to be held and shall consider the report of the person by whom the enquiry was held; and (4) any person desiring to challenge the validity of that order may apply to the High Court and he can get that order set aside only if he satisfies the Court that the order is not within the powers of that Act or that his interests have been substantially prejudiced by any requirements of that Act not having been complied with.
The steps to be taken for nationalising the Road Transport under the Act are as follows: (1) The State Transport Undertaking, which is a statutory authority under the Act, proposes a scheme; (2) the scheme may provide that the road transport services 349 should be run or operated by the State Transport Undertaking to the exclusion of a person or persons; (3) any Person, affected may file objections before the Government;(4) the Government following the rules of judicial procedure decides the dispute between the Undertaking and the person or persons affected; (5)the dispute is not necessarily confined only to the question whether the 'statutory requirements have been complied with, but may also relate to the question whether a particular person or persons should not.
be excluded; and (6) a personal hearing should be given to both the parties by the Government.
A comparison of the procedural steps under both the Acts brings out in bold relief the nature of the enquiries contemplated under the two statutes.
There, there is no lis, no personal hearing and even the public enquiry contemplated by a third party is presumably confined to the question of statutory requirements, or at any rate was for eliciting further information for the Minister.
Here, there is a clear dispute between the two parties.
The dispute comprehends not only objections raised on public grounds, but also in vindication of private rights and it is required to be decided by the State Government after giving a personal ' hearing and following the rules of judicial procedure.
Though there may be some justification for holding, on the facts of the case before the House of Lords that that Act did not contemplate a judicial act on that question we do not propose to express our opinion there is absolutely none for holding in the present case that the Government is not performing a judicial act.
Robson in 'Justice and Administrative Law ', commenting upon the aforesaid decision, makes the following observation at page 533: " It should have been obvious from a cursory glance at the New Towns Act that the rules of natural justice could not apply to the Minister 's action in making an order, for the simple reason that the initiative lies wholly with him.
His role is not to consider whether an order made by a local authority should be confirmed, nor does he have to determine a controversy between a, public authority and private interests.
350 The responsibility of seeing that the intention of Parliament is carried out is placed on him.
" The aforesaid observations explain the principle underlying that decision and that principle cannot have any application to the facts of this case.
In I Principles of Administrative Law by Griffith and Street, the following comment is found on the aforesaid decision : After considering the provisions of section 1 of the New Towns Act, 1946, the authors say " Like the town planning legislation, this differs from the Housing Acts in that the Minister is a party throughout.
Further, the Minister is not statutorily required to consider the objections.
It is obvious, as the statute itself states, that the creation of new towns is of national interest.
" At page 176, the authors proceed to state: Lord Thankerton did not analyse the meanings of I judicial ' and I administrative nor did he specify the particular factors which motivated his classification.
It is permissible to conclude that he looked at the Act as a whole, applying a theory of interpretation similar to the rule in Heydon 's Case ; , 7b).
" At page 178, they conclude thus: " It is submitted, however, that the thoroughness with which the Courts analysed the statutes in the Errington, Robinson, Johnson and Franklin Cases and the emphasis which they have placed on the fact that their decisions have been based solely on the statute under consideration makes such an approach inevitable.
" It is therefore clear that Franklin 's Case is based upon the interpretation of the provisions of that Act and particularly on the ground that the object of the enquiry is to further inform the mind of the Minister and not to consider any issue between the Minister and the objectors.
The decision in that case is not of any help to decide the present case, which turns upon the construction of the provisions of the Act.
For the aforesaid reasons, we hold that the State Government 's order under section 68 D is a judicial act.
351 The next question is whether the State Government disposed of the objections of the petitioners judicially in the manner prescribed by the Act.
It is said that under the Act and rules framed thereunder, the State Government should hear the dispute, but in this case the Secretary in charge of the Transport Department, who is not the State Government, gave the hearing.
The State Government is an impersonal body and it can only function through the machinery and in the manner prescribed by law.
Clause (60) of section 2 of the , defines I State Government ' as respects anything done or to be done after the commencement of the Constitution (VII Amendment) Act, 1956, to mean, in a State, the Governor, and in a Union Territory, the Central Government.
Under article 154(1) of the Constitution, I the executive power of the State shall be vested in the Governor and shall be exercised by him either directly or through officers subordinate to him in accordance with this Constitution '.
Article 163 enacts that ' there shall be a Council of Ministers with the Chief Minister at the head to aid and advise the Governor in the exercise of his functions, except in so far as he is by or under this Constitution required to exercise his functions or any of them in his discretion '.
Article 166(1) enjoins that I all executive action of the Government of a State shall be expressed to be taken in the name of the Governor '.
Sub clause (2) of that Article says that 'orders and other instruments made and executed in the name of the Governor shall be authenticated in such manner as may be specified in rules to be made by the Governor '.
And under sub cl.
(3), 'the Governor shall make rules for tile more convenient transaction of the business of the Government of the State, and for the allocation among Ministers of the said business in so far as it is not business with respect to which the Governor is by or under this Constitution required to act in his discretion '.
In exercise of the powers conferred by cls.
(2) and (3) of article 166 of the Constitution, the Government of Madras made rules styled as 'The Madras Government Business Rules and Secretariat Instructions '.
Rule 9 thereof prescribes 352 that without prejudice to the provisions of r. 7, the Minister in charge of a. department shall be primarily responsible for,the disposal of the business appertaining to that department.
Rule 21 enacts that except as otherwise provided by any other Rule, cases shall ordinarily be disposed of by or under the authority of the Minister in charge who may, by means of standing orders, give such directions as he thinks fit for the disposal of cases in the department.
Copies of such standing orders shall be sent to the Governor and the Chief Minister.
Rule 11 says that I all orders or instruments made or executed by or on behalf of the Government of the State shall be expressed to be made or executed in the name of the Governor '.
Under r. 12, every order or instrument of the Government of the State shall be signed either by a Secretary, an Additional Secretary, a Joint Secretary, a draftsman, a Deputy Secretary, an, Under Secretary or an Assistant Secretary to the Government of the State or such other officers as may be specially empowered in that behalf and such signature shall be deemed to be the proper authentication of such order or instrument '.
After the formation of the Andhra State on, October 3, 1953, the rules made by the Governor of Madras, under the provisions of the States Reorganization Act, Continue to be the rules of the Andhra State till they are amended in accordance with ', such law.
The Governor of Andhra State, in exercise of the powers conferred by cls.
(2) and (3) of article 166 of the Constitution directed that until other provisions are made in this regard, 'the business of the Government of Andhra be transacted in accordance with the Madras Government Business Rules.
and Secretariat Instructions in force on the first day of October, 1953 '.
On October 26, 1956, after the formation of the Andhra Pradesh State, as the Andhra Pradesh was not a new State but a continuation of the Andhra State, though there is change, in its name, the business rules of the Andhra state continue to govern the Secretariat of the AndhraPradesh Government.
The effect of the aforesaid provisions may be stated thus: A State Government 353 means the Governor; the executive power of the State vests in the Governor; it is exercised by him directly or by officers subordinate to him in accordance with the provisions of the Constitution; the Ministers headed by the Chief Minister advise him in the exercise of his functions; the Governor made rules enabling the Minister in charge of particular department to dispose of cases before him and also authorizing him, by means of standing orders, to give such directions as he thinks fit for the disposal of the cases in the department.
Pursuant to the rule, the record discloses, the Chief Minister, who was in charge of Transport, had made an order directing the Secretary to Government, Home Department, to hear the objections filed against the scheme proposed by the State Transport Autho rity.
The aforesaid machinery evolved by the rules for the disposal of cases by the State Government has been followed in this case.
The petitioners and others filed objections to the proposed scheme before the Secretary to the Government Transport Department.
He gave a personal hearing to the parties some of them appeared in person and others by representatives; the entire material recorded by him was placed before the Chief Minister in charge of Transport, who made his order approving the scheme; and the order was issued in the name of the Governor, authenticated by the Secretary in charge of the Transport Department.
It may therefore be said that the State Government gave the hearing to the petitioners in the manner prescribed by the rules made by the Governor.
At this state, the argument hinted at but not seriously pressed, may be noticed.
The Rules the Governor is authorised to make, the argument proceeds, are only to regulate the acts of the Governor or his subordinates in discharge of the executive power of the State Government, and therefore will not govern the quasi judicial functions entrusted to it.
There is a fallacy in this argument.
The concept of a quasijudicial act implies that the act is not wholly judicial; 45 354 it describes only a duty cast on the executive body or authority to conform to norms of judicial procedure in performing some acts in exercise of its executive power.
The procedural rules made by the Governor for the convenient transaction of business of the State Government apply also to quasi judicial acts, provided those 'Rules conform to the principles of judicial procedure.
The mode of performing quasi judicial acts by administrative tribunals has been the subject of judicial decisions in England as well as in India.
The House of Lords in Local Government Board vs Arlidge (1) in the context of the Housing, Town Planning Etc., Act, 1909, made the following observations at page 132: " My Lords, when the duty of deciding an appeal is imposed, those whose duty it is to decide it must act judicially.
They must deal with the question referred to them without bias, and they must give to each of the parties the opportunity of adequately presenting the case made.
The decision must be come to in the spirit and with the sense of responsibility of a tribunal whose duty it is to mete out justice.
But it does not follow that the procedure of every such tribunal must be the same.
" In New Prakash Transport Co., Ltd. vs New Swarna Transport Co., Ltd. (2) this Court reviewed the case law on the subject and came to the conclusion that the rules of natural, justice vary with varying constitutions of statutory bodies, and the rules prescribed by the legislature under which they have to act, and the question whether in a particular case they have been contravened must be judged not by any preconceived notion of what they may be but in the light of the provisions of the relevant Act.
This Court re affirmed the principle in Nagendra Nath Bora vs Commissioner of Hills Division (supra) (3).
With this background we shall proceed to consider the validity of the three alleged deviations of the State Government from the fundamental judicial procedure.
In the present case, the officer who received (1) (2) ; (3) ; 355 the objections of the parties and heard them personally or through their representatives, was the Secretary of the Transport Department.
Under the 'Madras Government Business Rules and Secretariat Instructions ' made by the Governor under article 166 of the Constitution, the Secretary of a department is its head.
One of the parties to the dispute before the State Government was the Transport Department functioning as a statutory authority under the Act.
The head of that department received the objections, heard the parties, recorded the entire proceedings and presumably discussed the matter with the Chief Minister before the latter approved the scheme.
Though the formal orders were made by the Chief Minister, in effect and substance, the enquiry was conducted and personal hearing was given by one of the parties to the dispute itself.
It is one of the fundamental principles of judicial procedure that the person or persons who are entrusted with the duty of hearing a case judicially should be those who have no personal bias in the matter.
In Ranger vs Great Western Ry.
Co.(1) Lord Cranworth, L.C., says: 'A judge ought to be, and is supposed to be, indifferent between the parties.
He has, or is supposed to have, no bias inducing him to lean to the one side rather than to the other In ordinary cases it is just ground of exception to a judge that he is not indifferent, and the fact that he is himself a party, or interested as a party, affords the strongest proof that he cannot be indifferent.
" In Rex vs Sussex Justices Ex Parte McCarthy (2) Lord Hewart, C. J., observed: " It is said, and, no doubt, truly, that when that gentleman retired in the usual way with the justices, taking with him the notes of the evidence in case the justices might desire to consult him, the justices came to a conclusion without consulting him, and that he scrupulously abstained from referring to the case in any way.
But while that is so, a long line of cases shows that it is not merely of some importance (1) ; , 89; ; , 827.
(2) , 258.
356 but is of fundamental importance that justice should not only be done, but should manifestly and undoubtedly be seen to be done.
The question therefore is not whether in this case the deputy clerk made any observation or offered any criticism which he might not properly have made or offered; the question is whether he was so related to the case in its civil aspects as to be unfit to act as clerk to the justices in the criminal matter.
The answer to that question depends not upon what actually was done, but upon what might appear to be done.
" This was followed in Rex vs Essex Justices Ex Parte Perkins(1).In Franklin 's Case (2), though on a construction of the provisions of that Act under consideration in that case it was held that the Minister was not acting judicially in discharging his duties, his Lordship accepted the aforesaid principle and expressd his view on the doctrine of 'bias ' thus, at page 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 aforesaid decisions accept the fundamental principle of natural justice that in the case of quasi judicial proceedings, the authority empowered to decide the dispute between opposing parties must be one without bias towards one side or other in the dispute.
It is also a matter of fundamental importance that a person interested in one party or the other should not, even formally, take part in the proceedings though in fact he does not influence the mind of the person, who finally decides the case.
This is on the principle that (1) (2) ; 357 justice should riot only be done, but should manifestly and undoubtedly be seen to be done.
The hearing given by the Secretary, Transport Department, certainly offends the said principle of natural justice and the proceeding and the hearing given, in violation of that principle, are bad.
The second objection is that while the Act and the ' Rules framed thereunder impose a duty on the State Government to give a personal hearing, the procedure prescribed by the Rules impose a duty on the Secretary to hear and the Chief Minister to decide.
This divided responsibility is destructive of the concept of judicial hearing.
Such a procedure defeats the object of personal hearing.
Personal hearing enables the authority concerned to watch the demeanour of the witnesses and clear up his doubts during the course of the arguments, and the party appearing to persuade the authority by reasoned argument to accept his point of view.
If one person hears and another decides, then personal hearing becomes an empty formality.
We therefore hold that the said procedure followed in this case also offends another basic principle of judicial procedure.
The learned counsel further contends that the mind of the State Government was foreclosed before the hearing was given and therefore no real enquiry was held by it as contemplated by the Act.
This argument is based upon the reports published on 27 12 1957 in the 'Deccan Chronicle ' and 'Golconda Patrika '.
Therein it was stated under date December, 26, as follows : " The Chief Secretary, Mr. M. P. Pai, told pressmen today that the Government has already taken a decision to nationalize the road transport in Krishna District and some routes had been chosen.
The Guntur Vijayawada route also comes under the nationalisation scheme.
About 65 buses would be plying oil these routes.
" The Chief Secretary was giving this information on December 6, 1957, even before the enquiry was commenced.
On the basis of this publication, it is contended, that the Government had already taken a decision to nationalize the road transport before the scheme 358 was approved by the Government and that the entire procedure was put through to implement the decision already taken to meet the requirements of the technicalities of law.
In the counter affidavit filed by the first respondent it is stated that the scheme was published in the Andhra Pradesh Gazette dated 24 12 1957 and that the alleged statement only referred to the said proposal under section 68 C of the .
Though the wording of the information published speaks of the decision of the Government, the Chief Secretary obviously must have been referring to the contents of the notification published two days earlier, on 24 12 1957.
We cannot from this publication in the newspapers come to the conclusion that the Government having finally decided to reject all possible objections, went through a farce of an enquiry.
We therefore hold, for the first two reasons, that the quasi judicial enquiry held by the State Government was vitiated by the, violation of the aforesaid fundamental principles of natural justice.
The last argument of the learned counsel for the petitioners is that the Road Transport Corporation, i.e., the first respondent, cannot implement the scheme proposed by the defunct State Transport Undertaking.
Some of the relevant facts are as follows The State Transport Undertaking published the scheme in the Andhra Pradesh Gazette dated November 14, 1957.
It also appeared through its representative, the General Manager, who made his representation to the Secretary of the Transport Department on 26 12 1957.
The State Government approved of the scheme on 7 1 1958 and the approved scheme was published in the Andhra Pradesh Gazette dated 9 1 1958 and it was directed to come into force with effect from 10 1 1958.
The Government of Andhra Pradesh established a Road Transport Corporation under the (Act LXIV of 1950), for the State of Andhra Pradesh, with effect from 11 1 1958.
The State Government transferred the business of the Road Transport Department to the said Corporation for management.
Thereafter, the said Corporation was taking subsequent steps to implement the scheme.
359 The argument is that the Road Transport Corporation has no power under the to take over the business of the State Transport Undertaking and to implement the scheme initiated by that Undertaking.
The said Corporation admittedly comes under the definition of 'State Transport, Authority ' under the Act.
But the question is whether ' the said Corporation is also a successor to the State Transport Authority that initiated the scheme.
It would certainly be the successor if the Corporation was legally entrusted with the duty of carrying on the business the Road Transport Department was doing before.
On January 9, 1958, in exercise of the powers conferred by section 3 of the , the Governor of Andhra Pradesh established with effect from January 11, 1958, a Road Transport Corporation called the Andhra Pradesh Road Transport Corporation for the State of Andhra Pradesh.
In exercise of the power conferred by section 34 of the , the Governor of Andhra Pradesh made an order dated 11th January, 1958, for the following administrative arrangements to come into force "(I) The Andhra Pradesh Road Transport Corporation (hereinafter referred to as the Corporation) shall take over the management of the existing Road Transport Department of the Government of Andhra Pradesh.
(2)All land and all stores, articles and other goods of the Road Transport Department shall pass to the Corporation.
(3) (a) Subject to the provisions of sub paragraphs (b)and (c), all the assets and liabilities of the Road Transport Department shall pass to the Corporation.
The other clauses need not be read as they are only consequential to the aforesaid clauses.
It is therefore clear from the said order that the Government entrusted the management of the Road Transport Department to the Road Transport Corporation and directed the transfer of all assets and liabilities to the said Corporation.
The effect of the said order is that the State 360 Corporation carries on the Road Transport business in the place of the State Transport Department which was functioning as the State Transport Undertaking under the Act before the said order.
If there was no legal impediment in the Government transferring the business carried on by one of its departments and its assets to the Corporation, the Corporation would be a successor to the pre existing State Transport Undertaking.
The petitioners contest the position that the Government has any such power under section 34 of the Road Transport Corporations.
Act, 1950.
Section 34 reads: "(1) The State Government may, after consultation with a Corporation established by such Government, give to the Corporation general instructions to be followed by the Corporation, and such instructions may include directions relating to the recruitment,, conditions of service and training of its employees, wages to be paid to the employees, reserves to be maintained by it and disposal of its profits and stocks.
(2) In the exercise of its powers and performance of its duties under this Act, the Corporation shall not depart from any general instructions issued under subsection (1) except with the previous permission of the State Government.
" The Road Transport Corporation Was constituted for extending and improving the facilities of the road transport in the Andhra Pradesh area.
The Government transferred the Undertaking and its assets to that Corporation and gave it directions under section 34 of the , to take over the management of the said undertaking.
The fact that under the Road Transport Corpora tions Act the Corporation can acquire an undertaking after paying compensation is not of much relevancy for, in this case, the Corporation does not purport to acquire any transport undertaking of the petitioners.
It has not been brought to our notice that the said direction is inconsistent with any of the provisions of the .
We, therefore, hold that the first respondent is the successor to the State Transport Undertaking which 361 proposed the scheme and as admittedly it satisfied the requirements of the definition of I Road Transport Authority ' under the Act, it is within its rights in implementing the scheme approved by the Government.
In the result, for the reason that the State Government did not make the enquiry consistent with the principles of natural justice in approving the scheme, the order approving the scheme is hereby quashed and a direction issued to the first respondent to forbear from taking over any of the routes in which the petitioners are engaged in transport business.
This judgment will not preclude the State Government from making the necessary enquiry in regard to the objections filed by the petitioners in accordance with law.
The petitioners will have liberty to file additional objections if any.
As the petitioners have failed on substantive points in the case, the parties are directed to bear their own costs.
WANCHOO, J.
This petition under Article 32 of the Constitution challenges the scheme of road transport introduced in the Krishna district of Andhra Pradesh.
The petitioners raise two main contentions, namely, (1) that the provisions of Chapter IV A of the , violate their fundamental rights guaranteed under the Constitution, and (2) that the scheme introduced is ultra vires Chapter IV A. I have had the advantage of reading the judgment prepared by my brother Subba Rao, J.
I agree with what he has said on the first contention and therefore do not propose to repeat the facts and the reasons given by him.
I have, however, been unable, with utmost respect, to persuade myself to agree fully with what has been said on the second contention.
I, therefore, proceed to deal with that only.
The second contention of the petitioners is that the scheme of road transport, which is sought to be put into effect, is ultra vires Chapter IV A of the , (IV of 1939), (hereinafter called the Act), inasmuch as the provisions of that Chapter have not 46 362 been strictly followed.
Before I deal with the contentions of the petitioners in this matter, I may indicate briefly the steps required to be taken before a scheme of road transport is finalised under Chapter IV A of the Act.
The first step is the preparation of the Scheme under section 68C, which lays down that where any State Transport Undertaking is of opinion that for the purpose of providing an efficient, adequate, economical and properly coordinated road transport service, it is necessary in the public interest that road transport services in general or any particular class of such service in relation to any area or route or portion thereof should be run and operated by the State Transport Undertaking, whether to the exclusion, complete or partial, of other persons or otherwise, the State Transport Undertaking may prepare a scheme for the purpose.
After the scheme is prepared, it has to be published in the Official Gazette and also in such other manner as the State Government may direct.
The next step is that any person affected by the scheme published under section 68C may, within thirty days from the date of publication, file objections thereto before the State Government; [section 68D(l)].
The third step is that the State Government has to consider the objections and after giving an opportunity to the objectors or their representatives and the representatives of the State Transport Undertaking to be heard in the matter, to approve or modify the scheme; (section 68D (2)).
Finally, the scheme as approved or modified is published in the Official Gazette as the approved scheme; (section 68D(3)).
Then comes the provisions for putting.
this approved scheme into effect.
Section 68F provides that the Regional Transport Authority shall thereupon issue permits to the State Transport Undertaking on its application in pursuance of the approved scheme.
The Regional Transport Authority is also given power to cancel or modify any existing permit or refuse to renew any existing permit for this purpose.
Section 68G provides for compensation where any existing permit is cancelled or its terms are modified.
The main attack of the petitioners is that sections 363 68C and 68D were not complied with.
The particulars of the attack may be summarised as below: (1) There was no State Transport Undertaking in existence which could have published the scheme (68C) (2) Even if a State Transport Undertaking was there, it did not form an opinion as required by section 68C and in particular, the General Manager, who acted for the State Transport Undertaking, had no authority to do so; (3)S. 68D(2) contemplates a hearing by the State Government of the objections filed.
There was no such hearing, as the Home Secretary in charge of Transport Department, who heard the objectors must be deemed to be one of the parties who have to be heard by the State Government, and in any case, the hearing by the Secretary was no hearing by the State Government.
(4)There was no real bearing at all and no genuine consideration of the objections by the State Government as the issue bad already been prejudged, (vide speech of the Chief Secretary on the 26th of December, 1957); and (5)The scheme could not be enforced by the Road Transport Corporation, which replaced the Road Transport Department soon after the scheme had been approved by the State Government.
It is necessary in order to appreciate and decide the point raised on behalf of the petitioners to mention briefly the facts relating to the preparation of the scheme and subsequent steps taken for its approval and enforcement.
The scheme was published on November 14, 1957, under the authority of Shri Guru Pershad, General Manager of the State Transport Undertaking Andhra Pradesh Road Transport.
Chap ter IV A of the Act had come into force from the 15th of February, 1957.
Before that Hyderabad State, as it then was, had passed Act XLV of 1956, amending the locally and incorporating in it provisions similar to the present Chapter IV A. Under the Hyderabad Act, the State Transport Undertaking was defined as the Road Transport 364 Department of the State providing road transport services.
When the Hyderabad State came to end and what was known as the Telengana area of that State was merged in the State of Andhra Pradesh, the Road Transport Department of Andhra Pradesh took over the road transport services in the Telengana area which were being run by the former Hyderabad State.
The present scheme was published, as already stated, on the 14th of November, 1957, by Shri Guru Pershad on behalf of the Road Transport Department of Andhra Pradesh.
The objections to the scheme were received by the Secretary to Government in charge of the Road Transport Department, and the objectors were heard by the Home Secretary in charge of the Transport Department on the 26th and 27th of December, 1957.
The scheme was finally approved by the Governor of Andhra Pradesh on the 7th of January, 1958, and was to come into force from the 10th of January, 1958.
The approved scheme was published in the Gazette on January 9, 1958.
In the meantime, the Government of Andhra Pradesh decided to establish a Road Transport Corporation under the , No. LXIV of 1950, for the State of Andhra Pradesh.
This decision was published on the 20th of December, 1957, and the Road Transport Corporation was to come in existence from the 11th of January, 1958.
It was to take over the business of the Road Transport Department of the State.
The members of the Road Transport Corporation were appointed on the 9th of January, 1958, and the Corporation was established with effect from the 11th of January, 1958.
It was this Corporation, which took over the duty of implementing the approved scheme, which was published on the 9th of January, 1958, and was to come into effect from the 10th of January, 1958.
The steps necessary under sections 68F, 68G and 68H of the Act to put the scheme into force were taken by this Corporation.
The argument of the petitioners under this head is put thus: There was a State Transport Undertaking under Hyderabad Act, which was operating in the present Telengana area of Andhra Pradesh.
This 365 was the Road Transport Department of the Hyderabad State, which became the statutory body under the Hyderabad Act.
When, however, the Hyderabad State came to end and the Telengana area was merged in Andhra Pradesh on the 1st of November, 1956, the State Transport Undertaking of the Hyderabad State continued to function as such for the Telengana area of Andhra Pradesh.
There was no extension of the Hyderabad Act to the rest of Andhra Pradesh, and the present scheme relates to Krishna District which is not in the Telengana area; consequently, it was not open to the State Transport Undertaking which was existing under the Hyderabad Act to frame this scheme for an area which was not in Telengana.
It was also urged that no State Transport Undertaking was formed as such after the coming into force of Chapter IV A of the Act in February, 1957.
I am of the opinion that there is no force in this argument.
It is true that tinder the Hyderabad Act, the State Transport Undertaking was defined as " the Road Transport Department of the State providing road transport service ".
When Hyderabad State came to end on the 1st of November, 1956, the Road Transport Department of Andhra Pradesh became the State Transport Undertaking within the meaning of the Hyderabad Act, though, as that Act was in force only in the Telengana area, road transport services could only be run in that area.
When, however, Chapter IV A of the Act came into force from the 15th of February, 1957, and applied to the whole of the State of Andhra Pradesh, the Hyderabad Act must be deemed to have been repealed by necessary implication, as Chapter IV A of the Act covered exactly the same field as was covered by the Hyderabad Act.
On the 15th of February, 1957, there was only Road Transport Department of Andhra Pradesh, which was in existence and which was providing transport services in certain areas of the State.
Now, under section 68A, a State transport undertaking is defined as any undertaking providing road transport service, where such undertaking is carried on by the Central Government or the State Government. " The Road Transport Department 366 of Andhra Pradesh was obviously an undertaking providing road transport service though only in a part of the State, and was carried on by the State Government of Andhra Pradesh.
Therefore, the Road Transport Department of Andhra Pradesh became the State Transport Undertaking under the definition in Is.
The fact that this undertaking which came in existence by virtue of the definition on the 15th of February, 1957, was at that time providing road transport services only in a part of the State, would not make it any the less a State Transport Undertaking within the meaning of that term and there is nothing in Chapter.
IV A, which precludes a State Transport Undertaking, which is for the time being providing transport services in a part of the State, from extending its activities and framing a scheme for other parts of the State.
I am, therefore, of opinion that a State Transport Undertaking was in existence in November, 1957, when the scheme was prepared and published, and it was the Road Transport Department of Andhra Pradesh.
The contentions on this head are two fold.
In the first place, it is urged that the General Manager, who acted for the State Transport Undertaking had no authority to do so on its behalf This is a question of fact and should have been specifically raised in the petition.
All that, however, is said about the authority of Shri Guru Pershad is to be found in paragraph 11 (e) of the petition in these words: "Mr. Guru Pershad was the General Manager of the Road Transport Department of the erstwhile Hyderabad State.
He was never appointed as Manager of the State Transport Undertaking of Andhra Pradesh, and therefore, he has no legal authority whatever to publish a scheme ".
Now, it is obvious that this objection was only confined to one point, namely, that Shri Guru Pershad had no authority to act for the State Transport Undertaking of Andhra Pradesh, as he was never appointed as manager of that undertaking.
It was not the case of the petitioners that even if he had been appointed as Manager of the Andhra Pradesh State Transport 367 Undertaking, he would have no authority to frame and publish a scheme on behalf of that undertaking.
It appears that Shri Guru Pershad, who was the Manager of the road transport services when they were run by the former Hyderabad State, continued to be such after the Telengana area of the Hyderabad State was merged in Andhra Pradesh.
It is unthinkable that Shri Guru Pershad should have issued a notification in the Gazette on the 14th of November, 1957, styling himself as " General Manager, State Transport Undertaking, Andhra Pradesh Road Transport ", if he was not in fact the General Manager of the Andhra Pradesh Road Transport.
It must, therefore, be held that Shri Guru Pershad was the General Manager of the Andhra Pradesh Road Transport, and, therefore, of the State Transport Undertaking.
His authority to publish the scheme, if he was the Manager of Andhra Pradesh State Transport Undertaking, has not been attacked.
The scheme was published on the 14th of November, 1957, by Shri Guru Pershad as such Manager.
The petitioners cannot at this stage be allowed to challenge his authority to do so, when they did not specifically raise this point in their petitions.
When, therefore, he prepared and published the scheme, it must be held that he did so on behalf of the State Transport Undertaking.
The second part of this contention is that the notification of the 14th November, 1957, does not say that the State Transport Undertaking was of opinion that it was necessary in the public interest that the road transport services should be run and operated by the State Transport Undertaking.
The actual words used in the notification are these: "In exercise of the powers conferred by section 68C of the , it is hereby proposed, for the purpose of providing an efficient, adequate, economical and properly coordinated road transport service in public interest, to operate the following transport service as per the particulars given below with effect from a date to be notified by the Government.
" No doubt, the words " that the State Transport Undertaking is of opinion " are not expressly to be found in this notification ; but at the same time it is impossible that a proposal like this should be prepared and published on behalf of the State Transport Undertaking without its forming an opinion that it was necessary in the public interest to do so.
I am of opinion that the State Transport Undertaking must have formed the opinion necessary under section 68C before it published its proposal and invited objections to the same.
There 175 no exact form of words provided for this purpose, and it would be quite in order to draw the inference from the words used in the notification that it was published after the State Transport Undertaking had formed the opinion necessary under section 68C.
In this connexion, reference may be made to paragraph 2 of the counter affidavit filed on behalf of the Andhra Pradesh State Road Transport Corporation, where it is said that the General Manager of the Andhra Pradesh Road Transport which was the State Transport Undertaking, was of opinion that the transport services in the Krishna District of Andhra Pradesh should be operated in the public interest by the Andhra Pradesh Road Transport.
It was, however, urged on behalf of the petitioners that this only disclosed the opinion of the General Manager and not of the State Transport Undertaking; but, as I have already said above, the authority of the General Manager to speak on behalf of the State Transport Undertaking was never specifically challenged in the petition.
There is, therefore, no force in this contention, and it must be rejected.
This contention relates to the hearing by the State Government under section 68 D(2).
In order to determine this question, it is necessary to consider whether the State Government, when it gives a hearing under section 68 D(2), is acting as a quasi judicial tribunal or is merely performing administrative functions.
If the State Government acts as a quasi judicial tribunal certain considerations apply to the nature of the hearing granted ; if, on the other hand, the State Government acts administratively, certain other 369 considerations apply in determining the propriety of the hearing in fact given in this case.
The contention on behalf of the petitioners is that the hearing contemplated is as a quasi judicial tribunal.
The learned Attorney General, on the other hand, contends that the State Government merely acts administratively when it gives a hearing under this provision.
What constitutes a quasi judicial act has been considered by this Court in Province of Bombay vs Kusaldas section Advani (1).
The principle has been summarised by Das J. (as he then was) at p. 725, in these words: The principles, as I apprehend them are: (i)that if a statute empowers an authority, not being a Court in the ordinary sense, to decide disputes arising out of a claim made by one party under the statute which claim is opposed by another party and to determine the respective rights of the contesting parties who are opposed to each other, there is a lis and prima facie and in the absence of anything in the statute to the contrary it is the duty of the authority to act judicially and the decision of the authority is a quasi judicial act; and (ii)that if a statutory authority has power to do any act which will prejudicially affect the subject, then, although there are not two parties apart from the authority and the contest is between the authority proposing to do the act and the subject opposing it, the final determination of the authority will yet be a quasi judicial act provided the authority is required by the statute to act judicially.
In other words, while the presence of two parties besides the deciding authority will prima facie and in the absence of any other factor impose upon the authority the duty to act judicially, the absence of two such parties is not decisive in taking the act of the authority out of the category of quasi judicial act if the authority is nevertheless required by the statute to act judicially.
" Now, it may be mentioned that the statute is not likely to provide in so many words that the authority (1) ; 47 370 giving the hearing is required to act judicially; that can only be inferred from the express provisions of the statute.
In the present case, it is urged by Mr. Nambiar appearing for the petitioners that there were two parties before the State Government, which was the deciding authority under section 68D(2), namely, the objectors and the representatives of the State Transport Undertaking.
Therefore, according to him, prima facie, there would be a duty to act judicially and there is no other factor which would take away the inference to be deduced from the presence of two parties before the State Government, which has to decide the matter.
Whether there is any other factor will, however, depend upon the circumstances of each case, and the nature of the matter under hearing and the scope of the hearing.
The learned Attorney General contends that if one looks at the nature of the matter to be heard and considers the scope of the hearing before the State Government in this case the only conclusion possible is that the State Government acts administratively when it gives a hearing under section 68(2).
What then is the nature of the hearing before the State Government ? Article 19(6)(ii) is of help in this connection.
It provides that nothing in sub clause (g) of article 19(1), which deals among other things with the right to carry on trade or business shall prevent the State from making any law relating to the carrying on by the State or by a corporation owned or controlled by the State, of any trade, or business, whether to the exclusion, complete or partial, of citizens or otherwise.
Chapter IV A has been inserted in the Act to carry out this purpose, so that the State may operate transport services to the exclusion, complete or partial, of citizens.
The scheme which has been published provides that there will be a complete exclusion of citizens when the scheme is enforced in the area to which it relates.
Now, the question is whether the exclusion of citizens as a whole is also an issue to be decided by the State Government when it hears objections.
Mr. Nambiar submits that the most important thing for the State Government to decide is whether there should be complete exclusion of citizens 371 on the enforcement of the scheme.
The learned Attorney General on the other hand contends that all that the State Government has to do is to see whether the scheme published is in the interest of the public and also whether it will provide an efficient, adequate, economical and properly coordinated road transport service.
The argument continues that if the State Government comes to that conclusion, the complete exclusion which the scheme provides ipso facto follows, and the State Government has not to decide the matter of exclusion as a separate issue.
In other words, the argument is that the State Government is not to decide between the competing claims of citizens providing transport privately and the State Transport Undertaking providing transport to the exclusion of citizens, and there is, therefore, no real lis in this case.
It is also pointed out that objection can not only be filed by the bus operators of that area who are to be excluded but also by anybody who is affected by the scheme, including the members of the travelling public.
Giving, my best consideration to the arguments on either side on this aspect of the matter, I have come to the conclusion that the scope of the hearing before the State Government is of a limited character, though the decision may affect citizens providing transport, the question whether private citizens should or should not be allowed to provide transport is really not a matter in issue before the State Government.
What is in dispute before the State Government is only whether the scheme that is proposed by the State Transport Undertaking is an efficient, adequate, economical and properly coordinated scheme for road transport service and whether it is in the interest of the public.
If the State Government comes to the conclusion that it is so, a complete exclusion proposed automatically follows and the question of exclusion is not to be determined as a separate issue as between the objectors and the State Transport Undertaking.
It is true that the State Government has the right to modify the scheme and in so doing it may drop a part of the scheme; but here again it is not modifying the scheme because of any right of a 372 private citizen to carry on road transport service in a particular area but because it considers that the scheme so far as that particular area is concerned is not efficient, adequate, economical or properly coordinated or in the public interest.
Unless it comes to that conclusion with respect to any part of the area.
comprised in the scheme and modifies it, the consequence of complete exclusion ipso facto follows.
What I wish to emphasise is that the State Government is not determining whether there should be Statemonopoly or private enterprise when it is considering objections under section 68D(2); it is only deciding whether the scheme put forward before it is such as can be approved with or without modifications within the four corners of the law laid down under section 68C. If it comes to that conclusion, the complete or partial exclusion follows.
If on the other hand it modifies any part of the scheme, exclusion fails to that extent.
Considering, therefore, the nature and the scope of the hearing under section 68D(2) it seems to me that there is really no lis.
Even though there may be two parties before the State Government at the bearing, there is no determination of the rights of the parties before it.
The determination is only of the efficiency etc.
of the scheme.
proposed and whether it is in the public interest.
Therefore, it cannot be said that the nature of the hearing in this case makes the State Government a quasi judicial tribunal and the decision a quasijudicial act within the meaning of the principles laid down in Advani 's Case(1).
I may in this connexion refer to Franklin vs Minister of Town and Country Planning (2).
The facts there were these: Under the New Towns Act, 1946, the Minister prepared a draft order for a new town and caused it to be published, and notices were given to the persons affected.
Thereafter objections were received from a number of persons who were the owners and occupiers of dwelling houses and lands in the affected area.
The Act provided that on receipt of the objections, an inspector was to hold a public local inquiry into the objections and make a report to (I) ; (2) ; 373 the Minister.
Thereupon, the Minister made the order under the Act.
These proceedings, as provided by the Act, were taken with respect to a place called Stevenage in 1946 and the Minister passed the necessary order eventually.
Some of the owners and occupiers of dwelling houses and lands situate at Stevenage applied to the Court to have the order quashed, on the ground, among others, that the requirements of the said Act had not been complied with and the interests of the appellants had been substantially prejudiced.
According to them, the New Towns Act, 1946, impliedly required that the objections of the appellants should be fairly and properly considered by the Minister and that the Minister should give fair and proper effect to the result of such consideration in deciding whether the said order should be made and that such implied requirements were not complied with.
It was held in that case that the Minister of Town and Country Planning had no judicial or quasi judicial duty imposed on him and the procedure followed was according to the requirements of the Act.
Now, substitute in the place of the New Towns Act, 1946, Chapter IV A of the Act; substitute in the place of the draft order of the Minister, the draft scheme of the State Transport Undertaking ; and substitute in place of the final order, the final approval of the State Government after hearing the objections.
It would seem, therefore, that the parallel between the present case and Franklin 's case (1) is complete.
There a draft order was published, followed by objections and an inquiry and hearing and a final order.
Here also a draft scheme is published, followed by objec tions and hearing, and final approval.
There the interest of persons occupying lands and houses in the area proposed to be affected by the order were involved.
Here also the interests of the bus operators at least, if not also of the travelling public, are involved.
In spite of that it was held that the Minister had no judicial or quasi judicial duty imposed on him by the Act, and the reason was that he was merely considering whether the scheme should go through.
Once he came to that conclusion after following the procedure (1) ; 374 provided in the Act, the ' effect on those occupying lands and dwelling houses would follow, according to the provisions of the Act.
Here also once the State Government decides that the scheme should be approved, the effect would be complete or partial exclusion of the bus operators of that area, as envisaged in the scheme.
To my mind, therefore, the present case is parallel to Franklin 's case (1) and on a parity of reasoning I would hold that the function of the State Government was administrative when it considered the objections under section 68D(2) and not quasi judicial.
The only difference that I see between the two cases is that the New Towns Act provided specifically for hearing of the objections by an Inspector and not by the Minister while this is not so in the present case.
I shall consider the effect of this later; but this has in my opinion, little, if any, bearing on the question whether the State Government was acting quasi judicially when deciding objections under section 68D(2).
I may also in this connexion refer to Nagendra Nath Bora vs Commissioner of Hills Division (2), where it was held by this Court that the question whether or not an administrative body or authority functions as purely administrative or in a quasi judicial capacity, must be determined in each case on an examination of the relevant statute and rules framed thereunder.
Similar was the view expressed by this Court in Express Newspapers Ltd. vs The Union of India (3), when considering the functions performed by a wage Board, and it was observed that whether the wage Board exercised judicial or quasi judicial functions is to be determined by the relevant provisions of the statute incorporating it and it would be impossible to lay down any universal rule which would help in the determination of this question.
Applying, therefore, the principles laid down by this Court in these cases and taking into account the express provisions contained in Chapter IV A and the Rules framed thereunder, the conclusion at which I arrive is that the hearing under section 68D(2) was not before a quasi judicial tribunal and the decision was not a quasi judicial act and (I) ; (2) A. I.R. 1958 S.C. 398.
(3) A.I.R. 1958 S.C. 878.
375 the State Government was acting purely administratively.
Having reached this decision, let me see what actually happened in this case.
The matter pertains to the Road Transport Department which was in charge of the Chief Minister.
The Home Secretary works under the Chief Minister and was in charge of the Road Transport Department.
The Chief Minister ordered, when the objections were put up before him, that the representation should be heard by the Home Secretary, and thereupon, the Home Secretary heard the objectors and a note of the hearing was placed before the Chief Minister for orders.
The Chief Minister then passed the order approving the scheme.
The main attack on this kind of hearing is two fold.
It is urged in the first place that rule 10 framed under Chapter IV A of the Act provides that the objectors will be given an opportunity of being heard in person or through authorised representatives.
It is said that in view of this rule it was not open to the Chief Minister to direct the Home Secretary to bear the objections when the decision was to be made by the Chief Minister.
It is pointed out that in Franklin 's case (1) there was a specific provision that an Inspector will hold an inquiry and hear the objections and make his report, and thereafter the Minister will pass the final order on the report of the Inspector.
There is no such specific provision in the Act or the Rules in this case, and, therefore, the hearing by the Home Secretary in these circumstances cannot be said to be a hearing by the State Government or the Chief Minister who had to decide the objections.
The learned Attorney General relies in this connexion on the Rules of Business framed under article 166(3) of the Constitution which provides for the making of rules for the more convenient transaction of the business of the Government of the State, a copy of which was shown to us.
It is said in paragraph 13(1) of the counter affidavit that these Rules do not provide for personal hearing; but it is open to the Minister to pass a standing order as he thinks fit for the disposal of business in his Ministry.
Consequently, in exercise of this power, the (1) ; 376 Chief Minister passed an order that the Home Secretary should hear these representations in order to comply with the provision of Chapter IV A and Rule 10, even though there is no provision in the Rules of Business for oral hearing by the Minister or the Secretary.
It is urged by Mr. Nambiar that the order passed by the Chief Minister in this case that the hearing should be given by the Home Secretary was not a standing order but an order in this particular case.
That seems to me to be correct ; but the question is whether, when an administrative hearing of this nature is being given under a rule which provides that the State Government should give a hearing to objectors, it is necessary that the Minister who decides must also hear.
It seems to me that where the hearing is administrative, it is not essential that the Minister must hear, so long as a hearing is given by an officer of the Government.
I may in this connexion refer to article 154 of the Constitution, which provides that the executive power of the State shall be vested in the Governor and shall be exercised by him either directly or through officers subordinate to him in accordance with the Constitution.
This being an ad ministrative hearing comes within the executive power of the State and there would be no infirmity if the Governor, who in view of the provisions of the , is the State Government, authorised through the Chief Minister a subordinate officer to give the hearing.
Reference in this connection may also be made to Local Government Board vs Arlidge (1), which dealt with the manner of hearing of an appeal by the Local Government Board under the Housing, Town Planning &c., Act, 1909.
The following observations of Lord Haldane at p. 132 are apposite in this context : " In the case of a Court of Law tradition in this country has prescribed certain principles to which in the main the procedure must conform.
But what that procedure is to be in detail must depend on the nature of the tribunal.
In modern times it has become increasingly common for Parliament to give an appeal (1) , 132. 377 in matters which really pertain to administration, rather than to the exercise of the judicial functions of an ordinary Court, to authorities whose functions are administrative and not in the ordinary sense judicial.
Such a body as the local Government Board has the duty of enforcing obligations on the individual which are imposed in the interest of the community.
Its, character is that of an organization with, executive functions.
In this it resembles other great departments of the State.
When, therefore, Parliament entrusts it with judicial duties, Parliament must be taken, in the absence of any declaration to the contrary, to have intended it to follow the procedure which is its own, and is necessary if it is to be capable of doing its work efficiently.
" These observations show that when one is dealing with a body like the State Government one has to take into account the procedure usually followed by the State Government in matters that come before it.
In these circumstances if the Minister ordered, in the absence of specific rules on the point, that the hearing should be by the Secretary, he was, in my opinion, complying with the essential requirement, namely, that there should be an oral hearing by the State Government before the decision of the objections.
The bifurcation of the function of hearing from the function of deciding cannot in the circumstances, when the hearing was administrative, be said to be improper or against rule 10, and was necessary in order that the Government may function efficiently.
Therefore, I am of opinion that the hearing by the Secretary was sufficient compliance of rule 10, which required a personal hearing before the decision of the objections.
The second ground of attack under this head is that in any case the Home Secretary who was also in charge of the Road Transport Department was not the right person to hear the objections on the ground that the scheme was put forward by his department.
Here again the fact that the hearing was of an administrative nature has to be borne in mind.
Bearing that in 48 378 mind and also considering that it was the Chief Minister who finally decided the matter and approved the scheme, it cannot be said that the Home Secretary in charge of the Transport Department was an improper person to give the hearing.
After all, the scheme was put forward as a proposal.
It was open to approval or modification after hearing the objections.
The body which put forward the scheme was the State Transport Undertaking which was a limb of the Government.
The Government has in a case of this kind to hear objections against a scheme prepared by one of its own limbs.
In these circumstances, if the Head of the Department, namely, the Secretary hears the oral objections on a scheme prepared by some one in that department who would necessarily be under him, like the General Manager of the Road Transport Department, it does not follow that the Secretary is an improper person to give the hearing because he hears his subordinate who put forward the scheme also, along with the objectors.
Further, the Secretary in this case is not the deciding authority which is the Chief Minister ' He made notes of the hearing and conveyed the arguments to the Chief Minister, and as the matter was purely administrative, the procedure cannot be said to be improper.
I am, therefore, of opinion that the contentions under this head must be rejected.
It is said that there was no real hearing at all and no genuine consideration of the objections as the issue had already been pre judged, and reliance in this connexion is placed on the statement of the Chief Secretary dated the 26th of December, 1957.
It appears that the Chief Secretary said that the Government had already taken a decision to nationalise transport in Krishna District and some routes had been chosen.
Learned Attorney General contends that this only refers to the scheme which had already been published on the 14th of November, 1957.
Mr. Nambiar on the other hand contends that it goes much further and shows that the Government had already made up their mind to nationalise road transport in Krishna District and therefore the hearing which the State Government gave to the objectors to the scheme was 370 a farce.
Now, taking into account what I have said above about the scope of the hearing under section 68D(2), it would be clear that there was no prejudging of the issue so far as the scheme was concerned.
It is true that the Chief Secretary said that there would be nationalisation in Krishna District, which meant of course complete exclusion of the private bus operators; ' but I have already said that the scope of the hearing under section 68D(2) is to consider whether the scheme is efficient, etc., and is in public interest.
If the answer is yes, complete exclusion follows.
Therefore, when the Chief Secretary said that the Government had decided to nationalise road transport in Krishna District, he was certainly not saying that the Government was wedded to the scheme which was published and to which objections had been invited.
The speech merely emphasises the aspect of complete exclusion; but it nowhere says that the scheme which was to bring about the exclusion into effect had already been approved.
I may again in this connection refer to Franklin 's case (ibid), where also an argument was raised that the Minister was biased so far as any consideration of the draft order was concerned, as he had said in an earlier speech that he would make the said order.
It was held that as the Minister had no judicial or quasi judicial duty imposed on him, consideration of bias in the execution of this duty was irrelevant, the sole question being whether or not he genuinely considered the report and the objections.
In the present case also, the sole question was whether the objections to the scheme were genuinely considered.
If after genuine consideration they were approved, complete exclusion would follow.
Simply because the Chief Secretary said that the Government had decided to nationalise road transport in Krishna District, it did not follow that the Government was not prepared to consider fairly the objections to the scheme on the approval of which nationalisation would follow through complete exclusion.
Considering, therefore, that the hearing before the State Government under section 68D(2) was purely administrative, there is no force in this objection.
380 Re.
It is urged that the scheme was proposed by the Andhra Pradesh Road Transport Department as the State Transport Undertaking within the meaning of section 68A and was approved while that undertaking was still in existence.
But immediately after the scheme was approved the Undertaking came to an end and the Road Transport Corporation came into existence and that Corporation could not carry out the scheme which had been approved before it came into existence.
The argument seems to be that the body which prepared the scheme and got it approved is the body which can enforce it, and as the Road Transport Corporation neither prepared it nor got it approved, it cannot enforce it.
I am of opinion that there is no force in this contention.
The Road Transport Corporation came into existence oil the 11th of January, 1958.
On the same date the State Government passed an order under section 34 of the Road Transport Corporation Act No. LIV of 1950 by which it directed that the Corporation shall take the management of the Road Transport Department of the Government of Andhra, Pradesh and all assets and liabilities of the Department shall pass to the Corporation.
The staff of the Road Transport Department were given option to serve under the Corporation and direction was given that those who opt to serve the Corporation shall be employed by the Corporation subject to the regulations made under the Act and the assurance given by the Government to the employees.
It was urged in the first place that such an order could not be passed under section 34 of the Road Transport Corporation Act.
Section 34, however, gives very wide powers to the State Government to give directions to the Corporation, including directions relating to the recruitment, condition of service and training of its employees, wages to be paid to the employee, reserve to be maintained by it and disposal of its profits or stocks.
In the circumstances, it was open to the State Government, under the wide powers Conferred by section 34 of the Road Transport Corporation Act, to ask the Corporation which was being created to take over the assets, liabilities and the employees of the Road Transport 381 Department which was being wound up.
Now, the effect of this order was to make the Road Transport Corporation a successor of the Road Transport Department.
It is true that there is nothing in Chapter IV A of the Act which provides for succession of one kind of undertaking as defined in section 68A(b) by another kind of undertaking as defined therein, but when in fact it happens that the Road Transport Corporation is ordered under section 34 of the Road Transport Corporation Act to take over everything from the Road Trans port Department, there is no reason why it should not be considered to be the successor of the Road Transport Department which was at that time the State Transport Undertaking.
If the Road Transport Corporation is thus a successor of the State Transport Undertaking from the 11th of January, 1958, I do not see why it cannot enforce the scheme which had already been approved at the instance of its predecessor.
I can see no sense in requiring the Road Transport Corporation to go through all these steps which had been gone through by its predecessor, except that it would delay the coming into force of the scheme ; probably, the argument has been raised merely for the sake of delay.
But I am of opinion that the Road Transport Corporation in this case being the successor of the State Transport Undertaking which got the Scheme prepared and approved is en titled to enforce it under section 68 F of Chapter IV A in the absence of any provision to the contrary in the Chapter.
This contention also fails.
In view of what I have said above on the second contention, the petition fails and I would dismiss it with costs.
SINHA, J. I have had the advantage of perusing the judgments prepared by our brothers, Subba Rao and Wanchoo, JJ.
After giving my best consideration to the opinions expressed in the two judgments, I have come to the conclusion that I am not in a position to agree with all the conclusions arrived at by our brother Subba Rao.
Two main controversies were raised on behalf of the petitioners, namely, (1) that the provisions of Chapter 382 IVA of the (which will be referred to in the course of this judgment as the Act), violate the fundamental rights guaranteed to citizens of India under the Constitution, and (2) that the scheme framed under the Act, was ultra vires the Act.
I agree with my brother Subba Rao that the said Chapter IVA of the Act does not infringe any fundamental rights of the petitioners, and that those provisions are constitutionally valid.
I also agree with him in holding that the Road Transport Department of the Andhra Pradesh Government, is a State Transport Undertaking under the Central Act; that the Notification publishing the scheme had been validly done, and that the conditions precedent to the initiation of the scheme, had been fulfilled.
But I do not agree with him in his conclusion that the State Government, in approving the published scheme, was discharging any judicial or quasi judicial function.
On the other hand, I agree with my brother Wanchoo in his conclusion that in so doing, the State Government was only performing its normal administrative function.
As my learned brothers aforesaid have stated the relevant facts in detail, it is not necessary for me to repeat them, but as I differ from my learned brother Subba Rao, with whom some of my colleagues on the Constitution Bench have agreed, and for whose opinions, I have the greatest respect, I should state my reasons for differing from them and for agreeing with our brother Wanchoo.
It may be taken as the settled view of this Court that the question whether a certain decision envisaged in a statute, is judicial or quasijudicial or only administrative in character, must de pend upon the terms of the statute law itself, apart from any pre conceived notions about the functions of a court or other tribunals vested with the duty and jurisdiction to decide controversies as a judicial body, vide Province of Bombay vs Kusaldas section Advani (1), Nagendra Nath Bora vs Commissioner of Hills Division(2) and Express Newspapers Limited vs Union of India (3).
Now, let us see what has been envisaged by the im (1) ; (2) ; (3) 383 pugned provisions of Chapter IVA of the Act.
The first step in the process is the preparation of a scheme of road transport service by a State Transport Undertaking "for the purpose of providing an efficient, adequate, economical and properly coordinated road transport service.
" Such a scheme may be to the exclusion, complete or partial, of other persons or otherwise.
The second step would be to publish such a scheme in the Official Gazette and also in such other manner as the State Government may direct, giving particulars of the nature of the service proposed to be rendered, area or route proposed to be covered and other prescribed particulars (section
68 C).
The third step in that process is the filing of objections to the scheme by any person affected by the scheme so published.
Those objections have to be filed before the State Government within thirty days from the date of the publication of the scheme (section
68 D (1)).
The fourth step is to be taken by the State Government, of considering the objections after giving an opportunity to the objectors or their representatives and the representatives of the State Transport Undertaking, to be heard (section
68 D(2) ).
And the last step is that after hearing all concerned, the State Government may approve or modify the scheme.
It is noteworthy that this section does not contemplate an outright rejection of the scheme but only a modification, if it is necessary.
The scheme as approved or modified, has then to be published in the Official Gazette, and thereupon, the scheme becomes final.
Such a scheme is called the "approved scheme ", and the area or route to which it relate,,;, is called the "notified area" or "notified route" Is.
68 D(3) ).
The approved scheme may at any time be cancelled, or modified by the State Transport Undertaking, according to the procedure already indicated, as contained in section 68 C and section 68 D, if it is proposed to modify it (section 68 E).
The provisions of Chapter IV, relating to the grant of stage carriage permits, etc., have been abrogated so as to make it obligatory on the Regional Trans port Authority to issue permits applied for by a State Transport Undertaking, in pursuance of the approved scheme.
Not only that, with a view to giving effect 384 to the approved scheme in respect of a notified area or notified route, the Regional Transport Authority has been authorized to refuse renewal of any permit, to cancel any existing permit, or to modify the terms of any existing permit (section
68 F).
The provisions of section 64, relating to appeals by aggrieved persons against orders of refusal to grant a permit, or of revocation or suspension of a permit, or of refusal to renew a permit, etc., have been abrogated in so far as those orders have been passed under section 68 F. A review of the provisions aforesaid, contained in sections 68 C to 68 F in Chapter IV A, leads to the following conclusions: (1)A State Transport Undertaking has been authorized to determine whether or not it is in the public interest that road transport services in general, or any particular class of service, should be run and operated by the State Undertaking, in relation to any area or route or a portion thereof, keeping in view the purpose of providing an efficient, adequate, economical and properly coordinated road transport service.
It is for the State Transport Undertaking to prepare a scheme in furtherance of its determination in favour of such a service, and to publish the same in the Official Gazette and elsewhere, with a view to informing the public, including those who may be affected by such a scheme.
(2) Objections to such a scheme may be taken by parties interested, but such objections are not claims.
(3) The State Government is authorized to decide the question whether the proposed scheme should be approved or modified, after hearing the parties or their representatives in support of their objections to the scheme.
As the objections have to be directed to the merits of the scheme proposed by the State Transport Undertaking, there is no question of any lis between conflicting claims.
(4) No particular person or body of persons in the Governmental hierarchy of officers, has been designated as the Authority to hear the objections and to pronounce upon them, unlike the provisions in Chapter IV.
Neither the provisions in Chapter IV A nor the rules made in pursuance of section 68 1, contemplate 385 adducing evidence or calling witnesses in support of or in opposition to the proposed scheme.
(5)The right of appeal as contemplated by section 64 in Chapter IV, has been expressly abrogated by section 68 F(3).
Nor is there any provision in Chapter IV A, requiring reasons to be given in writing for an order.
passed by a Regional Transport Authority under section 68 F(1) and (2), as contrasted with section 57(7) in Chapter IV, which requires the Authority to give its reasons in writing for refusing an application for a permit of any kind, because such an order is open to appeal, revision or review.
The question now arises whether, in view of the provisions of Chapter IV A, summarized above, and the conclusions as indicated above, the determination by the State Government is judicial or quasi judicial in character, as contended for the petitioners, or only of an administrative character, as contended on behalf of the respondents.
In order that a determination may be characterized as judicial or quasi judicial, it is essential that it should be objective, based on evidence pro and con (not necessarily given in accordance with the strict rules of evidence) by a determinate authority who should not have the right to delegate such a function of a judicial character.
Section 68 D(2) authori zes the State Government to decide whether or not the proposed scheme should be approved or modified.
' The "State Government" may mean the Governor himself or any of his Ministers or Deputy Ministers or any officers in the Secretariat, according to the rules of business promulgated under article 166 of the Constitution.
Section 68 D(2) could not have meant that the Governor himself or any of his Ministers should personally hear the objections that would be throwing too great a burden on them.
The objections may be heard by any one who has been delegated that power.
If that is correct, the function to be performed under section 68 D(2), does not satisfy the test of a judicial hearing.
Under that section, the objections may be heard by 'A ' and the decision arrived at by 'B '.
If that is 49 386 a regular procedure under that section, that is not an index of a judicial process.
Another very important consideration pointing to the conclusion that the determination under section 68 D(2) is not of a judicial character (using it in the comprehensive sense, including 'quasi judicial ', which expression has not been approved by high judicial authorities), is that no objective tests have been laid down in Chapter IV A with reference to which, the determination has to be arrived at.
The expressions "efficient", "adequate", "economical", "properly coordinated" and "public interest", are matters of opinion and policy as section 68 C itself indicates, and do not lay down any objective tests.
If I am right in that conclusion, there cannot be any question of evidence forthcoming in proof of something which is subjective to the authority determining that matter.
A very fundamental consideration in this connection, is whether sections 68 C and 68 D contemplate any lis.
In other words, what is the proper scope and ambit of the inquiry envisaged by those sections ? The scheme prepared and published in accordance with section 68 C, by a State Transport Undertaking, is placed before the public only after the Undertaking has reached the conclusion that it is necessary in the public interest.
After the scheme has been prepared and published as aforesaid, the objections to be filed under section 68 D have reference to the basic question whether or not the scheme as published, was in public interest.
Such objections are open to any person or organization, e.g., an Automobile Association, and are not limited only to persons who are providing road transport services.
In my opinion, it is a mistake to suppose that the objections contemplated by section 68 D(l), could be on grounds personal to the objectors who are engaged in the business of providing road transport services.
It is not open to any particular individual carrying on the business of providing road transport services, to claim that his route should be excluded from the operation of the published scheme.
I am led to that conclusion by the effective words of section 68 D(l), namely, "file objections thereto", that is, to the scheme published under section 68 C. 387 The objections have to be limited to the merits of the scheme as propounded by the State Transport Undertaking.
It will, therefore, be opening the gates too wide to hold that the objections have reference to particular routes or portions of routes covered by private transport services.
The underlying purpose of inviting objections, is not to invite "claims" by individual businessmen engaged in providing road transport services, but to bring out useful information bearing on the feasibility and soundness of the scheme, as propounded by the Undertaking.
Once, the Government has decided upon a policy of nationalization of road transport facilities, the question of safeguarding the interest of individual businessmen in that line, is no more relevant.
What is relevant.
for the purpose of the inquiry by the Government, on receipt of objections, is whether the published scheme is in the interest of the public.
In my opinion, therefore, it is erroneous to suppose that the object of section 68 D(l) is to afford any remedy to a private individual in his personal interest.
Particulars of the scheme required to be published under section 68C, are meant for the information of the public, so that persons feeling interested in a public venture like that, may offer intelligent and constructive criticism with reference to the merits of the scheme.
It is equally erroneous to suppose that there are two parties one, represented by the Undertaking, and the other, represented by persons who are engaged in the business of providing road transport services and that the Government is the third party, which is the arbitrator between the two contesting parties.
That, in my opinion, is not a correct reading of the provisions of Chapter IV A of the Act.
The whole aim and object of that Chapter is to replace individual businessmen engaged in that trade, by nationalised road transport services which are meant to be run in the interest of the community as a whole, and thus to serve the best public interest.
The Government is as much interested in the scheme as the Road Transport Undertaking which is a creature and a limb of the Government, brought into existence with a view to implementing the policy of the Government to provide nationalised 388 road transport services.
That being the whole scheme of the policy of nationalisation, it is not correct to represent the State Transport Undertaking as entering into competition with other individuals or incorporated bodies whose business it is to provide the same kind of transport facilities.
That is made clear by the provisions of section 68 F, which, as indicated above, make it obligatory on the Regional Transport Authority to issue permits as applied for by the State Transport Undertaking.
It follows from the foregoing observations that there is no question of the Government functioning as an adjudicating authority as between the rival claims of the Undertaking and private persons engaged in the same kind of activity, or that the Secretary to Government in the Department of Road Transport, when he personally heard the objections, was functioning as a judge, or that he was disqualified, by any bias, from hearing those objections.
If we carry this line of reasoning to its logical conclusion, then even the Minister in charge of the Department, may be said to be equally interested, and therefore, equally biased, and thus, disqualified from hearing those objections and coming to his own determination, as contemplated in section 68 D(2).
In my opinion, the concept that a person should not be a judge in his own cause, is wholly foreign to the scheme and provisions of Chapter IV A of the Act.
The scheme as prepared and published, may have proposed, as it did in the instant case, completely to exclude other persons from providing road transport service in the notified area by the notified routes.
But the State Government is not concerned with determining whether any or some or all of the objectors could be permitted to provide or continue to provide their own road transport service.
The State Government under section 68 D(2) has only to decide whether or not the proposed scheme should be approved or modified in any way.
The decision to be arrived at by the State Government, is confined to the scheme, and is not concerned with rival claims by persons providing road transport service in the same area or by the same routes.
That, in my opinion, is the reason why under that section, the State Government has not been authorized altogether to.
389 cancel the scheme, but only to approve or modify it.
The State Government has to examine the soundness of the declaration made by the Road Transport Undertaking that the proposed scheme is in public interest.
The stage of cancellation comes, if at all, later under section 68 E, when experience gained in working the approved scheme, may lead the State Transport Undertaking to the conclusion that it should be cancelled or modified.
But at the initial stage, that is to say, under section 68 D, the proposed scheme is already there only to be approved or modified in the light of the objections raised, if any.
It has been held and it may be taken as well settled that when there is a competition between a number of applicants for a particular route for supplying road transport service, the Regional Transport Authority or any other Authority deciding between those conflicting claims, has to determine the matter in a quasijudicial way, because they are determining questions affecting the rights of individuals.
But in the proceeding before the State Government, no such rival claims have to be decided upon.
What has to be determined is whether the proposed scheme will serve public interest.
Thus, in proceedings under Chapter IV of the Act, individual claims have to be decided upon, whereas under Chapter IVA, it is the collective interest of the community as a whole, which is the subjectmatter of determination by the State Government.
In other words, the proposed scheme is the outcome of the decision by a limb of the State Government (State Transport Undertaking), which has come to the con clusion that it is in the public interest that road trans port service should be run and operated by the State.
The calling of objections by persons affected by the scheme, is not with a view to deciding between the rival claims of the State Undertaking and individuals providing road transport services in the areas or routes proposed to be covered.
The State Transport Undertaking has not made any claim at this stage.
Such a claim arises after the determination by the State Government Under section 68D(2).
That stage is reached when the State Transport Undertaking applies for permits under section 68F.
Such a claim for a permit, once 390 made by the Undertaking, is no more a rival claim to be treated along with the claims of other individuals providing such road transport services, but an absolute claim which under that section shall be granted by the Regional Transport Authority which is authorized even to cancel an existing permit or modify the terms of an existing permit, or to refuse renewal of permits, with a view to implementing the approved scheme.
In my opinion, therefore, it is not correct to view the proceedings under Chapter IVA before the State Government as a lis between any rival claims, unlike proceedings under Chapter IV of the Act.
In view of these considerations, I would hold that there is no lis between rival claims, no determinate tribunal to determine any lis, and no procedure prescribed in Chapter IVA approximating or even simulating judicial procedure.
That being so, there is no question of any bias, because there can be none in a determination which is come to by officers of the Government in the discharge of their administrative duties.
As already indicated, the question now under consideration, does not admit of a general answer.
The answer must depend upon the relevant statutory provisions, and one case decided on its own basic statutory provisions, cannot be a controlling authority for another; but, by way of illustration, reported cases dealing with similar questions, have been referred to.
My learned brother Wanchoo, J., has referred in detail to Franklin 's case, hence, I need not add any observations with reference to that case.
But another case, namely, Robinson vs Minister of Town and Country Planning (1), perhaps, not referred to at the bar, seems to me to be instructive in so far as it has discussed this very question with reference to the provisions of section 1(1) of the Town and Country Planning Act, 1944, which is in these terms: : " Where the Minister of Town and Country Planning (in this Act referred to as 'the Minister ') is satisfied that it is requisite, for the purpose of dealing satisfactorily with extensive war damage in the area of a local planning authority, that a part or parts of their (I) , 853, 854.
391 area, consisting of land shown to his satisfaction to have sustained war damage or of such land together with other land contiguous or adjacent thereto, should be laid out afresh and redeveloped as a whole, an order declaring all or any of the land in such a part of their area to be land subject to compulsory purchase for dealing with war damage may be made by the Minister if an application in that behalf is made to him by the authority before the expiration of five years from such date as the Minister may by order appoint as being the date when the making of such applications has become practicable.
A part of the area of a local planning authority as to which the Minister is satisfied as aforesaid is in this Act referred to as an 'area of extensive war damage '.
" Lord Greene, M. R., who delivered the leading judgment of the Court of Appeal, reversing that of Henn Collins, J. thus summarized the procedure laid down in the Act : " The procedural provisions in connection with the obtaining of an order under the sub section may, so far as relevant, be summarised as follows: (a) Under sub section
(4) at least two months before the application is made the authority must publish a notice in a local newspaper; (b) under sub section
(5) the application must 'designate ' the land to which the application relates by reference to a map with or without descriptive matter ; (c) under sub section
(6) the a application must be accompanied by a statement illustrated by a map, for indicating the manner in which it is intended that the land in the area of extensive war damage should be laid out as respects its internal arrangement and in relation to the existing or intended lay out of the surrounding locality, and the manner in which it is intended that such land should be used whether for purposes requiring the carrying out of development or otherwise '; (d) under sub section
(7) if the Minister is satisfied that these particulars are adequate for enabling the expediency of the making of an order ' to be properly considered, he notifies the authority who must then advertise for objections; (e) under sched.
I unless the Minister, apart from an objection (which must be accompanied by a 392 written statement of its grounds) decides to refuse the application or to make an agreed modification to meet the objection, he must 'consider the grounds of the objection as set out in the statement ' and may call for a further statement.
Under para.
4 of the schedule the Minister, 'if satisfied that he is sufficiently informed, 'for the purpose of his deciding as aforesaid (sc.
whether or not to make the order applied for), as to the matters to which the objection relates ' he may decide to make the order without further investigation.
Subject, to this, the Minister (para. 5) must give the objector an opportunity of appearing before a person nominated by the Minister and, if the objector avails himself of this, a similar opportunity to the authority.
Under para.
6, if it appears to the Minister that the matters to which the objection relates call for investigation by a public inquiry, he must cause such an inquiry to be held, in which case, the requirements of para.
5 as to a private hearing need not be complied with; (f) under section 1(8), subject to the provisions of sched.
1, the Minister may make the order with or without modification, except that he cannot extend the area unless all persons interested consent.
" In the case of Phoenix Assurance Co., Ltd. vs Minister of Town and Country Planning (1), Henn Collins, J. considered the nature of the order to be passed under section I (I) of the Town and Country Planning Act, 1944, and came to the conclusion that the Minister 's function was of a quasi judicial character.
He followed that decision in the case which came up before the Court of Appeal in Robinson vs Minister of Town and, Country Planning (2).
The Court of Appeal reversed the decision of the learned Judge, and did not approve of his decision in Phoenix Assurance Co., Ltd. vs Minister of Town and Country Planning (1).
In the course of his judgment, Lord Greene, M. R., observed as follows at page 859: " It is the case of an original order to be made by the Minister as an executive authority who is at liberty to base his opinion on whatever material he thinks fit, (I) (2) , 853, 854.
393 whether obtained in the ordinary course of his executive functions or derived from what is brought out at a public inquiry if there is one.
To say that, in coming to his decision, he is in any sense acting in a quasi judicial capacity is to misunderstand the nature of the process altogether.
I am not concerned to dispute that the inquiry itself must be conducted on what may be described as quasi judicial principles, but this is quite a different thing from saying that any such principles are applicable to the doing of the executive act itself, i.e. , the making of the order.
The inquiry is only a step in the process which leads to that result, and there is, in my opinion, no justification for saying that the executive decision to make the order can be controlled by the courts by reference to the evidence or lack of evidence at the inquiry which is here relied on.
Such a theory treats the executive act as though it were a judicial decision (or, if the phrase is preferred, a quasi judicial decision) which it most emphati cally is not.
" I have devoted considerable space to the decision of the Court of Appeal, (supra), to show the close resemblance between the procedure envisaged in the Act of the British Parliament, and the law as laid down in Chapter IV A of the Act.
In the reported case also, there had to be an inquiry if objections were raised to the notified scheme of town planning, and the Minister concerned had to consider all the evidence led on behalf of the objectors.
In that case, unlike the instant case, there was a provision for receiving evidence pro and con, but even then, the Court of Appeal did not hold that the function of the Minister was of a judicial or quasi judicial character, chiefly on the ground that no objective tests were possible in coming to his conclusions before passing the order under the relevant section of the Act of Parliament.
For the reasons given above, I have come to the conclusion, in agreement with my brother Wanchoo, J., that the Government or the Minister concerned, when passing an order under section 68 D(2), had not to discharge a quasi judicial function, but was acting only in its or 50 394 his administrative capacity.
It follows from this con clusion that all considerations flowing from the basic idea of the proceedings before the State Government being of a quasi judicial character, are wholly out of the way.
It must, therefore, be held that the order of the State Government, impugned in this case, is not open to any interference by the courts.
I would, therefore, dismiss the petition with costs.
ORDER In view of the opinion of the majority the order approving the scheme is hereby quashed and a direction issued to the first respondent to forbear from taking over any of the routes in which the petitioners are engaged in transport business.
This will not preclude the State Government from making the necessary enquiry in regard to the objections filed by the petitioners in accordance with law.
The petitioners will have liberty to file additional objections, if any.
The parties to bear their own costs.
| With a view to nationalise the road transport services under Ch.
IV A of the (IV Of 1939), inserted into it by the amending Act 100 of 1956, the General Manager of Andhra State Transport Undertaking published a scheme under section 68C of the Act in the Official Gazette and invited objections thereto.
By an order of the Chief Minister the objections were received and heard by the Secretary to the Home Department, who was in charge of Transport, but were decided by the Chief Minister.
The State Government approved of the scheme and published it in the Official Gazette.
The petitioners, who were plying their buses on various routes in the Krishna District as permit holders under the Act, apprehending that their routes would be taken over by the newly established State Corporation in implementation of the scheme, applied to this Court for the protection of their fundamental rights to carry on their business.
It was contended, inter alia, on their behalf, (i) that Ch.
IVA of the Act was a piece of colourable legislation whose real object was to take over their business, under cover of cancellation of permits, in contravention of article 31 of the Constitution, (2) that the scheme itself was ultra vires the Act, for the reason, amongst others, that the State Government whose duty it was to act judicially in approving the scheme, had transgressed certain fundamental principles of natural justice.
Held (Per curiam), that the question of colourable legislation was, in substance, really one of legislative competence of the legislature that enacted it.
The legislature could only make laws within its legislative competence.
Its legislative field might be circumscribed by specific legislative entries or limited by fundamental rights created by the Constitution.
The legislature could not over step the field of its competency, directly or indirectly.
It would be for the Court to scrutinize if the legislature in purporting to make a law within its sphere, in effect and substance, 320 reached beyond it, it had infact the power to the law, its motive in making it would be irrelevant.
K. C. Gajapaji Narayan Deo vs The ' State of Orissa, [1954] S.C.R. i, followed.
The State of Bihar vs Maharajadhiraja sir Kameshwar singh of darbhangha considered So judged; it could not said that CH.
IVA of the Act was a colourable piece of legislation.
The power vested in the Regional ' Transport Authority by section 68F of the Act involved no transfer of business of the ,existing permit holders to the State Transport Undertaking nor could the latter be said thereunder to take over any assets of the former.
Section 68G of the Act in providing for compensation for un expired period of the permit did not imply that CH.
IVA of the Act involved any transfer of property or possession so as to entitle the permit holder to any compensation under article 31(2) Of the Constitution.
Chapter 1VA of the Act did not, therefore infringe the fundamental right of the petitioners under ' article 31 Of the Constitution.
Per Das, C. J., Bhagwati, and Subba Rao, jj.
While the purpose of section 68C of the Act was no doubt to provide a scheme of road transport service on the lines prescribed by it, the scheme proposed might affect the rights of individual permit holders by excluding them, partially or completely, from the business in any particular route or routes, and the procedure prescribed by section 68D and Rules 8 and 10 framed under the Act, required that the Government should hear both the objectors and the State Transport Undertaking before approving or modifying the scheme.
There was no doubt, therefore, that the State was deciding a lis and it was to do so judicially.
Province of Bombay vs Kusaldas section Advani, ; , Nagendra Nath Bora vs Commissioner, Hills Division, and Express Newspapers Ltd. vs The Union of India, , relied on.
Franklin vs Minister of Town and Country Planning, [19481 A. C. 87, held inapplicable.
It was a fundamental principle of natural justice that the authority empowered to decide a matter must have no bias in it and another, no less fundamental, was that where the Act provided for a personal hearing the authority that heard the matter must also decide it.
The procedure followed in the instant case whereby the Home Secretary, in charge of Transport, himself a party to the dispute, heard the objections and the Chief Minister decided them, violated those principles, and the order of the State Government approving the scheme, therefore,must be quashed.
Per Sinha and Wanchoo, jj.
The sole object of Ch.
IVA, of the Act was to nationalise the road, transport services and the inquiry envisaged by it was of a limited character.
That inquiry 321 was meant to find out whether the scheme propounded was in public interest as required by section 68C of the Act, and not to adjudicate rival claim of permit holder on the one hand and the State Transport Undertaking on the other ; for, on approval of the scheme, exclusion of private transport as proposed by the scheme was bound to follow as a matter of course.
There could, therefore, be no lis, and the Government in approving or modifying the scheme under Ch.
IVA and the Rules framed thereunder must be held to act in its normal administrative capacity.
No objections could be taken, in the instant case, to the procedure adopted by the Government in empowering the Secretary to hear objections while the Chief Minister decided them, and the Secretary could in no sense be a party to any dispute.
Province of Bombay vs Kusaldas section Advani, ; , Nagendra Nath Bora vs Commissioner, Hills Division, ; and Express Newspapers Ltd. vs The Union of India, , referred to.
Franklin vs Minister of Town and Country Planning, [19481 A.C. 87, applied.
Robinson vs Minister of Town and Country Planning, [1947] I All E. R. 851, referred to.
|
Summarize this legal judgement text concisely | Appeal No. 119 of 1955.
Appeal from the judgment and order dated June 16, 1953, of the Punjab High Court in Civil Reference No. 1 of 1953.
A. V. Viswanatha Sastri and Naunit Lal, for the appellant.
H. N. Sanyal, Additional Solicitor General of India, R. Gopalakrishnan, R. H. Dhebar and D. Gupta, for the respondent.
November 24.
The Judgment of the Court was delivered by SARKAR, J.
The appellant is a company carrying on business as a distiller of country liquor.
It was incorporated in May 1945 and was in fact a previously existing company called the Amritsar Distillery Co. Ltd. reconstructed under the provisions of the Company 's Act.
The appellant carried on the same business as its predecessor, namely, sale of the produce of its distillery to licensed wholesalers.
The wholesalers in their turn sold the liquor to licensed retailers from whom the actual consumers made their purchases.
The entire trade was largely controlled by Government regulations.
After the war started the demand for country liquor increased but difficulty was felt in finding bottles in which the liquor was to be sold.
In order to relieve the scarcity of bottles the Government devised in 1940 a scheme called the buy back scheme.
The scheme in substance was that a distiller on a sale of liquor became entitled to charge a wholesaler a price for the bottles in which the liquor was supplied at rates fixed by the Government which he was bound to repay to the wholesaler on the latter returning the bottles.
The 685 same arrangement, but with prices calculated at different rates was made for the liquor sold in bottles by a wholesaler to a retailer and by a retailer to the consumers.
Apparently it was conceived that the price fixed under the scheme would be found to be higher than the price which the bottles would fetch in the open market and the arrangement for the refund of the price would therefore encourage the return of the bottles from the consumers through the intermediaries ultimately to the distiller.
The price refundable was later increased perhaps because the previous price did not fully achieve the desired result of the bottles finding their way back to the distillers.
Sometime in 1944, the Amritsar Distillery Co. Ltd. which then was in existence, insisted on the wholesalers paying to it in addition to the price of the bottles fixed under the buy back scheme, certain amounts described as security deposits and calculated at varying rates per bottle according to sizes for the bottles in which the liquor was supplied to them promising to pay back for each bottle returned at the rate ' applicable to it and further promising to pay back the entire amount paid on a transaction when 90 per cent.
of the bottles covered by it had been returned.
The company while it was in existence realised these additional sums and so did the appellant after it took over the business.
The object of demanding and taking these additional sums was obviously to provide additional inducement for the return of the bottles to the distiller so that its trade in selling the produce of its distillery might not be hampered for want of bottles.
No time limit had been fixed within which the bottles had to be returned in order to entitle a wholesaler to the refund, nor does it appear that a refund had ever been refused.
The price of the bottles received by the appellant under the buy back scheme was entered by it in its general trading account while the additional sum received for them was entered in the general ledger under the heading " Empty Bottles Return Security Deposit Account ".
It is not disputed that for the accounting periods with which this case is concerned, the additional amounts had been taken 686 without Government 's sanction and entirely as a condition imposed by the appellant itself for the sale of its liquor.
The appellant was assessed to income tax on the balance of the amounts of these additional sums left after the refunds made there out.
It had also been assessed to business profits tax and excess profits tax on the same balance.
Its appeals against the orders of assessment to these taxes to the Appellate Assistant Commissioner and thereafter to the Tribunal failed.
It then obtained an order referring a certain question arising out of the assessments for decision by the High Court of Punjab.
The question originally suggested was reframed and in its final form reads thus: Whether on the facts and circumstances of the case the collections by the assessee company described in its accounts as " empty bottle return security deposits" were income assessable under section 10 of the Income tax Act? The High Court answered the question in the affirmative.
The present appeal is against that decision which related to all the three varieties of taxes for which the appellant had been made liable.
We are concerned in this appeal only with the additional sums demanded and received by the appellant and described as security deposit and not with the price of bottles which also it took under government sanction.
The question is whether these amounts called security deposits were.
trading receipts.
Now, as already stated, the appellant 's trade consisted in selling in bottles liquor produced in its distillery to wholesalers.
The sale was made on these terms: In each transaction of sale the appellant took from the wholesaler the price of the liquor, a certain sum fixed by the government, as price of the bottles in which the liquor was supplied and a further sum described as security deposit for the return of the bottles.
The moneys taken as price of the bottles were returned as and when the bottles were returned.
The moneys described as security deposit were also returned as and when the bottles were returned with only this difference that in this case the entire sum taken in one 687 transaction was refunded when 90 per cent.
of the bottles covered by it had been returned, though the remaining 10 per cent.
had not been returned.
Such being the nature of the appellant 's trade and the manner in which it was conducted, these additional sums appear to us to be its trading receipts.
Mr. Vishwanatha Sastri appearing on behalf of the appellant first contended that on these facts the amounts could not be regarded as price and that therefore they were not trading receipts.
He said that the price of the bottles was separately fixed and the amount taken as deposit was different from and exclusive of, it.
This contention is founded on the use of the word price in the buy back scheme in connection with the rates which the distiller was entitled to charge a wholesaler for the bottles.
It seems to us that this contention lays undue emphasis on that word.
We think that the High Court took substantially a correct view of the matter when it said that in realising these amounts " the company was really charging an extra price for the bottles ".
It is clear to us that the trade consisted of sale of bottled liquor and the consideration for the sale was constituted by several amounts respectively called, the price of the liquor, the price of the bottles and the security deposit.
Unless all these sums were paid the appellant would not have sold the liquor.
So the amount which was called security deposit was actually a part of the consideration for the sale and therefore part of the price of what was sold.
Nor does it make any difference that the price of the bottles was entered in the general trading account while the so called deposit was entered in a separate ledger termed " empty bottles return deposit account ", for, what was a consideration for the sale cannot cease to be so by being written up in the books in a particular manner.
Again the fact that the money paid as price of the bottles was repaid as and when the bottles were returned while the other moneys were repaid in full when 90 per cent.
of the bottles were returned does not affect the question for ,none of these sums ceased to be parts of the consideration because it had been agreed that they would be 688 refunded in different manners.
It is not contended that the fact that the additional sums might have to be refunded showed that they were not part of the price.
It could not be so contended because what was expressly said to be the price of bottles and admitted to be price was also refundable.
If so, then a slightly different method providing for their refund cannot by itself prevent these additional sums from being Price.
Now, if these additional sums were not part of the price, what were they ? Mr. Sastri said that they were deposits securing the return of the bottles.
According to him if they were such security deposits, they were not trading receipts.
Again we are unable to agree.
There could be no security given for the return of the bottles unless there was a right to their return for if there was no such right, there would be nothing to secure.
Now we find no trace of such a right in the statement of the care.
The wholesalers were clearly under no obligation to return the bottles.
The only thing that Mr. Sastri could point out for establishing such an obligation was the use of the words " security de posit ".
We are unable to hold that these words alone are sufficient to create an obligation in the wholesalers to return the bottles which they had bought.
If it had been intended to impose an obligation on the wholesalers to return the bottles, these would not have been sold to them at all and a bargain would have been expressly made for the return of the bottles and the security deposit would then have been sensible and secured their return.
The fact that there was no time limit fixed for the return of the bottles to obtain the refund also indicates that there was no obligation to return the bottles.
The substance of the bargain clearly was that the appellant having sold the bottles agreed to take them back and repay all the amounts paid in respect of them.
For this part of the case Mr. Sastri relied on Davies vs The Shell Company of China Ltd. (1), but we do not think that case assists at all.
What had happened there was that the Shell Company had appointed a large number of agents in China to sell its products (1) 689 and had taken from each agent a deposit to secure itself against the risk of default by the agent duly to PI account for the sale proceeds.
The deposits were made in Chinese dollars and later converted into sterling.
When the Company closed its business in China it reconverted the deposits into Chinese dollars and refunded to the agents the deposits made by them.
Owing to a favourable exchange for the conversion of sterling into dollars, the Company made a profit and it was sought to assess this profit to income tax.
It was held that the profit could not be taxed, for the deposits out of which it was made were really not trading receipts at all.
Jenkins, L. J., observed at p. 157: " Mr. Grant described the agents ' deposits as part of the Company 's trading structure, not trade receipts but anterior to the stage of trade receipts, and I think that is a fair description of them.
It seems to me that it would be an abuse of language to describe one of these agents, after he had made a deposit, as a trade creditor of the Company; he is a creditor of the Company in respect of the deposit, not on account of any goods supplied or services rendered by him in the course of its trade, but simply by virtue of the fact that he has been appointed an agent of the Company with a view to him trading on its behalf, and as a condition of his appointment has deposited with or, in other words, lent to the company the amount of his stipulated deposit.
" lie also said at p. 156: it If the agent 's deposit had in truth been a payment in advance to be applied by the Company in discharging the sums from time to time due from the agent in respect of petroleum products transferred to the agent and sold by him the case might well be different and might well fall within the ratio deciding of Landes Bros. vs Simpson (1) and Imperial Tobacco Co. vs Kelly (2).
But that is not the character of the deposits here in question.
The intention manifested by the terms of the agreement is that the deposit should be (1) (2) 87 690 retained by the Company, carrying interest for the benefit of the depositor throughout the terms of the agency.
It is to be available during the period of the agency for making good the agent 's defaults in the event of any default by him ; but otherwise it remains, as I see it, simply as a loan owing by the Company to the agent and repayable on the termination of the agency ".
It would therefore appear that the deposits in that case were held not to be trading receipts because they had not been made as part of a trading transaction.
It was held that they had been received anterior to the commencement of the trading transactions and really formed the trading structure of the Company.
The character of the amounts with which we are Concerned is entirely different.
They were parts of the trading transactions themselves and very essential parts: the appellant would not sell liquor unless these amounts were paid and the trade of the appellant was to make profit out of these sales.
The fact that in certain circumstances these amounts had to be repaid did not alter their nature as trading receipts.
We have already said that it is not disputed that what was expressly termed as price of bottles was a trading receipt though these had to be repaid in almost similar circumstances.
We may point out that it had not been said in Shell Company case(1) that the deposits were not trading receipts for the reason that they might have to be refunded; the reason for the decision was otherwise as we have earlier pointed out, namely, that they were no part of the trading transactions.
We therefore think that the deposits dealt with in the Shell Company case were entirely of a different nature and that case does not help.
Mr. Sanyal was prepared to argue that even if the amounts were securities deposited for the return of the bottles, they would still be trading receipts, for they were part of the trading transactions and the return of the bottles was necessary to enable the appellant to carry on its trade, namely, to sell liquor in them.
As we have held that the amounts had not been paid as security for the return of the bottles, we do not (1) 691 consider it necessary to pronounce upon thiscontention.
We might also refer to the observationsmade in Imperial Tobacco Co. vs Kelly(1) mentioned in the Shell Company case (2) and set out below.
There the Company in the course of its trading activity used to purchase tobacco in America and for that purpose had to acquire American dollars.
It so happened that after it had acquired a certain amount of dollars for making the purchases, it was prevented from buying tobacco in America by Government orders passed due to outbreak of war.
While the dollars lay with the Company, they appreciated in value and later the Treasury acquired the dollars and paid the Company for them in sterling at the then current rate of exchange, as a result of which payment the Company made a profit.
It was hold that the profit was a trading receipt of the Company.
Lord Greene said at p. 300: " The purchase of the dollars was the first step in carrying out an intended commercial transaction, namely, the purchase of tobacco leaf.
The dollars were bought in contemplation of that and nothing else ".
He also observed that the dollars " were an essential part of a contemplated commercial operation ".
It seems to us that the amounts with which this case is concerned, were paid and were refundable as an integral part of a commercial transaction, namely, the sale of liquor in bottles by the appellant to a wholesaler.
The case nearest to the present one is, in our view, that decided by this Court in K. M. section Lakshmanier & Sons vs Commissioner of Income tax and Excess Profits Tax, Madras (3).
There the appellants, who were the assessees, were merchants carrying on business as the sole selling agents for yarn manufactured by the Madura Mills Co. Ltd. They sold the yarn to their constituents and in the relevant accounting period the sales were made under three successive arrangements each of which covered a part of it.
Under each arrangement, the assessees were paid a certain initial (1) (2) (3) ; 692 sum by their customers.
The question was as to the nature of these initial payments.
Under the first arrangement " the appellants had two accounts for each constituent, namely, ' a contract deposit account ' and ' a current yarn account ', crediting the moneys received from the customers in the former account and transferring them to the yarn account in adjustment of the price of the bales supplied then and there, that is, as and when deliveries were made under a contract either in instalment or in full ".
It was held that the amounts received from the customers under this arrangement were taxable as they were merely advance payments of the price and could riot therefore be regarded as borrowed money.
This was clearly so because under this arrangement cash was deposited by a purchaser in respect of a contract of purchase at the time it was made and was to be applied when the goods had been delivered by the appellant under that contract towards the price payable in respect of them, such price not being payable in any other manner.
The arrangement for the second part of the accounting period was that the payment made by a constituent at the time of the making of a contract was taken as " Contracts advance fixed deposit " and it was refunded when the goods under the contract had been supplied and the price in respect thereof paid in full irrespective of the earlier payment.
With respect to the payment initially made under this arrangement Patanjali Sastri, C. J., said at p. 1067 : ". we are of opinion that, having regard to the terms of the arrangement then in force, they partake more of the nature of trading receipts than of security deposits.
It will be seen that the amounts received were treated as advance payments in relation to each " contract number " and though the agreement provided for the payment of the price in full by the customer and for the deposit being returned to him on the completion of delivery under the contract, the transaction is one providing in substance and effect for the adjustment of the mutual obligations on the completion of the contract.
We hold accordingly that 693 the sums received during this period cannot be regarded as borrowed money. .
It seems to us that the amounts involved in the present case were exactly of the nature of the deposits made in the second period in Lakshmanier & Sons ' case (1).
There, as here, as soon as a transaction of sale was made the seller received certain moneys in respect of it.
It is true that in Lakshmanier & Sons ' case the transaction was a contract to sell goods in future whereas in the present case the transaction was a sale completed by delivery of the goods and receipt of the consideration.
But that cannot change the nature of the payment.
In Lakshmanier & Sons ' case, the payment initially made was refundable after the price had been paid; in the present case the contract is to refund the amount on the return of the bottles already sold.
In each case therefore the payment was made as part of a trading transaction and in each case it was refundable on certain events happening.
In each case again the payment was described as a deposit.
As in that case, so in the present case, the payment cannot be taken to have been made by way of a security deposit.
We must therefore on the authority of Laskhmanier & Sons ' case, hold the amounts in the present case to have been trading receipts.
It was Mr. Sastri 's effort to bring the case within the arrangement that prevailed in the third part of the accounting period in Laskhmanier & Sons ' case, the initial payments made during which were held to be loans.
But we think that he has not succeeded in this.
The payments during the third period were made under the following arrangements: " Instead of calling for amounts from you towards 'Security Deposit ' due to bales for which we are entering into forward contracts with you and returning the same to you from the said deposit then and there, as we are doing now, and in order to make it feasible, we have decided to demand from you a certain sum towards Security Deposit and keep the same with us so long as our business connections under forward contracts will continue with you." Under this arrangement a certain (1)[1953] S.C.R. 1057.
694 sum was kept in deposit once and for all and there.
after Lakshmanier & Sons commenced to enter into the trading transactions, namely, forward contracts for sale of yarn with the constituents who deposited the money.
The sum so deposited was to be refunded with interest at three per cent.
per annum at the end of the business connection between the parties, if necessary, after retaining there out any amount due on the contracts made with the constituent which, the latter was at the termination of the business found not to have paid.
Patanjali Sastri, C. J., observed at p. 1063 in regard to the deposits made under this arrangement: "The amount deposited by a customer was no longer to have any relation to the price fixed for the goods to be delivered under a forward contract either in instalments or otherwise.
Such price was to be paid by the customer in full against delivery in respect of each contract without, any adjustment out of the deposit, which was to be held by the appellants as security for the due performance of his contracts by the customer so long as his dealings with the appellants by way of forward contract continued, the appel lants paying interest at 3 per cent.
in the meanwhile, and having, as appears from the course of dealings between the parties ' the use of the money for their own business.
It was only at the end of the " business connection " with the appellants that an adjustment was to be made towards any possible liability arising out of the customer 's default.
Apart from such a contingency arising, the appellants undertook to repay an equivalent amount at the termination of the dealings.
The transaction had thus all the essential elements of a contract of loan, and we accordingly hold that the deposits received under the final arrangement constitute borrowed money ".
Having observed that the description of the payment made by the customer as a deposit made no difference for a deposit included as a loan, the learned Chief Justice further said at p. 1064: " The fact that one of the conditions is that it is to be adjusted against a claim arising out of a possible 695 default of the depositor cannot alter the character of the transaction.
Nor can the fact that the purpose for which the deposit is made is to provide a security for the due performance of a collateral contract invest the deposit with a different character.
It remains a loan of which the repayment in full is conditioned by the due fulfilment of.
the obligations under, the collateral contract ".
In coming to the view that he did with regard to the arrangement prevailing in the third period, the learned Chief Justice referred ' with approval to the case of Davies vs Shell Company of China(1) which we have earlier mentioned.
Now it seems to us that the reasons on which the learned Chief Justice based his conclusion that the deposits during the third period were loans do not apply to the present case.
In the present case, unlike in Lakshmanier & Sons ' case, the amount paid has a relation to the price of the goods sold ; it is part of that price as we have earlier said.
It was a condition of each transaction of sale by the appellant.
It was refundable to the wholesaler as soon as he returned the bottles in which the liquor had been supplied to him in the transaction in respect of which the deposit had been made.
The deposit in the present case was really not a security at all ; it did not secure to the appellant anything.
Unlike Lakshmanier & Sons ' case, in the present case a deposit was made every time a transaction took place and it was refundable under the terms of that transaction independently of other deposits under other transactions.
In Lakshmanier & Sons ' case, the deposit was in the nature of the assee 's trading structure and anterior to the trading operations, as were the deposits considered in Shell Company case(1).
In the case in hand the deposit was part of each trading transaction.
It was re.
fundable under the terms of the contract relating to a trading transaction under which it had been made; it was not made under an independent contract nor was its refund conditioned by a collateral contract, as happened in Lakshmanier & Sons ' case.
(1) 696 We therefore think that the present case is governed by the arrangement covering the second period and: not the third period mentioned in Lakshmanier & Sons case (1), and, come to the conclusion that the amounts with which we are concerned were trading receipts.
Mr. Sastri also referred us to Morley vs Pattersall and contended that the amounts with which we are concerned, were of the same kind as those consideredin that case and were not income.
It seems to us that there is no similarity between the two cases at all.
Tattersall was a firm who sold horses of its constituents on their behalf and received the price which it was liable to pay them.
It so happened that in the course of years various customers did not come and demand the amounts due to them.
Initially Tattersall showed those amounts in its accounts as liabilities which they really were.
Later it thought that it would never have to pay back these amounts and thereupon transferred them to the credit of its partners.
The Revenue sought to tax the amounts so transferred as Tattersall 's income.
The question was whether the amounts upon transfer became Tattersall 's income.
It was never contended that the amounts when received as price of the constituent 's horses sold were Tattersall 's income and the only contention was that they became income upon being transferred to the credit of the partners.
It was held that the amounts had not by being entered on the credit side, become income of the firm.
Sir Wilfrid Greene said at p. 65 : " Mr. Hill 's argument was to the effect that, although they were not trading receipts at the moment of receipt, they had at that moment the potentiality of becoming trading receipts.
That proposition involves a view of Income Tax Law in which I can discover no merit except that of novelty.
" Then again he said: " It seems to me that the quality and nature of a receipt for Income Tax purposes is fixed once and for all when it is received.
What the partners did in (1) ; (2) 697 this case, as I have said, was to decide among themselves that what they had previously regarded as a liability of the firm they would not, for practical reasons, regard as a liability; but that does not mean that at that moment they received something, nor does it mean that at that moment they imprinted upon some existing asset a quality different from what it had possessed before.
There was no existing asset at all at that time.
" All that this case decided was that moneys which were not when received, income and as to this there was no question could never later become income.
With such a case we are not concerned.
The case turned on the fact that the moneys received by Tattersall were never its moneys; they had been received on behalf of others and that receipt only created a liability towards them.
Now it seems to us quite impossible to say that the amounts with which we are concerned were not the appellant 's moneys in the sense that the constituent 's moneys in the hands of Tattersall were not its.
The amounts in this case were not received on account of any one but the appellant.
No doubt these moneys might have to be refunded if certain things happened which however might never happen, but that did not make them the moneys of those who might become entitled to the refund.
Mr. Sastri referred us to the observations of Sir Wilfrid Greene, M. R., in Morley vs Tattersall (1) at p. 65 to the effect that, " The money which was received was money which had not got any profit making quality about it; it was money which, in a business sense, was a client 's money and nobody else 's" and contended that the amounts involved in the presentcase were of the same nature.
We are unable to agree.
If we are right in our view that the amounts were trading receipts, it follows that they must have a profit making quality about them.
Their payment was insisted upon as a condition upon which alone the liquor would be supplied with an agreement that they would.
be repaid oil the return of the bottles.
They (1)(1938) 88 698 were part of the transactions of sale of liquor which produced the profit and therefore they had a profit making quality.
Again, a wholesaler was quite free to return the bottles or not as he liked and if he did not return them, the appellant had no liability to refund.
It would then keep the moneys as its own and they would then certainly be profit.
The moneys when paid were the moneys of the appellant and were thereafter in no sense the moneys of the persons who paid them.
Having given the matter our anxious consideration which the difficulties involved in it require, we think that the correct view to take is that the amounts paid to the appellant and described as " Empty Bottles Return Security Deposit " were trading receipts and therefore income of the appellant assessable to tax.
We agree with the High Court that the question framed for decision in this case, should be answered in the affirmative.
In the result the appeal fails and is dismissed.
The appellant will pay the costs in this Court.
Appeal dismissed.
| The appellant, a distiller of country liquor, carried on the business of selling liquor to licensed wholesalers.
Due to shortage of bottles during the war a scheme was evolved, where under the distiller could charge a wholesaler a price for the bottles in which liquor was supplied at rates fixed by the Government, which lie was bound to repay to the wholesaler on his returning the bottles.
In addition to this the appellant took a further sum from the wholesalers described as 'security deposit ' for the return of the bottles.
Like the price of the bottles these moneys were also repaid as and when the bottles were returned with this difference that the entire sum was refunded only when go% of the bottles covered by it had been returned.
The appellant was assessed to income tax on the balance of the amounts of these additional sums left after the refunds made there out.
Held, that the amounts paid to the appellant and described as 'security deposit ' were trading receipts and therefore income of the appellant assessable to tax.
These amounts were paid as an integral part of the commercial transaction of the sale of liquor in bottles and represented an extra price charged for the bottles.
They were not security deposits as there was nothing to secure, there being no right to the return of the bottles.
684 K. M. section Lakshmanier & Sons vs Commissioner of Income tax and Excess Profits Tax, Madras, ; , followed.
Davies vs The Shell Company of China Ltd., (1951) Tax Cas. 133; and Morley vs Tattersall, , distinguished.
Imperial Tobacco Co. vs Kelly, , referred to.
|
Summarize this legal judgement text concisely | ivil Appeal No. 709 of 1957.
Appeal by special leave from the judgment and order dated April 18, 1955, of the Madras High Court in Case Referred No. 25 of 1952.
A. V. Viswanatha Sastri and M. section K. Sastri, for the appellant.
"M. C. Setalvad, Attorney General for India, R, Ganapathy Iyer, R. H. Dhebar and D. Gupta, for the respondent.
November.24.
The Judgment of the Court was delivered by 649 GAJENDRAGADKAR, J.
The appellant is a firm acting as managing agents of the Janardana Mills Ltd., Coimbatore.
It purchased four contiguous plots of land admeasuring 5 acres 26 cents under four sale deeds executed on October 25, 1941, November 15, 1941, June 29, 1942, and November 19, 1942, respectively for a total consideration of Rs. 8,712 15 6.
After about five years these properties were sold by the appellant in two lots to the Janardana Mills Ltd. The first lot was sold on September 1, 1947, and the second on November 10, 1947, the total consideration for the two sales being Rs. 52,600.
These two sales realised for the appellant a sum of Rs.43,887 0 6 in excess of the purchase price.
The Income tax Officer treated the said amount of Rs. 43,887 as the income of the appellant for the assessment year 1948 49, and assessed it to income tax under the head " business ".
The officer held that there was no evidence to show that the appellant had purchased the said lands for agricultural purposes or that it had acquired them as an investment.
He also found that, since the lands were adjacent to the Janar dana Mills, the appellant must have purchased them solely with a view to sell them to the said mills with a profit.
That is why, though the transaction was in the nature of a solitary transaction, it was held that it had all the elements of a business transaction and was thus an adventure in the nature of trade.
Against this order of assessment the appellant preferred an appeal to the Appellate Assistant Commissioner.
The appellate authority upheld the appellant 's contention that the amount in question was not assessable as it cannot be hold to be income or profit resulting from a profit making scheme, and set aside the order under appeal.
The respondent challenged the correctness of this order by taking an appeal against it to the Incometax Appellate Tribunal.
The tribunal agreed with the view taken by the Income tax Officer and held that the amount in question was not a capital accretion but a gain made in an adventure in the nature of business 82 650 in carrying out a scheme of profit making.
The tribunal rejected the explanations given by the appellant as to why it had purchased the properties and held that the purchase had been made by the appellant solely with a view to sell the said properties at profit to the Janardana Mills.
At the instance of the appellant the tribunal then referred to the High Court of Madras the question suggested by it in these words: " whether there was material for the assessment of the sum of Rs. 43,887 being the difference between the purchase and sale price of the four plots of land as income from an adventure in the nature of trade ".
This reference was heard by Rajagopalan and Rajagopala Ayyangar, JJ., and the question referred has been answered against the appellant.
The High Court has held that the transaction in question was an adventure in the nature of trade and so the respondent was justified in taxing the amount in question under the head " business " for the relevant year.
The application for leave made by the appellant was rejected by the High Court.
Thereupon the appellant applied for, and obtained, special leave to appeal to this Court.
That is how the appeal has been admitted in this Court ; and the only question which it raises for our decision is whether the High Court was right in holding that the transaction in question was an adventure in the nature of trade.
We may at this stage brie y indicate the material facts and circumstances found by the tribunal and the inference drawn by it in regard to the character of the transaction in question.
The appellant purchased the four plots under four different sale deeds.
The first purchase was for Rs. 521 and it covered a piece of land admeasuring 281 cents; the second purchase related to 2 acres 791 cents and the price paid was Rs. 1,250; while the third and the fourth purchases were for Rs. 1,942 and Rs. 5,000 and they covered 28 1/4 cents and 1 acre and 90 cents respectively.
The property purchased under the first sale deed was sold on November 10, 1947, for Rs. 2,825 whereas the three remaining properties were sold on September 1, 1947, 651 for Rs. 49,775, the purchaser in both cases being the Janardana Mills Ltd. The purchase of the first item of property by the appellant had been made in the name of Mr. V. G. Raja, assistant manager of the Janardana Mills Ltd., who is the son in law Of G. Venkataswami Naidu, one of the partners of the appellant firm.
Naturally when this property was sold to the mills the document was executed by the ostensible owner V. G. Raja.
It is not disputed that the purchase in the name of V. G. Raja was benami for the appellant.
All the plots which were thus purchased by the appellant piecemeal are contiguous and they adjoin the mills.
On the plot purchased on June 29, 1942, there stood a house of six rooms which fetched an annual rent of about Rs. 100; and after deduction of taxes, it left a net income of Rs. 80 per year to the appellant.
The other plots are vacant sites and they brought no income to the appellant.
During the time that the appellant was in possession of these plots it made no effort to put up any structures on them or to cultivate them; and so it was clear that the only object with which the appellant had purchased these plots was to sell them to the mills at a profit.
It was, however, urged by the appellant that the properties had been bought as an investment.
This plea was rejected by the tribunal.
The tribunal likewise rejected the appellant 's case that it had purchased the plots for building tenements for the labourers working in the Janardana Mills.
Alternatively it was urged by the appellant that the Janardana Mills decided to purchase the plots because ' an award passed by an industrial tribunal in June 1947 had recommended that the mills should provide tenements for its labourers.
Thus the appellant 's case was that it had not purchased the properties with a view to sell them to the mills and the mills in fact would not have purchased them but for the recommendation made by the award which made it necessary for the mills to purchase the adjoining plots for the purpose of building tenements for its employees.
The tribunal was not impressed even by this plea; and so it ultimately held that the plots had been purchased by the appellant wholly and solely, 652 with the idea of selling them at profit to the mills.
The tribunal thought that since the appellant was the managing agent of the mills it was in a position to influence the decision of the mills to purchase the properties from it and that was the sole basis for its initial purchase of the plots.
On these findings the tribunal reached the conclusion that the sum of Rs. 43,887 was not a capital accretion but was a gain made in the adventure in the nature of business in carrying out the scheme of profit making.
The appellant contends that, on the facts and circumstances found in the cage, it is erroneous in law to hold that the transaction in question is an adventure in the nature of trade.
There is no doubt that the jurisdiction conferred on the High Court by section 66(1) is limited to entertaining references involving questions of law.
If the point raised on reference relates to the construction of a document of title or to the interpretation of the relevant provisions of the statute, it is a pure question of law; and in dealing with it, though the High Court may have due regard for the view taken by the tribunal, its decision would not be fettered by the said view.
It is free to adopt such construction of the document or the statute as appears to it reasonable.
In some cases, the point sought to be raised on reference may turn out to be a pure question of fact; and if that be so, the finding of fact recorded by the tribunal must be regarded as conclusive in proceedings under section 66(1).
If, however, such a finding of fact is based on an inference drawn from primary evidentiary facts proved.
in the case, its correctness or validity is open to challenge in reference proceedings within narrow limits.
The assessee or the revenue can contend that the inference has been drawn on considering inadmissible evidence or after excluding admissible and relevant evidence; and, if the High Court is satisfied that the inference is the result of improper admission or exclusion of evidence, it would be justified in examining the correctness of the conclusion.
It may also be open to the party to challenge a conclusion of fact drawn by the tribunal on the ground that it is not supported by any legal evidence; or that the impugned conclusion drawn 653 from the relevant facts is not rationally possible; and if such a plea is established, the court may consider whether the conclusion in question is not perverse and should not, therefore, be set aside.
It is within these narrow limits that the conclusions of fact recorded by the tribunal can be challenged under section 66(1).
Such conclusions can never be challenged on the ground,,, that they are based on misappreciation of evidence.
There is yet a third class of cases in which the assessee or the revenue may seek to challenge the correctness of the conclusion reached by the tribunal on the ground that it is a conclusion on a question of mixed law and fact.
Such a conclusion is no doubt based upon the primary evidentiary facts, but its ultimate form is determined by the application of relevant legal principles.
The need to apply the relevant legal principles tends to confer upon the final conclusion its character of a legal conclusion and that is why it is regarded as a conclusion on a question of mixed law and fact.
In dealing with findings on questions of mixed law and fact the High Court would no doubt have to accept the findings of the tribunal on the primary questions of fact; but it is open to the High Court to examine whether the tribunal had applied the relevant legal principles correctly or not; and in that sense, the scope of enquiry and the extent of the jurisdiction of the High Court in dealing with such points is the same as in dealing with pure points of law.
This question has been exhaustively considered by this Court in Meenakshi Mills, Madurai vs Commissioner of Income tax, Madras (1).
In this case the appellate tribunal had come to the conclusion that certain sales entered in the books of the appellant company in the names of certain intermediaries, firms and companies, were fictitious and the profits ostensibly earned by them were in fact earned by the appellant which had itself sold the goods to the real purchasers and received the prices.
On this finding the tribunal had ordered that the profits received from such sales should be added to the amount shown as profits in the appellant 's books and should be taxed.
The appellant 654 applied for a reference to the tribunal under section 66(1) and the High Court of Madras under section 66(2), but his application was rejected.
Then it came to this Court by special leave under article 136 and it was urged on its behalf that the tribunal had erred in law in holding that the firms and companies described as the intermediaries were its benamidars and that its application for reference should have been allowed.
This plea was rejected by this Court because it was held that the question of benami is purely a question of fact and not a mixed question of law and fact as it does not involve the application of any legal principles for its determination.
In dealing with the argument urged by the appellant, this Court has fully considered the true legal position in regard to the limitation of the High Court 's jurisdiction in entertaining references under section 66(1) in the light of several judicial decisions bearing on the point.
The ultimate decision of the Court on this part of the case was that " on principles established by authorities only such questions as relate to one or the other of the following matters can be questions of law under section 66(1): (1) the construction of a statute or a document of title (2) the legal effect of the facts found where the point for determination is a mixed question of law and fact; and (3) a finding of fact unsupported by evidence or unreasonable and perverse in nature ".
Having regard to this legal position this Court held that the question of benami was a pure question of fact and it could not be agitated under section 66(1).
The point about the scope and effect of the provisions of section 66(1)has again been considered by this Court in The Oriental Investment Co. Ltd. vs Commissioner of Income tax, Bombay(1) This was a case on the other side of the line.
It was held that whether the appellant 's business amounted to dealing in shares and properties or to investment is a mixed question of law and fact and that the legal effect of the facts found by the tribunal as a result of which the appellant could be treated as a dealer or investor is a question of law.
As a result of this conclusion the appeal (1) ; 655 preferred by the appellant was allowed, the order passed by the High Court refusing the appellant 's request for reference was set aside and the case was remitted to it for directing the tribunal to state a case, on the two questions mentioned in the judgment. ' These two decisions bring out clearly the distinction between findings of fact and findings of mixed questions of law and fact.
What then is the nature of the question raised before us in the present appeal ? The tribunal and the High Court have found that the transaction in question is an adventure in the nature of trade; and it is the correctness of this view that is challenged in the present appeal.
The expression " adventure in the nature of trade" is used by the Act in section 2, sub section
(4) which defines business as including any trade, commerce or manufacture, or any adventure or concern in the nature of trade, commerce or manufacture.
Under section 10, tax shall be payable by an assessee under the head profits and gains of business, profession or vocation in respect of the profit or gains of any business, profession or vocation carried on by him.
Thus the appellant would be liable to pay the tax on the relevant amount if it is held that the transaction which brought him this amount was business within the meaning of section 2, sub section
(4) and it can be said to be business of the appellant if it is held that it is an adventure in the nature of trade.
In other words, in reaching the conclusion that the transaction is an adventure in the nature of trade, the tribunal has to find primary evidentiary facts and then apply the legal principles involved in the expression " adventure in the nature of trade " used by section 2, sub section
It is patent that the clause " in the nature of trade " postulates the existence of certain elements in the adventure which in law would invest it with the character of a trade or business; and that would make the question and its decision one of mixed law and fact.
This view has been incidentally expressed by this Court in the case of Meenakshi Mills, Madurai (1) in repelling the appellant 's argument based on the decision of the (1) ; 656 House of Lords in Edwards vs Bairstow (1).
For the respondent, the learned Attorney General has, however, relied on the fact that the relevant observations in the case of Meenakshi Mills, Madurai, are obiter and he has invited our attention to the decision in the case of Edwards (1) in support of his contention that the judgment of the House of Lords would show that the question about the character of the transaction was ultimately treated as a question of fact.
Before we refer to the said decision it may be relevant to observe that there are two ways in which the question may be approached.
Even if the conclusion of the tribunal about the character of the transaction is treated as a conclusion on a question of fact, it cannot be ignored that, in arriving at its final conclusion on facts proved, the tribunal has undoubtedly to address itself to the legal requirements associated with the concept of trade or business.
Without taking into account such relevant legal principles it would not be possible to decide whether the transaction in question is or is not in the nature of trade.
If that be so, the final conclusion of the tribunal can be challenged on the ground that the relevant legal principles have been misapplied by the tribunal in reaching its decision on the point; and such a challenge would be open under section 66(1) because it is a challenge on a ground of law.
The same result is achieved from another point of view and that is to treat the final conclusion as one on a mixed question of law and fact.
On this view the conclusion is not treated as one on a pure question of fact, and its validity is allowed to be impeached on the ground that it has been based on a misapplication of the true legal principles.
It would thus be seen that whether we call the. conclusion in question as one of fact or as one on a question of mixed law and fact, the application of legal principles which is an essential part in the process of reaching the said conclusion is undoubtedly a matter of law and if there has been an error in the application of the said principles it can be challenged as an error of law.
The difference then is merely one of form and not substance; and on the whole it is (1) ; ; 657 more convenient to describe the question involved as a mixed question of law and fact.
That is the view expressed by this Court in the case of Meenakshi Mills, Madurai (1); and, in our opinion, it avoids any confusion of thought and simplifies the position by treating such questions as analogous to those falling under the category of questions of law.
Let us then consider whether the decision of the ' House of Lords in the case of Edwards(2) is inconsistent with this view.
In this case the respondents, who were respectively a director of a leather manufacturing company and an employee of a spinning firm, purchased a complete cotton spinning plant in 1946 with the object of selling it as quickly as possible at a profit.
They hoped to sell the plant in one lot, but ultimately had to dispose of it in five separate lots over the period from November 1946 to February 1948.
Assessments to income tax in respect of profits arising from this transaction were made under Case I of Schedule D for the years 1946 47 and 1947 48.
On the matter being taken before the Chancery Division, it was held in accordance with the earlier decisions of the Court of Appeal in Cooper vs Stubbs (3) and Leeming vs Jones (4) that the finding of the General Commissioners was a finding of fact which could not be challenged in appeal.
The attention of the court was drawn to the different view expressed in a Scottish case, Commissioners of Inland Revenue vs Fraser (5) where the Court of Session had held that it was at liberty to treat the matter as a mixed question of fact and law, and in fact it had overruled the finding of the General Commissioners in that behalf " It does not seem to me ", observed Upjohn, J., " that in this court I am at liberty to follow the practice of the Scottish Court, attractive though it would be to do so, if the matter was res integra ".
However, since apparently the finding of the General Commissioners did not appear to the court to be satisfactory, the matter was remitted to them with an intimation that they should consider (2) [1956]A.C.14;; (4) (1) [1956)S.C.R. 691.
(3) (1925) To Tax Cas. 29.
(5) 83 658 the question whether the transaction, being an isolated transaction, there was nevertheless an adventure in the nature of trade which was assessable to tax under Case 1 of Schedule D.
The Commissioners were directed to hear further arguments on this point before stating a supplementary case.
After remand, the Commissioners adhered to their earlier view and stated that they were of opinion that the transaction was an isolated case and not taxable and so they discharged the assessments.
With the statement of this supplementary case, the matter was argued before the Chancery Division again.
Wynn Parry, J., who delivered the judgment on this occasion referred to the earlier decisions of the Court of Appeal and held that " on those authorities prima facie the matter is concluded by the decision of the Commissioners that the transaction, the subject matter of the case, was not an adventure in the nature of trade ".
Then the learned judge examined the question as to whether the decision of the Commissioners can be said to be perverse; and held that it could not be so characterised.
In the result the appeal was dismissed.
The question then reached the Court of Appeal but the result was the same.
The Court of Appeal observed that the earlier decisions were binding on it no less than the Court of First Instance ; and so it held that the conclusion of the Commissioners was a finding of fact which the court cannot disturb.
However, it is apparent from the discussion that took place when the court granted leave to.
the Crown to take the matter to the House of Lords that the court did not feel happy about the correctness of the finding made by the General Commissioners in the case.
That is how the matter reached the House of Lords.
The facts in this case were so clearly against the finding of the Commissioners that Viscount Simonds made it clear at the outset that in his opinion, " what.
ever test is adopted, that is, whether the finding that the transaction was not an adventure in the nature of trade is to be regarded as a pure finding of fact or as the determination of the question of law or of mixed law and fact, the same result would be reached in this 659 case.
The determination cannot stand.
This appeal must be allowed and the assessments must be confirmed".
It is in the light of this emphatic statement that the rest of the judgment of Viscount Simonds must be considered.
He referred to the divergence of views expressed in English and Scottish decisions and his conclusion was that " if and so far as there is any,, divergence between the English and Scottish approach it is the former which is supported by the previous authority of this House to which reference has been made "; but he analysed the position involved in both the approaches and held that the difference between them was not of substance.
" To say that a transaction is or is not an adventure in the nature of trade ", observed Viscount Simonds, " is to say that it has or has not the characteristics which distinguish such an adventure but it is a question of law not of fact what are those characteristics, or, in other words, what the statutory language means.
It follows that the inference can only be regarded as an inference of fact if it is assumed that the Tribunal which makes it is rightly directed in law what the characteristics are and that, I think, is the assumption that is made ".
Dealing with the merits of the case, Viscount Simonds observed that " sometimes, as in the case as it now comes before the Court where all the admitted or found facts point one way and the inference is the other way, it can only be a matter of conjecture why that inference has been made.
In such a case it is easy either to say that the Commissioners have made a wrong inference of fact because they have misdirected themselves in law or to take a short cut and say that they have made a wrong inference of law, and I venture to doubt whether there is more than this in the divergence between the two jurisdictions which has so much agitated the Revenue authorities ".
Lord Radcliffe substantially agreed with this view.
He also referred to the divergence of views expressed in Scottish and English decisions and observed that " the true position of the Court in all these cases can be shortly stated.
If a party to a hearing before the Commissioners expresses dissatisfaction with their determination 660 as being erroneous in point of law,it is for them to state a case and in the body of it to set out the facts that they have found as well as their determination.
I do not think that inferences drawn from other facts are incapable of themselves being findings of fact, although there is value in the distinction between primary facts and inferences drawn from them.
When the case comes before the Court, it is its duty to examine the determination having regard to its knowledge of the relevant law.
If a case contains anything ex facie which is bad in point of law and which ' bears upon the determination, it is obviously, erroneous in point of law.
But, without any such misconception appearing ex facie, it may be that the facts found are such that no persons acting judicially and properly instructed as to the relevant law could have come to the determination under appeal.
In those circumstances,too, the Court must intervene ".
Lord Radcliffe remarked that the English courts had been led to be rather overready to treat these questions as pure questions of fact and added "if so I would say with very great respect that I think it a pity that such a tendency should persist ".
Therefore, it seems to us that in effect this decision is not inconsistent with the view we have taken about the character of the question raised before us in the present appeal.
As we have already indicated, to avoid confusion or unnecessary complications it would be safer and more convenient to describe the question about the character of the transaction in the context as a question of mixed law and fact.
The learned Attorney General has invited our attentionto the fact that the form in which the question referred tothe High Court has been framed in the present case seems to assume that the impugned finding is a finding of fact.
It is only in regard to a finding of fact that a question can be properly framed as to whether there was material to support the said finding.
We would, therefore, like to add that it would be more appropriate to frame the question in this form: whether, on the facts and circumstances proved in the case, the inference that the transaction in 661 question is an adventure in the nature of trade is in law justified ? In substance, that is the basis on which the question has been framed by the respondent and considered by the High Court.
This question has been the subject matter of several judicial decisions; and in dealing with it all the judges appear to be agreed that no principle can be evolved which would govern the decision of all cases in which the character of the impugned transaction falls to be considered.
When section 2, sub section
(4), refers to an adventure in the nature of trade it clearly suggests that the transaction cannot properly be regarded as trade or business.
It is allied to transactions that constitute trade or business but may not be trade or business itself.
It is characterised by some of the essential features that make up trade or business but not by all of them; and so, even an isolated transaction can satisfy the description of an adventure in the nature of trade.
Sometimes it is said that a single plunge in the waters of trade may partake of the character of an adventure in the nature of trade.
This statement may be true; but in its application due regard must be shown to the requirement that the single plunge must be in the waters of trade.
In other words, at least some of the essential features of trade must be present in the isolated or single transaction.
On the other hand, it is sometimes said that the appearance of one swallow does not make a summer.
This may be true if, in the metaphor, summer represents trade; but it may not be true if summer represents an adventure in the nature of trade because, when the section refers to an adventure in the nature of trade, it is obviously referring to transactions which individually cannot themselves be described as trade or business but are essentially of such a similar character that they are treated as in the nature of trade.
It was faintly argued for the appellant that it would be difficult to regard a single or an isolated transaction as one in the nature of trade because income resulting from it would inevitably lack the characteristics attributed to it by Sir George Loundes in Commissioner of I. T. vs Shaw Wallace and Company(1). 'Income their Lordships (1) (1932) L. R. 59 I.A. 206.
662 think ", observed Sir George Loundes, " in this Act connotes a periodical monetary return coming in with some sort of regularity or expected regularity from definite sources Then the learned judge proceeded to observe that income has been likened pictorially to the fruit of a tree, or the crop of a field.
It is essentially the produce of something which is often loosely spoken of as capital".
In our opinion, it would be unreasonable to apply the test involved in the use of this pictorial language to the decision of the question as to whether a single or an isolated transaction can be regarded as an adventure in the nature of trade.
In this connection we may, with respect, refer to the comment made by Lord Wright in Raja Bahadur Kamakshya Narain Singh of Ramgarh vs Commissioner of I. P., Bihar and Orissa (1) that " it is clear that such picturesque similes cannot be used to limit the true character of income in general ".
We are inclined to think that, in dealing with the very prosaic and sometimes complex questions arising under the Income tax Act, use of metaphors, however poetic and picturesque, may not help to clarify the position but may instead introduce an unnecessary element of confusion or doubt.
As we have already observed it is impossible to evolve any formula which can be applied in determining the character of isolated transactions which come before the courts in tax proceedings.
It would besides be inexpedient to make any attempt to evolve such a rule or formula.
Generally speak ing, it would not be difficult to decide whether a given transaction is an adventure in the nature of trade or not.
It is the cases on the border line that cause difficulty.
If a person invests money in land intending to hold it, enjoys its income for some time, and then sells it at a profit, it would be a clear case of capital accretion and not profit derived from an adventure in the nature of trade.
Cases of realisation of investments consisting Of purchase and resale, though profitable, are clearly outside the doma in of adventures in the nature of trade.
In deciding (1) (1943) L.R. 70 I.A, 180, 193.
663 the character of such transactions several factors are treated as relevant.
Was the purchaser a trader and were the purchase of the commodity and its resale allied to his usual trade or business or incidential to it ? Affirmative answers to these questions may furnish relevant data for determining the character of the transaction.
What is the nature of the commodity purchased and resold and in what quantity was it purchased and resold ? If the commodity purchased is generally the subject matter of trade, and if it is purchased in very large quantities, it would tend to eliminate the possibility of investment for personal use, possession or Goverment.
Did the purchaser by any act subsequent to the purchase improve the quality of the commodity purchased and thereby made it more readily resaleable ? What were the incidents associated with the purchase and resale ? Were they similar to the operations usually associated with trade or business ? Are the transactions of purchase and sale repeated ? In regard to the purchase of the commodity and its subsequent possession by the purchaser, does the element of pride of possession come into the picture ? A person may purchase a piece of art, hold it for some time and if a profitable offer is received may sell it.
During the time that the purchaser had its possession he may be able to claim pride of possession and aesthetic satisfaction ; and if such a claim is upheld that would be a factor against the contention that the transaction is in the nature of trade.
These and other considerations are set out and discussed in judicial decisions which deal with the character of transactions alleged to be in the nature of trade.
In considering these decisions it would be necessary to remember that they do not purport to lay down any general or universal test.
The presence of all the relevant circumstances mentioned in any of them may help the court to draw a similar inference; but it is not a matter of merely counting the number of facts and circumstances pro and con; what is important to consider is their distinctive character.
In each case, it is the total effect of all relevant factors and circumstances that determines the character of the transaction; and so, though we may attempt to derive some assistance from decisions bearing on this point, we cannot seek to deduce any rule from them and mechanically apply it to the facts before us.
In this connection it would be relevant to refer to another test which is sometimes applied in determining the character of the transaction.
Was the purchase made with the intention to resell it at a profit ? It is often said that a transaction of purchase followed by resale can either be an investment or an adventure in the nature of trade.
There is no middle course and no half way house.
This statement may be broadly true; and so some judicial decisions apply the test of the initial intention to resell in distinguishing adventures in the nature of trade from transactions of investment.
Even in the application of this test distinction will have to be made between initial intention to resell at a profit which is present but not dominant or sole; in other words, cases do often arise 'Where the purchaser may be willing and may intend to sell the property purchased at profit, but he would also intend and be willing to hold and enjoy it if a really high price is not offered.
The intention to resell may in such cases be coupled with the intention to hold the property.
Cases may, however, arise where the purchase has been made solely and exclus ively with the intention to resell at a profit and the purchaser has no intention of holding the property for himself 'or otherwise enjoying or using it.
The presence of such an intention is no doubt a relevant factor and unless it is offset by the presence of other factors it would raise a strong presumption that the transaction is an adventure in the nature of trade.
Even so, the presumption is not conclusive; and it is conceivable that, on considering all the facts and circumstances in the case, the court may, despite the said initial intention, be inclined to hold that the transaction was not an adventure in the nature of trade.
We thus come back to the same position and that is that the decision about the character of a transaction in the context cannot be based solely on the application of any abstract rule, principle or test and 665 m st in every case depend upon all the relevant facts and circumstances.
Let us now consider some of the decisions to which our attention was invited.
Normally the purchase of land represents investment of money in land; but where a company is formed for the purpose inter alia of acquiring and reselling mining property, and after acquiring and working various property, it resells the whole to a second company receiving payment in fully paid shares of latter company, it was held in The Californian Copper Syndicate (Limited and Reduced) vs Harris (Surveyor of Taxes) (1) that the difference between the purchase price and the value of the shares for which the property was exchanged is a profit assessable to income tax.
In this case Lord Justice Clerk has observed that "it is quite a well settled principle in dealing with the question of assessment of Income Tax, that where the owner of an ordinary in.
vestment chooses to realise it, and obtains a greater price for it than he originally acquired it at, the enhanced price is not profit in the sense of Schedule D of the Income Tax Act "; and he added that " it is equally well established that the enhanced value obtained from realisation or conversion of security may be so assessable where what is done is not merely a realisation or a change of investment but an act done in what is truly the carrying on or carrying out of a business ".
This was a clear case where the company was held to be carrying on the business of purchase and sale of mining property.
Where land purchased, and subsequently developed, with the object of making it more readily saleable, was sold at a profit, the intention of the assessee was treated to be not to hold the land as an investment, but as a trading asset in Cayzer, Irvine and Co. Ltd. vs Commissioners of Inland Revenue(2).
In his judgment, Lord President Normand referred to the large development expenditure incurred by the assessee to improve the property and observed that it appeared to be on the whole consistent with the idea that it was carrying on a trade in land rather than with the idea that (1) (2) 84 666 it was throughout holding it as an investment only to be realised if at all when it desired to meet some financial need.
In repelling the plea that the transaction showed investment, the Lord President added that the Commissioners " with their knowledge and experience of these matters, have come to the conclusion that the intention was to hold this estate not as an investment but as a trading asset and in, order to develop it and to market it ".
It would thus appear that the conduct of the assessee in incurring a large amount of expenditure on the development of land consisting mainly in the construction of roads and sewers was held to justify the inference that the transaction was an adventure in the nature of trade, though the property purchased and sold was land.
In the Commissioner 's of Inland Revenue vs Livingston (1) the assessees respondents were a ship repairer, a blacksmith and a fish salesmen 's employee; they purchased as a joint venture a cargo vessel with a view to converting it into a steam drifter and selling it.
They were not connected in business and they had never previously bought a ship.
After the ship was purchased, extensive repairs and alterations were carried out by the orders of the respondents and the ship was then sold at a profit.
It was held that the profit arising from the transaction was assessable to income tax under Case I of Schedule D. Lord President Clyde said that in deciding whether the profits in question were taxable, regard must be had to the character and circumstances of the particular venture.
" If the venture was one consisting simply in an isolated purchase of some article against an expected rise in price and, a subsequent sale ", observed the Lord President, " it might be impossible to say that the venture was in the nature of trade ".
According to him the test to be applied would be whether the operations involved in the transaction are of the same kind and carried on in the same way as those which are characteristic of ordinary trading in the line of business in which the venture was made.
If they are, there was no reason why the venture should not be (1), 667 regarded as in the nature of trade merely because it was a single venture which took only three months to complete.
Reference was then made to the steps taken ,by the assessees to buy a secondhand vessel and to ,convert into a marketable drifter; and it was stated that the profit made by the venture arose not from the mere appreciation of the capital value of an isolated purchase for resale but from the expenditure on the subject purchased of money laid out upon it for the purpose of making it marketable at a profit.
" That ", said the Lord President, " was the very essence of trade ".
It was in this connection that the Lord President observed that the appearance of a single swallow does not make a summer.
It would thus be noticed that this decision was based substantially on the ground that after the ship was purchased the assessees bestowed labour and money on converting it into a marketable drifter and that imprinted upon the transaction the character of trade.
It is true that some of the observations made by the Lord President would indicate that from the intention to resell at a profit it would be impossible to attribute to the transaction the character of an adventure in the nature of trade.
However, as we will presently point out, these observations have been explained by the Lord President himself subsequently in Rutledge vs Commissioners of Inland Revenue (1); and it is to this case that we will now refer.
In the case of Rutledge(2) the appellant was a moneylender who was also interested in a cinema company in 1920.
Since that time he had been interested ill various businesses.
He was in Berlin in 1920 on business connected with the cinema company where he was offered an opportunity of purchasing very cheaply a large quantity of paper.
He effected the purchase and within a short time after his return to England he sold the whole consignment to one person at a considerable profit.
This profit 'Was held liable to assessment to income tax, Schedule D, and to excess profits duty as being profit of an adventure in the nature of trade.
This assessment was the subject matter (1) 668 of an appeal before the Court of Appeal, and on behalf of the appellant the observations made by the Lord President Clyde in the case of Livingston (1) were pressed into service; but the Lord President did not accept the plea based on his earlier observations because he said that the said observations were intended to show that a single transaction fell far short of constituting a dealer 's trade; whereas, in the present case, the question was whether the transaction was an adventure in the nature of trade.
The Lord President agreed that mere intention is not enough to invest a transaction with the character of trade but he added that, if the purchase is made for no purpose except that of resale at a profit, there seems little difficulty in arriving at the conclusion that the deal was in the nature of trade though it may be wholly insufficient to constitute by itself a trade.
Then he referred to the illustration which he had cited in his earlier decision about the purchase of a picture and observed that if a picture was purchased to embellish the purchaser 's own house for a time, he might sell it if the anticipated appreciation in the value ultimately realised itself.
" In such a case ", says the Lord President, " I pointed out that it might be impossible to affirm that the purchase and sale constituted an adventure in the nature of trade although, again, the crisis of judgment might turn on the particular circumstances ".
It would thus be clear that the strong observations made by the Lord President in the case of Livingston (1) must be considered in the light of the clarification made by him in this case.
Lord Sands, who agreed with the Lord President has thus observed: "Your Lordship in the Chair has indicated that there may be cases of purchase and resale at a profit where the transaction cannot be said to be in the nature of trade.
In particular, this may be the case where there is no definite intention of reselling when the purchase is made ".
This decision, therefore, shows that where the assessee purchased a very large quantity of paper with the intention to sell it at profit the transaction was treated as an adventure in the nature of trade.
It was held (1) 669 to be a most successful adventure on the part of the assessee and having regard to the circumstances attending the purchase and sale it was treated as an adventure in the nature of trade.
In T. Beynon & Co. Ltd. vs Ogg (1) the court was dealing with the case of a company which was carrying on business as coal merchants, ship and insurance brokers and as sole selling agent for various colliery companies in which latter capacity it was a part of its duty to purchase wagons on its own account as a speculation and subsequently to dispose of them at a profit.
The assessee contended that the transaction of purchase and sale being an isolated one the profit was in the nature of a capital profit on the sale of an investment and should be excluded in computing its liability to income tax.
The court held that the profit realised was made in the operation of the company 's business and was properly included in the computation of company 's profits for assessment under Schedule D.
It appears that, in 1914, acting as agent on behalf of two colliery , companies, the assessee had purchased two lots of wagons each of which consisted of 250 wagons.
During the course of negotiations the assessee, foreseeing that the cost of material and wages was likely to increase, determined to buy a, third lot of 250 wagons for itself and did eventually purchase it.
In July 1915 the assessee sold this lot and made a profit of pound 2,500.
The question which arose for decision was whether this sum was chargeable to incometax.
In dealing with the argument that as an isolated transaction the profit arising out of it was not chargeable to tax, Sankey, J., observed that he thought " in most cases an insolated transaction does not fall to be chargeable ".
But he added " you have to consider the transaction and you cannot lay it down as a matter of law without regard to the circumstances that in this case the pound, 2,500 is not chargeable ".
Then the learned judge considered that the number of wagons purchased was large and held that the other circumstances attending the purchase and sale of the said wagons showed that this transaction was a (1) 670 transaction, and this profit was a profit " with the result that it made the operation of the assessee in that behalf its business.
The learned judge ' however, added a word of caution that he did not think it desirable to lay down any rule as to where the line ought to be drawn, and that it was not even possible to lay down such a rule.
" But ", said the learned judge, " it is perfectly easy to say whether Case A or Case B falls on the one side or the other ".
In the Balgownie Land Trust, Ltd. vs The Commissioners of Inland Revenue (1) the owner of a landed estate, at his death, had left his estate to trustees with a direction to realise.
The trustees were not successful in their efforts to sell the estate in the market.
So they formed a company with general powers to deal in real property ' and transferred the estate to this company in exchange for shares which were allotted to the beneficiaries under the trust and were, at the date of the appeal still mainly held by those beneficiaries or their representatives.
Soon after its incorporation the purchaser company made a substantial purchase of some other property acquired by borrowing on the security of the original estate.
The company received rents and paid a regular dividend on its capital.
In 1921 and the following years parts of the original estate were sold and in 1925 the whole of the additional property was sold.
When the profits realised by the sales were taxed under Schedule D for the year 1926 27, the assessee contended that the transactions in question were not in the nature of trade and the profits arising therefrom cannot be taxed.
This contention was negatived by the General Commissioners whereupon the assessee appealed.
Lord President Clyde described the problem raised by the assessee as one of.
the most familiar problems under Case I of Schedule D and ob.
served that " a single plunge may be enough provided it is shown to the satisfaction of the Court that the plunge is made in the waters of trade; but the sale of a piece of property if that is all that is involved in the plunge may easily fall short of anything in the nature of trade.
Transactions of sale are characteristic (1) 671 of trade, but they are not necessarily distinctive of it; much depends on the circumstances".
Then the conduct of the assessee after its incorporation was considered and it was held that the purchase of the property in substance amounted to a launching forth albeit, not in a very large scale.
In the result the finding of the Commissioners was confirmed and the profit, Was held liable to tax.
In Martin vs Lowry (1) the House of Lords was considering a case of a wholesale agricultural machinery merchant who had never had any connection with the linen trade purchasing from the government the whole of its surplus stock of aeroplane linen (some 44 million yards) at a fixed price per yard.
The contract of purchase provided in detail as to delivery, and the payment of the price.
The purchaser failed in his original attempt to sell the whole of the linen to Belfast linen manufacturers outright.
Then he sought to bring pressure on them by placing the linen for sale to the public.
It led to an extensive advertising 'campaign, renting of offices and engaging advertising manager, a linen expert as adviser and a staff of clerks.
Sales then proceeded rapidly and soon the whole stocks were disposed of.
In all 4,279 orders were received from 1,280 purchasers.
Assessment to income tax and excess profits duty were made upon the assessee in respect of profits of the transaction.
It was held that the dealings of the assessee in linen constituted the carrying on of a trade of which the profits were chargeable to income tax and excess profits duty.
One of the points raised before the House of Lords was that the assessee did not carry on trade or business but only engaged in a single adventure not involving trading operation.
In rejecting this contention, Viscount Cave, L. C., observed that " the Commissioners have found as a fact that he did carry on trade, and they set out in the Case ample material upon which they could come to that conclusion ".
He added that, indeed, having regard to the methods adopted for the resale of the linen, to the number of operations into which the assessee entered and to the time occupied by (1) 672 the resale, he did not himself see how they could have come to any other conclusion.
The other point raised in the appeal was that the profits in question did not come within the description of annual profits or ,gains but we are not concerned with that point.
In F. A. Lindsay, A. E. Woodward and W. Hiscox vs Commissioners of Inland Revenue (1) the appellant L, a wine merchant, had on hand a large quantity of American rye whisky.
He invited the appellants W & H who were also engaged in the wine trade to join with him in a venture of shipping the whisky to the United States.
It was agreed that W & H should contribute certain sums towards expenses and that the profits should be shared in certain proportions.
agreement was not reduced to writing.
The shipping of the whisky was arranged by L with consultation with W & H and was carried out gradually over a period of two years.
From time to time W & H met L who told them that the whisky had been successfully shipped to the United States and sold there profitably.
Subsequently the appellants decided to discontinue the export of whisky and to employ the monies which they had accumulated in the purchase with a view to resale of a wine business in Portugal.
In respect of the profits made by the appellants from the sale of wine an assessment was made on them jointly for 1922 23.
The Special Commissioners found that a partnership or joint venture subsisted between the appellants and that the profits of the sales of whisky were assessable to income tax.
The Lord President Clyde rejected the appellant 's contention and observed that " the nature of the transaction apart from the fraudulent breaches of law which were inherent in it was neither more nor less than the commercial disposal of a quantity of rye whisky ".
In point of fact the disposal was not effected by a single transaction but extended over a year and more; and so it could not fall outside the sphere of trade.
This was a clear case where a large number of distinctive features of trade were associated with the transaction.
(1) 673 The transaction of the purchase and sale of whisky was again brought before the court for its decision in the Commissioners of Inland Revenue vs Fraser (1).
In this case the assessee, a woodcutter, bought through an agent for resale whisky in bond for pound 407.
Nearly three years thereafter the whisky was sold at a profit for pound, 1,131.
This was the assessee 's sole dealing in whisky.
He had no special knowledge of the trade and he did not take delivery of the whisky nor did he have it blended and advertised.
Even so, it was held that the transaction was an adventure in the nature of trade.
It may be mentioned that when the matter was first taken before the Commissioners they took the view that an adventure in the nature of trade had not been carried on by the assessee, that merely an investment had been made and subsequently realised and so the profit was not assessable to income tax.
This view was, however, reversed by the First Division of the Court of Session and it was held that in coming to the conclusion the Commissioners had misdirected themselves as to the meaning of " being engaged in an adventure in the nature of trade ".
The Lord President Normand conceded that it would be extremely difficult to hold that a single transaction amounted to a trade but he added that it may be much less difficult to hold that a single transaction was an adventure in the nature of trade.
" There was much discussion ", observed the Lord President, " as to the criterion which the court should apply.
I doubt if it would be possible to formulate a single criterion.
" The following observations made by the Lord President in this connection may be usefully quoted: " It is in general more easy to hold that a single transaction entered into by an individual in the line of his own trade (although not part and parcel of his ordinary business) is an adventure in the nature of trade than to hold that a transaction entered into by an individual outside the line of his own trade or occupation is an adventure in the nature of trade.
(1) 85 674 But what is a good deal more important is the nature of the transaction with reference to the commodity dealt in.
The individual who enters into a purchase of an article or commodity may have in view the resale of it at a profit, and yet it may be that that is not the only purpose for which he purchased the article or the commodity, nor the only purpose to which he might turn it if favourable opportunity of sale does not occur.
In some of the cases the purchase of a picture has been given as an illustration.
An amateur may purchase a picture with a view to its resale at a profit, and yet he may recognise at the time or after wards that the possession of the picture will give him aesthetic enjoyment if he is unable ultimately, or at his chosen time, to realise it at a profit.
A man may purchase stocks and shares with a view to selling them at an early date at a profit, but, if he does so, he is purchasing something which is itself an investment, a potential source of revenue to him while he holds it.
A man may purchase land with a view to realising it at a profit, but it also may yield him an income while he continues to hold it ' If he continues to hold it, there may be also a certain pride of possession.
But the purchaser of a large quantity of a commodity like whisky, greatly in excess of what could be used by himself, his family and friends, a commodity which yields no pride of possession, which cannot be turned to account except by a process of realisation, I can scarcely consider to be other than an adventurer in a transaction in the nature of a trade; and I can find no single fact among those stated by the Commissioners which in any way traverses that view.
In my opinion the fact that the transaction was not in the way of business (whatever it was) of the Respondent in no way alters the character which almost necessarily belongs to a transaction like this.
Most important of all, the actual dealings of the Respondent with the whisky were exactly of the kind that take place in ordinary trade.
" These observations indicate some of the important considerations which are to be borne in mind in determining the character of a single transaction.
675 We may now refer to the decision of the House of Lords in Leeming vs Jones (1).
In this case the appellant was a member of a syndicate of four persons formed to acquire an option over a rubber estate with a view to resell it at a profit.
The option was secured but the estate was considered too small for a resale to a company for public floatation.
An option over another adjoining estate was accordingly secured and it was decided to resell the two estates to a public company to be formed for the purpose.
Another member of the syndicate undertook to arrange for the promotion of this company.
The syndicate 's total receipts resulting from the transactions in respect of the estates amounted to pound 3,000 and the balance remaining, after deduction of certain expenses, was divided between the members.
The appellant was assessed to income tax, Schedule D, in respect of his share.
The General Commissioners held that the appellant acquired the property or interest in the property in question with the sole object of turning it over again at a profit and that he at no time had any intention of holding it as an investment.
That is why they confirmed the assessment.
After the case was heard before the King 's Bench Division it was remitted to the General Commissioners for a finding as to whether there was or was not a concern in the nature of trade.
The Commissioners then found that the transaction in question was not a concern in the nature of trade and that there was no liability to assessment.
It may be pointed out that in remitting the case for the re consideration of the General Commissioners, Rowlatt, J., had observed that it was quite clear that what the Commissioners had got to find was whether there was a concern in the nature of trade and all that they had found was that the property was acquired with the sole object of turning it over again at a profit and without any intention of holding it as an investment.
" That describes ", said Rowlatt, J., " what a man does if he buys a picture that he sees going cheap at Christie 's, because he knows that in a month he will sell it again at Christie 's That ", according to (1) 676 the learned judge, " is not carrying on trade " and " so what the Commissioners must do is to say, one way or the other, was this, I will not say carrying on a trade, but was it a speculation or an adventure in the nature of trade ".
The learned judge to doubt added that he did not indicate which way the finding ought to be, but he commended the Commissioners to consider what took place in the nature of organising the speculation, maturing the property and disposing of the property, and when they have considered all that, to say whether they think it was an adventure in the nature of trade or not.
It is thus clear that Rowlatt, J., indicated clearly though in cautious words what he thought was the true nature of the transaction made.
Even so, on reconsideration of the matter the Commissioners returned a finding in favour of the assessee.
After the finding was returned Rowlatt, J., held that he must abide by his own decision in Pearm vs Miller (1) and so the appeal was allowed.
The matter was then taken to the Court of Appeal where the revised finding of the Commissioners was treated as a finding on a question of fact not open to challenge and the point which was considered at length was whether even if the transaction was not an adventure in the nature of trade, could the profit resulting from it be taxed under Case VI? The Master of the Rolls Lord Hanworth traced the history of the dispute, mentioned how Mr. Justice Rowlatt had indicated to the Commissioners what they had to consider in determin ing the question remitted to them and observed that " Mr Justice Rowlatt, and I think this Court, might perhaps have taken the course of saying that having regard to what he had called attention to in this case, the particular facts, of organising the speculation, of maturing the property, and the diligence in discovering a second property to add to the first, and the disposing of the property, there ought to be and there must be a finding that it was an adventure in the nature of trade; but Mr. Justice Rowlatt withheld his hand from so doing and I think he was right, for however strongly one may feel as to the facts, the facts (1) 677 are for the decision of the Commissioners ".
It would thus be clear that the decision of the Commissioners appeared both to Rowlatt, J., and the Court of Appeal to be erroneous.
Even so, they refused to interfere with it on the ground that it was a decision on a question of fact.
We may, with respect, recall that it was in regard to this approach that Lord Radcliffe observed in the case of Edwards (1) that " it was a pity that such a tendency should persist to treat the findings of the Commissioners on the question as to the character of the transaction as conclusive ".
In dealing wit the question as to whether if Case I did not apply Case VI could apply, Lord Justice Lawrence observed that " in the case of an isolated transaction of purchase and resale of property there is really no middle course open.
It is either an adventure in the nature of trade, or else it is simply a case of sale and resale of property ".
The Court of Appeal held that if the transaction did not fall in Case.
It was difficult to see how it could fall under Case VI.
The discussion on this part of the case is, however, not relevant for our purpose.
This decision of the Court of Appeal was taken before the House of Lords and the question debated before the House of Lords was about the application of Case VI to the transaction.
The House of Lords affirmed the view taken by the Court of Appeal and held that " Case VI was inapplicable because Case VI neces sarily refers to the words of Schedule D, that is to say, it must be a case of annual profits and gains and those words again are ruled by the first section of the Act which says that when an Act indicates that income tax shall be charged for any year at any rate the tax at that rate shall be charged in respect of the profits and gains according to the Schedules ".
Lord Buckmaster agreed with the observations of Lord Justice Lawrence that there can be no middle course open in such cases.
Viscount Dunedin, in concurring with the opinion of Lord Buckmaster, dealt with the several arguments urged by the Crown but the observations made by him with regard to the last argument are relevant for our purpose.
" The last argument of the (1) ; ; 678 counsel for the Crown ", observed Viscount Dunedin, was that there was a finding that the respondent never meant to hold the land bought as an investment.
The fact that a man does not mean to hold an investment may be an item of evidence tending to show whether he is carrying on a trade or concern in the nature of trade in respect of his investment but per se it leads to no conclusion whatever ".
According to Viscount Dunedin, recourse to Case VI ignores the fact that it had been settled again and again that Case VI does not suggest that anything that is a profit or gain falls to be taxed.
The observations made by Viscount Dunedin were considered in the Commissioners of Inland Revenue vs Reinhold (1).
We ought to add that the appellant has placed strong reliance on this decision.
In this case, the respondent was a director of a company carrying on a business of ware house men; he bought four houses in January 1945 and sold them at a profit in December 1947.
He admitted that he had bought the property with a view to resale and had instructed his agents to sell whenever a suitable opportunity arose.
The profits made by him on resale were assessed to tax.
On appeal before the General Commissioners he contended that the profit on resale was not taxable.
The Crown urged that the transaction was an adventure in the nature of trade and that profits arising therefrom were chargeable to Ax.
The General Commissioners being equally divided allowed the appeal and discharged the assessment.
It was on these facts that the matter was then taken before the First Division of the Court of Session and it was urged on behalf of the Crown that the initial intention of the assessee clearly was to sell the property at a profit and so the view taken by the General Commissioners about the character of the transaction was erroneous.
This argument was, however, rejected and the order of discharge passed by the General Commissioners was confirmed.
When the Crown referred to the observations of Lord Dunedin in the case of Leeming (2) which we have (1) (2) 679 already cited, Lord Carmont observed that he did not wish to read the said passage out of its context and without regard to the facts of the case then under consideration.
Then Lord Carmont added that though the language used by Lord Dunedin " may cover the purchase of houses" it " would not cover a situation in which a purchaser bought a commodity which from G its nature can give no annual return ".
"This comment of mine ", said Lord Carmont, " is just another way of saying that certain transactions show inherently that they are not investments but incursions into the realm of trade or adventures of that nature Then reference was made to the fact that the assessee was a warehouse company director and not a property agent or speculator and that the only purchases of property with which he was concerned were two separated by ten years and that the first heritage was acquired without the intention to sell, which only arose fortuitously.
His Lordship then put his conclusion in this way: "I would therefore say that the Commissioners of Inland Revenue have failed to prove and the onus is on them the case they sought to make out".
According to Lord Carmont, Lord Dunedin 's observations do not suggest that the initial declaration of intention per se leads to the conclusion that the transaction was in the nature of trade.
He thought that much more was required to show that the assessee was engaged in an adventure in the nature of trade than was proved in the case before the court.
Lord Russell, who concurred with this opinion, began with the observation that " prima facie the difference of opinion among the General Commissioners suggests that the case is a narrow one and that the onus on the appellants of showing that the transaction was an adventure in the nature of trade is not a light one".
Lord Russell then mentioned the argument of the Lord Advocate that if a person buys anything with a view to sale that is a transaction in the nature of trade because the purpose of the acquisition in the mind of the purchaser is all important and conclusive; and that the nature of the thing purchased and the other surrounding circumstances do not 680 and cannot operate so as to render the transaction other than an adventure in the nature of trade, and observed that in his opinion the argument so formulated " is too absolute and is not supported by the judicial pronouncements on which it was sought to be raised ".
He then referred to the variety of circumstances which are or may be relevant to the determination of such a question; and he concluded with the observation that the appellants had not discharged the burden of showing that the transaction was an adventure in the nature of trade.
Lord Keith also took the same view and stated that " the facts were, in his opinion, insufficient to establish that this was an adventure in the nature of trade ".
This case was no doubt a case on the border line; and if we may say so with respect it was perhaps nearer an adventure in the nature of trade than otherwise.
It would not be unreasonable to suggest that, in this case, if the Commissioners had found that the transaction was an adventure in the nature of trade, the court would probably not have interfered with the said conclusion; but the Commissioners were equally divided and so the assessment had been discharged by them.
It was under these circumstances that the point about the onus of proof became a matter of substance; and, as we have already pointed out, all tile learned judges have emphasized that the onus had not been discharged and that no case had been made out for reversing the order of discharge passed by the Commissioners.
However that may be, it would, we think, be unsafe to treat this case as laying down any general proposition the application of which would assist the appellant before us.
We would also like to add that there can be no doubt that Lord Russell 's criticism against the contention raised by the Lord Advocate was fully justified because the contention as raised clearly overstated the significance and effect of the initial intention.
As we have already pointed out, if it is shown that, in purchasing the commodity in question, the assessee was actuated by the sole intention to sell it at a profit, that no doubt is a relevant circumstance which would raise a strong presumption that the 681 purchase and subsequent sale are an adventure in the nature of trade; but the said presumption is not conclusive and it may be rebutted or offset by other relevant circumstances.
What then are the relevant facts in the present case ? The property purchased and resold is land and it must be conceded in favour of the appellant that land is generally the subject matter of investment.
It is contended by Mr. Viswanatha Sastri that the four purchases made by the appellant represent nothing more than an investment and if by resale some profit was realised that cannot impress the transaction with the character of an adventure in the nature of trade.
The appellant, however, is a firm and it was not a part of its ordinary business to make investment in lands.
Besides, when the first purchase was made it is difficult to treat it as a matter of investment.
The property was a small piece of 28 1/4 cents and it could yield no return whatever to the purchaser.
It is clear that this purchase was the first step taken by the appellant in execution of a well considered plan to acquire open plots near the mills and the whole basis for the plan was to sell the said lands to the mills at a profit.
, Just as the conduct of the purchaser subsequent to the purchase of a commodity in improving or converting it so as to make it more readily resaleable is a relevant factor in determining the character of the transaction, so would his conduct prior to the purchase be relevant if it shows a design and a purpose.
As and when plots adjoining the mills were available for sale, the appellant carried out his plan and consolidated his holding of the said plots.
The appellant is the managing agent of the Janardana Mills and probably it was first thought that purchasing the plots in its own name and selling them to the mills may invite criticism and so the first purchase was made by the appellant in the name of its benamidar V. G. Raja.
Apparently the appellant changed its mind and took the subsequent sale deeds in its own name.
The conduct of the appellant in regard to these plots subsequent to their 86 682 purchase clearly shows that it was not interested in obtaining any return from them.
No doubt the appellant sought to explain its purpose on the ground that it wanted to build tenements for the employees of the mills; but it had taken no steps in that behalf for the whole of the period during which the plots remained in its possession.
Besides, it would not be easy to assume in the case of a firm like the appellant that the acquisition of the open plots could involve any pride of possession to the purchaser.
It is really not one transaction of purchase and resale.
It is a series of four transactions undertaken by the appellant in pursuance of a scheme and it was after the appellant had consolidated its holdings that at a convenient time it sold the lands to the Janardana Mills in two lots.
When the tribunal found that, as the managing agent of the mills, the appellant was in a position to influence the mills to purchase its properties its view cannot be challenged as unreasonable.
If the property had been purchased by the appellant as a matter of investment it would have tried either to cultivate the land, or to build on it; but the appellant did neither and just allowed the property to remain unutilised except for the net rent of Rs. 80 per annum which it received from the house on one of the plots.
The reason given by the appellant for the purchase of the properties by the mills has been rejected by the tribunal; and so when the mills purchased the properties it is not shown that the sale was occasioned by any special necessity at the time.
In the circumstances of the case the tribunal was obviously right in inferring that the appellant knew that it would be able to sell the lands to the mills whenever it thought it profitable so to do.
Thus the appellant purchased the four plots during two years with the sole intention to sell them to the mills at a profit and this intention raises a strong presumption in favour of the view taken by the tribunal.
In regard to the other relevant facts and circumstances in the case, none of them offsets or rebuts the presumption arising from the initial intention; on the other hand, most of them corroborate 683 the said presumption.
We must, therefore, hold that the High Court was right in taking the view that, on the facts and circumstances proved in this case, the transaction in question is an adventure in the nature of trade.
The result is the appeal fails and must be dismissed with costs.
Appeal dismissed.
| The appellant, who was a firm acting as managing agents of a limited company (the Mills), purchased four plots of land adjoining the Mills on various dates between 1941 and 1942, and about five years later sold them to the Mills, as a result.
of which the appellant realised a sum of Rs. 43,887 in excess of the purchase price, For the assessment year.
1948 49 the Income tax Officer treated the amount as the income.
of the appellant 'and assessed it to income tax under head 'business ', on the ground that there was no evidence to show that the appellant had purchased the said lands for agricultural purposes or that they were acquired as an investment, and, that since the lands: were adjacent to the Mills the appellant must have purchased them solely with a view to sell them to the Mills; with.
profit. 'He considered that the transaction ' had ;ill the elements of a business transaction ' and was thus an adventure in the, natural of 'trade within section 2(4)of the Indian Income tax Act 7 The Appellate, Tribunal rejected the explanation given by the appellate 'regarding" the object with which it had purchased the plots of land agreed 641 with the view taken by the Income tax Officer.
At the instance of the appellant the Tribunal referred to the High Court the question: " whether there was material for the assessment of the sum of.
Rs. 43 87 being the difference between the purchase and sale price of the four plots of land as income from all adventure in the nature of trade.
The High Court held that ' the transaction in question was an adventure in the nature of trade and so the income tax authorities were justified in taxing the amount under the head 'business ' for the relevant year.
On appeal by special leave to the Supreme Court, it was contend ed for the appellant that on the facts and circumstances of the case it was erroneous in law to hold that the transaction ill question was an adventure in the nature of trade.
On the other hand, it was urged for the respondent that the question as raised before the High Court was one of fact not liable to be challenged under section 66(1) of the Act.
Held, (1) that the expression " adventure in the nature of trade " in sub section
(4) Of section 2 of the Indian Income tax Act, 1922, postulates the existence of certain elements in the adventure which in law would invest it with the character of trade or business and that a tribunal while considering a question as to whether a transaction is or is not an adventure in the nature of trade, before arriving at its final conclusion on facts, has to address itself to the legal requirements associated with the concept of trade or business.
Such a question is one of mixed law and fact and the decision of the tribunal thereon is open to consideration under section 66(1) of the Act.
Meenakshi Mills, Madurai vs Commissioner of Income tax, Madras, ; and Oriental Investment Co., Ltd. vs Commissioner of Income tax, Bombay; , , relied on.
Edwards vs Bairstow ; , considered and held not inconsistent with the above said decisions.
2) that in the circumstances of this case it would be more appropriate to frame the question in this from: " whether, on the facts and circumstances proved in the case, the inference that the transaction in question is an adventure in the nature of trade is in law justified.
" Held, further, that even an isolated transaction might be regarded as an adventure in the nature of trade within section 2(4) Of the Act, if it is characterised by some of the essential features that make up trade or business.
Though judicial decisions which deal with the character of transactions alleged to be in the nature of trade do not purport to lay down any general or universal test, the presence of all the relevant circumstances, mentioned by. them my help the court to draw a similar inference, but it is not a matter of merely counting the number of facts and circumstances pro and con; it is the total effect of all the relevant factors and circumstances that determine the distinctive character of the transactions 648 If a person invests money in land intending to hold it, enjoys its income for some time, and then sells it at a profit,then it is a case of capital accretion and not profit derived from an adventure in the nature of trade.
But where a purchase has been made solely and exclusively with the intention to resell at a profit and the purchaser had no intention of holding the property for himself or otherwise enjoying or using it, there would be a strong presumption that the transaction is an adventure in the nature of trade; but this may be rebutted by the other facts or circumstances of the case.
The Californian Copper Syndicate (Limited and Reduced) vs Harris (Surveyor of Taxes), ; T. Beynon lnland Revenue vs Livingston, ; Martin vs Lowry, ; Rutledge vs Commissioners of Inland Revenue, ; Balgownie Land Trust, Ltd. vs The Commissioners of Inland Revenue, ; F. A. Lindsay, A. E. Woodward and W. Hiscox vs Commissioners of Inland Revenue, and Cayzer, Irvine and Co., Ltd. vs Commissioners of Inland Revenue, , considered.
Commissioners of Inland Revenue vs Reinhold, , distinguished and considered as not laying down any general proposition of law.
In the present case, the circumstances showed that the appellant whose ordinary business was not to make investment in lands had purchased the plots of land with the sole intention of selling them to the Mills at a profit and this intention raised a strong presumption that the purchase and the subsequent sale were an adventure in the nature of trade; and, it was held that in the absence of any rebutting evidence, the Income tax authorities were justified in taxing the amount in question as income from business.
|
Summarize this legal judgement text concisely | iminal Appeal No. 186 of 1956.
Appeal by special leave from the judgment and order dated February 18, 1955, of the Punjab High Court in Criminal Appeals Nos. 389 and 406 of 1954, arising out of the judgment and order dated June 16, 1954, of the Court of the Additional Sessions Judge, Ferozepur, in Sessions Case No. 5 of 1954 and Trial No. 5 of 1954.
726 Jai gopal Sethi, Vidya Dhar Mahajan and K. L. Arora, for the appellants.
N.S. Bindra, B. H. Dhebar and T. M. Sen, for the respondent.
December 4.
The Judgment of the Court was delivered by SARKAR, J.
Eight persons were tried ::or offences under sections 148, 307 and 364 both read with sections 149 and 34 of the Indian Penal Code, by the Additional Ses.
sions Judge, Ferozepur.
The learned Sessions Judge acquitted four of the accused, namely, Het Ram, Teja Ram, Manphul and Surja Ram as he did not think that their presence at the occurrence had been proved beyond reasonable doubt.
He convicted the remaining four, namely, Narain, Jot Ram, Gheru and Jalu under sections 307 and 364 read with section 34.
He sentenced Narain, Jot Ram and Gheru to rigorous imprisonment for three years under section 307 and two years under section 364.
He sentenced Jalu to two years ' rigorous imprisonment under each section.
On appeal by the convicted persons the High Court of Punjab maintained the convictions but reduced the sentences passed on Jot Ram and Gheru to one year 's rigorous imprisonment and Jalu to the term of imprisonment already undergone.
It maintained the sentence passed on Narain and dismissed his appeal.
Narain, Jot Ram and Gheru have appealed To this Court from that judgment.
The prosecution case is that one Sultan was the proprietor of a field described in the proceedings as plot No. 97.
Sahi Ram had been a tenant of the land.
The land had not been cultivated in the year preceding the occurrence with which this case is concerned and the owner had thereupon resumed possession of it.
On June 14, 1953, Mani Ram a son of the proprietor, arrived at the field on a tractor accompanied by a Tabourer, Moola Ram, with the object of Ploughing it and found Sahi Ram actually ploughing.
Mani Ram turned Sahi Ram out of the field.
Sahi Ram raised a protest but eventually left abandoning his plough on the field.
Mani Ram then began to plough the field 727 with his tractor.
A little later the tractor developed mechanical trouble and Mani Ram stopped ploughing and started attending to it.
While Mani Ram was so engaged, Sahi Ram arrived at the spot accompanied by seven persons, being the accused earlier named other than Narain, variously armed.
Jalu had come on a horse.
They fell upon Mani Ram and assaulted him.
Moola Ram who ran to his rescue was also assaulted.
Moola Ram then attempted to run away whereupon Sahi Ram and his party chased him.
While Sahi Ram and his party had their attention on Moola Ram, Mani Ram got into his tractor and began to drive away from the field.
At this point of time Narain arrived on a horse with a gun in his hand.
He told the pursuers of Moola Ram to leave him as he was merely a hired man and pointed out that the real culprit Mani Ram was about to escape in the tractor.
The party then turned round and pursued Mani Ram.
Narain on his horse soon overtook Mani Ram and fired at him while he was still on the tractor in the driver 's seat.
Mani Ram fell down from the tractor which, being in motion, proceeded on its own and ran into a tree and stopped.
Narain 's horse fell against the cultivator of the tractor and was injured.
Mani Ram picked himself up and staggered for shelter into the hut of one Mukh Ram, which was nearby.
The pursuers then came up and Jot Ram fired a shot at Mani Ram inside the hut and so did Gheru.
Mani Ram fell down in the hut.
Mukh Ram threw himself on the body of Mani Ram to protect him.
Gheru and Narain then said that they would burn the hut with Mani Ram inside it.
Sahi Ram suggested that it would be better to carry Mani Ram to their house and there kill him and burn his body.
Mukh Ram 'was then dragged away and Mani Ram 's body was put on a horse and Jalu mounted it.
The party then proceeded towards the village by a foot path with Mani Ram, who was then unconscious, as their captive.
After they had gone some distance Raghbir, the younger brother of Mani Ram, having heard of the incident came to rescue Mani Ram.
He met Jalu on the horse with Mani Ram and Sahi Ram walking close behind, 728 the rest of the party being at some distance.
Raghbir asked Jalu to put down Mani Ram on which Jalu threatened to kill, and Sahi.
Ram pointed his sela at Raghbir.
Raghbir then shot at Sahi Ram with the pistol he was carrying and the latter fell down and died soon after.
Jalu got off the horse and ran away.
Before the others could arrive Raghbir carried Mani Ram to the house of one Birbal from where he, was later taken to the hospital.
The defence was that the prosecution case was wholly false and the real facts were as follows: On the date of the occurrence Sahi Ram was ploughing the field when Mani Ram and Raghbir came there and tried to stop him.
There was an altercation.
Jot Ram and Gheru who were in a field nearby came up and advised Sahi Ram not to dispute over the matter with Mani Ram but have it decided by Panchayat.
Sahi Ram, Jot Ram and Gheru then left the field and proceeded towards the village.
While going Jot Ram noticed that Sahi Ram was carrying a pistol and took it away from him to prevent him from using it in his excitement.
Mani Ram and Raghbir also went towards the village but by a different route.
The par.
ties again met at the village Shamlat.
Raghbir abused Sahi Ram and fired a shot at him killing him outright.
Jot Ram apprehending that he might also be shot at, fired the pistol which he had taken from Sahi Ram and might have injured Mani Ram.
There were two unknown persons with Raghbir and Mani Ram at this time and they also used their fire arms.
Mani Ram might have received injuries from these firings also.
The accused denied that any of them except Jot Ram and Gheru were present at the incident.
There were thus two conflicting versions of the same incident and there were two cross cases based on these separate versions.
We are concerned with the case started on the complaint of Mani Ram and concerning the injuries suffered by him and his abduction.
The other case was against Mani Ram, Raghbir, Sultan and Dalip also a son of Sultan and was based on what the defence version of the incident in the present case was.
In that case Raghbir and Mani 729 Ram were charged under section 302 read with section 34 of the Indian Penal Code for having caused the death of Sahi Ram and Sultan and Dalip were charged under section 302 read with section 109 of the same Code in the same connection.
The learned Sessions Judge who heard both the cases, acquitted Mani Ram, Raghbir, Sultan and Dalip of the charges brought against them and convicted the appellants and Jalu in the present case accepting the prosecution version of the incident.
As we have earlier stated, the conviction was upheld by the High Court.
In view of the concurrent findings of fact in the Courts below, the learned Advocate for the appellants confined himself in this Court to a question of law which we now proceed to discuss.
It has to be remembered that we are concerned only with the case in which the appellants had been tried for offences against Mani Ram.
With the other case we are not concerned.
In the trial Court, the prosecution had cited Raghbir as a witness.
Raghbir however refused to give evidence claiming protection under article 20 of the Constitution.
The learned Sessions Judge held that Raghbir could not be compelled to give evidence and rejected the contention of the accused that he was not entitled to the protection.
The prosecution in the end did not offer Raghbir as a witness and dropped him.
When the matter came up before the High Court in appeal, it was said on behalf of the appellants, that the learned Sessions Judge was wrong in holding that Raghbir was entitled to the protection of article 20 and that the trial had been vitiated by this decision as a result of which the accused had been deprived of the benefit of Raghbir 's evidence.
The High Court however held that the fact that Raghbir was not examined did not vitiate the trial in any way.
It is this part of the High Court judgment that has been challenged before us by the learned Advocate for the appellants.
The High Court observed as follows: " We may assume that Raghbir would 92 730 not have supported the prosecution story or that he would have admitted to having shot Sahi Ram.
The fact that he was unwilling to make a statement does not constitute an irregularity in the trial.
Had he been compelled to say something, he would, in all probability, not have told the truth, and the question is how the case would have been affected by his statement? In my view, whatever he had stated would not have rebutted the convincing testimony of the other witnesses in the case and therefore the failure of the Court to examine him does not in any way affect the ultimate decision of the case.
" The learned Advocate contended that the High Court had in view the provisions of section 167 of the Evidence Act though the section was not in terms referred.
We think this is a fair view to take.
The learned Advocate said that what the High Court has done is to say that even assuming that Raghbir 's evidence did not support the prosecution story, that would not have made any difference to the result, because, what ever he stated would not have rebutted the convincing testimony of the other witnesses.
According to the learned Advocate, this view was not justified by section 167.
It seems to us that the expression of the opinion of the High Court on this matter has not been happily worded.
The question under section 167 is not so much whether the evidence rejected would not have been accepted against the other testimony on the record as whether that evidence " ought not to have varied the decision.
" It is clear that if what Raghbir had said in his evidence had gone to support the defence version, then a, serious question would arise as to whether the decision of the trial Court would have been in favour of the accused instead of against them, as it happened to be.
It seems to us however that section 167 does not help the appellants.
It is clear from the record that the prose cution, though it had cited Raghbir as a witness, was not very keen to examine him When Raghbir objected to give evidence, the prosecution dropped him.
Therefore it seems to us that this is not a case in which evidence can be said to have been rejected 731 within section 167 of the Evidence Act.
The prosecution did not in fact tender Raghbir as a witness.
Nor have we any idea as to what he would have said had he given evidence.
Nor is it a case where the defence wanted to call him as a witness.
It is not necessary for us, nor have we been asked, to decide the question whether Raghbir was entitled under article 2o of the Constitution to refuse to give evidence.
It is amply clear from the record that the prosecution did not offer him as a witness upon his claiming protection under article 20.
The learned Advocate for the appellants then argued that in this view of the matter, it must be held that a material witness had been kept out of court by the prosecution and that would give rise to an adverse inference against the prosecution case and cast serious reflection on the fairness of the trial.
We were referred by learned Advocate to Habeeb Mohammad vs The State of Hyderabad (1) in this connection.
We agree that if a material witness has been deliberately or unfairly kept back, then a serious reflection is cast on the propriety of the trial itself and the validity of the conviction resulting from it may be open to challenge, The question then is, was Raghbir a material witness ? It is an accepted rule as stated by the Judicial Committee in Stephen Seneviratne vs The King (2) that " witnesses essential to the unfolding of the narrative on which the prosecution is based, must, of course, be called by the prosecution.
" It will be seen that the test whether a witness is material for the present purpose is not whether he would have given evidence in support of the defence.
The test is whether he is a witness " essential to the unfolding of the narrative on which the prosecution is based ".
Whe ther a witness is so essential or not would depend on whether be could speak to any part of the prosecution case or whether the evidence led disclosed that he was so situated that he would have been able to give evidence of the facts on which the prosecution relied.
It is not however that the prosecution is bound to call all witnesses who may have seen the occurrence and (1) ; (2) A.I.R. (1936) P.C. 289.
732 so duplicate the evidence.
But apart from this,.
the prosecution should call all material witnesses.
Was Raghbir then a witness essential to the unfolding of the prosecution case ? That clearly Raghbir was not.
The prosecution case, as we have seen, was concerned with the injuries caused to Mani Ram and his abduction.
According to the prosecution case, Raghbir arrived after these offences had been committed ; after Mani Ram had been assaulted and shot at and after he had been put on a horse and had been carried some distance.
The prosecution no doubt admits that Raghbir shot Sahi Ram but says that he did so in self defence.
This incident is an entirely separate incident.
It is not necessary to prove it in order to prove the offences with which the appellants were charged.
Raghbir therefore was not a witness whom the prosecution was bound to call to establish its case.
The fact, assuming it to have been so, that Raghbir would have said in his evidence that the incidents did not happen as the prosecution stated, may no doubt have established a good defence.
But if it was so, then he would have been only a witness material for the defence and not a witness essential to the unfolding of the narrative on which the prosecution case is based.
The prosecution is not bound to call witnesses to establish the defence but only witnesses who are material for proving its own case.
Indeed, since according to the prosecution case Raghbir arrived after the alleged offences were committed, he could not have given any evidence about the prosecution case.
We, therefore, think that the contention of the learned Advocate for the Appellants that the prosecution should have called Raghbir to ensure a fair trial or that he was a witness material to the prosecution case, is unfounded.
We do not think that the trial has at all been vitiated by the failure to call Raghbir.
It may be pointed out that the appellants had not sought to produce Raghbir as a witness on their behalf The learned Advocate then addressed us on the question of the sentence passed on Narain.
He said that the High Court passed a higher sentence on him 733 because it was under the impression that he had caused the only grievous injury that was found on the body of Mani Ram.
The learned Advocate pointed out that there was no evidence to show that the grievous injury had been caused by Narain.
It seems to us that this contention is justified.
There is however evidence to show that Narain merited the higher sentence.
It was he who directed the attack against Mani Ram.
He called the other members of the attacking party to desist from pursuing Moola Ram as Mani Ram was the real enemy and should be dealt with.
It is upon that the serious injuries on Mani Ram came to be inflicted.
We, therefore, think that the higher sentence imposed on the appellant Narain was justified.
No other question arises in this appeal.
The result is that the appeal fails and is dismissed.
Appeal dismissed.
| Several persons attacked and seriously injured one M.
After assaulting him the assailants were carrying him away when M 's brother R came to rescue him and in self defence shot dead one of the assailants and carried M away.
For the assault on M eight persons, including the appellants, were tried for offences under (1) C.B.N.S. 161; (1862)133 R.R. 311.
725 sections 148, 307 and 364 both read with sections 140 and 34 Of the Indian Penal Code.
At the trial R was cited as a witness by the prosecution, but R refused to give evidence claiming protection under article 20 Of the Constitution.
The Sessions judge upheld R 's objection and the prosecution gave him up as a witness.
After trial, the Sessions judge acquitted four of the accused but convicted the appellants and one other person.
In appeal before the High Court the appellants urged that the Sessions judge was wrong in holding that R was entitled to the protection of article 2o and that the trial was vitiated by this decision whereby the accused had been deprived of the benefit of R 's evidence.
The High Court was of the view that if R had been compelled to give evidence he would not have supported the prosecution but whatever he would have stated would not have rebutted the convincing testimony of the other witnesses and that therefore the failure to examine R did not in any way affect the ultimate decision of the case.
The High Court apparently had section 167 Of the Evidence Act in view.
In the result the High Court upheld the convictions.
The appellants appealed and contended that the view of the High Court was not justified by section 167 and that the trial was not fair as R, a material witness, had been kept out of Court.
Held, that the trial was not vitiated by the failure of the prosecution to examine R as a witness.
Section 167 did not help the appellants as it was not a case in which evidence could be said to have been rejected within the meaning of that section.
Further, R was not a witness material to the prosecution inasmuch as he arrived on the scene after the assault was over and it was not necessary for the prosecution to examine him to ensure a fair trial.
Where a material witness has been deliberately or unfairly kept back, a serious reflection is cast on the propriety of the trial and the validity of the conviction resulting from it may be open to challenge.
The test whether a witness is material is whether he is essential to the unfolding of the narrative on which the prosecution is based and not whether he would have given evidence in support of the defence.
Habeeb Mohammad vs The State of Hyderabad, [1954] S.C.R. 475; Stephen Seneviratne vs The King, A.I.R. 1936 P.C. 289.
|
Summarize this legal judgement text concisely | 13 & 38.
41 of 57 and 55 of 1958.
Petitions under Article 32 of the Constitution of India for the enforcement of Fundamental rights.
V. M. Limaye and section section Shukla, for the petitioners (In Petitions Nos. 13, 38 411/57).
492 Purshottam Tricumdas and J. B. Dadachanji, for the petitioner (In Petition No. 55/58).
H. N. Sanyal, Additional Solicitor General of India, H. J. Umrigar, K. L. Hathi and R. H. Dhebar, for the respondent.
November 18.
The Judgment of the Court was delivered by BHAGWATI, J.
These six petitions under article 32 of the Constitution challenge the vires of the Bombay Tenancy and Agricultural Lands (Amendment) Act, 1956 (Bom.
XIII of 1956) (hereinafter referred to as the " impugned Act ").
It was an Act further to amend the Bombay Tenancy and Agricultural Lands Act, 1948 (Bom.
LXVII of 1948) (hereinafter called the 1948 Act ").
The petitioners are citizens of India and landholders within the meaning of the 1948 Act holding several acres of land within the State of Bombay out of which a few acres are under their own cultivation, the bulk of the lands being under the cultivation of tenantsexcept in the case of the petitioners in Petition No. 58 of 1958 where the whole of the lands are under the cultivation of tenants.
The 1948 Act had been passed by the State Legislature as a measure of agrarian reform on December 28, 1948, with a view to amend the law relating to tenancies of agricultural lands and to make certain other provisions in regard to those lands and the objectives sought to be achieved were thus set out in the second paragraph of the preamble: " AND WHEREAS on account of the neglect of a landholder or disputes between a landholder and his tenants, the cultivation of his estate has seriously suffered, or for the purpose of improving the economic and social conditions of peasants or ensuring the full and efficient use of land for agricultural purposes, it is expedient to assume management of estates held by landholders and to regulate and impose restrictions on the transfer of agricultural lands, dwelling houses, sites and lands appurtenant thereto belonging to or occupied by agriculturists, agricultural labourers and (1) 493 artisans in the Province of Bombay and to make provisions for certain other purposes hereinafter appearing. . .
Section 2(8) of the said Act defined " Land " to mean: "(a) land which is used for agricultural purposes, and includes (a) the sites of farm buildings appurtenant to such land; and used for agricultural purposes, and (b). . . . . . . . . . (i) the sites of dwelling houses occupied by agriculturists, agricultural labourers or artisans and land appurtenant to such dwelling houses.
(ii). . . . . . . . . . " "Landholder " was defined in section 2(9) of the said Act to mean: "a zamindar, jagirdar, saranjandar, inamdar, talukdar, malik or a khot or any person not hereinbefore specified who is a holder of land or who is interested in land, and whom the State Government has declared on account of the extent and the value of the land or his interests therein to be a land bolder for the purposes of this Act.
" Under section 2(21) of the said Act the words and expressions used in the Act but not defined were to have the meaning assigned to them in the Bombay Land Revenue Code, 1879, and the , as the case may be.
With a view to achieve the objective of establishing a socialistic pattern of society in the State within the meaning of Articles 38 and 39 of the Constitution, a further measure of agrarian reform was enacted by the State Legislature, being the impugned Act, hereinbefore referred to, which was designed to bring about such distribution of the ownership and control of agricultural lands as best to subserve the common good thus eliminating concentration of wealth and means of production to the common detriment.
The said Act received the assent of the President on March 16, 1956, was published in the Bombay Government 494 Gazette on March 29, 1956, and came into force throughout the State on August 1, 1956.
In about November, 1956, certain landholders from Kolhapur and Sholapur districts in the State of Bombay filed petitions in the Bombay High Court under article 226 of the Constitution challenging the constitutionality of the impugned Act on various grounds. ' A Division Bench of the Bombay High Court pronounced its judgment on February 21, 1957, dismissing those petitions with costs except in regard to a declaration as regards the invalidity of section 88D of the Act.
The petitioners herein thereupon filed these petitions under article 32 of the Constitution challenging the vires of the impugned Act and praying for a writ of mandamus against the State of Bombay ordering them to forbear from enforcing or taking any steps in enforcement of the act, costs and further reliefs.
Petition No. 13 of 1957 appears to have been filed on December 3, 1956, but effective steps therein were taken only when an application for, stay with a prayer for an ex parte order being C.M.P. No. 359 of 1957 was filed herein on March 21, 1957.
Petitions Nos.
38 to 41 of 1957 were filed on March 21, 1957, and Petition No. 55 of 1958 was filed on March 19, 1958.
All these petitions followed a common pattern and the main grounds of attack were: that the State Legislature was not competent to pass the said Act, the topic of legislation not being covered by any 'entry in the State List; that the said Act was beyond the am bit of article 31 A of the Constitution and was therefore vulnerable as infringing the fundamental rights enshrined in articles 14, 19 and 31 thereof; that the provisions of the said Act in fact infringed the fundamental rights of the petitioners conferred upon them by articles 14.
119 and 31 of the Constitution; that the said Act was a piece of colourable legislation and in any event a part of the provisions thereof suffered from the vice of excessive delegation of legislative power.
The answer of the State was that the impugned Act was covered by Entry No. 18 in List 11 of the Seventh Schedule to the Constitution, that it was a piece of legislation for the extinguishment or modification of 495 rights in relation to estates within the definition thereof in article 31 A of the Constitution and that therefore it was not open to challenge under articles 14, 19 and 31 thereof and that it was neither a piece of colourable legislation nor did any part thereof come within the mischief of excessive delegation.
As to the legislative competence of the State Legislature to pass the impugned Act the question lies within a very narrow compass.
As already stated, the impugned Act was a further measure of agrarian reform enacted with a view to further amend the 1948 Act and the object of the enactment was to bring about such distribution of the ownership and, control of agricultural lands as best to subserve the common good.
This object was sought to be achieved by fixing ceiling areas of lands which could be held by a per son and by prescribing what was an economic holding.
It sought to equitably distribute the lands between the landholders and the tenants and except in those cases where the landholder wanted the land for cultivating the same personally for which due provision was made in the Act, transferred by way of compulsory purchase all the other lands to tenants in possession of the same with effect from April 1, 1957, which was called the " tillers day ".
Provision 'Was also made for disposal of balance of lands after purchase by tenants and the basic idea underlying the provisions of the impugned Act was to prevent the concentration of agricultural lands in the hands of landholders to the common detriment.
The tiller or the cultivator was brought into direct contact with the State eliminating thereby the landholders who were in the position of intermediaries.
The enactment thus affected the relation between landlord and tenant, provided for the transfer and alienation of agricultural lands, aimed at land improvement and was broadly stated a legislation in regard to the rights in or over land: categories specifically referred to in Entry 18 in List 11 of the Seventh Schedule to the Constitution, which specifies the head of legislation as " land, that is to say, rights in or over land, land tenures including the relation of landlord and tenant, and the collection of 496 rents; transfer and alienation of agricultural land; land improvement and agricultural loans; colonization ".
It is well settled that these heads of legislation should not be construed in a narrow and pedantic sense but should be given a large and liberal interpretation.
As was observed by the Judicial Committee of the Privy Council in British Coal Corporation vs The King (1): "Indeed, in interpreting a constituent or organic statute such as the Act, that construction most beneficial to the widest possible amplitude of its powers must be adopted.
" The Federal Court also in the United Provinces V. Atiqa Begum (2) pointed out that none of the items in the Lists is to be read in a narrow or restricted sense and that each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended in it.
This Court in Navinchandra Mafatlal vs The Commissioner of Income tax, Bombay City (3) also expressed the same opinion and stated: "The cardinal rule of interpretation, however, is that words should be read in their ordinary, natural and grammatical meaning subject to this rider, that in construing words in a constitutional enactment conferring legislative power the most liberal construction should be put upon words so that the same may have effect in their widest amplitude." (See also Thakur Amar Singhji vs State of Rajasthan(4)).
Having regard to the principle of construction enunciated above, it is clear that the impugned Act is covered by Entry 18 in List II of the Seventh Schedule to the Constitution and is a legislation with reference to "land " and this plea of legislative incompetence of the State Legislature to enact the impugned Act therefore fails.
If, then, the State Legislature was competent to enact the impugned Act, is the Act ultra vires the Constitution as infringing any of the fundamental (1) ,518.
(3) [1955] 1 S.C.R. 829, 836, 837.
(2) , 134.
(4) [1955]2S.C.R 303,329.
497 rights conferred upon the petitioners ? In the course Of the arguments before us learned counsel for the petitioners confined their attack only to the constitutionality of sections 5, 6, 7, 8, 9, 17A, 31A to 31D and 3 to 32R of the impugned Act as violative of the fundamental right guaranteed under article 19(1)(g) of the Constitution.
The first question to consider in this context however is whether the impugned Act is protected by article 31 A of the Constitution because if it in so protected, no challenge on the score of the provi sions thereof violating articles 14,19 and 31 of the Con stitution would be available to the petitioners.
The relevant portions of article 31 A which fall to be considered here read as follows: "(1) Notwithstanding anything contained in article 13, no law providing for: (a) the acquisition by the State of any estate or of any rights therein or the extinguishment or modification of any such rights. . . shall be deemed to be void on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by article 14, article 19 or article 31.
Provided that where such law is a law made by the Legislature of a State, the provisions of this article shall not apply thereto unless such law, having been reserved for the consideration of the President, has received his assent. . . (2) In this article, (a)the expression " estate " shall, in relation to any local area, have the same meaning as that expression or its local equivalent has in the existing law relating to land tenures in force in that area, and shall also include any jagir, inam, or muafi or other similar grant and in the States of Madras and TravancoreCochin any janmam rights.
(b) the expression " rights " in relation to an estate, shall include any rights vesting in a proprietor, sub proprietor, under proprietor, tenure holder, raiyat, 63 inder raiyat or other intermediary and any rights or Privileges in respect of land revenue.
" The question which we have to address ourselves intially is whether the lands held by the petitioners,who are admittedly landholders within the 8 Act, are of the term contained in section 2.(9) of the 194 "estates " within the meaning of article 31 A of the constitution.
Before we launch upon that enquiry it would perhaps be of helP to note how the various land tenures originated.
Baden Powell in his Land Systems of British India (1892 Ed.), Vol. 1, dealing with the general view of land tenures traced the origin and growth at @p.
97 of different tenures in the manner following at pp.
97 99 (Chapter IV): " 4.
Effects of Land Revenue Administration and Revenue farming.
Then again the greater Oriental governments which preceded ours, have always, in one form or another, derived the bulk of their State revenues and Royal property from the land.
In one system known to us, "Royal lands " were allotted in the principal villages, and this fact may have suggested to the Mughals their plan of allotting spcial farms and villages to furnish the privy Purse, and has had other survivals.
But, speaking generally, the universal plan of taking revenue was by taking a share of the actual grain heap on the the threshing floor from each payment levied on each estate or each field as the case might be. . .
To collect this revenue, the ruler appointed or recognized not only a headman and accountant in each village, but also a hierarchy of graded officials in districts and minor divisions of territory formed for administrative purposes.
These officers were often remunerated by holdings of land, and a class of land tenures will be found in some parts of India owning its origin to these hereditary official holding section Not only so, but during the decline which Oriental governments have usually undergone, the Revenue official have been commonly found to merge in, or be superseded, by revenue farmers persons who 499 contracted for a certain sum of revenue to be paid int, the Treasury from a given area, I as representing the State dues exigible from the land holdings within that area.
Such revenue farmers, or officials, whatever their origin, have always tended to absorb the interest of the land holders and to become in time the virtual landlords over them.
Nor is it only that landlord tenures arise in this way.
No sooner does the superior right take shape than we find many curious new tenures created by the landlord or arising out of his attempts to conciliate or provide for certain eminent claims in the grade below him.
section 5.
Effects of Assignment or Remission of LandRevenue.
Yet another class of tenures arises in connection with the State Revenue administration; and that is when the ruler either excuses an existing land holder from paying his revenue, either wholly or in part; or " alienates " or assigns the revenue of a certain estate or tract of country in favour of some chief, or other person of importance, or to provide funds for some special objects, or to serve as a recompense for services to be rendered.
At first such grants are carefully regulated, are for life only, and strictly kept to their purpose, and to the amount fixed.
But as matters go on, and the ruler is a bad or unscrupulous one, his treasury is empty, and he makes such grants to avoid the dificulty of finding a cash salary.
The grants become permanent and hereditary; they are also issued by officials who have no right to make them; and not only do they then result in landlord tenures and other curious rights, but are a burden to after times, and have furnished a most troublesome legacy to our own Government when it found the revenues eaten up by grantees whose titles were invalid, and whose pretensions, though grown old in times of disorder, were inadmissible.
Such grants may have begun with no title to the land but only a right to the revenue, but want of 500 supervision and control has resulted in the grantee seizing the landed right also.
Here we find the distinction between the State owned lands which are unalienated where the tenures arise out of the exigencies of revenue collection and alienated lands the revenue whereof is remitted either wholly or in part or in other words " alienated " or assigned to grantees for various purposes.
Various land tenures thus developed and series of proprietorships came into existence.
The main tenures which the British found when they came into power comprised: (1) the Khas or tenure by Government; (2)the Raiyatwari tenure; (3) the Zamindari or landlord tenure and (4) the Taluqdari or double tenure.
It is interesting to note in this connection that in the table compiled by Baden Powell in Vol.
III of his Book at p. 142 giving some idea of the distribution of the different classes of landed estates in Madras the different classes of landed estates described therein included not only Zamindaris but also " estates " hold by Raiyats paying diverse sums as and by way of land revenue.
So far as the area within the State of Bombay was concerned the position is thus summed up in Dande kar 's Law of Land Tenures, Vol. 1 at p. 12: Section III.
Classification of land according to the interest of the holder: "Land is either Government land or not Government land; that is, it is either unalienated or alienated.
The expression for unalienated land is khalsa or ryatawari in some parts as opposed to dumala or inam lands, that is, alienated lands In Gujrat Government lands are called " sarkari " as opposed to "baharkhali"lands meaning alienated lands lands the produce.of which had not to be brought to the common threshing ground.
In some parts of Gujrat there are," talpad " (Government) lands as opposed to " Wanta " lands.
In old Regulations two kinds of land have been referred to, namely, malguzarry land and lakhiraj land.
The former meant land paying 501 assessment to Government, whereas the latter meant land free from payment of assessment.
Khalsa land in the permanent occupation of holders was denominated, before the survey settlements, in the different parts of 'the Presidency by the expressions mirasi, dhara, suti and muli.
I Government arable land not in the permanent occupation of an occupant was and is described by the name sheri.
In alienated villages, lands corresponding to Government "sheri " lands are denominated by the expressions, "sheri " ".Khas Kamath " and " Ghar Khedu ".
Lands in leasehold or farmed villages are called khoti lands.
Lands which are given under leases and the assessment of which is regulated by the terms thereof are called kauli lands.
" It will be observed that Mirasi, Dhara, Suti and Muli were all tenures in regard to unalienated lands, the tenure holders being permanent holders of land having hereditary interests in their holdings. , The Khoti tenures in the Konkan and the Bhagdari and Narvadari tenures in some parts of Gujrat were also tenures in regard to unalienated lands, there venue being assessed on those lands on entire villages and not on specific pieces of land either in lump or on the basis of a fixed Bighoti assessment on each field and the tenure holders being responsible for the payment of the, sum in certain specified modes.
The general prevailing tenure, however, was the Raiyatwari tenure where the Raiyat or the tenant had the right of an occupant in his holding.
The right of an occupant was a heritable right and on the death of a registered occupant the name of his heir was entered in his place.
All these were land tenures in respect of unalienated lands and the Bombay Survey and Settlement Act (Bom. 1 of 1865) passed in 1865.
applied, generally to the same.
There were of course certain Acts which dealt with specific tenures mentioned above, e.g., Bhagdari and Narvadari Tenures Act (Bom.
V of 1862), and Khoti Settlement Act (Bom.
1 of 1880); but by and large they were tenures in regard to unalienated lands and were governed by the Bombay Survey and Settlement Act, 1865.
In 1879 the State Legislature 502 enacted, the Bombay Land Revenue Code (Bom.
V of 1879) with a view to consolidate and amend the law relating to Revenue Officers, to the assessment and recovery of land revenue and to other matters connected with land revenue administration.
This Act extended to the whole of the State of Bombay excluding the City of Bombay and certain other areas therein mentioned.
We shall have occasion to refer to certain provisions of this Act hereafter.
Turning now to alienated lands in which category were comprised lands not belonging to government and lands not paying revenue to government which were exceptions to the principles of State proprietorship and of liability of land holders to pay land revenue to government we find that the alienations were classified as: (1) political tenures such as Jagirs and Saranjams; (2) Service Inams ; (3) Personal Inams and (4) Religious endowments.
The principal alienations were Inams, Jagirs or Saranjams and Watans.
Each of them was considered as a tenure, had got its own history, its own features and peculiarities.
Summary settlements were effected by the government with these tenure holders and their rights as such recognized.
There were Taluqdari tenures or estates in Gujrat which also came under this category and it may be noted that several pieces of legislation were passed by the State Legislature in regard to those several tenures of alienated lands, e. g., Titles to Rent Free Estates Act (Bom.
XI of 1852); Ahmedabad Taluqdar 's Act (Bom.
VI of 1862); Bombay Hereditary Offices Act (Bom.
III of 1874); Broach and Kaira Encumbered Estates Act (Bom.
XIV of 1877); Broach and Kaira Encumbered Estates Act (Bom.
XXI of 1881); Matadars Act (Bom.
VI of 1887) and Gujrat Taluqdars Act (Bom.
VI of 1888).
Our attention was also drawn in this connection to the various Acts passed by the State Legislature (between 1949 and 1955) abolishing the several land tenures in Bombay where the government was not in direct contact with the tiller of the soil but there was an interposition of intermediaries between them, the intermediaries having leased out parts of 503 the lands to the tenants who actually cultivated the soil and it was urged that the interests of these intermediaries were estates properly so called.
It is to be noticed, however, that the several land tenures which were thus abolished were not only tenures in respect of alienated lands but also comprise unalienated lands, e.g., the Bombay Bhagdari and Narvadari Tenures Abolition Act, 1949 (Bom.
XXXII of 1949); The Bombay Khoti Abolition Act, 1949 (Bom.
VI of 1950) and the Bombay Merged Territories (Janjira and Bhor) Khoti Tenure Abolition Act, 1953 (Bom.
LXXI of 1953).
There was no distinction made thus between land tenures in regard to alienated lands and those in regard to unalienated lands.
It may also be noted that all these Acts followed a common pattern, viz., the abolition of these land tenures, award of compensation to the tenure holders whose tenures were thus abolished and the establishment of direct relations between the government on the one hand and the tenure holders cultivating the lands personally and the tenants cultivating the soil on the other.
All these persons, thus cultivating the soil were given the status of occupants and direct relationship was thus established between the government and them.
These Acts so far as our present purpose is concerned are only mentioned to show the different types of land tenures which existed in the State of Bombay prior to their abolition as aforesaid.
These were the various land tenures known in the State of Bombay and we may at this stage appropriately refer to the statistics (1886 87) of these tenures given by Baden Powell in Vol.
III of his said Book at p. 251 504 Tenure Number of Number of Area in Remarks.
estates or Village.
acres holding Village land holders: 1284,238 30,118 1/2 475,016 I have added Raiyatwari (occupied together Village.
land only) these paying at full rates and the much smaller number paying at privileged rates the latter are 213,405 and how far these repre sent bhagdar etc.
,I have no means of tra velling.
Overlord 530 1/2 530 1/2 1,419,397 tuners (gross area) Taluqdari 41 41 79334 Mewasi Udhad 123 123 194,830 Jambandi Kot 17,32 1/2 17,32 1/2 2160,517 Issafat 7 7 3608 Revenue free 2165 3/4 2165 3/4 4483,343 These refer to i.e.inam & whole villages Jagir or estates not to revenue privileges on individual fields,etc., which are includeded in village land holding.
505 It is to be noted that the holdings of the landholders in Ryatwari villages apart from others were also styled therein as estates or holdings.
It was vehemently urged before us by learned counsel for the petitioners that the expression " estate " aptly applied only to lands held by the various tenure holders of alienated lands above referred to, and that it could not apply to the holdings of occupants who had merely a right of occupancy in specific pieces of unalienated lands.
The word " estate " had been defined in the Bombay Land Revenue Code, 1879, in section 2(5) to mean : " any interest in lands and the aggregate of such interests vested in a person or aggregate of persons capable of holding the same," and would prima facie cover not only an interest in alienated lands but also in unalienated lands.
It was however urged that the expression " estate " should be construed in a narrower sense having regard to the legislative history and particularly to the fact that the lands held by the tenure holders of alienated lands only had prior to 1879 been recognized as estates and the holding of an occupant was not treated as such.
The distinction thus sought to be made between holders of unalienated lands and holders of alienated lands.
is not of much consequence because even in regard to unalienated lands besides the occupants there were tenure holders called Bhagdars and Narwadars and Khotes who had interests in lands held by them under those several tenures which lands were unalienated lands.
The interests which these tenure holders enjoyed in the lands held by them were " estates " and it could not therefore be predicated of the expression "estate" that it could only be used in connection with alienated lands.
If this distinction was therefore of no avail, we have only got to consider if there is any reason why a narrow interpretation should be put upon the expression "estate" as suggested by the petitioners.
Reliance was placed by the learned counsel for the petitioners on a decision of this Court in Hariprasad Shivshankar Shukla vs A. D. Divikar (1) where the word retrenchment " as defined in section 2(00) and the word (1) [1957] S.C.R. 121, 132. 64 506 retrenchment " in section 25F of the , as amended by Act XLIII of 1953 were held to have no wider meaning than the ordinary accepted connotation of those words and were held to mean the discharge of surplus labour or staff by the employer for any reason whatsoever, otherwise than as a punishments inflicted by way of disciplinary action, and did not include termination of services of all workmen on a bona fide closure of industry or on change of ownership or management thereof.
Even though the word " retrenchment" was defined as meaning the termination of services by an employer of the workmen for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, which words were capable of including within their scope the termination of services of all workmen on a bona fide closure of industry or on change of ownership or management thereof, the word " retrenchment " was construed in a narrow sense because the word " retrenchment " connoted in its ordinary acceptance that the business itself was being conducted and a portion of the staff or labour force was discharged as surplusage.
This Court observed in the course of the judgment at page 132: " In the absence of any compelling words to indicate that the intention was even to include a bona fide closure of the whole business, it would, we think, be divorcing the expression altogether from its context to give it such a wide meaning as is contended for by learned counsel for the respondent.
What is being defined is retrenchment, and that is the context of the definition.
It is true that an artificial definition may include a meaning different from or in excess of the ordinary acceptation of the word which is the subject of definition; but there must then be compelling words to show that such a meaning different from or in excess of the ordinary meaning is intended.
Where, within the framework of the ordinary acceptation of the word, every single requirement of the definition clause is fulfilled, it would be wrong to take the definition as destroying the essential meaning of the word defined.
" 507 Reliance was also placed on a decision of the Court of Appeal in England in Re The Vexatious Actions Act, 1896, In re Bernard Boaler (1) where the words " legal proceedings " were held not to include criminal proceedings, in spite of the words being prima facie capable of including the same.
Kennedy, C. J., expressed his view at page 32 that it was impossible to say that the meaning of the expression " legal proceedings " was in itself and by itself clear and unambiguous and followed the dictum of Lord Esher in Rex vs City of London Court(2): " If the words of an Act admit of two interpretations then they are not clear ; and if one interpretation leads to an absurdity and the other does not, the Court will conclude that the Legislature did not intend to lead to an absurdity, and will adopt the other interpretation.
" Scrutton, J., also expressed the same opinion at p. 41 : " I find general words used in the Act capable of two meanings, a wider and a narrower one.
On the whole I think the language is more suited to the narrower than the wider meaning.
The narrower meaning will affect the liberties of the subject to some extent; the wider meaning will most seriously affect the liberties of the subject in a matter, his personal liberty and safety, which I see no reason in the Act to believe was in the contemplation of the Legislature.
I decline to make this more serious interference with the liberty of the subject, unless the Legislature uses language clear enough to convince me that that was its intention, and I think ample meaning is provided for its words, and ample remedy is provided for the grievance in respect of which Parliament was legislating by putting the narrower construction on the general words it has used.
" Are there any circumstances in the present case which would compel us to put a narrower construction on the expression " estate " in section 2(5) of the Bombay Land Revenue Code, 1879 ? It is true that the expression " estate " was used prior to 1879 in connection (1) (2) , 290.
508 with the interests which the various tenure holders of alienated lands held in their respective lands but it does not therefore follow that that expression could be used only in connection with those interests and no others.
The Watandars, Saranjamdars, Inamdars and Taluqdars and the like were no doubt holders of " estates " but does that fact militate against the occupants also holding " estates " in the lands which were the subject matter of their tenures.
The words of the definition contained in section 2(5) of the Bombay Land Revenue Code, 1879, were clear and unambiguous.
They meant any interest in lands and the expression " lands " was capable of comprising within its ambit alienated and unalienated lands.
As a matter of fact, the definition of " Superior holder " in section 2(13) and the definition of " alienated " in section 2(20) of the Code, provisions of section 111 in regard to revenue management of villages or estates not belonging to the Government, of section 113 with regard to the partition of estates and of section 36 prescribing liability for revenue amongst others refer not only to alienated lands but also to unalienated lands and the expression " estates " used therein can have reference not only to alienated lands but also to unalienated lands.
If the definition of the expression " estate " in the context of the Code is thus clear and unambiguous as comprising both the types of lands, there is no reason why a narrower construction as suggested by the petitioners should be put upon the expression " estate ".
(See the observations of Kennedy, L. J., in Vexatious Actions Act, 1896, In re.
Boaler (1) at p. 31 and the observations of this Court in Baia Sri Sailendra Narayan Bhanja Deo vs The State of Orissa (2).
Even if there was any ambiguity in the expression, the wider significance should be adopted in the context of the objectives of the Act as stated above.
We are, therefore, of opinion that the expression estate " had the meaning of any interest in land and it was not confined merely to the holdings of landholders of alienated lands.
The expression applied not only to such " estate " holders but also to land holders and occupants of unalienated lands.
(1) (2) ; 509 It was however contended on behalf of the petitioners that the Bombay Land Revenue Code was not a law relating to land tenures in force in the State of Bombay and therefore the definition of the expression " estate " contained therein would not avail the respondent.
It was urged that the Code was passed by the State Legislature in order to consolidate and amend the law relating to Revenue Officers, and to the assessment and recovery of Land Revenue, and to other matters connected with the Land Revenue Administration in the Presidency of Bombay and was merely concerned with the collection of land revenue by the State and had nothing to do with land tenures as such.
This argument, however, ignores the various provisions of the Code which define the status as also the rights and obligations of the occupant who has been defined in section 2(16) of the Code to mean the holder in actual possession of unalienated lands other than a tenant provided that where the holder in actual possession is a tenant, the landholder or superior landlord, as the case may be, shall be deemed to be the occupant.
Chapter VI deals with the Grant, Use and Relinquishment of unalienated lands and section 65 thereof prescribes the uses to which an occupant of land for purposes of agriculture may put his land.
Under section 68 an occupant is entitled to the use and occupation of his land for the period therein prescribed on fulfilling the conditions therein mentioned and under section 73 occupancy is stated to be transferable and heritable.
Section 73 as it was enacted in 1879 read as follows: " The right of occupancy shall subject to the provisions contained in section 56, and to any conditions lawfully annexed to the occupancy and save as otherwise prescribed by law, be deemed an heritable and transferable property.
" Certain amendments have been made in this section by various Bombay Land Revenue Amendment Acts, (Bom.
VI of 1901 and Bom.
IV of 1913) and the section as it stands at present reads:" An occupancy shall, subject to the provisions contained in section 56, and to any conditions lawfully annexed to the tenure, and save as otherwise prescribed by law, be deemed an heritable and transferable 510 property.
" This goes to show that an occupant holds the land under a tenure and occupancy is a species of land tenures.
The provisions contained in section 73(A) relating to the power of the State Government to restrict the right of transfer and the provisions in regard to relinquishments contained in sections 74, 75 and 76 also point to the same conclusion.
These and similar provisions go to show that occupancy is one of the varieties of land tenures and the Bombay Land Revenue Code, 1879, comes within the description of " existing laws relating to land tenures in force" in the State of Bombay within the meaning of article 31A (2)(a).
BadenPowell has similar observations to make in regard to these provisions in his Land Systems in British India, Vol. 1 at p. 321: "Nothing whatever is said in the Revenue Code about the person in possession (on his own account) being " owner " in the Western sense.
He is simply called the " occupant ", and the Code says what he can do and what he cannot.
The occupant may do anything he pleases to improve the land, but may not without permission do anything which diverts the holding from agricultural purposes.
He has no right to mines or minerals.
These are the facts of the tenure; you may theorize on them as you please; you may say this amounts to proprietorship, or this is a dominium minus plenum; or anything else.
" There is no doubt therefore that the Bombay Land Revenue Code, 1879, was an existing law relating to land tenures in force in Bombay at the time when the Constitution (Fourth Amendment) Act, 1955, was passed and article 31A in its amended form was introduced therein and the expression "estate " had a meaning given to it under section 2(10) there, viz., " any interest in land " which comprised within its scope alienated as well as unalienated lands and covered the holdings of occupants within the meaning thereof.
The 1948 Act was passed by the State Legislature in order to amend the law which governed the relations between landlords and tenants of agricultural lands the object sought to be achieved being as hereinbefore 511 set out.
Section 2 of the Act defined the expressions " to cultivate personally " (section 2(6)); ,landholder " (section 2(9)); " protected tenant " (section 2(14) ) amongst other expressions and provided in section 2(21) that words and expressions used in this Act but not defined shall have the meaning assigned to them in the Bombay Land Revenue Code, 1879, and the , as the case may be.
This brought in the definition of the expression " estate " which had the mean ing assigned to it in that Code, viz., any interest in land ".
The expression " landholder in section 2(9) above was defined to mean " a zamindar, jagirdar, saranjamdar, inamdar, talukdar, malik or a khot or any person not hereinbefore specified who is a holder of land or who is interested in land, and whom the State Government has declared on account of the extent and value of the land or his interests therein to be a landholder for the purposes of this Act.
" The latter part of this definition is significant and shows that not only holders of alienated lands but also holders of unalienated lands were comprised therein provided, however, the extent and value of the land or their interests therein were such as to deserve a declaration in that behalf at the hands of the State Government.
The only point to note here is that no distinction was made even in this Act between alienated lands and unalienated lands and all interests in land howsoever acquired were treated on a par so far as the holdings were concerned, necessarily implying that even an occupant would come within the description of landholder and his interests therein would come within the definition of " estate " as defined in the Bombay Land Revenue Code, 1879.
Chapter III made provisions for protected tenants, their special rights and privileges and whoever came within the category of protected tenant was given the right to purchase from the landlord the land held by him as such protected tenant notwithstanding any.
thing contrary in law, usage or contract subject to the provisions of sub section 6 which imposed restrictions on the holdings of landlords as well as tenants.
These provisions were analogous to the provisions contained in sections 32 to 32 R of the impugned Act except that in the 512 1948 Act the protected tenant had the option to purchase the land whereas under the impugned Act there was a provision for compulsory purchase of the land by the tenant on a specified date subject to certain conditions therein mentioned.
Section 34 of the 1948 Act gave the landlord the right to determine protected tenancy under certain conditions and was analogous to section 31 of the impugned Act which empowered the landlord to terminate the tenancy for personal cultivation and non agricultural purposes.
50 acres of land were prescribed as the limit of the holding either by the landlord or the protected tenant which provision was analogous to the one found in the impugned Act in regard to ceiling area and economic holdings.
Power was given to the State Government under section 36 to reduce the limit of 50 acres by a notification in the official gazette and power was also given similarly to direct that the limits of fifty acres or the reduced limit specified in such notification shall comprise such kind or kinds of lands in the area as may be specified in the notification.
This power was analogous again to the power given to the State Government under section 7 of the impugned Act to vary the ceiling area or economic holding originally prescribed in sections 5 and 6 of the Act.
These instances culled out from some of the provisions of the 1948 Act go to show that the agrarian reform which was initiated by that Act was designed to achieve the very same purpose of distribution of the ownership and control of agricultural lands so as to subserve the common good and eliminate the concentration of wealth to the common detriment which purpose became more prominent when the Constitution was ushered in on January 26, 1950, and the directive principles of State Policy were enacted inter alia in articles 38 and 39 of the Constitution.
With the advent of the Constitution these provisions contained in the 1948 Act required to be tested on the touch stone of the fundamental rights enshrined in Part III thereof and when the Constitution (First Amendment) Act, 1951, was passed introducing articles 31A and 31B in the Constitution, care was taken to specify the 1948 Act in the Ninth Schedule so as to make it immune from 513 attack on the score of any provision thereof being violative of the fundamental rights enacted in Part III of the Constitution.
The 1948 Act was the second item in that schedule and was expressly saved from any attack against the constitutionality thereof by the express terms of article 31B.
The impugned Act which was passed by the State Legislature in 1956 was a further measure of agrarian reform carrying forward the intentions which had their roots in the 1948 Act.
Having regard to the comparision of the various provisions of the 1948 Act and the impugned Act referred to above it could be legitimately urged that if the cognate provisions of the 1948 Act were immune from attack in regard to their constitutionality, on a parity of reasoning similar provisions contained in the impugned Act, though they made further strides in the achievement of the objective of a socialistic pattern of society would be similarly saved.
That position, however, could not obtain because whatever amendments were made by the impugned Act in the 1948 Act were future laws within the meaning of article 13(2) of the Constitution and required to be tested on the self same touchstone.
They would not be in terms saved by article 31B and would have to be scrutinized on their own merits before the courts came to the conclusion that they were enacted within the constitutional limitations.
The very terms of article 31B envisaged that any competent legislature would have the power to repeal or amend the Acts and the Regulations specified in the 9th Schedule thereof and if any such amendment was ever made the vires of that would have to be tested.
(Vide Abdul Rahiman Jamaluddin Hurjuk vs Vithal Arjun Undare That brings us back to the provisions of article 31A and to a consideration as to whether the impugned Act was a legislation for the acquisition by the State of any estate or of any rights therein or the extinguishment or modification of any such rights within, the meaning of sub article (1)(a) thereof We have already held that the Bombay Land Revenue Code,, 1879, was (11)(1957)59:Bom L.R.579.
65 514 an existing law relating to land tenures in force in the State of Bombay and that the interests of occupants amongst others fell within the expression " estate " contained therein.
That, however, was not enough for the petitioners and it was further contended on their behalf that even though the impugned Act may be a law in regard to an " estate " within the meaning of the definition contained in article 31A(2)(a) it was not law providing for the acquisition by the State of any estate or any rights therein or for the extinguishment or modification of any such rights.
The impugned Act was certainly not a law for the acquisition by the State of any estate or of any rights therein because even the provisions with regard to the compulsory purchase by tenants of the land on the specified date transferred the title in those lands to the respective tenants and not to the State.
There was no compulsory acquisition of any " estate " or any rights therein by the State itself and this provision could not help the respondent.
The respondent, however, urged that the provisions contained in the impugned Act were enacted for the extinguishment or modification of rights in " estates " and were, therefore, saved by article 31A(1)(a).
It was on the other hand urged by the petitioners (1) that the extinguishment or modification of any such, rights should only be in the process of the acquisition by the ,State of any estate or of any rights therein and (2) that the provisions in the impugned Act amounted to a suspension of those rights but not to an extinguishment or modification thereof We shall now proceed to examine these contentions of the petitioners.
article 31A(1)(a) talks of two distinct objects of legislation; one being the acquisition by the State of any estate or of any rights therein and the other being the extinguishment or modification of any such., rights,.
If the = acquires an estate or any rights therein that acquisition would have to be a compulsory acquisition within the meaning of article 31(2)(A) which was also introduced in the Constitution by the Constitution (Fourth Amendment) Act, 1955, simultaneously with article 31A(1) thereof.
There was no provision made for the transfer of the ownership of any property to the 515 State or a Corporation owned or controlled by 'the State with the result that even though,these provisions deprived the landholders of their property they did not amount to a compulsory acquisition of the property by the State.
If this part of article 31A(1)(a) is thus eliminated what we are left with is whether these provisions of the impugned Act provided for an extinguishment or modification of any rights in " estates ".
That is a distinct concept altogether and could not be in the process of acquisition by the State of any " estate " or of any rights therein.
Acceptance of the interpretation which is sought to be put upon these words by the petitioners would involve the addition of words " in the process of the acquisition by the State of any estate or of any rights therein " or " in the process of such acquisition " which according to the well known canons of construction cannot be done.
If the language of the enactment is clear and unambiguous it would not be legitimate for the Courts to add any words thereto and evolve therefrom some sense which may be said to carry out the supposed intentions of the legislature.
The intention of the Legislature is to be gathered only from the words used by it and no such liberties can be taken by the Courts for effectuating a supposed intention of the Legislature.
There is no warrant at all, in our opinion, ' for adding these words to the plain terms of article 31A (1)(a) and the words extinguishment or modification of any such rights must be understood in their plain grammatical sense without any limitation of the type suggested by the petitioners.
It, therefore, remains to consider whether the relevant provisions of the impugned Act were designed to bring about an extinguishment or modification of the landlord 's rights in their " estates ".
These provisions are contained in sections 32 to 32R of the impugned Act and are under the heading " Purchase of lands by Tenants ".
Section 32 provides that " on the first day of April, 1957 (hereinafter referred to as " the tillers day ") every tenant shall, subject to the provisions of the next succeeding sections, be deemed to have purchased from his landlord, free of all incumbrances 516 subsisting thereon on the said day, the land held by him as tenant. . . . provided certain conditions are fulfilled.
Under section 32A the tenant shall be deemed to have purchased the lands up to the ceiling area and the tenant shall not be deemed to have purchased lands held by him as such tenant if he holds lands partly as owner and partly as tenant but the area of the land held as owner is equal to or exceeds the ceiling area (section 32B).
Section 32C empowers the tenant to chose the land to be purchased if he holds lands separately from more than one landlord and in spite of anything contained in the Bombay Prevention of Fragmentation and Consolidation of Holdings Act, 1947 (Bom.
LXII of 1947) the tenant shall be deemed to have purchased even such fragments of the land held on tenancy (section 32D).
The balance of any land after the purchase by the tenant as above is to be disposed of as if it were land surrendered by the tenant (section 32E); and the right of the tenant to purchase such land where the landlord is a minor, or a widow, or a person subject to any mental or physical disability or a serving member of the armed forces is postponed till one year after the cessation of disability.
The price to be paid by the tenant is to be determined by the Tribunal as soon as may be after the tiller 's day and the Tribunal is in the first instance to record in the prescribed manner the statement of the tenant whether lie is willing or is not willing to purchase the land held by him as a tenant and if the tenant fails to appear or makes a statement that he is not willing to purchase the land, the Tribunal is to declare by an order in writing that such tenant is not willing to purchase the land and that the purchase is ineffective (section 32G).
These provisions also apply to a sub tenant of a permanent tenant who is deemed to have purchased the land subject to the conditions specified in sections 32 to 32E (section 321).
Section 32J provides for an appeal to the State Government against the decision of Tribunal.
Section 32K prescribes the mode of payment of price by the tenant; and the purchase price is recoverable as arrears of land revenue (section 32L).
Under section 32M on the deposit of the price in lump sum or of 517 the last instalment of such price, the Tribunal is to issue a certificate of purchase to the tenant in respect of the land, which certificate of purchase shall be Conclusive evidence of purchase.
If a tenant fails to pay the lump sum within the period prescribed or is at any time in arrears of four instalments the purchase is to be ineffective and the land is to be at the disposal of the Collector and any amount deposited by such tenant towards the price of the land is to be refunded to him.
Section 32N gives the landlord a right to recover rent when purchase becomes ineffective, as if the land had not been purchased at all.
Section 32P gives the power to the Collector to resume and dispose of land not purchased by tenants.
The amount of purchase price is to be applied towards satisfaction of debts (section 320) ; and the, purchaser is to be evicted from the land purchased by him as aforesaid if he fails to cultivate the land personally (section 32R).
It is argued on the strength of these provisions that there is no effective purchase or effective sale of the land between the landlord and the tenant on the tiller 's day or the alternative period prescribed in that behalf until certain conditions are fulfilled.
To start with it is only an inchoate right which is given to the tenant to purchase the land which he can perfect on a statement being made by him before the Tribunal that he is willing to purchase the land.
Even if he does so, the land does not vest in him because only on the payment of the purchase price either in lump or by instalments can he get the certificate of purchase from the Tribunal.
If he commits default in pay ment, the purchase is ineffective and he gets no title to the land.
These provisions, it is submitted, do not vest the title to the land in the tenant at all until all these conditions are fulfilled and if any one or more of them is not fulfilled the purchase becomes ineffective in fact it is no purchase at all with the result that the title to the land which is already vested in the landlord is not at, all transferred to the purchaser.
If that is so, there is no compulsory sale or compulsory purchase of the land in question on the tiller 's day or the alternative period of time prescribed therefor and 518 there is no extinguishment of the rights of the landlord.
His rights in the land are merely suspended and such suspension is certainly not an extinguishment of his rights therein nor a modification thereof within the meaning of the expression used in article 31A (1)(a).
Reliance is placed in support of this proposition on the observations of this Court in Thakur Raghubir Singh vs Court of Wards, Ajmer (1).
In that case, this Court considered the provisions of section 112 of the Ajmer Tenancy and Land Records Act (XLII of 1950) which provided that if a landlord habitually infringes the rights of a tenant under the Act he would be deemed to be a landlord who is disqualified to manage his own property and his property would be liable to be taken under the superintendence of the Court of Wards.
Mahajan, J., (as he then was) observed at p. 1055: " Section 112 of the Act XLII of 1950, intended to regulate the rights.
of landlords and tenants, is obviously not a law providing for " the acquisition by the State " of the estates of the landlords, or of any rights in those estates.
It is also not a law providing for the extinguishment or modification of any such rights.
The learned Attorney General laid emphasis on the word " modification" used in Article 31 A.
That word in the context of the article only means a modification of the proprietary right of a citizen like an extinguishment of that right and cannot include within its ambit a mere suspension of the right of management of estate for a time, definite or indefinite.
" These observations were confined to suspension of the right of management of the estate and not to a suspension of the title to the estate.
Apart from the question whether the suspension of the title to the estate for a time, definite or indefinite would amount to a modification of a right in the estate within the meaning of article 31A (1)(a), the position as it obtains in this case is that there is no suspension of the title of the landlord at all.
The title of the landlord to the land passes immediately to the tenant on the tiller 's (1) ; 519 day and there is a completed purchase or sale thereof as between the landlord and the tenant.
The tenant is no doubt given a locus penitentiae and an option of declaring whether he is or is not willing to purchase the land held by him as a tenant.
If he fails to appear or makes a statement that he is not willing to purchase the land, the Tribunal shall by an order in writing declare that such tenant is not willing to purchase the land and that the purchase is ineffective.
It is only by such a declaration by the Tribunal that the purchase becomes ineffective.
If no such declaration is made by the Tribunal the purchase would stand as statutorily effected on the tiller 's day and will continue to be operative, the only obligation on the tenant then being the payment of price in the mode determined by the Tribunal.
If the tenant commits default in the payment of such price either in lump or by instalments as determined by the Tribunal, section 32M declares the purchase to be ineffective but in that event the land shall then be at the disposal of the Collector to be disposed of by him in the manner provided therein.
Here also the purchase continues to be effective as from the tiller 's day until such default is committed and there is no question of a conditional purchase or sale taking place between the landlord and tenant.
The title to the land which was vested originally in the landlord passes to the tenant on the tiller 's day or the alternative period prescribed in that behalf.
This title is defeasable only in the event of the tenant failing to appear or making a statement that he is not willing to purchase the land or committing default in payment of the price thereof as determined by the Tribunal.
The tenant gets a vested interest in the land defeasable only in either of those cases and it cannot therefore be said that the title of landlord to the land is suspended for any period definite or indefinite.
If that is so, there is an extin guishment or in any event a modification of the landlord 's right in the estate well within the meaning of those words as used in article 31A(1)(a).
We have, therefore, come to the conclusion that the impugned Act is covered by article 31A and is protected 520 from attack against its constitutionality on the score of its having violated the fundamental rights, enshrined in articles 14, 19 and 31 of the Constitution.
That being so, the attack levelled against sections 5, 6, 8, 9, 17A, 31 A to 31 D and 32 to 32R on the score of their being violative of the fundamental rights conferred upon the petitioners is of no avail to the petitioners.
This being the true position it is not necessary for us to consider the interesting questions which were argued before us at some length, viz., the nature, scope and extent of the provisions contained in articles 31(1) and 31(2) of the Constitution and the line of demarcation between them as also the impact of article 31(1) on the fundamental right enshrined in article 19(1)(f) of the Constitution.
Suffice it to say that under the circum stances no fundamental right of the petitioners before us is infringed by the impugned Act or the provisions thereof and the petitions under article 32 cannot be sustained.
The impugned Act being within the legislative competence of the State Legislature no question as to its being a piece of colourable legislation can arise.
It is not a legislation resorted to by the State Legislature with a view to by pass the provisions of List II of the seventh schedule to the Constitution, attempting to do something which it was otherwise not competent to do.
The legislation being covered by Entry 18 of the said List is really a further measure for agrarian reform which it was well within its competence to enact.
It is not an expropriatory legislation in the guise of one covered by Entry 18 in the said List.
It only fixes the ceiling area for the holding of the land lord cultivating the land personally and transfers the excess holding to the tenant in actual cultivation thereof and there too the price of the land as fixed by the Tribunal has got to be paid by the tenant to the landlord.
The tenant also is not entitled to hold land beyond the ceiling area and there is a balance sought to be struck between the interests of the landlord and those of the tenants so that the means of production are not concentrated in the hands of one party to the common detriment.
The price payable is also either 521 in lump or in such instalments as may be determined by the Tribunal and on default committed by the tenant in payment thereof the purchase becomes ineffective and the land deemed to have been purchased by the tenant reverts to the Collector to be dealt with in accordance with the provisions contained in the Act in that behalf.
It may be that instalments may be spread over a particular period which may thus be determined by the Tribunal and unless default is committed by the tenant in payment of four instalments the purchase does not become ineffective.
That, however, is not a provision which makes the payment of price in any manner illusory.
The landlord is entitled to the rents of the land as if there had been no purchase of the land by the tenant and the payment of such rent is made the first charge on the land.
There is, therefore, no scope for the argument that the provisions in this behalf contained in the Act were illusory or that the impugned Act is a piece of colourable legislation.
The only question that now survives is whether section 7 of the impugned Act is bad by reason of excessive delegation of legislative power.
Section 7 invests the Government with the power to vary the ceiling area and economic holding which have been prescribed in sections 5 and 6 of the Act.
Sections 5, 6 and 7 of the Act read as under : " 5.
Ceiling area: (1) For the purposes of this Act, the ceiling area of land shall be (a) 48 acres of jirayat land, or (b) 24 acres of seasonally irrigated land or paddy or rice land, or (c) 12 acres of perennially irrigated land.
(2) Where the land held by a person consists of two or more kinds of land specified in sub section (1), the ceiling area of such holding shall be determined on the basis of one acre of perennially irrigated land being equal of two acres of seasonally irrigated land or paddy or rice land, or four acres of jirayat land.
66 522 6.
Economic holding (1) For the purposes of this Act an economic holding shall be (a) 16 acres of jirayat land, or (b) 8 acres of seasonally irrigated land, or paddy or rice land, or (c) 4 acres of perennially irrigated land.
(2) Where the land held by a person consists of two or more kinds of land specified in sub section (1) an economic holding shall be determined on the basis applicable to the ceiling area under sub section (2) of section 5. 7.
Power of Government to vary ceiling area and economic holding: Notwithstanding anything contained in sections 5 and 6, it shall be lawful for the State Government, if it is satisfied that it is expedient so to do in the public.
interest, to vary, by notification in the Official Gazette, the acreage of the ceiling area or economic holding, or the basis of determination of such ceiling area or economic holding, under subsection (2) of section 5, regard being had to (a) the situation of the land, (b) its productive capacity, (c) the fact that the land is located in a backward area, and (d) any other factors which may be prescribed.
" It is contended that section 7 does not fix any criteria for the guidance of the State Government and that the power which is given to the State Government to vary the ceiling area and economic holding is unguided and unfettered and that it is possible to exercise it at the sweet will and discretion of the State Government even in favour of a, single individual or in favour of political sufferers and the like.
It is urged that no broad principle or policy is enunciated by the Legislature in this behalf and it would be open to the State Government to exercise this power arbitrarily and even in a discriminatory manner and that such entrustment of power to the State Government amounts to excessive delegation of legislative power and section 7 therefore must be held to be void.
523 The principles by which the courts are guided in the determination of this question are now well settled.
In the State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of Darbhanga (1) Mahajan, J., (as he then was observed): The legislature applied its mind to the question Of the method and manner of payment of compensation.
It settled its policy and the broad principles.
It gave the State Government the power to determine matters of detail after having settled vital matters of policy.
It cannot be said that the legislature did not apply its mind to the subject matter of the legislation and did not lay down a policy.
The proportion in which compensation was payable in cash or in bonds or whether the whole of it was to be paid in cash is a matter which only the State Government could fix and similarly, the interval of instalments and the period of redeemability of the bonds were also matters of detail which the executive could more appositely determine in exercise of its rule making power.
It cannot be said in this case that any essential legislative power has been delegated to the executive or that the legislature did not discharge the trust which the Constitution had reposed in it.
If the rule making authority abuses its power or makes any attempt to make the payment illusory the expropriated proprietor will not be without a remedy.
" If the legislature settles the policy and the broad principles of legislation, there is no bar against leaving the matters of detail to be fixed by the executive and such delegation will not amount to excessive delegation of legislative power such as to vitiate the enactment.
In the case before us the preamble to the Act says what the policy of the impugned Act is, viz., further to amend the 1948 Act which as we have already observed sets out specific objectives to be achieved.
Sections 5 and 6 prescribe the ceiling area and the economic holding which are fixed by the legislature itself having regard to the normal conditions then prevailing within the State.
The legislature knew what were the different types, of land, their situation (1) , 954. 524 and productive capacity and having regard to all the relevant factors determined the ceiling area as also the economic holding.
There were, however, bound to be differences between district and district and one part of the State and another and having therefore enunciated the broad principles and policy which were embodied in sections 5 and 6 of the Act the legislature enacted section 7 empowering the State Government to vary the ceiling area and the economic holding if it was satisfied that it was expedient so to do in the public interest, regard being had to the various criteria therein specified.
The State Government was to be guided in arriving at its satisfaction in regard to the expediency thereof by (a) the situation of the land, (b) its productive capacity, (c) the fact that the land is located in a backward area, and (d) any other factors which may be prescribed.
In so far as the situation of the land and its productive capacity were variable factors, more so if the land was located in a backward area, the State Government was enjoined to have regard to these factors as determining the variations one way or the other from the normal standard adopted by the Legislature in sections 5 and 6 of the Act.
" Any other factors which may be prescribed " would be factors ejusdem generis to the factors mentioned earlier in the section and could not be any and every factor which crossed the mind of the executive.
The very terms of the section preclude any single individual being treated in this manner because it talks of the variation in the ceiling area and the economic holding being considered by the State Government to be expedient in the public interest and the satisfaction of any individual interest could hardly be said to be a matter of public interest.
No doubt individuals would be benefited by the variations contemplated in section 7 but for that purpose the State Government has got to be satisfied that it is expedient in the public interest to do so and no variation in regard to ceiling area or the economic holding of a single individual can ever be said to have been contemplated within the terms of section 7.
It appears however that this argument found favour with the Bombay High Court in its decision in Parashram Damodhar vs 525 State of Bombay (1) where the Court observed that the power to issue a notification may be exercised in favour of a single individual under the authority reserved under section 7 and may lay the State Government open to a charge of favouritism.
With great respect to the learned judges of that High Court, we are of the view that no such thing is ever contemplated in the terms of section 7 of the Act.
There is also no warrant for the suggestion that the State Government might vary the ceiling area and the economic holding, say for instance, for benefiting the political sufferers within the State.
If the situation of the land and its productive capacity as also the fact that the land is located in a backward area are the criteria to be determined before the State Government is satisfied that it is expedient to vary the ceiling area and the economic holding in the public interest and " any other factors which may be prescribed " are to be read ejusdem generis with the above as already observed, no question of benefiting political sufferers can ever enter into the picture.
That would be an extraneous consideration.
It does not come within the criteria specified in section 7.
of the Act on a true construction thereof.
Such considerations therefore do not militate against the validity of the provisions contained in that section.
In our opinion, the broad principles and policy have been laid down by the legislature, the criteria have been fixed according to which the State Government has to be satisfied that it is expedient to vary the ceiling area and economic holding already prescribed by the legislature and the mere matter of working out the details having regard to those criteria which are specifically mentioned therein which has been delegated to the State Government does not amount to any excessive delegation of legislative power.
It is also to be remembered that this power of variation of the ceiling area and the economic holding is vested in the State Government and is left to its subjective satisfaction having regard to the criteria therein specified.
As was observed by Kania, C. J., in Dr. N. B. Khare vs The State of Delhi (2): (1) A. I. R. (2) ; , 526.
526 This whole argument is based on the assumption that the Provincial Government when making the order will not perform its duty and may abuse the provisions of the section.
In my opinion, it is not proper to start with such an assumption and decide the legality of an Act on that basis.
Abuse of the power given by a law sometimes occurs; but the validity of the law cannot be contested because of such an apprehension.
" These observations of Karda, C. J., were quoted with approval by Patanjali Sastri, C. J., in The State of West Bengal vs Anwar Ali Sarkar (1) where it was stated: " Whether a law conferring discretionary powers on an administrative authority is constitutionally valid or not should not be determined on the assumption that such authority will act in an arbitrary manner in exercising the discretion committed to it.
" The above observations of Kania, C. J., were then quoted and the judgment proceeded: " On the contrary, it is to be presumed that a public authority will act honestly and reasonably in the exercise of its statutory powers. . . . . . .
We may lastly refer to the observations of this Court in Pannalal Binjraj vs Union of India (2): " It may also be remembered that this power is vested not in minor officials but in top ranking authorities like the Commissioner of Income tax and the Central Board of Revenue who act on the information supplied to them by the Income tax Officers concerned.
This power is discretionary and not necessarily discriminatory and abuse of power cannot be easily assumed where the discretion is vested in such high officials.
(Vide Matajog Dobey vs H. section Bhari, [1955] 2 section C. R. 925, 932).
There is moreover a presumption that public officials will discharge their duties honestly and in accordance with the rules of law.
(Vide People of the State of New York vs John E. Van De Carr, etc., (1950 310 199 U. section 552; ; It has also been observed by this Court in A. Thangal Kunju (1) (1952] section C. R. 284, 301.
(2) ; 257, 258.
527 Musaliar vs M. Venkitachalam Potti, ; , with reference to the possibility of discrimination between assessees in the matter of the reference of their cases to the Income tax Investigation Commission that " it is to be presumed, unless the contrary were shown, that the administration of a particular law would be done " not with an evil eye and unequal hand " and the selection made by the Government of the cases of persons to be referred for investigation by the Commission would not be discriminatory.
" This presumption, however, cannot be stretched too far and cannot be carried to the extent of always holding that there must be some undisclosed and unknown reason for subjecting certain individuals or corporations to hostile and discriminatory treatment (Vide Gulf, Colorado, etc.
vs W. H. Ellis; , ; 41 L. Ed. 666).
There may be cases where improper execution of power will result in injustice to the parties.
As has been observed, however, the possibility of such discriminatory treatment cannot necessarily invalidate the legislation and where there is an abuse of such power, the parties aggrieved are not without ample remedies under the law (Vide Dinabandhu.
Sahu vs Jadumony Mangaraj; , ,146).
What will be struck down in such cases will not be the provision which invests the authorities with such power but the abuse of the power itself.
" It, therefore, follows that section 7 of the Act cannot be impugned on the ground of excessive delegation of legislative power.
All the various contentions urged by the petitioners therefore fail and the result is that the petitions filed by the petitioners before us must be dismissed with costs.
The State of Bombay which is the only respondent in all these petitions will however get only one set of costs therein.
Petitions dismissed.
| The petitions challenged the constitutional validity of the Bombay Tenancy and Agricultural lands (Amendment) Act, 1956, (1) ; 62 490 (Bom.
XIII of 1956) which, in further amending the Bombay Tenancy and Agricultural Lands Act, 1948 (Bom.
LXVII of 1948), ;Ought to distribute the ownership and control of agricultural lands in implementation of the Directive principles of State policy laid down by articles 38 and 39 of the Constitution.
The impugned Act sought to distribut equitably the lands between the landholders and the tenants, except where the landholder required the same for cultivation by himself, by way of compulsory _Purchase of all surplus lands by tenants in possession thereof with effect from April 1, 1957, called the 'tiller 's day '.
The basic idea underlying the Act was to prevent concentration of agricultural lands in the hands of the landholders.
The Act thus, being a legislation in respect of rights in and over land, affected the relation between landlord and tenant and provided for the transfer and alienation of agricultural lands.
The petitioners, who were landholders as defined by section 2(9) of the Act contended that (1) the impugned legislation was beyond the competence of the State Legislature, (2) that, not being protected by article 31A, of the Constitution, it infringed articles 14, 19 and 31 of the Constitution and (3) that it was a piece of colourable legislation vitiated in part by excessive delegation of legislative power to the State.
On behalf of the respondent it was urged that the impugned legislation fell within Entry 18 in List 11 Of the Seventh Schedule to the Constitution, that 'provided for the extinguishment or modification of rights to estates and was as such protected by article 31A of the Constitution and that there was no excessive delegation of legislative power.
Held, that it was well settled that the heads of legislation specified in Entry 18 in List 11 of the Seventh Schedule to the Constitution should not be construed in a narrow and pedantic sense but should be given a large and liberal interpretation.
There could, therefore, be no doubt that the impugned Act fell within the purview of Entry 18 in List 11 of the Seventh Schedule to the Constitution and the plea of legislative incompetence must fail.
British Coal Corporation vs The King, ; United Provinces v .
Atiqa Begum, and Navinchandra Mafatlal vs The Commissioner of Income tax, Bombay City, [1955] 1 S.C.R. 829, relied on.
There could be no doubt that the Bombay Land Revenue Code, 1879, was the existing law relating to land tenures in force in the State of Bombay within the meaning of article 31A(2)(a) of the Constitution and the word 'estate ' as defined by section 2(5) Of the Code clearly applied not only to lands held by the various tenure holders of alienated lands but also to land holders and occupants of unalienated lands.
There was no ambiguity in that definition and, therefore, no justification for putting a narrower construction on that word so as to mean the land holders of the former category alone and not of the latter; even if there was any, the wider meaning of the word was the one to be adopted in the context of the objective of the Act.
491 Case law discussed.
The word 'landholder ' as defined in section 2(9) of the Act also made no distinction between alienated and unalienated lands and showed that the interest of such a landholder fell within the definition of 'estate ' contained in section 2(5) of the Code.
There was no warrant for the proposition that extinguishment or modification of any rights in estates as contemplated by article 31A(1)(a) of the Constitution must mean only what happened in the process of acquisition of any estate or of any rights therein by the State.
The language of the Article was clear and unambiguous and showed that it treated the two concepts as distinct and different from each other.
Sections 32 to 32R of the impugned Act clearly contemplated the vesting of the title in the tenure on the titter 's day, defeasible only on certain specified contingencies.
They were designed to bring about an extinguishment or in any event a modification of the landlord 's rights in the estate within the meaning of article 31A(1)(a) of the Constitution.
The impugned Act, therefore, was not vulnerable as being violative of Arts.14, 19 and 31 of the Constitution.
It would not be correct to contend that the sections merely contemplated a suspension of the landholders ' right and not their extinguishment.
Thakur Raghubir Singh vs Court of Wards, Ajmer, ; , held inapplicable.
Where the Legislature settled the policy and broad principles of the legislation, there could be no bar against leaving matters of detail to be fixed by the executive and such delegation of power could not vitiate the enactment.
In the instant case, since the Legislature had laid down the policy of the Act in the preamble, enunciated the broad principles in sections 5 and 6 and fixed the four criteria in section 7 itself, the last of which had necessarily to be read ejusdem generis with the others, it was not correct to say that the impugned Act by section 7 had conferred uncontrolled power on the State Government to vary the ceiling area or the economic holding or that section 7 was vitiated by an excessive delegation of legislative power to the State.
Parshram Damodhar vs State of Bombay, A.I.R. 1957 Bom.
257, disapproved.
Dr. N. B. Khare vs The State of Delhi, ; ; The State of West Bengal vs Anwar Ali Saykar, [1952] S.C.R. 284 and Pannalal Binjraj vs Union of India, [1957] S.C.R. 233, referred to.
|
Summarize this legal judgement text concisely | Appeal No. 125 of 1955.
Appeal from the judgment and decree dated November 20, 1951, of the former Court of Judicial Commissioner, Vindhya Pradesh, in Civil First Appeal No. 47 of 1951, arising out of the judgment and decree dated June 4, 1951, of the Court of Additional District Judge, Umaria, in Civil Original Suit No. 17/19/17 of 1950.
Sardar Bahadur, for the appellants.
Achhru Ram, B. C. Misra and P. K. Chakravarty, for the respondents.
December 9.
The Judgment of the Court was delivered by S.K. DAS, J.
This is an appeal on a certificate granted by the erstwhile Judicial Commissioner of Vindhya Pradesh, which is now part of the State of Madhya Pradesh.
On behalf of respondent No. 1, Nagar Mal, who was defendant No. 1 in the suit, a preliminary objection has been taken to the effect that the suit was not maintainable by reason of the provisions of section 4 of the Rewa State Companies Act, 1935, and the appeal filed by the plaintiffs must, therefore, be dismissed.
As this preliminary objection was not taken in any of the two courts below, learned counsel for the appellants wanted time to consider the point.
Accordingly, on October 28, 1958, we adjourned the hearing of the appeal for about a month.
The appeal was then heard on November 27, 1958.
As we are of the opinion that the preliminary objection must succeed, it is necessary to state the facts only in so far as they have a bearing on it.
When cloth control came into force in Rewa State, the cloth dealers of Budhar a town in that State, formed themselves into an Association to collect the quota of cloth to be allotted to them and sell it on profit wholesale and retail.
The, Association at Budhar consisted of 25 members who made contributions to the initial 771 capital of the association which was one lac of rupees.
No formal Articles of Association were written; nor Se was it registered.
The Association functioned through a President and a pioneer worker; they kept accounts and distributed the profits.
Respondent No. 1, Nagar Mal, was the President of the said Association from January 1946 to June 26, 1946.
Before that, Seth Badri Prasad, one of the plaintiffs appellants before us, was the President.
Nagar Mal ceased to be President after June 26, 1946, and Seth Badri Prasad again became President.
The Association worked till Febr uary 1948 ; then cloth was decontrolled and the work of the Association came to an end.
On June 25, 1949, thirteen members of the Association out of the twenty five brought a suit, and in the plaint they alleged that respondent No. 1, who was President of the Association, from January 1946 to June 1946, had given an account of income and expenditure for the months of January, February and March, 1946, but had given no accounts for the months of April, May and June, 1946.
They, therefore, prayed (a)that defendant No. 1 (Nagar Mal) be ordered to give the accounts of the Cloth Association, Budhar, from the beginning of the month of April 1946 to June 26, 1946; (b)that defendant No. 1 be ordered to pay the amount, whatever is found due to the plaintiffs on account being done, along with interest at the rate of annas 12 per cent.
per month; and (c)that interest for the period of the suit and till the realisation of the dues be allowed.
Besides Nagar Mal the other eleven businessmen, who were members of the Association, were joined as proforma defendants, some of whom later filed an application to be joined as plaintiffs.
Though the plaint did not mention any particular transaction of the Association during the period when Nagar Mal was its President, the judgments of the courts below show that the real dispute between the parties related to the sale of cloth of a consignment known as the Gwalior consignment.
It appears that in April 1946 a consignment of 666 bales of cloth had come from Gwalior 772 and an order was passed by the Cloth Control Officer that the consignment would be allotted to Nagar Mal who would give the Association an option of taking over the consignment; if the Association did not exercise the option, the consignment would be taken over by Nagar Mal.
It appears that there was some dispute as to whether the other members of the Association were willing to take over the consignment of Gwalior cloth.
We are not concerned now with the details of that dispute because we are not deciding the appeal on merits.
It is enough if we say that ultimately there was an order to the effect that only 390 bales should be allotted to the Association out of which Nagar Mal had given the Association benefit of the sales of 106 bales, and the dispute related to the share of profits made on the remaining 284 bales.
Respondent No. 1, Nagar Mal, raised various points by way of defence, his main defence being that none of the members of the Association were entitled to any share in the profits on the sales of 284 bales of Gwalior cloth.
The learned District Judge, who dealt with the suit in the first instance, passed a preliminary decree in favour of the plaintiff appellants.
The decree directed Nagar Mal to render accounts of the Cloth Association at Budhar from April 1, 1946 to June 26, 1946, and it further directed that leaving out 106 bales of Gwalior cloth which Nagar Mal gave to the Association, an account should be rendered of the rest of the 390 bales and the profits on the sale thereof shall be according to the capital shares of the members of the Association.
Nagar Mal preferred an appeal to the learned Judicial Commissioner of Vindhya Pradesh, who reversed the finding of the learned District Judge and came to the conclusion that the other members of the Association were not entitled to participate in the profits made on the sale of 284 bales of the Gwalior cloth and inasmuch as Nagar Mal had rendered accounts with regard to all other transactions, the suit for accounts must fail.
He accordingly allowed the appeal and dismissed the suit.
The preliminary point taken before us is founded on 773 the provisions of section 4 of the Rewa State Companies Act, 1935.
Sub section (1) of section 4 relates to banking business.
We are concerned with sub section
(2) of section 4 which is in these terms: " 4(2).
No company, association or partnership, consisting of more than twenty persons shall be formed for the purpose of carrying on any other, business that has for its object the acquisition of gain by the company, association or partnership, or by the individual members thereof, unless it is registered as a company under this Act, or is formed in pursuance of a Charter from the Durbar." Mr. Sardar Bahadur, who has appeared on behalf of the appellants and who took time to consider the point, has now conceded before us that the aforesaid provision was in force in the Rewa State at the relevant time when the Association was formed at Budhar and he, has further conceded that the said provision was in force till the Indian Companies Act came into force in the said area in 1950.
We must, therefore, decide the preliminary point on the basis of the provision in section 4(2) of the Rewa State Companies Act, 1935.
Now, the preliminary point taken on behalf of respondent no.1 is this.
It is contended that by reason of section 4(2) aforesaid, the Cloth Association at Budhar was not a legal Association, because it was formed for the purpose of carrying on a business which had for its object the acquisition of gain by the individual members thereof and further because it was not registered as a Company under the Rewa State Companies Act, 1935; nor was it formed in pursuance of a charter from the Durbar.
It has been contended before us on behalf of respondent no.1 that by reason of the illegality in the contract of partnership the members of the partnership have no remedy against each other for contribution or apportionment in respect of the partnership dealings and transactions.
Therefore, no suit for accounts lay at the instance of the plaintiffs appellants, who were also members of the said illegal Association.
We consider that this contention is sound and must be upheld.
On behalf of the appellants, Mr. Sardar 774 Bahadur has urged the following points in answer to the preliminary objection: firstly, he has contended that we should not allow the preliminary objection to be raised at this late stage; secondly, he has contended that even though the Association was in contravention of section 4(2) of the Rewa State Companies Act, 1935, the purpose of the Association was not illegal and a suit was maintainable for recovery of the contributions made by the appellants and also for accounts; thirdly, he has contended that on the analogy of section 69(3)(a) of the , it should be held that the appellants had a right to bring a suit for accounts of the Association which was dissolved in February 1948.
We proceed now to consider these contentions of learned counsel for the appellants.
The first contention that respondent No. 1 should not be allowed to raise an objection of the kind which he has now raised at this late stage can be disposed of very easily.
The objection taken rests on the provisions of a public statute which no court can exclude from its consideration.
The question is a pure question of law and does not require the investigation of any facts.
Admittedly, more than twenty persons formed the Association in question and it is not disputed that it was formed in contravention of section 4(2) of the Rewa State Companies Act, 1935.
A similar question arose for consideration in Surajmull Nargoremull vs Triton Insurance Company Ltd. (1).
In that case sub section
(1) of section 7 of the Indian Stamp Act (11 of 1899) was pleaded as a bar before their Lordships of the Privy Council, the section not having been pleaded earlier and having passed unnoticed in the judgments of the courts below.
At p. 128 of the report Lord Sumner said:,, The suggestion may be at once dismissed that it is too late now to raise the section as an answer to the claim.
No court can enforce as valid that which competent enactments have declared shall not be valid, nor is obedience to such an enactment a thing from which a court can be dispensed by the consent of the parties, or by a failure to plead or to argue the (1)(1924) L.R. 52 I.A. 126, 128.
775 point at the outset: Nixon vs Alibion Marine Insurance Co., (1867) L. R. ; The enactment is prohibitory.
It is not confined to affording a party a protection, of which he may avail himself or not as he pleases ".
In Sri Sri Shiba Prasad Singh vs Maharaja Srish Chandra Nandi (1), the provisions of section 72 of the Indian Contract Act were overlooked by the High Court; the section was only mentioned in passing by the Subordinate Judge and it appears that the bar of section 72 of the Indian Contract Act was not argued or only faintly argued before the Subordinate Judge or in the High Court.
In these circumstances, their Lordships of the Privy Council held that they were unable to exclude from their consideration the provisions of a public statute.
In our view, the same principle applies in the present case and section 4(2) of the Rewa State Companies Act, 1935, being prohibitory in nature cannot be excluded from consideration even though the bar of that provision has been raised at this late stage.
On his second contention learned counsel for the appellants has relied on U. Sein Po vs U. Phyu (2).
That was a case in which three members of an association formed for carrying on a rice business claimed a decree (1) declaring the respective shares of the subscribers to that association and (ii) directing that the plaintiffs be repaid their shares after reconverting the property of the association into cash and after payment of all debts and liabilities.
The association, it was found, consisted of twenty seven members; it was not registered and its formation was in contravention of sub section
(2) of section 4 of the Indian Companies Act.
The lower court granted the decree asked for and this was affirmed in appeal by the High Court.
The learned Judges referred to the decision in Sheppard vs Oxenford(3) and Butt vs Monteaux (4), and rested their decision on the following passage of " Lindley on Partnership " (the learned Judges quoted the passage at p. 145 of the 9th edition but the same passage will be found at pp.
148 149 of the 11th edition): (1) (1949) L.R. 76 I.A. 244.
(2) Ran. 540.
(3) ; ; (4) ; ; 69 E.R. 345. 776 Although, therefore, the subscribers to an illegal company have not a right to an account of the dealings and transactions of the company and of the profits made thereby, they have a right to have their subscriptions returned; and the necessary account taken; and even though the moneys subscribed have been laid out in the purchase of land and other things for the purpose of the company the subscribers are entitled to have that land and those things reconverted into money, and to have it applied as far as it will go in payment of the debts and liabilities of the concern, and then in repayment of the subscriptions.
In such cases no illegal contract is sought to be enforced; on the contrary, the continuance of what is illegal is sought to be prevented.
" We do not think that the decision aforesaid, be it correct or otherwise, is of any help to the appellants in the present case.
The appellants herein have not asked for a return or refund of their subscriptions; on the contrary, they have asked for a rendition of accounts in enforcement of an illegal contract of partnership.
The reliefs they have asked for necessarily imply a recognition by the court that an association exists of which accounts ought to be taken.
When the association is itself illegal, a court cannot assist the plaintiffs in getting accounts made so that they may have their full share of the profits made by the illegal association.
The principles which must apply in the present case are those referred to in the following passage at p. 145 of Lindley on Partnership (11th edition): " The most important consequence, however, of illegality in a contract of partnership is that the members of the partnership have no remedy against each other for contribution or apportionment in respect of the partnership dealings and transactions.
However ungracious and morally reprehensible it may be for a person who has been engaged with another in various dealings and transactions to set up their illegality as a defence to a claim by that other for an account and payment of his share of the profits made thereby, such a defence must be allowed to prevail in 777 a court of justice.
Were it not so, those who ex hypothesi have been guilty of a breach of the law, would obtain the aid of the law in enforcing demands arising out of that very breach; and not only would all laws be infringed with impunity, but, what is worse, their very infringement would become a ground for obtaining relief from those whose business it is to enforce them.
For these reasons, therefore, and not from any greater favour to one party to an illegal transaction than to his companions, if proceedings are instituted by one member of an illegal partnership against another in respect of the partnership transactions, it is competent to the defendant to resist the proceedings on the ground of illegality It is true that in order that illegality may be a defence, it must affect the contract on which the plaintiff is compelled to rely so as to make out his right to what he asks.
It by no means follows that whenever money has been obtained in breach of some law, the person in possession of such money is entitled to keep it in his pocket.
If money is paid by A to B to be applied by him for some illegal purpose, it is competent for A to require B to hand back the money if B has not already parted with it and the illegal purpose has not been carried out: see Greenberg vs Cooperstein (1).
The case before us stands on a different footing.
It is a claim by some members of an illegal association against another member on the footing that the association should be treated as legal in order to give rise to a liability to render accounts in respect of the transac tions of the association.
Such a claim is clearly unten able.
Where a plaintiff comes to court on allegations which on the face of them show that the contract of partnership on which he sues is illegal, the only course for the courts to pursue is to say that he is not entitled to any relief on the allegations made as the courts cannot adjudicate in respect of contracts which the law declares to be illegal (Senaji Kapurchand vs Pannaji Devichand(2)).
The same view, which we (1) (2)A.I.R. 98 778 think is correct, was expressed in Kumaraswami vs Chinnathambi (1).
As to the last contention of learned counsel for the appellants, based on the analogy of section 69(3)(a) of the Partnership Act, it is enough to point out that under the , an unregistered firm is not illegal; there is no direct compulsion that a partnership firm must be registered, though the disabilities consequent on non registration may be extremely inconvenient.
Moreover, the suit before us was not one for accounts of a dissolved firm, but for accounts of an illegal association which was in existence at the relevant period for which accounts were asked.
We do not think that the argument by analogy is of any help to the appellants; in our opinion, the analogy does not really apply.
For the reasons given above, we hold that the preliminary objection succeeds.
The appeal is accordingly dismissed.
As the preliminary objection was taken at a very late stage, we direct that the parties must bear their own costs of the hearing in this Court.
Appeal dismissed.
(1) I.L.R. [1951] Mad 593.
| When cloth control was introduced in Rewa State, 25 cloth dealers of Budhar, including the thirteen appellants, formed themselves into an Association to collect the quota of cloth to be allotted to them and to sell it on profit.
The Association functioned through a President and a pioneer worker; they kept accounts and distributed profits.
After cloth had been decontrolled and the work of the Association had come to an end, the appellants filed a suit against the first respondent for rendition of accounts for a portion of the period that he had been President of the Association and for realisation of the amount found due with interest.
The suit was decreed by the trial Court but was, on appeal, dismissed by the judicial Commissioner.
In appeal before the Supreme Court, the first respondent raised, for the first time, a preliminary objection that the suit was not maintainable as the Association consisting of more than 20 persons was not registered as required by section 4(2) Of the Rewa State Companies Act, 1935, and that consequently the members of the Association had no remedy against each other in respect of its dealings and transactions.
The appellants objected to the raising of the new plea and contended that, nevertheless, the suit was maintainable Held, that the suit was not maintainable.
In view of section 4(2) of the Act the Association was illegal.
The reliefs claimed for rendition of accounts in enforcement of the illegal contract of partnership necessarily implied recognition by the Court that the Association existed of which accounts were to be taken.
The Court could not assist the plaintiffs in obtaining their share of the profits made by the illegal Association.
U.Sein Po vs U. Phyu, Rang.
540, not applicable.
Held further, that the new point ought to be allowed to be raised.
The question was a pure question of law and did not require the investigation of any facts.
The objection rested on the provisions of a public statute which no court could exclude from its consideration.
Surajmull Nargoremull vs Triton Insurance Company Ltd., (1924) L.R. 52 I.A. 126; Sri Sri Shiba Prasad Singh vs Maharaja Srish Chandra Nandi, (1949) L.R. 76 I.A. 244, followed.
The analogy of section 69(3)(a) of the , did not apply, an under that Act an unregistered firm was 97 770 not illegal.
Besides, the suit was not one for accounts of a dissolved firm but of an illegal Association which was in existence id at the relevant time.
|
Summarize this legal judgement text concisely | minal Appeal No. 118 of 1958.
Appeal from the judgment and order dated May 14, 1958, of the Allahabad High Court in Criminal Revision No. 1594 of 1956, arising out of the judgment and order of the Court of Additional Sessions Judge at Kanpur in Criminal Revision No. 13 of 1956.
C. P. Lal, for the appellant.
640 Gopi Nath Dikshit, for the respondent.
November 24.
The Judgment of the Court was delivered by VENKATARAMA AIYAR, J.
The facts leading up to this appeal are these: On April 26, 1954, the appellant was arrested by the Sisamau Police for offences under sections 420, 482,483, 485 and 486 of the Indian Penal Code on the allegation that he was in possession of 25 packets of Chand Chhap Biri, which were alleged to bear counterfeit trade marks.
On May 26, 1954, one Harish Chandra Jain acting on behalf of Messrs. Mohan Lal Hargovind Das filed a complaint charging that the appellant was in possession of counterfeit bidis, wrappers and labels and praying that a case under the sections above mentioned be registered and investigated.
On that, the Magistrate passed the following order : " section O. Sisamau.
Please investigate and register a case.
" After investigation, the police submitted their chargesheet on September 30, 1954, and summons was ordered to the appellant on July 22, 1955.
On September 17, 1955, the appellant filed an application before the Magistrate wherein he raised a preliminary objection that the proceedings were barred by section 15 of the (4 of 1889), hereinafter referred to as the Act.
That section provides : " No such prosecution as is mentioned in the last foregoing section shall be commenced after the expiration of three years next after the commission of the offence, or one year after the first discovery thereof by the prosecutor, whichever expiration first happens.
" The contention of the appellant was that the offence was discovered on April 26, 1954, when he was arrested and the goods seized, and that, in consequence, the issue of process on July 22, 1955, was beyond the period of one year provided under section 15 of the Act, and that the proceedings should therefore be quashed as barred by limitation.
The Magistrate rejected this contention, and a Revision Petition preferred against this order to the Additional Sessions Judge, Kanpur, 641 shared the same fate.
The appellant then filed a further Revision Petition to the High Court of Allahabad, being Criminal Revision No. 1594 of 1956, and the same was heard along with other similar Revision Petitions by a Bench consisting of James and Takru, JJ.
By their judgment dated May 13, 1958, the learned Judges held that the prosecution commenced when the complaint was presented on May 26, 1954, and that as the discovery was on April 26, 1954, the proceedings were within time under section 15 of the Act.
In view of the importance of the question raised, they granted leave to appeal to this Court under article 134 (1)(c) of the Constitution, and that is how the matter comes before us.
The point for decision is, when does a prosecution commence for purposes of section 15 of the Act, whether on the date when the complaint is preferred, or when the process is issued thereon? The word "prosecution " is not defined in the Act, nor are there any provisions therein bearing on this question.
Now, under the law and apart from statutory prescriptions, a prosecution commences, where it is at the instance of a private prosecutor, when the complaint is preferred.
The position is thus stated in Halsbury 's Laws of England, Vol.
X, 3rd Edn., p. 340, para.
630: " Criminal prosecutions, except where there are statutory provisions to the contrary, may be commenced at any time after the commission of the offence.
A prosecution is commenced, when an information is laid before a justice, or, if there is no information, when the accused is brought before a justice to answer the charge, or, if there is no preliminary examination before a justice, when an indictment is preferred.
" It is further stated there that different statutes provide for various periods of limitation within which a prose cution could be commenced after the commission of the offence, and that three years is the period provided for an offence under the Merchandise Marks, Act, 1887, which corresponds to the .
It is therefore settled law that unless 642 there is something to the contrary in the statute, when a private complaint is presented it is the date of pre sentation thereof that marks the commencement of the prosecution.
Now, what is the nature of the prosecution under section 15 of the Act ? It is relevant in this connection to refer to sections 13 and 14, which run as follows: section 13: ',In the case of goods brought into India ' by sea, evidence of the port of shipment shall, in a prosecution for an offence against this Act or section 18 of the , as amended by this Act, be prima facie evidence of the place or country in which the goods were made or produced.
" section 14(1): " On any such prosecution as is mentioned in the last foregoing section or on any prosecution for an offence against any of the sections of the Indian Penal Code, as amended by this Act, which relate to trade, property and other marks, the Court may order costs to be paid to the defendant by the prosecutor or to the prosecutor by the defendant, having regard to the information given by and the conduct of the defendant and prosecutor respectively.
(2) Such costs shall, on application to the Court, be recoverable as if they were fine.
" The object of the above provisions is to protect the rights of persons who manufacture and sell goods with distinct trade marks against invasion by other persons passing off their goods fraudulently and with counterfeit trade marks as those of the manufacturers.
Normally, the remedy for such infringement will be by action in Civil Courts.
But in view of the delay which is incidental to civil proceedings and the great injustice which might result if the rights of manufacturers are not promptly protected, the law gives them the right to take the matter before the Criminal Courts, and prosecute the offenders, so as to enable them effectively ,and speedily to vindicate their rights.
It is for this, reason that a short period of limitation is provided heir preferring a complaint under a. 15 of the and there is also a special provision for award of costs of the proceedings to or by the complainant.
in Ruppell vs Ponnuswami Tewan (1), the question &rose whether a prosecution launched by the complainant in 1898 in respect of goods sold and marked with what was alleged to be, a counterfeit trade mark in 1893 was in time.
In deciding that it was a barred under section 15 of the Act, the Court observed as follows: Section 15 of the Merchandise Mark,% Act IV of 1889, enacts that no prosecution such as the present shall be commenced after the expiration of one year after the first discovery of the offence by the prosecutor.
The reason for this limitation is clear.
Ordinarily the infringement of a trade.
mark is rather a civil than a criminal wrong, but as civil proceedings may require much time and expenditure to bring them to a conclusion, the Legislature, in its anxiety to protect traders, has allowed resort to the criminal courts to provide a speedy remedy in cases where the aggrieved party is diligent and does not by his conduct show that the case.
is not one of urgency.
if, therefore, the person aggrieved fails to resort to the criminal courts within a year of the offence coming to his knowledge, the law assumes that the case is not one of urgency, and it leaves him to his civil remedy by an action for injunction.
" It will be noticed that the complainant is required to resort to the Court within one year of the discovery of the offence if he is to have the benefit of proceeding under the Act.
That means that if the complaint is presented within one year of such discovery, the requirements of section 15 are satisfied.
The period of limitation, it should be remembered, is intended to operate against the complainant and to ensure ' diligence on his part in prosecuting his rights, and not against the Court.
Now, it will defeat the object of the enactment and de Drive traders of the protection which the law intended to give them, if we were to hold that unless process is issued on their complaint within one year of the discovery of the offence, it should be thrown out.
It will be an unfortunate state of the law if the trader whose rights had been infringed and who takes lip the matter promptly before the Criminal (1) Mad. 488.
644 Court is, nevertheless, denied redress owing to the delay in the issue of process which occurs in Court.
The appellant relies on certain decisions as showing that.
the prosecution must be held to commence only when process is issued and not when complaint is filed.
In Sheik Meeran Sahib vs Ratnavelu Mudali (1), De Rozario vs Gulab Chand Anundjee (2) and Golap Jan vs Bholanath Khettry (3) cited by the appellant, the question was whether an action for damages for malicious prosecution would lie when the complaint was dismissed without notice to the plaintiff.
It was held that the plaintiff could not be held to have been prosecuted unless process was issued to him and that where the complaint was dismissed without such process being issued, there was no prosecution and no action for damages in respect of such prosecution would lie.
These decisions have no bearing on the present question.
In suits for damages for malicious prosecution, one of the points to be decided is, whether the plaintiff was, in fact, prosecuted; and if he was, no question arises as to when the prosecution commenced.
On the other hand, the point for decision in a prosecution under the Act is, not whether there was a prosecution but when it was instituted ; and a question as to whether there was prosecution or not would be wholly foreign to it.
Indeed, in an action for damages for malicious prosecution, when it is held that there was prosecution, that could properly be held to have commenced when the complaint was filed and not when the process was issued.
Vide the observations of Woodroffe, J., in the course of the argument in Golap Jan vs Bholanath Khettry (3) at p. 884.
The decisions in Sheik Meeran Sahib vs Ratnavelu Mudali (1), De Rozario vs Gulab Chand Anundjee (2) and Golap Jan vs Bholanath Khettry (3) therefore do not throw any light on the matter now under consideration.
It may be that these decisions may have to be reconsidered in the light of the recent decision of the Privy Council in Mohamed Amin vs Jogendra Kumar Bannerjee (4), wherein it was observed: (1) Mad.
181 (2) Cal.
(3) Cal.
(4) , 331. 645 " The test is not whether the criminal proceedings have reached a stage at which they may be described as a prosecution; the test is whether such proceedings have reached a stage at which damage to the plaintiff results.
" Vide also Ramaswami Iyer on The Law of Torts, 4th Edn., p. 318.
The decision in R. R. Chari vs The State of Uttar Pradesh (1) was relied on by the appellant as showing that until process was issued, there was no prosecution.
There, the appellant was proceeded against under the provisions.
of the Prevention of Corruption Act No. 2 of 1947.
The Deputy Magistrate, Kanpur, issued a warrant for his arrest on October 22, 1947.
Thereafter, on December 6, 1948, the prosecution obtained the necessary sanction under the Act.
The contention of the appellant was that the prosecution must be held to have been instituted against him on October 22, 1947, when he was arrested, that as no sanction for his prosecution had been obtained at that time, the proceedings were bad, and that the defect was not cured by sanction being obtained subsequently on December 6, 1948.
This Court held that under the special provisions of the Prevention of Corruption Act, the police had the power to arrest the appellant pending investigation and that was all the effect of the order of the Deputy Magistrate dated October 22, 1947, and that therefore there was no prosecution on the date of the arrest.
But here, we are dealing with a private complaint, and as pointed out at p. 315 of the Report, section 190(1)(a) of the Criminal Procedure Code would apply to such cases, and the Magistrate must be held to have taken cognizance when the complaint was received.
This decision, in our opinion, does not assist the appellant; nor does the decision in Gopal Marwari vs King Emperor (2).
There, considering sections 200 and 202 of the Criminal Procedure Code, the learned Judges observed that there was a distinction between initiation of proceedings before the Magistrate and his taking cognizance of the same.
It is Sufficient to say that that is not (1) ; (2) Pat 433. 646 the question 'which we have got to decide here, and on the language of section 15 of the Act, which is what we are concerned with in this appeal, all that is required is that a private 'prosecutor ' should prefer this complaint within one year of the discovery of the offence ', and if that is done, ' the bar under that section cannot apply.
We agree with the decision of the learned Judges of the Court.
below that the, proceedings are not barred by section 15 of the Act.
This appeal is accordingly dismissed.
Appeal dismissed.
| On April 26, 954, the appellant was arrested for offences under sections 420, 482, 483, 485 and 486 Indian Penal Code and bidis alleged to bear counterfeit trade marks were seized from him.
On this a complaint was filed on May 26, against the appellant that he was in possession of counterfeit bidis, wrappers and labels.
After investigation, the police submitted a charge sheet on September 30, 1954, and summons was ordered to the appellant on July 22, 1955.
The appellant raised a preliminary objection before the Magistrate that the proceedings were barred by section 15 of the Indian Merchandise Marks Act.
He contended that the offence was discovered on April 26, 1954, when he was arrested and the prosecution which commenced with the issue of process against him on July 22, 1954, was beyond the period of one year provided by section 15.
Held, that the prosecution was not barred by section 15 as the prosecution commenced on the presentation of the complaint which was within one year of the discovery of the offence and not on the issuing of the process.
It is settled law that unless there is something to the contrary in the statute, when a private complaint is presented it is the date of presentation thereof that marks the commencement of the prosecution.
The period of limitation is intended to operate against the complainant and not against the Court.
It will defeat the object of the Act and deprive traders of the protection of the law if it were held that the complaint should be thrown out unless process was issued within one year.
of the discovery of the offence.
|
Summarize this legal judgement text concisely | Appeal No. 177 of 1955.
Appeal from the judgment and decree dated September 28, 1953, of the former Nagpur High Court in First Appeal No. 115 of 1951, arising out of the judgment and decree dated July 25, 1951, of the Court of Additional District Judge, Bhandara, in Civil Suit No. 14 A of 1957.
C. B. Aggarwala and Radheylat Aggarwal, for the appellant.
section P. Sinha and section N. Mukherjee, for the respondent.
December 1.
The Judgment of the Court was delivered by 700 KAPUR, J.
This is an appeal against the judgment and decree of the High Court of Nagpur reversing the decree of the Additional District judge dismissing the plaintiff 's suit.
The appellant before us is the defendant Kishori Lal who claimed to be the adopted son, adopted by the husband of the plaintiff, Mst.
Chaltibai who is the respondent in this appeal.
The suit out of which this appeal arises was brought by Mst.
Chaltibai, the widow of Lakshminarayan, a Marwari Aggarwal of the District of Bhandara against Badrinarayan defendant No. 1 and his son Kishori Lal defendant No. 2 now appellant for a declaration that properties in sch.
B & C belonged to her as heir to her deceased husband Lakshminarayan and for possession of the property in schedule D.
The facts of the litigation relevant for the purpose of this judgment are these: Badrinarayan and Lakshminarayan were two brothers the former who was elder was carrying on business at Raipur and the latter who was younger carried on business in the ancestral village named Tirora where it is stated Badrinarayan also was doing some business.
Lakshminarayans first wife died in 1919 leaving a son and a daughter.
In 1922 Lakshminarayan married the respondent Mst.
Chaltibai.
His son died sometime after this marriage and therefore the only remaining child of Lakshminarayan was the daughter Mst.
Jamnabai who was married to one Chotteylal.
On January 6, 1936, Lakshminarayan died of a heart disease leaving his estate which is given in schs.
B, C and D and is valued at about Rs. 30,000.
Although the plaintiff Chaltibai, now respondent, had alleged that Lakshminarayan died suddenly and did not suffer from any heart disease previous to his death, the appellant pleaded that Lakshminarayan developed heart trouble in 1934.
He also pleaded that because of this heart trouble Lakshminarayan became despaired of begetting a son and therefore adopted in Jaisth (May June) 1935 the appellant Kishorilal then aged 13 years who was the youngest of the five sons of his brother Badrinarayan, the others being Mohanlal, Gowardhan, Nandlal and Narayan.
He further pleaded that after 701 his adoption he resided with Lakshminarayan as his adopted son and when Lakshminarayan died he performed his obsequies as such adopted son, was placed on the gaddi and the turban was tied on his head in accordance with the custom of the caste; that he was on the thirteenth day (tervi) taken by the respondent Chaltibai in her lap from Badrinarayan with the consent and in the presence of the relations of Lakshmi narayan on the thirteenth day of the death of Lakshminarayan ; that he entered into possession of the estate of the deceased Lakshminarayan and was recognised as his adopted son even by the respondent who continued to accept and treat him as such upto 1946; and in 1942 the respondent performed his (the appellant 's marriage).
After he attained majority he managed the estate himself and there was a partition in the family of Badrinarayan on October 30, 1943, in which the appellant, because of his having been given out in adoption in another family, received no share.
The respondent in the plaint denied both the adoption and the treatment or acceptance of the appellant as an adopted son.
She also stated that she was an illiterate purdanashin woman who was not conversant with the management of business and after the death of her husband she reposed full confidence in Badrinarayan who assured her that he would properly look after her affairs, business and property and consequently Badrinarayan took over the management of the estate and the account books and also looked after court work.
At his instance she (the respondent) signed certain papers without understanding them or without knowing their contents and sometimes she even signed blank papers.
The appellant and his father Badrinarayan then attempted to oust her from the business and the estate of her husband which led to disputes between the parties and proceedings under ss.107 & 145 of the Code of Criminal Procedure were started, a receiver was appointed and the Magistrate by an order dated May 19, 1947, directed the parties to have their rights decided by a civil court.
This order was unsuccessfully challenged by the appellant in revision.
In the criminal case the appellant, it is 702 alleged, asserted that he had been adopted by Lakshminarain six months prior to his death, a fact which the respondent Chaltibai denied in her plaint.
On these pleadings the court framed four issues and the two relevant issues for the purpose of this appeal are : (1)Did the deceased Lakshminarayan validly adopt the defendant No. 2 in the bright fortnight of Jyestha (June), 1935 A. D. ? (b) Was the adoption valid according to law ? (2) Had the plaintiff all along recognised the adoption as valid and legal and had she been treating defendant No. 2 as Lakshminarayan 's son all along ? (b) If so, result ? The trial court dismissed the suit.
It held the adoption proved but found against the appellant on the question of estoppel.
The High Court on appeal reversed the finding as to the factum of adoption but upheld the finding on the question of estoppel.
It was of the opinion that the respondent was not estopped on account of any misrepresentation made by her and that there was no such conduct on her part which deprived her of her right of bringing the present suit and that both parties knew that there was no adoption in fact.
The appeal was therefore allowed.
The defendant Kishorilal has brought this appeal to this Court under a certificate of the High Court and the judgment of the High Court is assailed on several grounds: Firstly, it was urged that the evidence produced in support of the adoption proved that the appellant was adopted by Lakshminarayan six months before his death.
Secondly, the doctrine of estoppel was relied upon, estoppel on the ground that the respondent Chaltibai had represented in previous legal proceedings and in various ways by execution of docu ments and by her actions that the appellant was the adopted son of Lakshminarayan.
She had put him in possession as owner of all the estate of Lakshminarayan, and had given up her own claim to heirship to his estate and as a result of this conduct and representations made by the respondent the appellant had 703 altered his possession (i) by being completely transplanted from his real father 's family into another family and (ii) by being deprived of his share of the properties in his natural family.
Thirdly, it was argued that because of her admission that the appellant was the adopted son of Lakshminarayan and his heir the burden was on her to show that he was not the adopted son.
And fourthly, it was submitted that having regard to the long course of conduct of the respondent Chaltibai in treating the appellant as the adopted son of Lakshminarayan the evidence produced should be appraised in such a manner as to hold it sufficient for proving the adoption.
There is no formal deed of adoption, the appellant therefore sought to prove it by the evidence of six witnesses who were.
his real brother Mohanlal, his natural father Badrinarayan and two relations Narsingdas and Shankarlal, a neighbour Chattarpatti who is some kind of a physician and Kishorilal himself appeared in support of his case.
A seventh witness Sobharam was produced to prove an admission by Lakshminarayan that he had adopted the appellant.
The story of the adoption as disclosed by the evidence for the appellant was that as Lakshminarayan had no son of his own he asked his brother Badrinarayan to give his youngest son in adoption to which he agreed and the adoption took place at the house of Lakshminarayan at Tirori in the month of Jyaistha 1935 about six months before the death of Lakshminarayan.
The formalities of adoption, according to this evidence, consisted of placing the appellant as a son not in lap of the adoptive mother but of Lakshminarayan who put a tilak on the appellant 's forehead and tied a turban on his head.
This was followed by distribution of pansupari to the persons assembled who were Narasingdas and Shankarlal who were from outside Tirora, Raman and Jivan Singh who were servants of Lakshminarayan, Chhatarpatti a neighbour and Bhaiyalal who has not been examined and there was also present Mohanlal a real brother of the appellant.
Some other persons were also present by the appellant but they are not witnesses in the case and Badrinarayan and Mohanlal did 704 not mention their presence.
No religious ceremony was performed and there was no priest though witness Narsingdas stated that a priest was present at the adoption ceremony and ganesh puja was performed.
The evidence also shows that no invitations were sent to the brotherhood, friends or relations and besides the persons mentioned above no one else was present and thus no publicity was given to the adoption.
None of the relations of the respondent were invited or were present although she had brothers and sisters and they were married.
Even the respondent Chaltibai was not present at the ceremony of adoption.
It is stated that she was in some inner room.
And after the formalities of adoption Lakshminarayan himself put the adopted son in the lap of the respondent Chaltibai.
The adoption was not followed by any feast nor was any photograph taken and no presents were given to the adopted son.
Lakshminarayan did not consult any priest as is usual for fixing an auspicious day for adoption.
Although the defendants were allowed to amend their written statement they gave no details of the adoption by Lakshminarayan beyond saying that it was in the month of Jyaistha 1935 but what date it was not mentioned.
The parties are Aggarwals and belong to a commercial community who maintain complete and detailed accounts.
Although Badrinarayan who was defendant No. 1 chose to put in accounts of January 20, 1936, in connection with what he expended on the tervi (thirteenth) day ceremony after the death of Lakshminarayan yet he filed no such accounts showing the date when he and his son the appellant came to Tirora from Raipur for the purposes of adoption or when they went back.
No contemporary document of any kind has been produced to show when the adoption took place or what was expended by Badrinarayan nor have the accounts of Lakshminarayan who ac cording to the appellant himself maintained account books been produced to show as to the expenses of whatever little ceremony was observed on the date of the adoption.
The account produced by Badrinarayan shows the amount expended on the occasion of 705 thirteenth day ceremony after the death of Lakshminarayan on betel leaves, milk, betelnuts and also what was paid at the house of Lakshminarayan including the amount paid for the turban for the reading of the garud puran or what was paid to Kesu (which we are told is a pet name of Kishorilal) for touching the feet of the elders.
The significance of this fact has not been explained by the appellant.
I As an adoption results in changing the course of succession, depriving wives and daughters of their rights and transferring properties to comparative strangers or more remote relations it is necessary that the evidence to support it should be such that it is free from all suspicion of fraud and so consistent and probable as to leave DO occasion for doubting its truth.
Failure to produce accounts, in circumstances such as have been proved in the present case, would be a very suspicious circumstance.
The importance of accounts was emphasised by the Privy Council in Sootrugun vs Sabitra (1) ; in Diwakar Rao vs Chandanlal Rao (2) ; in Kishorilal vs Chunilal (3); in Lal Kunwar vs Charanji Lal (4) and in Padamlal vs Fakira Debya (5).
The oral evidence of witnesses deposing to the factum of adoption is both insufficient and contradictory.
Beyond their being agreed on the question of taking the appellant in adoption by Lakshminarayan the witnesses are not in accord as to the details of the adoption or as to the ceremonies or as to the usual feast following it.
The giving of presents is the only detail on which they are agreed, they all deposed that no presents were given.
As to what happened in regard to the taking of the appellant in her lap by the respondent after the death of Lakshminarayan the witnesses are not in accord.
There is disagreement as to its date how it came about and why.
The adoption during the lifetime of Lakshminarayan is contradicted by a document dated January 24, 1938, a sale deed by the respondent Chaltibai in favour of the (1) (1834) 2 Knapp.
(2) Calcutta 201 (P.C.).
(3) (1908) 36 I.A. 9.
(4) (1909) 37 I.A. 1, 7.
(5)A.I.R. 193, (P.C.) 84.
89 706 Firm Ganeshram Fatteh Chand the family firm of witness Narsingdas.
Therein the adoption of the appellant is stated to have taken place after the death of Lakshminarayan and was by (Chaltibai respondent under the authority of her deceased husband and with the consent of the whole family.
This document was witnessed by the natural father Badrinarayan.
No satisfactory explanation of this wholly different adoption being mentioned in a deed executed only two years after the death of Lakshminarayan has been given by the appellant, except this that whether he was adopted by Lakshminarayan in his lifetime or after his death by the respondent Chaltibai, he would be the adopted son of Lakshminarayan and therefore this discrepant recital in the sale deed was of little consequence.
This argument ignores the case set up by the appellant in his written statement and the utter lack of evidence of the authority of the husband or of the assent of his kinsmen which was neither pleaded nor proved.
Another circumstance which casts a great deal of doubt on the adoption set up by the appellant is that after the adoption the appellant went back to Raipur where his natural father was residing.
Although Badrinarayan stated that after the adoption the appellant lived with his adoptive father, this is negatived by the evidence produced by the appellant himself which is to the effect that he went back to school at Raipur and returned to Tirora on the day Lakshminarayan died.
The High Court also found that he left for Raipur after the obsequies and returned three or four months later.
The school leaving certificate shows that he was a student in the school at Tirora from June 22, 1936 to June 30, 1937, and there he was entered as the son of Badrinarayan.
Taking all these facts into consideration the High Court, in our opinion, has cor rectly held that the factum of adoption by Lakshminarayan has not been established.
It was next argued on behalf of the appellant that even though the evidence produced in support of the adoption might be unsatisfactory and not sufficient to establish the factum of adoption the respondent in this 707 case was estopped from setting up the true facts of the case inasmuch as she represented in the former document and legal proceedings and in various other ways that the appellant was the adopted son of the deceased Lakshminarayan and thereby caused him to change his position by being transferred from the family of Badrinarayan to that of Lakshminarayan.
These documents will be discussed later.
In this case both the parties were aware of the truth of the facts and consequently the doctrine of estoppel was inapplicable.
It cannot be said that the respondent by her own words or conduct wailfully caused the appellant to believe the existence of a certain state of things i.e. adoption by Lakshminarayan and induced him to act on that belief so as to alter his position and therefore she could not be concluded from averring a different state of things as existing at the same time.
See Pickard vs Sear (1) and Square vs Square (2 ).
The Privy Council in Mohori Bibi vs Dhurmdas Ghogh (3 ) held that there can be no estoppel where the truth of the matter is known to both the parties.
Therefore when both the parties are equally conversant with the true facts the doctrine of estoppel is inapplicable.
The documents giving rise to the plea of estoppel were four and the appellant also relied on the acts of the respondent which will be referred to later.
The first document was an application dated March 21, 1936, for a succession certificate which was filed by the respondent as " guardian mother " of the appellant Kishorilal.
The necessity for this application arose because in order to get insurance money on a policy taken out by the deceased Lakshminarayan a succession certificate had to be obtained.
The High Court came to the conclusion that there was no evidence to show that the respondent Chaltibai 's signatures were obtained on the document after it was explained to her, the document was in English and she was not conversant with that language.
Two other drafts were made for the application for this succession certificate which (1) ; ; (2) (3) (1902) 30 I.A. 114.
708 are both on the record.
In these two drafts Badrinarayan is shown as " guardian uncle " of the appellant Kishorilal.
Although Badrinarayan was reluctant to do so he had to admit the existence of these two drafts but added that he had instructed Jivan Singh a servant of Lakshminarayan not to file the application till after he had consulted a Mr. P. section Deo, a pleader and after he had consulted him the application was filed but with Chaltibai as guardian.
This document in para.
3 sets out the names of the relations of the deceased.
They were the widow Chaltibai, the daughter Jamnabai, the brother Badrinarayan and the four sons of Badrinarayan.
In this column the appellant Kishorilal was not shown as a relative of the deceased.
In a later paragraph it was stated that the petitioner i. e. the appellant Kishorilal claimed the certificate as the adopted son of the deceased Lakshminarayan.
On the finding of the High Court that the document was not explained to the respondent Chaltibai it cannot be said that it established any admission, much less estoppel.
This document did not contain any admission which would necessarily show that Kishorilal appellant was adopted by Lakshminarayan during his lifetime.
The next document relied upon is a bahi entry in a Mathura Panda 's book dated July 21, 1944.
The story is that the respondent Chaltibai visited Mathura on her way back from Badrinarayan and the Panda of the family made an entry in his bahi after making enquiries from her showing the appellant Kishorilal as the adopted son.
The entry is signed by her.
This document is contradicted by another entry in the same Panda 's bahi which is stated to have been made at the instance of Mohanlal, the eldest brother of the appellant on March 2, 1947, about 2 1/2 years after the pre vious entry.
In the later entry the appellant Kishorilal was shown as the son of Badrinarayan and not the adopted son of Lakshminarayan.
Whether the document the previous Bahi entry was at the instance of the respondent Chaltibai or not is not material because it does not advance the case of the appellant.
This document also does not show that the appellant 709 was adopted by Lakshminarayan.
Then there is a document adhikar patra dated May 4, 1946, by which a dispute between the appellant and the respondent was referred to the arbitration of 7 persons.
It was signed by the appellant and the respondent and it was therein recited: " Relations between us mother and son have become strained in connection with some matters.
it is very necessary to remove the same".
In another portion of the document also words used are "between us the mother and the son".
This document also was not accepted by the High Court as containing an admission because even at the time of its execution the respondent Chaltibai was denying the adoption of Kishorilal which was proved by the testimony of two of the panches (arbitrators) themselves.
It cannot be said therefore that this document represented correct state of affairs but even if it did it cannot be treated as an admission by the respondent that the appellant was adopted by Lakshminarayan.
Lastly there is the deed of sale dated January 24, 1938, wherein the respondent had recited that the appellant Kishorilal was adopted by her husband ,in accordance with his wishes and consent of the entire family ".
This recital negatives the whole case of the appellant as set up in his written statement that he was adopted by Lakshminarayan during his lifetime.
In his written statement he bad only pleaded his having been placed in the lap of the respondent Chaltibai as confirmatory of his adoption by Lakshminarayan.
The documents mentioned above do not support the plea that the appellant had been led.
to alter his position through a belief in any misrepresentation made by the respondent Chaltibai as to his having been adopted by Lakshminarayan.
And he cannot be allowed to set up a case different to his case in the written statement nor can he be allowed to prove his title as an adopted son on such different case.
See Tayammaul vs Sashachalla Naiker (1), Gopeelal vs Mussamat Chandraolee Buhajee (2 ).
The correct rule of estoppel applicable in the case of adoption is that it (1) (1865) 10 M.I.A. 429.
(2) (1872) SUPP.
I.A. 131.
710 does not confer status.
It shuts out the mouth of certain persons if they try to deny the adoption, but where both parties are equally conversant with the true state of facts this doctrine has no application.
Two further facts which the appellant 's counsel relied upon to support his plea of estoppel were: (1) his being allowed to perform the obsequies of Lakshminarayan and (2) the performance of his marriage by the respondent Chaltibai as his adoptive mother.
If the adoption itself is disproved these two facts will not add to the efficacy of the plea of estoppel which otherwise is inapplicable: Dhanraj vs Sonabai (1).
The appellant relied on Rani Dharam Kunwar vs Balwant Singh (2) which was a case where the adoptive mother, the Rani had herself in a previous proceeding pleaded that she had authority to adopt and the Privy Council were of the opinion that the question could be decided on its own facts without recourse to the doctrine of estoppel, although they did not differ from the view of the courts below as to the applicability of the doctrine of estoppel.
That was not a case of the parties being equally conversant with the true facts and further there was a finding that the person claiming to be the adopted son was as a matter of fact adopted.
In our view there is no substance in the plea of estoppel raised by the appellant.
Whatever the acts of the respondent Chaltibai, what.
ever her admissions and whatever the course of conduct she pursued qua the appellant Kishorilal they could not amount to estoppel as both parties were equally conversant with the true facts.
In none of the four documents which are signed by her, is there any admission that Kishorilal was adopted by her husband during his lifetime.
On the other hand in the sale deed dated January 24, 1938, she recited an adoption by herself which is not the adoption that the appellant relied upon in support of his case.
The other documents i. e. the application for succession certificate and the arbitration agreement and the entry in the Panda 's bahi are all consistent with the recital in the sale deed and do not establish the case (1) (1925) 52 I.A. 231, 243.
(2) (1912) 39 I.A. 142, 148.
711 of the appellant as to the adoption by Lakshminarayan himself.
It was then argued for the appellant that the course of conduct of the respondent and her various acts of admission and the treatment of the appellant as an adopted son by the respondent and other members of the family gave rise to a strong inference that he (the appellant) was adopted as aleged by him and the evidence should have been so appraised as to support that inference.
Particular emphasis was placed by counsel for the appellant on the fact that soon after the death of Lakshminarayan it was given out that the appellant was his adopted son and this assertion was continuously made in many transactions and documents.
These documents, the course of conduct of Chaltibai respondent in treating the appellant as the adopted son of Lakshminarayan and the length of the appellant 's possession of Lakskminarayan 's estate, it was contended, showed that he was the adopted son of Lakshminarayan.
It was also submit ted that the admissions shifted the onus on to the respondent on the principle that what a party himself admits to be true may reasonably be presumed to be so and until the presumption was rebutted, the fact admitted must be taken to be established: Chandra Kunwar vs Narpat Singh (1).
The question of onus loses its efficacy because it was never objected to in the courts below and evidence having been led by the parties, at this stage the court has to adjudicate on the material before it.
And admissions are not conclusive, and unless they constitute estoppel, the maker is at liberty to prove that they were mistaken or were untrue: Trinidad Asphalt Company vs Coryat (2).
Admissions are mere pieces of evidence and if the truth of the matter is known to both parties the principle stated in Chandra Kunwar 's case (1) would be inapplicable.
And in this case there is no admission by the respondent of the appellant 's adoption by her husband in his lifetime.
Such admissions that there are cannot help the case of the appellant or support a different appraisal of the evidence of the factum of (1) (1906) 34 1.
A. 27.
(2) 712 adoption or establish an adoption which is otherwise disproved.
In order to properly appreciate the effect of these admissions it is necessary to consider the circumstances under which these various documents were executed and the acts done or the admissions made.
At the death of Lakshminarayan the respondent was 24 or 25 years old surrounded by the family of Badrinarayan whose interest it was to foist an adoption on her.
Her own relations do not seem to have taken much interest in her or her affairs.
She was thus a widow, lonely and dependent upon her husband 's relations.
The trial Court described her as a pardanashin woman.
Although Badrinarayan himself denied that he was managing the estate of Lakshminarayan, Narsingdas one of the appellant 's witnesses stated that Badrinarayan was doing so and Badrinarayan admitted that he looked after the court cases though at the request of the respondent.
It is with this back.
ground that the evidence has to be considered and weighed.
Any admission made by a widow situated as the respondent was would necessarily carry very little weight: Padamlal vs Fakira Debya (1).
Besides the four documents above mentioned the appellant Kishorilal relied on the following facts as instances of admissions and conduct of the respondent Chaltibai.
The first is the performance of obsequies by the appellant and the subsequent taking of the appellant in her lap by the respondent.
The mere fact of performance of these funeral rites does not necessarily support an adoption.
The performance of these rites frequently varies according to the circumstances of each case and the view and usage of different families.
The evidence led by the appellant him self shows that in the absence of the son, junior relations like a younger brother or a younger nephew performs the obsequial ceremonies.
As was pointed out by the Privy Council in Tayamal 's case (2) the performance of funeral rites will not sustain an adoption unless it clearly appears that the adoption itself was performed under circumstances as would render it (1) A.I.R. 1931 (P.C.) 84.
(2) (1865) 10 M.I.A. 429.
713 perfectly valid.
But then it was submitted that the taking by the respondent of the appellant in her lap coupled with the performance of obsequies was a clear proof of her acceptance of the appellant 's adoption by her deceased husband.
This again is slender basis for any such inference as Badrinarayan himself stated that it was not customary amongst them for the widow to take the adopted son in her lap and in this particular case it was only done as she desired it.
As proof of adoption by Lakshminarayan this piece of evidence has no value because that is not the case of the appellant; and as showing confirmatory process it is valueless in the absence of evidence sufficient to establish the adoption by Lakshminarayan which in this case is lacking.
The appellant 's residing with Lakshminarayan after his adoption and after the death of Lakshminarayan with the respondent was next relied upon by counsel for the appellant As we have already said the appellant had not proved that he was residing with Lakshminarayan after his adoption; on the contrary the evidence shows that he left Tirora soon after his alleged adoption and did not return till after the death of Lakshminarayan.
And then again he returned to Raipur and returned to Tirora after about four or five months.
The mere fact that he continued to reside with the respondent since would not in this case prove adoption, because in the school register he was shown as the son of Badrinarayan and continued to be so shown upto June 30, 1937, and mere residence of a young nephew with a widowed and young aunt is no proof of adoption by her husband in the absence of satisfactory evidence of the factum of adoption.
The appellant, it was next contended, was in possession of the properties of Lakshminarayan after the latter 's death and his name was brought on the record in all civil and revenue proceedings.
As we have said above, Badrinarayan took over the management of the estate of Lakshminarayan and was looking after the conduct of the court cases.
If in those circumstances the mutations were made in the name of the 90 714 appellant or suits were brought in his, name or even if he took out licences in his name would be matters of small consequence.
It is not shown that at the time of the mutations the respondent was present or was represented or the suits were brought with her knowledge and it appears that all this was done because the management of the estate as well as the conduct of the cases in courts was in the hands of Badrinarayan.
Then the fact that after he attained majority, the appellant was managing the estate and was recognised by everybody as its owner also is of little consequence because as far as the respondent was concerned somebody had to manage the property, whether it was Badrinarayan or the appellant Kishorilal to her it made no difference.
It may also be mentioned here that in the mutation order passed by the Tehsildar on April 8, 1936, which related to 3As.
share of Mouza Jabartola the mutation entry was made in favour of the respondent and not in the name of the appellant and in the jamabandi papers relating to different holdings in some places the appellant is shown under the guardianship of his mother Chaltibai and in other places under the guardianship of Badrinarayan as his uncle.
A great deal of stress was laid by the appellant on the fact that his marriage was performed by the respondent Chaltibai and she purported to do so as his adoptive mother.
The performance of the marriage itself does not prove adoption, which is otherwise disproved, and as a circumstance supporting the inference of adoption set up by the appellant it is wholly neutral.
At the most the circumstances relied upon by the appellant may be acts of acquiescence attributed to the respondent but they would be important only if they were brought to bear upon the question which depended upon preponderance of evidence.
If the facts are once ascertained, presumption arising from conduct cannot establish a right which the facts themselves disprove: See Tayamal 's case (1) at p. 433.
Presumptions cannot sustain an adoption even though (1)(1865) 10 M.I.A. 429.
715 it might have been acquiesced in by all concerned when as in the present case, the evidence shows that the adoption did not take place.
Another fact on which the appellant relied was that on October 30, 1933, Badrinarayan, his wife and his sons partitioned their family property.
That is not an act of the respondent and cannot affect her rights if they are otherwise enforceable.
On the whole we are of the opinion that the judgment of the High Court is sound and that this appeal should be dismissed with costs.
Appeal dismissed.
| The respondent filed a suit for declaration and possession of certain properties left by her deceased husband L.
The appellant contested the suit on the grounds that L had adopted him as his son six months before his death In addition to the oral evidence of adoption the appellant alleged that he performed the obsequies of L as such adopted son, that on the thirteenth day after the death of L he was taken by the respondent in her lap, that he entered into possession of the estate of L, that the 699 respondent performed his marriage and that he was recognised as the adopted son of L even by the respondent.
The appellant further pleaded that the respondent was estopped from challenging his adoption by her representations in previous legal proceedings and in documents and on account of the fact that the appellant had by this adoption lost his share of the properties in his natural family.
The respondent denied both the adoption and the treatment of acceptance of the appellant as the adopted son of L.
The trial Court dismissed the suit holding the adoption proved.
On appeal the High Court held the adoption was not proved and decreed the suit.
Both Courts held that the respondent was not estopped from challenging the adoption.
Held, that the High Court.
had correctly held that the adoption of the appellant by L had not been established.
As an adoption results in changing the course of succession, the evidence to support it should be such that it should be free from all suspicion of fraud and so consistent and probable as to leave no occasion for doubting its truth.
Held further, that the.
respondent was not estopped from disputing the adoption.
The correct rule of estopped applicable in the case of adoption is that it does not confer status; it only shuts the mouths of certain persons if they try to deny the adoption.
But where both parties are conversant with the true state of facts the doctrine of estopped has no application.
Admissions made by a party are not conclusive, and unless they constitute estopped, the maker is at liberty to prove that they were mistaken or were untrue.
Presumptions arising from the conduct of a party cannot sustain an adoption even though it might have been acquiesced in by all concerned when the evidence shows that the adoption did not take place.
Mohori Bibi vs Dhurmdas Ghosh, (1902) 30 I.A. 114, relied upon.
|
Summarize this legal judgement text concisely | 103 of 1958.
Petition under article 32 of the Constitution for enforcement of fundamental rights.
M. T. Paikeday and Ganpat Rai, for the petitioner.
Sardar Bahadur, for respondent No. 1.
M. R. Krishna Pillai, for respondent No. 3. 788 1958.
December 11.
The Judgment of the Court was delivered by HIDAYATULLAH, J.
This is a petition under article 32 of the Constitution by one C. K. Achuthan, who claims to have held a contract for the supply of milk and other articles of diet for the year 1958 1959 but whose contract for supply of milk is said to have been cancelled by the District Medical Officer (second respondent herein).
The contract for the.
supply of milk has now been given to the third respondent, the Co operative Milk Supplies Society, Cannanore.
From the petition, it appears that the petitioner held contracts for the supply of milk to the Government Hospital at Cannanore (Kerala State) ever since 1946, and that previous to this, his brother in the same business held similar contracts from 1936.
In 1957, a " uniform procedure for fixing up contracts " was adopted, and by a notification, conditions for acceptance of tender were laid down.
The petitioner as well as the third respondent submitted their respective tenders, which were to be opened by the Superintendent of the Hospital in the presence of interested parties.
We need not refer to all the conditions under which tenders were to be accepted, except those which have a bearing upon this matter.
It was stated in the conditions that no tender marked at " current market rates " would be accepted, and further that in the supply of milk, preference would be given to approved Co operative Milk Supply Unions and Societies, if their tender was within a margin of 5 per cent.
over the market rate or the lowest tendered rate, whichever was less.
All persons making tender for the contract had to produce a certificate of solvency and tax clearance certificates, and to make a deposit with the tender.
On January 20, 1958, the tenders which were submitted were scrutinised and the tender of the petitioner for the supply of milk was accepted and that of the third respondent rejected.
It appears that the Superintendent (respondent No. 2) communicated to the Director of Public Health, her reasons for accepting the tender of the petitioner and not accepting that 789 of the third respondent.
Certain correspondence then ensued between the Director of Health Services and the second respondent, as a result of which the petitioner was informed that the contract for the supply of milk given to him was cancelled.
He was informed that it was the policy of Government that in the matter of supply to Government medical institutions in Cannanore District the Co operative Milk Supplies Union was to be given contracts on the basis of prices fixed by the Revenue Department.
It appears that some more correspondence between the Director of Health Services and the second respondent ensued, and it was pointed out to the second respondent that action should have been taken under Cl. 20 of the conditions of the tender and the contract only cancelled after giving a month 's notice to the petitioner.
In furtherance of these instructions, the second respondent issued a notice in terms of Cl. 20 of the tender, and cancelled the contract after the notice period.
The present petition has been filed to question the several orders referred to above.
It may be pointed out that previous to this, the petitioner had applied under article 226 of the Constitution to the High Court of Kerala, but his petition (O. P. No. 201 of 1958) was rejected by Raman Nayar, J., on June 6, 1958.
A Letters Patent Appeal was also dismissed by Koshi, C. J., and Vaidialingam, J. (A. section No. 354 of 1958 decided on July 7, 1958).
The High Court held that the present matter was no more than a breach, if any, of the contract by the State Government, and that the appropriate remedy was to file a civil suit and not to proceed under article 226.
It appears that no special leave to appeal was sought from this Court against the above orders, and the matter has been brought for adjudication, not by way of appeal but directly under article 32 of the Constitution as an infringement of the fundamental right of the petitioner.
The contention of the petitioner in this behalf is that he is entitled to an equal treatment in the eye of law, and that there has been discrimination against him vis a vis, the third respondent.
He claims protection under articles 14, 16(1), 19(1)(g) and 790 31 of the Constitution.
In our opinion, none of these Articles can be made applicable to the facts of the present case.
No doubt, the petitioner claims to have succeeded in obtaining the contract from the Government, and the third respondent failed to do so.
But even if he held the contract, the petitioner did not acquire an absolute right to be continued in that contract, because power was reserved by the Government under Cl. 20 to terminate the contract after giving a month 's notice.
Whether the exercise of that power in the present case was regular or legal, is not a matter on which we are called upon to pronounce, because adjudication of such dispute can appropriately take place only before the ordinary Civil Courts, where evidence can be gone into and examined at length.
The gist of the present matter is the breach, if any, of the contract said to have been given to the petitioner which has been cancelled either for good or for bad reasons.
There is no discrimination, because it is perfectly open to the Government, even as it is to a private party, to choose a person to their liking, to fulfill contracts which they wish to be performed.
When one person is chosen rather than another, the aggrieved party cannot claim the protection of article 14, because the choice of the person to fulfill a particular contract must be left to the Government.
Similarly, a contract which is held from Government stands on no different footing from a contract held from a private party.
The breach of the contract, if any, may entitle the person aggrieved to sue for damages or in appropriate cases, even specific performance, but he cannot complain that there has been a deprivation of the right to practise any profession or to carry on any occupation, trade or business, such as is contemplated by article 19(1)(g).
Nor has it been shown how article 31 of the Constitution may be invoked to prevent cancellation of a contract in exercise of powers conferred by one of the terms of the contract itself.
The main contention of the petitioner before us was thus under article 16(1) of the Constitution, and he claimed equal opportunity of employment under the 791 State.
To begin with, a contract for the supply of goods is not a contract of employment in the sense in which that word has been used in the Article.
The petitioner wag not to be employed as a servant to fetch milk on behalf of the institution, but was a contractor for supplying the articles on payment of price.
He claimed to have been given a contract for supply of milk, and did not claim to be an employee of the State.
Article 16(1) of the Constitution , both in its terms and in the collocation of the words, indicates that it is confined to " employment " by the State, and has reference to employment in service rather than as contractors.
Of course, there may be cases in which the contract may include within itself an element of service.
In the present case, however, such a consideration does not arise, and it is therefore not necessary for us to examine whether those cases are covered by the said Article.
But it is clear that every person whose offer to perform a contract of supply is refused or whose contract for such supply is breached cannot be said to have been denied equal opportunity of employment, and it is to this matter that this case is confined.
Looking to the facts of the case, it is manifest that the petitioner was supplying, or in other words, selling milk and other articles of diet to the State for the use of hospitals and similar institutions.
He was in no sense a servant, and no question of employment qua servant arose.
In these circumstances, it is plain that article 16(1) of the Constitution is not attracted to the facts.
In our opinion, the petition under article 32 of the Constitution is wholly misconceived.
No fundamental right is involved.
At best, it is a right to take the matter to the Civil Court, if so advised, and to claim damages for breach of contract, if any.
The petition accordingly fails, and is dismissed with costs.
Petition dismissed.
| For the supply of milk to the Government Hospital at Cannanore for the year 1948 49, the petitioner and the third respondent, the Co operative Milk Supplies Society, Cannanore, had submitted tenders, and the Superintendent who scrutinised them accepted that of the petitioner and communicated to the Director of Public Health the reasons for the decision.
Subsequently, the contract to the petitioner was cancelled after giving the requisite notice in terms of Cl. 20 Of the tender, and he was informed that it was the policy of the Government that in the matter of supply to Government medical institutions in Cannanore District, the Co operative Milk Supplies Union was to be given contracts on the basis of prices fixed by the Revenue Department.
The petitioner contended, in a petition filed under article 32 Of the Constitution, that there had been discrimination against him vis a vis the third respondent, that he was denied equal opportunity of employment under the State, and that the fundamental rights under articles 14, 16(1), 19(1) (g) and 31 had been infringed.
Held, that none of the fundamental rights were involved in the present case.
A contract which is held from Government stands on no different footing from a contract held from a private party and when one person is chosen rather than another the aggrieved party cannot claim the protection of article 14.
A contract for the supply of goods is not a contract of employment and the petitioner who was supplying milk to the State hospital was in no sense a servant and no question of employment qua servant arose.
Article 16 (1) was therefore not attracted to the case.
|
Summarize this legal judgement text concisely | section 176, 177 and 253 of 1956; 34, 35, 51 53, 69, 70, 75, 94 & 137 of 1957 ; 34, 58, 72, 90, 92, 106, 109 & 115 of 1958.
Petitions under Article 32 of the Constitution of India for.
enforcement of Fundamental rights.
C.B. Aggarwal and Naunit Lal, for the petitioner (In Petition No. 176 of 1956).
Achhru Ram and Naunit Lal, for the petitioner (In Petition No. 177 of 56).
Naunit Lal, for the petitioner (In Petitions Nos.
253/ 56; 34, 35, 51 53, 69, 70, 75, 94 and 137/57; 34, 58, 92, 106, 109 & 115/58).
750 Radhey Lal Aggarwal and A. G. Ratnaparkhi, for the petitioner (In Petition No. 90/58).
H. N. Sanyal, Additional Solicitor General of India, S.M. Sikri, Advocate General for the State of Punjab, Gopal Singh and T. M. Sen, for respondent No. 1 (In Petition No. 176/56).
S.M. Sikri, Advocate General for the State of Punjab, and T. M. Sen, for respondent No. 1 (In Petitions Nos. 177 & 253/56; 34, 35, 51 53, 69, 70, 75, 94 & 137/57; 34, 58, 72, 90, 92, 106, 109 & 115/58).
R.S. Gheba, for respondent No. 3 (In Petition No. 90/58).
Dipak Dutta Chowdhury, for respondent No. 3 (In Petition No. 176/56).
Udai Bhan Chowdhury, for respondent No. 7 (In Petition No. 59/57) and respondent No. 3 (In Petition No. 70/57).
Harnam Singh and Sadhu Singh, for the Interveners (In Petition No. 176/56).
December 8.
The Judgment of the Court was delivered by SINHA, J.
These petitions under article 32 of the Constitution impugn the constitutionality of the Punjab Security of Land Tenure Act (Punj.
X of 1953) (which will be referred to hereinafter as the Act), as amended by Act XI of 1955.
The petitioners are land owners of the lands affected by the provisions of the impugned Act.
The State of Punjab and its officers, besides persons claiming benefits under the Act, are the respondents in these several petitions.
The impugned Act has a history which may shortly be set out.
With a view to providing for the security of tenure to tenants, the Punjab Tenants (Security of Tenure) Ordinance IV of 1950, was promulgated with effect from May 13, 1950.
That Ordinance was replaced by the Punjab Tenants (Security of Tenure) Act XII of 1950, which came into force on November 6, 1950, on the date on which it was first published in the Punjab Government Gazette.
The Act prescribed a limit of one hundred standard acres of land (equivalent to two hundred ordinary acres) which could be 751 held by a land owner for his " self cultivation "; and it was termed" permissible limit " (section
2(3) ).
Any landowner having land in excess of the " permissible limit was authorized by section 3 to select for " self cultivation land out of the entire area held by him in the State of.
Punjab, as land owner, and reserve it for his own use to the extent of the " permissible limit ".
This " right of reservation " had to be exercised, first, in respect of land in his self cultivation; and if the extent of such land fell short of the " permissible limit ", he could, under section 4, make up the deficiency by ejecting tenants under him in respect of such lands as fell within his reserved area.
Section 5 fixed the minimum period of tenancy as four years, subject to certain exceptions set out in section 6.
These were some of the salient features of the Act of 1950, which itself was amended by the Punjab Tenants (Security of Tenure) Act (Punj.
V of 1951), which came into force on December 24, 1951.
By the amending Act, the " permissible limit " was reduced to 50 standard acres equivalent to 100 ordinary acres, and the minimum period of tenancy was raised to five years.
It also made provisions for preferential right of pre emption (section
12A), and conferred a right of purchase on the tenant in respect of land in his possession (section
12B), subject to certain exceptions(s. 12C).
Another legislation in this series was the Prevention of Ejectment (Temporary Powers) Ordinance No. 1 of 1952, which came into force on June 11, 1952.
Then, came the Punjab Security of Land Tenure Act (Punj.
X of 1953), now impugned, which repealed the aforesaid Acts XII of 1950 and V of 1951.
It came into force on April 15, 1953.
This Act itself was amended by Act LVII of 1953 and Act XI of 1955.
Though.
this Act has undergone subsequent amendments in 1957 and 1958, we are not concerned with those amendments, because they came into existence after this Court was moved under article 32 of the Constitution.
We are concerned with the state of the law as it stood after the amendment of 1955, aforesaid.
Before dealing with the grounds of attack urged against the impugned Act, it is convenient to set out, 752 in a nut shell, the salient provisions of the Act, which have given rise to the present controversy, and which give an idea of the scope and nature of the legislation now under examination.
The Act has a short Preamble, namely, " to provide for the security of land tenure and other incidental matters ".
The Act further reduces the " permissible area " (section 2(3) ) in relation to a landlord or a tenant, to 30 standard acres equivalent to 60 ordinary acres, thus, releasing a larger area for re settlement of tenants ejected or to be ejected under the provisions of the Act.
So to say, it creates a pool of "surplus area" (section 2(5 a)), meaning thereby the area other than the"reserved area"in excess of the "permissible area" as aforesaid.
"Reserved area" means the area lawfully reserved by the landlord under the provisions of the two Acts aforesaid, which were repealed by the Act (section
2(4)).
The definition of a tenant under the Act, includes a sub tenant and a self cultivating lessee (section
2(6)).
As already indicated, a tenant also may be liable to be ejected from any area which he holds in any capacity whatever in excess of the " permissible area ".
Section 10 A authorizes the State Government or any officer empowered by it in this behalf, to utilize any " surplus area " for re settlement of tenants ejected or to be ejected under the provisions of section 9(1).
But a tenant inducted on to such " surplus area ", holds the land under the land owner, who, thus, becomes entitled to receipt of rent from the tenant.
Section 12 lays down the maximum rent payable by a tenant.
Section 17 recognizes the rights of certain tenants to pre empt sales or fore closure of land.
Section 18, which formed the subject matter of the most vehement attack on behalf of the petitioners, confers upon the tenants of the description given in the several clauses of the Act, the right to purchase from the land owner the land held by them, subject to certain exceptions, and subject to the payment in a lump sum or in six monthly instalments not exceeding ten, of the purchase price to be determined in accordance with cls.
(2) and (3) of section 18.
Section 23 invalidates any decree or order of any.
court or authority, or a notice 753 of ejectment, which is not consistent with the provisions of the Act.
Thus, the Act seeks to limit the area which may be held by a land owner for the purpose of self cultivation, thereby, releasing " surplus area " which may be utilized for the purpose of resettling ejected tenants, and affording an opportunity to the tenant to become the land owner himself on payment of the purchase price which, if anything, would be less than the market value.
It, thus, aims at creating what it calls a class of " small land owners " meaning thereby, holders of land not exceeding the " permis sible area " (section
2(2)).
The utmost emphasis has been laid on self cultivation which means " cultivation by a land owner either personally or through his wife or children, or through such of his relations as may be prescribed, or under his supervision " (section
2(9) ).
The arguments at the Bar, on behalf of the petitioners may be put under three main heads, namely, (1) that the Legislature had no legislative competence to enact the Act, (2) that the provisions of the Act contravene the petitioners ' fundamental rights enshrined in articles 14, 19(1)(f) and 31 of the Constitution, and (3) that certain specified provisions of the Act amount to unreasonable restrictions on the petitioners ' rights to hold and dispose of property.
At the outset, it is necessary to deal with the question of legislative competence, which was raised on behalf of some of the petitioners, though not on behalf of all of them.
This argument of want of legislative competence goes to the root of the impugned Act, and if it is well founded, no other question need be gone into.
It has been argued that Entry 18 in List II of the Seventh Schedule to the Constitution, should not be read as authorizing the State Legislature to enact a law limiting the extent of the land to be held by a proprietor or a landowner.
Entry 18 is in these words: " 18.
Land, that is to say, rights in or over land tenures including the relation of landlord and tenant, and the collection of rents; transfer and alienation of agricultural land improvement and agricultural loans; colonization.
" 754 It will be noticed that the Entry read along with article 246(3) of the Constitution, has vested exclusive power in the State to make laws with respect to " rights in or over land tenures including the relation of landlord and tenant. .
The provisions of the Act set out above, deal with the landlord 's rights in land in relation to his tenant, so as to modify the landlord 's rights in land, and correspondingly, to expand the tenant 's rights therein.
Each of the expressions " rights in or over land " and " land tenures ", is comprehensive enough to take in measures of reforms of land tenures, limiting the extent of land in cultivating possession of the land owner, and thus, releasing larger areas of land to be made available for cultivation by tenants.
Counsel for some of the petitioners who challenged the legislative competence of the State Legislature, were hard put to it to enunciate any easily appreciable grounds of attack against Entry 18 in List II of the Seventh Schedule.
It was baldly argued that Entry 18 aforesaid, was not intended to authorize legislation which had the effect of limiting the area of land which could be directly held by a proprietor or a land owner.
It is difficult to see why the amplitude of the words " rights in or over land " should be cut down in the way suggested in this argument.
A similar argument was advanced in the case of The United Provinces vs Mst.
Atiqa Begum (1).
In that case, the United Provinces Regularization of Remissions Act, 1938 (U. P. XIV of 1938), was challenged.
One of the main provisions of that Act had validated remission of rent.
It had been argued that the United Provinces Legislature was not competent to legislate about the remission of rent, when the relevant words in Entry 21, relating to land in the Provincial List of the Seventh Schedule to the Constitution Act of 1935, were " collection of rents ".
Entry 21 relating to " land " bad added certain words by way of explanation and illustration of the intention of the Constitution makers, ,so as to indicate that the word " land " was meant to be used in its widest connotation.
A member of the (1)[1940] F.C.R. 110.
755 Full Bench of the Allahabad High Court, in his judgment which was the subject matter of the appeal to the Federal Court, had come to the conclusion that Item No. 21 aforesaid, including the words " collection of rents ", had not authorized the Provincial Legislature to validate remission of rent.
That conclusion was not upheld by the Federal Court which held that remission of rent was a matter covered by Item No. 21, and it was, therefore, within the competence of the Provincial Legislature to enact the impugned Act; and Gwyer, C. J., in the course of his judgment observed that the Items in the several lists of the Seventh Schedule, should not be read in a narrow or restricted sense, and that each general word should be held to extend to all ancillary and subsidiary matters which could fairly ' and reasonably be said to be comprehended in it.
The same Item 21 in List II (Provincial List) of the Seventh Schedule to the Constitution Act of 1935, came up for consideration before the Judicial Committee of the Privy Council on appeal from the Federal Court of India in Megh Raj vs Allah Rakhi (1), affirming the judgment of the Lahore High Court.
In that case, the Punjab Restitution of Mortgaged Lands Act (Punj.
IV of 1938) had been challenged as ultra vires.
By that Act, the Legislature had provided for redemption of mortgages on terms much less onerous than the terms of the mortgage deeds.
Their Lordships of the Judicial Committee of the Privy Council repelled the contention raised on behalf of the appellants that the words of Item No. 21, were not wide enough to comprehend the relationship of mortgagor and mortgagee in respect of agricultural land.
Their Lordships observed that Item 21 aforesaid, forming a part, as it did, of the Constitution, should, on ordinary principles, receive the widest construction, unless, for some reasons, it is cut down either by the terms of that item itself, or by other parts of the Constitution, which have, naturally, to be read as a whole; and then proceeded to make the following very significant observations : (1) (1946) L.R. 74 I.A. 12. 756 " As to item 21, " land ", the governing word, is followed by the rest of the item, which goes on to say, 'that is to say '.
These words introduce the most general concept ' rights in or over land '.
Rights in land ' must include general rights like full ownership or leasehold or all such rights.
Rights over land ' would include easements or other collateral rights, whatever form they might take.
Then follow words which are not words of limitation but of expla nation or illustration, giving instances which may furnish a clue for particular matters: thus there are the words relation of landlord and tenant, and collection ' of rents ".
Thus, their Lordships concluded that the Item 21 relating to land, would include mortgages as an incidental and ancillary subject.
Another branch of the same argument was that Entry 18 could not cover the determination of the relation of landlord and tenant, which is envisaged by some of the provisions of the Act, particularly section 18, which has the effect of converting the tenant into a land owner himself, by virtue of the purchase.
This argument is also disposed of by the judgment of the Federal Court in United Provinces vs Atiqa Begum (1).
It was next contended that Entry 18 has got to be read with article 19(5), in order to determine the legislative competence in enacting the impugned statute.
In other words, it was contended that cl.
(5) of article 19 of the Constitution, is in the nature of a proviso to the Entry ; and that the Entry so read along with article 19(5), lays down the test of the legislative competence.
This argument is easily disposed.
of with reference to the provisions of article 31 A of the Constitution.
If it is held that the provisions of the impugned statute lay down the law for the modification of rights in estates, as defined in sub article
(2) of article 31A, none of the grounds of attack founded on any of the provi sions of articles 14, 19 or 31, can avail the petitioners.
As will presently appear, the Act lays down provisions which are in the nature of modifications of rights in estates within the meaning of article 31A(1).
That being (1) 757 so, article 19(5) is wholly out of the way in this case.
In view of all these considerations, it must be held that there is no legal foundation for the contention that the impugned Act is beyond the legislative competence of the State Legislature.
Having dealt with the question of legislative competence, we have to deal with the several contentions raised on behalf of the petitioners, with reference to the provisions of articles 14, 19 and 31 of the Constitution.
On this part of the case, it has rightly been conceded on behalf of the petitioners that if the impugned Act comes within the purview of any of the clauses of article 31A, the law will be immune from attack on any of the grounds based on the provisions of articles 14, 19 and 31.
But it has been argued that the provisions of article 31A(1)(a), which are admittedly the only portions of the Article, which are relevant to the present inquiry, are not attracted to the impugned Act.
It has been conceded on behalf of the respondents that the Act does not provide for the acquisition by the State of any estate or of any rights in any estate.
Hence, the crucial words which must govern this part of the controversy, are the words " the extinguishment or modification of any such rights "; that is to say, we have to determine whether or not the impugned Act provides for the extinguishment or modification of any rights in " estates ".
article 31A(2) defines what the expression II estate " used in article 3 1 A means.
According to that definition, " the expression " estate " shall, in relation to any local area, have the same meaning as that expression or its local equivalent has in the existing law relating to land tenures in force in that area, and shall also include any jagir, inam or Muafi or other similar grant and in the States of Madras and Kerala, any janmam right".
It is common ground that we have to turn to the definition of an estate, as contained in the Punjab Land Revenue Act XVII of 1887.
Section 3(1) of that Act has the following definition: (1) " estate " means any area (a) for which a separate record of rights has been made; or 758 (b)which has been separately assessed to land revenue, or would have been so assessed if the land revenue had not been released, compounded for or redeemed ; or (c)which the (State) Government may, by general rule or special order, declare to be an estate ".
Clause (c) of the definition is out of the way, because it has not been claimed that the State Government has made any declaration within the meaning of that clause.
Estate, therefore, for the purposes of the present controversy, means any area or which a separate record of rights has been made, or which has been separately assessed to land revenue (omitting the unnecessary words).
In this connection, it is also necessary to refer to the definition of a holding in section 3(3) in the following terms: "(3) 'holding" means a share or portion of an estate held by one landowner or jointly by two or more landowners ".
It was not controverted at the Bar that in Punjab, there are very few estates as defined in section 3(1), quoted above, in the sense that one single land owner is seized and possessed of an entire estate which is equated with a whole village.
In other words, in Punjab, an estate and a village are inter changeable terms, and almost all villages are owned in parcels, as holdings by co sharers, most likely, descendants of the holder of a whole village which came to be divided amongst the co sharers, as a result of devolution of interest.
The parties were also agreed that the impugned Act deals with holdings, as defined in the Land Revenue Act, or shares or portions thereof.
The argument on behalf of the petitioners to get over the provisions of article 31A, is that the Act does not deal with any estate or any rights therein, but only with holdings or shares or portions thereof.
This argument proceeds on the assumption that holdings are not any rights in an estate.
If the petitioners are right in their contention that the immunity granted by article 31A of the Constitution, is available only in respect of entire estates and not portions of estates, then the argument on behalf of the respondents that the Act is saved by the 759 provisions of that Article fails in limine.
If, on the other hand, it is held that article 31A applies not only to entire estates or any rights therein, but also to shares or portions of an estate or rights therein, then all the arguments advanced on behalf of the petitioners, founded on the provisions of Arts 14, 19 and 31, are thrown overboard.
Therefore, it becomes necessary to consider the amplitude of the expression " any estate or of any rights therein " in article 31A(1)(a).
Rights in an estate may be either quantitative or qualitative.
That is to say, rights in an estate may be held by persons having different qualities of rights in lands constituting an estate, as a result of sub infeudation.
Generally speaking and omitting all references to different kinds of land tenures prevailing in different parts of India, it may be said that at the apex of the pyramid, stands the State.
Under the State, a large number of persons variously called proprietors, zamindars, malguzars, inamdars and jagirdars, etc., hold parcels of land, subject to the payment of land revenue designated as peshkash, quit rent or malguzari, etc., representing the Government demands by way of land tax out of the usufruct of the land constituting an estate, except where Government demands had been excused in whole or in part by way of reward for service rendered to the State in the past, or to be rendered in the future.
An estate, thus, is an area of land which is a unit of revenue assessment, and which is separately entered in the Land Revenue Collector 's register of revenue paying or revenue free estates.
A single estate, unless governed by the Rule of Primogeniture, would, in course of time, be hold by a number of persons in the same rights as co sharers in the estate.
Those several co sharers are all jointly and severally liable for the payment of the Government demands, if any, though, by an arrangement with the Revenue Department, they may have had a distribution made of the total Government demands as payable in respect of aliquot portions of the estate.
Generally speaking, in the first instance, each sharer in an estate is liable to pay his portion of the landrevenue, but if, for any reasons, the Government 760 demands cannot be realized from any defaulting share primarily liable for them, the entire estate, including the shares of those who may not be the defaulting proprietors, is liable to be sold or otherwise dealt with for the realization of those demands.
Thus, the unity of assessment of land revenue in respect of the entire estate remains intact.
In actual practice, the holder of each specified portion or share of an estate, holds his portion for his own exclusive use and occupation.
Such a sharer in an estate in Punjab is known as the land owner of a " holding ".
But such a holding still continues to be a portion or a share of the estate out of which it has been carved.
Such a division of an estate is quantitative or a vertical division of an estate.
But there may also be a horizontal or qualitative division of the lands in an estate, effected by the process of sub infeudation.
Continuing the illustration of the pyramid, generally speaking, the lands in an estate may in their entirety or in portions, be let out to what, in Eastern India, are known as tenure holders, for example, patnidars, in areas covered by the Permanent Settlement.
Tenure holders were persons who took lands of an estate not necessarily for the purpose of self cultivation, but also for settling tenants on the land, and realizing rents from them.
These patnidars may have darpatnidars under them, and darpatnidars sepatnidars, and in this way, the sub infeudation went on.
All these classes are included within the terms " tenure holders ", " sub proprietors " or " under proprietors ".
The persons who are inducted on to the land for bringing it under their direct cultivation, are generally known in Eastern India as raiyats with rights of occupancy in the land held by them.
But raiyats, in their turn, may have inducted tenants under them in respect of the whole or a portion of their holding.
The tenant holding under a raiyat is known as an under raiyat, and an under raiyat may induct a tenant under himself, and he will be an under raiyat of the second degree.
Thus, in each grade of holders of land, in the process of subinfeudation described above.
the holder is a tenant under his superior holder, the landlord, and also the 761 landlord of the holder directly holding under him.
Thus, in Eastern India, the interest of intermediaries between the proprietor of an " estate " at the top and the actual tiller of the soil at the bottom, is known as that of a " tenure holder ", and the interest of tenants other than tenure holders, is given the generic name of a " holding ".
A holding in Eastern India, thus, indicates the interest of the actual tiller of the soilraiyat or under raiyat unlike the " holding " in Punjab where, as indicated above, its signifies the interest of the holder of a share in an estate.
Thus, holdings in Punjab are vertical divisions of an estate; whereas in Eastern India, they represent a horizontal division, connoting a lesser quality of an estate in land than the interest of a tenure holder in his tenure, or of a land owner in his estate or portion of an estate.
It is not necessarily true that there should be intermedia ries in every estate or a portion of an estate.
Very often, the holder of an estate may be holding his entire estate directly in his possession by way of khudkasht, zeerat, kamath or neezjote, or it may be that the proprietor has only raiyats under him without the intermediation of tenure holders, and the raiyats may not have any under raiyats under them.
The process of sub infeudation described above, naturally, varies with the size of the estate.
It appears to be common ground in this case that in Punjab, an estate means the whole village, whereas in Eastern India, an estate may comprise a whole district or only a cluster of villages, or a single village, or even a part of a village.
The larger the size of an estate, the greater the process of sub infeudation and vice versa.
In Punjab, as there was no permanent settlement of Revenue as in Bengal, Bihar, Orissa and other parts of Eastern India, the unit of revenue assessment has been the village.
Thus, a holding in Punjab means a portion of a village either big or small.
That portion may be in the direct possession of the landowner himself, or he may have inducted tenants on a portion or the whole of his holding.
The interest of the tenant in Punjab, appears to have been a precarious tenure, even more precari ous than that of an under raiyat in Eastern India.
The 96 762 Punjab Legislature, realising that the interest of a tenant was much too precarious for him to invest his available labour and capital to the fullest extent so as to raise the maximum quality and quantity of money crops or other crops, naturally, in the interest of the community as a whole, and in implementation of the Directive Principles of State Policy, thought of granting longer tenures, and as we have seen above, the period has been progressively increased until we arrive at the stage of the legislation now impugned, which proposes to create a large body of small land owners who have a comparatively larger stake in the land, and consequently, have greater impetus to invest their labour and capital with a view to raising the maximum usufruct out of the land in their possession.
Keeping in view the background of the summary of land tenures in Punjab and elsewhere, we have to construe the amplitude of the crucial words " any estate or of any rights therein " in article 31A (1) (a).
Soon after the coming into effect of the Constitution, the different States in India embarked upon a scheme of legislation for reforming the system of land holding, so as (1) to eliminate the intermediaries, that is to say, those who hold interest in land in between the State at the apex and the actual tillers of the soil in other words, to abolish the class of rent receivers, and (2) to create a large body of small landholders who have a permanent stake in the land, and who are, therefore, interested in making the best use of it.
As the connotation of the term " estate " was different in different parts of the country, the expression " estate " described in el.
(2) of article 31 A, has been so broadly defined as to cover all estates in the country, and to cover all possible kinds of rights in estates, as shown by sub cl.
(b) of cl.
(2) of article 31A, which is in these terms: shall include any rights vesting in a proprietor, sub proprietor, under proprietor, tenure holder (raiyat, under raiyat) or other intermediary and any rights or privileges in respect of land revenue.
" The expression " rights " in relation to an estate has been given an all inclusive meaning, comprising both 763 what we have called, for the sake of brevity, the " horizontal " and " vertical " divisions of an estate.
A proprietor in an estate may be the proprietor holding the entire interest in a single estate, or only a co sharer proprietor.
The provisions aforesaid of article 31A, bearing on the construction of the expression " estate " or "rights" in an estate, have been deliberately made as wide as they could be, in order to take in all kinds of rights quantitative and qualitative in an area co extensive with an estate or only a portion thereof.
But it has been suggested that the several interests indicated in sub cl.
(b), quoted above, have been used with reference to the area of an entire estate, but knowing as we do, that a raiyat 's or an under raiyat 's holding generally is not co extensive with the area of an entire estate but only small portions thereof, it would, in our opinion, be unreasonable to hold that the makers of the Constitution were using the expression " estate " or " rights " in an estate, in such a restricted sense.
Keeping in view the fact that article 31A was enacted by two successive amendments one in 1951 (First Amendment), and the second in 1955 (Fourth Amendment) with retrospective effect, in order to save legislation effecting agrarian reforms, we have every reason hold that those expressions have been used in their widest amplitude, consistent with the purpose behind those amendments.
A piece of validating enactment purposely introduced into the Constitution with a view to saving that kind of legislation from attacks on the ground of constitutional invalidity, based on articles 14, 19 and 31, should not be construed in a narrow sense.
On the other hand, such a constitutional enactment should be given its fullest and widest effect, consistently with the purpose behind the enactment, provided, however, that such a construction does not involve any violence to the language actually used.
Another branch of the same argument was that if the makers of the Constitution intended to include within the purview of article 31A, not only entire estates but also portions thereof, nothing would have been easier than to say so in terms, and that in the absence of any specific mention of " portions of an estate 764 we should not read that article as covering " portions of an estate " also.
In our opinion, there is no substance in this contention, because they must be attributed full knowledge of the legal maxim that " the greater contains the less " Omne Majus continet in se minus.
In this connection, our attention was invited to the decision of a Full Bench of the Punjab High Court in the case of State of Punjab vs section Kehar Singh (1), to the effect that a holding being a part of an estate, was not within the purview of article 31A of the Constitution.
In this connection, it is necessary to state the conflict of views in that High Court itself.
In the case of Bhagirath Ram Chand vs State of Punjab (2), the validity of the very Act impugned before us, was challenged on grounds based upon Articles 14, 19 and 31 of the Constitution.
The learned Judges constituting the Full Bench, unanimously held that the impugned Act did not infringe those provisions of the Constitution, and the restrictions on the right of land holding, imposed by the Act, were reasonable, and that the classification did not exceed the permissible limit.
But they also held that the Act was saved by article 31A of the Constitution, which applied equally to an entire estate or to a portion thereof.
Besides giving other reasons, which may not bear close scrutiny, they made specific reference to the doctrine that the whole includes the part.
Thus, the Full Bench specifically held that article 31A of the Constitution applied equally to portions of estates also.
This decision of the Full Bench was followed by a Division Bench of the same High Court, consisting of Bhandari, C. J., and Dulat, J., in the case of Hukam Singh vs The State of Punjab (3).
That Bench was concerned with the provisions of another Act Punjab Village Common Lands (Regulation) Act, 1954.
In that case, the Division Bench, naturally, followed the decision of the Full Bench in so far as it had ruled that the I whole ' includes the part, and that where an Act provides for rights in an estate, it provides for rights in a part of an estate also.
The later Full (1) (1958) 60 P.L.R 461.
(2) A.I.R. 1954 Pun.
(3) 765 Bench case referred to above, was decided by three Judges, including Bhandari, C. J., who agreed with the judgment of the Court delivered by Grover, J.
Perhaps, the better course would have been to constitute a larger Bench, when it was found that a Full Bench of three Judges, was inclined to take a view contrary to that of another Full Bench of equal strength.
Such a course becomes necessary in view of the fact that otherwise the subordinate courts are placed under the embarrassment of preferring one view to another, both equally binding upon them.
In our opinion, the view taken by the earlier Full Bench is the correct one.
The learned Chief Justice who was a party to both the conflicting views on the same question, has not indicated his own reasons for changing his view.
The Full Bench has accepted the force of the legal maxim that the greater contains the less, referred to above, but has not, it must be said with all respect, given any good reasons for departing from that well established maxim.
The judgment of the Full Bench on this part of the case is based entirely upon the definition of an estate, as contained in the Punjab Land Revenue Act, set out above.
It has not stopped to consider the further question why a holding, which is a share or a portion of an estate, as defined in the Punjab Act, should not partake of the characteristics of an estate.
Keeping in view the background of the legislative history and the objective of the legislation, is there any rational reason for holding that the makers of the Constitution thought of abolishing only intermediaries in respect of an area constituting one entire estate but not of a portion thereof ? On the other hand, as indicated above, they have used the expression " estate" in an all inclusive sense.
They have not stopped at that; they have also added the words " or any rights therein ".
The expression " rights " in relation to an estate again has been used in a very comprehensive sense of including not only the interests of proprietors or sub proprietors but also of lower grade tenants, like raiyats or under raiyats, and then they added, by way of further emphasizing their intention, the expression " other intermediary ", thus, clearly showing that 766 the enumeration of intermediaries was only illustrative and not exhaustive.
If the makers of the Constitution have, thus, shown their intention of saving all laws of agrarian reform, dealing with the rights of intermediaries, whatever their denomination may be, in our opinion, no good reasons have been adduced in support of the view that portions or shares in an estate are not within the sweep of the expression " or any rights therein ".
A recent decision of this Court in the case of Ram Narain Nedhi vs The State of Bombay (1) dealt with the constitutionality of the Bombay Tenancy and Agricultural Lands (Amendment) Act, 1956, which contains similar provisions with a view to doing away with intermediaries, and establishing direct relationship between the State and tillers of the soil.
In that case also, the contention had been raised that the expression " estate " had reference to only alienated lands and not to unalienated lands, and this Court was invited to limit the meaning of the expression in the narrower sense.
This Court repelled that contention in these words: the context of the Code is thus clear and unambiguous as comprising both the types of lands, there is no reason why a narrower construction as suggested by the petitioners should be put upon the expression " estate. . . .
Even if there was any ambiguity in the expression, the wider significance should be adopted in the context of the objectives of the Act as stated above.
" These observations apply with full force to the contention raised on behalf of the petitioners in the present cases also.
Another branch of the same argument as to why the provisions of article 31A do not apply to the Act, is that the Act did not have the effect of either extinguishing or modifying any rights in any estate, assuming that the expression " estate " includes reference also to parts of an estate.
In this connection, it is contended that the provisions of the Act impugned in these cases, did not amount to the extinguishment of (1) [1959] SUPP.
(1) S.C.R. 489.
767 the interest of the land owners in estates or portions thereof, and that what the Act did was to transfer some of the rights of the land owners to their tenants.
In this connection, reliance was placed on the observations of this Court in the case of Thakur Raghubir Singh vs Court of Wards, Ajmer (1), where Mahajan, J. (as he then was, speaking for the Court, observed that the expressions " extinguishment " and " modification " used in article 31A of the Constitution, meant extinguishment or modification respectively of a proprietary right in an estate, and should not include, within their ambit, a mere suspension of the right of management of an estate for a time definite or indefinite.
Those observations must be strictly limited to the facts of that case, and cannot possibly be extended to the provisions of Acts wholly dissimilar to those of the Ajmer Tenancy and Land Records Act, XLII of 1950, which was the subject matter of the challenge in the case then before this Court.
This Court held, on a construction of the provisions of that Act, that they only suspended the right of management but did not amount to any extinguishment or modification of any proprietary rights in an estate.
The provisions of the Act then under consideration of this Court, have absolutely no resemblance to those of the Act now before us, and it is impossible to put a similar interpretation on these provisions.
In the recent decision of this Court (not yet reported*), this Court had been invited to apply the observations of this Court referred to above, to the provisions of the Bombay Act.
It was pointed out in that case that those observations of Mahajan, J. (as he then was), must be read as limited to an Act which only brings about a suspension of the right of management of an estate, and could not be extended to the provisions of an Act which either extinguishes or modifies certain rights of a proprietor in an estate or a portion thereof.
In this connection, it was further argued that extin guishment of a right, does not mean substitution of (1) ; , 1055, 1056.
Since reported as Sri Ram Narain Modhi vs The State of Bombay, [1959] SUPP (1) S.C.R. 489.
768 another person in that right, but total annihilation of that right.
In our opinion, it is not necessary to discuss this rather metaphysical argument, because, in our opinion, it is enough for the purpose of this case to bold that the provisions of the Act, amount to modification of the landowner 's rights in the lands comprised in his " estate " or " holding ".
The Act modifies the land owner 's substantive rights, particularly, in three respects, as indicated above, namely, (1) it modifies his right of settling his lands on any terms and to anyone he chooses; (2) it modifies, if it does not altogether extinguish, his right to cultivate the " surplus area" as understood under the Act; and (3) it modifies his right of transfer in so far as it obliges him to sell lands not at his own price but at a price fixed under the statute, and not to any one but to specified persons, in accordance with the provisions of the Act, set out above.
Thus, there cannot be the least doubt that the provisions of the Act, very substantially modi the land owner 's rights to hold and dispose of his property estate or a portion thereof.
It is, therefore clear that the provisions of article 31A save the impugned Act from any attack based on the provisions of articles 14, 19 and 31 of the Constitution.
That being so, it is not necessary to consider the specific provisions of the Act, which, it was contended, were unreasonable restrictions on the land owner 's rights to enjoy his property, or whether he had been unduly discriminated against,, or whether the compensation,if any, provided for under the Act, was illusory or, at any rate, inadequate.
Those grounds of attack are not available to the petitioners.
In the result, all these petitions are dismissed with costs, the State of Punjab and its officers being entitled to only one set of hearing fees in all the petitions.
Petitions dismissed.
| The point in controversy in these petitions was the con stitutional validity of the Punjab Security of Land Tenure Act (Punj.
X Of 1953), as amended by Act XI of 1955, which sought to "provide for the security of land tenure and other incidental matters ".
The impugned Act which admittedly dealt with holdings as defined by the Punjab Land Revenue Act, 1887, limited the area which might be held by a land owner for the purpose of self cultivation and thereby released surplus area to be utilised for resettling ejected tenants ; and by section 18 conferred upon the tenants the right to purchase from the land owners the lands held by them and thus themselves to become the landowners on prices which would be below the market value.
It was contended on behalf of the petitioners, who were,landowners affected by the impugned Act, that under Entry 18 in List II of the Seventh Schedule to the Constitution, the State Legislature was incompetent to enact a law limiting the extent of the land to be held by a land owner and that the provisions of the impugned Act contravened the petitioners ' fundamental rights under articles 14, 19(1)(f)and 31 of the Constitution.
Held, that the contentions must fail.
The words " rights in or over land " and " land tenures occurring in Entry 18 in List 11 of Seventh Schedule to the Constitution were sufficiently comprehensive to include measures of land tenure reforms, such as the impugned Act, that sought to limit the extent of land in cultivating possession of the landowner in order to release larger areas of land to be made available for cultivation by tenants and that Entry read with article 246(3) of the Constitution gave the State Legislature exclusive power to enact such measures.
Such determination of the relation of landlord and tenant as was contemplated by section 18 and other provisions of the impugned Act, which sought to convert a tenant into a land owner, was well within the ambit of Entry 18.
749 The United Provinces vs Mst.
Atiqa Begum, and Megh Raj vs Allah Rakhi, (1946) L.R. 74 I.A. 12, referred to.
It was beyond doubt that the impugned Act substantially modified the land owner 's rights to hold and dispose of his property in any estate or portion thereof and thus fell within the purview of article 31A(1)(a) of the Constitution and was immune from any attack on the ground that it contravened articles 14, 19and 31 of the Constitution.
The observations made by this Court in Thakur Raghubir Singh vs Court of Wards, Ajmer, ; , in connection with another Act, with absolutely different provisions, must be limited to the facts of that case and were wholly inapplicable.
Thakur, Raghubir Singh vs Court of Wards, Ajmer, ; , distinguished and held inapplicable.
The words " any estate or of any rights therein " occurring in article 31A(1)(a) read in the light of article 31A(2) included any kinds of rights either quantitative or qualitative in the area encompassed by an estate or any portion of it and thus included holdings as defined by the Punjab Land Revenue Act, 1887, and any shares or portions thereof.
Regard being had to the legal maxim that the greater must include the less, it was, inappropriate to suggest that the Constitution should have specifically mentioned "portion of an estate" in article 31A if it intended to give that Article such a comprehensive construction.
Bhagirath Ram Chand vs State of Punjab, A.I.R. 1954 Pun. 167, approved.
State of Punjab vs section Kehar Singh, (1958) 60P.L.R. 461, dis approved.
Ram Narain Medhi vs The State of Bombay, [1959] SUPP.
(1) S.C.R. 489, applied.
Hukam Singh vs The State of Punjab, , referred to.
|
Summarize this legal judgement text concisely | Appeal No.208 of 1958.
Appeal by special leave from the order dated January 29, 1958, of the Commissioner of Income tax,Delhi & Rajasthan at New Delhi, under section 8A(2) of the 532 Taxation on Income (Investigation Commission) Act, 1947.
Harnam Singh and Sadhu Singh for the appellant.
M. C. Setalvad, Attorney General for India, C. K. Daphtary, Solicitor General of India, B. Sen and R. H. Dhebar for the respondents.
A. C. Mitra and B. P. Maheshwari, for the interveners.
November 19.
The Judgment of Das, C. J., and Kapur, J.,, was delivered by Das, C. J. Bhagwati, section K. Das and Subba Rao, JJ., delivered separate judgments.
DAS, C. J.
This appeal by special leave filed by one Shri Besheshar Nath hereinafter referred to as ",the assessee " calls in question the validity of a settlement made under section 8A of the Taxation on Income (Investigation Commission) Act, 1947 (30 of 1947), hereinafter referred to as " the Investigation Act ".
This Act, which came into force on May 1, 1947, by a notification issued by the Central Government under section (1) (3) thereof, has had a short but chequered career, as will appear from the facts hereinafter stated.
In order to appreciate the several questions canvassed before us it is necessary to refer to the provisions of the impugned Act.
Section 3 authorised the Central Government to constitute an Income Tax Investigation Commission (hereinafter called the Commission) and imposed on it the following duties: " (a) to investigate and report to the Central Government on all matters relating to taxation on income, with particular reference to the extent to which the existing law relating to, and procedure for, the assessment and collection of such taxation is adequate to prevent the evasion thereof; (b) to investigate in accordance with the provisions of this Act any case or points in a case referred to it under section 5 and make a report thereon (including such interim report ' s as the Commission may think fit) to the Central Government in respect of all or any of the assessments made in relation to the case 533 before the date of its report or interim report, as the case may be.
" We may skip over section 4 which dealt with the composition of the Commission.
Section 5, which is of importance was as follows: " 5.
(1) The Central Government may at any time ' before the 30th day of June, 1948, refer to the Commission for investigation and report any case or points in a case in which the Central Government has prima facie reasons for believing that a person has to a substantial extent evaded payment of taxation on income, together with such material as may be available in support of such belief, and may at any time before the 30th day of June, 1948, apply to the Commission for the withdrawal of any case or points in a case thus referred, and if the Commission approves of the withdrawal, no further proceedings shall thereafter be taken by or before the Commission in respect of the case or points so withdrawn.
(2) The Commission may, after examining the material submitted by the Central Government with reference to any case or points in a case and making such investigation as it considers necessary, report to the Central Government that in its opinion further investigation is not likely to reveal any substantial evasion of taxation on income and on such report being made the investigation shall be deemed to be closed.
(3) No reference made by the Central Government under sub section (1), at any time before the 30th day of June, 1948, shall be called in question, nor shall the sufficiency of the material on which such a reference has been made be investigated in any manner by any Court.
(4) If in the course of investigation into any case or points in a case referred to it under sub section (1), the Commission has reason to believe (a)that some person other than the person whose case is being investigated has evaded payment of taxation on income, or (b) that some points other than those referred to 534 it by the Central Government in respect of any case also require investigation, it may make a report to the Central Government stating its reasons for such belief and, on receipt of such report, the Central Government shall, notwithstanding anything contained in sub section (1), forthwith refer to the Commission for investigation the case of such other person or such additional points as may be indicated in that report.
" The date " 30th day of June, 1948 " appearing in sub sections
(1) and (3) was, by Act 49 of 1948, substituted by the words " 1st day of September, 1948 ".
Section 6 set out the various powers conferred on the Commission and section 7 prescribed the procedure of the Comission.
It is not necessary to set out the various powers and the details of the procedure in extenso and it will suffice to say that they have been considered by this Court and pronounced to be much more drastic and harsh than the powers to be exercised and the procedure to be followed by the income tax authorities acting under the provisions of the Indian Income Tax Act, 1922.
The relevant portions of section 8 ran as follows: " 8.
(1) Save as otherwise provided in this Act, the materials brought on record shall be considered by all the three members of the Commission sitting together and the report of the Commission shall be in accordance with the opinion of the majority.
(2) After considering the report, tile Central Government shall by order in writing direct that such proceedings as it thinks fit under the Indian Income Tax Act, 1922, the Excess Profits Tax Act, 1940, or any other law, shall be taken against the person to whose case the report relates in respect of the income of any period commencing after the 31st day of December, 1938; and, upon such a direction being given, such proceedings may be taken 'and completed under the appropriate law notwithstanding the restrictions contained in section 34 of the Indian Income Tax Act, 1922, or section 15 of the Excess Profits Tax Act, 1940, or any other law and notwithstanding any lapse of time or any decision to a different effect given 535 in the case by any Income tax authority or Income Tax Appellate Tribunal.
(3). . . . . . . . . . (4) In all assessment or re assessment proceedings taken in pursuance of a direction under sub section ' (2), the findings recorded by the Commission on the case or on the points referred to it shall, subject to the provisions of sub sections (5) and (6), be final; but no proceedings taken in pursuance of such direction shall be a bar to the initiation of proceedings under section 34 of the Indian Income Tax Act, 1922.
(5). . . . . . . . . . (6). . . . . . . . . . (7) Notwithstanding anything to the contrary contained in this Act or in any other law, for the time being in force, any evidence in the case admitted before the Commission or an authorised official shall be admissible in evidence in any proceedings directed to be taken under sub section (2).
(8). . . . . . . . . .
Section 9 barred the jurisdiction of Courts to call in question any act or proceeding of the Commission or any authorised official appointed under section 6.
Section 10 gave power to the Central Government to make rules by notification in the official gazette.
On July 22, 1948, the case of the assessee was referred to the Commission in the following terms: " Ministry of Finance (Revenue Division) New Delhi, the 22nd July, 1948.
Under section 5 (1) of the Taxation on Income (Investigation Commission) Act, 1947, the cases of the following persons are hereby referred to the Investigation Commission for investigation and report, as the Central Government has prima facie reasons for believing that each such person has either alone or in combination with the other persons mentioned below, evaded payment of taxation on income to a substantial 536 extent.
The material available in support of 'such belief accompanies.
No. Name EP.
829/1 Beshashar Nath and Co. 829/2 Lala Beshashar Nath.
Sd./ Pyare Lal, Deputy Secretary, Ministry of Finance (Revenue Division).
The Secretary,Income tax, Investigation Commission, New Delhi.
" It is not necessary to set out the annexures that accompanied this Orders It appears that the total wealth statement of the assessee was filed on November 10, 1948, and was forwarded to the authorised official.
It also appears that from January 8, 1949, to October 14, 1949, the authorised official was engaged in the collection of assessment records of the assessee from the territorial income tax offices and of materials from the Civil Supplies Directorate regarding the assessee.
In the meantime by a. 33 of Act 67 of 1949 the following section was inserted in the Act as section 8A: " 8A. Settlement of cases under investigation:(1) Where any Person concerned in any case referred to or pending before the Commission for investigation applies to the Commission at any time during such investigation to have the case or any part thereof settled in so far as it relates to him, the Commission shall, if it is of opinion that the terms of the settlement contained in the application may be approved, refer the matter to the Central Government, and if the Central Government accepts the terms of such settlement, the Commission shall have the terms thereof recorded and thereupon the investigation, in so far as it relates to matters covered by such settlement, shall be deemed to be closed.
(2) For the purpose of enforcing the terms of any, settlement arrived at in pursuance of sub section (1), 537 the Central Government may direct that such proceedings as may be appropriate under the Indian Income tax Act, 1922 (XI of 1922), the Excess Profits Tax Act, 1940 (XV of 1940), or any other law may be taken against the person to whom the settlement relates, and in particular the provisions of the second proviso to clause (a) of sub section (5) of section 23, section 24B, the proviso to sub section 2 of section 25A, the proviso to subjection 2 of section 26 and sections 44 and 46 of the Indian Income tax Act, 1922, shall be applicable to the recovery of any sum specified in such settlement by the, Income Tax Officer having jurisdiction to assess the person by whom such sum is payable as if it were income tax or an arrear of income tax within the meaning of those provisions.
(3) Subject to the provisions of sub section (6) of section 8, any settlement arrived at under this section shall be conclusive as to the matters stated therein, and no person whose case has been so settled be entitled to re open in any proceeding for the recovery of any sum under this section or in any subsequent assessment or reassessment proceeding relating to taxation on income or in any other proceeding before any Court or other authority any matter which forms part of such settlement.
(4) Where a settlement has been accepted by Government under sub section (1), no proceedings under section 34 of the Indian Income Tax Act, 1922 (XI of 1922), or under section 15 of the Excess Profits Tax Act, 1940 (XV of 1940), shall be initiated in respect of the items of income covered by the settlement, unless the initiation of such proceedings is expressly allowed by the terms of the settlement." On July 5, 1949, the total wealth statement was received back from the authorised official.
Our Constitution came into force on January 26, 1950.
The order sheet shows that the authorised official on May 26, 1950, issued a notice to the assessee fixing the hearing for June 10, 1950, which indicates that the authorised official was proceeding with the investigation set in motion by the reference of the assessee 's 68 538 case to the Commission.
The assessee appears to have attended on June 6, 1950, with an application for extension of time which apparently was given.
On September 30, 1950, the assessee supplied certain statements of his firm.
The entry in the order sheet ,,,against the date October 31, 1950, shows that the assessee asked for further extension of time.
There appears to be a hiatus of about 3 years and evidently nothing was done until June 9, 1953, when the authorised official fixed the hearing of the case on June 15, 1953.
The authorised official submitted his interim report to the Commission on June 9. 1953.
The assessee was examined on October 9, 10 and 13, 1953, and the authorised official submitted his final report on October 19, 1953.
On January 30, 1954, notice was issued to the assessee to appear before the Commission on February 15, 1954.
Presumably to get ready for the hearing the assessee, on February 5, 1954, asked for inspection of certain assessment orders concerning his case , for the return of his lease deed filed by him and a copy of the statement of one L. Kalidas and for production of certain documents before the Commission.
The hearing, which had been fixed for February 15, 1954, was adjourned till March 4, 1954.
Witness Kalidas was examined on March 4,.
On March 29, 1954, the assessee asked for a, copy of the deposition given by the witness Durgadas before the Commission.
After the evidence was closed notice was issued to the assessee on May 1, 1954, asking him to appear before the Commission on May 19, 1954.
On that date the assessee attended, arguments were heard and orders were reserved.
Learned counsel for the assessee states that at the close of the arguments on May 19, 1954, the Commission announced its view that the income, profits and gains that had escaped assessment in the hands of the assessee for the period beginning with April 1, 1939, and ending March 31, 1947, were the sum of Rs. 4,47,915, that the Commission also threw a hint that should the assessee accept the said finding he would be granted the benefit of a settlement on the lower concessional basis of.
payment of 75% and a small penalty of Rs. 14,064 539 other alternative than to make the best of the bad job by proposing a settlement under section 8A offering to pay Rs. 3,50,000 by way of tax and penalty.
This sequence of events is amply borne out by paragraphs 3 and 4 of the settlement application filed by the assessee on May 20, 1954, a copy of which has been produced before us by the respondents.
The Commission on May 24, 1954, made a report under section 8A (1) to the Central Government that it was of opinion that the terms of settlement contained in the application might be approved.
The Central Government having accepted the proposed settlement, the Commission had the terms thereof recorded.
The Central Government by its Order C No. 74 (9 IT) 54 made on July 5, 1954, under section 8A (2) of the Investigation Act directed that demand notice in accordance with the said terms be served immediately by the Income Tax Officer and that all such other proceedings under the Indian Income Tax Act or other law as may be necessary be taken with a view to enforce the payment of the demand and that the entire sum of Rs. 3,50,000 be demanded in one sum.
It appears, however, that the assessee was allowed to make payments by instalments of Rs. 5,000, per month.
In the meantime on May 28, 1954, this Court delivered judgment in Suraj Mall Mohta and Co. vs A. V. Visvanatha Sastri (1).
In that case in the course of investigation of the case of Messrs. Jute and Gunny Brokers Ltd. which had been referred to the Commission under section 5 (1) of the Investigation Act, it was alleged to have been discovered by the Commission that Suraj Mall Mohta and Co. had made large profits which they had not disclosed and had thus evaded taxation.
A report to that effect having been made on August 28, 1953, by the Commission to the Central Government under section 5 (4) of the Investigation Act the Central Government on September 9, 1953, referred the case against Suraj Mall Mohta and Co. to the Commission under the provisions of section 5 (4).
On September 15, 1953, the Commission notified Suraj Mall [1955] 1 S.C.R.448 540 Mohta and Co. that their cases had been referred for investigation and called upon them to furnish certain materials, details of which were set out in annexure to the petition.
On April 12, 1954, Suraj Mall Mohta and Co. filed a petition under article 32 of the Constitution asking for an appropriate writ restraining the, Commission from taking any action on the ground that the provisions of the Investigation Act had become void being discriminatory in character.
By that judgment this Court held that both section 34 of the Indian Income Tax Act, 1922, as it then stood, and sub section
(4) of section 5 of the Investigation Act dealt with persons who had similar characteristics of being persons who had not truly disclosed their income and had evaded payment of tax on their income but that as the procedure prescribed by the Investigation Act was substantially more prejudicial than the procedure under the Indian Income Tax Act, 1922, sub section
(4) of section 5 and the procedure prescribed by the Investigation Act, in so far as it affected persons proceeded against under that sub section was a piece of discriminatory legislation which offended the provisions of article 14 of the Constitution and was, therefore, void and unenforceable.
Sub section (4) of section 5 of the Investigation Act having been declared void, Parliament passed the Indian Income Tax Amendment Act (33 of 1954) amending section 34 of the Indian Income Tax Act, 1922.
Paradoxical as it may seem, the result of this amendment was that persons who originally, fell only within the ambit of section 5 (1) of the Investigation Act and formed a distinct class of substantial tax evaders also came within the amended section 34 of the Indian Income Tax Act, 1922.
The position after the amendment, therefore, was that the Income Tax Officers could pick out some of these persons and refer their cases under section 5 (1) of the Investi gation Act and thereby subject them to the drastic and harsh procedure of that Act, while they could deal with other persons similarly situate under section 34 as amended and apply to them the comparatively more beneficial procedure laid down in the Indian Income Tax Act, 1922.
Promptly several applications were 541 made under article 32 of the Constitution complaining that after the amendment of section 34 of the Indian Income Tax Act, section 5 (1) of the Investigation Act became discriminatory in that the persons falling within it could be dealt with under the drastic, prejudicial and harsh procedure prescribed by the Investigation Act, while other persons similarly situate and belonging to the same category could at the whim or pleasure of the Income Tax authorities be proceeded against under the more beneficial procedure prescribed under the Indian Income Tax Act.
All those applications were disposed of by a common judgment reported as Shree Meenakshi Mills Ltd. vs Sri A. V. Visvanatha Sastri (1) This Court held that section 34 of the Income Tax Act, as amended by the Indian Income Tax Amendment Act, 1954 (33 of 1954), operated on the same field as section 5 (1) of the Investigation Act, and, therefore, section 5 (1) had become void and unenforceable as the procedure applied to persons dealt with thereunder became discriminatory in character.
It should be noted that in none of those petitions disposed of by that judgment had any assessment been made under the Investigation Act and this Court only prohibited further proceedings before the Commission under the Investigation Act.
The assessee appellant now before us who had entered into a settlement under section 8 of the Investigation Act and had been assessed in accordance with the terms of the settlement continued to pay the tax by monthly instalments of Rs. 5,000 as before.
Finally on December 20, 1955, came the decision of this Court in M. CT.
Muthiah vs The Commissioner of Income Tax, Madras (2).
In that case the Central Government had under section 5 (1) of the Investigation Act referred the case to the Commission.
The Commission after holding an enquiry recorded its findings and held that an aggregate sum of Rs. 10,07,322 4 3 represented the undisclosed income during the period under investigation.
The Commission having submitted its report to the Central Government, the latter acting under section 8 (2) of the Investigation Act directed that appropriate action under the (1) (2) ; 542 Indian Income Tax Act, 1922, be taken against that assessee with a view to assess or re assess the income which had escaped assessment for the period 1940 41 to 1948 49.
The Income Tax Officer accordingly issued notices and made the re assessment for the years 1940 41, 1941 42 and 1943 44 to 1948 49 based upon the finding of the Commission, which was treated as final and conclusive.
These assessment orders were served on that assessee.
There was, however, no re.
assessment order for the year 1942 43.
In regard to the assessment orders which had been served the assessee concerned applied to the Commissioner of Income Tax under section 8 (5) of the Investigation Act for reference to the High Court on questions of law arising out of those re assessment orders.
During the pendency of those proceedings the assessee, in that case on December 6, 1954, filed a petition contending that the provisions of the Investigation Act were illegal, ultra vires and unconstitutional.
The majority of this Court held that different persons, though falling under the same class or category of substantial evaders of income.
tax, were being subjected to different procedures, one a summary and drastic procedure and the other the normal procedure which gave to the assessees various rights which were denied to those who were specially treated under the procedure prescribed by the Investigation Act and, therefore, the assessments made under section 8 (2) were void and unenforceable.
That was a case of assessment under section 8 (2) in invitum after an investigation under the Investigation Act.
The assessee appellant before us, who had at the end of the investigation entered into a settlement and been assessed in accordance with the terms of such settlement, however, went on making payments in discharge of the balance due under the terms of settlement right up to September 8, 1957, when he made the last payment of Us.
8,000 bringing the aggregate payment up to Rs. 1,28,000.
In the meantime the Income Tax Officer had sent a certificate requesting the Collector of Delhi for the recovery of the balance due by the assessee under the settlement.
In execution of that certificate some of 543 the properties belonging to the assessee situate in Dharamsalla and Hissar were attached.
On December 27, 1957, the assessee made an application to the Income Tax Commissioner.
After pointing out that between July 5, 1954, and December 27, 1957, the petitioner had paid in all Rs. 1,28,000 towards the ' discharge of his liability under the settlement and referring to the decisions of this Court in suraj Mall Mohta 's case (1) and Muthiah 's case (2) the assessee submitted that the settlement under a. 8A of the Investigation Act had no force and did not bind the petitio ner and that the settlement had been made under the pressure of the situation and in view of the coercive machinery of the Investigation Act and that from either point of view the settlement was not binding.
His contention was that when section 5(1) of the Investigation Act had been held unconstitutional the settlement under section 8A could not be enforced, for the foundation of the proceedings under section 8A was the reference under section 5(1) and the foundation having crumbled down the superstructure must fall with it.
Under the circumstances the assessee submitted that the attached properties be released and the amount already recovered under the settlement be refunded.
On January 29, 1958, the Income Tax Commissioner sent the following communication to the assessee: No. L 228(1)/54 55/17590 Office of the Commissioner Income Tax Delhi and Rajasthan, New Delhi.
Dated, New Delhi the 29th January, 1958.
Shri Besheshar Nath, 9, Barakhamba Road, New Delhi.
Dear Sir, Sub: Taxation on Income (Investigation Commission) Act, 1947 Order u/s 8A(2) Your petition dated 27th December, 1957.
With reference to your petition dated 27th December, 1957, regarding the settlement arrived at (1) ; (2) ; 544 under section 8A(2) of the Taxation on Income (Investigation Commission) Act, 1947, I am to inform you that the settlement is valid and binding on you.
You are, therefore, requested to make good arrears of instalments which you have not paid recently by 5th February, 1958, and also to continue making the payments in accordance with the instalments scheme agreed to, failing which the recovery proceedings will be vigorously pursued through the usual recovery channels.
Your 's faithfully, Sd./ section K. Gupta, Commissioner of Income tax, Delhi & Rajasthan, New Delhi.
Being aggrieved by the above decision the assessee thereupon moved this Court and obtained special leave to appeal against that order.
The appeal has now come up for final disposal before us.
It may be mentioned here that as the respondents are anxious to have the matters of controversy raised in this appeal decided and set at rest by a decision of this Court, the respondents, for the purposes of this appeal, have not insisted on their objection that an appeal does not lie under article 136 of the Constitution against an order of the Commissioner of Income Tax.
Learned counsel for the assessee also has not pressed his claim for refund of the amounts already paid and has pressed the appeal regarding the balance that remains to be paid under the settlement which is characterised as invalid.
Model Knitting Industries Ltd. which has a case pending in the High Court of Calcutta where the same questions as are in issue in the appeal before us, are also in issue has been.
permitted to intervene and we have heard counsel appearing for that intervener.
In view of the three decisions referred to above learned Attorney General does not seriously contend that the powers conferred on the Commission by section 6 and the procedure laid down by section 7 of the Investigation Act are not discriminatory, but what he urges is that none of the said decisions has held that section 5(1) is 545 wholly void and inoperative.
He says that section 5(1) only authorises the Central Government to refer certain cases to the Commission.
Upon such a reference two lines of procedure are clearly indicated by the Investigation Act, namely, (1) that an investigation may be held in invitum following the procedure prescribed and exercising the powers conferred by the lnvestigation Act and (2) that a settlement may be made under section 8A. If the first procedure is followed and an assessment is made under section 8(2) such assessment will undoubtedly be invalid as has been held in Muthiah 's case (1), but if on a case being referred the settlement procedure is followed then the consequential order of assessment under section 8A cannot be questioned.
We are unable to accept this line of argument as permissible in view of the provisions of the Investigation Act.
It will be recalled that when the case of the assessee was referred to the Commission under section 5(1) on July 22, 1948, there was no provision for settlement in the Act at all.
Therefore, that reference, when it was made, consigned the assessee to the only procedure of investigation that was then prescribed by the Act.
In the next place it should be remembered that after section 8A was added in the Investigation Act by section 33 of Act 67 of 1949 an authorised official was appointed under section 6(3) to investigate the affairs of the assessee and to examine the books and to interrogate any person or obtain any statement from any person and under sub section
(4) the authorised official was empowered to exercise the same powers as had been vested in the Commission under sub sections
(1) and (2) of section 6.
Further, by its own terms section 8A made it clear that the person concerned in any case referred to the Commission for investigation might apply to the Commission at any time during such investigation to have the case settled.
Therefore this provision for settlement was an integral part of the entire investigation procedure.
It was not a separate or independent procedure apart from the investigation procedure.
It is true that there was nothing to prevent the assessee from straightaway (1) ; 69 546 making a proposal for settlement before any actual step towards investigation was taken by the Income Tax authorities, but before the Commission could refer the proposal for settlement to the Central Government it had to be satisfied that the terms of settlement contained in the application were such as might be approved.
For the purpose of satisfying itself the Commission had obviously to go into the facts either by itself or through an authorised official and to consider the materials collected by the authorised official and in the process of doing so had to hold an investigation of some sort and that investigation had neces sarily to be made in accordance with the procedure prescribed by the Investigation Act itself.
It is, therefore, not correct to say that there could be a pro ceeding for settlement without any investigation at all.
In our opinion section 8A did not provide for a separate procedure at all.
When a case was referred under section 5(1) it was really for investigation and a settlement was something which could crop up in the process of that investigation just as in the course of a suit parties may arrive at some compromise.
In recording the compromise and passing a judgment in accordance with the compromise thereof, the court exercises the same jurisdiction as it exercises in entertaining and disposing of the suit itself.
Likewise in entertaining a proposal for settlement the Commission exercised its jurisdiction of investigation under section 5, followed the procedure prescribed by section 7 and exercised all its powers under section 6.
As already stated the language of s.8A itself shows that a settlement can be proposed only during such investigation.
In our judgment, therefore, the contention of the learned Attorney General that the Investigation Act prescribed two procedures is not well founded.
Learned Attorney General then points out that the Investigation Act was a pre Constitution Act and that before the commencement of the Constitution when there was no such thing as a fundamental right, its provisions could not be questioned however discriminatory the procedure may have been.
He urges that after the commencement of the Constitution the 547 assessee has not been subjected to the coercive procedure laid down by the Investigation Act, but voluntarily proposed a settlement which was accepted by the Central Government on the recommendation of the Commission.
In that situation he was in the same position as Qasim Razvi had been in and the observations to be found in the judgment of Mukherjea, J., who delivered the majority judgment in Syed Qasim Razvi vs The State of Hyderabad (1) applied to the present appeal.
We do not think it is necessary, for the purpose of this appeal, to go minutely into the facts of Qasim Razvi 's case (1) with reference to which the observations relied on had been made, or to analyse the correctness of the reasoning adopted in that case, for that can only be done by a larger Bench.
We are definitely of opinion, however, that the observations made in the majority judgement should not be extended but must be kept strictly confined to the special facts of that case.
In our judgement those observations have no ~application to the facts of the present appeal before us, for here even after the commencement of the Constitution, the process of investigation continued in that the authorised official went on collecting materials by following the procedure prescribed by section 7 and exercising the powers conferred on him by section 6 of the Investigation Act.
The last argument advanced by the learned Attorney General is that if there had been a breach of the assessee 's fundamental right by subjecting him to a discriminatory procedure laid down in the Investigation Act, the asessee, by voluntarily entering into a settlement, must be taken to have waived such breach and cannot now be permitted to set up his fundamental right.
Immediately two questions arise for consideration, namely, (1) whether the assessee could waive the breach of the fundamental right in question and (2) whether in the facts and circumstances of this case he had actually done so.
(1): In Behram Khurshed Pesikaka vs State of Bombay (2) there was a general discussion whether a (1) (2) 548 fundamental right could be waived.
At page 638 Venkatarama Aiyar, J., observed: " The question is, what is the legal effect of a statute being declared unconstitutional.
The answer to it depends on two considerations firstly does the constitutional prohibition which has been infringed affect the competence of the Legislature to enact the law or does it merely operate as a check on the exercise of a power which is within its competence; and secondly, if it is merely a check, whether it is enacted for the benefit of individuals or whether it is imposed for the benefit of the general public on grounds of public policy.
If the statute is beyond the competence of the Legislature, as for example, when a State enacts a law which is within the exclusive competence of the Union, it would be a nullity.
That would also be the position when a limitation is imposed on the legislative power in the interests of the public, as, for instance, the provisions in Chapter XIII of the Constitution relating to inter State trade and commerce.
But when the law is within the competence of the Legislature and the unconstitutionality arises by reason of its repugnancy to provisions enacted for the benefit of individuals, it is not a nullity but is merely unenforceable.
Such an unconstitutionality can be waived and in that case the law becomes enforceable.
In America this principle is well settled.
(Vide Cooley on Constitutional Limitations, Volume 1, pages 368 to 371 ; Willis on Constitutional Law at pages 524, 531, 542 and 558 ; Rottschaefer on Constitutional Law at pages 28 and 29 30).
" After referring to three decisions of the American Supreme Court which are also now relied on by the learned Attorney General, the learned Judge concluded as follows: " The position must be the same under our Constitution when a law contravenes a prescription intended for the benefit of individuals.
The rights guaranteed under article 19 (1) (f) are enacted for the benefit of owners of properties and when a law is found to infringe that provision, it is open to any person whose rights have been infringed to waive it and when there 549 is waiver there is no legal impediment to the enforcement of the law.
It would be otherwise if the statute was a nullity; in which case it can neither be waived nor enforced.
If then the law is merely unenforceable and can take effect when waived it cannot be treated as non and as effaced out of the statute book.
It is scarcely necessary to add that the question of waiver is relevant to the present controversy not as bearing on any issue of fact arising for determination in this case but as showing the nature of the right declared under article 19 (1) (f) and the effect in law of a statute contravening it.
" When the case came up before the court on review Mahajan, C. J., with the concurrence of Mukherjea, Vivian Bose, and Ghulam Hassan, JJ., said at page 653: " In our opinion, the doctrine of waiver enunciated by some American Judges in construing the American Constitution cannot be introduced in our Constitution without a fuller discussion of the matter.
No inference in deciding the case should have been raised on the basis of such a theory.
The learned Attorney General when questioned about the doctrine did not seem to be very enthusiastic about it.
Without finally expressing an opinion on this question we are not for the moment convinced that this theory has any relevancy in construing the fundamental rights conferred by Part III of our Constitution.
We think that the rights described as fundamental rights are a necessary consequence of the declaration in the preamble that the people of India have solemnly resolved to constitute India into a sovereign democratic republic and to secure to all its citizens justice, social, economic and political; liberty of thought, expression belief, faith and worship; equality of status and of opportunity.
These fundamental rights have not been put in the Constitution merely for individual benefit, though ultimately they come into operation in considering individual rights.
They have been put there as a matter of public policy and the doctrine of waiver can have no application to provisions of law which have been enacted as a matter of constitutional policy.
550 Reference to some of the Articles, inter alia, articles 15 (1), 20, 21, makes the proposition quite plain.
A citizen cannot get discrimination by telling the State " You can discriminate ", or get convicted by waiving the protection given under articles 20 and 21.
" On that occasion one of us preferred not to express any opinion on this subject and said at page 670: " In coming to the conclusion that I have, I have in a large measure found myself in agreement with the views of Venkatarama Aiyar, J., on that part of the case.
1, however, desire to guard myself against being understood to agree with the rest of the observations to be found in his judgment, particularly those relating to waiver of unconstitutionality, the fundamental rights being a mere check on legislative power or the effect of the declaration under article 13(1) being " relatively void ".
On those topics I prefer to express no opinion on this occasion.
" It will, however, be noticed that the observations of the learned judges made in that case did not relate to the waiver of a breach of the fundamental right under article 14.
The fundamental right, the breach whereof is complained of by the assessee, is founded on article 14 of the Constitution.
The problem, therefore, before us is whether a breach of the fundamental right flowing from article 14 can be waived.
For disposing Of this appeal it is not necessary for us to consider whether any of the other fundamental rights enshrined in Part III of our Constitution can or cannot be waived.
We take the view that this court should not make any pronouncement on any question which is not strictly necessary for the disposal of the particular case before it.
We, therefore, confine our attention to article 14 and proceed to discuss the question on that footing.
Article 14 runs as follows: " The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India.
" It is the first of the five Articles grouped together under the heading " Right to Equality".
The underlying object of this Article is undoubtedly to secure to 551 all persons, citizen or non citizens, the equality of status and of oppotunity referred to in the glorious preamble of our Constitution.
It combines the English doctrine of the rule of law and the equal protection T. clause of the 14th Amendment to the American Federal Constitution which enjoins that no State shall deny to any person within its jurisdiction the equal protection of the laws ".
There can, therefore, be no doubt or dispute that this Article is founded on a sound public policy recognised and valued in all civilised States.
Coming then to the language of the Article it must be noted, first and foremost that this Arti cle is, in form, an admonition addressed to the State and does not directly purport to confer any right on any person as some of the other Articles, e.g., article 19, do.
The obligation thus imposed on the State, no doubt, enures for the benefit of all persons, for, as a necessary result of the operation of this Article, they all enjoy equality before the law.
That is, however, the indirect, though necessary and inevitable, result of the mandate.
The command of the Article is directed to the State and the reality of the obligation thus imposed on the State is the measure of the fundamental right which every person within the territory of India is to enjoy.
The next thing to notice is that the benefit of this Article is not limited to citizens, but is available to any person within the territory of India.
In the third place it is to be observed that, by virtue of article 12, " the State " which is, by article 14, forbidden to discriminate between persons includes the Government and Parliament of India and the Government and the legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India.
Article 14, therefore, is an injunction to both the legislative as well as the executive organs of the State and the other subordinate authorities.
As regards the legislative organ of the State, the fundamental right is further consolidated and protected by the provisions of article 13.
Clause (1) of that Article provides that all laws in force in the territories of India immediately before the commencement of the Constitution, in so 552 far as they are inconsistent with the provisions of Part III shall, to the extent of the inconsistency be void.
Likewise el.
(2) of this Article prohibits the State from making any law which takes away or abridges the rights conferred by the same Part and follows it up by saying that any law made in contravention of this clause Shall, to the extent of the contravention, be void.
It will be observed that so far as this Article is concerned, there is no relaxation of the restriction imposed by it such as there are in some of the other Articles, e.g., article 19, cls.
(2) to (6).
Our right to equality before the law is thus completely and without any exception secured from all legislative discrimination.
It is not necessary, for the purpose of this appeal to consider whether an executive order is a " law" within the meaning of article 13, for even without the aid of article 13 our right to the equal protection of the law is protected against the vagaries, if any, of the executive Government also.
In this connection the observations of Lord Atkin in Eshugbayi Eleko vs Officer Administering the Government of Nigeria (1) are apposite.
Said his Lordship at page 670 that in accordance with British jurisprudence no member of the executive can interfere with the liberty or property of a British subject except when be can support the legality of his act before a court of justice That apart, the very language of article 14 of the Constitution expressly directs that " the State ", which by article 12 includes the executive organ, shall not deny to any person equality before the law or the equal protection of the law.
Thus article 14 protects us from both legislative and executive tyranny by way of discrimination.
Such being the true intent and effect of article 14 the question arises, can a breach of the obligation imposed on the State be waived by any person ? In the face of such an unequivocal admonition administered by the Constitution, which is the supreme law of the land, is it open to the State to disobey the constitutional mandate merely because 'a person tells the State that it may do so ? If the Constitution asks the State as (1) L.R. [1931] A,.
C. 662.
553 to why the State did not carry out its behest, will it be any answer for the State to make that " true, you directed me not to deny any person equality before the law, but this person said that I could do so, for he had no objection to my doing it.
" I do not think the State will be in any better position than the positions in which Adam found himself when God asked him as to why he had eaten the forbidden fruit and the State 's above answer will be as futile as was that of Adam who pleaded that the woman had tempted him and so he ate the forbidden fruit.
It seems to us absolutely clear, on the language of article 14 that it is a command issued by the Constitution to the State as a matter of public policy with a view to implement its object of ensuring the equality of status and opportunity which every welfare State, such as India, is by her Constitution expected to do and no person can, by any act or conduct, relieve the State of the solemn obligation imposed on it by the Constitution.
ever breach of other fundamental right a person or a citizen may or may not waive, he cannot certainly give up or waive a breach of the fundamental right that is indirectly conferred on him by this constitutional mandate directed to the State.
The learned Attorney General has relied on various passages in text books written by well known and eminent writers, e.g., Cooley, Willoughby, Willis and Rottschaefer and on eight American decisions.
In considering the statements of law made by American writers and judges the following observations of Patanjali Sastri, C. J., in The State of Travancore Cocochin and others vs The Bombay Co. Ltd. (1) should conatantly be borne in mind: scope and purpose, and a varying body of doctrines and tests have grown around them interpreting, extending or restricting, from time to time, their operation and application in the context of the expanding American commerce and industry, and we are of opinion that not much help can be derived from them (1) ; ,112O, 1121.
70 554 in the solution of the problems arising under article 286 of the Indian Constitution.
" (See also The State of Bombay vs R.M.D. Chamarbaugwala(1)).
The American authorities cited by the Attorney General relate to waiver of obligations under a contract, of the deprivation of right to property without due process of law or of the constitutional right to trial by jury and the like.
They have no bearing on the question of the waiver of the equal protection clause of the 14th Amendment which, like our article 14, is a mandate to the State.
It is signifi cant that no American decision is forthcoming which upholds the waiver of the breach of that clause.
When a case of breach of any of the fundamental rights akin to what are dealt with in the American authorities will come before us it will, then, be the time for us to discuss those authorities and to consider their applicability in the matter of the interpretation of the corresponding provisions of our Constitution.
For the moment we prefer to confine our observations to a consideration of waiver of the breach of the fundamental right under article 14.
Learned Attorney General has relied on three decisions of this Court: (1) Laxmanappa Hanumantappa Jamkhandi vs The Union of India (2), (2) Dewan Bahadur Seth Gopal Das Mohta vs The Union of India (3) and (3) Baburao Narayanrao Sanas vs The Union of India(4) in support of his thesis that a breach of article 14 may well be waived by a person.
In none of those cases, all of which were disposed of on the same day (October 21, 1954) was the question of waiver specifically or seriously discussed.
As learned counsel appearing for the intervener points out, the first of the above mentioned cases proceeded on the footing that as article 265 was not a fundamental right conferred by Part III, it could not be enforced under article 32.
Learned counsel for the intervener further submitted that the decision in the 2nd case mentioned above could also be explained on that basis and on the further ground that proceeding under article 32 was not (1) ; , 918.
(3) ; (2) ; (4) intended to be used for obtaining relief against the voluntary action of a person and that appropriate remedy for recovery of money lay in a suit.
The decision in the 3rd case proceeded on the same basis and did not carry the matter any further.
It is impossible to treat any of those decisions as representing the considered opinion of this Court on the question of waiver of a breath of the fundamental right under article 14 of the Constitution.
Reference was also made by the learned Attorney General to the decision of a Single Judge of the Allahabad High Court in Subedar vs State (1) where it was held that article 20(3) conferred merely a privilege and that such privilege could always be waived It was overlooked that if a person volun tarily answered any question then there was no breach of his fundamental right at all, for the fundamental right is that a person shall not be compelled to incriminate himself.
That case, therefore, is not a case of waiver at all.
The case of Pakhar Singh vs The State (2) is also, for the same reason, not a case of waiver.
(2): The answer to this question depends upon facts which have not been properly investingated.
The appeal is against the order of the income tax authorities which order makes no reference to the plea of waiver.
Further the filing of the statements of case having been dispensed with, we have not had the benefit of the statement of facts on which this plea is said to be founded.
The view taken on question (1), however, relieves us of the necessity of going into this question.
On a consideration of the nature of the fundamental right flowing from article 14, we have no doubt in our mind that it is not for a citizen or any other person who benefits by reason of its provisons to waive any breach of the obligation on the part of the State.
We are, therefore, of the opinion that this appeal should be accepted, the order of the Income Tax Commissioner, Delhi, dated January 29, 1958, should be set aside and all proceedings now pending for implementation of the order of the Union Government dated July 5, 1954, (1) A. I. R. 1957 All.
(2) A. 1.
R. 1958 Punj.
556 should be quashed and that the assessee appellant, should get the costs of this appeal.
BHAGWATI, J.
I agree with the reasoning adopted and the conclusion reached in the judgments prepared by My Lord the Chief Justice and my brother, section K. Das, J., in regard to the ultra vires character of the proceedings adopted under section 8 A of the Taxation on Income (Investigation Commission) Act, 1947 (30 of 1947), and the void character of the settlement reached thereunder.
As regards the parts of the judgments which deal with the question whether a fundamental right guaranteed by the Constitution can be waived at all, I find myself in agreement with the judgment prepared by my brother, Subba Rao, J., and am of the opinion that it is not open to a citizen to waive the fundamental rights conferred by Part III of the Constitution.
The question of waiver came to be argued before us in this way.
If the proceedings and the settlement under section 8 A of the Act were void as aforesaid, the respondent contended that the appellant had waived the fundamental right enshrined in article 14 of the Constitution and was therefore not entitled to challenge the settlement.
This was only by way of reply to the contention of the appellant and was not set out in proper details in any affidavit filed on behalf of the respondent.
The learned Attorney General, however, relied upon the application made by the appellant before the Investigation Commission and the contents thereof as also the payments made by the appellant from time to time both before and after the pronouncement of our decision in M. Ct.
Muthiah vs The Commissioner of Income tax, Madras (1) in order to support this plea of waiver and the arguments before us proceeded on that basis.
No objection was taken by either of the parties before us to the issue of waiver being decided on such materials and the question was argued at considerable length before us.
The arguments moreover extended to the whole field of fundamental rights and were not confined to article 14 only.
(1) ; 557 We, therefore, see no reason why we should refrain from pronouncing our opinion on that question.
The preamble to our Constitution, article 13 and the language in which the fundamental rights have been enacted lead to one conclusion and one conclusion only that whatever be the position in America, no distinction can be drawn here, as has been attempted in the United States of America, between the fundamental rights which may be said to have been enacted for the benefit of the individual and those enacted in public interest or on grounds of public policy.
Ours is a nascent democracy.
and situated as we are, socially, economically, educationally and politically, it is the sacred duty of the Supreme Court to safeguard the fundamental rights which have been for the first time enacted in Part III of our Constitution.
The limitations on those rights have been enacted in the Constitution itself, e.g., in articles 19, 33 and 34.
But unless and until we find the limitations on such fundamental rights enacted in the very provisions of the Constitution, there is no justification whatever for importing any notions from the United States of America or the authority of cases decided by the Supreme Court there in order to whittle down the plenitude of the fundamental rights enshrined in Part III of our Constitution.
The genesis of the declaration of fundamental rights in our Constitution can be traced to the following passage from the Report of the Nehru Committee (1928): " Canada, Australia and South Africa have no declaration of rights in their Constitutions but there are various articles to be found in the Constitution of the Irish Free State which may properly be grouped under the general head " fundamental rights ".
The reason for this is not far to seek.
Ireland is the only country where the conditions obtaining before the treaty were the nearest approach to those we have in India.
The first concern of the people of Ireland was, as indeed it is of the people of India to day, to secure fundamental rights that have been denied to them.
The other dominions had their rise from earlier British 558 settlements which were supposed to have carried the law of England with them.
Ireland was taken and kept under the rule of England against her own will and the acquisition of dominion status by her became a matter of treaty between the two nations.
We conceive that the constitutional position in India is very much the same.
That India is a dependency of Great Britain cannot be denied.
That position can be altered in one of two ways force or mutual consent.
It is the latter in furtherance of which we are called upon to recommend the principles of a constitution for India.
In doing so it is obvious that our first care should be to have our fundamental rights guaranteed in a manner which will not permit their withdrawal under any circumstances.
" At the Round Table Conference that preceded the making of the Government of India Act, 1935, therefore, the, Indian leaders pressed for a Bill of Rights in the proposed Constitution Act, in order to bind the administration with certain declarations of individual rights.
This was, however, rejected by the Simon Commission with these observations: " We are aware that such provisions have been inserted in many Constitutions, notably in those of the European States formed after the War.
Experience, however, has not shown them to be of any great practical value.
Abstract declarations are useless unless there exist the will and means to make them effective.
" The framers of our Constitution however followed the American view represented by the famous words of Jefferson in preference to that expressed by the Simon Commission : " The inconveniences of the declaration are, that it may cramp government in its useful exertions.
But the evil of this is short lived, moderate and reparable.
The inconveniences of the want of a declaration are permanent, afflictive and irreparable.
They are in constant progression from bad to worse.
The executive in our governments is not the sole, it is scarcely the principal object of my jealousy.
The tyranny of the legislatures is the most formidable dread. . . . 559 (Vide Basu 's Commentary on the Constitution of India, Vol. 1, p. 74).
and incorporated the fundamental rights in Part III of our Constitution.
The object sought to be achieved was as the preamble to the Constitution states " to secure to all its citizens: JUSTICE, social, economic and political; ]LIBERTY of status and of opportunity; and to promote among them all FRATERNITY assuring the dignity of the individual and the unity of the Nation and article 13 provided: " 13.
(1) All laws in force in the territory of India immediately before the commencement of this Constitution, in so far as they are inconsistent with the provisions of this Part, shall, to the extent of such inconsistency, be void.
(2) The State shall not make any law which takes away or abridges the rights conferred by this Part and any law made in contravention of this clause shall, to the extent of the contravention, be void. . . " Laws in force " were defined in article 13(3) to include : " Laws passed or made by a Legislature or other competent authority in the territory of India before the commencement of this Constitution and not previously repealed, notwithstanding that any such law or any part thereof may not be then in operation either at all or in particular areas " and they were declared void, in so far as they were inconsistent with the provisions of this Part, to the extent of such inconsistency.
As regards laws to be enacted after the commencement of the Constitution, the State, in the wider significance of the term as including " the Government and Parliament of India and the Government and the legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India " (Vide article 12) was enjoined not to make any law which takes away or abridges the rights conferred by this Part and 'any law made in con travention of this clause was to the extent of the 560 contravention declared void.
It will be seen that the prohibition was thus effective both against past laws as well as future laws and both were equally void in so far as they were " inconsistent with " or " in derogation of " the fundamental rights enshrined in Part III of the Constitution.
no distinction was made between the past laws and future laws in this respect and they were declared void to the extent of the inconsistency or the extent of the contravention a,,; the case may be, leaving the unoffending parts thereof untouched.
It will be also seen that under article 13(2) an admonition was administered to the State not to enact any law which takes away or abridges the rights conferred by this Part and the obligation thus imposed on the State enured for the benefit of all citizens of Bharat alike in respect of all the fundamental rights enacted in Part III of the Constitution.
No distinction was made in terms between the fundamental rights said to have been enacted for the benefit of the individual and those enacted in the public interest or on grounds of public policy.
The question then arises whether a breach of the obligation thus imposed on the State can be waived by a citizen.
To borrow the words of My Lord the Chief Justice " In the face of such unequivocal admonition administered by the Constitution, which is the supreme law of the land, is it open to the State to disobey the Constitutional mandate merely because a citizen told the State that it may do so ? if the Constitution asks the State as to why the State did not carry out its behest, will it be any answer for the State to make that " True, you directed me not to take away or abridge the rights conferred by this Part, but this citizen said that I could do so, for he had no objection to my doing so.
" I do not think the State will be in any better position than the position in which Ad am found himself when God asked him as to why he had eaten the forbidden fruit and the State 's above answer will be as futile as that of Adam who pleaded that the woman had tempted him and Bo he ate the forbidden fruit.
" It is absolutely clear on a perusal of article 13(2) of the Constitution that it is a constitutional mandate 561, to the State 'and no citizen can by any act or conduct relieve the State of the solemn obligation imposed on it by article 13(2) and no distinction can be made at all between the fundamental rights enacted for the benefit of the individual and those enacted in the public interest or on grounds of public policy.
What then is the basis of this distinction which has be strenuously urged before us that there are certain fundamental rights which are enacted only for the private benefit of a citizen, e.g., rights of property, which can be waived by him and there are other fundamental rights enacted for the public good or as a matter of public policy which it would not be open to a citizen to waive even though he were affected by the breach thereof.
Reliance is placed in this behalf on certain decisions of the Supreme Court of the United States of America, passages from Willoughby, Willis and Rottschaeffer, quoted in the judgment of T. L. Venkatarama Aiyar, J., in Behram Khurshed Pesikaka vs The State of Bombay (1) and the observations of the said learned Judge in that case adopting the said distinction.
(Vide pp.
638 643 of the Report).
I am afraid this distinction cannot be accepted.
There is nothing in the terms of the various articles embodying the fundamental rights in Part III of our Constitution which warrants such a distinction.
The fundamental rights are enacted with all precision and wherever limitations on their exercise are thought of they are also similarly enacted.
Such constitutional limitations are to be found within the terms of the articles themselves and there is no justification for reading in the terms of the articles anything more than what is expressly stated therein.
There is further this distinction between the American Constitution and ours that whereas the American Constitution was merely enacted in order to form a more perfect union, establish justice, insure domestic tranquillity, provide for common defence, promote the general welfare and secure the blessings of liberty and was an outline of government and nothing more, our Constitution was (1) 71 562 enacted to secure to all citizens, justice, Liberty. ' Equality and Fraternity and laid emphasis on the welfare state and contained more detailed provisions,, defining the rights and also laying down restrictions thereupon in the interest of the general welfare, etc.
As observed by Wills in his Constitutional Law at p. 477: "The conflict between man and the state is as old as human history.
For this reason some compromise must be struck between private liberty and public authority.
There is some need of protecting personal liberty against governmental power and also some need of limiting personal liberty by governmental power.
The ideal situation is a matter of balancing one against the other, or adjusting conflicting interests." " In the United States Constitution an attempt has been made to strike a proper balance between personal liberty and social control through express limitations written into the Constitution and interpreted by the Supreme Court, by implied limitations created by the Supreme Court, and by the development of the governmental powers of regulation, taxa tion, and eminent domain by the Supreme Court." (Ibid pp. 477 478), whereas our Constitution has expressly sought to strike the balance between a written guarantee of individual rights and the collective interests of the community by making express provisions in that behalf in Part III of the Constitution.
(Vide Gopalan vs State of Madras) (1).
Moreover in the matter of considering the statements of law made by the text book writers in America and the dicta of the judges of the Supreme Court there in the various decisions cited before us, we must bear in mind the following admonition of Patanjali Sastri, C. J., in the State of Travancore Cochin vs The Bombay Co., Ltd. (2).
" These clauses are widely different in language, scope and purpose, and a varying body of doctrines (1) ; (2) [1952] S.C.R.1112, 1120 and tests have grown around them interpreting, extending or restricting, from time to time, their operation and application in the context of the expanding American commerce and industry, and we are of opinion that not much help can be derived from them in the solution of the problems arising under article 286 of the Indian Constitution" or for the matter of that, articles embodying the fundamental rights in Part III of our Constitution (see also The State of Bombay vs R. M. D. Chamarbaugwala(1) The rights conferred on citizens may be thus classified : (i) statutory rights; (ii) constitutional rights; and (iii) fundamental rights.
One need not consider the statutory rights in this context but the constitutional rights are those created and conferred by the Constitution.
They may or may not be waived by a. citizen, as stated in the text books and the decisions of the Supreme Court of the United States of America above referred to.
But when the rights conferred are put on a high pedestal and are given the status of fundamental rights, which though embodied in the Constitution itself are in express terms distinguished from the other constitutional rights (e.g., fundamental rights which are enshrined in Part III of the Constitution and are enacted as immune from any legislation inconsistent with or derogatory thereto and other constitutional rights which are enacted in other provisions, for instance in articles 265 and 286 and in Part XIII of the Constitution), they are absolutely inviolable save as expressly enacted in the Constitution and cannot be waived by a citizen.
The Constitution adopted by our founding fathers is sacrosanct and it is not permissible to tinker with those fundamental rights by any ratiocination or analogy of the decisions of the Supreme Court of the United States of America.
The only manner in which that can be done is by appropriate amendment of the Constitution and in no other manner whatever.
There is no difficulty whatever in working out this position and to my mind the difficulties pointed out (1) ; , 918.
564 are more imaginary than real.
If a citizen wanted to assert his fundamental right under the circumstances envisaged for instance in the judgment of my brother section K. Das, J., and made an application for a writ under article 32 or article 226 of the Constitution he would be promptly confronted with the argument that the Court should in the exercise of its discretion refuse him the relief prayed for.
The remedy is purely discretionary and no Court in those circumstances would exercise @ its discretion in his favour (Vide Dewan Bahadur Seth Gopal Das Mohta vs Union of India (1), Baburao Narayan Savas vs Union of India(2) and Laxmanappa Hoonmantappa Janakhandi vs Union of India (3).
Even then he might merely obtain a relief declaring the legislation ultra vires the Constitution and the Court would not grant him any consequential relief For that relief he would have to approach the regular courts of law, when all questions of law, apart from the mere constitutionality of the provision would be considered by the Court on a contest between the par.
ties, e.g., estoppel, acquiescence, limitation and the like (Compare our observations in Sales Tax Officer, Banaras vs Kanayalal Mukundlal Saraf (4) ).
The only thing which parties would be concluded by would be the adjudication as to the ultra vire 's character of the measure in question and the citizen would not be entitled to the relief claimed merely for the asking.
These considerations, therefore, do not militate against the position that a citizen cannot waive the fundamental rights conferred upon him by Part III of the Constitution.
I fully endorse the opinion expressed by Mahajan, C. J., in Behram Khursheed Pesikaka vs The State of Bombay (5) at page 653 : ,,We think that the rights described as fundamental rights are a necessary consequence of the declaration in the preamble that the people of India have solemnly resolved to constitute India into a (1) [1955] I S.C.R. 773.
(3) [19551 1 S.C.R. 769.
(2) (4) Civil Appeal No. 87 Of 1957 decided on September 23, 1958.
(5) 565 sovereign democratic republic and to secure to all its citizens justice, social, economic and political; liberty of thought, expression, belief, faith and worship; equality of status and of opportunity.
These fundamental rights have not been put in the Constitution merely for individual benefit, though ultimately they come into operation in considering individual rights.
They have been put there as a matter of public policy and the doctrine of waiver can have no application to provisions of law which have been enacted as a, matter of constitutional policy.
" This, in my opinion is the true position and it cannot therefore be urged that it is open to a citizen to, waive his fundamental rights conferred by Part III of the Constitution.
The Supreme Court is the bulwark of the fundamental rights which have been for the first time enacted in the Constitution and it would be a, sacrilege to whittle down those rights in the manner attempted to be done.
The result is however the same and agree with the order proposed by My Lord the Chief Justice.
section K. DAS J.
This is an appeal by special leave from an order dated January 29, 1958, passed by the Commissioner of Income tax, Delhi, respondent No. 1 before us, in circumstances which are somewhat unusual and out of the ordinary.
We shall presently relate those circumstances; but at the very outset it may be stated that two questions of far reaching importance fall for consideration in this appeal.
One is the validity of a settlement made under section 8A of the Taxation on Income (Investigation Commission) Act, 1947 (30 of 1947) hereinafter referred to as the Act, after the coming into force of the Constitution on January 26, 1950, and the second is if a fundamental right guaranteed by the Constitution can be said to have been waived by the appellant in the circumstanoes of this case. 'The appellant before us is Basheshar Nath, whom we shall hereafter call the assessee.
As we have already stated, the Commissioner of Income tax, Delhi, is the first respondent, The second respondent 566 is the Union of India.
We also allowed the Model Knitting Industries, a limited liability Company with its registered office in Calcutta, to intervene in the appeal, on the ground that the intervening Company has a case pending in the High Court of Calcutta where the same questions are in issue.
We have also heard the intervener in support of the appeal.
On behalf of the appellant it has been ' contended that the Commissioner of Income tax, Delhi, is a tribunal within the meaning of Art, 136 of the Constitution and exercised judicial functions when it passed the impugned order of January 29, 1958.
The respondents pointed out, however, that the so called order was nothing but a reply which respondent No. 1 gave to a communication received, from the assessee.
However, the respondents have waived any prelimi nary objection to the maintainability of the present appeal, and the learned Attorney General appearing for the respondents has frankly stated before us that he is raising no such preliminary objection, as the Union Government is equally anxious to have a decision on the question, very important from its point of view and with far reaching financial consequences, as to whether a settlement made under section 8A of the Act after January 26, 1950, and the orders passed thereon by the Union Government are valid.
We have, therefore, proceeded on the footing that the present appeal is competent, and have considered it unnecessary to decide in the abstract the more general question as to the circumstances in which an order made by a revenue authority like the Commissioner of Income tax partakes of the character of A judicial or quasi judicial order.
Now, for the facts and circumstances which have led up to this appeal.
The Act received the assent of the Governor General on April 18, 1947, and came into force on May 1, 1947.
On July 22, 1948, the case of the assessee was referred to the Investigation Commission, constitued under section 3 of the Act.
The reference was made under section 5(1) of the Act, and it ,stated that the Central Government had prima facie reasons for believing that the assessee either alone or 567 in combination with ' other persons evaded payment of taxation on income to a substantial extent, and therefore the case of the asseesee was sent to the Investigation Commission for investigation and report.
The period of investigation was from April 1, 1939 to March 31, 1947.
The report of the Investigation Commission which has been made available to us shows that the case against the assessee was that he carried on a business of supplying tents, executing contract works, and commission agency for some textile mills on a fairly extensive scale, both individually and in partnership With his brother.
It appears that the total wealth statement of the assessee was filed on November 10, 1948, and was forwarded to an authorised official appointed under section 6(3) of the Act.
From January 8, 1949 to October 14, 1949 the authorized official was engaged in the collection of assessment records of the assessee from the income tax authorities and of materials from the Civil Supplies Directorate.
On July 5, 1949, the total wealth statement was received back from the assessee and the order ,sheet shows that on May 26, 1950, (that is, after the coming into force of the Constitution) the authorised official is sued a notice to the assessee fixing the hearing for June 10, 1950.
The assessee then asked for time, and it appears that for a period of about three years till June, 1953, nothing was done.
Thereafter, the authorised official held a preliminary investigation and computed intially that the undisclosed income ,of the assessee for the period in question was Rs. 12,07,000; on further scrutiny and examination of accounts and after heating the assessee 's explanation, the authorised official reduced the amount in his final report, submitted sometime towards the end of 1953, to Rs. 9,56,345.
The Investigation Commission considered the report of the authorised official, heard the assessee, and came to the conclusion that the total amount to be assessed in the hands of the assessee was Rs ' 4,47,915.
In their report dated May 24, 1954 the Investigation Commission said: " During the course of the hearing before us,the assessee as well as his Auditors applied for a 568 settlement after admitting liability for the aforesaid sum.
In the circumstances, we consider it proper to allow the assessee the benefit of a settlement on the lower concessional basis of 75% of evaded income payable by way of tax and a moderate penalty of Rs, 14,064. .
The assessee accepting our findings both as regards the amount of income that escaped assessment and the amount of tax and penalty payable, offered a settlement.
In the circumstances, we re commend the acceptance by the Government of the assessee 's offer of a settlement.
" The Central Government accepted the settlement under section 8A of the Act and on July 5, 1954, passed an order under section 8A(2) directing the issue of a demand notice by the Income tax Officer concerned for a sum of Rs. 3,50,000 (including the penalty of Rs. 14,064) on the assessee and further directing that " all such other proceedings under the Indian Income tax Act or under any other law, as may be necessary, should be taken with a view to enforcing the payment of the demand and the terms and conditions of settlement." Though under the terms of settlement no instalments were given, it appears that the assessee was allowed to pay the amount at the rate of Rs. 5,000 per month.
It further appears that up to and including September 8, 1957, the assessee had paid in all a sum of Rs. 1,28,000 towards the demand.
In December, 1955 was given the decision of this Court in M. CT.
Muthiah vs The Commissioner of Income tax, Madras (1), in which the majority of Judges held that section 5(1) of the Act was ultra vires the Constitution, as it was discriminatory and violative of the fundamental right guaranteed by article 14 of the Constitution by reason of two amendments which were made in section 34 of the Indian Income tax Act 1922 one in 1948 by the enactment of the Income.
tax and Business Profits Tax (Amendment) Act, 1948 (48 of 1948) and the other in 1954 by the enactment of the Indian Income tax (Amendment) Act, 1954 (33 of 1954).
Sometime earlier than the aforesaid deci sion, the Income tax Officer concerned had sent a (1) ; , 569 recovery certificate to the Collector, New Delhi, and the assessee stated that in execution of the said certificate his properties situated in Dharamsala and Hissar were attached.
On December 27, 1957, the assessee filed a petition to the Income tax Commissioner, Delhi, in which after stating the relevant facts, the assessee claimed that, after the decision in Muthiah 's case (1), the settlement made under section 8A of the Act had no force and was not binding on him: the assessee then prayed that the attached properties should be released from attachment and the amounts recovered under the terms of settlement refunded to him.
On January 29, 1958, the Commissioner of Income tax sent the following reply " With reference to your petition dated 27th December 1957 regarding the settlement arrived at under section 8A(2) of the Taxation on Income (Investigation Commission) Act, 1947, 1 am to inform you that the settlement is valid and binding on you.
You are ' therefore, requested to make good the arrears of instalments which you have not paid recently by 5th February, 1958 and also to continue making the payments in accordance with the instalments ' scheme agreed to, failing which the recovery proceedings will be vigorously pursued through the usual recovery channels.
" The assessee asked for and obtained special leave from this Court on February 17, 1958, to appeal from the aforesaid order.
In the appeal as orginally filed in pursuance of the special leave granted to the assessee, the prayer portion was inadvertently left out.
Subsequently, the assessee prayed that (a) the report of the Investigation Commission dated May 24, 1954, be quashed, (b) the settlement made on the basis of the report and the directions given by the Central Government in pursuance thereof and the proceedings for recovery of arrears of tax be all quashed, and (c) the amounts already recovered may be ordered to be refunded.
With regard to the last prayer, we may state here that it was not pressed before us and we are relieved from the task, at least in this appeal, of (1) ; 72 570 deciding in what circumstances and on what considerations a refund of tax voluntarily paid can be claimed.
Therefore, the first and foremost question before us is the validity of the settlement made under section 8A of , the Act.
On behalf of the assessee the main argument is that section 5(1) of the Act having been held ultra vires the Constitution, the very foundation for the report of the Investigation Commission has disappeared and a settlement based thereon is neither valid, nor can it be enforced.
On behalf of the respondents, the learned Attorney General has contended that there is no decision of this Court which has held that section 5(1) of the Act is wholly void and on a proper construction of the various sections of the Act, it will be found that there are two separate and distinct procedures or jurisdictions which the Investigation Commission may follow or exercise: one is investigation and the other relates to settlement.
He has submitted that the jurisdiction conferred on the Investigation Commission under section 8A, which was inserted in the Act in 1949 by section 33 of Act 67 of 1949, is not affected by the decision in Muthiah 's case (1), and if the Investigation Commission had jurisdiction to entertain an application from the assessee for settlement, approve of the same, and refer it to the Central Government, the latter had also jurisdiction to accept it under sub s.(1) and make necessary orders under sub.s.
(2) of section 8A.In short, the argument of the learned Attorney General is that there is nothing in Muthiah 's decision (1), which renders section 8A constitutionally invalid.
It is necessary to read at this stage the relevant provisions of the Act in so far as they bear upon the problems before us.
We have said that the Act came into force on May 1, 1947.
This was before the coming into force of the Constitution of India, and no question of the violation of any fundamental rights guaranteed by the Constitution arose on that date.
Section 3 of the Act empowers the Central Government (now Union Government) to constitute a Commission to be called the Income tax Investigation (1) ; 571 Commission, whose duties shall be (to quote the words of the section) " (a) to investigate and report to the Central Government on all matters relating to taxation on income, with particular reference to the extent to which the existing law relating to, and procedure for, the ' assessment and collection of such taxation is adequate to prevent the evasion thereof ; (b)to investigate in accordance with the provisions of this Act any case or point in a case referred to it undersection 5 and make a report thereon (including such interim reports as the Commission may think fit) to the Central Government in respect of all or any of the assessments made in relation to the case before the date of its report or interim report, as the case may be.
" We are concerned in this appeal with the duty of the Commission referred to in section 3(b) above.
Section 4 deals with the composition of the Commission, details whereof are unnecessary for our purpose, Sub sections (1), (2) and (4) of section 5 are relevant to the problems before us and must be read : " 5(1).
The Central Government may at any time before the 1st day of September 1948 refer to the Commission for investigation and report any case or points in a case in which the Central Government has prima facie reasons for believing that a person has to a substantial extent evaded payment of taxation on income, together with such material as may be available in support of such belief, and may at any time before the 1st day of September, 1948 apply to the Commission for the withdrawal of any case or points in a case thus referred, and if the Commission approves of the withdrawal, no further proceedings shall thereafter be taken by or before the Commission in respect of the case or points so withdrawn.
(2) The Commission may, after examining the material submitted by the Central Government with reference to any case or points in a case and making such investigation as it considers necessary, report to the Central Government that in its opinion further investigation is not likely to reveal any substantial 572 evasion of taxation on income and on such report being made the investigation shall be deemed to be closed.
(3). . . . . . . . . . (4) If in the course of investigation into any case or points in a case referred to it under sub section (1), the Commission has reason to believe (a)that some person other than the person whose case is being investigated has evaded payment of taxation on income, or (b) that some points other than those referred to it by the Central Government in respect of any case also require investigation, it may make a report to the Central Government stating its reasons for such belief and, on receipt of such report, the Central Government shall, notwithstanding anything contained in sub section (1), forthwith refer to the Commission for investigation the case of such other person or such additional points as may be indicated in that report.
" Section 5 as originally enacted mentioned the date, 30th of June, 1948, but by Act 49 of 1948 the date substituted was " 1st day of September, 1948 ".
Section 6 states the powers of the Commission, and they may be summarised thus: (a) the Commission has power to require any person or banking or other Company to give information on relevant points; (b) it has power to administer oaths and all the powers of a civil court to take evidence, enforce the attendance of witnesses etc; (c) it has power to impound and retain a document in its custody; (d)it has power to ask an authorised official to examine accounts and interrogate any person; (e) it has power to give directions to an authorised official; (f) it has power to close the investigation and make a best of judgment assessment in respect of a person who refuses or fails to attend in person to give evidence or produce documents etc; and 573 (g) it has power of seizure, search etc.
in certain specified circumstances.
Sections 6A and 6B deal with the power of the Commission to tender immunity from prosecution and to withdraw such tender.
Section 7 states the procedure to be followed by the Commission, sub sections
(2), (4) and (6) whereof need only be referred to here: " 7(2) In making an investigation under clause (b) of section 3, the Commission shall act in accordance with the principles of natural justice, shall follow as far as practicable the principles of the (1 of 1872), and shall give the person whose case is being investigated a reasonable opportunity of rebutting any evidence adduced against him; and the power of the Commission to compel production of documents shall not be subject to the limitation imposed by section 130 of the (1 of 1872), and the Commission shall be deemed to be a court and its proceedings legal proceedings for the purpose of sections 5 and 6 of the (XVIII of 1891).
(3). . . . . . . . . . (4) No person shall be entitled to inspect, call for, or obtain copies of, any documents, statements or papers or materials furnished to, obtained by or produced before the Commission or any authorised official in any proceedings under this Act; but the Commission, and after the Commission has ceased to exist such authority as the Central Government may in this behalf appoint, may, in its discretion, allow such inspection and furnish such copies to any person: Provided that, for the purpose of enabling the person whose case or points in whose case is or are being investigated to rebut any evidence brought on the record against him, he shall, on application made in this behalf and on payment of such fees as may be prescribed by Rules made under this Act, be furnished with certified copies of documents, statements, papers and materials brought on the record by the Commis Sion.
(5). . . . . . . . . . 574 (6) In any proceedings under this Act, the Commission may, in its discretion, admit in evidence and act upon any document notwithstanding that it is not duly stamped or registered.
" Section 8 states in effect what the Commission shall do on the conclusion of the investigation: it states that the materials brought on the record shall be considered by all the members, and the report shall be in accordance with the opinion of the majority.
Subsection (2) of section 8 gives the Central Government power to direct reopening of assessment proceedings on the report of the Commission.
Sub section (4) states that in the assessment or reassessment proceedings in pursuance of a direction given under sub section
(2), the findings recorded by the Commission shall be final, subject to the provisions of sub sections
(5) and (6).
Then comes section 8A which must be quoted in full: "section 8A(1) Where any person concerned in any case referred to or pending before the Commission for investigation applies to the Commission at any time during such investigation to have the case or any part thereof settled in so far as it relates to him, the Commission shall, if it is of opinion that the terms of the settlement contained in the application may be approved, refer the matter to the Central Government, and if the Central Government accepts the terms of such settlement, the Commission shall have the terms thereof recorded and thereupon the investigation, in so far as it relates to matters covered by such settlement, shall be deemed to be closed.
(2) For the purpose of enforcing the terms of any settlement arrived at in pursuance of subsection (1), the Central Government may direct that such proceedings as may be appropriate under the Indian Income tax Act, 1922 (XI of 1922), the Excess Profits Tax Act, 1940 (XV of 1940) or any other law may be taken against the person to whom the settlement relates, and, in particular, the provisions of the second proviso to clause.
(a) of sub section (5) of section 23, section 24B, the proviso to sub section (2) of section 25A, the proviso to sub section (2) of section 26 and sections 44 and 46 of the Indian Income tax Act, 1922 575 shall be applicable to the recovery of any sum specified in such settlement by the Income tax Officer having jurisdiction to assess the person by whom such sum is payable as if it were income tax or an arrear of income tax within the meaning of those provisions.
(3) Subject to the provisions of subsection (6) of section 8, any settlement arrived at under this section shall be conclusive as to the matters stated therein, and no person whose case has been so settled shall be entitled to reopen in any proceeding for the recovery of any sum under this section or in any subsequent assesssment or reassessment proceeding relating to taxation on income or in any other proceeding before any court or other authority any matter which forms part of such settlement.
(4) Where a settlement has been accepted by Government under sub section (1), no proceedings under section 34 of the Indian Income tax Act, 1922 (XI of 1922), or under section 15 of the Excess Profits Tax Act, 1940 (XV of 1940), shall be initiated in respect of the items of income covered by the settlement unless the initiation of such proceedings is expressly allowed by the terms of the settlement.
" Section 9 bars the jurisdiction of courts, but it is not disputed that if any of the provisions of the Act are ultra vires the Constitution, section 9 will neither cure the defect nor stand in the way of the assessee.
Section 10, the last section, gives the Central Government power to make rules.
The above recital gives a brief conspectus of the main provisions of the Act.
It is necessary now to refer to a few earlier decisions of this Court with regard to some of these provisions.
The earliest in point of time is the decision in Suraj Mall Mohta and Co. vs A. V. Viswanatha Sastri where sub section
(4) of section 5 of the Act and the procedure prescribed by the Act in so far as it affected the persons proceeded against under that sub section, were held to be discriminatory and therefore void and unenforceable.
No opinion was, however, expressed on the validity of section 5(1) of the Act.
(1) ; 576 In Shree Meenakshi Mills Ltd., Madurai vs Sri A. V. Viswanatha Sastri (1), it was held that after the coming into force on July 17, 1954, of the Indian Income tax (Amendment) Act, 1954, (33 of 1954) which operated on the same field as section 5(1) of the Act, the provisions of section 5 (1) became void and unenforceable as being discriminatory in character.
It was further held that when an Act was valid in its entirety before the date of the Constitution, that part of the proceedings regulated by the special procedure and taken during the pre Constitution period could not be questioned how.
ever discriminator it might have been, but the discriminatory procedure could not be continued after the coming into force of the Constitution.
In that case (Meenakshi Mills ' case(1)) the Investigation Commission had not even commenced the proceedings though a period of seven years had elapsed and the investigation was pending when the writ petitions were filed.
In those circumstances it was held that the proceedings before the Investigation Commission which had become discriminatory could no longer be continued.
Then came the decision in M. CT.
Muthiah vs The, Commissioner of Income tax, Madras(2).
The facts relevant to that decision were that the Investigation Commission held an enquiry into three cases and submitted a report on August 26, 1952, finding a particular sum to be the undisclosed income during the investigation period.
The Central Government accepted the report and passed an order under section 8(2) of the Act on September 16, 1952.
Notices under section 34 of the Indian Income tax Act were then issued and reassessments except for one year were made on the findings of the Commission, which were treated as final and conclusive.
The re assessment orders were served on the assessees in February and May 1954.
On December 6, 1954, the assessees filed their writ petitions challenging the constitutionality of section 5 (1) of the Act.
It was held by the majority that section 5 (1) was discriminatory and violative of the fundamental right guaranteed under article 14 of the Constitution, because section 34 of the Indian Income tax Act, 1922 as (1) (2) ; 577 amended in 1948 operated on the same field and from and after January 26, 1950, it included the strip of territory which was also occupied by section 5 (1) and two substantially different laws of procedure, one more , prejudicial to the assessee than the other, could not be allowed to operate on the same field in view of the , guarantee of article 14 of the Constitution.
In the result it was held that barring those cases which were already concluded by reports made by the Commission and directions given by Government before January 26, 1950, the cases which were pending before the commission for investigation as also assessment or reassessment proceedings which were pending on January 26, 1950, were hit by article 14.
The assessment orders were accordingly quashed as being unconstitutional.
Now, we come back to the problems before us: (1) what is the effect of Muthia 's decision(1) in the present ease, and (2) does the Act contemplate two separate and distinct, but severable, procedures or jurisdictions one relating to investigation and the other to settlement, so that the vice of discrimination (if any) attaches to the investigation procedure only and not to the other ? We do not see how the learned Attorney General can escape from the position that Muthia 's decision (1) holds in express terms that section 5 (1) of the Act was hit by article 14 of the Constitution on and after January 26, 1950.
The ratio of the decision was thus explained in the majority judgment at page 1260, 1261: " After the 8th September, 1948, there were two procedures simultaneously in operation, the one under Act XXX of 1947 and the other under the Indian Income tax Act with reference to persons who fell within the same class or category, viz., that of the substantial evaders of income tax.
After the 8th September, 1948, therefore, some persons who fell within the class of substantial evaders of income tax were dealt with under the drastic and summary procedure prescribed under Act XXX of 1947, while other (1) ; 73 578 persons who fell within the same class of substantial evaders of income tax could be dealt with under the procedure prescribed in the Indian Income tax Act after service of notice upon them under the amended section 34 (1) of the Act.
Different persons, though falling under the same class or category of substantial evaders of income tax, would, therefore, be subject to different procedures, one a summary and drastic procedure and the other a normal procedure which gave to the assessees various rights which were denied to those who were specially treated under the procedure prescribed in Act XXX of 1947.
The legislative competence being there, these provisions, though discriminatory, could not have been challenged before the advent of the Constitution.
When, however, the Constitution came into force on the 26th January, 1950, the citizens obtained the fundamental rights enshrined in Part III of the Constitution including the right to equality of laws and equal protection of laws enacted in article 14 thereof, and whatever may have been the position before January 26, 1950, it was open to the persons alleged to belong to the class of substantial evaders thereafter to ask as to why some of them were subjected to the summary and drastic procedure prescribed in Act XXX of 1947 and others were subjected to the normal procedure prescribed in section 34 and the cognate sections of the Indian Income tax Act, the procedure prescribed in Act XXX of 1947 being obviously discriminatory and, therefore, violative of the fundamental right guaranteed under article 14 of the Constitution.
" That ratio is equally applicable in the present case, and if section 5(1) of the Act is unenforceable after January 26, 1950, the reference made thereunder against the assessee must also fall after that date and with it must go overboard all that was done under the drastic and summary procedure prescribed under the Act after January 26,1950.
Two possible arguments that (1) substantial evaders whose s were referred by the Central Government for investigation by the Commission 579 before September 1, 1948, formed a class by themselves and (2) that proceedings having started before the Commission under a reference valid at the time when it was made cannot be affected by any subsequent amendment of the Income tax Art, 1922, were raised, but not accepted in Suraj Mall Mohta 's Meenakshi Mills ' or Muthia 's case (1) (2) (3).
There has been some argument before us as to how the two procedures one prescribed under the Income tax Act, 1922, and the other under the Act compare and contrast with each other; but this is a point which was canvassed at great length in each of the three cases mentioned above.
This Court found in unequivocal terms that the procedure prescribed under the Act was more summary and drastic, and in Suraj Mall Mohta 's case the substantial differences between the two procedures were summarised at pp.
463 466 of the report.
We do not propose to cover the same ground again, but cop tent ourselves with drawing attention to what was pointedly said in Suraj Mall Mohta 's case namely, that it was conceded on behalf of Government that the procedure prescribed by the impugned Act in sections 6 and 7, which we have read earlier, was more drastic than the procedure prescribed in sections 37 and 38 of the Indian Income tax Act.
It was stated therein that though in the first stages of investigation there was some similarity between the two procedures, the overall picture was not the same.
The learned Attorney General has not seriously contested the correctness of this position, but has argued that what we are concerned with in the present case is not the mere possibility of a differential treatment, but what actually was done by the Commission in the case of the present assessee after January 26, 1950.
He has submitted that the assessee was not subjected to any differential treatment in fact, and has invoked to his aid the ratio of our decision in Syed Qasim Razvi vs The State of Hyderabad (4), where the majority judgment laid down the following tests: in a case where part of the trial cannot be challenged as (1) [1955] 1S.C.R.448 (2) (3) [1955) 2 S.C.R. 1247.
(4) 580 bad, it is incumbent on the court to consider, first whether the discriminatory provisions of the law can be separated from the rest and even without them a fair measure of equality in the matter of procedure can be secured, and secondly, whether the procedure actually followed 'did or did not, proceed upon the discriminatory provisions and it was stated that a; mere threat or possibility of unequal treatment was not sufficient to invalidate the subsequent proceedings.
A reference was there made to the earlier decisions, of this Court in Keshavan Madhava Xenon vs The State of Bombay (1), and Lachmandas Kewalram Ahuja vs The State of Bombay (2 ), and the decision in Lachmandas case (supra), again a majority decision, was distinguished on two grounds: first, the question as to whether after eliminating the discriminatory provisions it was still possible to secure a fair measure of equality with the normal procedure was neither raised nor considered ; secondly, it was assumed that it was not possible to proceed with the trial without following the discriminatory procedure and as that procedure became void on the coming into force of the Constitution, the jurisdiction to proceed under that procedure came to an end.
Applying the tests laid down in the majority decision of Syed Qasim Razvi 's case (3), the learned Attorney General has contended that in the present case the discriminatory provisions can be separated from the rest of the Act, and the assessee was not in fact subjected to any discriminatory procedure.
He has sought to distinguish Muthia 's case on the same ground, viz., that the re assessments made in that case were actually based on a discriminatory procedure.
In our view the ratio of the majority decision in Syed Qasim Razvi 's case (3) has no application in the case under our consideration, and the principle which applies is what was laid down in Lachmandas 's case (2).
The majority decision is Syed Qasim Razvi 's case proceeded on the finding (to quote the words of Mukherjea, J., who delivered the majority judgment) that " although there were deviations in certain particulars, (1) ; (2) (.3) 581 the accused had substantially the benefit of a normal trial".
The minority judgments, however, very pertinently pointed out that the discriminatory provisions were an integral part of the Regulation under which the accused person in that case was tried and in fact the discriminatory provisions were applied.
Bose, J. (as he then was expressed the view (at p. 618) " that in testing the validity of a law, it is irrelevant to consider what has been done under it, for a law is either constitutional or not and the validity or otherwise cannot depend upon what has been accomplished under its provisions.
" It is, we think, unnecessary to go into the controversy which arises out of the two views expressed above.
For the present case, it is sufficient to say that (1) the discriminatory provisions are an integral part of the procedure prescribed under the Act which cannot be separated from the rest; and (2) we are satisfied that the report which led to the settlement was made by the Investigation Commission in pursuance of and as a direct result of the discriminatory procedure which it followed.
Indeed, the Investigation Commission followed the only procedure of investigation prescribed under the Act, which was a drastic and summary procedure, and if that procedure became void on the coming into force of the Constitution, the jurisdiction of the Investigation Commission practically came to an end (see Lachmandas 's case, supra).
It is necessary to explain here why we cannot accept the contention of the learned Attorney General that there are two procedures or two jurisdictions under the Act.
What in substance is the effect of the provisions of the Act, in so far as they relate to the Commission 's duty under section 3 (b)? The Commission receives a reference under section 5 (1) if it does not proceed under section 5 (2), it exercises such of its powers under section 6 as it considers necessary.
It then follows the procedure laid down in section 7 and submits its report under section 8.
On that report, the Central Government takes action under section 8 (2).
If, however, the assessee applies for settlement, even then the Commission has the, duty to report to Government if the terms of settlement are 582 approved by it.
To fulfil this duty, the Commission must get the materials by exercising its powers under section 6 and by following the procedure laid down in section 7.
That is exactly what was done in the present case.
An authorised official was asked to examine the accounts etc.
under section 6 (3).
He examined the accounts and submitted an interim report in 1953.
He followed the procedure laid down in the Act with regard to inspection of documents, examination of witnesses etc.
He then submitted a final report.
The Commission then heard the assesee on May 19, 1954, and reserved orders.
On May 20, 1954, after the assessee knew what the final finding of the Commission was going to be, he filed an application for settlement.
The Commission made its final report four days after.
It is difficult to understand how in the circumstances stated above, it can be said that the Commission followed a non discriminatory procedure or that it had two jurisdictions one relating to investigation and the other to settlement.
The jurisdiction was really one, and the procedure followed also the same.
It is not as though the Act provided a separate procedure for purposes of effecting a settlement; nor is this a case where a settlement has been made without applying any of the provisions relating to investigation.
A full investigation was made, and after the assessee had been subjected to the drastic and summary procedure under the Act, he was told what the result of the investigation was.
Then, he made an application for settlement, which was approved by the Commission under section 8A.
We are accordingly of the view that the learned Attorney General has failed to make out his case that (1) Muthia 's decision (1) does not apply and (2) the settlement under section 8A of the Act is a legally valid settlement by reason of the severability or non application of the discriminatory procedure under the Act in the case of the assessee.
This brings me to the second question, that of waiver of a fundamental right, which is as important as it is complex.
It is a question on which unfortunately we (1) [1955] 2 S.C.R.1247.
583 have not been able to achieve unanimity.
It is beset with this initial difficulty that the present appeal is not from a judgment or order rendered after the trial of properly framed issues; it is from an order which merely rejected the prayer of the assessee that his properties attached in execution of the recovery certificate should be released and the amounts paid under the terms of the settlement refunded.
The question of waiver was neither raised, nor tried; and the necessary facts were not ascertained or determined by the revenue authority concerned.
Unfortunately, the filing of a statement of their case by the parties was also dispensed with, the result whereof has been that the question of waiver has been urged for the first time in the course of arguments here.
We have, however, heard full arguments on it, and proceed to consider it on such materials as have been placed before us.
It is necessary to make one point clear.
The respondents have raised the plea of waiver, and the onus lies heavily on them to establish the essential requirements in support of the plea.
Two points arise in this connection: (1) have the respondents established, on the materials before us, the necessary facts on which a plea of waiver can be founded ; and (2) if so, can a fundamental right guaranteed by the Constitution be waived at all.
If the first point is answered in the negative, the second point need not be answered in the abstract.
On behalf of the respondents, it has been submitted that assuming (without conceding) that the discriminatory provisions of the Act were applied in the case of the assessee before he asked for a settlement, the materials on record show that he never objected to the procedure adopted, voluntarily asked for a settlement, got by the settlement the benefit.
of reducing his liability for both tax and penalty, and paid without demur the following instalments (some even after Muthia 's decision (1) ) (1) [1955] 2 S.C.P. 1247.
584 Payments made up to April 55 10,000 Payment made on 10 5 55 5,000 19 6 55 5,000 7 7 55 5,000 13 8 55 5,OOO 7 9 55 5,000 15 10 55 5,000 10 11 55 5,000 15 12 55 5,000 8 2 56 5,000 13 2 56 5,000 7 3 56 5,000 14 5 56 5,000 19 5 56 5,000 13 6 56 5,000 6 8 56 5,000 7 9 56 5,000 9 10 56 5,000 10 11 56 5,000 23 12 56 5,000 14 1 57 5,000 29 3 57 5,000 4 6 57 5,000 8 9 57 8,000 1,28,000 The learned Attorney General has in this connection referred us to the application for settlement which the assessee had made to the Commission, wherein the following statements were made: " in view of the fact that though no disclosure statement had been made before the submission of his reports by the authorised official,, still during the enquiry before the Commission,, the assessee and his auditors admitted their liability to tax in respect of the aforesaid sum of Rs. 4,47,915, the Commission was of the opinion that the assessee should be granted the benefit of a settlement on the lower concessional basis of payment of 75 per cent.
of the undisclosed income by way of tax.
The Commission was also of the opinion that the assessee should pay by way of penalty a sum of Rs. 14,064.
585 The assessee accepts the conclusions of the Commission as regards the amount of income that escaped assessment, the tax payable thereon and the penalty payable as aforesaid.
" On the basis of these statements, the learned Attorney General has argued that there is no foundation for the suggestion made on behalf of the assessee that the application for settlement was made " under the pressure of circumstances and in view of the coercive machinery of the Act." He has submitted that the necessary facts on which the plea of waiver is founded have been established, and he has relied on three cases decided by this Court, where according to him the effect of the decisions was to accept such a plea in circumstances very similar: Dewan Bahadur Seth Gopal Das Mohta vs The Union of India(1); Baburao Narayanrao Sanas vs The Union of India (2); and Laxnanappa Hanumantappa Jamkhandi vs The Union of India (3) On behalf of the assessee, it is contended on the contrary that the necessary facts to found a plea of waiver are totally absent in the present case, and none of the aforesaid three decisions which were all pronounced on the same day proceed on a plea of waiver.
Two of the three decisions referred to above relate to a settlement made under section 8A and the third to an order made under section 8(2) of the Act.
All the three decisions were pronounced on applications made under article 32 of the Constitution, and not on any appeal from an order of the revenue authority.
In Gopal Das Mohta 's case (1) the argument urged was, inter alia, that sections 5, 6, 7 and 8 of the Act were invalid and ultra vires as they contravened the provisions of articles 14, 19 (1) (f), and 31 of the Constitution and the prayer made was that the entire proceedings should be quashed as also all orders made by the Central Government in pursuance of the settlement under section 8A.
In rejecting the argument and prayer, Mahajan, C. J., who delivered the , judgment of the Court said at p. 776 (1) ; (2) (3) ; 74 586 " In our judgment this petition is wholly misconceived.
Whatever tax the petitioner has already paid, or whatever is still recoverable from him, is being recovered on the basis of the settlement proposed by him and accepted by the Central Government.
Because Of his request for a settlement no assessment was made against him by following the whole of the procedure of the Income tax Act.
In this situation unless and until the petitioner can establish that his consent was improperly procured and that he is not bound thereby he cannot complain that any of his fundamental rights has been contravened for which he can claim relief under article 32 of the Constitution.
Article 32 of ',,the Constitution is not intended for relief against the voluntary actions of a person.
His remedy, if any, lies in other appropriate proceedings.
" There has been a good deal of argument before us as to the true effect of the decision in Gopal Das Mohta 's case (1).
While I recognise that the reason stated for the decision, viz., that article 32 is not intended for relief against voluntary actions of a person, comes very near to saying that a person has waived his protection in a given case since whatever injury he may incur is due to his own act rather than to the enforcement of an unconstitutional measure against him, I am unable to hold that the decision proceeded strictly on the doctrine of waiver; it is perhaps true to say that some of the observations made therein are of a " Delphic nature to be translated into concreteness by the process of litigating elucidation" (to borrow the words of Frankfurter, J., in Machinists vs Gonzales (2).
It seems to me that the decision proceeded more upon the scope of article 32 than upon the doctrine of waiver.
I am fortified in this view by the circumstance that in a decision given only a month earlier (see Behram Khurshed Pesikaka vs The State of Bombay (3)) the same learned Chief Justice expressed himself strongly, though tentatively, against introducing in our Constitution the doctrine of waiver as enunciated by some American Judges in construing the American Constitution, without a full discussion of the matter.
The report of Gopal (1) [1955] 1 S.C.P. 773.
(2) ; ,619 (3) 653,654.
587 Das Mohta 's case (1) does not contain any reference to the doctrine of waiver, and it is obvious that no ,fuller discussion of the doctrine took place in that case.
It is not, therefore, reasonable to hold that the effect of Gopal Das Mohta 's case is to uphold the doctrine of waiver.
Babu Rao 's case (2) merely followed Gopal Das Mohta (1) and gave no separate reasons.
Laxmanappa Jamkhandi 's case (3) dealt with an order under section 8(2) of the Act and said at p. 772: " From the facts stated above it is plain that the proceedings taken under the impugned Act XXX of 1947 concluded so far as the Investigation Commission is concerned in September, 1952, more than two years before this petition was presented in this Court.
The assessment orders under the Income tax Act itself were made against the petitioner in November, 1953.
In these circumstances we are of the opinion that he is entitled to no relief under the provisions of Article 32 of the Constitution.
It was held by this Court in Ramjilal vs Income tax Officer, Mohindar garh; , , that as there is a special pro.
vision in Article 265 of the Constitution, that no tax shall be levied or collected except by authority of law, clause (1) of Article 31 must therefore be regarded as concerned with deprivation of property otherwise than by the imposition or collection of tax, and inasmuch as the right conferred by article 265 is not a right conferred by Part III of the Constitution, it could not be enforced under Article 32.
In view of this decision it has to be held that the petition under Article 32 is not maintainable in the situation that has arisen and that even otherwise in the peculiar circumstances that have arisen it would not be just and proper to direct the issue of any of the writs the issue of which is discretionary with this Court.
" Here, again, there is no reference to the doctrine of waiver, and the case was decided on the ambit and scope of article 32 of the Constitution.
I would hold, therefore, that the decisions of this Court relied on by the learned Attorney General do (1) ; (2) (3)[1955] 1 S.C.R.769.
588 not help him in establishing waiver.
Let me now examine the circumstances on which the learned Attorney General founds his plea of waiver.
Indeed, it is true that the assessee submitted to the discriminatory procedure applied to him by the Commission; he also asked for a settlement under which he agreed to pay 75% of his alleged tax liability and a small amount of penalty; he made some payment in instalments even after Muthia 's decision in December, 1955.
Do these circumstances amount to waiver ? It is to be remembered that in 1953 1954 when the discriminatory procedure of the Act was applied to him and the report against him was made by the Commission on which the settlement is based, the assessee did not know, nor had it been declared by a court of competent jurisdiction that section 5(1) of the Act was ultra vires.
In his application for a settlement, he said clearly in paragraph 3 that the Commission announced it as its view that the income, profits and gains that had escaped assessment in the hands of the assessee was Rs. 4,47,915.
The assessee also knew that under the Act this finding was final and binding on him.
If in these circumstances, the assessee made an application for settlement, can it be said that it is a voluntary or intentional relinquishment of a known right ? I venture to think not.
It has been said that ' waiver ' is a troublesome term in the law.
The generally accepted connotation is that to constitute ' waiver ', there must be an intentional relinquishment of a known right or the voluntary relinquishment or abandonment of a known existing legal right, or conduct such as warrants an inference of the relinquishment of a known right or privilege.
Waiver differs from estoppel in the sense that it is contractual and is an agreement to release or not to assert a right; estoppel is a rule of evidence.
(See Dawson Bank Limited vs Nippon Menkwa Kabushiki Kaisha) (1).
What is the known legal right which the assessee intentionally relinquished or agreed to release in 1953 1954 ? He did not know then that any part of the Act was invalid, and I doubt if in (1) (1935) L.R.62 I.A.100,108.
589 the circumstances of this case, a plea of 'waiver ' can be founded on the maxim of 'ignorance of law is no excuse '.
I do not think that the maxim 'ignorance of law is no excuse ' can be carried to the extent of saying that every person must be presumed to know that a piece of legislation enacted by a legislature of competent jurisdiction must be held to be invalid, in case it prescribes a differential treatment, and he must, therefore, refuse to submit to it or incur the peril of the bar of waiver being raised against him.
I do not think that such pre science is a necessary corollary of the maxim.
On the contrary, the presumption, if any, which operated at the relevant time was the presumption that a law passed by a competent legislature is valid, unless declared unconstitutional by a court of competent jurisdiction.
Furthermore, I do not think that any inference of waiver can be retrospectively drawn from the instalments paid in 1956 57, particularly when the question of refund of the amounts already paid is no longer a live issue before us.
It would, I think, be going too far to hold that every unsuspecting submission to a law, subsequently declared to be invalid, must give rise to a plea of waiver: this would make constitutional rights depend for their vitality on the accident of a timely challenge and render them illusory to a very large extent.
I hold, therefore, that the necessary foundation for sustaining the plea of waiver has not been laid in this case, and the onus being on the respondents, the plea must fail.
In view of my finding that the necessary foundation on facts for sustaining the plea of waiver has not been laid in this case, it becomes unnecessary to decide, in the abstract, the further question if a right guaranteed by any of the provisions in Part III of the Constitution can be waived at all.
I am of the view that this Court should indeed be rigorous in avoiding to pronounce on constitutional issues where a reason.
able alternative exists; for we have consistently followed the two principles (a) that " the Court will not anticipate a question of constitutional law in 590 advance of the necessity of deciding it " (Weaver on Constitutional Law, p. 69) and (b) " the Court will not formulate a rule of constitutional law broader than is required by the precise facts to which it is to be applied " (ibid, p. 69).
My Lord the Chief Justice and my learned brother Kapur, J., have however expressed the view that the fundamental right guaranteed under article 14 cannot be waived; my learned brethren, Bhagwati and Subba Rao, JJ., have expressed the view that none of the fundamental rights guaranteed by the Constitution can be waived.
I greatly regret to have to say that I have come to a conclusion different from theirs with regard to this question, and as they have thought fit to express their views on it proceed now to explain why I have come to a conclusion different from those of my learned brethren on this question.
This question was mooted, though not fully answered, in Behram Khurshed Pesikaka 's case (1).
Venkatarama Aiyar, J., expressed his views at pages 638 to 643 of the report.
Mahajan, C. J., with whom Mukherjea, Vivian Bose and Ghulam Hasan, JJ., concurred, expressed his views at pages 651 to 655 of the report, and my Lord the Chief Justice as Das, J., reserved his opinion on the question.
The view which Venkatarama Aiyar, J., expressed was this: if the constitutional provision which has been infringed affects the competence of the legislature which passed the law, the law is a nullity; as for example, when a State enacts a law which is within the exclusive competence of the Union; when, however, a law is within the competence of the legislature which passed it and the unconstitutionality arises by reason of its repugnancy to provisions enacted for the benefit of individuals, it is not a nullity, but is merely unenforceable; such unconstitutionality can be waived and in that case the law becomes enforceable.
He said that in America this principle was well settled and he referred to Cooley on Constitutional Limitations, Volume 1, pages 368 to 371 ; Willis on Constitutional Law at (1) , 653, 654. 591 pages 524, 531, 542 and 558; Rottschaefer on Constitutional Law at pages 28 and 29 30.
He then referred to certain American decisions in support of his views and then said: " The position must be the same under our Constitution when a law contravenes a prescription intended for the benefit of individuals. .
It is open to any person whose rights have been infringed to waive it and when there is waiver, there is no legal impediment to the enforcement of the law.
It will be otherwise if the statute was a nullity; in which case it can neither be waived nor enforced.
If then the law is merely unenforceable and can take effect when waived, it cannot be treated as non est and as effaced out of the statute book.
" The contrary view expressed by Mahajan, C. J., can be best explained in his own words: " We think that it is not a correct proposition that constitutional provisions in Part III of our Constitution merely operate as a check on the exercise of legislative power.
It is axiomatic that when the lawmaking power of a State is restricted by a written fundamental law, then any law enacted and opposed to fundamental law is in excess of the legislative authority and is thus a nullity.
Both these declarations of unconstitutionality go to the root of the power itself and there is no real distinction between them.
They represent but two aspects of want of legislative power.
The legislative power of the Parliament and the State legislatures as conferred by articles 245 and 246 of the Constitution stands curtailed by the fundamental rights chapter of the Constitution.
" His Lordship then referred to article 13 of the Constitution and said that it was a clear and unequivocal mandate of the fundamental law prohibiting the State from making any laws which came into conflict with Part III of the Constitution.
His Lordship added: " In our opinion the doctrine of, waiver enunciated by some American Judges in construing the American Constitution cannot be introduced in our Constitution without a fuller discussion of the matter. .
Without finally expressing an opinion on this question, we 592 are not for the moment convinced that this theory has any relevancy in construing the fundamental rights conferred by Part III of the Constitution.
We think that the rights described as fundamental rights are a necessary consequence of the declaration in the ,preamble that the people of India have solemnly resolved to constitute India into a sovereign democratic republic and to secure to all its citizens justice, social, economic and political; liberty of thought, expression, belief, faith and worship; equality of status and of opportunity.
These fundamental rights have not been put in the Constitution merely for individual benefit, though ultimately they come into operation in considering individual rights.
They have been put there as a matter of public policy and the doctrine of waiver can, have no application to provisions of law which have been enacted as a matter of constitutional policy.
" It would appear that the two main reasons which Mahajan, C. J., gave in support of the views expressed by him were these.
Firstly, he held that the effect of article 13 of the Constitution was to prohibit the State from making any laws which came into conflict with Part III of the Constitution and he recognised no such distinction as was drawn by Venkatarama Aiyar, J., between absence of legislative power (that is, incompetence of the legislature) and non observance of provisions which operate merely as a check on the exercise of legislative power.
He thought that absence of legislative power and check on the exercise of legis lative power were both aspects of want of legislative power.
Secondly, he referred to the preamble and the scheme of Part III of the Constitution in support of his view that the doctrine of waiver did not apply.
I shall take these reasons in the order in which I have stated them.
First, as to the effect of article 13 of the Constitution.
Article 13 is in two parts: the first part deals with " all laws in force in the territory of India immediately before the commencement of this Constitution " 'and says that so far as such laws are inconsistent with the provisions of Part III, they shall to the extent of such inconsistency be void; the second part deals with laws made after the commencement of the Constitution and says that " the State shall not make any law which takes.
away or abridges the rights conferred by Part III " of the Constitution and any law made in contravention of cl.
(2) of article 13 shall to the extent of the contravention be void.
It seems clear to me that the Article itself recognises the distinction between absence of legislative power which will make the law made by an incompetent legislature wholly void, and exercise of legislative power in contravention of a restriction or check on such power, which will make the law void to the extent of the inconsistency or contravention.
The use, of the words " to the extent of the inconsistency " and " to the extent of the contravention " indubitably points to such a distinction, and indeed this was pointed out in Bhikaji Narain Dhakras vs The State of Madhya Pradesh (1).
This was an unanimous decision of this Court and several earlier decisions including the decision in Kesavan Madhava Menon 's case (2), on which Mahajan, C. J., placed so much reliance, were considered therein.
The decision in Behram Khurshed Pesikaka (3)was also considered, and then the following observations were made with regard to article 13 of the Constitution at p. 598 " Article 13(1) by reason of its language cannot be read as having obliterated the entire operation of the inconsistent law or having wiped it out altogether from the statute book.
Such law existed for all past transactions and for enforcement of rights and liabilities accrued before the date of the Constitution, as was held in Keshavan Madhava Menon 's case.
The law continued in force even after the commencement of the Constitution, with respect to persons who were not citizens and could not claim the fundamental right.
In short, article 13(1) had the effect of nullifying or rendering the existing law which had become inconsistent with article 19(1)(g) read with el.
(6) as it then stood ineffectual, nugatory and devoid of any legal (1) [1055] 2 S.C.R. 589 (2) ; (3) ,653.
654. 75 594 force or binding effect only in respect of the exercise of the fundamental right on or after the date of the commencement of the Constitution. .
All laws,existing or future, which are inconsistent with the provisions of Part III of our Constitution are, by the express provision of article 13, rendered void I to the extent of such inconsistency '.
Such laws were not dead for all purposes.
" The aforesaid view expressed in Bhikaji Narain 's case (1) was accepted in many later decisions including the decision in Muthia 's case (2).
The same distinction was again referred to in another unanimous decision of this Court in The State of Bombay vs R.M.D. Chamarbaugwala (3) where at p. 885 it was observed: The Court of Appeal has rightly pointed out that when the validity of an Act is called in question, the first thing for the court to do is to examine whether the Act is a law with respect to a topic assigned to the particular Legislature which enacted it.
if it is, then the court is next to consider whether, in the case of an Act passed by the Legislature of a Province now a State), its operation extends beyond the boundaries of the Province or the State, for under the provisions conferring legislative powers on it such Legislature can only make a law for its territories or any part thereof and its laws cannot, in the absence of a territorial nexus, have any extra territorial operation.
If the impugned law satisfies both these tests, then finally the court has to ascertain if there is anything in any other part of the Constitution which places ~any fetter on the legislative powers of such Legislature.
The impugned law has to pass all these three test.
" Therefore, the mere use of the word ~(6 void " in article 13 does not necessarily militate against the application of the doctrine of waiver in respect of the provisions contained in Part III of our Constitution.
Under the American Constitution also, a law made in violation of a constitutional guarantee is struck down, because under article VI of that Constitution, " the Constitution and the laws of the United States which (1) ; (2) ; (3) ; 595 shall be made in pursuance thereof. . shall be the supreme law of the land.
" I am unable, therefore, to accept the view that article 13 shows that the doctrine of waiver can never be applied in respect of the provisions in Part III of the Constitution.
Let me now go to the second reason.
Is there any thing in the preamble and the scheme of our Constitution, with particular reference to Part III, which will make the doctrine of waiver inapplicable ? Let me first place the two preambles side by side: Premple to our Premple to the American Constitution.
Constitution,1787.
"We the people of India "We the people of the United having solemny resolved to States, in order to form a constitute India into a so more perfect Union,establish vereign democratic republic justice,insure domestic tra and to secure to all its ci nquillity,provide for the tizens:justice,social,ecc common defence,promote the nomic and political; liber general welfare,and secure ty of though,expression, the blessing of liberty to belief,faith and worship; ourselves and our posterity equality of status and of do ordain and establish opportunity;and to promote this Constitution for the among them all fraternity United State of America." assuring the dignity of the individual and the unity of the nation;in our Constitu ent Assemply this twenty sixth day of November,1949 do hereby adopt,enact and give to ourselves this Co nstitution.
" 596 American Constitution were : (a) to form a more perfect Union; (b) to establish justice; (c) to insure domestic tranquillity; (d) to promote general welfare; and (e) to secure the blessings of liberty.
In our Constitution, the emphasis is on the Welfare State on Justice, Liberty, Equality and Fraternity.
But the question before us is the limited question of the application of the doctrine of waiver.
I do not find any.
thing in the two preambles which will make the doctrine applicable in one case and not applicable in the other.
It is necessary to refer here to one important distinction between the two Constitutions.
Speaking broadly, the American Constitution of 1787, except for defining the enumerated powers of the Federal Government and limiting the powers of the States, was an outline of government and nothing more.
Its provisions were written in general language and did not provide minute specifications of Organisation or power.
It contemplated subsequent legislation and interpretation for carrying the provisions into effect.
In other words, it was early recognised that the Constitution was not self executing.
The Indian Constitution is more detailed, and in Part III of the Constitution are provisions which not merely define the rights but also state to what extent they are subject to restrictions in the interests of general welfare, etc.
In other words, there is an attempt at adjustment of individual rights with social good, and in that sense the limitations or restrictions are also defined.
But I do not think that this distinction has any particular bearing on the question at issue before us.
The rights as also the restrictions are justiciable, and an interpretation of the rights given and of the restrictions imposed, by courts of competent jurisdiction is contemplated.
Indeed, I recognise that there is a constitutional policy behind the provisions enacted in Part III of the Constitution.
In a, sense, there is a legislative policy in all statutory enactments.
In my opinion, the crucial question is not whether there is a constitutional or legislative policy behind a particular provision, but the question is is the provision meant 597 primarily for the benefit of individuals or is it for the benefit of the general public ? That distinction has, I think, been recognised in more than one decision.
Take, for example, an ordinary statutory enactment like section 80 of the Code of Civil Procedure which says that no suit shall be instituted against the Government or against a public officer in respect of any act purporting to be done by such public officer in his official capacity until the expiration of two months next after a notice in writing has been given, etc.
There is undoubtedly a reason of public policy behind this provision, but it is open to the party for whose benefit the vision has been made to waive notice and indeed the party may be estopped by his conduct from pleading the want of notice.
As the Privy Council pointed out in AL.
Villavar Chettiar vs Government of the Province of Madras (1), there is no inconsistency between the propositions that the provisions of a section are mandatory and must be enforced by the court and that they may be waived by the authority for whose benefit they are provided.
The question then is is there anything in the statute which militates against the application of the doctrine of waiver to such right, subject to the safeguards and precautions necessary for the application of the doctrine, provided the right is for the benefit of individuals ? I am conscious that rights which the Constitution itself characterises as fundamental must be treated as such and it will be wrong to whittle them down.
But are we whittling down fundamental rights when we say that the question of waiver of fundamental rights cannot be answered in the abstract by a general affirmative or a general negative; the question must always depend on (a) the nature of the right guaranteed and (b) the foundation on the basis of which the plea of waiver is raised.
It is to be remembered that the rights guaranteed by Part III of the Constitution are not confined to citizens alone.
Some of the rights are guaranteed to non citizens also.
Moreover, they are not all rights relating to justice, liberty, equality and fraternity; some of the provisions define the rights (A) (1947) L.R. 74 I.A. 223, 228.
698 while others indicate the restrictions or checks subject to which the rights are granted.
Article 33, for example, does not give any right to any person; on the contrary it gives power to Parliament to modify the rights conferred by Part III in their application to persons.
Article 34 lays down a conferred by Part III while in any area.
It is not, there fore, quite correct to say that all the provisions in Part III grant fun amental rights, though the heading is 'Fundamental Rights '.
There is, I think, a three fold classification: (1) a right granted by an ordinary statutory enactment; (2) a right granted by.
the Constitution; and (3) a right guaranteed by Part III of the Constitution.
With regard to an ordinary statutory right there is, I think, no difficulty.
It is well recognised that a statutory right which is for the benefit of an individual can in proper circumstances be waived by the party for whose benefit the provision has been made.
With regard to a constitutional right, it may be pointed out that there are several provisions in our Constitution which do not occur in Part III, but which yet relate to certain rights; take, for example, the rights relating to the Services under the Union and the States in Part XIV.
I do not think that it can be seriously contended that a right which is granted to a Government servant for his benefit cannot be waived by him, provided no question of jurisdiction is involved.
I may refer in this connection to the provisions in Part XIII which relate to trade, commerce and intercourse within the territory of India.
These provisions also impose certain restrictions on the legislative powers of the Union and of the States with regard to trade and commerce.
As these provisions are for the benefit of the general public and not for any particular individual, they can not be waived, even though they do not find place in Part III of the Constitution.
Therefore, the crucial question is not whether the rights or restrictions occur in one part or other of the Constitution.
The crucial question is the nature of the right given: is it for the benefit of individuals or is it for the general public? 599 That, in my opinion, is the true test.
I may here state that the source of the right contractual or statutory is not the determining factor.
The doctrine of waiver is grounded on the principle that a right, statutory or otherwise, which is for the benefit of an individual can be waived by him.
I am aware that a right which is for the benefit of the general public must in its actual operation relate to particular individuals, in the same way as a right for the benefit of individuals will in its actual operation arise in connection with individual A or individual B.
The test is not whether in its operation it relates to an individual.
The test is for whose benefit the right has been primarily granted for the benefit of the general public or for individuals ? Let me now apply this test to some of the provisions in Part III of the Constitution.
These provisions have been classified under different heads: (1) right to equality, (2) right to freedom, (3) right against exploitation, (4) right to freedom of religion, (5) cultural and educational rights, (6) right to property and (7) right to constitutional remedies.
There can be no doubt that some of these rights are for the benefit of the general public.
Take, for example, article 23 which prohibits traffic in human beings, etc ; so also article 24 'which says that no child below the age of 14 shall be employed to work in any factory or mine or engaged in any other hazardous employment.
I do not wish to multiply examples and it is sufficient to state that several of these rights are rights which are meant primarily for the benefit of the general public and not for an individual.
But can we say the same thing in respect of all the rights ? Let us take article 31, which says that no person shall be deprived of his property save by authority of law and that no property shall be compulsorily acquired or requisitioned save for a public purpose and save by authority of law which provides for compensation, etc.
Take a case where a man 's property is acquired under a law which does not fix the amount of compensation or specify the principles on which or the manner in which the compensation is to be determined and given.
The man whose 600 property is taken may raise no objection to the taking of his property under such law.
Indeed, he may expressly agree to Government taking his land for a public purpose under the law in question, though it does not comply with the requirements as to compensation.
Can such a man after two or three years change his mind and say that the law is invalid and his land on which a school or a hospital may have been built in the meantime should be restored to him, because he could not waive his fundamental right ? In my opinion, if we express the view in the abstract that no fundamental right can ever be waived, many startling and unforeseen results may follow.
Take another example.
Suppose a man obtains a permit or a licence for running a motor vehicle or an excise shop.
Having enjoyed the benefit of the permit for several years, is it open to him to say when action is proposed to be taken against him to terminate the licence, that the law under which the permit was granted to him was not constitutionally valid ? Having derived all the benefit from the permit granted to him, is it open to him to say that the very Act under which a permit was granted to him is not valid in law ? Such and other startling results will follow if we decide in the abstract, by a general negative, that a fundamental right can never be waived.
Take article 32, which is a right to a constitutional remedy, namely, the right to move the Supreme Court by appropriate proceedings for the enforcement of the rights conferred by Part III.
It is now well settled by several decisions of this court that the right under article 32 is itself a fundamental right.
Suppose a person exercises that right and initiates appropriate proceedings for enforcement of a fundamental right ' Later he thinks better of it and withdraws his application.
Still later he changes his mind.
Can he then say that he could not waive his right under article 32 and the order passed on his application for withdrawal had no legal validity ? We may take still another example.
Under article 30(1) of the Constitution, all minorities, whether based on religion or language, have the right to establish and administer educational institutions of 601 their choice.
Suppose, there is a minority educational institution and the minority has the right to administer that institution, but they want grant from Government.
The minority may have to surrender part of its right of administration in order to get Government aid.
Can the minority waive its right? Such a question arose for consideration in the advisory opinion which we gave in connection with the Kerala Education Bill and , so far as I have been able to understand, the effect of our opinion is that the minority can surrender part of its right of administration of a school of its own choice in order to get aid from Government.
If we now hold that the minority can never surrender its right, then the result will be that it will never be able to ask for Government aid.
I do not see any such vital distinction between the provisions of the American Constitution and those of our Constitution as would lead me to the conclusion that the doctrine of waiver applies in respect of constitutional rights guaranteed by the American Constitution but will not apply in respect of fundamental rights guaranteed by the Indian Constitution.
Speaking generally, the prohibition in Part III is against the State from taking any action in violation of a fundamental right.
The word 'State ' in that Part includes the Government and Parliament of India as also the Government and Legislature of each of the States and also all local or other authorities within the territory of India or under the control of the Government of India.
The American Constitution also says the same thing in effect.
By article VI it states that the Constitution and the laws of the United States which shall be made in pursuance thereof shall be the supreme law of the land.
It is well settled in America that the first ten amendments to the original Con stitution were substantially contemporaneous and should be construed in pari materia.
In many of the amendments the phraseology used is similar to the phraseology of the provisions of Part III of our Constitution.
The position under the American Constitution is 76 602 well settled and a succinct statement of that position will be found in Rottschaefer on Constitutional Law, pp. 28 29.
The learned author has summarised the position thus: " There are certain constitutional provisions that may be waived by the person for whose protection they were intended.
A person who has waived that protection in a given instance may not thereafter.
raise the issue that his, constitutional rights have been infringed in that instance, since whatever injury he may incur is due to his own act rather than to the enforcement of an unconstitutional measure against him.
A person who would otherwise be entitled to raise a constitutional issue is sometimes denied that right because he is estopped to do so.
The factor usually present in these cases is conduct inconsistent with file present assertion of that right, or conduct of such character that it would be unjust to others to permit him to avoid liability on constitutional grounds.
A person may not question the constitutionality of the very provision on which he bases the right claimed to be infringed thereby, nor of a provision that is an integral part in its establishment or definition.
The acceptance of a benefit under one provision of an Act does not ordinarily preclude a person from asserting ' the invalidity of another and severable provision thereof, but there are exceptions to this rule.
The. ' promoters of a public improvement have been denied ' the right to contest the validity of the rule apportioning its cost over the benefited lands, and a person who has received the benefits of a statute may not there ' after assert its invalidity to defeat the claims of those, against whom it has been enforced in his own favour.
A state is estopped to claim that its own statute deprives it.
of its property without due process of law but it is permitted to assert that its own statute invades rights that its constitution confers upon it.
Prior inconsistent conduct will not,however preclude a person from asserting the, invalidity of an act if under all the circumstances its assertion involves no 603 unfairness or injustice to those against whom it is raised.
" The learned Attorney General placed reliance on the following decisions: (1) Pierce vs Somerset Railway (1); (2) Wall vs Parrot Silver and Copper Company (2); (3) Pierce Oil Corporation vs Phoenix Refining Company (3) ; (4) Shepard vs Barron(4) ; (5) United States V. Murdock(5); (6) Patton vs United States (6) ; and (7) Adams vs United States (7).
The position in America is so well settled that I think it is unnecessary to examine the aforesaid decisions in detail.
I need only refer to the observations of Frankfurter, J., in William A. Adam 's case (supra).
The observations were made in connection with a case where a trial was held without a jury at the request of the accused person himself in spite of the guarantee of Amendment VI.
The observations were " What was contrived as protections for the accused should not be turned into fetters.
To assert as an absolute that a layman, no matter how wise or experienced he may be, is incompetent to choose between judge and jury as the tribunal for determining his guilt or innocence, simply because a lawyer has not advised him on the choice, is to dogmatize beyond the bounds of learning or experience.
" I have not been able to find any real reason on the basis of which the decisions given above with regard to the American Constitution can be held to be inapplicable to similar cases arising under the Indian Constitution.
Two subsidiary reasons have been given for holding that the position under the Indian Constitution is different.
One is that ours is a nascent democracy and, therefore, the doctrine of waiver should not apply.
With respect, I am unable to concur in this view.
I do not think that we shall be advancing the cause of democracy by converting a fundamental right into a fetter or using it as a means for getting out of an (1) ; (2) (1917) 244.U.S.407.
(3) (1922) 259.U.S.125.
(4) (1904) 194.U.S.553.
(5) (1931) 284.U.S.141.
(6) (1930) 281.U.S.276.
(7) (1942) 317.U.S.269.
604 agreement freely entered into by the parties.
I appreciate that waiver is not to be light heartedly applied, and I agree that it must be applied with the fullest rigour of all necessary safeguards and cautions.
What I seriously object to is a statement in the abstract and "in absolute terms that in no circumstances can a right given by any of the provisions in Part III of the Constitution be waived.
Another point taken is that the provisions in Part III embody what are called natural rights ' and such rights have been retained by the people and can never be interfered with.
I am unable to acquiesce in this.
The expression natural rights ' is in itself somewhat vague.
Sometimes, rights have been divided into natural rights ' and civil rights ', and natural rights ' have been stated to be those which are necessarily inherent or innate and which come from the very elementary laws of nature whereas civil rights are those which arise from the needs of civil as distinguished from barbaric communities.
I am unable, however, to agree that any such distinction is apparent from the provisions in Part III of our Constitution: all the rights referred to therein appear to be created by the Constitution.
I do not think that Locke 's doctrine of natural rights ', which was perhaps the authority for the American Declaration of Independence, played any part in the enactment of the provisions of Part III of our Constitution.
The doctrine which has long since ceased to receive general acceptance, has been thus explained by E. W. Paterson (see Natural Law and Natural Rights, Southern Methodist University Press, Dallas, 1955, p. 61): " The theory of natural rights, for which we are indebted to the seventeenth century English philosopher, John Locke, is essentially different from the theories of natural law just discussed in that it lacked the two important characteristics above mentioned: the concept of an immutable physical order and the concept of divine reason. .
He begins with the purpose of justifying the existence of a government with coercive powers.
What inconveniences would arise if there were no government? Men would live in a " stage of nature '; to avoid confusion with the 605 political state I shall call this a condition of nature '.
In such a condition man would be free to work, to enjoy the fruits of his labour, and to barter with others; he would also be free to enforce the law of nature (whose precepts Locke did not define) against every other man.
Since Locke was an optimist about human nature he thought men would get along pretty well in this lawless condition.
Yet the condition of nature is for Locke a fiction like the assumption of a frictionless machine in mechanics.
The chief disadvantages that men in this condition would suffer were, he thought, the absence of an established law,, the absence of a known and impartial magistrate to settle disputes, the absence of a. power sufficient to execute and enforce the judgment of the magistrate.
Moved by these inconveniences, men would enter into a social compact with each other whereby each would transfer to a third person, the government, such rights over his person and property as the government must have in order to remove these inconveniences.
All other rights, privileges, and immunities he reserved, as a grantor of land conveys the fee simple to his son and reserves a life estate to himself.
These reserved rights were natural ' rights because they had originated in the condition of nature and survived the social compact.
" There are, in my opinion, clear indications in Part III of the Constitution itself that the doctrine of ' natural rights ' had played no part in the formulation of the provisions therein.
Take articles 33, 34 and 35 which give Parliament power to modify the rights conferred by Part III.
If they were natural rights, the Constitution could not have given power to Parliament to modify them.
Therefore, I am of the view that the doctrine of 'natural rights ' affords nothing but a foundation of shifting sand for building up a thesis that the doctrine of waiver does not apply to the rights guaranteed in Part III of our Constitution.
The true position as I conceive it is this: where a right or privilege guaranteed by the Constitution rests in the individual and is primarily intended for his benefit and does not impinge on the right of others, it 606 can be waived provided such waiver is not forbidden by law and does not contravene public.
policy or public morals.
In the case before us, I have held that there is no foundation on facts to sustain the plea of waiver.
Therefore, I would allow the appeal with costs.
The order of the Commissioner of Income tax, Delhi, dated January 29, 1958, must be set aside and all proceedings now pending for implementation of the order of the Union Government dated July 5, 1954, must be quashed.
SUBBA RAO, J.
I have had the advantage of perusing the judgments of my Lord the Chief Justice and my learned brother, section K. Das, J.
I agree with their conclusion, but I would prefer to express my opinion separately in regard to the question of the applicability of the doctrine of waiver to the fundamental rights.
This case raises a most serious and important question, viz., whether the doctrine of waiver operates on the fundamental rights enshrined in the Constitution, a question not confined to the immediate purpose of this litigation, but to the public in general.
The question is bound to arise frequently, and the varying observations already expressed by the learned Judges of this Court would lend scope for conflicting decisions involving parties in unnecessary litigation and avoidable hardship.
The question was directly raised and fully argued before us.
In the circumstances, I cannot share the opinion of my learned brother, section K. Das, J., that this Court should avoid a decision on this question and leave it to be decided in a more appropriate case.
The facts have been fully stated by my Lord the Chief Justice in his judgment and I need not restate them.
The learned Attorney General contended that in the American Law the principle of waiver was applied to rights created by the Constitution except in cases where the protection of the rights was based upon public policy and that, by the same analogy, if no public policy was involved, even in India, the person 607 affected by the infringement of the fundamental rights could waive the constitutional protection guaranteed to him.
It was said that in the present case the appellant waived his fundamental right under article 14 of the Constitution as the right was only in respect of his liability to tax and he could legitimately waive it.
To, appreciate this argument it would be convenient at the outset to notice the American Law on the subject.
Certain rights, which are sometimes described as the Bill of Rights, have been introduced by the Amendment; to the Constitution of America.
They declare the rights of the people of America in respect of the freedom of religion speech, press, assemblage and from illegal seizurs.
They guarantee trial by jury in certain criminal and civil matters.
They give protection against self incrimination.
The Fifth Amendment of the Constitution of the United States prescribes that no person shall be deprived of life.
, liberty or property without due process of law; nor shall private property be taken for public use without just compensation.
The Fourteenth Amendment of the Constitution introduces the rule of due process as a protection against the State action.
The said amendments are intended as a protection to citizens against the action of the Union and the States.
Though the rights so declared are general and wide in their terms, the Supreme Court of America, by a long course of judicial, interpretation, having regard to the social conditions ' in that country, has given content to those rights and imposed limitations thereon in an attempt to reconcile individual rights with social good, by evolving counterbalancing doctrines of police power, eminent domain,,.
and such others.
During the course of the evolution.
of the law, attempts were made to apply the doctrine of waiver to the provisions of the Constitution of America.
American Courts applied the doctrine with great caution and in applying the same, laid down definite principles.
The said principles were culled out from the various decisions and clearly summarized in the authoritative, text books on the Constitution of America under different heads: 608 WILLIS ON 'CONSTITUTIONAL LAW ': 1.
Self incrimination: The privilege against self incrimination ' like any other privilege, is one which may be waived.
Double jeopardy: Double jeopardy is a privilege and may be waived expressly or impliedly.
Immunity against unreasonable searches and seizures: The immunity is one which may be waived and by consent one can make a search and seizure reasonable.
Jury Trial: The United States Supreme Court. . held that neither a jurisdictional question nor the interest of the State was involved, but only the privilege and right of the accused, and that these were subject to waiver in accordance with the usual rules.
Due Process of Law as a matter of jurisdiction: In order to delimit personal liberty by exercising social control, the branch of the government undertaking to do so must have jurisdiction.
If it does not have jurisdiction, it is taking personal liberty (life, liberty or property) without due process of law.
To this rule there are no exceptions.
It cannot be waived. 'COOLEY 'S CONSTITUTIONAL LIMITATIONS ': Where a constitutional provision is designed for, the protection solely of the property rights of the.
citizen, it is competent for him to waive the protection, and to consent to such action as would be invalid if taken against his will.
In criminal cases the doctrine that a constitutional privilege may be waived must be true to a very limited extent only.
A party may consent to waive rights of.
property, but the trial and punishment for.
public offences are not within the provinces of individual con.
sent or agreement.
CORPUS JURIS SECUNDUM: It has been stated supra (p. 1050, note 32) that the doctrine of waiver extends to rights and privileges 609 of any character, and since the word ' waiver ' covers every conceivable right, it is the general rule that a person may waive any matter which affects his property, and any alienable right or privilege of which he is the owner or which belongs to him or to which he is legally entitled, whether secured by contract, conferred by statute, or guaranteed by constitution, provided such rights and privileges rest in the individual, are intended 'for his sole benefit, do not infringe on the rights of others, and further provided the waiver Of the right or privilege is not forbidden by law, and does not contravene public policy, and the principle is recognized that everyone has a right to waive, and agree to waive, the advantage of a law or rule made solely for the benefit and protection of the individual in his private capacity, if it can be dispensed with and relinquished without infringing on any public right and without detriment to the community at large. .
As a general rule, rights relating to procedure and remedy are subject to waiver, but if a right is so fundamental in its nature as to be regarded by the state as vitally integrated in immemorially established processes of the administration of justice, it cannot be waived by anyone.
The cases cited at the Bar illustrate the aforesaid principles.
The doctrine was applied to the obligations under a contract in Pierce vs Somerset Railway (1); to deprivation of property without due process of law in Pierce Oil Corporation vs Phoenix Refining Company(2) and Shepard vs Barron (3) to trial by jury in Patton vs United States (4) and Adams vs United States(5); and to self incrimination in United States vs Murdock (6).
It is true, as the learned counsel for the appellant contended, that in some of the aforesaid decisions, observations are in the nature of obiter, but they clearly indicate the trend of judicial opinion in America.
(1) (1898) 43 L. Ed 316; ; (2) ; ; (3) ; ; (4) ; ; (5) ; (6) ; ; 77 610 The American Law on the subject may be summarized thus: The doctrine of waiver can be invoked when the Constitutional or Statutory guarantee of a right is not conceived in public interest or when it does not affect the jurisdiction of the authority infringing the said right.
But if the privilege conferred or the right created by the statute is solely for the benefit of the individual, he can waive it.
But even in those cases the Courts invariably administered a caution that having regard to the nature of the right some precau tionary and stringent conditions should be applied before the doctrine is invoked or applied.
This leads me to the question whether the fundamental rights enshrined in the Indian Constitution pertain to that category of rights which could be waived.
To put it differently, whether the Constitutional guarantee in regard to the fundamental rights restricts or ousts the jurisdiction of the relevant authorities under the Constitution to make laws in derogation of the said rights or whether the said rights are for the benefit of the general public.
At the outset I would like to sound a note of warning.
While it is true that the judgments of the Supreme Court of the United States are of a great assistance to this Court in elucidating and solving the difficult problems that arise from time to time, it is equally necessary to keep in mind the fact that the decisions are given in the context of a different social, economic and political set up, and therefore great care should be bestowed in applying those decisions to cases arising in India with different social, economic and political conditions.
While the principles evolved by the Supreme Court of the United States of America may in certain circum stances be accepted, their application to similar facts in India may not always lead to the same results.
It is therefore necessary to consider the nature of the fundamental rights incorporated in the Indian Constitution, the conditions of the people for whose benefit and the purpose for which they were created, and the effect of the laws made in violation of those rights.
The Constitution of India in its preamble promises to secure to all citizens justice, social, economic and 611 political; liberty of thought, expression, belief, faith and worship; equality of status and of opportunity; and to promote among them all fraternity assuring the dignity of the individual and the unity of the nation.
One of the things the Constitution did to achieve the object is to incorporate the fundamental rights in the Constitution.
They are divided into seven categories: (i) right to equality articles
14 to 18; (ii) right to freedom articles
19 to 22; (iii) right against exploitation articles
23 and 24; (iv) right to freedom of religion articles 25 to 28 ; (v) cultural and educational rightsArts.
29 and 30; (vi) right to property articles
31, 31 A and 31B; and (vii) right to Constitutional remediesArts.
32 to 35.
Patanjali Sastri, J., as he then was, pointed out, in Gopalan vs The, State of Madras(1), that fundamental rights contained in Part III of the Constitution are really rights that are still reserved to the people after the delegation of rights by the people to the institutions of Government both at the Centre and in the States created by the Constitution.
Article 13 reads : (1) All laws in force in the territory of India immediately before the commencement of this Constitution, in so far as they are inconsistent with the pro.
visions of this Part, shall, to the extent of such inconsistency, be void.
(2) The State shall not make any law which takes away or, abridges the rights conferred by this Part and any law made in contravention of this clause, shall, to the extent of the contravention, be void.
" This Article, in clear and unambiguous terms, not only declares that all laws in fore before the commencement of the Constitution and made thereafter taking away or abridging the said rights would be void to the extent of the contravention but also prohibits the State from making any law taking away or abridging the said rights.
Part III is therefore enacted for the benefit of all the citizens of India, in an attempt to preserve to them their fundamental rights against infringement by the institutions created by the Constitution; for, without that safeguard, the objects (1) ; 612 adumbrated in the Constitution could not be achieve, ].
For the same purpose, the said chapter imposes a limitation on the power of the State to make laws in violation of those rights.
The entire part, in my view, has been introduced in public interest, and it is not proper that the fundamental rights created under the various Articles should be dissected to ascertain whether any or which part of them is conceived in public interest and which part of them is conceived for individual benefit.
Part III reflects the attempt of the Constitution makers to reconcile individual freedom with State Control.
While in America this process of reconciliation was allowed to be evolved by the course of judicial decisions, in India, the fundamental rights and their limitations are crystallized and embodied in the Constitution itself; while in America a freehand was given to the judiciary not only to evolve the content of the right but also its limitations, in the Indian Constitution there is not much scope for such a process.
The Court cannot therefore import any further limitations on the fundamental rights other than those contained in Part III by any doctrine, such as " waiver " or otherwise.
I would, therefore, hold that the fundamental rights incorporated in Part III of the Constitution cannot be waived.
It is said.
that such an inflexible rule would, in certain cases, defeat the very object for which the fundamental rights are created.
I have carefully scrutinized the Articles in Part III of the Constitution of India, and they do not, in my view, disclose any such anomaly or create unnecessary hardship to ' the people for whose benefit the rights are created.
Article, 14 embodies the famous principle of equality before the law and equal protection of the laws, and articles 15 to 18 and article 29(2) relate to particular applications of the rule.
The principle underlying these Articles is the mainspring of our democratic form of government and it guarantees to its citizens equal protection in respect of both substantive and procedural laws.
If the doctrine of waiver is engrafted to the said fundamental principles, it will mean that a citizen can agree to be discriminated. ' When one realizes the unequal 613 positions occupied by the State and the private citizen, particularly in India where illiteracy is rampant, it is easy to visualize that in a conflict between the State and a citizen, the latter may, by fear of force or hope of preferment, give up his right.
It is said that in such a case coercion or influence can be established in a Court of law, but in practice it will be well nigh impossible to do so.
The same reasoning will apply to articles 15 and 16.
article 17 illustrates the evil repercussion of the doctrine of waiver in its impact on the fundamental rights.
That Article in express terms forbids untouchability; obviously, a person cannot ask the State to treat him as an untouchable.
Article 19 reads: "(1) All citizens shall have the right (a) to freedom of speech and expression; (b) to assemble peaceably and without arms; (c) to form associations or unions; (d) to move freely throughout the territory of India ; (e)to reside and settle in any part of the territory of India; (f) to acquire, hold and dispose of property ; and (g) to practice any profession, or to carry on any occupation, trade or business.
" The right to freedom is the essential attribute of a citizen under democratic form of government.
The freedoms mentioned in article 19 are subject to certain restrictions mentioned in cls.
(2) to (6) of that Article.
So far as the freedoms narrated in sub cls.
(a) to (g) of Cl.
(1) of article 19 are concerned, I cannot visualise any contingency where a citizen would be in a worse position than he was if he could not exercise the right of waiver.
In regard to freedom to acquire, hold and dispose of property, a plausible argument may be advanced, namely, that a citizen should have a right to waive his right to acquire, hold and dispose of property ; for, otherwise he might be compelled to acquire and hold his property, even if he intended to give it up There is an underlying fallacy in this argument.
The Article does not compel a citizen to acquire, hold and 614 dispose of property just as it does not compel a per.
son to do any of the acts covered by the other freedoms.
If he does not want to reside in any part of the territory of India or to make a speech or to practise any profession, he is at liberty not to do any of ,,these things.
So too, a person may not acquire the property at all or practise any profession but if he seeks to acquire property or practise any profession, he cannot be told that he has waived his right at an earlier stage to acquire property or practise the profession.
A freedom to do a particular act involves the freedom not to do that act.
There is an essential distinction between the non exercise of a right and the exercise of a right subject to the doctrine of waiver.
So understood, even in the case of the right covered by sub cl.
(f) of cl.
(1), there cannot be any occasion when a citizen would be worse off than when he had no fundamental rights under the Article.
The preservation of the rights under article 19 without any further engrafting of any limitations than those already imposed under the Constitution, is certainly in the interest of the public ; for, the rights are essential for the development of human personality in its diverse aspects.
Some comment is made in regard to the right covered by el.
(3) of article 20, and it is asked that if a person has no liberty to waive the protection under that clause, he could not give evidence even if he wanted to give it in his own interest.
This argument ignores the content of the right under cl.
(3) of article 20.
The fundamental right of a person is only that he should not be compelled to be a witness against himself.
It would not prevent him from giving evidence voluntarily.
Under article 21, no person shall be deprived of his life or personal liberty except according to procedure established by law and article 22 gives protection against arrest and detention in certain cases.
I do not think that any situation can be conceived when a person could waive this right to his advantage.
Article 23(1) prohibits traffic in human beings and forced labour.
It is not suggested that a person can waive this Constitutional protection.
So too, the right under article 24, which prohibits employment 615 of children in factories, cannot be waived.
That apart, so far as this Article is concerned, no question of waiver can arise as a child cannot obviously waive his right under this Article.
Article 25 gives guarantee for religious liberty subject to certain restrictions contained therein.
It declares that all persons are equally entitled to freedom of conscience and the right freely to profess, practise and propagate religion.
This right is certainly conceived in the public interest and cannot be waived.
So too, freedom to manage religious affairs, freedom as to payment Of taxes for promotion of any particular religion and freedom as to attendance at religious instruction or religious worship in certain educational institutions are all conceived to enforce the religious neutrality of the State and it cannot be suggested that they are not in public interest.
The cultural and educational rights of the minorities and their right to establish and administer educational institutions of their choice are given for the protection of the rights of the minorities and it cannot be said that they are not in public interest.
Article 31, which prohibits the State from depriving a person of his property save by authority of law or to acquire any property without paying compensation, is intended to protect the properties of persons from arbitrary actions of the State.
This Article is conceived in the interest of the public and a person cannot say that he can be deprived of his property without authority of law or that his land can be acquired without compensation.
It is suggested that if a person, after waiving his fundamental right to property and allowing the State to incur heavy expenditure in improving the same, turns round and claims to recover the said property, the State would be put to irreparable injury.
Firstly, no such occasion should arise, as the State is not expected to take its citizens ' property or deprive them of their property otherwise than by authority of law.
Secondly, if the owner of a property intends to give it to the State, the State can always insist upon conveying to it the said property in the manner known to law.
Thirdly, other remedies may be open to the 616 recover compensation or damages for the improvements bonafide made or the loss incurred, having regard to the circumstances of a particular case.
These considerations, in my view, are of no relevance in considering the question of waiver in the context of fundamental rights.
By express provisions of the Constitution, the State is prohibited from making any law which takes away or abridges the rights conferred by Part III of the Constitution.
The State is not, therefore, expected to enforce any right contrary to the Constitutional prohibition on the ground that the party waived his fundamental right.
If this prohibition is borne in mind, no occasion can arise when the ' State would be prejudiced.
The prejudice, if any, to the State would be caused not by the non application of the doctrine of waiver but by its own action contrary to the Constitutional prohibition imposed on it.
It is then said that if the doctrine of waiver is to be excluded, a person can apply to the Supreme Court under article 32 of the Constitution for the relief provided therein, withdraw the petition, get the order of the Supreme Court dismissing it and then apply over again for issue of a writ in respect of the same right.
The apprehension so expressed is more imaginary than real; for, it has no foundation either in fact or in law.
When an application is dismissed, for whatever reason it may be whether on merits or on admission , the order of the Court becomes final and it can be reopened only in the manner prescribed by law.
There is no scope for the application of the doctrine of waiver in such a cage.
Articles 33 and 34 contain some of the Constitutional limitations on the application and the enforcement of the fundamental rights.
The former.
Article confers power on Parliament to modify the rights conferred by Part III of the Constitution in their application to facts and the latter enables it to impose restrictions on the rights conferred by ' that Part, while martial law is in force in any area.
These two Articles, therefore, do not create fundamental rights, but impose limitations thereon and I 617 cannot appreciate the argument that their presence in Part III either derogates from the content of the fundamental rights declared therein or sustains the doctrine of waiver in its application to the said rights.
Article 35 confers on the Parliament, the power to legislate for giving effect to the provisions of Part III to the exclusion of the Legislatures of the, States.
This Article also does not create a fundamental right, but provides a machinery for enforcing that right.
A startling result, it is suggested, would flow from the rejection of the doctrine of waiver and the suggestion is sought to be illustrated by the following example : A person takes a permit for several years from the State for running a motor vehicle or an excise shop.
Having enjoyed the benefit for several years and when action is proposed to be taken against him to terminate the licence, he contends that the law under which the permit was granted to him offended his fundamental rights and therefore constitutionally not valid.
It is asked whether it would be open to him to say that the very Act under which the permit was granted to him was not valid in law.
To my mind, this illustration does not give rise to any anomaly.
Either a person can run a motor vehicle or an excise shop with licence or without licence.
On the basis the law is valid, a licence is taken and the motor vehicle is run under that licence and if that law offends his fundamental right and therefore void, he continues to ran the business without licence, as no licence is required under a valid law.
The aforesaid illustration does not, there.
fore, give rise to any anomaly and even if it does, it does not affect the legal position.
I have considered the various provisions relating to the fundamental rights with a view to discover if there is any justification for the comment that without the aid of the doctrine of waiver a citizen, in certain circumstances, would be in a worse position than that he would be if he exercised his right.
I have shown that there is none.
Nor is there any basis for the suggestion that the State would irreparably suffer under certain contingencies; for, any resulting hardship would be its 78 618 own making and could be avoided if it acted in accordance with law.
A large majority of our people are economically poor, educationally backward and politically not yet conscious of their rights.
Individually or even collectively, they cannot be pitted against the State organizations and institutions, nor can they meet them on equal terms.
In such circumstances, it is the duty of this Court to protect their rights against themselves.
I have, therefore, no hesitation in holding that the fundamental rights created by the Constitution are transcendental in nature, conceived and enacted in national and public interest, and therefore cannot be waived.
That apart, I would go further and hold that as section 5(1) of the Act XXX of 1947 was declared to be void by this Court in M. Ct.
Muthiah vs The Commissioner of Income tax, Madras (1), the appellant can.
not, by the application of the doctrine of waiver, validate the enquiry made under the said Act.
It is suggested that there is a distinction between a case where the enactment is beyond the legislative competence Of the Legislature which made it and the case where the law is unconstitutional on the ground of existence of a constitutional limitation, that while in the former case the law is null and void, in the latter case the law is unenforceable and may be revived by the removal of the limitation by an amendment of the Constitution.
On this distinction an argument is sought to be built to the effect that as in the present case section 5(1) of the Act XXX of 1947 was declared to be invalid only on the ground that it was hit by article 14 of the Constitution, the law must be deemed to be on the statute book and therefore the appellant was within his right to waive his constitutional guarantee.
I am unable to appreciate this, argument.
The scope of article 13(1) of the Constitution was considered by this Court in Keshavan Madhava Menon vs The state of Bombay (2).
This Court by a majority held that article 13(1) of the Constitution does not make (1) ; (2) ; 619 existing laws which are inconsistent with the fundamental rights, void ab initio, but only renders such laws unenforceable and void with respect to the exercise of the fundamental rights on and after the date of commencement of the Constitution.
Mahajan, C. J., who was a party to that decision, explained the word ,void ' in article 13(1) of the Constitution in Behram Khurshed Pesikaka vs State of Bombay (1).
He observed at page 652 thus: " It is axiomatic that when the law making power of a State is restricted by written fundamental law, then any law enacted and opposed to the fundamental law is in excess of the legislative authority and is thus a nullity.
Both these declarations of unconstitutionality go to the root of the power itself and there is no real distinction between them.
They represent but two aspects of want of legislative power.
The legislative power of Parliament and the State Legislatures as conferred by articles 245 and 246 of the Constitution stands curtailed by the fundamental rights Chapter of the Constitution.
" This decision in clear and unambiguous terms lays down that there cannot be any distinction on principle between Constitutional incompetency and Constitutional limitation.
In either case, the Act is void, though in the latter case, the pre constitutional rights and liabilities arising under the statute are saved.
This Court again dealt with the meaning of the word void ' in Bhikaji Narain Dhakras vs State of Madhya Pradesh (2).
There the question was whether an Act 'Which was declared void on the ground of inconsist ency with the Constitution, can be revived by any subsequent amendment to the Constitution removing the inconsistency.
This Court answered the question in the affirmative.
Das, acting C.; J., observed at page 598 thus: " As explained in Keshavan Madhava Menon 's case, the law became void not in toto or for all purposes or for all times or for all persons but only to the extent of such inconsistency that is to,say, to the extent, it became inconsistent with the provisions of Part (1) (2) ; 620 III which conferred the fundamental rights on the citizens.
It did not become void independently of the existence of the rights guaranteed by Part III.
In Short, Article 13(1) had the effect of nullifying or rendering the existing law which had become inconsistent with article 19(1)(g) read with clause (6) as it then stood ineffectual, nugatory and devoid of any legal force or binding effect only with the exercise of the fundamental right on and after the date of the commencement of the Constitution. . . .
It is only as against the citizens that they remained in a dormant or moribund condition.
In our judgment, after the amendment of clause (6) of article 19 on the 18th June, 1951, the impugned Act ceased to be unconstitutional and became revivified and enforceable against citizens as well as against non citizens.
" This judgment does not say anything different from that expressed in Keshavan Madhava Menon 's case (1) nor does it dissent from the view expressed by Mahajan, C. J., in Behram Khurshed 's case (2).
The problem that confronted the learned Judges was a different one and they resolved it by applying the doctrine of "eclipse '.
The legal position, vis a vis, the law declared to be void either on the ground of legislative incompetence or for the reason of constitu tional limitation, as stated in the earlier decisions, remains unshaken by this decision.
So long as the inconsistency remains the law continues to be void, at any rate vis a vis the fundamental rights of a person.
We are not concerned in this case with the doctrine of revival; for the inconsistency of section 5(1) of the Act with the fundamental right under article 14 of the Constitution has not been removed by any amendment of the Constitution.
So long as it is not done, the said section is void and cannot affect the fundamental rights of the citizens.
In M. Ct.
Muthiah vs The Commissioner of Income tax, Madras (3), it was declared that section 5(1) of Act XXX of 1947 was unconstitutional on the ground that it infringed the fundamental rights of the citizens under article 14 of the Constitution.
(1) ; (2) (3) ; 621 Under article 141 of the Constitution, the law declared by the Supreme Court is binding on all the Courts in India.
It follows that the Income tax Commissioner had no jurisdiction to continue the proceedings against the appellant under Act XXX of 1947.
If the Commissioner had no jurisdiction, the appellant could not by waiving his right confer jurisdiction on him.
The scope of the doctrine of waiver was considered by this Court in Behram Khurshed 's case(1).
There a person was prosecuted for an offence under section 66(b) of the Bombay Prohibition Act and he was sentenced to one month 's rigorous imprisonment.
One of the questions raised there was whether section 13(b) of the Bombay Prohibition Act, having been declared to be void under article 13(1) of the Constitution in so far as it affected the consumption or use of liquid medicinal or toilet preparation containing alcohol, the prosecution was maintainable for infringement of that section.
The Court held that in India once the law has been struck down as unconstitutional by the Supreme Court, no notice can be taken of it by any Court, because, after it is declared as unconstitutional, it is no longer law and is null and void.
Even so, it was contended that the accused had waived his fundamental right and therefore he could not sustain his defence.
Mahajan, C. J., delivering the judgment of the majority, repelled this contention with the following observations at page 653: " The learned Attorney General when questioned about the doctrine did not seem to be very enthusiastic about it.
Without finally expressing an opinion on this question we are not for the moment convinced that this theory has any relevancy in construing the fundamental rights conferred by Part III of our Constitution.
We think that the rights described as fundamental rights are a necessary consequence of the declaration in the preamble that the people of India have solemnly resolved to constitute India into a sovereign democratic republic and to secure to all its citizens justice, social, economic and political ; liberty ,of thought, expression, belief, faith and worship; (1) 622 equality of status and of opportunity.
These fundamental rights have not been put in the Constitution merely for the individual benefit though ultimately they come into operation in considering individual rights.
They have been put there as a matter of public policy and the doctrine of waiver can have no application to provisions of law which have been enacted as a matter of Constitutional policy.
Reference to some of the articles, inter alia, Articles 15(1) 20, 21, makes the proposition quite plain.
A citizen cannot get discrimination by telling the State 'You can discriminate ', or get convicted by waiving the protection given under Articles 20 and 21.
" On the question of waiver, Venkatarama Aiyar, J., in his judgment before review, considered the American decisions and was inclined to take the view that under our Constitution when a law contravenes the provisions intended for the benefit of the individual, it can be waived.
But the learned Judge made it clear in his judgment that the question of waiver had no bearing to any issue of fact arising for determination in that case but only for showing the nature of the right declared under article 19(1)(f) and the effect in law of a statute contravening it.
Das, J., as he then was, in his dissenting judgment, did not state his view on this question but expressly reserved it in the following words: " In coming to the conclusion that I have, I have in a large measure found myself in agreement with the views of Venkatarama Aiyar, J., on that part of the case.
I, however, desire to guard myself against being understood to agree with the rest of the observations to be found in his judgment, particularly those relating to waiver of 'unconstitutionality, the fundamental rights being a mere check on the legislative power or the effect of the declaration under article 13(1) being relatively void '.
On those topics prefer to express no opinion on this occasion.
" I respectfully agree with the observations of Mahajan, C. J.
For the aforesaid reasons, hold that the doctrine of waiver has no application in the case of fundamental rights under our Constitution.
623 ORDER The appeal is allowed.
The order of the Income Tax Commissioner, Delhi, dated January 29, 1958, is set aside and all proceedings now pending for implementation of the order of Union Government dated July 5, 1954, are quashed.
The appellant shall get costs of this appeal.
| The two questions for determination in this appeal were, (1) whether a settlement under section 8A of the Taxation of Income (Investigation Commission) Act, 1947 (30 Of 1947) made after the commencement of the Constitution was constitutionally valid and (2) whether the waiver of a fundamental right was permissible under the Constitution.
The appellant 's case was on July 22, 1948, referred by the Central Government under section 5(1) of the Act to the Investigation Commission.
for investigation and report.
The Commission directed the authorised official under section 6 of the Act to examine the appellant 's accounts.
He submitted his final report by the end of 1953.
The Commission considered the report heard the assessee and came to the conclusion that Rs. 4,47,915 had escaped assessment.
Thereupon the appellant on May 20, 1954, applied to the Commission for a settlement of his case under section 8A of the Act, agreeing to pay Rs. 3,50,000 by way of tax and penalty at the concessional rate.
The Commission reported to the Central Government approving of the settlement, the Central Government accepted it and it was recorded by the Commission.
The Central Government directed the recovery of the said amount under section 8A(2) of the Act.
The appellant was permitted to make payments by monthly instalments of Rs. 5,000 and the total amount thus paid up to September 8, 1957, aggregated to Rs. 1,28,000.
In the meantime the Income Tax Officer issued a certificate and certain properties of the appellant were attached.
Relying on the decisions of this Court in Suraj Mall Mohta and Co. vs A. V. Visvanatha Sastri, ; and M. Ct.
Muthiah vs The Commissioner of Income tax, Madras, ; , the appellant applied to the Commissioner of Income tax challenging the validity of the settlement made under section 8A of the Act on the ground that section 5(1) Of the Act on which it was founded had been declared void by this Court, and claimed that his properties might be released from attachment and the amount paid under the settlement might be refunded to him.
, On January 29, 1958, the Commissioner of Income Tax sent a reply to the appellant maintaining that the settlement was valid and 529 that the appellant was bound thereunder to pay up the arrears of instalments and requesting him to continue to pay in future.
Against this decision of the Commissioner of Income Tax the.
appellant came up to the Supreme Court by special leave.
It was contended on behalf of the respondent that the Act laid down two distinct and separate procedures, one for investigation and the other for settlement and it was the former alone and not the D, latter that was affected by the decisions of this Court.
and that the appellant by voluntarily entering into the settlement had waived his fundamental right founded on article 14 of the Constitution.
Held (Per Curiam), that both the contentions must fail.
It was not correct to say that the Taxation of Income (In vestigation Commission) Act, 1947, laid down two different procedures, one for investigation and assessment under section 8(2) of the Act and another for settlement under section 8A of the Act and assessment in terms of such settlement and that while the decision of this Court in M. Ct.
Muthiah vs The Commissioner of Incometax, Madras, declaring section 5(1) of the Act to be discriminatory and therefore void, affected only the former procedure and not the latter.
The Act laid down but one procedure and in entertaining a proposal for settlement as in the investigation itself the Commission exercised the same jurisdiction, and powers and followed the one and the same procedure as laid down by sections 5, 6 and 7 Of the Act.
Since the settlement in the instant case was no exception to that rule, it was covered by the decision and must be held to be violative of article 14 Of the Constitution.
M. Ct.
Muthiah vs The Commissioner of Income tax, Madras, ; , applied.
The observations made in the majority judgment of this Court in Syed Qasim Razvi vs The State of Hyderabad, [1953] S.C.R. 589, must be kept strictly confined to the special facts of that case and had no application to the facts of the present case.
Syed Qasim Razvi vs The State of Hyderabad, [1953] S.C.R. 589, held inapplicable.
Per Das, C. J., and Kapur J.
There could be no waiver of the fundamental right founded on article 14 Of the Constitution and it was not correct to contend that the appellant had by entering into the settlement under section 8A of the Act, waived his fundamental right under that Article.
Article 14 was founded on a sound public policy recognised and valued all over the civilised world, its language was the language of command and it imposed an obligation on the State of which no person could, by his act or conduct, relieve it.
As it was not strictly necessary for the disposal of this case, the question whether any other fundamental right could be waived need not be considered in this connection.
Laxamanappa Hanumantappa jamkhandi vs The Union of India; , ; Dewan Bahadur Seth Gopal Das Moht 67 530 vs The Union of India, [1955] 1 S.C.R.773; Baburao Narayanrao Sanas vs The Union Of India, [1954] 26 I.T.R. 725; Subedar vs State, A.I.R. 1957 All.
396 and Pakhar Singh vs The State, A.I.R. 1958 Punj.
294, distinguished and held inapplicable.
Per Bhagwati and gubba Rao, jj.
There could be no waiver '.,not only of the fundamental right enshrined in article 14 but also of any other fundamental right guaranteed by Part III of the Constitution.
The Constitution made no distinction between fundamental rights enacted for the benefit of the individual and those enacted in the public interest or on grounds of the public policy.
There could, therefore, be no justification for importing American notions or authority of decided cases to whittle down the transcendental character of those rights, conceived in public interest and subject only to such limitations as the Constitution had itself thought fit to impose.
Article 13(2) was in terms a constitutional mandate to the State in respect of all the fundamental rights enacted in Part III of the Constitution and no citizen could by waiver of any one of them relieve the State of the solemn obligation that lay on it.
The view expressed by Mahajan, C. J., in Behram Khurshed Pesikaka vs The State of Bombay, , correctly laid down the law on the point.
Since the arguments in the instant case had covered the entire field of fundamental rights, there was no reason why the answer should be confined to article 14 alone.
Behram Khurshed Pesikaka vs The State of Bombay, ; State of Travancore Cochin vs The Bombay Co., Ltd., and The State of Bombay vs R. M. D. Chamarbaugwala; , , referred to.
Per section K. Das, J. It seems clear that article 13 itself re cognises the distinction between absence of legislative power which will make the law made by an incompetent legislature wholly void, and exercise of legislative power in contravention of a restriction or check on such power, which will make the law void to the extent of the inconsistency or contravention; therefore the mere use of the word " void " in article 13 does not necessarily militate against the application of the doctrine of waiver in respect of the provisions contained in Part III of the Constitution.
Behram Khurshed Pesikaka vs The State of Bombay, , considered.
Bhikaji Narain Dhakyas vs The State of Madhya Pradesh, ; ; M. Ct.
Muthiah vs The Commissioner of Income tax, Madras, ; and The State of Bombay vs R.M.D. Chamarbaugwala, ; , referred to.
There was nothing in the two preambles to the Indian and the American Constitutions that could make the doctrine of waiver applicable to the one and not to the other; since the doctrine 531 applied to the constitutional rights under the American Constitution, there is no reason why it should not apply to the fundamental rights under the Indian Constitution.
Case law considered.
But it must be made clear that there is no absolute rule, or one formulated in the abstract, as to the applicability of that doctrine to fundamental rights and such applicability must depend on (1) the nature of fundamental right to which it is sought to be applied and (2) the foundation on the basis of which the plea is raised.
The true test must be whether the fundamental right is one primarily meant for the benefit of individuals or for the benefit of the general public.
Where, therefore, the Constitution vested the right in the individual, primarily intending to benefit him and such right did not impinge on the rights of others, there could be a waiver of such right provided it was not forbidden by law or did not contravene public policy or public morals.
As in the instant case the respondents who had raised the plea, had failed to prove the necessary facts on which it could be sustained, the plea of waiver must fail.
Per Subba Rao, J. Apart from the question as to whether there could be a waiver in respect of a fundamental right, section 5(1) of the Taxation of Income (Investigation Commission) Act, 1947, having been declared void by this Court in M. Ct.
Muthiah vs The Commissioner of Income tax, Madras, as being violative of the fundamental right founded on Art ' 14 Of the Constitution and such decision being binding on all courts in India, the Commissioner of Income tax had no jurisdiction to continue the proceedings against the appellant under that Act and the appellant could not by a waiver of his right confer jurisdiction on him.
No distinction could be made under article 13(1) of the Con stitution between the constitutional incompetency of a legislature and constitutional limitation placed on its power of legislation, for a statute declared void on either ground would continue to be so, so long as the inconsistency continued.
As the inconsistency of section 5(1) of the Act with article 14 continued, it must continue to be void.
Keshavan Madhava Menon vs The State of Bombay, [1951] S.C.R. 228; Behram Khurshed Pesihaka vs State of Bombay, and Bhikaji Narain Dhakras vs State of Madhya Pradesh, ; , referred to.
|
Summarize this legal judgement text concisely | Appeal No. 153 of 1955.
Appeal by Special Leave from the judgment and decree dated August 30, 1954, of the Allahabad High Court in Civil Revision Application No. 540 of 1951, arising out of the judgment and decree dated March 31, 1951, of the Court of the Additional Civil Judge, Mathura, in Suit No. 19 of 1950.
G. C. Mathur, for the appellants.
C. B. Aggarwala and Ganpat Rai, for the respondent.
December 5.
The Judgment of the Court was delivered by KAPUR, J.
This is an appeal by special leave against the decision of the High Court of Judicature at Allahabad passed in revision under section 115 of the Code of Civil Procedure.
The landlord who was the plaintiff in the trial court is the appellant before us and the tenant who was the defendant is the respondent.
The facts of this appeal are that in 1938 the respondent took on rent the accommodation in dispute which is termed a ' tal ' on a monthly agreed rent of Rs. 21 4 as.
and was using the same for the purpose of stacking timber.
A portion of it was a covered godown which had three walls and a kucha roof.
On January 28, 1950, the appellant made an application to the House Allotment Officer under section 3 A of the United Provinces (Temporary) Control of Rent and Eviction Act, 1947 (U. P. III of 1947) (hereinafter termed the Act) for the fixation of " reasonable annual rent " of the accommodation in dispute.
He therein alleged that in January 1949 he had " constructed anew " a big godown 80 x 25 x 11 feet according to the instructions of the respondent and expended a fairly large sum of money on it and was therefore entitled to a monthly rent of Rs. 165.
The House Allotment Officer fixed on February 18, 1950, the rent at Rs. 35 736 per mensem which on review was raised on May 25, 1950, to Rs. 40 per mensem.
He held that the accommodation was not a newly constructed accommodation as the respondent had been a tenant from 1938.
He determined the increase of rent on the basis of the building that was added by the new construction.
He also held that: " The cost of land, the floor area of godown and rent of other similar premises would be irrelevant as all of these existed before new construction and were included in rent before new construction ".
The appellant thereupon instituted a suit on the ground of inadequacy of the reasonable annual rent under section 5(4) of the Act alleging that he had constructed the portion of the accommodation " anew " and put up ferro concrete roof 80 x 25 feet and that the construction was undertaken at the request of the respondent who had agreed to pay enhanced rent but had refused to do so; that although the House Allotment officer, Mathura, had fixed the rent of the accommodation at Rs. 35 which wag subsequently raised to Rs. 40 per mensem, the proper rent should not be less than Rs. 115 per mensem and therefore prayed for the enhancement of " reasonable annual rent ".
The defence was that there was no construction at the request of the respondent but it had been undertaken in order to put up another storey on the top of the old building; that as far as the accommodation in possession of the respondent was concerned there was no new construction of accommodation after June 30, 1946; that the ferro concrete roof had in no way benefited him, on the other hand the space at his disposal had diminished because of the number of pillars constructed and the lowering of the roof.
He also pleaded that the suit was not maintainable under the Act and that no suit could be filed " after the order of the House Allotment Officer ".
The relevant issues raised were : (1)" Whether the suit is not maintainable in view of any provisions of the Act No. 3 of 1947 ? (2)Whether the suit after the fixation of rent by the House Allotment Officer is not maintainable ? 737 (5) What should be the reasonable and proper rent of the accommodation in suit ? " The learned Additional Civil Judge found that the suit was not barred because of the Act; that the suit against the order of the House Allotment Officer was maintainable; that newly constructed accommodation on the whole was bigger and more spacious than the old kacha hall and that the accommodation had increased and after taking into consideration the amount spent on the construction be increased the " reasonable adequate rent " to Rs. 55 8 0.
Against this decree of the learned Judge the respondent took a revision to the High Court under section 115 of the Code of Civil Procedure.
The High Court was of the opinion that if the accommodation was a new construction erected after June 30, 1946, the suit was maintainable and the High Court could not interfere with the finding of the Civil Judge as to the amount of rent.
If on the other hand, the construction was an old one, the suit did not lie and the agreed rent would continue to be payable.
It also held that the construction on the upper storey was a new construction but as far as the accommodation in the occupation of the respondent was concerned the construction could not be called new construction and therefore B. 3 A was not applicable and as no suit lay at the instance of the landlord to have the agreed rent enhanced, the tenant was only liable to pay the agreed rent and no more.
The revision petition was therefore allowed and the suit of the appellant was dismissed.
The main controversy raised between the parties was whether the High Court could, in revision under section 115 of the Code of Civil Procedure, interfere with this decision of the trial court.
The respective contentions were these: The appellant contended that it was within the jurisdiction of the Additional Civil Judge to decide the question of the date of construction of the accommodation and in doing so he could decide rightly or wrongly as the matter was within his 93 738 jurisdiction and therefore the High Court had no power to interfere merely because in its opinion the decision was erroneous.
In other words, this question was merely one of the facts in issue between the parties unconnected with jurisdiction.
He also contended that the House Allotment Officer having decided in his favour the question of the date of construction which section 3 A of the Act authorises him to decide, his right to bring the suit was established and therefore the High Court could not in revision under section 115, Code of Civil Procedure, go into the correctness of that decision.
The respondent 's counsel on the other hand submitted that the decision of the court as to the date of construction was in this case a jurisdictional fact i.e. a fact which went to the root of the jurisdiction of the court because unless the accommodation was held to have been a new construction made after June 30, 1946, the appellant would be bound by the agreed rent and would have no right of suit under section 5(4) and the court would have no jurisdiction to entertain the suit.
In order to decide the question at issue, it is necessary at this stage to refer to the scheme of the Act.
The object of the Act was to control letting and the rents of residential and nonresidential accommodations.
"Accommodation" was defined in section 2(a) as follows: 2.(a) "accommodation means residential and non residential accommodation in any building or part of the building and includes. . . . " Reasonable annnal rent " is defined in section 2(f): 2.(f) " Reasonable annual rent in the case of accommodation constructed before July 1, 1946, means (1)if it is separately assessed to municipal assessment, its municipal assessment plus 25 per cent thereon ; (2)if it is a part only of the accommodation so assessed, the proportionate amount of the municipal assessment of such accommodation plus 25 per cent.
thereon ; (3) if it is not assessed to municipal assessment 739 (i)but was held by a tenant on rent between April 1, 1942, and June 30, 1946, fifteen times the rent for the one month nearest to and after April 1, 1942, and (ii)if it was not so held on rent, the amount determined under section 3 A and in the case of accommodation constructed on or after July 1, 1946, means the rent determined in accordance with section 3 A ".
As to how reasonable annual rent of a building was to be determined was provided for in section 3 A: S.3 A " (1) In the case of any accommodation constructed after June 30, 1946, or falling under subclause (ii) of clause (3) of sub _ section (f) of section 2, the District Magistrate may, on the application of the land lord or the tenant, determine the reasonable annual rent thereof.
(2)In determining the reasonable annual rent under sub section (1) the District Magistrate shall take into account (a)if the accommodation was constructed after June 30, 1946, the cost of construction and of maintenance and repairs of the accommodation, its situation and any other matter, which in the opinion of the District Magistrate, is material and (b) if it is accommodation (i) falling under clause (2) or sub clause (1) of clause (3) of sub section (f) of section 2, the principles therein ,set forth, and (ii)falling under sub clause(1) of clause (3) of subsection (f) aforesaid, the principles set forth in clause (a) of sub section (1) of section 6.
(3)Subject to the result of any suit filed under sub section (4) of section 5, the rent fixed by the District Magistrate under this section shall be the annual reasonable rent of the accommodation." " Agreed rent " was defined in section 5(1) of the Act to be. . . . the rent payable for any ac commodation to which this Act applies shall be such as may be agreed upon between the landlord and the tenant.
" Section 5(4) of the Act provided: 740 " If the landlord or the tenant, as the case may be, claims that the annual reasonable rent of any accommodation to which the Act applies is inadequate or excessive, or if the tenant claims that the agreed rent is higher than the annual reasonable rent, he may institute a suit for fixation of rent in the Court of the Munsif having territorial jurisdiction, if the annual rent claimed or payable is Rs. 500 or less, and in the Court of the Civil Judge having territorial jurisdiction if it exceeds Rs. 500, provided that the Court shall not vary the agreed rent unless it is satisfied that the transaction was unfair, and in the case of lease for a fixed term made before April 1, 1942, that the term has expired ".
Section 6 provided for the procedure as follows (1) " In determining the amount of annual or monthly rent in any suit under section 5 the court shall take into account (a)in the case of accommodation constructed before July 1, 1946, the pre war rent, the reasonable annual or monthly rent, the prevailing rent on the date of the suit for similar accommodation in the locality, the cost of maintenance and repairs of such accommodation and any material circumstances proved by the plaintiff or the defendant, (b)in the case of accommodation constructed on or after July 1, 1946, the cost of construction and of maintenance and repairs of accommodation, its situation and any other circumstance which the court may consider material.
(2)No appeal shall lie from any decree or order of the Munsiff or the Civil Judge in a suit brought under sub section (4) of section 5: Provided that (except as regards the rate of rent but no further) the decree or order so passed shall not operate as res judicata between the parties or their representatives in interest in any suit or proceedings under any other law It is not necessary to refer to other sections of the Act.
The Act therefore in the preamble sets out the objects of the Act.
In section 2(a) it defined the meaning of 741 the word accommodation ' to mean residential and non residential accommodation in any building or part of the building and in section 2(f) it laid down in three parts what the reasonable annual rent was, one part dealing with accommodation constructed before July 1, 1946, and assessed to municipal assessment, the second part with accommodation so constructed and not assessed to municipal assessment but held by a tenant between April 1, 1942, and June 30, 1946, and the third part with accommodation constructed on or after July 1, 1946, and these last two were to be determined in accordance with the provisions of section 3 A which empowered the District Magistrate to do so.
Sub section (1) of this section gave power to the District Magistrate to determine the reasonable annual rent in the case of accommodation constructed after June 30, 1946, or falling under cl.
(ii) of sub section
3 of section 2 (f) i.e. if it was not assessed to municipal assessment though constructed before July 1, 1946, and was not held by a tenant between April 1, 1942, and June 30,1946.
Subsection 2 of section 3 A laid down the factors to be taken into consideration in determining the reasonable annual rent and under sub section 3 the rent so fixed was to be the annual reasonable rent of the accommodation but this was subject to the result of a suit filed under section 5(4).
Therefore under section 3 A the District Magistrate was entitled to determine the amount of reasonable annual rent when either of the two facts on which his power depended was shown to exist i.e. (1) the accommodation was constructed after June 30, 1946, or (2) although it existed previously it was not assessed to municipal assessment and had not been held by a tenant on rent between April 1, 1942, and June 30, 1946.
The District Magistrate 's power to determine the rent under section 3 A therefore was not confined to accommodation constructed after June 30,1946, alone.
The rent determined by the District Magistrate under section 3 A was the reasonable annual rent under the Act subject to the result of any suit filed under sub section
(4) of section 5.
A wrong decision by the District Magistrate under section 3 A or an order made by him in excess of his 742 powers under that section could be rectified by a suit under section 5(4).
This provision of the Act i.e. section 5(4) provided for three classes of suits, one by a landlord that the reasonable annual rent was inadequate and (2) by the tenant that the annual rent was excessive and (3) also by the tenant that the agreed rent was higher than the reasonable annual rent.
Hence under this section the appellant landlord 's right of suit was restricted to challenging the inadequacy of the reasonable annual rent but he could not sue for varying the agreed rent.
The appellant in the present case brought his suit on the around of inadequacy of the reasonable rent as determined under section 3 A and consequently its maintainability depended on the determination of the jurisdictional fact i. e. date of its construction, whether it was before or after June 30, 1946, on the decision of which would depend his right to bring the suit; because if there was no new construction, the agreed rent would be operative and the appellant would have no right of suit under section 5(4) of the Act.
Consequently, by wrongly deciding this question the court would be entertaining a suit by the landlord for enhancement of the agreed rent and thereby assuming jurisdiction it did not possess and the landlord would be circumventing the restriction on his right to sue for enhancement of agreed rent which the law did not allow.
As the issues raised show the learned Additional Civil Judge was alive to the fact that the maintainability of the suit depended on the determination of this question.
The appellant had specifically alleged that the accommodation had been constructed after June 30, 1946, a fact which was denied by the respondent.
That gave rise to the first two issues and the learned Civil Judge held: " I am therefore of the opinion that portion of the building in suit which has been newly replaced must be treated as a new accommodation, and hence this Court can determine its rent under the provisions of section 5(4).
In view of the fact that it is a new 743 accommodation no question of agreed rent arises and the landlord can bring a suit for fixation of rent ".
Two facts therefore stand out clearly in the judgment of the trial court (1) that it was the existence of a newly constructed accommodation which gave jurisdiction to the court to determine its reasonable annual rent and (2) that as it was a newly constructed accommodation, the question of agreed rent did not arise.
The High Court, in our view, approached the question quite correctly when it stated that the question for determination was whether the accommodation had been constructed before or after June 30, 1946, and that if it was constructed before that date the suit was incompetent and if after, the suit would lie.
The contention raised by the appellant in this Court was that the decision of the trial Court as to whether the accommodation was constructed before or after July 1, 1946, cannot be challenged in revision in the High Court and he relied on the following observation of Lord Esher, M. R., in the Queen vs Commissioner for Special Purposes of the Income Tax (1): " When an inferior court or tribunal or body, which has to exercise the power of deciding facts, is first established by Act of Parliament, the legislature has to consider, what powers it will give that tribunal or body.
It may in effect say that, if a certain state of facts exists and is shown to such tribunal or body before it proceeds to do certain things, it shall have jurisdiction to do such things, but not otherwise.
There it is not for them conclusively to decide whether that state of facts exists, and, if they exercise the jurisdiction without its existence, what they do may be questioned, and it will be held that they have acted without jurisdiction.
But there is another state of things which may exist.
The legislature may intrust the tribunal or body with a jurisdiction, which includes the jurisdiction to determine whether the preliminary state of facts exists as well as the jurisdiction, on finding that it does exist, to proceed further or do something more.
When the legislature are establishing such a tribunal or body with limited jurisdiction, (1) , 319. 744 they also have to consider, whatever jurisdiction they give them, whether there shall be any appeal from their decision, for otherwise there will be none.
In the second of the two cases I have mentioned it is an erroneous application of the formula to say that the tribunal cannot give themselves jurisdiction by wrongly deciding certain facts to exist, because the legislature gave them jurisdiction to determine all the facts, including the existence of the preliminary facts on which the further exercise of their jurisdiction depends; and if they were given jurisdiction so to decide, without any appeal being given, there is no appeal from such exercise of their jurisdiction.
These observations which relate to inferior courts or tribunals with limited jurisdiction show that there are two classes of cases dealing with the power of such a tribunal (1) where the legislature entrusts a tribunal with the jurisdiction including the jurisdiction to determine whether the preliminary state of facts on which the exercise of its jurisdiction depends exists and (2) where the legislature confers jurisdiction on such tribunals to proceed in a case where a certain state of facts exists or is shown to exist.
The difference is that in the former case the tribunal has power to determine the facts giving it jurisdiction and in the latter case it has only to see that a certain state of facts exists.
In the present case the appellant asked for a determination of reasonable annual rent under section 3 A on the ground that the accommodation was constructed after June 30, 1946, and the House Allotment Officer therefore had power to determine the reasonable annual rent.
In order to give jurisdiction to the civil court there bad to be in existence a reasonable annual rent as defined under section 2(f) whether it fell within its first two clauses or was determined under section 3 A. The reason.
able annual rent could be varied at the instance of the landlord or the tenant on the ground of its inadequacy or excess but the landlord could not.
bring a suit to vary the agreed rent nor could the court entertain such a suit although it was open to the tenant to do so and the court could at his instance entertain 745 such a suit.
The proceedings before the civil court are not by way of an appeal from any order under section 3 A made by the District Magistrate.
Section 115, Code of Civil Procedure, empowers the High Court, in cases where no appeal lies, to satisfy itself on three matters: (a) that the order made by the subordinate court is within its jurisdiction; (b) that the case is one in which the court ought to exercise its jurisdiction; (e) that in exercising the jurisdiction the court has not acted illegally, that is, in breach of some provision of law or with material irregularity that is by committing some error of procedure in the course of the trial which is material in that it may have affected the ultimate decision.
Per Sir John Beaumont in Venkatagiri Ayyangar vs Hindu Religious Endowment Board, Madras (1).
Therefore if an erroneous decision of a subordinate court resulted in its exercising jurisdiction not vested in it by law or failing to exercise the jurisdiction so vested or acting with material irregularity or illegality in the exercise of its jurisdiction the case for the exercise of powers of revision by the High Court is made out.
In Joy Chand Lal Babu vs Kamalaksha Chaudhury (2), the subordinate court gave an erroneous decision that the loan was a commercial loan and therefore refused to exercise jurisdiction vested in it by law and the Privy Council held that it was open to the High Court to interfere in revision under section 115.
Sir John Beaumont said at p. 142: " There have been a very large number of decisions of Indian High Courts on section 115, to many of which their Lordships have been referred.
Some of such decisions prompt the observation that High Courts have not always appreciated that although error in a decision of a subordinate court does not by itself involve that the subordinate court has acted illegally or with material irregularity so as to justify interference in revision under sub section
(c), nevertheless, if the erroneous decision results in the subordinate court exercising a jurisdiction not vested in it by law, (1)(1949) L.R. 76 I.A. 67, 73.
(2) (1949) L.R. 76 I.A. 131.
94 746 or failing to exercise a jurisdiction so vested, a case for revision arises under sub section
(a) or sub.s.
(b), and subs.
(c) can be ignored.
The cases of Babu Ram vs Munnalal (1) and Hari Bhikaji vs Naro Vishvanath (2), may be mentioned as cases in which a subordinate court by its own erroneous decison (erroneous, that is, in the view of the High Court), in the one case on a point of limitation and in the other on a question of res judicata, invested itself with a jurisdiction which in law it did not possess; and the High Court held, wrongly their Lordships think, that it had no power to interfere in revision to prevent such a result.
In the present case their Lordships are of opinion that the High Court, on the view which it took that the loan was not a commercial loan, had power to interfere in revision under sub section
(b) of section 115 ".
In Keshardeo Chamria vs Radha Kissen Chamria (3) both these judgments of the Privy Council as also the previous judgments in Rajah Amir Hassan Khan vs Sheo Baksh Singh (4 ) and Balakrishna Udayar vs Vasudeva Aiyar (5) were reviewed and it was held that section 115 of the Code of Civil Procedure applies to matters of jurisdiction alone, the irregular exercise or non exercise of it or the illegal assumption of it.
Thus if a subordinate court had jurisdiction to make the order it made and has not acted in breach of any provision of law or committed any error of procedure which is material and may have affected the ultimate decision, then the High Court has no power to interfere.
But if on the other hand it decides a jurisdictional fact erroneously and thereby assumes jurisdiction not vested in it or deprives itself of jurisdiction so vested then the power of interference under section 115 becomes operative.
The appellant also relied on Rai Brij Raj Krishna vs section K. Shaw and Bros. (6) where this Court quoted with approval the observations of Lord Esher in Queen vs Commissioner for Special Purposes of the Income Tax(7) and The Colonial Bank of Australia vs Willan where Sir James Co] ville said : (1)(1927) I.L.R. 49 All. 454.
(3)[1953] S.C.R. 136.
(5)(1917) L.R. 44 I.A. 261.
(7)(1888) , 319.
(2) Bom.
(4) (1884) L.R. 11 I.A.237.
(6) ; (8) , 443. 747 " Accordingly the authorities. . . establish that an adjudication by a Judge having jurisdiction over the subject matter is, if no defect appears on the face of it, to be taken as conclusive of the facts stated therein and that the Court of Queen 's Bench will not on certiorari quash such an adjudication on the ground that any such fact, however essential has been erroneously found ".
But these observations can have no application to the judgment of the Additional Civil Judge whose jurisdiction in the present case is to be determined by the provisions of section 5(4) of the Act.
And the power of the High Court to correct questions of jurisdiction is to be found within the four corners of section 115.
If there is an error which falls within this section the High Court will have the power to interfere, not otherwise.
The only question to be decided in the instant case is as to whether the High Court had correctly interfered under section 115 of the Code of Civil Procedure with the order of the Civil Judge.
As we have held above, at the instance of the landlord the suit was only maintainable if it was based on the inadequacy of the reasonable annual rent and for that purpose the necessary jurisdictional fact to be found was the date of the construction of the accommodation and if the court wrongly decided that fact and thereby conferred jurisdiction upon itself which it did not possess, it exercised jurisdiction not vested in it and the matter fell within the rule laid down by the Privy Council in Joy Chandlal Babu vs Kamalaksha Chaudhury (1).
The High Court had the power to interfere and once it had the power it could determine whether the question of the date of construction was rightly or wrongly decided.
The High Court held that the Civil Judge had wrongly decided that the construction was of a date after June 30, 1946, and therefore fell within section 3 A.
In these circumstances the appeal must fail and is dismissed with costs throughout.
Appeal dismissed.
(1) (1949) L.R 76 I.A. 131.
| Landlord and Tenant Accommodation Agreed monthly rent New construction Enhancement of rent House Allotment Officer 's findings Power of the civil courts to interfere U. P. Templeton Control of Rent and Eviction Act, 1947 (U.P. 3 of 1947), SS.
2(a)(f) 3A, 5(4), 6.
In 1938 the respondent took on rent from the appellant the accommodation in dispute on a monthly rent of Rs. 21 4as.
On January 28, 1950, the appellant made an application to the House Allotment Officer under section 3A of the U.P. Temporary Control of Rent and Eviction Act, 1947, for an increase in rent, on the allegation that according to the instruction of the respondent lie had made a new construction in January, 1949.
The 734 Officer considered that the accommodation was not a newly constructed one as the respondent had been a tenant from 1938, but he increased the rent to Rs. 40 per mensem on the basis of the building that was added by the new construction.
The appellant thereupon instituted a suit under section 5(4) Of the Act for the enhancement of " reasonable annual rent ".
The respondent 's defence inter alia, was that the new construction was undertaken in order to put up another storey on the top of the old building, that so far as the accommodation in his possession was concerned there was no new construction of accommodation after June 30, 1946, and that, therefore, the suit was not maintainable.
The trial court found that as a result of the new construction the accommodation had increased and was of the opinion that the portion of the building which had been newly replaced must be treated as a new accommodation and hence the, court could determine its rent under section 5(4).
In revision, the High Court held that though the construction on the upper storey was a new construction, so far as the accommodation in the occupation of the respondent was concerned the construction could not be called a new one and therefore section 3A of the Act was not applicable.
Accordingly the revision petition was allowed and the suit was dismissed.
On appeal by special leave to the Supreme Court it was contended for the appellant that the House Allotment Officer having decided in his favour the question of the date of construction which section 3A of the Act authorised him to decide, the High Court could not in revision go into the correctness of the decision ; and, in any case, it was within the jurisdiction of the trial court to decide the question of the date of construction and in doing so it could decide rightly or wrongly, and as the matter was one of fact the High Court had no power to interfere under section 115 Of the Code of Civil Procedure.
Held:(1) that a wrong decision made by the House Allot ment Officer under section 3A of the Act or an order made by him in excess of his powers under that section could be rectified by a suit under section 5(4) of the Act; and (2)that the maintainability of the suit brought under section 3A of the Act depended on the determination of the jurisdictional fact i.e., date of construction of the accommodation, whether it was after June 30, 1946, and if the court wrongly decided that fact and thereby assumed jurisdiction not vested in it, the High Court had the power to interfere under section 115 of the Code of Civil Procedure, and once it had the power it could determine whether the question of the date of construction was rightly or wrongly decided.
Joy Chand Lal Babu vs Kamalaksha Chaudhury, (1949) L.R. 76 I.A. 131, relied on.
Queen vs Commissioner for Special Purposes of the Income Tax, ; Venkatagiri Ayyangar vs Hindu Religious Endowment Board, Madras, (1949) L.R. 76 I.A. 67 and Keshardeo Chamria vs Radha Kissen Chamria, [1953] S.C.R. 136, considered.
735 Rai Brij Raj Krishna vs section K. Shaw and Bros., [1951] S.C.R. 145, distinguished The relevant provisions of the Act are set out in the judg ment.
|
Summarize this legal judgement text concisely | 121 of 1958.
Petition under Article 32 of the Constitution for enforcement of Fundamental rights.
G. B. Pai and Sardar Bahadur, for the petitioner.
M. C. Setalvad, Attorney General for India, B. Sen and T. M. Sen, for the respondents.
December 11.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J.
The petitioner has been doing business as an exporter of coir products to foreign countries for the last twenty years.
On July 4, 1958, he applied to respondent 2, the Chairman, Coir Board, Ernakulam, requesting that he should be registered as an established exporter.
This application was accompanied by an income tax clearance certificate and attested copies of bills of lading.
Respondent 2 declined to register the petitioner on the ground that his application was defective inasmuch as the requisite certificate regarding his financial status bad not been produced and no evidence had been given to show that he had exported the minimum quantity required (500 Cwts.).
The petitioner was told that unless he complied with the requirements asked for within seven days his application would be rejected without further notice.
The petitioner found that he could not comply with the directions issued by respondent 2 and so it became impossible for the petitioner to get registration and licence applied for by him.
That is why he filed the present petition under article 32 of the Constitution and prayed for the issue of a writ or order in the nature of mandamus to direct the second respondent to grant the petitioner registration and licence as applied for by him and to prohibit or restrain the said respondent from acting on, or implementing, the rules issued under the , by issue of a writ of certiorari, prohibition or such other writ or order appropriate to protect his rights.
The petitioner also prayed that " if found necessary " the said 781 rules should be declared to be ultra vires the powers of the Central Government and invalid being in violation of the fundamental rights guaranteed by articles 14 and 19 of the Constitution.
The Union of India has, been impleaded as respondent 1 to the petition.
Before dealing with the points raised by the petition it would be necessary to refer briefly to the provisions( of the (45 of 1953), hereinafter called the Act, and the rules framed under it in 1958.
This Act was enacted by the Parliament because it was thought expedient in the public interest that the Union should take under its control the coir industry (section 2).
Section 4 of the Act provides for the establishment and constitution of the Coir Board and section 10 enumerates its functions and duties.
Under section 10(1) it shall be the duty of the Board to promote by such measures as it thinks fit the development under the control of the Central Government of the coir industry.
Sub section (2) enumerates the measures which the Board may take with the object of developing the coir industry without prejudice to the generality of the provisions of sub section
Amongst the measures thus enumerated, sub section
(2) (b) refers to the regulation under the supervision of the Central Government of the production of husks, coir yarn and coir products by registering coir spindles and looms for manufacturing coir products, as also manufacturers of coir products, licensing exporters of coir yarn and coir products and taking such other appropriate steps as may be prescribed.
Sub section (2)(g) refers to the promotion of co operative Organisation among producers of husks, coir fibre and coir yarn and manufacturers of coir products, and sub section
(2)(1) refers to the licensing of retting places and warehouses and otherwise regulating the stocking and sale of coir fibre, coir yarn and coir products both for internal market and for exports.
Section 26(1) confers on the Central Government power to make rules for carrying out the purposes of the Act subject to the condition of previous publication.
Sub section (2) enumerates the matters in res pect of which rules may be made, in particular and without prejudice to the generality of the power 782 conferred by sub section
Sub section (2) (k) refers inter alia to the registration of manufacturers of coir products and the conditions for such registration and the ,,grant or issue of licences under the Act; and sub section
(2)(1) deals with the form of applications for registration and licences under the Act and the fee, if any, to be paid in respect of any such applications.
Under the powers conferred by section 26 the Central Government framed rules in 1958.
For the purposes of the present petition it would be relevant to refer to rr.
17 to 22.
Rule 17 deals with registration and licensing of exports; and it provides that no person shall, after the coming into force of the rule, export coir fibre, coir yarn or coir products unless he has been registered as an exporter and has obtained an export licence under these rules.
The proviso deals with exemptions with which we are not concerned.
Rule 18 lays down that any person who has in any of the three years immediately preceding the commencement of the rules exported not less than twenty five tons of coir yarn or coir products other than coir rope, or exported any quantity of coir fibre or coir rope, may be registered an exporter of coir yarn, coir products other than coir rope or coir fibre or coir rope as the case may be.
Rule 19 provides for the registration of persons other than those covered by r. 18 and it lays down inter alia that such persons may be registered as exporters of coir yarn if, during the period of twelve months immediately preceding the date of application, a minimum quantity of twenty five tons of coir yarn had been rehanked or baled in a factory owned or otherwise possessed by the applicant and registered under the Indian , or, if the applicant has had a total purchase turnover of one hundred tons of coir yarn.
The proviso to this rule authorises the Chairman by notification to exempt from the operation of this rule any co operative society the members of which are owners of industrial establishments or any Central Co operative Marketing Society.
Rules 20 and 22 prescribe the mode of making an application for registration as an exporter and for licence respectively while r. 21 provides for the 783 cancellation of registration.
The present petition does not challenge the validity of any of the provisions of the Act.
It, however, seeks to challenge the vires of rr. 18, 19, 20(1)(a), 21 and 22(a).
There is no doubt that coir and coir products play an important role in our national economy.
They are commodities which earn foreign exchange, the total ' value of our exports in these commodities being of the order of Rupees Ten Crores per year.
It was found that several malpractices had crept in the export trade of these commodities such as non fulfilment of contracts, supplying goods of inferior qualities and cut throat competition; and these in turn considerably affected the volume of the trade.
That is why Parliament thought it necessary that the Union should take under its control the coir industry in order to regulate its export trade.
It is with the object of developing the coir industry that the Coir Board has been established and the registration and licensing of exporters has been introduced.
The petitioner does not dispute this position and makes no grievance or complaint against the relevant provisions in the Act.
It is, however, urged that the relevant rules which prescribe the quantitative test for the registration of established exporters are ultra vires because the introduction of the said test is inconsistent with the provisions of the Act.
In this connection Mr. Pai, for the petitioner, sought to rely on the report submitted by the Ad Hoc Committee for external marketing which the Coir Board had appointed on August 20, 1954.
His grievance is that the report of the said Committee does not recommend the adoption of the quantitative test, but seems to suggest that a qualitative test would be more appropriate ; and that, according to Mr. Pai, also indicates that the quantitative test had been improperly prescribed by the rules.
We are not impressed by these arguments.
It is clear that there is no provision in the Act which excludes or prohibits the application of the quantitative test in making rules for registration of exporters or for issuing licences for export trade.
In fact the Act has deliberately left it to the rule making authority to frame rules 784 which it may regard as appropriate for regulating the trade; and so it would be impossible to accept the argument that the rule making authority was bound to prescribe the qualitative rather than the quantitative test.
Besides, it does not appear that the report of the Committee on which Mr. pai relied definitely indicated its partiality for the adoption of the qualitative test.
Indeed Appx.
XI to the said report would suggest that the Committee in fact was not averse to the adoption of a quantitative test; but even if the Committee had expressly recommended the adoption of a qualitative, not a quantitative, :test, it would be idle to suggest that the Coir Board was bound to accept the said recommendation or that the Central Government was not competent to make rules contrary to the recommendations of the Committee.
The validity of the rules can be successfully challenged if it is shown that they are inconsistent with the provisions of the Act or that they have been made in excess of the powers conferred on the rule making authority by section 26 of the Act.
In our opinion, no such infirmity has been established in respect of the impugned rules.
It is then contended that the relevant rules would ultimately tend to establish a monopoly in the export trade of coir commodities and would thereby extinguish the trade or business of small dealers like the petitioner.
It is also contended that the application of the quantitative test discriminates between persons carrying on business on a large scale and those who carry on business on a small scale.
That is how articles 19 and 14 of the Constitution are invoked and the validity of the relevant rules is challenged on the ground that they violate the fundamental rights of the petitioner under the said Articles.
We think there is no substance in this contention.
If it is conceded that the regulation of the coir industry is in the public interest, then it would be difficult to entertain the argument that the regulation or control must be introduced only on the basis of a qualitative test.
It may well be that there are several difficulties in introducing and effectively enforcing the qualitative test.
It is well known that granting 785 permits or licences to export or import dealers on the basis of a quantitative test is not unknown in regard to export and import of essential commodities.
It would obviously be for the rule making authority to decide which test would meet the requirements of public interest and what method would be most expedient in controlling the industry for the national ' good. Beside,%, even the adoption of a qualitative test may tend to extinguish the trade of those who do not satisfy the said test; but such a result cannot obviously be treated as contravening the fundamental rights under article 19.
Control and regulation of any trade, though reasonable within the meaning of article 19, sub article
(6), may in some cases lead to hardship to some persons carrying on the said trade or business if they are unable to satisfy the requirements of the regulatory rules or provisions validly introduced ; but once it is conceded that regulation of the trade and its control are justified in the public interest, it would not be open to a person who fails to satisfy the rules or regulations to invoke his fundamental right under article 19(1)(g) and challenge the validity of the regulation or rule in question.
In our opinion, therefore, the challenge to the validity of the rules on the ground of article 19 must fail.
The challenge to the validity of the said rules on the ground of article 14 must also fail, because the classification of traders made by rr. 18 and 19 is clearly rational and is founded on an intelligible differentia distinguishing persons falling under one class from those falling under the other.
It is also clear that the differentia has a rational relation to the object sought to be achieved by the Act.
As we have already pointed out, the export trade in coir com modities disclosed the existence of many malpractices which not only affected the volume of trade but also the reputation of Indian traders; and one of the main reasons which led to this unfortunate result was that exporters sometimes accepted orders far beyond their capacity and that inevitably led to non fulfilment of contracts or to supply of inferior commodities.
In 99 786 order to remedy this position the trade had to be regulated and so the intending exporter was required to satisfy the test of the prescribed minimum capacity and to establish the prescribed minimum status before his application for registration is granted.
In this connection it may also be relevant to point out that the rules seem to contemplate the granting of exemption from the operation of some of the relevant tests to co operative societies; and that shows that the intention of the Legislature is to encourage small traders to form co operative societies and carry on export trade on behalf of such societies; and so it would not be possible to accept the argument that the impugned rules would lead to a monopoly in the trade.
It is thus clear that the main object which the rules propose to achieve is to remove the anomalies and malpractices prevailing in the export trade of coir commodities and to put the said trade on a firm and enduring basis in the interest of national economy.
We are, therefore, satisfied that the challenge to the impugned rules on the ground of infringement of article 14 of the Constitution must also fail.
In the result we hold that there is no substance in the petition.
It accordingly fails and is dismissed with costs.
Petition dismissed.
| The petitioner, an unsuccessful applicant for registration as an exporter and licensee for exporting coir products, challenged the vires of the rr. 18, 19, 20(1)(a), 21 and 22(a) made by the Central Government in exercise of its powers under section 26(1) of the (45 Of 1953).
The Act had for its object the regulation and control of the Coir industry in public interest.
It was contended on his behalf that the impugned rules, which prescribed the quantitative, and not the qualitative, test for registration of established exporters, were inconsistent with the provisions of the Act and as such, ultra vires the Act and that they tended to create a monopoly in the export trade of coir commodities and thereby destroy the business of small dealers and discriminated between those who carried on large scale business and those who carried on small scale business and thus impugned articles 19 and 14 Of the Constitution.
Held, that the contentions were without substance and must be negatived.
There was no provision in the , that excluded or prohibited the application of the quantitative test and the rules were in no way inconsistent with the Act nor in excess of the powers conferred on the Central Government by section 26 of the Act.
Where an Act sought to control an industry in public interest it would obviously be for the rule making authority to decide which rules and regulations would meet the requirement of public interest.
Such rules and regulations, though reasonable within the meaning of article 19(6), might cause hardship to those who failed to comply with them.
But once it was conceded that the regulation and control of the trade were justified in public interest, article 19(1)(g) could not be invoked to challenge the validity of the rules.
Nor did the impugned rules violate article 14 Of the Constitu tion.
The classification of traders under rr.
18 and 19 was clearly founded on an intelligible differentia that had a rational relation to the object of the Act.
The exemption made by the rules in favour of co operative societies from some of the relevant tests indicated that the Legislature intended to encourage small 780 traders.
It was not, therefore, correct to say that the rules would lead to a monopoly in the trade.
|
Summarize this legal judgement text concisely | minal Appeal No. 187 of 1956.
Appeal by special leave from the judgment and order dated December 7, 1955, of the Patna High Court in Criminal Revision No. 875 of 1954, arising out of the judgment and order dated May 31, 1954, of the Court of the Additional Sessions Judge at Arrah in Criminal Appeal No. 293 of 1953.
B. K. Saran and K. L. Mehta, for the appellants.
B. H. Dhebar and T. M. Sen, for the respondent.
November 14.
The Judgment of the Court was delivered by GAJENDERAGADKAR, J.
This criminal appeal raises a short question about the construction of the word " detains " occurring in a. 498 of the Indian Penal Code.
It arises in ' this way.
The two appellants were charged before the trial magistrate under section 498 of the Code in that on or about October 27, 1952, at the village Mohania they wrongfully detained Mst.
59 466 Rahmatia, the legally married wife of the complainant Saklu Mian, when they knew or had reason to believe that she was the wedded wife of the, complainant and was under his protection, with intent to have illicit intercourse with her.
The prosecution case was that Mst.
Rahmatia had disappeared from her husband 's house on October 21, 1952; the complainant made J. search for her for several days but was not able to trace her whereabouts.
Ultimately he filed a complaint at the police station after he was informed by Shakoor Mian (P. W. 4) that he had seen the complainant 's wife at the house of the two appellants.
The complainant then went to the house of the appellants along with Shakoor Mian (P. W. 4), Musa Mian (P. W. 2) and Suleman Mian (P. W. 3); they saw the woman in the house of the appellants whereupon the complainant asked appellant No. I Alamgir to let his wife go with him but appellant No. I told him that he had married her and appellant No. 2 warned him to get away and said that, if he persisted, he would be driven out.
This story is corroborated by the three companions of the complainant.
The appellants denied the charge.
They pleaded that the complainant had not validly married the woman and that she had not been detained by them.
According to them, the woman was tired of living with the complainant and that she had voluntarily and of her free will come to stay with the appellants.
The learned trial magistrate believed the prosecution evidence, rejected the pleas raised by the defence, con victed the appellants of the charge framed and sentenced them to undergo simple imprisonment for two months each.
This older of conviction and sentence was challenged by the appellants by their appeal before the court of sessions.
The appellate court confirmed the conviction of the appellants but reduced their sentence from simple imprisonment for two months to a fine of Rs. 50 or in default simple imprisonment for one month each.
The appellants then moved the High Court at Patna in its revisional jurisdiction.
When the revisional application came to be heard before Choudhary, J., the learned judge thought 467 that the appellate court should not have reduced the sentence imposed on the appellants by the trial magistrate and so he issued a notice against the appellants calling upon them to show cause why their sentence should not be enhanced.
This notice and the main revisional application were ultimately heard by Ramaswamy and Imam, JJ., who confirmed the order of conviction and enhanced the sentence against both the appellants by ordering that each of them should suffer six months ' rigorous imprisonment.
An application made by the appellants to the High Court for a certificate to appeal to this Court was rejected.
The appellants then applied for and obtained special leave to appeal to this Court.
That is how this appeal has come before us for final disposal.
On behalf of the appellants, Mr. B. K. Saran has urged that the evidence in the case clearly shows that the woman was dissatisfied with her husband and had left his house and protection voluntarily and of her free will.
If having thus left the house she came to stay with the appellants and they allowed her to stay with them, it cannot be said that they have detained her within the meaning of section 498.
According to him, the word " details " used in section 498 must necessarily imply that the woman detained is unwilling to stay with the accused and has been compelled so to stay with him against her will, and desire.
It is difficult to imagine that, if a woman is willing to stay with a person, it can be said that the person has detained her.
That is not the plain grammatical meaning of the word " detains ".
It is this argument which calls for our consideration in the present appeal.
At the outset it would be relevant to remember that section 498 'occurs in Ch.
XX of the Indian Penal Code which deals with offences.
relating to marriage.
The provisions of section 498, like those of section 497, are intended to protect the rights of the husband and not those of the wife.
The gist of the offence under section 498 appears to be the deprivation of the husband of his custody and his proper control over his wife with the object of having illicit intercourse with her.
In this connection it would be material to compare and contrast the 468 provisions of section 498 with those of section 366 of the Code.
Section 366 deals with cases where the woman kidnapped or abducted is an unwilling party and does not respond to the criminal intention of the accused.
In these cases the accused intends to compel the victim afterwards to marry any person against her will or to force or seduce her to illicit intercourse.
In other words section 366 is intended to protect women from such abduction or kidnapping.
If it is shown that the woman who is alleged to have been abducted or kidnapped is a major and gave her free consent to such abduction or kidnapping, it may prima facie be a good defence to a charge under section 366.
On the other hand section 498 is intended to protect not the rights of the wife but those of her husband; and so prima facie the consent of the wife to deprive her husband of his proper control over her would not be material.
It is the infringement of the rights of the husband coupled with the intention of illicit intercourse that is the essential ingredient of the offence under a. 498.
Incidentally it may be pointed out that the offence under section 498 is a minor offence as compared with the offence under section 366.
The policy underlying the provisions of section 498 may no doubt sound inconsistent with the modern notions of the status of women and of the mutual rights and obligations under marriage.
Indeed Mr. Saran vehemently argued before us that it was time that sections 497 and 498 were deleted from the Penal Code.
That, however, is a question of policy with which courts are not concerned.
It is no doubt true that if the words used in a criminal statute are reasonably capable of two constructions, the construction which is favourable to the accused should be preferred; but in construing the relevant words, it is obviously necessary to have due regard to the context in which they have been used; and, as we will presently point out, it is the context in which the word" detains " has been used in section 498 that is substantially against the construction for which the appellant contends.
Section 498 provides: 469 " Whoever takes or entices away any woman who is and whom he knows or has reason to believe to be the wife of any other man, from that man, or from any person having the care of her on behalf of that man, with intent that she may have illicit intercourse with any person, or conceals or detains with that intent any such woman, shall be punished with imprisonment, of either description for a term which may extend to ' two years, or with fine, or with both.
It would be noticed that there are three ingredients of the section.
The offender must take or entice away or conceal or detain the wife of another person from such person or from any other person having the care of her on behalf of the said person.
He must know or has reason to believe that the woman is the wife of another person; and the taking, enticing, concealing or detaining of the woman must be with intent that she may have illicit intercourse with any person.
It is clear that if the intention of illicit intercourse is not proved the presence of the first two ingredients would not be enough to sustain the charge tinder section 498.
It is only if the said intention is proved that it becomes necessary to consider whether the two other ingredients are proved or not.
It is plain that four different kinds of cases are con templated by the section.
A woman may be taken away or enticed away or concealed or detained.
There is no doubt that when the latter part of the section refers to any such woman, it does not mean any woman who is taken or enticed away as described in the first part, but it refers to any woman who is and whom the offender knows or has reason to believe to be the wife of any other man.
It is not seriously disputed that in the first three classes of cases the consent of the woman would not matter if it is shown that the said consent is induced or encouraged by the offender by words or acts or otherwise.
Whether or not any influence proceeding from the offender has operated on the mind of the woman or has co operated with or encouraged her inclimations would always be a question of fact.
If, on evidence, the court is satisfied that the act of the woman in 470 leaving her husband was caused either by the influence of allurement or blandishments proceeding from the offender, that may be enough to bring his case within either of the three classes of cases mentioned by section 498.
In this connection, when the consent or the free will of the woman is relied upon in defence, it is necessary to examine whether such alleged consent or free will was not due to allurement or blandishments or encouragement proceeding from the offender.
It is, however, urged that, when the latter part of the section speaks of detention, it must prima facie refer to the detention of a woman against her will.
It may be conceded that the word " detains" may denote detention of a person against his or her will ; but in the context of the section it is impossible to give this meaning to the said word.
If the object of the section had been to protect the wife such a construction would obviously have been appropriate; but, since the object of the section is to protect the rights of the husband, it cannot be any defence to the charge to say that, though the husband has been deprived of his rights, the wife is willing to injure the said rights and so the person who is responsible for her willingness has not detained her.
Detention in the context must mean keeping back a wife from her husband or any other person having the care of her on behalf of her husband with the requisite intention.
Such keeping back may be by force; but it need not be by force.
It can be the result of persuasion, allurement or blandishments which may either leave caused the willingness of the woman, or may have encouraged, or co operated with, her initial inclination, to leave her husband.
It seems to us that if the willingness of the wife is immaterial and it cannot be a defence in cases falling tinder the first three categories mentioned in section 498, it cannot be treated as material factor in dealing with the last category of case of detention mentioned in the said section.
Therefore, we are satisfied that the High Court was right in holding that the charge of detention has been proved against appellant No. I inasmuch as both the courts of facts have found that 471 he had offered to marry Mst.
Rahmatia and thereby either persuaded or encouraged her to leave her husband 's house.
It may be that Rahmatia was dissatisfied with her husband and wanted voluntarily to leave her husband; but, on the evidence, it has been held that she must have been encouraged or induced not to go back to her husband because she knew that she would find ready shelter and protection with appellant No. 1 and she must have looked forward to marry him.
In fact appellant No. 1 claims to have married her.
Thus there can be no doubt that he intended to have illicit sexual intercourse with her.
That is the effect of concurrent findings of fact recorded against appellant No. I ; and it would not be open to him to challenge their correctness or propriety in the present appeal.
This section has been the subject matter of several judicial decisions and it appears that, except for a few notes of dissent, there is a fair amount of unanimity of judicial opinion in favour of the construction which we feel inclined to place on the word " detains " in section 498.
It is, however, true that the relevant decisions, to some of which we would presently refer disclose a striking difference of approach in dealing with questions of fact.
It would appear that though the relevant portion of the section has received the same construction in dealing with same or similar facts, the learned judges have differed in their conclusion as to whether the accused person had been guilty of conduct which would bring his case within section 498.
This, however, is a difference in the method of approaching evidence and assessing its effects.
It would be futile and even improper to consider whether a particular conclusion drawn from the specific evidence adduced in the case was right or not.
What is important in such cases is to see how the section has been construed and, as we have just indicated, in the matter of construction there appears a fair amount of unanimity.
Let us now refer to some of the decisions cited before us.
In 1868, the Madras High Court held in Sundara Dass Tevan (1) that depriving the husband of his (1) (1868) IV Mad.
H.C.R. 20.
472 proper control of his wife for the purpose of illicit inter course is the gist of the offence just as it is the offence of taking away a wife under the same section; and a detention occasioning such deprivation may be brought about simply by the influence of allurement and blandishment.
On the facts of the case, however, the court was not satisfied that the accused bad offered any such allurement or blandishment and so the order of conviction passed against the appellant was quashed.
It appears that the construction put by the Madras High Court on section 498 in this case has been generally accepted in the said High Court (Vide: Ramaswamy Udayar vs Raju Udayar (1) ).
The Bombay High Court has taken the same view in Emperor vs Jan Mahomed (2).
It was held by the High Court that the offence contemplated by & 498 is complete if it appears that the accused went away with the woman in such a manner as to deprive her husband of the control of his wife; the fact that the woman accompanied the accused of her own free will does not diminish the criminality of the act.
Even in this case, the court was unable to discover any evidence, direct or indirect, about the intention of the accused or any allurement or blandishment offered by him and so the order of conviction passed against the accused was set aside.
This question came to be considered by the said High Court again in Emperor vs Mahiji Fula (3).
Mr. Justice Broomfield who delivered the main judgment of the Bench has expressed the view that " the word I detains ' means, by deprivation, and according to the ordinary use of the language I keeps back" '; and he adds that ,there may be various ways of keeping back.
It need not necessarily be by physical force.
It may be by persuasion or, as the Court " (Madras High Court) " has observed in this particular case" (Sundara Dass Thevan (4)) " by allurement or blandishment ".
On the facts, however, it appeared to the trial court that the conduct of the accused did not bring his case within the mischief of section 498.
The wife of the complainant had been taken (1) A.I.R. (1953) Mad. 333.
(3) Bom.
88, 92.
(2) (1902) IV Bom.
L. R. 435.
(4) (1868) IV Mad. H. C. R. 20.
473 away by her brother and she was subsequently married by natra marriage to the accused.
The complainant learnt about this incident and went to the accused to ask him to allow his wife to go back to him.
On seeing the complainant and his friends the accused came out with a dharia and threatened the complainant and his companions who then re turned to their village.
The conduct of the accused ' when the complainant approached him, it was said, cannot necessarily indicate that the accused had detained the woman.
This was the ' view taken by the trial court who acquitted the accused ; on appeal the High Court saw no reason to differ and so the order of acquittal was confirmed by it.
Divatia, J., who delivered the concurring judgment apparently differed from Broomfield, J., in regard to the construction of the word " detains ".
He agreed that the scheme of section 498 showed that though the woman may be perfectly willing to go with the man the offence of taking or enticing away would occur because it simply consists of taking or enticing away a woman without anything more; but according to him, in the latter part of the section, which speaks of concealing or detaining the woman, the woman would be detained only if she is prevented from going in any quarter where she wants to go.
In our opinion, this construction is not sound.
It is not easy to see how the act of concealing the woman would necessarily import any considerations of the consent of the woman ; besides, according to Divatia, J., himself, the woman 's Consent would be irrelevant in the cases of taking or enticing her away.
If that be so, it is difficult to make her consent relevant and decisive in dealing with the cases of detention.
Unfortunately the learned judge does not appear to have appreciated the fact that the primary and the sole object of section 498 is to protect the husband 's rights and not the rights of the wife.
If it is shown that the woman 's inclination to stay away from her husband was either instigated or encouraged by the offender, she can be said to have been detained or kept away from her husband within the meaning of the section 60 474 though at the time of the detention she may be willing to say with the offender.
The same view has been expressed by Broomfield and Sen, JJ., in Emperor vs
Ram Narayan Baburao Kapur (1) and by Beaumont C.J., and Sen, J., in Mahadeo Rama vs Emperor (2).
We may point out that in both these cases the court was have detained the woman.
The Calcutta High Court appears to have put a similar construction on the word "detention".
In Prithi Missir vs Harak Nath Singh (3) it has been held by the said High Court that " the word ' detention ' is ejusdem generis with enticement and concealment.
It does not imply that the woman is being kept against her will but there must be evidence to show that the accused did something which had the effect of preventing the woman from returning to her husband ".
On the merits, however, the court held that the learned trial magistrate had not come to any definite finding of fact.
In fact it did not appear that the accused was keeping the complainant 's wife as his mistress; and on the whole, the court was not satisfied that the accused was responsible for the conduct of the complainant 's wife for leaving her husband 's house and so detention was held not proved against the accused.
In Mabarak Sheikh vs Ahmed Newaz (4) the same High Court held that there can be no detention of a woman within the meaning of section 498, second part, if the woman is an absolutely free agent to go away from the person charged whenever she likes.
It appears that the learned judges were inclined to hold that there could be no detention if the woman was an absolutely free agent to go away from the person charged whenever she likes to do so; and in support of this view they have referred to some of the decisions which we have already considered.
With respect, it appears that the effect of the earlier decisions has not been properly considered and the findings of fact recorded in the said decisions are assumed to lend colour to, and modify, the construction of the section (1) (3) I.L.R. (2) A.I.R. (1943) Bom. 179.
(4) 475 adopted by them.
Besides, the relevant observations appear to be obiter because, on the facts, it was found in this case that the woman was not a free agent and so the charge against the accused under section 498 was held established.
In Bipad Bhanjan Sarkar vs Emperor (1), Henderson and Khundkar, JJ., have considered the word " detains " in the same manner as we have done.
However, as in many other cases, in this case also, the court found that there was absolutely nothing to show that the accused had done anything which could bring his case within the mischief of section 498.
The Patna High Court, in Banarsi Raut vs Emperor (2), has held that providing shelter to a married woman is such an inducement as to amount to detention within the meaning of section 498.
This case shows that where a married woman was found living in the house of the accused for some time and sexual intercourse between them had been established, the court was inclined to draw the inference that there was per suasion or inducement of the woman as would come within the meaning of the word " detention ".
This is a case on the other side of the line where on facts the inference was drawn against the accused.
The Lahore High Court has taken a similar view as early as 1913 in Bansi Lal vs The Crown (3 ).
The court has held that where the accused had provided a house for the woman where she stayed after deserting her husband under the protection of the accused as his mistress, it was active conduct on his part which was sufficient to bring him within the terms of section 498.
In 1939, however, a Division Bench of the Lahore High Court has taken a contrary view in Harnam Singh vs Emperor (4).
In this case the revisional application filed by Harnam Singh against his conviction under section 498 was first argued before Din Muhammad, J., who referred it to a Division Bench because he thought that the question of law raised was of some importance.
In his referring judgment the learned judge mentioned some of the relevant decisions to which his attention was drawn and indicated his own view that (1) I.L.R. (3) (1913) XlV Punjab L. R. 1066.
(2) A.I.R. (1938) Pat.
(4) A.I.R. (1939) Lah.
476 the word " detains " would naturally imply some overt act on the part of the person who detains in relation to the person detained.
He thought that mere blandishment would not constitute any relevant factor in the matter of detention.
The matter was then placed before a Division Bench consisting of Young, C. J., and Blacker, J. Unfortunately the judgment of the Division Bench does not discuss the question of the construction of section 498 ; it merely records the conclusion of the court in these words: " In our opinion, the word " detains " clearly implies some act on the part of the accused by which the woman 's movements are restrained and this again implies unwillingness on her part.
Detention cannot include persuasion by means of blandishments or similar inducements which would leave the woman free to go if she wished ".
The learned judges also added that they were of the opinion that the word " detains " cannot be reasonably construed as having reference to the husband.
In our opinion, these observations do not correctly represent the true purport and effect of the provisions of section 498.
The position, therefore, is that, on the findings of fact made by the lower courts against appellant No. I it must be held that he has been rightly convicted under section 498.
That takes us to the question of sentence imposed on him by the High Court in its revisional jurisdiction.
We are satisfied that the High Court was not justified in directing appellant No. I to suffer rigorous imprisonment for six months by way of enhancement of the sentence.
It is unnecessary to emphasise that the question of sentence is normally in the discretion of the trial judge.
It is for the trial judge to take into account all relevant circumstances and decide what sentence would meet the ends of justice in a given case.
The High Court undoubtedly has jurisdiction to enhance such sentence under section 439 of the Code of Criminal Procedure; but this jurisdiction can be properly exercised only if the High Court is satisfied that the sentence imposed by the trial judge is unduly lenient, or, that, in passing the order of sentence, the trial judge had manifestly failed to consider the 477 relevant facts.
It may be that the High Court thought that the appellate order passed by the Sessions Judge modifying the original sentence was wrong, and in that sense, the issue of notice under section 439 of the Code of Criminal Procedure against appellant No. 1 to show cause why his sentence should not be enhanced may have been justified; but, in enhancing the sentence, the High Court should, we think, have restored the sentence passed by the trial judge himself.
It is true that, in enhancing the sentence, the High Court has observed that " women in this country, whether chaste or unchaste, must be protected and that it is the duty of the court to see that they are given sufficient protection ".
We are inclined to think that the considera tion set out in this observation is really not, very helpful and not decisive because, as we have already observed, section 498 does not purport to protect the rights of women but it safeguards the rights of husbands.
Besides, in the present case, it is clear that Mst.
Rahmatia, who is a woman of loose moral character, was dissatisfied with the complainant, who is her second husband, and was willing to marry appellant No. 1.
In such a case, though appellant No. I is guilty under section 498, it is difficult to accept the view of the High Court that the sentence of two months ' simple imprisonment imposed on him, by the trial court was so unduly or manifestly lenient as not to meet the ends of justice.
It would not be right for the appellate court to interfere with the order of sentence passed by the trial court merely on the ground that if it had tried the case it would have imposed a slightly higher or heavier sentence.
We would accordingly modify the order of sentence passed against appellant No. 1 by reducing it to that of simple imprisonment for two months.
The case of appellant No. 2 is clearly different from that of appellant No. 1.
The findings of fact recorded by the courts below do not implicate appellant No. 2 in the act of persuasion or offering blandishments or inducements to Mst.
Rahmatia.
The only evidence against this appellant is that when the complainant went to take away his wife appellant No. 2 threatened 478 him.
The record shows that appellant No. 2 is the brother of appellant No. 1; and, if knowing that Rahmatia had married his brother, appellant No. 2 told the complainant to walk away, that cannot legally justify the inference that he must have offered any inducement, blandishment or allurement to Rahmatia for leaving the protection of her husband and refusing to return to him.
Indeed the courts below have not considered the case of this appellant separately on its own merits at all.
In our opinion, the conviction of appellant No. 2 is not supported by any evidence on the record.
The result is the appeal preferred by appellant No. 2 is allowed, the order of conviction and sentence passed against him is set aside and he is ordered to be acquitted and discharged.
Appeal of appellant No. 1 dismissed.
Appeal of appellant No. 2 allowed.
| One R, the wife of S, disappeared from her husband 's house.
She was traced to the house of the appellants, A and his brother B.
When S went there and asked A to let his wife go with him A told him that he had married her and B threatened S and asked him to go away.
The appellants were charged under section 498 Indian Penal Code for detaining R when they knew or had reason to believe that she was the wedded wife of S, with intent to have illict intercourse with her.
The appellants pleaded that R was not validly married to S and that she had not been detained by them inasmuch as she was tired of living with S and had voluntarily and of her free will come to stay with them.
The Magistrate found the appellants guilty, convicted them and sentenced them to undergo simple imprisonment for two months each.
On appeal the Sessions Judge confirmed the conviction but reduced the sentence to a fine of Rs. 50/ each.
The appellants filed a revision before the High Court.
The High Court issued a notice of enhancement and after hearing the appellants dismissed the revision and enhanced the sentence to rigorous imprisonment for six months each.
Held, that detention in section 498 means keeping back a wife from her husband or any other person having the care of her on behalf of her husband.
Such keeping back may be by force; but it need not be by force.
It can be the result of persuasion, allurement or blandishments which may have either caused the willingness of the woman, or may have encouraged, or co operated with, her initial inclination to leave her husband.
The object of the section is to protect the rights of the husband and it cannot be any defence to the charge to say that, though the husband has been deprived of his rights, the wife is willing to injure the said rights and so the person who is responsible for the willingness has not detained her.
A was rightly convicted as the charge of detention was proved against him on the findings of the Courts below that he had offered to marry R and had thereby either persuaded or encouraged her to leave her husband 's house.
But the charge was not made out against B as it was not proved that he had offered any inducement, blandishment or allurement to R for leaving the protection of her husband and for refusing to return to him.
465 Sundara Dass Teva, (1868) IV Mad. H. C. R. 20; Ramaswamy Udayar vs Raju Udayar, A. 1.
R. ; Emperor vs Jan Mohomed, (1902) IV Bom.
L.R. 435; Broomfield, J., in Emperor vs
Mahiji Fula, Bom.
88, Emperor vs Ram Narayan Baburao Kapur, ; Mahadeo Rama vs Emperor, A.I.R. (1943) Bom.
179; Prithi Missir vs Harak Nath Singh, I.L.R. ; Bipad Bhanjan Sarkar vs Emperor, I.L.R. ; Banarsi Raut vs Emperor, A.I.R. (1938) Pat.
432 and Bansi Lal vs The Crown, (19I3) Punj.
L.R. 1066, approved.
Divatia, J., in Emperor vs Mahiji Fula, Bom.
88, Mabarak Sheikh vs Ahmed Newaz, and Harnam Singh vs Emperor, A.I.R. (1939) Lah.
295, disapproved.
Held further, that the High Court was not justified in en hancing the sentence to six months rigorous imprisonment, and it should have only restored the sentence passed by the trial Court.
The question of sentence is normally in the discretion of the trial Court and the High Court can enhance the sentence only if it is satisfied that the sentence imposed by the trial Court is unduly lenient, or, that in passing the order of sentence, the trial Court had manifestly failed to consider the relevant facts.
The sentence of two months simple imprisonment imposed by the trial Court was not so unduly or manifestly lenient as not to meet the ends of justice.
|
Summarize this legal judgement text concisely | Appeal No. 288 of 1958.
Appeal by Special Leave from the judgment and order dated December 3, 1956, of the Punjab High Court (Circuit Bench) at Delhi in Letters Patent Appeal No. 25 D of 1956, arising out of the judgment and order dated April 9, 1956, of the said High Court (Circuit Bench) at Delhi in Civil Writ No. 8 D of 1955.
N. C. Chatterjee and R. section Narula, for the appellant.
M. C. Setalvad, Attorney General for India, B. Sen and T. M. Sen, for the respondent 1958.
December 12.
The Judgment of the Court was delivered by section K. DAS, J.
This is an appeal by special leave and the only question for decision is if the order of the President dated October 1, 1954, removing the appellant from service with effect from that date is invalid, as claimed by the appellant, by reason of a contravention of the provisions of article 311(2) of the Constitution.
The short facts are these.
The appellant stated that he joined permanent Government service on April 4, 1924.
In 1947, before partition, he was employed as Assistant Secretary, Frontier Corps of Militia and Scouts in the then North Western Frontier Province, under the administrative control of the External Affairs Department of the Government of India.
The appellant stated that the post which be held then was a post in the Central Service, Class 11.
After partition, the appellant opted for service in India and was posted to an office under the Ministry of Commerce in the Government of India in October, 1947.
In December, 1949, he was transferred to the office of the Chief Controller of Imports, New Delhi, to clear off certain arrears of work.
In August, 1951, he was posted as 894 and Deputy Chief Controller of imports, Calcutta, and continued to work in that post till September, 1952.
He then took four months ' leave on average pay and on the expiry of his leave on January 24, 1953, he was transferred as Section officer in the Development Wing of the Ministry of Commerce.
The appellant thought that the order amounted to a reduction of his rank and lie made certain representations.
As these representations bore no fruit, he applied for leave preparatory to retirement on February 6, 1953.
In that application the appellant stated: Normally I am due to retire in April 1956 but I find it difficult to reconcile myself to the new conditions of service under which I am now placed to work.
I find that I would not be wasting only myself but I would also not be doing full justice to the ' interest of my Government and country in my present environment.
Under the circumstances, I pray that I may be permitted to retire from the 1st May, 1953.
" On February 14, 1953, the appellant amended his leave application and said that he had been informed by the I Administrative Branch of the Development Wing that the question of permission to retire was under consideration, because of some difficulty with regard to the inclusion in the service of the appellant the period during which he held the, post of Assistant Secretary, Frontier Corps; therefore be said that he might be granted leave on full average pay for four months with effect from February 15, 1953, if the decision to give him permission to retire was likely to be postponed beyond May 1, 1953.
He amended his leave application by making the following prayer: " Leave may be sanctioned for four months from.
the 15th February, 1953, or up to the date from which I am permitted to retire whichever may be earlier ".
On March 10, 1953, the appellant was informed that he could not be allowed to retire at that stage, but the Ministry had agreed to grant him leave from February 16, 19 3, to April 30, 1953.
The appellant then went on leave and on February 25, 1953, he 895 wrote to Government to say that he was contemplating to join the service of Messrs. Albert David & Co. Ltd., Calcutta, and for that purpose he was accepting a course of training in that Company for two months.
In April, 1953, the appellant accepted service under Messrs. Albert David & Co. Ltd., and he wrote to Government to that effect on April 6, 1953.
On June 16, 1953, the appellant was charged with hav ing violated r. 15 of the Government Servants ' Conduct Rules and Fundamental Rule 11.
Rule 15 of the Government Servants ' Conduct Rules states, inter alia, that a Government servant may not without the previous sanction of Government engage in any trade or undertake any employment other than his public duties.
Fundamental Rule 11 says in effect that unless in any case it be otherwise distinctly provided, the whole time of a Government servant is at the disposal of the Government which pays him.
A. P. Mathur, Joint Chief Controller of Imports, was asked to hold an enquiry against the appellant on the charge mentioned above.
The appellant submitted an explanation and an enquiry was held by A. P. Mathur in due course.
The Enquiring Officer submitted his report on September 12, 1953, in which he found that the appellant had, contrary to the rules governing the conditions of his service, accepted private employment without previous sanction of Government during the period when he was still in Government service.
On April 14, 1954, the appellant was asked to show cause in accordance with the provisions of article 311(2) of the Constitution.
As the whole of the argument in this case centres round this show cause notice, it is necessary to set it out in full Sir, I am directed to say that the Enquiry Officer appointed to enquire into certain charges framed against you has submitted his report ; a copy of the report is enclosed for your information.
On a careful consideration of the report, and in particular of the conclusions reached by the Enquiry Officer in respect of the charges framed against you the President is provisionally of opinion that a 896 major penalty, viz., dismissal, removal or reduction should be enforced on you.
Before he takes that action, he desires to give you an opportunity of showing cause against the action proposed to be taken.
Any representation which you may make in that connection will be considered by him before taking the proposed action.
Such representation, if any, should be made, in writing, and submitted so as to reach the undersigned not later than 14 days from the receipt of this letter by you.
Please acknowledge receipt of this letter.
Yours faithfully, Sd.
section Bhoothalingam, Joint Secretary to the Government of India.
" The appellant then showed cause and on October 1, 1954, the President passed an order in which it was stated that after taking into consideration the report of the Enquiring Officer and in consultation with the Public Service Commission, the President found that the charge had been proved against the appellant and the appellant was accordingly removed from service with effect from that date.
The appellant then moved the Punjab High Court by a petition under article 226 of the Constitution in which his main contentions were (a) that he had no opportunity of showing cause against the action proposed to be taken in regard to him within the meaning of article 311 (2) of the Constitution and (b) that he had asked for leave preparatory to retirement and accepted service under Albert David & Co. Ltd. in the bona fide belief that Government had no objection to his accepting such private employment.
Dulat, J., who dealt with the petition in the first instance, held against the appellant on both points.
He found that there was no contravention of the provisions of article 311 (2) of the Constitution and on the second point, he held that on the facts admitted in the case there was no doubt that the appellant had accepted private employment in contravention of the rules governing the conditions of his service and there was little substance 897 in the suggestion of the appellant that he had no sufficient opportunity to produce evidence.
The second point no longer survives, and the only substantial point for our consideration is the alleged contravention of article 311(2) of the Constitution.
Mr. N. C. Chatterjee, who has appeared on behalf of the appellant, has submitted before us that the show cause notice dated April 14, 1954, stated all the three punishments mentioned in article 311 (2) and inasmuch as it did not particularise the actual or exact punishment proposed to be imposed on the appellant, the notice did not comply with the essential requirements of article 311 (2) of the Constitution; therefore, the final order of removal passed on October 1, 1954, was not a valid order.
In the recent decision of Khem Chand vs Union of India (1) this Court explained the true scope and effect of article 311 (2) of the Constitution.
It was stated in that decision that the reasonable opportunity envisaged by article 311 (2) of the Constitution included (a) an opportunity to the Government servant to deny his guilt and establish his innocence, (b) an opportunity to defend himself, 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 its 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.
It is no longer in dispute that the appellant did have opportunities (a) and (b) referred to above.
The question before us is whether the show cause notice dated April 14, 1954, gave the appellant a reasonable opportunity of showing cause against the action proposed to be taken in regard to him.
Mr. N. C. Chatterjee has emphasised two observations made by this Court in Khem Chand 's case (1).
He points out that in connection with opportunity (c) aforesaid, this Court observed that a Government (1) ; 113 898 servant can only make his representation if the competent authority after the enquiry is over and after applying its 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.
Mr. Chatterjee emphasises the observation " one of the three punishments ".
Secondly, he has drawn our attention to the observations made in the judgment of the Judicial Committee in High Commissioner for India and High Commissioner for Pakistan vs I. M. Lall (1), which observations were quoted with approval in Khem Chand 's case (2).
One of the observations made was: " In the opinion of their Lordships no action is proposed within the meaning of the sub section " (their Lordships were dealing with sub section (3) of section 240 of the Government of India Act, 1935) " until a definite conclusion has been come to on the charges, and the actual punishment to follow is provisionally determined on." Mr. Chatterjee emphasises the expression " actual punishment " occurring in the said observations.
It is to be remembered, however, that both in I. M. Lall 's case, (1) and Khem Chand 's case (1) the real point of the decision was that no second notice had been given to the Government servant concerned after the enquiry was over to show cause against the action proposed to be taken in regard to him.
In I. M. Lall 's case (1) a notice was given at the same time as the charges were made which directed the Government servant concerned 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, etc.
" In other words, the notice was what is usually called a combined notice embodying the charges as well as the punishments proposed.
Such a notice, it was held, did not comply with the requirements of sub section
(3) of section 240.
In Khem Chand 's case (2) also the report of the Enquiring Officer was approved by the Deputy Commissioner, Delhi, who imposed the (1) (1948) L.R. 75 I.A. 225,242.
(2) ; 899 penalty of dismissal without giving the Government servant concerned an opportunity to show cause against the action proposed to be taken in regard to him.
In Khem Chand 's case (1) the learned SolicitorGeneral appearing for the Union of India sought to distinguish the decision in I. M. Lall 's case (2) on the ground that the notice there asked the Government servant concerned to show cause why he should not be dismissed, removed or reduced or subjected to any other disciplinary action, whereas in Khem Chand 's case(1) the notice issued to the Government servant before the enquiry mentioned only one punishment, namely, the punishment of dismissal.
Dealing with this argument of the learned Solicitor General this Court said (at p. 1100): " 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 bad been reached where the charges had been established and the competent authority had applied its mind to the gravity or otherwise of the proved charge tentatively and proposed a particular punishment.
" Therefore, the real point of the decision both in I. M. Lall 's case (2) and Khem Chand 's case (1) was that no opportunity had been given to the Government servant concerned to show cause after a stage had been reached when the charges had been established and the competent authority bad applied its mind to the gravity or otherwise of the charges proved and tentatively proposed the punishment to be given to the Government servant for the charges so proved.
It is true that in some of the observations made in those two decisions the words " actual punishment " or particular punishment " have been used, but those (1) ; (2) (1948) L.R. 75 I.A. 225, 242.
900 observations must, however, be taken with reference to the context in which they were made.
Let us examine a little more carefully what consequences will follow if article 311(2) requires in every case that the " exact " or " actual " punishment to be inflicted on the Government servant concerned must be mentioned in the show cause notice issued at the second stage.
It is obvious, and article 311 (2) expressly says so, that the purpose of the issue of a show cause notice at the second stage is to give the Government servant concerned a reasonable opportunity of showing cause why the proposed punishment should not be inflicted on him; for example, if the proposed punishment is dismissal, it is open to the Government servant concerned to say in his representation that even though the charges have been proved against him, he does not merit the extreme penalty of dismissal, but merits a lesser punishment, such as removal or reduction in rank.
If it is obligatory on the punishing authority to state in the show cause notice at the second stage the " exact " or " particular " punishment which is to be inflicted, then a third notice will be necessary if the State Government accepts the representation of the Government servant concerned.
This will be against the very purpose for which the second show cause notice was issued.
Then, there is another aspect of the matter which has been pointedly emphasised by dulat, J.
If in the present case the show cause notice had merely stated the punishment of dismissal without mentioning the other two punishments, it would still be open to the punishing authority to impose any of the two lesser punishments of removal or reduction in rank and no grievance could have been made either about the show cause notice or the actual punishment imposed.
Can it be said that the enumeration of the other two punishments in the show cause notice invalidated the notice ? It appears to us that the show cause notice in the present case by mentioning the three punishments gave a better and fuller opportunity to the appellant to show cause why none of the three punishments should be inflicted on him.
We desire to 901 emphasise here that the case before us is not one in which the show cause notice is vague or of such a character as to lead to the inference that the punishing authority did not apply its mind to the question of punishment to be imposed on the Government servant.
The show cause notice dated April 14, 1954, stated in clear terms that " the President is provisionally of opinion that a major penalty, namely, dismissal, removal or reduction, should be enforced on you.
" Therefore, the President had come to a tentative conclusion that the charge proved against the appellant merited any one of the three penalties mentioned therein and asked the appellant to show cause why any one of the aforesaid three penalties should not be imposed on him.
We see nothing wrong in principle in the punishing authority tentatively forming the opinion that the charges proved merit any one of the three major penalties and on that footing asking the Government servant concerned to show cause against the punishment proposed to be taken in the alternative in regard to him.
To specify more than one punishment in the alternative does not necessarily make the proposed action any the less definite; on the contrary, it gives the Government servant better opportunity to show cause against each of those punishments being inflicted on him, which he would not have had if only the severest punishment had been mentioned and a lesser punishment not mentioned in the notice had been inflicted on him.
We turn now to certain other decisions on which learned counsel for the appellant has relied.
They are: Jatindra Nath Biswas vs R. Gupta (1), Dayanidhi Rath vs B. section Mohanty (2) and Lakshmi Narain Gupta vs A. N. Puri (3).
In the case of Jatindra Nath Biswas (1) no second show cause notice was given and the decision proceeded on that footing.
Sinha, J., observed, however: "Where there is an enquiry, not only must he have an opportunity of contesting his case before the (1) (2) A.I.R. 1955 Orissa 33.
(3) A.I.R. 1954 Cal.
3.35 902 enquiry, but, before the punishment is imposed upon him, he must be told about the result of the enquiry and the exact punishment which is proposed to be inflicted." Mr. Chatterjee has emphasised the use of the word " exact ".
As we have pointed out, the decision proceeded on a different footing and was not rested on the ground that only one punishment must be mentioned in the second show cause notice.
The decision in Dayanidhi Rath 's case (1) proceeded on the footing that if the punishment that is tenatively proposed against a civil servant is of a graver kind, he can be awarded punishment of a lesser kind; but if the punishment that is tentatively proposed is of a lesser kind, there will be prejudice in awarding a graver form of punish ment.
What happened in that case was that the show cause notice stated that in view of the Enquiring Officer 's findings contained in the report with which the Secretary agreed and in consideration of the past record of the Government servant concerned, it was proposed to remove him from Government service; in another part of the same notice, however, the Government servant concerned was directed to show cause why the penalty of dismissal should not be inflicted for the charges proved against him.
Thus, in the same notice two punishments were juxtaposed in such a way that it was difficult to say that the punishing authority had applied its mind and tentatively come to a conclusion as to what punishment should be given.
It was not a case where the punishing authority said that either of the two punishments might be imposed in the alternative; on the contrary, in one part of the notice the punishing authority said that it was proposed to remove the Government servant concerned and in another part of the notice it said that the proposed punishment was dismissal.
In Lakshmi Narain Gupta 's case (2) the notice called upon the petitioner to show cause why disciplinary action, such as reduction in rank, withholding of increments, etc., should not be taken against him.
The learned Judge pointed out (1) A.I.R. 1955 Orissa 33.
(2) A.I.R. 1954 Cal 335.
903 that there were seven items of penalties under r. 49 of the Civil Service (Classification, Control and Appeal) Rules, and the notice did not indicate that the punishing authority had applied its mind and come to any tentative conclusion as to the imposition of any of the punishments mentioned in that rule.
On that footing it was held that there was no compliance with the provisions in article 311(2) of the Constitution.
We do not, therefore, take these decisions as laying down that whenever more than one punishment is mentioned in the second show cause notice, the notice must be held to be bad.
If these decisions lay down any such rule, we must hold them to be incorrect.
We have come to the conclusion that the three decisions on which learned counsel for the appellant has placed his reliance do not really support the extreme contention canvassed for by him, and we are further of the view that the show cause notice dated April 14, 1954, in the present case did not contravene the provisions of article 311 (2) of the Constitution.
The appellant had a reasonable opportunity of showing cause against the action proposed to be taken in regard to him.
This disposes of the principal point in controversy before us.
Mr. Chatterjee referred to certain mistakes of reference in the order of the President dated October 1, 1954.
Instead of referring to r. 15 of the Government Servants ' Conduct Rules, r. 13 was referred to.
There was also a reference to para.
5 of a particular Government order which prohibited Government servants from taking up commercial employment within two years of retirement.
Mr. Chatterjee submitted that this particular order did not apply to Government servants in Class 11.
We do not think that the inaccurate references were of any vital importance.
In effect and substance the order of removal dated October 1, 1954, was based on the ground that the appellant violated r. 15 of the Government Servants ' Conduct Rules and r. II of the Fundamental Rules; he accepted private employment without sanction of Government while he was still in Government service.
That was the basis for the enquiry against 904 the appellant and that was the basis for the order of removal passed against him.
For these reasons we hold that there is no merit in the appeal which must accordingly be dismissed with costs.
Appeal dismissed.
| The appellant, a Government servant, was charged with having, contrary to the rules governing the conditions of his service, accepted private employment without sanction of Government while he was still in Government service.
The Officer who held an enquiry against him found the charge to be true and submitted a report.
On April 14, 1954, a notice was issued to the appellant asking him to show cause in accordance with the provisions of article 3II(2) of the Constitution in the following terms:. . .
On a careful consideration of the report, and in particular of the conclusions reached by the Enquiring Officer in respect of the charges framed against you, the President is provisionally of opinion that a major penalty, viz., dismissal, removal or reduction should be enforced on you.
Before he takes that action, he desires to give you an opportunity of showing cause against the action proposed to be taken. .
The appellant then showed cause and on October 1, 1954, the President passed an order removing the appellant from service with effect from that date.
It was contended for the appellant, inter alia, that the show cause notice dated April 14, 1954, stated all the three punishments mentioned in article 311(2) and that inasmuch as it did not particularise the actual or exact punishment proposed to be imposed on the appellant, the notice did not comply with the essential requirements of article 311(2) and, therefore, the final order of removal passed on October, 1`954, was not a valid order.
Held, that the show cause notice dated April 14, 1954, did not contravene the provisions of article 311(2) of the Constitution.
There is nothing wrong in principle in the punishing authority tentatively forming the opinion that the charges proved merit any one of the three major penalties and on that footing asking the Government servant concerned to show cause against the punishment proposed to be taken in the alternative in regard to him, because it gives the Government servant better opportunity to show cause against each of those punishments being inflicted on him, which he would not have had if only the severest punishment had been mentioned and a lesser punishment not mentioned in the notice had been inflicted on him.
893 High Commissioner for India and High Commissioner for Pakistan vs I. M. Lall, (1948) L.R. 75 I.A. 225 and Khem Chand vs Union of India, ; , explained.
Jatindra Nath Biswas vs R. Gupta, ; Dayanidhi Rath vs B. section Mohanty, A.I.R. 1955 Orissa 33 and Lakshmi Narain Gupta vs A. N. Puri, A.I.R. 1954 Cal.
335, distinguished.
|
Summarize this legal judgement text concisely | Appeal No. 695 of 1957.
Appeal by special leave from the judgment and order dated September 17, 1957, of the Andhra 1113 Pradesh High Court in Civil Revision Petition No. 1112 of 1957 arising out of the order dated July 6, 1957, of the Court of the Second Additional Judge, City Civil Court, Hyderabad (Decan), made on the application under 0. 1, r. 10, (C. P. C. in Original Suit No. 43/1 of 1957.
M.C. Setalvad, Attorney General for India, C. K. Daphtary, Solicitor General of India, H. N. Sanyal, Additional Solicitor General of India, N. C. Chatterjee, Syed Mohasim, Akbar Ali Mosavi, H. J. Umrigar, 0.
N. Srivastava, J. B. Dadachanji, section N. Andley, Rameshwar Nath and P. L. Vohra, for the appellant.
Purshottam Tricumdas, Anwarull Pusha and G. Gopalakrishnan, for respondent No. 1.
Sir Sultan Ahmed, A. Ramaswami Iyengr C. Chakravarthy, section Ranganathan and G. Gopalakrishan, for respondent No. 2.
G.S. Pathak, A. V. Viswanatha sastri, Mohd. Yunus Saleem, Ghulam Ahmed Khan, Choudhary Akhtar Hussain, Shaukat Hussain and Sardar Bahadur, for respondent No. 3. 1958.
May 23.
The judgment of B. P. Sinha and J. L. Kapur JJ. was delivered by Sinha J. Jafer Imam J. delivered a separate judgment.
SINHA J.
This appeal by special leave is directed against the concurring judgments and orders of the courts below, allowing the intervention of respondents I and 2 and adding them as defendants 2 and 3 in the suit instituted by the appellant against her alleged husband, now respondent 3, who was the sole defendant in the suit as originally framed.
The main question in controversy in this appeal is the true construction of sub r.
(2) of r. 10 of 0. 1 of the Code of Civil Procedure, and its application to the facts of this case which are given below: On April 12, 1957, the plaintiff appellant in this Court instituted the suit out of which this appeal arises against the third respondent who is the second son of His Exalted Highness the Nizam of Hyderabad, and who will, hereinafter, be referred to as the Prince.
1114 In the plaint she alleged that she is the lawfully married wife of the Prince, the marriage ceremony (Nikah) having been solemnized in accordance with the Shia Law by a Shia Mujtahid on October 19, 1948.
The plaintiff also averred that the issue of the marriage were three daughters aged 8, 7 and 5 years; that the fact of the marriage was known to all persons acquainted with the Prince; that there was a prenuptial agreement, whereby the Prince agreed to pay Rs. 2,000 per month to the plaintiff as Kharch e pandan; that the Prince stopped the payment of the allowance aforesaid of Rs. 2,000 per month, since January, 1953, without any reasons and in contravention of the said agreement.
On these allegations, she asked for the following two declarations: (1)That the plaintiff be declared to be the legally wedded wife (Mankuha) of the defendant, (2)That a decree be passed in favour of this plaintiff against the defendant declaring her to be entitled to receive from the defendant 1.
G. Its. 2,000 per month as Kharch e pandan.
" It may be noted that she did not make any claim for arrears of the allowance aforesaid since the date the Prince is alleged to have stopped payment of the same.
Only ten days later, on April 22, 1957, the Prince filed his written statement, admitting the entire claim of the plaintiff for the two declarations aforesaid.
On that very date, an application under 0. 1, r. 10, of the Code of Civil Procedure, on behalf of (1) Saliebzadi Anwar Begum, and (2) Prince Shahainat Ali Khan, minor, under the Guardianship of his mother, the said Sahebzadi, was made.
They are respondents I and 2 respectively in this Court.
The Sahebzadi, respondent 1, claimed to be the " lawful and legally wedded wife" of the Prince, and respondent 2, the son of the Prince by the first respondent.
In their petition they stated inter alia: " The plaintiff herself has stated in the plaint that the defendant is trying to suppress the facts of his marriage with the plaintiff so that the members of his family should conclude that the plaintiff is not his Nikah wife, and the defendant is interested in denying the rights and status of the plaintiff.
1115 The petitioners on being joined as parties to the suit will be equally interested in denying the marriage of the plaintiff and her rights and status. .
The peti tioners have reasons to believe that the above suit is a result of collusion.
The object and motive of the plaintiff in instituting the above suit is to adversely affect the relationship of the petitioners and the defendant and also to deprive the rights and interests of the petitioners in the defendant 's estate.
" On June 15, 1957, the plaintiff made an answer to the petition for intervention, filed by respondents I and 2 aforesaid.
She denied the right of the interveners to be impleaded in that suit, and asserted that the " possibility of the rights of the petitioners being infringed are very remote, contingent upon their or plaintiff surviving the defendant or other circumstances which may or may not arise." She also founded her objection on the ground that, having regard to the admission of the defendant in his written statement, " there is no serious controversy in the suit.
" She also added a number of legal objections which need not be specifically noticed as they have not been pressed in this Court.
She further asserted that the petitioners (meaning thereby, respondents I and 2) are neither necessary nor proper parties to the suit.
She anticipated the ground most hotly contested in this Court, by asserting that the " judgment of this Hon 'ble Court in this suit will not be conclusive as against petitioners as they allege collusion and they will not be prejudiced by not being made parties.
" She ends her statement by making the following significant allegation: " The alleged collusion and motive attributed to the plaintiff for instituting this suit are denied.
On the other hand, the application to be added as defendants is mala fide and malicious and is evidently inspired by some strong force behind them interested in harassing the plaintiff and exposing her to the risk of a vexatious and protracted litigation.
" The Prince, in his own answer to the application for intervention, stated that he admitted that the first 142 1116 respondent is his wife and that the second respondent is his son, and repeated his admission by saying that lie married the plaintiff in October, 1948, and the first respondent in December 1952.
He added further that when he married the first respondent, he had already three daughters by the plaintiff, which fact was known to the first respondent at the time of her marriage with him.
He supported the plaintiff in her objection to the intervention by asserting that the rights of respondents 1 and 2 will not be affected in any way, and by insisting upon his Muslim right of having four wives living at the same time.
He also supported the plaintiff in her denial of the allegation of collusion and " that the suit is intended to adversely affect the relationship of the petitioners and the defendant respondent and to deprive the rights and interests of the petitioners in the defendant respondent 's estate.
" He, in his turn, added the following equally significant penultmate para: " That the petitioners ' application has been filed in order to prolong the litigation and that the defen.
dant responaent 's father His Exalted Highness the Nizam, appears to be more interested than petitioner No. 1 herself, in creating unnecessary complications in the suit.
" On these allegations and counter allegations, after hearing the parties, the trial court, by its judgment and order dated July 6, 1957, allowed the application for intervention, and directed respondents 1 and 2 to be added as defendants.
The court, after discussing all the contentions raised on behalf of the parties, observed that there were indications in the record of a possible collusion between the plaintiff and the defendant; that the relief claimed under section 42 of the Specific Relief Act, being discretionary, could not be granted as of right ; that the presence of the interveners would help the court in unravelling the mysteries of the litigation, and that there was force in the contention put forward on behalf of the interveners that under section 43 of the Specific Relief Act, any declaration given in favour of the plaintiff will be binding upon the interveners.
It also held that in order effectually and completely to 1117 adjudicate upon and settle the present controversy, the presence of the interveners was necessary.
The plaintiff moved the High Court of Judicature of Andhra Pradesh, at Hyderabad, under section 115 of the Code of Civil Procedure, to revise the aforesaid order of the learned trial judge.
The High Court, in a wellconsidered judgment, after discussing the points raised for and against the addition of the parties, and noticing almost all the authorities quoted before us, refused to interfere with the discretion exercised by the trial court, and dismissed the revisional application.
It came to the conclusion that the first respondent, the admitted wife of the defendant, and the second respondent, the admitted son by her, are interested in denying the status claimed by the plaintiff, and " have some rights against the estate of the 3rd respondent.
The learned Judge of the High Court further observed When so much sanctity is attached to the status of marriage, it would indeed be strange that persons who are so intimately related to the 3rd respondent as wife and son, should be denied the opportunity of contesting the status of the petitioner as his lawfully married wife. .
It cannot be that the petitioner is seeking any empty relief carrying with it the stamp of futility and it is difficult to assume that she is fighting a vain or purposeless litigation.
If what she is seeking is a relief which will carry with it certain legal incidents, are not persons interested in denying her status proper parties to the litigation ? " The Court also observed that it was with a view to avoiding multiplicity of suits that r. 10(2) of 0. 1, had made provision foradding parties.
The Court noticed the argument under section 43 of the Specific Relief Act, but did not express any final opinion, because, in its view, it had already reached the " conclusion that the proposed parties are persons whose presence before the court is necessary within the meaning of 0. 1, r. 10 (2), so as to ensure that the dispute should be finally determined once for all in the presence of all the parties interested.
" Against the judgment of the High Court, refusing to set aside the order passed by the learned trial judge, 1118 the plaintiff moved this Court and obtained special leave to appeal.
In the forefront of his arguments in support of the appeal, the learned Attorney General submitted that the court had no jurisdiction to add the first two respondents as defendants in the suit.
He relied upon the words of the relevant portion of sub rule (2) of r. 10 of O. I of the Code, which are as follows: " (2). . . and that the name of any person who ought to have been joined, whether as plaintiff or defendant, or whose presence before the Court may be necessary in order to enable the Court effectually and completely to adjudicate upon and settle all the questions involved in the suit, be added.
He rightly pointed out, and there was no controversy between the parties before us, that the added defendants do not come within the purview of the words " who ought to have been joined ", which apparently have reference to necessary parties in the sense that the suit cannot be effectively disposed of without their presence on the record.
The learned Attorney General strenuously argued that it cannot be asserted in this case that the presence of the added defendantsrespondents 1 and 2 before the court was necessary in order to enable the court effectually and completely to adjudicate upon and settle all the questions involved in the suit.
He founded this argument on the legal position that the wife and the son of the Princerespondents I and 2 have no present interest in his estate.
Their expectancy of succession to the estate of the Prince does not clothe them with any right vested or contingent to intervene in this action.
In this connection, he pointed out that r. 10 of 0. 1 of the Code of Civil Procedure, which corresponds to portions of 0. 16, r. 11, of the Rules of the Supreme Court in England, has been the subject matter of judicial interpretation in many cases.
Both, in this country and in England, there have been two currents of judicial opinion, one taking what may be called the narrower view, and the other, the wider view.
As illustrations of the former, that is to say, the narrower 1119 view, may be cited the cases of Moser vs Marsden (1) and McCheane vs Gyles (No. 2) (2).
In India, this view is represented by the decision in the case of Sri Mahant Prayaga Doss Jee Varyu vs The Board of Commissioners for Hindu Religious Endowments, Madras (3).
On the other side of the line, representing the wider view, may be cited the case of Dollfus Mieg Et Compagnie section A. vs Bank of England (4).
In India, the decisions of the Madras High Court, in the cases of Vydianadayyan vs Sitaramayyan (5) and Secy. of State vs M. Murugesa Mudaliar (6), were cited as illustrations.
But it was contended on behalf of the appellants that whether the narrower or the wider view of the interpretation of sub r.
(2) of r. 10 of 0.
I of the Code of Civil Procedure is taken, the result, so far as the present controversy is concerned, would be the same.
In the leading case of Moser vs Marsden (1), Lindley L. J. has held that a party who is not directly interested in the issues between the plaintiff and the defendant, but is only indirectly or commercially affected, cannot be added as a defendant because the court has no jurisdiction, under the relevant rule, to bring him on the record even as a " proper party ".
That was a suit to restrain the alleged infringement of the plaintiff"s patent by the defendant, Marsden.
The Court held, reversing the order of the trial judge, that the party sought to be added had no direct interest in.
the subject matter of the litigation, and all that could have been said on behalf of the party intervening was that the judgment against the defendant would affect his interest commercially.
The Court distinguished the previous decisions in Vavasseur vs Krupp(7) and Apollinaris Company vs Wilson (8), on the ground that in those cases the litigation would have affected the property of the persons not before the court.
This leading case of Moser vs Marsden (1) is clearly an authority for the proposition that the court has jurisdiction to add as a party defendant only a person (1) (2) (3) Mad.
(4) [195O] 2 All E. R. 605.
(5) Mad.
(6) A. I. R. (7) .
(8) 1120 who is directly interested in the subject matter of the litigation and not a person who will be only indirectly or commercially affected.
Kay L. J. who agreed with Lindley L. J. in that case, observed that the relevant rule of the Supreme Court, on its proper construction, authorized the court to add only such persons as would be bound by the judgment to be given in the action, but did not authorize the court to add any persons who would not be so bound and whose interest may only indirectly be affected in a commer cial sense.
To the same effect is the decision in Re I. G. Farbeninadusrie A. G. Agreement (1).
The Court held that in order that a party may be added as a defendant in the suit, he should have a legal interest in the subject matter of the litigation legal interest not as distinguished from an equitable interest, but an interest which the law recognizes.
Lord Greene M. R. giving the judgment of the Court, also observed that the court had.
no jurisdiction to add a person as a party to the litigation if he had no legal interest in the issue involved in the case.
In the case of Vydianadayyan vs Sitaramayyan (2), in which the wider view of the interpretation of the relevant rule was taken, Turner C. J. delivering the judgment of the Court, observed that the wider interpretation which enabled the court to avoid conflicting decisions on the same question and which would finally and effectually put an end to the litigation respecting it, should be adopted.
But in that case also the party added as defendant was interested in the subject matter of the litigation, though there was no impediment to the court determining the issues between the parties originally before the court.
The learned Judge, on a discussion of the English and Indian cases on the subject, came to the conclusion that a material question common to all the parties to the suit and to third parties should be tried once for all.
He held that to secure this result the court bad a discretion to add parties a discretion which has to be judicially exercised, that is, that by adding the new parties the court should not inflict injustice upon the parties already on the record, in the sense (1) (2) Mad.
1121 that they would be prejudiced in the fair trial of the questions in controversy.
The two Madras decisions in Sri Mahant Prayaga Doss Jee Varu vs The Board of Commissioners for Hindu Religious Enclowmentg, Madras (1) and Secy.
of State vs M. Murugesa Mudaliar (2) appear to have taken conflicting views on the question whether Government could be added as a party to the litigation not because it was directly interested in the subjectmatter of the litigation, but because the law enacted by the legislature of that State had been questioned.
this controversy appears to have been raised in the Federal Court in the case of The United Provinces vs Mst.
Atiqa Begum (3).
In that case the provincial legislature of the United Provinces, as it then was, had enacted the United Provinces Regularization of Remissions Act (XIV of 1938) precluding the courts from entertaining any question as to the validity of certain orders of remission of rents.
The validity of that Act was questioned in a litigation between a landlord and his tenants.
At the High Court stage the Provincial Government was added as a party to the litigation at the instance of the Advocate General, with a view to enabling the Government to come up in appeal to the Federal Court in order to obtain a more authoritative pronouncement on the vales of the Act.
In the Federal Court the power of the High Court to add the Provincial Government as a party was specifically questioned.
Gwyer C. J. noticed the two Madras decisions referred to above but assumed that there was jurisdiction in the Court in a proper case to do so, and, therefore, did not express his considered opinion in view of the fact that his two colleagues, Sulaiman and Varadachariar JJ.
had agreed, though for different reasons, in the view that the High Court had jurisdiction to implead the Government though it was only indirectly interested in the litigation.
Sulaiman J. was inclined to take the view that there was a discretion in the High Court to add the Government as a party.
On the other hand, Varadachariar J. (1) Mad. 34.
(2) A.I.R. 1929 Mad 443.
(3) 1122 was inclined to take the view that the State did not stand on the same footing as a private third party for all purposes.
He took the view that the State as the guardian of the public interest should not be called upon to show some pecuniary or proprietary interest or interest in public revenue in the questions involved, to be added as a party.
He also observed that in a case where the State intervention was concerned, " it must be decided on broad grounds of justice and convenience and not merely as turning on the interpretation of a particular rule in the Civil Procedure Code.
" Discussing the question whether it was a matter of discretion or of Jurisdiction in the court to make an order adding a party, the learned Judge made the following observations : " In my opinion, there is no case here of defect of jurisdiction in the sense in which it is said that consent cannot cure a defect of jurisdiction.
It is true that in Moser vs Marsden (1), Lindley L. J. observed that the question was not one of " discretion but of jurisdiction ".
But as the antithesis shows, the learned L. J. apparently had in mind the difference between the decision of the question of joinder on the interpretation of a rule of law and a direction given by the lower court in the exercise of its discretion, because in the latter case the court of appeal would generally be reluctant to interfere.
It may even be regarded as a case of excess of jurisdiction within the meaning of section 115 of the Civil Procedure Code, but that will not make the order void in the sense that it may be ignored or treated as if it had never been passed.
" It would thus appear that the courts in India have not treated the matter of addition of parties as raising any question of the initial jurisdiction of the court.
It may sometimes involve a question of jurisdiction in the limited sense in which it is used in section 115 of the Code of Civil Procedure.
It is no use multiplying references bearing on the construction of the relevant rule of the Code relating to addition of parties.
Each case has to be determined on its own facts, and it has to be recognized that no decided cases have been brought to our notice which (1) 1123 can be said to be on all fours with the facts and circumstances of the present case.
There. ,cannot be the least doubt that it is firmly established as a result of judicial decisions that in order that a person may be added as a party to a suit he should have a direct interest in the subject matter of the litigation whether it raises questions relating to moveable or immoveable property.
In the instant case, we are not concerned with any controversy as regards property or estate.
Hence, all the cases cited at the bar, laying down that a person who has no present interest in the subjectmatter cannot be added, are cases which were con cerned with property rights.
In this case, we are concerned primarily with a declaration as regards status which directly comes under the provisions of section 42 of the Specific Relief Act.
We are concerned, in this case, with the following provisions of section 42: " 42.
Any person entitled to any legal character, or to any right as to any property, may institute a suit against any person denying.
or interested to deny, his title to such character or right, and the Court may in its discretion make therein a declaration that he is so entitled, and, the plaintiff need not in such suit ask for any further relief.
" This section recognizes the right in any person to have a declaration made in respect of his legal character or any right to property.
To such a suit for a mere declaration, any person denying or interested to deny the existence of any legal character or the alleged right to any property, would be a necessary party.
The plaintiff appellant chose to implead only her alleged husband, the Prince.
There is no clear averment in the plaint that the defendant had ever denied the legal character in question, namely, the status of the plaintiff as his wife.
The substance of the plaintiff 's cause of action is stated in para.
3 of the plaint.
From the words used in the said para.
of the plaint, it is clear that the persons who are alleged to have known the existence of the relationship of husband and wife between the parties would include the respondents 1 and 2, and that the Prince had been trying to suppress the fact of 143 1124 the marriage with the plaintiff so as to lead the members of his family to conclude that the plaintiff is not his wife,.
The gravamenofthechargeagaiiistthePrince is that " he refuses to openly acknowledge the plaintiff as his legally wedded wife, ", and that this conduct has cast a cloud oil the plaintiff 's status as such wife.
Such a conduct on the part of the Prince, it is further alleged, is not only injurious and detrimental to the rights of the plaintiff, but is adversely affecting the rights of the issue of the marriage, meaning thereby, the three daughters by the plaintiff.
It is thus clear, as was contended on behalf of respondents I and 2, that reading between the lines of the averments aforesaid, it is suggested that not only the defendantrespondent 3 but the other inembers of his family, including respondents I and 2, were interested ill deying the plaintiff 's alleged status, and that this suit ,",as being instituted to clear the cloud cast not, only upon the plaintiffs status as a legally wedded wife, but upon the status of the three daughters by her.
It is clear, therefore, that if the plaintiff had been less disingenuous and had impleaded the first and the second respondents also, as defendants in the suit, the latter could not have been discharged from the action on the ground that they had been unnecessarily impleaded and that no cause of action bad been disclosed against them.
They would certainly have been proper parties to the suit.
This is a very important aspect of the case which has to be kept ill view in order to determine the question whether respondonts, 1 and 2 had been rightly added as defendants on their own intervention.
It is also clear on the words of the statute, quoted above, that the grant of a declaration such as is contemplated by section 42, is entirely in the discretion of the court.
At this stage it is convenient to deal with the other contention raised on behalf of the appellant namely, that in view of the unequivocal admission of the plaintiffs claim by the Prince in his written statement and repeated as aforesaid in his counter to the application for intervention by respondents I and 2, no serious controversy now survives.
It is suggested 1125 that the declarations sought in this case would be granted as a matter of course.
In this connection, our attention was called to the provisions of r. 6 of 0. 12 of the Code of Civil Procedure, which lays down that upon such admissions as have been made by the Prince in this case the court would give judgment for the plaintiff.
These provisions have got to be read along with r. 5 of 0. 8 of the (,ode with particular reference to the proviso which is in these terms: " Provided that the Court may in its discrettion require any fact so admitted to be proved otherwise than by such admission.
" The proviso quoted above is identical with the proviso to section 58 of the Indian Evidence Act, which lays down that facts admitted need not be proved.
Reading all these provisions together, it is manifest that the court is not bound to grant the declarations prayed for even though the facts alleged in the plaint may have been admitted.
In this connection, the following passage in Anderson 's " Actions for Declaratory Judgments ", Vol. 1, p. 340, under article 177, is relevant: " A claim of legal or equitable rights and denial thereof on behalf of an adverse interest or party constitutes a ripe cause for a proceeding, seeking declaratory relief.
A declaration of rights is not proper where the defendant seeks to uphold the plaintiff , in such an action.
The required element of adverse parties is absent." " In others words the controversy must be between the plaintiff and the respondent who asserts an interest adverse to the plaintiff.
In the absence of such a situation there is no justiciable controversy and the case must be characterized as one asking for an advisory opinion, and as being academic rather than justiciable. . . " " i.e., there must be an actual controversy of justiciable character between parties having adverse interest." Hence, if the court, in all the circumstances of a parti cular case, takes the view that it would insist upon the burden of the issue being fully discharged, and if the, 1126 court, in pursuance of the terms of section 42 of the Specific Relief Act, decides, in a given case, to insist upon clear proof of even admitted facts, the court could not be said to have exceeded its judicial powers.
That the plaintiff herself or her legal advisers did not take the view contended for on her behalf, is shown by the fact that a few days after the filing of the written statement of the Prince, on April 27, Barkat Ali, the Mujtahid, who is alleged to have solemnized the marriage, was examined in court, and he gave his statement on oath in support of the plaintiff 's claim.
He also proved certain documents in corroboration of the plaintiff 's case and his own evidence.
This witness was not cross examined on behalf of the defendant.
It was stated before us, on behalf of respondents 1 and 2, that there were pieces of documentary evidence apart from certain alleged admissions made by or on behalf of the plaintiff, which seriously militate against the plaintiff 's case and the statement of the witness referred to above.
We need not go into all that con troversy, because we are not, at this stage, concerned with the truth or otherwise of the plaintiffs case.
At this stage we are only concerned with the question whether in adding respondents I and 2 as defendants in the action, the courts below have exceeded their powers.
It is enough to point out at this stage that the plaintiff did not invite the court to exercise its powers under r. 6 of 0. 12 of the Code of Civil Procedure, and, therefore, we are not called upon to decide whether the trial court was right in not pronouncing judgment on mere admission.
The court, when it is called upon to make a solemn declaration of the plain tiff 's alleged status as the defendant 's wife, has, naturally, to be vigilant and not to treat it as a matter of course, as it would do in a mere money claim which is admitted by the defendant.
The adjudication of status, the declaration of which is claimed by the plaintiff, is a more serious matter, because by its intendment and in its ultimate result it affects not only the persons actually before,the court in the suit as originally framed, but also the plaintiff 's progeny who are not parties to the action, and the respondents 1 and 2.
1127 If the declaration of status claimed by the plaintiff is granted by the court, naturally the three daughters by the plaintiff would get the status of legitimate children of the Prince.
If the decision is the other way, they become branded as illegitimate.
The suit clearly is not only in the interest of the plaintiff herself but of her children also.
It is equally clear that not only the Prince is directly affected by the declaration sought, but his whole family, including respondents I and 2 and their descendants, are also affected thereby.
This, naturally leads us to a discussion of the effect of section 43 of the Specific Relief Act, which goes with and is an integral part of the scheme of declaratory decrees which form the subject matter of Ch.
VI of the Act.
That section is in these terms: " 43.
A declaration made under this Chapter is binding only oil the parties to the suit, persons claiming through them respectively, and where any of the parties are trustees, on the persons for whom, if in existence at the date of the declaration, such parties would be trustees.
" On behalf of the appellant it was contended by the learned Attorney General that the declaration of status sought in this suit by the plaintiff will be binding only upon her and the Prince, and being a rule of ' res judicata will bind only the parties to the suit and their privies.
It was further contended that respondents I and 2 are in no sense such privies.
The argument proceeds thus: Section 43 lays down a rule of res judicata in a modified form, and it was so framed as to make it clear beyond all doubt by the use of the word " only " that a declaration under section 42 is binding on the parties to the suit and on persons claiming through them respectively.
If any question arises in the future after the inheritance to the estate of the, Prince opens out, it could not be said that the plaintiff and respondents 1 and 2 were claiming through different persons under a conflicting title which was the core of the rule of res judicata.
In this connection, reliance was placed upon the decision of the Judicial Committee of the Privy Council 'in the case of Syed ' Ashgar Reza Khan vs Syed Mahomed Mehdi Hossein 1128 Khan (1).
That case lays down that a decision in a former suit that the common ancestor of all the parties to the subsequent suit was entitled to the whole of the profit of a market in dispute in the two litigations, as against his co sharers in the zamindari in which the market was situate, does not operate as res judicata in a subsequent dispute between those who claim under him.
In this connection, reliance was also placed upon a decision of the Madras High Court in the case of Vythilinga Muppanar vs Vijayathammal(2), to the same effect.
Mr. Pathak, appearing on behalf of the .Prince, the third respondent, supported the appellant by raising a further point that the words " claiming through " mean the same thing as " claiming under in section 11 of the Code of Civil Procedure, laying down the rule of res judicata, and that those words are not apt to refer to a declaration.
of a more personal status, and that they mean the same thing as pi ivy in estate ,is understood under the common law.
He called our attention to the following passage in ' Bigelow on Estoppel ', 6th Edn., at pp.
158 and 159: " In the law of estoppel one person becomes privy to another (1) by succeeding to the position of that other as regards the Subject of the estoppel, (2) by holding in subordination to that other. . . .
But it should be noticed that the ground of privity is property and not personal relations To make a man a privy to an action he must have acquired an interest in the subject matter of the, action either by inheritance, succession, or purchase from a party subsequently to the action, or he must hold property sub ordinately.
" He also drew our attention to similar observations in " Casperz on Estoppel".
On the other hand, Mr. Purshottam and Sir Syed Sultan Ahmed, appearing on behalf of respondents I and 2, respectively, contended that " claiming through " and " claiming under " have not exactly the same significance in law, and that the rule laid down in section 43 of the Specific Relief Act does not stand on the same footing as a rule of res judicata contained in section II of the Code of (1) (1903) L.R. 30 I.A. 71.
(2) ivlad.
43. 1129 Civil Procedure, or estoppel by judgment, as discussed in the works of Bigelow and (Casperz, relied upon on behalf of the other side.
On behalf of respondents I and 2 it was further contended that the suit was really intended not to bind the Prince who has shown no hostility to the claim, but to bind respondents 1 and 2.
It was also contended that if the court were to grant the declaration that the plaintiff is the lawfully wedded wife of the Prince, if a controversy arises hereafter between the plaintiff and her children on the one side and respondents I and 2 on the other, this judgment will not only be admissible in evidence in that litigation, but will be binding upon thereon the plaintiff ', because she is privy to the judgment, and oil her children, because they will be claiming the benefit of the declaration through her, and on respondents I and 2 because they are admittedly the wife and son of the Prince and will be manifestly claiming through him.
In this connection, it has to be remarked that the discretion vested in a court to grant a merely declaratory relief as distinguished from a judgment which is capable of being enforced by execution, derives its utility and importance from the objects it has in view, namely to " prevent future litigation by removing existing causes of controversy to quiet title" and "to perpetuate testimony ", as also to avoid multiplicity of proceedings.
This practice of granting declaratory reliefs, which originated in England in the Equity courts, has been very much extended in America by statutory provisions.
In India, the law has been codified in the Specific Relief Act, in Ch.
VI, and has, in a sense, extended the scope of the rule by providing for declarations not only in respect of claims to property but also in respect of disputes as regards status.
From the terms of section 42 of the Act, it would appear that the Indian courts have not been empowered to grant every form of declaration which may be available in America.
In its very entire, a declaratory decree does not confer any new right, but only clears Lip mists which may have gathered round the title to property or to status or a legal character.
When a 1130 court makes a declaration in respect of a disputed status, important rights flow from such a judicial declaration.
Hence, a declaration granted in respect of a legal character or status in favour of a person is meant to bind not only persons actually parties to the litigation, but also persons claiming through them as laid down in section 43 of the Act.
It is, thus, a rule of substantive law, and is distinct and separate from the rule of res judicata or estoppel by judgment.
The doctrine of res judicata, as it has been enunciated in a number of rules laid down in section 11 of the Code of Civil Procedure, covers a much wider field than the rule laid down in section 43 of the Specific Relief Act.
For example, the doctrine of res judicata lays particular stress upon the competence of the court.
On the other hand, section 43 emphasizes the legal position that it is a judgment in personam as distinguished from a judgment in rem.
A judgment may be res judicata in a subsequent litigation only if the former court was competent to deal with the later controversy.
No such considerations find a place in section 43 of the Specific Relief Act.
Again, a previous judgment may be res judicata in a subsequent litigation between parties even though they may not have been eo nomine parties to the previous litigation or even claiming through them.
For example, judgment in a representative suit, or a judgment obtained by a presumptive reversioner will bind the actual reversioner even though he may not have been a party to it, or may not have been claiming through the parties in the previous litigation.
When a declaratory judgment has been given, by virtue of section 43, it is binding not only on the persons actually parties to the judgment but their privies also, using the term 'privy ' not in its restricted sense of privy in estate, but also privy in blood.
Privity may arise (1) by operation of law, for example, privity of contract; (2) by creation of subordinate interest in property, for example, privity in estate as between a landlord and a tenant, or a mortgagor and a mortgagee; and (3) by blood, for example, privity in blood in the case of ancestor and heir.
Otherwise, in some conceivable cases, the provisions of section 43, quoted 1131 above, would become otiose.
The contention raised on behalf of the appellant, which was strongly supported by the third respondent through Mr. Pathak, as stated above, is that a declaratory judgment would not bind anyone other than the party to the suit unless it affects some property, in other words, unless the parties were privy in estate.
But such a contention would render the provisions of section 43 aforesaid, applicable only to declarations in respect of property and not declarations in respect of status.
That could not have been the intendment of the statutory rule laid down in section 43.
Sections 42 and 43, as indicated above, go together, and are meant to be co extensive in their operation.
That being so, a declaratory judgment in respect of a disputed status, will be binding not only upon the parties actually before the court, but also upon persons claiming through them respectively.
The use of the word only ' in section 43, as rightly contended on behalf of the appellant, was meant to emphasize that a declaration in Ch.
VI of the Specific Relief Act, is not a judgment in rem.
But even though such a declaration operates only in personam, the section proceeds further to provide that it binds not only the parties to the suit, but also persons claiming through them, respectively.
The word I respectively ' has been used with a view to showing that the parties arrayed on either side, are really claiming adversely to one another, so far as the declaration is concerned.
This is another indication of the sound rule that the court, in a particular case where it has reasons to believe that there is no real conflict, may, in exercise of a judicial discretion, refuse to grant the declaration asked for for oblique reasons.
As a result of these considerations, we have arrived at the following conclusions: (1) That the question of addition of parties under r. 10 of 0.
I of the Code of Civil Procedure, is generally not one of initial jurisdiction of the court, but of a judicial discretion which has to be exercised in view.
of all the facts and circumstances of a particular case; but in some cases, it may raise controversies as to the power of the court, in contra distinction to its inherent 144 1132 jurisdiction, or, in other words, of jurisdiction in the limited sense in which it is used in section 115 of the Code; (2)That in a suit relating to property in order that a person may be added as a party, he should have a direct interest as distinguished from a commercial interest in the subject matter of the litigation; (3)Where the subject matter of a litigation is a declaration as regards status or a legal character, the rule of present or direct interest may be relaxed in a suitable case where the court is of the opinion that by adding that party it would be in a better position effectually and completely to adjudicate upon the controversy ; (4)The cases contemplated in the last proposition have to be determined in accordance with the statutory provisions of sections 42 and 43 of the Specific Relief Act ; (5)In cases covered by those statutory provisions the court is not bound to grant the declaration prayed for, on a mere admission of the claim by the defendant, if the court has reasons to insist upon a clear proof apart from the admission; (6)The result of a declaratory decree on the question of status such as in controversy in the instant case affects not only the parties actually before the court but generations to come, and, in view of that consideration, the rule of I present interest ' as evolved by case law relating to disputes about property does not apply with full force; and (7)The rule laid down in section 43 of the Specific Relief Act is not exactly a rule of res judicata.
It is narrower in one sense and wider in another.
Applying the propositions enunciated above to the facts of the instant case, we have come to the conclusion that the courts below did not exceed their power in directing the addition of respondents I and 2 as parties defendants in the action.
Nor can it be said that the exercise of the discretion was not sound.
Furthermore, this case comes before us by special leave and we do not consider that it is a fit case where we should interfere with the exercise of discretion by the courts below.
The appeal is, accordingly, 1133 dismissed.
As regards the question of costs, we direct that it will abide the ultimate result of the litigation and will be disposed of by the trial court.
IMAM J.
I regret I cannot agree with the opinion of my learned brethren expressed in the judgment just delivered.
The appellant in her plaint had asked for a declaration that she was a legally wedded wife of respondent 3 and that she was also entitled to receive from him Kharch e Pandan at the rate of Rs. 2,000 per month.
This respondent filed his written statement in which he unequivocally admitted that the appellant was married to him and that she was also entitled to the Kharch e Pandan as claimed in the plaint.
He further admitted that the appellant bore him three issues out of the marriage.
The appellant sought no relief or any declaration against respondents 1 and 2 as, indeed, she could not have, because she had no cause of action against them.
There is nothing in the pleadings of the appellant and respondent 3 which discloses that respondents I and 2 have any cause of action against the appellant.
Respondents 1 and 2, however, filed an application under 0. 1, r. 10(2), of the Code of Civil Procedure before the Judge of the City Civil Court, Hyderabad, praying that they should be added as parties to the suit filed by the appellant.
The Judge of the City Civil Court allowed the application and his decision was affirmed by the High Court.
The question for decision in this appeal is whether the J@dge of the City Civil Court was justified in adding respondents I and 2 as parties to the suit and whether the decision of the High Court upholding his order should be affirmed.
The provisions of 0. 1, r. 1, state as to who may be joined as plaintiffs in a suit and 0. 1, r. 3, states who may be joined as defendants.
The parties who are to be joined as plaintiffs and defendants in a suit are persons in whom and against whom any right to relief in respect of or arising out of the same act or transaction or series of acts or transactions is alleged to exist, whether jointly, severally or in the alternative, where, if such persons were parties in separate suits, any 1134 common question of law or fact would arise.
Independent of this, a court has jurisdiction under 0.1, r. 10(1), to substitute or add as plaintiff any person whom it considers necessary for the determination of the real matters in dispute.
Under 0. 1, r. 10(2), the court has the power to strike off a party who has been improperly joined, whether as plaintiff or defendant, and to join, as plaintiff or defendant, any person who ought to have been joined, or whose presence before the court may be necessary in order to enable it effectually and completely to adjudicate upon and settle all the questions involved in the suit.
It is quite obvious from the contents of the plaint and the written statement of respondent 3 that there was no occasion for the appellant to have joined respondents I and 2 as defendants in the suit.
There remains, then, to consider whether the circumstances appearing in this case justified the Judge of the City Civil Court to add respondents 1 and 2 as defendants under the provisions of 0. 1, r. 10(2).
Respondents 1 and 2 in their application under 0. 1, r. 10(2), of the Code of Civil Procedure, in essence, relied upon the five following grounds for their plea that they should be added as defendants in the suit: (1)That respondent I was the lawful and legally wedded wife of respondent 3, (2) That respondent 2 was the son of respondent 3, (3) That respondents 1 and 2 should be joined as parties to the suit because the question to be adjudicated upon would seriously affect their rights and interest in the estate of respondent 3, (4)That by adding respondents 1 and 2 as parties neither a new cause of action would be introduced nor would the nature of the suit be altered, (5)That the issue to be tried in the suit, after res pondents I and 2 were added as parties, would still be the same as the case made by the appellant was that respondent 3 was interested in denying the appellant 's marriage to respondent 3 a fact which respondents I and 2 were equally interested in denying.
The first two grounds afford no justification for respon dents I and 2 being added as parties to the suit, where 1135 the only question to be decided is whether the appellant is married to respondent 3 and whether he had contracted to pay to the appellant Rs. 2,000 a month as Kharch e pandan.
Even if the appellant successfully proved that she was married to respondent 3, who had contracted to pay her Rs. 2,000 per month as Kharch e pandan, the status and the rights of respondents I and 2 as wife and son of respondent 3 would remain unaffected.
A Mohammedan is entitled to marry more than once and have wives to the number four at one and the same time.
This is his right under his personal law and no one can question the exercise of this right by him.
In the suit between the appellant and respondent 3, the question as to whether the appellant was married to respondent 3 was a matter entirely personal to the appellant and respondent 3.
The appellant claimed that she was lawfully married to respondent 3.
It was open to respondent 3 to either deny or admit her claim.
In fact, respondent 3 had admitted the claim of the appellant that she was married to him.
It is not open to anyone else in the present litigation to say that he has falsely made such an admission.
It is true that respondents 1 and 2 have alleged collusion between the appellant and respondent 3.
No positive facts are asserted in support of this.
The suggestion is based merely on suspicion.
Unless the court is justified in adding respondents 1 and 2 as defendants in the suit the suggestion made by them that there is collusion between the appellant and respondent 3 should be ignored by the court on the simple ground that respondents 1 and 2 have no locus standi to make any such representation in the present case.
The 3rd, 4th and 5th grounds may be considered together as they are inter connected.
Grounds 4 and 5 suggest that there would be neither a new cause of action introduced nor would the nature of the suit be altered and the issue to be tried in the suit would still be the same even if respondents I and 2 were added as parties.
The only issue in the suit filed by the appellant is whether she was married to respondent 3 and whether there was a contract by the latter to pay 1136 her Rs. 2,000 per month as Kharch e pandan.
If respondents I and 2 are added as parties, questions relating to right of inheritance in the estate of respondent 3 would arise for determination in addition to the only issue stated above in the case.
The main ground, upon which respondents 1 and 2 claim that they should be added as parties to the suit, is to be found in the 3rd ground which, in substance, is that if the appellant is declared to be lawfully wedded to respondent 3, then the rights and interests of respondents I and 2 in the estate of respondent 3 would be affected.
In other words, in the estate of respondent 3, on his death, in addition to respondents 1 and 2, the appellant and her three children by him would have rights of inheritance.
Consequently, the extent of inheritance of respondents I and 2 in the estate of respondent 3 would be considerably diminished.
It was urged that if the appellant is given the declaration, which she seeks, the judgment of the court would be in the exercise of matrimonial jurisdiction and it would be a judgment in rem as stated in section 41 of the Indian Evidence Act.
Such a declaration would also be binding on respondents 1 and 2 by virtue of the provisions of section 43 of the Specific Relief Act.
The appellant asked for a declaration under section 42 of the Specific Relief Act.
This section permitted a person who claimed to be entitled to any legal character, or to any right to property, to institute a suit against any person denying, or interested to deny, such character or right.
Respondents 1 and 2 was interested in denying the appellant 's status as a wife and the status of her three children as the legitimate children of respondent 3.
A declaration in her favour would be binding on respondents I and 2 and they would never be in a position to disprove the appellant 's marriage to respondent 3.
This was an impossible situation where the declaration had been obtained from a court as the result of collusion between the appellant and respondent 3.
This submission presupposes that respondents I and 2 would survive respondent 3.
During the lifetime of respondent 3 neither the appellant nor her children on 1137 the one hand nor respondents 1 and 2 on the other have any right, , whatsoever in his estate under the Mohammedan law.
During the lifetime of respondent 3 respondents I and 2 would have the right to be maintained by him and, if the appellant is also his wife, then she and her children would also have the right to be maintained by him.
The appellant and respondent 1 would also have rights arising out of a contract, if any, between them and respondent 3.
None of these rights, however, are rights or interests in the estate of respondent 3.
The submission also presupposes that on the death of respondent 3 he would have left behind some estate to be inherited by his heirs.
These submissions are entirely speculative and afford no basis for the impleading of respondents 1 and 2 as parties to the appellant 's suit.
It was said, however, that the right to inherit is a present right in respondents 1 and 2 and if the appellant is declared to be the wife of respondent 3, then that right to inheritance is affected.
This contention is erroneous and there is no legal basis to support it.
If the appellant is declared to be the wife of respondent 3 such a declaration could not affect the right to inherit on the part of respondents I and 2 in the estate of respondent 3, assuming that respondent 3 on his death left an estate to be inherited and that the appellant and her children and respondents I and 2 survived him.
The extent of the inheritance of each one of these may thus become less but so far as that is concerned it cannot be predicated during the lifetime of respondent 3 as to what would be the extent of the inheritance of his heirs.
Under the Mohammedan law, by which the parties are governed, respondent 3 could yet validly marry two other women and have children from them, in which case, the inheritance, if any, could not be to the same extent if respondent 3 died leaving only respondents I and 2 as his heirs.
The entire question raised by res pondents I and 2 is based on the supposition that they have rights in the estate of respondent 3.
Under the Mohammedan law they have no such rights.
It is only in the event of their surviving respondent 3 that their rights will vest in his estate and the extent of 1138 their inheritance will be calculated on the number of persons entitled to inherit his estate at the time of his death.
It was urged, however, that unless respondents 1 and 2 are now given an opportunity to show that there was no valid marriage between the appellant and respondent 3, a declaration that there was a marriage between these two persons would be binding on them by virtue of the provisions of section 43 of the Specific Relief Act.
If, therefore, on the death of respondent 3 a question arose as to who were entitled to inherit his estate, respondents I and 2 would not be able to question the rights of the appellant and her children and they would be adversely affected by the declaration.
It is somewhat doubtful, having regard to the terms of section 43, that such a declaration in the present suit would be binding on respondents I and 2 as they would not be claiming their right to inheritance through the appellant and respondent 3 respectively.
Assuming, however, that such a declaration would be binding on them, that would be no justification for their being impleaded in the present litigation where the issue is not one of inheritance but one of marriage between the appellant and respondent 3.
If the submission has any substance it might as well be said by any one that he should be impleaded as a party to a suit and should be allowed to contest the suit, although there was no cause of action against him, because the decree in the suit would bind him on the ground of res judicata.
It is true that in a suit under section 42 of the Specific Relief Act it is discretionary with the court to make or not to make the declaration asked for.
The exercise of that discretion, however, has to be judicial.
In the present case there does not appear to be any legal impediment in the way of the court refusing to make the declaration asked for since respondent 3 had acknowledged the marriage and had admitted the claim for Rs. 2,000 per month as Kharch e pandan.
The appellant has not asked for any sum of money to be decreed in her favour.
There is no cause of action now left to the appellant which can be the basis for the present suit.
The appellant could rely upon the 1139 acknowledgement which raises a presumption under the Mohammedan law that she is married to respondent 3.
There appears to be no good ground for adding respondents I and 2 as parties to the present suit.
If hereafter on the happening of a certain event and the existence of certain circumstance any question arose whether the appellant was married to respondent 3, then those who were interested in disproving the marriage would be in a position to do so and rebut the presumption arising from the acknowledgement.
Under O. 1, r. 10, of the Code of Civil Procedure the court has the power to pass orders regarding the adding of parties or striking off the name of a party.
Whether the exercise of this power is a matter of jurisdiction or of discretion appears to have been the subject of difference of opinion in the courts of law here and in England.
Whichever view may be correct it is.
patent that resort to the exercise of such power could only be had if the court is satisfied that it is necessary to make an order under 0. 1, r. 10, in order to effectually and completely adjudicate upon and settle all questions involved in the suit.
The court ought not to compel a plaintiff to add a party to the suit where on the face of the plaint the plaintiff has no cause of action against him.
If a party is added by the court without whose presence all questions involved in the suit could be effectually and completely adjudicated upon, then the exercise of the power is improper and even if it be a matter of discretion such an order should not be allowed to stand when that order is questioned in a superior court.
The plaintiff is entitled to choose as defendants against whom he has a cause of action and he should not be burdened with the task of meeting a party against whom he has no cause of action.
It was, however, suggested that on the face of the plaint not only respondent 3 was interested in denying his marriage with the appellant but a legitimate inference could be drawn from the contents of the pleadings that respondents 1 and 2 were also interested in denying the marriage.
No allegation made in the pleadings even remotely suggests that respondents I and 2 were interested to deny the alleged 145 1140 marriage of the appellant to respondent 3 or were denying the same.
Under section 42 of the Specific Relief Act a suit may be instituted against any person denying or interested to deny the plaintiffs legal character or right to any property.
The plaint does not suggest that respondents 1 and 2 were denying the appellant 's status as wife of respondent 3.
Such an issue was raised by the appellant against respondent 3 only.
In law, it cannot be said that respondents 1 and 2 are interested to deny the status of the appellant as the wife of respondent 3 because the status of respondent I as wife and respondent 2 as the son of respondent 3 is not in the least affected even if the appellant is declared to be the wife of respondent 3, as under the Mohammedan law respondent 3 is entitled to have both the appellant and respondent 1 as his wives and .children through them.
The true legal position in the present suit between the appellant and respondent 3 is that respondents I and 2 have no locus standi in such a suit.
There is no danger of multiplicity of suits during the lifetime of respondent 3.
The suggestion that the present suit would lead to multiplicity of suits is founded on an assumption which no court of law can assume.
It cannot be assumed that respondent 3 would die first.
It may well be that he may survive both respondents I and 2, in which case, no question of any suit coming into existence at their instance would arise.
If the order allowing respondents 1 and 2 to be added as parties in a suit of the present nature is allowed to stand it will open the way to a wider exercise of powers under 0. 1, r. 10, and in a manner which was not contemplated by the Code of Civil Procedure, or section 42 of the Specific Relief Act or permissible under the Mohammedan law.
I would, accordingly, allow the appeal as both the courts below were in error in supposing that this was a case in which the provisions of 0. 1, r. 10, applied and would set aside the orders of the courts below.
The appellant is entitled to her costs throughout.
BY COURT: The appeal is dismissed.
Costs to abide the result of litigation in the trial court.
Appeal dismissed.
| The appellant instituted a suit against the third respondent, inter alia, for a declaration that she was his lawfully married wife, alleging that though the fact of her marriage was known to all who knew him, he was trying to suppress the facts in such a way that the members of his family should conclude that she was not his Nikah wife, that he refused to openly acknowledge her as his legally wedded wife and that this conduct on his part had cast a cloud on her status as such wife and was affecting the rights of the issue of the marriage, her three daughters.
The third respondent filed his written statement admitting the claim, but on the same date respondents i and 2 made an application under 0.
i, r. 10(2), of the Code of Civil Procedure for being impleaded in the suit as defendants on the grounds that they were respectively the wife and son of the third respondent, that they were interested in denying the appellant 's status as wife and the status of her children is the legitimate children of the third respondent, that the suit was the result of a collusion between the appellant and the third respondent and that if the appellant was declared to be lawfully wedded to the third respondent, the rights and interests of respondents i and 2 in the estate of the third respondent would be affected.
The application was contested by both the appellant and the third respondent.
The trial court allowed the application and the order was confirmed by the High Court in its revisional jurisdiction.
The question was whether the lower courts did not exceed their powers in directing the addition of respondents i and 2 as parties defendants in the action : Held (per Sinha and Kapur jj.
Imam J., disscenting), that in view of the averments in the plaint which showed that not only the third respondent but the other members of his family, including respondents i and 2, were interested in denying the appellant 's status as a legally wedded wife, respondents i and 2 were proper parties to the suit.
The question of addition of parties under O. I, r. 10, of the Code of Civil Procedure is generally not one of initial Jurisdiction of the court, but of a judicial discretion ; in a suit for a declaration as regards status or a legal character under section 42 Of 1112 the Specific Relief Act, the rule that in order that a person may be added as a party he must have a present or direct interest in the subject matter of the suit, is not wholly applicable, and the rule may be relaxed in a suitable case where the court is of the opinion that by adding that party it would be in a better position effectually and completely to adjudicate upon the controversy.
In such suits the court is not bound to grant the declaration prayed for, on a mere admission of the claim by the defendant, if the court has reasons to insist upon clear proof, apart from the admission.
A declaratory judgment in respect of a disputed status will be binding not only upon the parties actually before the court but also upon persons claiming through them respectively, within the meaning of section 43 Of the Specific Relief Act.
The word " respectively " in the section has been used with a view to showing that the parties arrayed on either side, are really claiming adversely to one another, so far as the declaration is concerned.
Per Imam J.
The facts of the present case do not justify the addition of respondents i and 2 as defendants under the provisions of 0.
i, r. 1O(2), of the Code of Civil Procedure, because. : (1)There is nothing in the pleadings to suggest that respondents 1and 2 were denying the appellant 's status as wife of the third respondent, and the court ought not to compel the plaintiff to add parties to the suit where on the face of the pleadings plaintiff has no cause of action against them.
(2)Under the Mohammedan law a man is entitled to have four wives at one and the same time and, consequently, as the third respondent has admitted that the appellant was married to him, respondents i and 2 have no locus standi to make any representation in the suit that there was collusion between the appellant and the third respondent.
(3)During the lifetime of the third respondent neither the appellant nor her children on the one hand nor respondents i and 2 on the other have any rights in his estate, under the Mohammedan law.
(4)Assuming that a declaration in the suit would be binding upon respondents i and 2, which is doubtful having regard to the terms of section 43 of the Specific Relief Act, that would be no justification for their being impleaded in the suit where the issue is not one of inheritance but one of marriage between the appellant and the third respondent.
|
Summarize this legal judgement text concisely | Appeals Nos. 254 to 256 of 1958.
Appeals by special leave from the judgment and orders dated May 14, 1956, and June 15, 1956, of the Bombay High Court in Special Civil Applications Nos.
1270, 1373 and 1374 of 1956.
ORIGINAL JURISDICTION: Petitions No& IS and 66 of 1957.
Petitions under Article 32 of the Constitution of India for the enforcement of fundamental rights.
A. V. Viswanatha Sastri and section section Shukla, for the appellants and the petitioners.
C. K. Daphtary, Solicitor General of India, H. J. Umrigar and B. H. Dhebar, for the respondents.
December 16.
The Judgment of the Court was delivered by SUBBA RAO, J.
These are three appeals by Special Leave from the judgment of the High Court of Judicature at Bombay dismissing the petitions filed by the appellants for Writs in the nature of Prohibition restraining the respondents from realising from the appellants land revenue in respect of their estates at an enhanced rate for the year 1955 56.
The petitioners in the two petitions also asked for similar relief against the respondents.
The appeals as well as the Writ Petitions were heard together, as they raised a common question of law.
The material facts in Civil Appeal No. 254 of 1958 may be briefly stated: The appellant was a taluqdar owning several taluqdari villages situate in the Dholka Taluka of Ahmedabad District.
In the year 1922 23 there was a revision settlement of land revenue of the lands situate in the said taluka including the said taluqdari villages.
Under that settlement the aggregate of the land revenue payable in respect of the lands comprised in the said taluqdari villages was fixed in a sum of Rs. 62,627 2 6.
In the year 1925 26, in exercise of the powers conferred under 913 s.22 of the Gujarat Taluqdars Act, 1888 (Bom.
VI of 1888) (hereinafter referred to as the Taluqdars ' Act), the Government of Bombay ascertained and declared that a jama of Rs. 32,643 3 0 was payable in respect of the said taluqdari villages and the said declaration was to remain in force for a period of thirty years from the year 1925 26.
In the year 1949, the Bombay Legislature passed the Bombay Taluqdari Abolition Act, 1949, hereinafter referred to as the Abolition Act, and it came into force on or about August 15, 1950.
By section 3 of the Abolition Act, taluqdari tenure was abolished and all the incidents of the said tenure attaching to any land comprised in the taluqdari estate were extinguished.
Under the Abolition Act, the appellant became an occupant of the lands.
After the expiry of the thirty year period, the talatis of the respective villages called upon the appellant to pay the full land revenue assessment in respect of the lands comprised in the said villages.
The appellant contending that he was only liable to pay jama declared to be payable by him by the Government in 1925 26 filed a Writ Petition in the High Court of Bombay for the aforesaid relief.
The appellant in Civil Appeal No. 255 of 1958 was a; taluqdar owning several taluqdari villages situate in Dholka and Dhandhulka Talukas of Ahmedabad District.
The facts in this case are similar to those given in Civil Appeal No. 254 of 1958 except in regard to the fact that the jama ascertained and declared to be payable by the appellant in this appeal by the Government in 1925 26 was about Rs. 5,734 as against the settlement amount of Rs. 14,452 11 0.
The appellant in Civil Appeal No. 256 of 1958 was a taluqdar owning several taluqdari villages situate in Dholka Taluka in Ahmedabad District.
The facts in this appeal also are similar to those in the other two except in regard to the fact that in this case the Government ascertained and declared the jama payable by the appellant to be Rs. 21,877 as against the settlement amount of Rs. 44,551.
115 914 Writ Petition No. 66 of 1957 filed by the appellant in C. A. No. 254 of 1958 relates to the demand of enhanced revenue in respect of his Sanad estate.
The facts in this petition are similar to those in the appeals except that the Government ascertained and declared the jama payable by him at Rs. 20,886 as against the settlement amount of Rs. 48,247 13 0.
The Writ Petition relates to the demand made for the year 1956 57.
Writ Petition No. 18 of 1957 was filed by Thakur Vikramsinhji Manharsinhji of Gumph Estate, Ahmedabad District, Bombay State, who was a taluqdar of Gumph Estate in Ahmedabad District comprising of seven taluqdari villages.
The facts in this petition also are similar to those in the appeals.
In, this case the jama ascertained and declared was Rs. 16,499 4 0 whereas the assessment was fixed at Rs. 30,223 12 0.
This Writ Petition also relates to the demand made for the year 1955 56.
The appellants in the appeals and the petitioners in the Writ Petitions aforesaid will be, for the sake of convenience, described hereafter as the appellants.
Mr. A. V. Viswanatha Sastri, the learned Counsel for the appellants, contends that the jama ascertained and declared to be due from the appellants for a period of thirty years was fixed at the revenue settlement, that by reason of section 117R of the Bombay Land Revenue Code, 1879 (hereinafter referred to as the Code), they were liable to pay only the said assessment till there was re settlement and that therefore the respondents have no right to make a demand for an amount higher than that declared to be due from them in 1925 26.
The learned Solicitor General counters this argument by contending that under the Taluqdars ' Act, there was an essential distinction between revenue settlement and the ascertainment and declaration of the jama; that after the Abolition Act, the amount of jama was payable only till the expiry of the thirty year period and that thereafter the appellants who bad become mere occupants would be liable to pay the entire land revenue assessment already fixed in respect of those lands.
The question 915 is which of the two contentions should prevail having regard to the relevant provisions of the Taluqdars ' Act, the Abolition Act and the Code.
It will be convenient to read the relevant provisions from the two Acts.
GUJARAT TALUQDARS ACT, 1888: " 2.
(1) In this Act, unless there be something repugnant in the subject or context, (a) . . . . . . . . . . (b) . . . . . . . . . . (c) " jama " means land revenue payable by a taluqdar to the Provincial Government.
It shall be lawful for the Provincial Government whenever it may seem expedient, to direct a revenue survey or a revised revenue survey of any taluqdari estate, under the provisions of the Bombay Land Revenue Code, 1879, applicable to such survey.
The settlement register prepared by the Survey Officer under section 108 of the said Code on the occasion of making any such survey shall, unless the Provincial Government otherwise direct contain, in lieu of the particulars specified in the said section, the following particulars (namely) : (a) the area and the assessment of each surveynumber.
22.(1) If a taluqdar 's estate, or any portion thereof, is not wholly or partially exempt from landrevenue and its liability to payment of land revenue is not subject to special conditions or restrictions, the jama payable to Government in respect of such estate or person thereof shall, if a survey settlement has been extended thereto, be the aggregate of the surveyassessments of the lands composing such estate or such portion thereof, minus such deduction, if any, as Government shall in each case direct.
(2) The Governor in Council may declare the amount of jama so ascertained fixed for any term not exceeding thirty years." BOMBAY TALUQDARI TENURE ABOLITION ACT, LXII of 1949: 916 "3.With effect from the date on which this Act comes into force, (i)the tuluqdari tenure shall wherever it prevails be deemed to have been abolished; and (ii)save as expressly provided by or under the provisions of this Act, all the incidents of the said tenure attaching to any land comprised in a taluqdari estate shall be deemed to have been extinguished.
(4)All revenue surveys or revised revenue surveys of taluqdari estates directed by the State Government under section 4 of the Taluqdars Act and all settlements made shall be deemed to have been made under Chapters VIII and VIII A of the Code and the settlement registers and other records prepared of such surveys shall be deemed to have been prepared under the corresponding provisions of the Code.
(5)(1) Subject to the provisions of sub section (2), (a)all taluqdari lands are and shall be liable to the payment of land revenue in accordance with the provisions.
of the Code and the rules made thereunder, and (b) a taluqdar holding any taluqdari land or a cadet of a taluqdar 's family holding any taluqdari land hereditarily for the purpose of maintenance, immediately before the coming into force of this Act, shall be deemed to be an occupant within the meaning of the Code or any other law for the time being in force.
(2)Nothing in sub section (1) shall be deemed to affect (b)the right of any person to pay jama only under any agreement or settlement recognised under section 23 or under a declaration under section 22 of the Taluqdars ' Act so long as such agreement, settlement or declaration remains in force under the provisions of this Act.
(17) The enactments specified in Schedule II are hereby repealed: Provided that the repeal of the said enactment shall not in any way be deemed to affect, (a) . . . . . . . . . . 917 (b). . . . . . . . . . (c) any declaration made or any agreement or settlement recognised, any partition confirmed and any management of the taluqdari estate assumed under the provisions of any of the enactments hereby repealed, and any proceedings connected with such partition or management instituted before the aforesaid date shall be continued and disposed of as if this Act had not been passed.
" The position emerging from the aforesaid provisions may be summarized thus: The Taluqdars ' Act was enacted to make special provision for the revenue administration of the estates held by certain superior land holders in the districts of Ahmedabad, Kaira, Broach and the Panch Mahals.
Section 4 enabled the Governor in Council to direct a revenue survey or revised revenue survey of any taluqdari estate under the provisions of the Bombay Land Revenue Code.
In regard to such an estate, survey would be made under section 108 of the Code and the Settlement Officer would I prepare a Register to be called the " Settlement Register which would contain the particulars mentioned in section 5 of the Taluqdars ' Act in lieu of the particulars specified in section 108 of the Code.
Under section 22 of the Taluqdars ' Act, the jama payable by a taluqdar would be the aggregate of the survey assess ments of the lands compoSING sucH an estate or such portion thereof minus such deduction, if any, that the Government in each case should direct.
Under sub section 2, the Governor in Council was empowered to declare the jama so ascertained fixed for any term not exceeding thirty years.
In 1949, the taluqdari tenure was abolished by the Bombay Taluqdari Tenure Abolition Act.
By section 5 of the Abolition Act, the taluqdars became occupants within the meaning of the Code, i.e., they were deemed to be holders in actual possession of unalienated lands other than the tenants; with the result that all the taluqdari lands became liable to, the payment of land revenue in accordance with the provisions of the Code and the rules made thereunder.
918 Sub section 2 of section 5 saved the right of any person to pay jama only under an agreement or settlement recognized under section 23 or a declaration made under section 22 of the Taluqdars ' Act so long as such agreement, settlement or declaration remained in force.
Shortly stated, the combined effect of the provisions was that the taluqdari tenure was abolished and that the taluqdar became the occupant with liability to pay land revenue in accordance with the provisions of the Code.
If there was no other relevant provision indicating a contrary intention, it is manifest from the aforesaid summary that the appellants would be liable to pay land revenue in accordance with the provisions of the Code after the period fixed in the declaration expired, i.e., from the year 1955 1956.
The learned Counsel for the appellants contends that by reason of section 117R of the Code, the declaration made by the Governor in Council fixing the amount of jama, for a period of thirty years would continue to be in force even after the expiry of the said period till a revision settlement was made and therefore the saving clause would preclude the Government from demanding higher amount of revenue than the jama ascertained and fixed in the declaration till the date of the revised settlement.
Section 117R of the Code reads: " All settlements of land revenue heretofore made and introduced and in force at the date of the commencement of the Bombay Land Revenue Code (Amendment) Act, 1939, shall be deemed to have been made and introduced in accordance with the provisions of this Chapter and shall, notwithstanding anything contained in section 117E, be deemed to continue to remain in force until the introduction of a revision settlement.
" If the declaration of the Governor in Council is a settlement of land revenue within the meaning of this section, it would continue to be in force till the intro duction of the revision settlement.
It is, therefore, necessary to ascertain the meaning of the words " settlement of land revenue " in the section.
Settlement is defined by section 117C(1) to mean the result.
of the 919 operations conducted in a zone in order to determine the land revenue assessment.
What is the scope of the operations conducted to arrive at the said result ? The provisions of Ch.
VIII A lay down the successive steps to be followed by the authorities concerned to fix the land revenue.
Under section 117D, the Government may at any time direct a settlement of the land revenue of any land of which revenue survey has been made under section 95 or not.
It may also direct at any time a revised settlement of the land revenue of such lands.
A settlement once made remains in force for a period of thirty years unless the State Government directs that it should remain in force for any period less than thirty years.
In a case where a revised settlement of land revenue has not been made for one reason or other, the Government may extend the term of the settlement for such period as it may think fit.
The land revenue assessment shall be determined by dividing the lands to be settled into different groups and fixing a standard rate for each group.
Groups are ordinarily formed on a consideration of various factors such as physical configuration, climate, rainfall, price and yield of principal crop and other relevant considerations.
Land revenue of individual survey numbers and sub divisions shall be based on their classification and value in the manner prescribed.
The Settlement Officer, who is entrusted with the duty of making the settlement, shall follow the prescribed procedure and fix a standard rate for each class of land in each group on a consideration of the relevant factors.
A hierarchy of Tribunals are created for the persons aggrieved to take the matter in appeal.
Finally the State Government passes orders approving the standard rates or varying them.
After the State Government has passed orders and the notice of the same has been given in the prescribed manner, settlement will be deemed to have been introduced and land revenue according to such settlement will be levied from such date as the State Government may direct.
It will be seen from the aforesaid summary of the scheme of land revenue settlement that land revenue is fixed for each land, having regard to the group 920 within which it falls.
All such settlements of landrevenue made before the Bombay Land Revenue (Amendment) Code, 1939, will be deemed to remain in force until the introduction of a revised settlement.
Part II of the Taluqdars ' Act provided for survey and settlement.
Under section 4 of the Taluqdars ' Act, the Governor in Council might direct a revenue survey of the taluqdari estate under the provisions of the Code.
The settlement register prepared under that Code was directed contain particulars mentioned in section 5 such as area and assessment of such survey number, etc.
Presumably, under that Act a settlement was made in regard to the taluqdari estates and settlement registers were prepared fixing the assessment of each survey number.
That settlement would certainly be a settlement of land revenue within the meaning of section 117R of the Code and that would continue to be in force till a resettlement was made.
Part IV of the Taluqdars ' Act dealt with Revenue Administration.
Section 22 laid down that in a case where survey settlement had been extended to a taluqdari estate, the jama payable by the taluqdar to Government in respect of such an estate shall be the aggregate of the survey assessments of the lands composing such estate or such portion thereof minus such deduction, if any, as Government shall direct in each case.
Under sub section
(2) of section 22, the Governor in Council could declare the amount of jama so ascertained fixed for any term not exceeding thirty years.
Under section 23, nothing in the Act was deemed to affect the validity of any agreement thereto before entered into by or with a taluqdar and still in force as to the amount of his jama, nor of any settlement of the amount of jama made by or under the orders of Government for a term of years and still in force.
Sections 22 and 23 provided for the arrangements entered into or to be entered into with the Governor in Council in respect of the jama payable by the taluqdars.
Section 23 saved the previous agreements or settlements in respect of the jama.
Section 22 authorised the Government to fix the jama, having regard to the aggregate of the survey assessments of the lands and to declare 921 the same fixed for a period of years not exceeding thirty.
The declaration under a. 22 or the agreement or settlement of jama mentioned in section 23(1) might be described broadly as a settlement entered into between the Government and a taluqdar but it was not a settlement of land revenue within the meaning of section 117R of the Code, for settlement of revenue was the result of operations carried on in respect of different classes of lands in the manner prescribed by Ch.
A of the Code or the settlement in respect of such lands in accordance with the pre existing laws it was beyond the scope of Ch.
VIII A to ascertain ' the jama, though the rates fixed under such a settlement were taken as the basis by the Government in ascertaining the jama payable by the taluqdar.
The jama payable by the taluqdar was distinct from the revenue assessment of the land comprised in the taluqdari estate and they could not be equated.
Section 17 of the Abolition Act repealed the Taluqdars ' Act and expressly provided that the repeal of the said enactment shall not affect any declaration made or any agreement or settlement recognized in respect of the taluqdari estates.
Section 5(2) (b) of the Abolition Act expressly saved the agreement or settlement recognized under section 23 or a declaration made under section 22 from the operation of the Act till such agreement, settlement or declaration remained in force.
It is, therefore, manifest that the declaration made under the Taluqdars ' Act enured to the advantage of the taluqdars, notwithstanding the repeal of the Taluqdars ' Act, till such time it was in force.
When the Abolition Act came into force, the time mentioned in the declaration in the cases before us, i.e., thirty years, had not run out and therefore the declaration made by the Government under the Taluqdars ' Act continued to be in force till 1955 56.
After the expiry of the time, the appellants would be liableto pay the entire land revenue according to the settlement register.
The entire scheme of the Abolition Act was that after the passing of that Act, the taluqdars became 116 922 occupants with the result that they would be liable to pay land revenue in accordance with the provisions of the Land Revenue Code.
If sub section
(2) was not inserted in section 5, they would be liable to pay land revenue under the Code, notwithstanding the declaration made or the agreement entered into by the Government with them in regard to the jama payable by them.
Sub section (2) was only enacted to preserve to them the concession till the period fixed had expired.
We, therefore, hold that the declaration made by the Governor in Council in 1925 26 expired in 1955 56 and the appellants became liable to pay the entire land revenue according to the settlement registers from the year 1955 56.
In the result, all the appeals and the Writ Petitions are dismissed with costs.
, the State of Bombay and the Collector of Ahmedabad, who are the respondents herein, getting one set of hearing costs in all.
Petitions dismissed.
| The appellants were Taluqdars owning taluqdari villages in District Ahmedabad, State of Bombay.
In 1922 23 there was a revision settlement of land revenue and the aggregate sum of land revenue payable by each taluqdari estate was fixed.
In 1925 26, in exercise of the powers conferred by section 22 of the Gujrat Taluqdars Act, 1888 (Bom.
VI of 1888), the Government of Bombay ascertained and declared the jama payable by each taluq which was much less than the amount of land revenue and the said declaration was to remain in force for thirty years.
With the passing in 1949 of the Bombay Taluqdari Abolition Act, 1949, the taluqdari estates of the appellants were abolished and they became occupants of the lands and, after the expiry of the thirty years, were called upon to pay the full land revenue assessment in respect of the lands.
It was contended on behalf of the appellants that by reason of section II7R of the Bombay Land Revenue Code, i879, the declaration made by the Governor in council fixing the amount of jama for a period of thirty years would continue to be in force even after the expiry of that period till a revision settlement was made and the Government was precluded from demanding the higher amount of revenue till then.
Held, that the contention must fail.
The jama payable by the Taluqdars under section 22 Of the Gujrat Taluqdars Act, 1888, was distinct from the revenue assessment of land comprised in the taluqdari estate and they could not be equated.
The declaration under section 22 or the fixation of the jama under section 23(1) of the Act was in the nature of a settlement entered into between the Government on the one hand and the Taluqdar on the other but that was no settlement of land revenue within the meaning of section II7R of the Bombay Land Revenue Code, 1879.
As section 5(2) (b) of the Bombay Taluqdari Tenure Abolition Act, 1949, expressly saved the settlement made under section 23 and the 912 declaration under section 22 of the Gujrat Taluqdars Act, the appellants were liable to pay the entire land revenue after the expiry Of 30 years, i.e., from the year 1955 56.
|
Summarize this legal judgement text concisely | iminal Appeal No. 1 of 1955.
Appeal from the judgment and order dated October 13, 1954, of the former Judicial Commissioner 's Court, Ajmer, in Criminal Reference No. 31 of 1954.
H. J. Umrigar and T. M. Sen, for the appellant.
The respondents did not appear.
December 16.
The Judgment of the Court was delivered by HIDAYATULLAH, J.
This appeal was preferred by the State of Ajmer, but after reorganisation the b of States, the State of Rajasthan stands substituted for the former State.
It was filed against the decision of the Judicial Commissioner of Ajmer, who certified the case as fit for appeal to this Court under article 132 of the Constitution.
The Ajmer Legislative Assembly enacted the Ajmer (Sound Amplifiers Control) Act, 1952 (Ajmer 3 of 1953), (hereinafter called the Act) which received the assent of the President on March 9, 1953.
This Act was successfully impugned by the respondents before the learned Judicial Commissioner, who held that it was in excess of the powers conferred on the State Legislature under section 21 of the (49 of 1951) and, therefore, ultra vires the State Legislature.
The respondents (who were absent at the hearing) were prosecuted under section 3 of the Act for breach of the first two conditions of the permit granted to the first respondent, to use sound amplifiers on May 15 and 16, 1954.
These amplifiers, it was alleged against them, were so tuned as to be audible beyond 30 yards (condition No. 1) and were placed at a height of more than 6 feet from the ground (condition No. 2).
The second respondent was at the time of the breach, operating the sound amplifiers for the Sammelan, for which permission was obtained.
On a reference under section 432 of the Code of Criminal Procedure, the Judicial Commissioner of Ajmer held that the pith and substance of the Act fell within 114 906 Entry No. 31 of the Union List and not within Entry No. 6 of the State List, as was claimed by the State.
Under article 246(4) of the Constitution, Parliament had power to make laws for any Part of the territory of India not included in Part A or B of the First Schedule, notwithstanding that such matter was a matter enumerated in the State List.
Section 21 of the , enacted: " (1) Subject to the provisions of this Act, the Legislative Assembly of a State, may undertake laws for the whole or any part of the State with respect to any of the matters enumerated in the State List or in the Concurrent List, (2) Nothing in subsection ( 1) shall derogate from the power conferred on Parliament by the Constitution to make laws with respect to any matter for a State or any part thereof." Under these provisions, the legislative competence of the State Legislature was confined to the two Lists other than the Union List.
If, therefore, the subjectmatter of the Act falls substantially within an Entry in the Union List, the Act must be declared to be unconstitutional, but it is otherwise, if it falls substantially within the other two lists, since prima facie there is no question of repugnancy to a central statute or of an " occupied field".
The rival Entries considered by the Judicial Commissioner read as follows: Entry No. 31 of Post and Telegraphs; Telephones, wire the Union List.
less,broadcasting and other like forms of communication.
Entry No. 6 of Public health and sanitation; hospita the State List.
ls and dispensaries.
The attention of the learned Judicial Commissioner was apparently not drawn to Entry No. 1 of the State List, which is to the following effect: Entry No. 1 of Public order(but not including the use the State List.
of naval,military or air forces of the Union in aid of civil power.) 907 Shri H. J. Umrigar relied upon the last Entry either alone, or in combination with Entry No. 6 of the State, List, and we are of opinion that he was entitled to do so.
After the dictum of Lord Selborne in Queen vs Burah (1), oft quoted and applied, it must be held as settled that the legislatures in our Country possess plenary powers of legislation.
This is so even after the division of legislative powers, subject to this that the supremacy of the legislatures is confined to the topics mentioned as Entries in the Lists conferring respectively powers on them.
These Entries, it has been ruled on many an occasion, though meant to be mutually exclusive are sometimes not really so.
They occasionally overlap, and are to be regarded as enume ratio simplex of broad categories.
Where in an organic instrument such enumerated powers of legislation exist and there is a conflict between rival Lists, it is necessary to examine the impugned legislation in its pith and substance, and only if that pith and substance falls substantially within an Entry or Entries conferring legislative power, is the legislation valid, a slight transgression upon a rival List, notwithstanding.
This was laid down by Gwyer, C. J., in Subramanyam Chettiar vs Muthuswamy Goundan (2), in the following words: " It must inevitably happen from time to time that legislation, though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely intertwined that blind adherence to a strictly verbal interpretation would result in a large number of statutes being declared invalid because the legislature enacting them may appear to have legislated in a forbidden sphere.
Hence the rule which has been evolved by the Judicial Committee whereby the impugned statute is examined to ascertain its 'pith and substance ', or its 'true nature and character ', for the purpose of determining whether it is legislation with respect to matters in this list or in that.
" This dictum was expressly approved and applied by the Judicial Committee in Prafulla Kumar Mukherjee (1) (2) , 201.
908 vs
Bank of Commerce, Ltd., Khulna (1), and the same view has been expressed by this Court on more than one occasion.
It is equally well settled that the power to legislate on a topic of legislation carries with it the power to legislate on an ancillary matter which can be said to be reasonably included in the power given.
It becomes, therefore, necessary to examine closely how the Act is constructed and what it provides.
The Act in its preamble expresses the intent as the control of the use ' of sound amplifiers.
The first section deals with the title, the extent, the commencement and the interpretation of the Act.
It does not unfold its pith and substance.
The last two sections provide for penalty for unauthorised use of sound amplifiers and the power of police officers to arrest without ",arrant.
They stand or fall with the constitutionality or otherwise of the second section, which contains the essence of the legislation.
That section prohibits the use in any place, whether public or otherwise, of any sound amplifier except at times and places and subject to such conditions as may be allowed, by order in writing either generally or in any case or class of cases by a police officer not below the rank of an inspector, but it excludes the use in a place other than a public place, of a sound amplifier which is a component part of a wireless apparatus duly licensed under any law for the time being in force.
In the explanation which is added, 'public place ' is defined as a place (including a road, street or way, whether a thoroughfare or not or a landing place) to which the public are granted access or have a right to resort or over which they have a right to pass.
The gist of the prohibition is the use ' of an external sound amplifier not a component part of a wireless apparatus, whether in a public place or otherwise, without the sanction in writing of the designated authority and in disregard of the conditions imposed on the use thereof.
It does not prohibit the use in a place other than a public place of a sound amplifier which is a component part of a wireless apparatus.
(1) (1947) L.R. 74 I.A. 23.
909 There can be little doubt that the growing nuisance of blaring loud speakers powered by amplifiers of great output needed control, and the short question is whether this salutary measure can be said to fall within one or more of the Entries in the State List.
It must be admitted that amplifiers are instruments of broadcasting and even of communication, and in that view of the matter, they fall within Entry 31 of the Union List.
The manufacture, or the licensing of amplifiers or the control of their ownership or possession, including the regulating of the trade in such apparatus is one matter, but the control of the 'use ' of such apparatus though legitimately owned and possessed, to the detriment of tranquillity, health and comfort of others is quite another.
It cannot be said that public health does not demand control of the use of such apparatus by day or by night, or in the vicinity of hospitals or schools, or offices or habited localities.
The power to legislate in relation to public health includes the power to regulate the use of amplifiers as producers of loud noises when the right of such user, by the disregard of the comfort of and obligation to others, emerges as a manifest nuisance to them.
Nor is it any valid argument to say that the pith and substance of the Act falls within Entry 31 of the Union List, because other loud noises, the result of some other instruments, etc., are not equally controlled and prohibited.
The pith and substance of the impugned Act is the control of the use of amplifiers in the interests of health and also tranquillity, and thus falls substantially (if not wholly) within the powers conferred to preserve, regulate and promote them and does not so fall within the Entry in the Union List, even though the amplifier, the use of which is regulated and controlled is an apparatus for broadcasting or communication.
As Latham, C. J., pointed out in Bank of New South Wales vs The Commonwealth (1): " A power to make laws 'with respect to ' a subjectmatter is a power to make laws which in reality and substance are laws upon the subject matter.
It is not (1) ; , 186.
910 enough that a law should refer to the subject matter or apply to the subject matter: for example, incometax laws apply to clergymen and to hotel keepers as members of the public; but no one would describe an income tax law as being, for that reason, a law with respect to clergymen or hotel keepers.
Building regulations apply to buildings erected for or by banks; but such regulations could not properly be described as laws with respect to banks or banking.
" On a view of the Act as a whole, we think that the substance of the legislation is within the powers conferred by Entry No. 6 and conceivably Entry No. 1 of the State List" and it does not purport to encroach upon the field of Entry No. 31, though it incidentally touches upon a matter provided there.
The end and purpose of the legislation furnishes the key to connect it with the State List.
Our attention was not drawn to any enactment under Entry No. 31 of the Union List by which the ownership and possession of amplifiers was burdened with any such regulation or control, and there being thus no question of repugnancy or of an occupied field, we have no hesitation in holding that the Act is fully covered by the first cited Entry and conceivably the other in the State List.
The Judicial Commissioner 's order, with respect, cannot be upheld, and it must be set aside.
We allow the appeal and reverse the decision, and we declare the Act in all its parts to be intra vires the State Legislature.
As the matter is four years old we do not order a retrial and we record that the State does not, as a result of the reversal of the decision under appeal, propose to prosecute the respondents, and that a statement to this effect was made before us at the hearing.
Appeal allowed.
| The Ajmer (Sound Amplifiers Control) Act, 1952, was enacted by the Ajmer Legislative Assembly which, by section 21 Of the , was empowered to make laws for the whole or any part of the State with respect to any of the matters enumerated in the State List or in the Concurrent List.
The respondents were prosecuted under section 3 Of the Act for breach of the conditions of the permit granted for the use of sound amplifiers.
On a reference under section 432 of the Code of Criminal ' Procedure, the judicial Commissioner of Ajmer held that the Act fell within Entry NO. 31 of the Union List and not within Entry No. 6 of the State List as was claimed by the State, and, therefore, was ultra vires the State Legislature.
Held, that the pith and substance of the impugned Act was the control of the use of amplifiers in the interests of health and also tranquillity and thus the Act was substantially within the powers conferred by Entry No. 6 and conceivably Entry No 1 of the State List, and did not fall within Entry No. 31 of the Union List, even though the amplifier, the use of which is regulated and controlled, is an apparatus for broadcasting or communication.
Accordingly, the Act was intra vires the State Legislature.
|
Summarize this legal judgement text concisely | Appeal No. 120 of 1955.
Appeal from the judgment and decree dated March 25, 1949, of the Madras High Court in Appeal No. 55 of 1946, arising out of the judgment and decree dated November 26, 1945, of the Court of the District Judge of Bellary in Original Suit No. 39 of 1943.
A. V. Viswanatha Sastri and K. R. Chaudhury for B. K. B. Naidu, for the appellant.
K.N. Rajagopala Sastri and M. section K. Sastri, for the respondents.
December 19.
The Judgment of the Court was delivered by IMAM, J.
This appeal is before us on a certificate granted by the High Court as according to that Court a substantial question of law arose in the case which was stated by it to be " Is the adoption of the second defendant invalid, as the approval or consent of the five trustees mentioned in paragraph 14 of the will of Kari Veerappa, Exbt.
P 2(a) was not obtained; and is the authority to adopt at an end if any one of those five persons did not accept the trusteeship or died before the adoption or refused to give their approval ".
In view of certain matters about to be stated, the question of law as propounded by the High Court does not require to be considered.
Kari Veerappa was the last male owner of the estate mentioned in his will, Exbt.
P 2(a), which he executed on October 10, 1920.
Under this will he authorised his wife Setra Veeravva, first defendant, to adopt a son for the purpose of continuation of his family as 970 he had no issue.
The authority to adopt was in the following terms: " I have given her permission to adopt as many times as would be necessary, should the previous adoption be unsuccessful.
But Veeravva must adopt only a boy approved by the respectable persons appointed by me in paragraph 14; should Veeravva die before making any adoption, the persons becoming trustees should arrange for the adoption of a boy for the continuation of my family in accordance with my kulachara (family usage) At this stage it is unnecessary to refer to the other provisions of the will of Kari Veerappa.
This gentle.
man died on October 23, 1920.
After his death, his widow made two attempts to adopt a son in accordance with his will.
The first attempt was in 1939 which did not accomplish the purpose of the will as the person alleged to have been adopted died.
The validity of this adoption was being questioned, but as the boy said to have been adopted had died, effects to dispute the adoption did not materialise.
Veeravva thereafter, on October 11, 1942, adopted second defendant, Sesalvada Kotra Basayya.
Two documents in this connection are on the record.
The first document is Exbt.
D 25 dated the 18th of September, 1942, which was a registered agreement to adopt the second defendant.
The second document is also a registered document, which is described as the deed of adoption and is dated June 23, 1943.
This clearly states that on October 11, 1942, Veeravva had adopted the 2nd defendant.
Reference was also made in this document to the agreement of September 18, 1942.
The appellant claiming to be the nearest reversioner of Kari Veerappa filed the present suit asking for a declaration that the adoption of the second defendant by Veeravva was invalid and not binding on the appellant or the other reversioners to the estate of the late Kari Veerappa.
The suit filed by the appellant was heard by the District Judge of Bellary who dismissed it.
The appellant appealed to the High Court of Madras.
His appeal was dismissed and the decision of the District 971 Judge was substantially affirmed.
The High Court did not allow compensatory costs granted by the District Judge, nor did it agree with his finding that the appellant had failed to prove the relationship he had propounded and that lie was not a reversioner at all, far less the nearest reversioner.
In the opinion of the High Court, the appellant was a relative and a reversioner, though he had not proved that he was the nearest reversioner alive at the time the appeal was heard and that he need not prove this until he actually sought to recover possession of the property after Veeravva 's death.
When this appeal came on for hearing the learned Advocate for the respondents took a preliminary objection that the suit filed by the plaintiff must in any event fail, having regard to the provisions of section 14 of the (30 of 1956), hereinafter referred to as the Act.
Hence the present appeal arising out of that suit must also fail.
It was contended on behalf of the respondents that either there was a valid adoption or there was not.
If there was a valid adoption and the decisions of the High Court and the District Judge on this question were correct, then obviously the suit of the appellant must be dismissed.
If, on the other hand, it was found that the adoption of the second defendant by Veeravva was either invalid or, in fact, had not taken place, then under the provisions of section 14 of the Act, Veeravva became the full owner of her husband 's estate and was not a limited owner thereof.
Consequently, the appellant 's suit was not maintainable.
In, view of this submission we are of the opinion that the point raised by way of preliminary objection must first be considered and decided.
It is well settled that an appellate court is entitled to take into consideration any change in the law (vide the case of Lachmeshwar Prasad Shukul vs Keshwar Lal Chaudhuri(1).
Section 14 of the Act states: " 14(1) Any property possessed by a female Hindu, whether acquired before or after the commencement of this Act, shall be held by her as full owner thereof and not as a limited owner.
(1) 972 Explanation.
In this sub section, " property" includes both movable and immovable property acquired by a female Hindu by inheritance or devise, or at a partition, or in lieu of maintenance or arrears of maintenance, or by gift from any person, whether a relative or not, before, at or after her marriage, or by her own skill or exertion, or by purchase or by prescription, or in any other manner whatsoever, and also any such property held by her as stridhana immediately before the commencement of this Act.
(2)Nothing contained in sub section (1) shall apply to any property acquired by way of gift or under a will or any other instrument or under a decree or order of a civil court or under an award where the terms of the gift, will or other instrument or the decree, order or award prescribe a restricted estate in such property.
" On behalf of the appellant it was urged that section 14 of the Act did not apply to the facts of the present case because the estate of Veerappa was not in possession of his widow Veeravva but was in possession of the second defendant at the time the Act came into force and, secondly, because under sub section
(2) of section 14 Veeravva got a restricted estate under the will Exbt.
P 2(a) and the agreement to adopt, Exbt.
It was submitted that the widow , s power of adoption did not depend on her ownership of the estate of her husband.
That power in the present case was derived under the Hindu law either from the authority conferred by her husband or the consent of his agnates.
The Act did not enlarge her power of adoption and did not render an invalid adoption made by her immune from attack by the reversioners during her life time.
The act of Veeravva in the present case was to bring in a stranger.
The appellant as a rever sioner was, therefore, entitled during the life time of Veeravva to bring the present suit to obtain a declaration that the adoption of the second defendant was invalid.
The question raised by the preliminary objection taken by the respondents must be considered an the assumption that the adoption of the second defendant 973 was invalid.
The provisions of a. 14 of the Act would not arise for consideration, if the second defendant had been validly adopted.
It is necessary, therefore, to determine whether the provisions of section 14 apply to the facts of the present case.
It was strongly urged on behalf of the appellant that the words " any property possessed by a female Hindu " in section 14 of the Act referred to actual possession of the property whether the property was acquired before or after the Act came into force.
This was a condition precedent to the applicability of the provisions of section 14 to the present case.
Since the Act came into force on June 17, 1956, and the decision of the High Court was given on March 25, 1955, the question as to who was in actual possession of the estate of Veerappa did not arise for consideration on the case of the appellant set out in his plaint.
The appellant should accordingly be given an opportunity to have a finding recorded on this question after the taking of evidence in that respect.
On behalf of the respondents it was urged that the words " any property possessed by a female Hindu " did not refer merely to actual physical possession only but to ownership and possession in law as well.
It was further urged on behalf of the respondents that even if it be assumed that the words " possessed by a female Hindu " mean actual possession then, in the present case, it had been proved that Veeravva was in actual possession of the estate of Veerappa when the Act came into force.
It could not be disputed that on the death of Veerappa, Veeravva came into possession of his estate and that she remained in possession at least until 1942 when the adoption of the second defendant is said to have taken place.
But even on the adoption of the second defendant, the agreement to adopt dated September 18, 1942, stated that Veeravva was to remain in possession of her husband 's estate during her life time in spite of the adoption.
In the written statement filed by Veeravva and the second defendant it was clearly stated in para.
6 thereof that Veeravva came into possession of her husband 's property and that she recovered possession 974 of the property covered by the decree in 0.
section 20 of 1921 on the file of the Subordinate Judge 's Court, Bellary, and that she had been in sole possession of the said property up to date and that although she had adopted the second defendant on October 11, 1942, it was subject to retention of the enjoyment, possession and management by her of her husband 's property during her life time.
An affidavit had been filed in this Court by the second defendant in which he has clearly admitted that Veeravva is still in possession of his adoptive father 's estate in pursuance of the agreement of September 18, 1942.
This was an admission against his own interest by the second defendant which he was not likely to make unless it was a fact that Veeravva was in possession of the estate since her husband 's death up to the present.
In answer to the affidavit of the second defendant and Veeravva that she was in actual possession, the appellant had failed to file an affidavit with any clear assertion that to his knowledge Veeravva was not in Possession.
The affidavit filed by the appellant was in the nature of submissions made to the Court rather than an affidavit in which facts to his knowledge were asserted.
In para.
2 he had made the significant statement " I understand that the possession of the suit properties has been and is now, in truth and in fact, with the alleged adopted son, the second petitioner.
He is in possession of these properties and is dealing with them." He did not disclose bow he came to under.
stand this.
He certainly did not assert that all that was stated in para.
2 was to his knowledge.
As an alternative, the appellant in para.
4 of his affidavit had submitted ,If I succeed in proving that the adoption is not true and valid, the petitioners cannot turn round and say that the possession of the first petitioner is that of a widow of an intestate and invoke the provisions of section 14 of the Succession Act." He had further submitted in this paragraph that, even on the case of the respondents set out in their petition for adding additional grounds, Veeravva 's estate was divested by the adoption, and as she came into possession by reason of the ante adoption agreement 975 Exbt.
D 25, section 14 of the Act was not applicable.
It seems to us that if it were permissible to decide the question of Veeravva 's possession on only the affidavits before us, we would find no difficulty in holding that she was in possession of her husband 's estate when the Act came into force.
It is to be remembered, however, that this question has arisen now and the appellant has had no real opportunity to establish his assertion that the second defendant is in actual possession and not Veeravva.
It is necessary therefore to consider the true scope and effect of the provisions of sub section
(1) of a. 14 of the Act.
If the words " possessed by a female Hindu " occurring therein refer only to actual physical possession, it may be necessary to call for a finding on the question of such possession; if, on the contrary, these words have a wide connotation and include constructive possession or possession in law, the preliminary objection can be determined on the footing that Veeravva was in such possession at the relevant time.
The provisions of section 14 of the Act have been the subject of scrutiny and interpretation by various High Courts.
In the case of Rama Ayodhya Missir vs Raghunath Missir (1) and in the case of Mt. Janki Kuer vs Chhathu Prasad (2) the Patna High Court took the view that the effect of sections 14 and 15 of the Act was that a reversioner recognised as such under the Hindu law was no more a reversioner, as a female Hindu possessing any property, whether acquired before or after the commencement of the Act, held not a limited estate but an absolute estate therein, and after the coming into force of the Act, he had no right of reversion or any kind Of Spes successionsis.
The High Courts of Calcutta, Andhra Pradesh and Madhya Pradesh have taken a view which does not support the view expressed by the Patna High Court in the aforesaid cases, The High Court of 'Madhya Pradesh in the case of Mt. Lukai vs Niranjan (3) dissented from the decisions of the Patna High Court in the above mentioned cases. ' Indeed, the Patna High Court in the case of (1)A.I.R. 1957 Pat. 480.
(2) A.I.R. 1957 Pat.
(3) A.I.R. 1058 Madh.
Pra. 160.
976 Harak Singh vs KailaSh Singh (1) overruled its previous decisions referred to above, and rightly pointed out that the object of the Act was to improve the legal status of Hindu women, enlarging their limited interest in property inherited or held by them to an absolute interest, provided they were in possession of the property when the Act came into force and, therefore, in a position to take advantage of its beneficial provisions; but the Act was not intended to benefit alienees who with their eyes open purchased the property from the limited owners without justifying necessity before the Act came into force and at a time when the vendors had only a limited interest of Hindu women.
In the case before us, the essential question for con sideration is as to how the words "any property possessed by a female Hindu, whether aquired before or after the commencement of this Act " in a. 14 of the Act should be interpreted.
Section 14 refers to property which was either acquired before or after the commencement of the Act and that such property should be possessed by a female Hindu.
Reference to property acquired before the commencement of the Act certainly makes the provisions of the section re trospective, but even in such a case the property must be possessed by a female Hindu at the time the Act came into force in order to make the provisions of the section applicable.
There is no question in the present case that Veeravva acquired the property of her deceased husband before the commencement of the Act.
In order that the provisions of section 14 may apply to the present case it will have to be further established that the property was possessed by her at the time the Act came into force.
It was the case of the appellant that the estate of Veerappa was in actual possession of the second defendant and not Veeravva at the relevant time.
On behalf of the respondent it was urged that the words " possessed by " had a wider meaning than actual physical possession, although physical possession may be included in the expression.
(1) A.I.R. 1958 Pat.
977 In the case of Gaddam Venkayamma vs Gaddam Veerayya (1) Viswanatha Sastri, J., with whom Satyanarayana Raju, J., agreed, expressed the opinion that "the word ' possessed ' in section 14 refers to possession on the date when the Act came into force.
course, possession referred to in section 14 need not be actual physical possession or personal occupation of the property by the Hindu female but may be possession in law.
The possession of a licensee, lessee or a mortgagee from the female owner or the possession of a guardian or a trustee or an agent of the female owner would be her possession for the purpose of section 14.
The word " possessed " is used in section 14 in a broad sense and in the context possession means the state of owning or having in one 's hands or power.
it includes possession by receipt of rents and profits.
" The learned Judges expressed the view that even if a trespasser were in possession of the land belonging to a female owner, it might conceivably be regarded as being in possession of the female owner, provided the trespasser had not perfected his title.
We do not think that it is necessary in the present case to go to the extent to which the learned Judges went.
It is sufficient to say that possessed " in section 14 is used in a broad sense and in the context means the state of owning or having in one 's hand or power.
In the case of Gostha Behari vs Haridas Samanta (2), P. N. Mookherjee, J., expressed his opinion as to the meaning of the words " any property possessed by a female Hindu " in the following words: "The opening words in " property possessed by a female Hindu obviously mean that to come within the purview of the section the property must be in possession of the female concerned at the date of the commencement of the Act.
They clearly contemplate the female 's possession when the Act came into force.
That possession might have been either actual or constructive or in any form recognised by law, but unless the female Hindu, whose limited estate in the disputed property is claimed to have been transformed into (1) A.I.R. 1957 Andh.
Pra. 280.
123 (2) A.I.R. 1957 Cal.
557, 559.
978 absolute estate under this particular section, was at least in such possession, taking the word " possession " in its widest connotation, when the Act came into force, the section would not apply ".
In our opinion, the view expressed above is the correct view as to how the words " any property possessed by a female Hindu " should be interpreted.
In the present case if the adoption was invalid, the full owner of Veerappa 's estate was his widow Veeravva and even if it be assumed that the second defendant was in actual possession of the estate his possession was merely permissive and Veeravva must be regarded as being in constructive possession of it through the second defendant.
In this situation, at the time when the Act came into force, the property of Veerappa must be regarded in law as being possessed by Veeravva.
It was suggested that according to the will of Veerappa, Exbt.
P_2(a), in the properties mentioned in para.
1 of that will, Veeravva got only a restricted estate.
The provisions of para.
4 of the will, however, make it clear that they would come into force only if the trustees mentioned in the will and Veeravva should disagree.
No material was shown to us that, in fact, the trustees and Veeravva had disagreed and that the provisions of para.
4 were given effect to.
Paragraph 12 of the will also showed that if the adoption was invalid, the property devolved on Veeravva as in intestacy.
It is clear, therefore, that the provisions of para.
4 are of no assistance to the appellant in applying the provisions of sub section
(2) of section 14 of the Act.
Reference was also made to the contents of the agreement, Exbt.
D 25, dated September 18, 1942, in this connection.
It is clear. ' however, that by this agreement no estate was conferred on Veeravva and she did not thereby acquire any estate, much less a restricted estate.
All that this document stated was that there was an agreement between the guardians of the boy to be adopted and Veeravva that even if the boy is adopted, Veeravva would remain in possession and enjoyment of her husband 's estate during her life time.
In our opinion, there is 979 no material on the record by which it can reasonably be said that the provisions of sub section
(2) of section 14 of the Act applied to the present case.
It was urged that the act of Veeravva in adopting the second defendant was to bring in a stranger and this action of hers could be questioned by a reversioner, as any alienation made by her, during her life time.
Reference was made to section 42 of the Specific Relief Act, Illustration (f).
In our opinion, this is of no avail to the appellant, because Illustration (f) obviously refers to a Hindu widow 's estate and has no reference to a full owner.
The right of a reversioner as one of the heirs under section 42, Specific Relief Act, is limited to the question of preserving the estate of a limited owner for the benefit of the entire body of reversioners; but as against a full owner, the reversioner has no such right.
In our opinion, under the Act Veeravva becoming a full owner of her husband 's estate, the suit could not succeed and the appeal must accordingly fail.
In our opinion, the appellant 's suit was not maintainable, having regard to the provisions of section 14 of the Act, even if it be assumed that there was no valid adoption of the second defendant.
The appeal accordingly fails and is dismissed with costs.
Appeal dismissed.
| Sub section (1) of section 14 Of the , provided: " Any property possessed by a female Hindu, whether acquired before or after the commencement of this Act, shall be held by her as full owner thereof and not as a limited owner." A suit instituted by the nearest reversioner of K for a declaration that the adoption made by K 's widow was invalid, was dismissed and during the pendency of the appeal filed against the decree dismissing the suit, the , came into force.
At the hearing of the appeal the respondent raised the preliminary objection that even if the adoption were held to be invalid, the appellant 's suit must fail in view of the provisions of section 14 Of the Act under which K 's widow, who was a party to the suit and the appeal, would be entitled to a full ownership of her husband 's properties, while it was urged for the appellant that section 14 Of the Act did not apply to the facts of the case because the properties were not in, the possession of K 's widow, but were only with the adopted son at the time the Act came into force.
Held, that the word "possession" in section 14 Of the , is used in the widest connotation and it may be either actual or constructive or in any form recognised by law.
969 Gostha Behari vs Haridas Samanta, A.I.R. 1957 Cal.
557, approved.
In the present case, if the adoption was invalid K 's widow would be the full owner of K 's estate, and even if it be assumed that the adopted son was in actual possession of the estate, his possession was merely permissive and K 's widow must be regarded as being in constructive possession of it through him.
Accordingly, section 14 was applicable and as K 's widow became a full owner of her husband 's estate, the appellant 's suit was not maintainable.
|
Summarize this legal judgement text concisely | 122 of 1958.
Petition under Article 32 of the Constitution of India for the enforcement of Fundamental rights.
1958, Oct. 16, 17, 28, 29, 30.
Basdeva Prasad and Naunit Lal, for the petitioner : The main question to be considered in the case is as to whose privilege has been involved and violated those of the press or the House of the Legislature.
Notice served on the petitioner by the Privileges Committee of the Bihar Assembly is illegal and invalid and the Constitution of the Privileges Committee is illegal as the Chief Minister of the State Dr. section K. Sinha himself has been the Chairman of the Committee.
On May 30, 1957, there was a debate in the Bihar Legislative Assembly when M. P. N. Singh, one of the oldest members of the Assembly, made a speech the gist of which was a criticism of the administration of Bihar as run by Dr. section K. Sinha, the Chief Minister, and cited certain instances of favouritism.
At this stage the Speaker held that a portion of the speech was objectionable and ordered it to be struck off and expunged.
It was a general statement.
No specific 102 810 direction was given to the Press.
The opposite party was claiming the right to prohibit all publication of proceedings a right which the House of Commons possesses with its own history, but never exercises it.
The speech was made on May 30, 1957, and the official authorised report was published and made available on January 2, 1958. 'The Search Light ', being a daily newspaper, came out on May 31 with what happened in the Assembly.
A privilege motion was said to have been moved and referred to the Committee of Privileges; no voting was taken and no time limit was given for the presentation of the report which was required under the rules of the House.
If no time limit was prescribed then under rule 215 the report was to be submitted within a month.
It was after more than a year i.e. on August 18, 1958, that the petitioner received a notice to show cause why appropriate action should not be taken against him for the breach of privilege.
This showed malice on the part of the Privileges Committee.
The action of the Privileges Committee raised constitutional points affecting the petitioners fundamental right of freedom of expression.
The Legislature cannot have such a privilege as will deprive the citizens of their fundamental rights which are guaranteed by the Constitution, specially the right of freedom of expression under article 19(1) (a).
In the actual motion the charge was that the speech was published in its entirety, " Jyon ka Tyon " ; but the motion adopted by the Privileges Committee, the charge against the Editor was that he published a perverted and unfaithful report of the proceeding, and the expunged portions of the speech was also published in derogation of the order of the Speaker.
[Wanchoo, J.
If the publication of expunged portions would make a report false, how could it be anything other than perverted and unfaithful?] [Daphtary:It was unfaithful as it was not a true report, as portions expunged had also been published].
The reference was not by the House but by the Speaker.
It was open to the petitioner to challenge the procedure, as one of the grounds of his objection 811 was that the motion was not put to vote.
Important questions arose as a result of the proceedings, one of them being : Can a Committee presided over by a Chief Minister who has such an interest in the matter as might give him a real bias be deemed to be empowered to carry on the investigation and recommend punishment ? [Daphtary:I object to the use of the word 'bias '.
It is not supported by the petition or the plea].
The allegation of mala fide is much stronger than bias.
[Chief Justice.
article
19(1) had granted fundamental rights against law made by the State.
There were no fundamental rights against the Constitution itself.
If the Constitution provided that the House shall have certain privileges then it was clear that there cannot be a question of fundamental rights against the Constitution.
If the Constitution provided that the House shall have the privileges that so much shall be published then article 19(1) will not prevail against the Constitution].
I rely on Amendment One of the American Constitution on which the fundamental rights in article 19(1) are based.
Cooley 's " Constitutional Law " (P. 350).
Express Newspapers (Private) Ltd. vs Union of India, , 121.
[Sinha, J. In America people were more forthright in their views and opinions and that we could have better guidance from English precedents than from American.] Article 194 (3) which dealt with powers, privileges and immunities of the Legislatures were subject to the provisions of the Constitution.
Article 194(3) cannot be said to abridge the provisions of article 19(1) which guaranteed fundamental rights.
Article 194(3) of the Constitution provided the procedure of the British House of Commons in regard to powers, privileges and immunities.
Even then any power or privilege which militated against the fundamental rights cannot be deemed to be valid.
The Legislature can follow the procedure of the British House of Commons, but this 812 privilege of legislature cannot go contrary to the fun damental rights.
If such a privilege is allowed, the Legislature would assume sovereignty as against the Constitution itself under the garb of privileges.
Even in England, the ban on the publication of the proceedings in Parliament had ceased to exist in practice after the 16th century.
The proceedings of legislatures are open to the public and the citizens have a right to know whatever happens in the House and also to know as to how any portion of the proceedings is ordered to be expunged.
The Blitz case Gunupati Keshavram Reddy vs Nafisul Hasan, A. I. R. in which the Supreme Court ordered the release of a correspondent who had been arrested by the Speaker of the U. P. Assembly in connection with breach of privilege.
He was not produced before the Magistrate and on Habeas Corpus petition, he was released.
Article 20 prevailed and it was established that article 194(3) could not go against article 20 guaranteeing a person 's liberty.
[Chief Justice.
If the privileges were given by the Constitution itself, then the question of fundamental rights does not come at all.
Article 19(1) is against law made by the State Government.
Fundamental rights do not prevail against the Constitution.
The counsel could take the stand that Bihar Legislative Assembly has not got the powers which it claims.
The question was whether the Assembly had such powers under the Constitution].
In England there was no written constitution.
The House of Commons had claimed the right to prohibit publication but in fact and in actual practice never exercised that right.
The American Constitution also granted full freedom to publish the proceedings of the House including the expunged portions.
That being so, it was for the Court to interpret article 194(3) harmoniously with article 19(1) and the provisions of the former had to be consistent with fundamental rights granted under the Constitution.
In England the Parliament is supreme and there is no written constitution, but here the Constitution is supreme.
The right to expunge could be claimed only for the purpose of 813 official record.
They could not claim a total prohibition.
There was a common basis for this in both American and English democratic systems.
The people, had the right to know as to what was happening in the House to enable them to exercise their franchise properly.
If people have a right to see and hear the proceedings, other people who are not able to be in the House have a right to know through publi shed proceedings.
Wason vs Walter, (1868) L. R. IV Q. B. 73, 95.
(The counsel refers to the standing orders in the British House of Commons quoting May 's Parliamentary Practice).
Article 194(1) in its entirety was subject to the provisions of the Constitution and under article 19 to the provisions of the Constitution.
If under article 194(3) the application of the House of Common laws provided complete immunity, then it was impossible to continue the consistency of article 194(1) and article 194(3).
Article 194(1) provided clearly that it was subject to the provisions of the Constitution in the matter of freedom of speech, etc., in the State Legislature.
It was impossible to contend that article 194(3) was not subject to the provisions of the Constitution.
Under article 194(1) it was made clear that a member of the House of Legislature did not have the same immunity as had a member of the House of Commons who enjoyed complete freedom and had no restriction of whatever sort.
Here article 194(1) made the freedom of speech in the House subject to the provision of the Constitution.
[The Chief Justice.
It might be that one of the immunities was singled out and made subject to the provisions of the Constitution].
Privileges and rights of the House of Commons extended also to elections.
The power of the House of Commons to fix its own elections could not be challenged in a tribunal or a court.
Here in India, elections were held under a separate authority provided by the Constitution under Ch.
XV and such elections could be challenged and appeared against in the High Court, tribunals, etc.
In England, the validity of an election was to be determined by the House 814 of Commons itself or its tribunal.
Such a privilege could not be claimed by a House of Legislature here.
[The Chief Justice.
Here we had powers, privileges and immunities which may be prescribed by law by legislation under article 194(3) and it was Part XV in the Constitution which provided for elections.
It showed that powers, privileges and immunities had been separated and dealt with separately].
The whole scheme of the Constitution had to be taken into account.
The reasonable interpretation of article 194(3) was that, like article 194(1) it was also in its entirety made subject to the provisions of the Constitution.
The next point was that the Chief Minister could not be the Chairman of the Committee of Privileges with quasi judicial powers to summon witness and demand production of evidence.
In this case, the Chief Minister had a certain interest in the matter and this was against all principles of natural justice: [The Chief Justice.
Whether Counsel claimed that the Chief Minister could not be at all the Chairman of the Committee or that the Chief Minister or anybody should not be the Chairman or in the Committee if he had an interest].
I put it on the ground of interest only.
Voting took place in the Committee and if the Chief Minister had not been there might be a tie.
(Quoted Rule 62 of the Standing Orders of the House of Commons to show that the Chief Minister could not be the Chairman of the Committee of Privileges).
I will now deal with and challenge the procedural aspect of the matter.
It was the House alone which had a right to refer the matter of breach of privilege.
Rule 207 of the Assembly clearly laid down that the matter must be of recent occurrence.
In the House of Commons, it was accepted that " recent occurrence " could not go beyond ten days.
The privilege motion got precedence over even adjournment motions.
Then under r. 215, no time limit was fixed by the House for the report to be submitted, as such the report was to be submitted within 815 a month.
The House had not extended the date for the submission of the Report by the Privileges Committee and in the absence of such extension, the reference not being reported, the Committee became " functus officio ".
It was against this that the petitioner sought to move the Honourable Court for prohibition of the proceedings against him and for the vindication of his fundamental rights.
Either the Committee had become " functus officio " or the non submission of the report within the stipulated time under r. 215 first proviso could only mean that the Committee had nothing to recommend.
Regarding the procedure adopted, Rules 208 and 209 had to be taken together.
There were objections to the motion at the time it was moved.
The publication of a true and full account could not be termed unfaithful and perverted.
It was for the court to determine whether there has been a breach of privilege committed.
[Sinha, J. Is it our jurisdiction? Is it not the exclusive function of the Parliament ?] [The Chief Justice.
What was a privilege and what was not could be stated but whether there was a breach of privilege or not it was for the House to say].
There was no breach of privilege.
What we are claiming is that the reporting of proceedings is not a privilege the House can claim.
Then my other point is that I have not published the expunged portion.
[Daphtary, Solicitor General: It is for the House to decide].
Am I not entitled to come to this Court as custodian of my fundamental rights, that powers are claiming to punish and proceed against me and coerce me? The question was whether one was not entitled to bring a petition under article 32 against it ? C. K. Daphtary, Solicitor General for India, B. K. P. Sinha and section P. Varma, for the respondents.
The question to be considered is how much of the portion which contained all the allegations fell under article 32.
The Article could deal only with breach of fundamental rights.
If any of the powers or exercise of the 816 powers and privileges and the defence and assertion of any of the immunities involved, were a breach of fundamental rights or were something contrary to fundamental rights, even then the powers and the privileges were good.
They could not be considered bad as offending those rights.
It was not open for someone to come and say that there was no such power and immunity when such powers and immunities were provided under article 194(1) and was made part of the Constitution.
Every citizen had been given the right of freedom of speech by the Constitution.
A member of the House of a Legislature also enjoys that freedom by virtue of being a citizen.
Only rules and regulations made in excess of legislative powers could be questioned and not the powers themselves.
Then there was the question of amendment of the Constitution which was not affected by fundamental rights.
The result would be that by amendments of the Constitution fundamental rights could be modified or removed.
That was what was done by amendments in articles 31(a) and 31(b) where the rights were modified.
Article 194 was put there in the Constitution by the framers simultaneously with other provisions.
It therefore had an equal footing with other provisions of the Constitution and unless expressly stated in the provision itself could not be made subject to other provisions of the Constitution.
All parts of the Constitution were made by the same people and were equal.
One could not be made more important than the other.
[Subba Rao, J. What was the idea then in giving a paramount position to fundamental rights in our Constitution ?] They are fundamental to human beings.
[Subba Rao, J. If the legislature had made a law defining its powers and privileges, could that law be valid if it infringed the fundamental rights?] The Constitution itself said that powers, privileges and immunities would be such as the Legislature would lay down.
Even such a law would not be against the fundamental rights.
It would be in exercise of the constituent law.
The Constitution makers 817 thought it best that they would not define the powers of the Legislature and left to the Legislature to decide what powers it will have.
[Subba Rao, J. When a law was made by the Legislature it was subject to fundamental rights under article 19 but when the Legislature made laws relating to its powers, etc.
, it was not subject to article 19.
Was that not an anomalous situation ?] There was no anomaly at all.
The Constitution makers themselves had said what powers and privileges of the Legislature were.
When it was so made as a law by virtue of powers granted by the Constitution then it could not be subject to fundamental rights.
That what the Constitution itself had chosen to give was subject to fundamental rights was not a sound argument.
[Bhagwati, J. The fundamental rights were on a high pedestal and any other provisions should not infringe them].
What was constitutional was constitutional.
Unless there were provisions made expressly subject to other provision or provisions they had all the same footing and were on the same plane.
Wherever the Constitution makers wanted to say it, they said so.
They were otherwise independent of each other, unless stated to the contrary.
No part of the Constitution could be said to be void and if one part was struck down then it would mean that the Constitution itself was being struck down.
Article 194 had to be given the status of Constitution law.
The first point was that powers, privileges and immunities given by article 194(3), were not subject to article 19.
Having established that, the second point that would arise would be what were those powers and privileges.
What was the ambit of those powers.
In England there were instances to show that breach of privilege was treated as contempt of the House, disobedience of the Speaker 's order was contempt.
(Refers to the standing order 62 of the House of Commons).
103 818 The argument advanced by the other side was fallacious.
[Quotes from May 's Parliamentary Practice].
Standing order 62 did not apply to the Committee of Privileges.
It applied to select committees and standing committees but not to the Committee of Privileges, which was a sessional committee appointed at the beginning of each session.
The House of Commons had powers to make rules from time to time and regulate its own procedure.
All that the court had to satisfy itself about was whether or not the House had the power to follow up a breach of privileges.
[Bhagwati, J. Whether power to make rules had not been within limits.
In an effort to protect immunities and privileges one could not expand the privileges and immunities].
All the precedents of the House of Commons were not available dating back to 16th or 17th Century but there was enough in May 's Parliamentary Practice to support the argument.
So long as the debates were correctly and faithfully reported the right to prevent publication was not enforced.
Journalists were present in the House galleries by the leave and licence of House and on sufferance.
What the Speaker said was not to be published, it could not be published.
[Subba Rao, J. What was the purpose of expunging a portion of the proceedings ?] The expunged portion was not deemed to have been stated in the House.
There was the case in the House of Lords where an expunged portion was published and became breach of privilege.
The privilege of the House to control publication was always there though it might not be exercised.
The House, was always zealous of its privileges.
Even here in India, House privilege had been asserted at the time when Mr. Vithalbhai Patel was President of the Assembly.
There was heated debate on the question as to in whom did the control of the precinct of the House vest, the Viceroy or the President of the Assembly.
Mr. Patel to assert the Privilege of the House asked the galleries to be cleared.
Privilege was not ordinarily exercised if the report was faithful and accurate.
But it was 819 necessary in order to ensure if the member could say things without fear of being misreported.
Otherwise his freedom of speech was affected.
It was the power and privilege of the House of Commons to decide what was a breach or not.
The courts could go to the extent to find whether a particular privilege existed.
[The Chief Justice: If the privilege claimed was excessive would it not affect fundamental rights ?] It depended on the wording of the notice.
In the present case the motion and Committee 's notice had to be read together.
It would not be correct to give fundamental rights paramountcy over other parts of the Constitution.
With reference to the allegations of mala fide '.
What was the ' mala fide '? Who could deny it except the secretary as the 'mala fides ' charge was levelled against the Committee of Privileges ? [Sinha, J. Including the Chief Minister].
" Mala Fides " was alleged against the Committee.
[Sinha, J. The petition says that the committee is influenced by the Chairman].
It is not so.
I will confine myself to the petition which says that the Committee of Privileges is proceeding against the petitioner mala fide ' in order to muzzle him and restrict him from expressing his views.
The Chief Minister was the Chairman of the Committee.
There was nothing to show nor was it claimed that the member of the Committee were all his party men.
There were members of other parties.
It was not alleged otherwise.
It could not also be said that the members of the Committee were all his adherents.
In the circumstances, what else could be done except for the Secretary to deny the allegations of 'mala fide ' which was levelled against the committee appointed by the Speaker and the Chief Minister was Chairman from long before the matter under consideration was taken up.
[The Chief Justice.
What about the time lag? No step was taken for one whole year and the allegation 820 is that, when some articles were published, the matter was taken up].
The action was taken after some time to enable the party to correct itself.
Sinha, J.
The point raised was that the Committee did not do anything for one year and then woke up one morning and then pressed the matter].
How is the matter carried any further by these arguments.
Ultimately the House would judge and it was composed of 316 members.
Where was the question of mala fide '? No one in the House opposed the motion.
Where was the malice of the Committee, whether it issued the notice immediately or after some time ? [Sinha, J. The argument of the petitioner 's Counsel was that the House should have been presumed to have dropped the matter as the House had not done anything at all for one year and all of a sudden the matter was taken up.
The point made out was that but for the petitioner 's subsequent action, no notice would have been issued by the Committee].
They had issued the notice stating that there was a breach of privilege.
[Sinha, J. Had not the Committee become 'functus officio ' by lapse of time ?] No. the Committee had the power to launch the prosecution.
It did not do it immediately.
It waited for three or four months.
[Sinha, J. The very essence of these proceedings which are of a summary character is that the matter should be expeditiously dealt with].
Is it not a matter of internal management ? The House had decided something and it was for the Committee to take some action.
The House did not rescind the decision.
With reference to the claim that rules had not been followed: the standing Order 62 of the House of Commons did not apply to the Privileges Committee which was a sessional committee.
Then there was rule 215 about the time limit.
What was it that the House had done? It appointed one of its committees to 821 inquire and submit its report within a period.
The House could say that it could extend the time and enlarge the scope of time limit.
[The Chief Justice.
But as long as the rule stand. . ].
The nature of the rule had to be gone into.
It was something fixed by the House for the guidance of the Committee.
The rules were made for the benefit of the House.
It was a matter for themselves, not for the benefit of an outsider to seek to enforce it.
On the subject of malice, if something was lawful it did not matter how much malice there was, the motive of malice could not make unlawful what was otherwise lawful.
Malice imputed was that the Chief Minister was the Chairman of the Committee.
He might not be there.
The Speaker might appoint some one else.
How can then one presume that the committee would act maliciously ? There were responsible persons holding, responsible positions.
H. N. Sanyal, Additional Solicitor General of India, for the Attorney General for India, cited the powers of the legislature of Nova Scotia and the position there, summed up the law relating to powers and privileges ' Basdeva Prasad, in reply.
The main fact to be borne in mind is that the Parliament or the Legislature in India was not really as sovereign as the ' British Parliament which was supreme in all matters.
Article 194(1) is not a repetition of article 19(1)(a), but are abridgement of the freedom of expression and, speech which would have otherwise been available to ' the members of the legislature as ordinary citizens.
Article 194(3) itself does not provide a constitutional exemption to the freedom guaranteed under article 19(1)(a) and article 194(3) is subject to the provisions of the Constitution in Part III and the other article 21.
Article 194(3) does not import into the Indian Constitution the powers, privileges and immunities in their entirety, as for instance the right to prohibit publication altogether could not be imported.
822 It had already been made clear that article 194(1) was subject to the provisions of the Constitution.
The point was that article 194(3) in its entirety was subject to the Constitution.
Article 32 itself was very significant as to what rights and powers of Part III were ]lore important.
Writs could be issued for breach of fundamental rights or other violation of rights, including powers of taxation.
Therefore, article 194 did not enlarge but it abridged the scope of application of article 19(1)(a), since it was also made subject to the rules and standing orders that might be made by the House.
[The Chief Justice.
Whether Parliament could not under the residuary powers of legislation, make a law imposing restrictions on the freedom of speech of members of the State Legislature.
It was pointed that article 19(1) was a primary right; article 19(2) cut it to some extent; article 194(1) also made it subject to the provisions of the Constitution but the freedom of speech was further restricted.
The Constitution itself appeared to provide those limitations.
Would not then article 194(1) read with article 19(1) equally lead to an anomaly?] Article 194(2) flowed from article 194(1).
If article 194 imported powers, privileges and immunities wholesale from the House of Commons of Great Britain, how could they be exercised ? There was article 208.
Any other form of restriction arising from the exercise of those powers would be unreasonable restriction.
What article 194 gave powers, privileges and immunities.
Article 208 gave the power to punish, subject to the provisions of the Constitution.
It could not be said that the British House of Commons had the power to punish a man twice.
A man could not be held guilty of privilege by an ordinary court of law and at the same time by the House of Commons.
But here article 208 and article 194 came to be subject to article 21 in that no one could be deprived of personal liberty with.
out a procedure of law.
[The Chief Justice.
But then you have not come to the stage of article 21 at all.
Your liberty has not been taken away].
823 My liberty is threatened.
The notice says there is prima facie case.
Then there is the allegation of mala fide and bias.
I refer to the claim of the House to be the Bole Judge of its privileges.
I say that the, must be subject at least to constitutional rights.
[The Chief Justice.
If article 194(3) incorporated all the privileges, then could not that privilege itself be taken as procedure established by law ?] Article 21 never contemplated that there would be no procedure.
Supposing none of them was followed and a warrant was issued, could not that be questioned in a court of law ? [The Chief Justice.
If the man is arrested then we shall consider].
It would then be subject to the jurisdiction of their Lordships.
Article 21 guaranteed that there would be no interference with the personal liberty of the citizen except according to a procedure enacted by law.
There must be a substantive law.
and such law must be valid.
If your Lordships hold with me that fundamental rights were superior, then article 194 would have to be read with article 19(1) and the American position would help.
If the House was the sole Judge then neither article 21 nor article 22 would be available.
[The Chief Justice.
If one could publish anything that was said in the House there would be no meaning in expunging.
Being expunged,, meant it was not said].
Yes, but will not the House take notice? It is the right of the people to know what had been said and what was expunged.
Expunction would be for the purposes of official record.
Even in Hansard, the expunged portion is not removed but only red lines put over it.
[Sinha, J. The argument advanced was that under the language of article 194(2) you could not publish anything at all].
Yet, if the claim of total prohibition was accepted, then I would be on velvet.
But would that position be allowed in India ? The House of Commons debated 824 on the Public, and I have a right to publish what takes place.
[Sinha, J. You claim a total right to publish].
Yes, total right to publish whatever takes place in the House.
I will not claim I have a right to publish garbled and unfaithful report, I have a right to publish a faithful report of what was said or done.
The argument of the learned Solicitor General was that article 194(3) was not subject to the provisions of the Constitution.
In the Constitution, the power was given to the President to make all laws and regulations in Part D States and the provision did not say subject to fundamental rights Could the President make laws that would have the effect of taking away fundamental rights or that it was said that citizens in Part D states aid not have any fundamental rights? All the provisions of the Constitution had to be read in relation to the chapter on fundamental rights.
In the absence of law, the power to make rules could come in conflict with fundamental rights.
Law could mean a power or authority.
[Subba Rao, J. Under article 194(3), the legislature of a State had all the powers, privileges and immunities of the House of Commons.
One of such powers was to prevent publication of a garbled version.
If in exercise of that power, the legislature made an order asking someone to appear at its bar, would that order come within the meaning of law ?] " Law included order, regulation or notification." [The Chief Justice.
What is the meaning of an order ? Does it mean an executive order ?] It is an executive order.
Order flowing from public authority.
The definition of the State included Government, Parliament, Legislature and local authority.
It would be an order passed by authority.
Article 21 would cover acts under the enacted law.
Here, a Committee of the House was proceeding to take action to deprive the petitioner of his personal liberty.
What was the remedy? What could be the procedure? [The Chief Justice.
It would be argued that the Constitution itself was law.
It Deed not be enacted by 825 the Legislature.
If article 194 imported all the privileges of the House of Commons, then no question arose at all.
That itself prescribed the powers and privileges].
[Subba Rao, J.
If in exercise of such a power an order was made by the legislature, would it not be law within the meaning of its definition in the Constitution ?] Executive order will be included in the expression law ".
[Subba Rao, J.
If an order, which would be law as thus defined, be made, would it be valid if it infringed the fundamental rights ?] [The Chief Justice.
The State could make a law relating to contempt of Court.
Supposing the State did not make such a law, the Court could still haul up people for contempt.
Was not there inherent power ?] The High Courts had the power to punish.
But the question of punitive punishment would arise.
[The Chief Justice.
Fundamental rights were fundamental in the sense that human rights which were valuable were fundamental.
The other provisions of the Constitution could be equally efficacious].
My point was that any law or action had to be within the constitutional rights guaranteed by the Constitution.
Even the right to punish would have to be within the ambit of the fundamental rights chapter.
If anyone was committed for contempt of court which was not fully established, could he not seek redress ? Justice 'Was not a cloistered virtue.
Could be not then claim a remedy under the ordinary law ? [Subba Rao, J. A law made by the Legislature in respect of privileges would be subject to fundamental rights.
If the law was not made, the privileges were not subject to fundamental rights].
[Sinha, J. This will be a good reason for the Legislature not to make law at all].
Article 194(3) bad to be interpreted as coming within the scope of fundamental rights.
The first part was admittedly so.
The second part was equally subject to the fundamental rights by the very necessary implication.
104 826 Privileges did come within judicial review.
They could go into the nature of privilege and on the given facts decide their constitutional validity.
December 12.
The Judgment of Das, C. J., Bhagwati, Sinha and Wanchoo, JJ., was delivered by Das, C. J. Subba Rao, J., delivered a separate Judgment.
DAS, C. J.
The petitioner before us, who is a citizen of India, is by profession a journalist and has at all material times been and is still working as the editor of the Searchlight., one of the well known English daily newspapers having a large circulation in Patna and other places in the State of Bihar.
The first respondent has at all material times been and is the Chief Minister of the State of Bihar and the Chairman of the Committee of Privileges of the Bihar Legislative Assembly.
The Committee of Privileges has been impleaded as the second respondent as if it is a legal entity entitled to sue or to be sued in its name.
The third respondent is called and described as the Secretary to the Bihar Legislative Assembly as if it also is a legal entity but the incumbent of that office has not been named in the cause title.
As no objection has been taken to the way the second and the third respondents have been impleaded as parties nothing further need be said about the propriety of such procedure.
This petition under article 32 of the Constitution raises several important questions of far reaching effect.
It came to be filed in the following circumstances: In his speech made in the Bihar Legislative Assembly on May 30, 1957, in course of the general discussion on the Budget for the year 1957 58 Shri Maheshwar Prasad Narayan Sinha, a Congress mem ber of that Assembly, delivered what has been described as " one of the bitterest attacks against the way the Chief Minister was conducting the administration of the State ".
The Chief Minister, who also belongs to the Congress party, is the first respondent before us.
Shri Maheshwar Prasad Narayan Sinha 827 referred to the way the Chief Minister, according to him, was being guided by the advice of a gentleman who was well understood by all to be Shri Mahesh Prasad Sinha, who was an ex minister of Bihar and had been defeated at the last general elections.
The member referred, as common knowledge, to the activities of Shri Mahesh Prasad Sinha in the selection of Ministers and the formation of the Ministry as also to the glaring instances of encouragement of corruption by the Government by, amongst other things, the transfer of a Muslim District Engineer from Darbhanga to Muzaffarpur for exploiting that officer 's influence on the Muslim voters of Muzaffarpur.
Similar reference was made to the case of a District and Sessions Judge who, notwithstanding the recommendation for his discharge made by the Chief Justice after a regular judicial enquiry had been held by a High Court Judge, was ordered only to be transferred to another place on the intervention of Shri Mahesh Prasad Sinha.
The member strongly criticised the appointment of Shri Mahesh Prasad Sinha as the Chairman of the Bihar State Khadi Board as having been made only to enable him to stay in Patna where residential accommodation at Bailey Road had been procured for him.
The distribution of portfolios amongst the ministers did not also escape strictures from this member.
There is no dispute indeed it is admitted in paragraph 6 of the present petition that immediately after Shri Maheshwar Prasad Narayan Sinha referred to the question of appointment of the Chairman of the Khadi Board, a point of order was raised by another member of the Assembly, Shri Satendra Narain Agarwal, and the Speaker stated as follows: " Mahesh Babu ke Sambandh Me Jitni Baten Kahi Gain Uske Bare Me Maine Kah Diya Ki Us Tarah Ki Bat Ko Proceeding Se Nikal Diya Jayega Lekin State Khadi Board Ke Chairman Ke Bare Me Jo Kuch Kahenge We Karyawahi Me Rahenge or Iske Bishai Me Manniya Sadasya Ko Kahane Ka Hak Hai. " which translated into English means roughly: " I have already ruled with reference to whatever has been said about Mahesh Babu that such words 828 would be expunged from the proceedings but that whatever may be said with reference to the Chairmanship of the State Khadi Board will remain in the proceedings and the Hon 'ble member has the right to speak on that matter.
" In its issue of May 31,1957, the Searchlight published a report of the speech of Shri Maheshwar Prasad Narayan Sinha which is set out in paragraph 2 of the petition and also reproduced in what has been called "annexure B " in annexure III to the petition.
It will suffice, for the purposes of our decision of this petition, to set out the opening part of the report which reads as follows: BITTEREST ATTACK ON CHIEF MINISTER M. P. Sinha 's choice as Khadi Board chief condemned.
Maheswar Babu 's scathing criticism of Government.
(By our Assembly Reporter) Patna, May 30.
One of the bitterest attacks against the way the Chief Minister was conducting the administration of the State was made in the Bihar Assembly today by Mr. Maheshwar Prasad Narayan Singh, a Congress member who said that contrary to all principles of good Government, the Chief Minister was guided by the advice of a gentleman who had been defeated at the election and stood condemned before the bar of public opinion.
He also named the gentleman by whose advice the Chief Minister was allegedly running the administration.
In this sixty minute speech which was punctuated with frequent applause by Congress as well as Opposition benches, Mr. M. P. N. Singa said that corruption 829 could not be eradicated from Government unless the Chief Minister refused to be influenced by such undesirable elements.
He said it was common knowledge that (luring the period of the formation of the new ministry which took unduly long time many aspirants for Ministership and Deputy Ministership went to a defeated Minister for pleading their case so that the defeated Minister concerned could influence the Chief Minister.
" It has not been denied by the learned advocate for the petitioner that the references to the gentleman who had been defeated at the election and was said to have stood condemned and by whose advice the Chief Minister (respondent 1) was alleged to be guided, were intended to be and were understood by the public to be references to Shri Mahesh Prasad Sinha, all reference to whom had, as herein before mentioned, been directed by the Speaker to be expunged from the proceedings.
On June 10, 1957, one Shri Nawal Kishore Sinha, a member of the Bihar Legislative Assembly, gave notice to the Secretary, Bihar Legislative Assembly (respondent 3) that he wanted to raise a question of the breach of privilege of the House.
That notice was in the following terms "To The Secretary, Bihar Legislative Assembly, Patna.
The 10th June, 1957.
Sir, I give notice that I want to raise the following question involving a breach of privilege of the House, after question hour today.
" That the Hon 'ble Speaker ordered that all references regarding Shri Mahesh Prasad Sinha, Ex Industry Minister, made in the speech of Shri Maheshwar Prasad Narain Sinha on the 30th May, 1957, except that of his appointment as the Chairman of the Khadi 830 Board, be expunged but in spite of this the " Searchlight ", a local daily, published the entire speech of Shri Maheshwar Prasad Narayan Sinha, containing all references to Shri Mahesh Prasad Sinha which were ordered to be expunged.
Hence there has been a breach of the privilege of the House.
A copy of the " Searchlight ", dated the 31st of May, is filed herewith.
Yours faithfully, Nawal Kishore Sinha, M.L.A." An account of the proceedings that took place in the House on June 10, 1957, appears from " annexure D " in annexure III to the petition.
It will appear from that account that after Shri Nawal Kishore Sinha had asked for leave to move his motion, the Speaker read out to the members the relevant rule as to the procedure that has to be followed when, on such leave being asked for, an objection is or is not taken.
Thereafter, as no objection was raised in accordance with that rule, the Speaker declared that the mover had received the permission of the House to move his motion.
One Shri Karpuri Thakur having remarked that he could express no view without knowing what had been printed and what had been directed not to be printed, the Speaker read out the text of the notice sent in by Shri Nawal Kishore Sinha set out above which referred to the issue of the Searchlight in question.
As Shri Karpuri Thakur was apparently satisfied by this, the Speaker then requested Shri Nawal Kishore Sinha to move his resolution.
The account shows that Shri Nawal Kishore Sinha then said "Sir, I beg to move: that the matter be referred to the Privilege Committee of the House".
No amendment having been moved, the Speaker, according to the report of the proceedings set forth in " annexure D " ' put the question to the louse and, nobody objecting to the same, declared the resolution carried.
It appears that the Committee of Privileges (respondent 2) did not take up the consideration of the matter promptly and while the mattet was pending before the 831 Committee sharp exchanges of charges and counter charges took place between the petitioner and the Chief Minister (respondent 1) as are evidenced by the extracts from the issues of the Searchlight of May 27, 28 and 31, 1958.
There appears to have been a debate on June 5, 1958, for two hours in the Bihar Legislative Assembly on the alleged failure of the State Government to protect the petitioner from being assaulted by goondas.
It is said that these exchanges roused the Committee of Privileges from slumber into activity on August 10, 1958, when it passed a resolution which, according to annexure II to the petition, ran as follows "The question is that Shri M. section M. Sharma, Editor and Shri Awadhesh Kumar Tiwari, Printer and Publisher of the " Searchlight " be called upon to show cause why appropriate action be not taken against them by reason of the commission of a breach of privilege in respect of the Speaker of the Bihar Legislative Assembly and the Assembly itself by publishing a perverted and unfaithful report of the proceedings of the Assembly relating to the speech of Shri Maheswar Prasad Narain Sinha, M.L.A., expunged portions of whose speech were also published in derogation to the orders of the Speaker passed in the House on the 30th May, 1957, and that they be further directed to be in attendance at the meeting or meetings of the Committee on such date or dates as may be fixed by the Committee for consideration of the case against them." On August 18, 1958, the petitioner was served with a notice dated August 14,1958, issued by respondent 3, the Secretary to the Bihar Legislative Assembly, calling upon the petitioner to show cause, on or before September 8, 1958, why appropriate action should not be recommended against him for breach of privilege of the Speaker and the Assembly in respect of the offending publication.
It is necessary, in view of one of the points taken by the learned advocate for the petitioner, to set out the full text of this notice which was thus worded: 832 "Government of Bihar, Legislative Assembly Secretariat.
Confidential No. 3538 1A.
From Shri Enayetur Rahman, B.A., B.L., Secretary to the Legislative Assembly.
To Shri M. section M. Sharma, Editor, " The Searchlight Searchlight Press, Patna.
Patna, August 13/14, 1958.
Whereas a question involving breach of privilege of the Bihar Legislative Assembly arising out of the publication of a news item in the Searchlight, dated the 31st May, 1957, under the caption " Bitterest attack on Chief Minister", was raised in the Assembly by Shri Nawal Kishore Sinha, M. L. A. (Patna) on the 10th June, 1957, and whereas the same, having been referred to the Committee of Privileges for examination, investigation and report, was considered by the Committee which has been pleased to find a prima facie case of breach of privilege made out against you.
You are hereby directed to show cause, if any, on or before the 8th September, 1958, why appropriate action should not be recommended against you for breach of privilege of the Speaker and the Assembly.
Please also take notice that the question will come up for examination by the Committee on the 8th September, 1958, at 11 am.
in the Official Sitting Room (Ground Floor) of the Assembly Buildings, Patna, and thereafter on such day or days and at such time and 833 place as the Committee may from time to time appoint.
You are also informed that if the matter comes to evidence, you can, if you so choose, adduce evidence, both oral and documentary, relevant to the issue, and you must come prepared with the same on the date fixed in this behalf.
Enayetur Rehman, Secretary to the Legislative Assembly.
" Finding that things had begun to move and apprehending an adverse outcome of the enquiry to be held by the Committee of Privileges (respondent 2), the petitioner moved the High Court at Patna under article 226 for an appropriate writ;, order or direction restraining and prohibiting the respondents from proceeding further with the enquiry referred to above.
It appears that on August 29, 1958, the article 226 petition came up for preliminary hearing and after it had been urged for a day and a half before the High Court for admission, the petitioner on September 1, 1958, withdrew that petition allegedly " with a view to avail the fundamental rights granted to him under article 32 of the Constitution.
" The present petition under article 32 of the Constitution was filed on September 5, 1958.
The petitioner contends that the said notice and the proposed action by the Committee of Privileges (respondent 2) are in violation of the petitioner 's fundamental rights to freedom of speech and expression under article 19(1)(a) and to the protection of his personal liberty under article 21 and the petitioner claims by this petition to enforce those fundamental rights.
An affidavit in opposition affirmed by Shri Enayatur Rahman, the present incumbent of the office of respondent 3, has been filed on behalf of the respondents wherein it is maintained that the report contained in the offending publication was not in accordance with the authorised report of the proceedings in the House in that it contained even those remarks which, having been, by order of the Speaker, directed to be expunged, did not form part of the proceedings.
105 834 It is claimed that generally speaking proceedings in the House are not in the ordinary course of business meant to be published at all and that under no circumstances is it permissible to publish the parts of speeches which had been directed to be expunged and consequently were not contained in the official report.
Such Publication is said to be a clear breach of the privilege of the Legislative Assembly, which is entitled to protect itself by calling the offender to book and, if necessary, by meting out suitable punishment to him.
This claim is sought to be founded on the pro visions of cl.
(3) of article 194 which confers on it all the powers, privileges and immunities enjoyed by the House of Commons of the British Parliament at the commencement of our Constitution.
Learned advocate for the petitioner relies upon article 19(1)(A) and contends that the petitioner, as a citizen of India, has the right to freedom of speech and expression and that, as an editor of a newspaper, he is entitled to all the benefits of freedom of the Press.
It is, therefore, necessary to examine the ambit and scope of liberty of the Press generally and under our Constitution in particular.
In England freedom of speech and liberty of the Press have been secured after a very bitter struggle between the public and the Crown.
A short but lucid account of that struggle will be found narrated in the Constitutional History of England by Sir Thomas Erskine May (Lord Farnborough), Vol. 11, ch.
IX under the heading " Liberty of Opinion ".
In the beginning the Church is said to have persecuted the freedom of thought in religion and then the State suppressed it in politics.
Matters assumed importance when the art of printing came to be developed.
The Press was subjected to a rigorous censorship.
Nothing could be published without the imprimatur of the licenser and the publication of unlicensed works was visited with severe punishments.
"Political discussion was silenced by the licenser, the Star Chamber, the dungeon, the pillory, mutilation and branding." Even in the reign of Queen Elizabeth printing was interdicted save in London, Oxford and Cambridge.
" Nothing marked more deeply the tyrannical spirit 835 of the first two Stuarts than their barbarous persecutions of authors, printers and the importers of prohibited books: nothing illustrated more signally the love of freedom than the heroic courage and constancy with which those persecutions were borne " (1).
There was no mention of freedom of speech or of liberty of the Press in the Petition of Rights of 1628.
The fall of the Star Chamber augured well for the liberty of the Press, but the respite was short lived, for the Restoration brought renewed trials upon the Press.
The Licensing Act (13 & 14 Chs.
11 c. 33) placed the entire control of the Press in the Government.
Liberty of the Press was interdicted and even news could not be published without licence.
Then came the Revolution of 1688; but even in the Bill of Rights of 1688 there was no mention of freedom of speech or of liberty of the Press.
In 1695, however, the Commons refused to renew the Licensing Act and the lapse of that Act marked the triumph of the Press, for thenceforth the theory of free Press was recognised and every writing could be freely published, although at the peril of the rigorous application of the law of libel.
William Blackstone in his 4th Book of Commentaries published in 1769 wrote at p. 145: " The liberty of the Press is indeed essential to the nature of a free State; but this consists in laying no previous restraints upon publication, and not in freedom from censure for criminal matter when published.
Every free man has an undoubted right to lay what sentiments he pleases before the public; to forbid this, is to destroy the freedom of the Press; but if he publishes what is improper, mischievous or illegal, he must take the consequences of his own temerity.
" Halam in his Constitutional History of England expresses the same view by saying that liberty of the Press consists merely in exemption from the licenser.
To the same effect are the observations of Lord Mansfield, C. J., in King vs Dean of St. Asaph (2).
The liberty of the Press, therefore, primarily consists in (1) May 's Constitutional History of England, Vol.
ii PP.
240 41.
(2) ; 836 printing without any previous license subject to the consequences of law.
It is, in substance, a mere application of the general principle of the rule of law, namely, that no man is punishable except for a distinct breach of the law (1).
It was thus, as a result of a strenuous struggle, that the British people have at long last secured for themselves the greatest of their liberties the liberty of opinion.
In the United States of America freedom of speech and liberty of the Press have been separately and specifically safeguarded in the Constitutions of most of the different States.
Portions of the Constitutions of the 48 federating States, relevant for our purpose, have been collected in Cooley 's Constitutional Limitations, Vol. 11, ch. 12, pp.
876 880.
Fifteen States, only, namely, Alabama, Arizona, Colorado, Idaho, Illinois, Indiana, Kansas, Missouri, Montana, Nebraska, North Dakota, Oregon, South Dakota, Wash ington and Wyoming do not specifically refer to liberty of the Press but content themselves by providing for freedom of speech.
The Constitutions of the rest of the federating States separately and 'Specifically mention liberty of the Press in addition to freedom of speech.
The first Amendment of the federal Constitution of the United States, which was ratified in 1791, provides that " Congress shall make no law. . . abridging the freedom of speech or of the Press ".
The Fifth and the Fourteenth Amendments also protect people from being deprived of life, liberty or property without due process of law.
Prior the advent of our present Constitution, there was no constitutional or statutory enunciation of the freedom of speech of the subjects or the liberty of the Press.
Even in the famous Proclamation of Queen Victoria made in 1858 after the British power was firmly established in India, there was no reference to the freedom of speech or the liberty of the Press, although it was announced that " none be in any wise favoured, none molested or disquieted by reason of their Religious Faith or Observances; but that all shall alike enjoy the equal and impartial protection (1) Dicey 's Law of the Constitution, 9th Edn., p. 247.
837 of the law;. . .
Indeed during the British period of our history the Press as such had no higher or 'better rights than the individual citizen.
In Arnold vs King Emperor (1) which was a case of an appeal by the editor of a newspaper against his conviction for criminal libel under section 499 of the Indian Penal Code, Lord Shaw of Dunfermline in delivering the judgment of the Privy Council made the following observations at p. 169: " Their Lordships regret to find that there appeared on the one side in this case the time worn fallacy that some kind of privilege attaches to the profession of the Press as distinguished from the members of the public.
The freedom of the journalist is an ordinary part of the freedom of the subject, and to whatever lengths the subject in general may go, so also may the journalist, but, apart from statute law, his privilege is no other and no higher.
The responsibilities which attach to his power in the dissemination of printed matter may, and in the case of a conscientious journalist do, make him more careful; but the range of his assertions, his criticisms, or his comments, is as wide as, and no wider than, that of any other subject, No privilege attaches to his position.
" Then came our Constitution on January 26, 1950.
The relevant portions of article 19, as it now stands and which is relied on, are as follows: " 19 (1) All citizens shall have the right (a) to freedom of speech and expression; . . . . . . . . . . . . . . . . . . . (2) 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.
" (1) (1914) L.R. 41 I.A. 149.
838 It will be noticed that this Article guarantees to all citizens freedom of speech and expression but does not specifically or separately provide for liberty of the Press.
It has, however, been held that the liberty of the Press is implicit in the freedom of speech and expression which is conferred on a citizen.
Thus, in Romesh Thappar vs State of Madras (1) this Court has held that freedom of speech and expression includes the freedom of propagation of ideas and that freedom is ensured by the freedom of circulation.
In Brijbhushan vs The State of Delhi (2) it has been laid down by this Court that the imposition of pre censorship 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).
To the like effect are the observations of Bhagwati, J., who, in delivering the unanimous judgment of this Court in Express Newspapers Ltd. vs Union of India(1) said at page 118 that freedom of speech and expression includes within its scope the freedom of the Press.
Two things should be noticed.
A non citizen running a newspaper is not entitled to the fundamental right to freedom of speech and expression and, therefore, cannot claim, as his fundamental right, the benefit of the liberty of the Press.
Further, being only a right flowing from the freedom of speech and expression, the liberty of the Press in India stands on no higher footing than the freedom of speech and expression of a citizen and that no privilege attaches to the Press as such, that is to say, as distinct from the freedom of the citizen.
In short, as regards citizens running a newspaper the position under our Constitution is the same as it was when the Judicial Committee decided the case of Arnold vs The King Emperor (4) and as regards non citizens the position may even be worse.
The petitioner claims that as a citizen and an editor of a newspaper he has the absolute right, subject, of course, to any law that may be protected by el.
(2) of article 19, to publish a true and faithful report of the publicly heard and seen proceedings of Parliament or (1) ; (3) (2) ; (4) I.A. 149. 839 any State Legislature including portions of speeches directed to be expunged along with a note that that portion had been directed to be so expunged.
The respondents before us do not contend that the petitioner 's freedom of speech and expression is confined only to the publication of his own sentiments, feelings, opinions, ideas and views but does not extend to the publication of news or of reports of proceedings or of views of others or that such last mentioned publications are not covered by the interpretation put upon the provisions of article 19(1)(a) by this Court in the three decisions referred to above or that the case of Srinivasa vs The State, of Madras (1), which apparently supports the petitioner, was wrongly decided.
For the purposes of this case, therefore, we are relieved of the necessity for examining the larger questions and have to proceed on the footing that the freedom of speech and expression conferred on citizens includes the right to publish news and reports of proceedings in public meetings or in Parliament or State Legislatures.
The respondents, however, deny that the petitioner has the absolute right broadly formulated as here in before mentioned.
They urge, inter alia, that under article 194(3) Parliament and the State Legislatures have the powers, privileges and immunities enjoyed by the House of Commons of British Parliament and those powers, privileges and immunities prevail over the freedom of speech and expression conferred on citizens under article 19(1)(a).
Besides a few minor miscellaneous points raised by the learned advocate for the petitioner, which will be dealt with in due course, two principal points arising on the pleadings have been canvassed before us and they are formulated thus: I. Has the House of the Legislature in India the privilege under article 194(3) of the Constitution to prohibit entirely the publication of the publicly seen and heard proceedings that took place in the House or even to prohibit the publication of that part of the proceedings which had been directed to be expunged ? II.
Does the privilege of the House under article (1) A.I.R. (1951) Mad.
70. 840 194(3) prevail over the fundamental right of the petitioner under article 19(1)(a) ? Re I: Article 194, on which depends our decision not only on this point but also on the next one, may now be set out: "194.
(1) Subject to the provisions of this Constitution and to the rules and standing orders regulating the procedure of the Legislature, there shall be freedom of speech in the Legislature of every State.
(2) No member of the Legislature of a State shall be liable to any proceedings in any court in respect of anything said or any vote given by him in the Legislature or any committee thereof, and no person shall be so liable in respect of the publication by or under the authority of a House of such a Legislature of any report, paper, votes or proceedings.
(3) In other respects, the powers, privileges and immunities of a House of the Legislature of a State, and of the members and the committees of a House of such Legislature, shall be such as may from time to time be defined by the Legislature by law, and, until so defined, shall be those of the House of Commons of the Parliament of the United Kingdom, and of its members and committees, at the commencement of this Constitution.
(4) The provisions of clauses (1), (2) and (3) shall apply in relation to persons who by virtue of this Constitution have the right to speak in, and otherwise to take part in the proceedings of, a House of the Legislature of a State or any committee thereof as they apply in relation to members of that Legislature." This Article, which applies to the State Legislatures and the members and committees thereof, is a reproduction, mutatis mutandis, of article 105 which applies to both Houses of Parliament and the members and committees thereof.
It is common ground that the.
Legislature of the State of Bihar has not made any law with respect to the powers, privileges and immunities of the House of the Legislature as enumerated in entry 39 of List II of the Seventh Schedule to the Constitution just as Parliament has made no law with respect to the matters enumerated in entry 74 of List 841 I of that Schedule.
Therefore under the latter part of cl.
(3) of article 194 the Legislative Assembly of Bihar has all the powers, privileges and immunities enjoyed by the House of Commons at the commencement of our Constitution.
What, then, were the powers, privileges and immunities of the House of Commons which are relevant for the purposes of the present petition ? Parliamentary privilege is defined as " the sum of the peculiar rights enjoyed by each House collectively as a constituent part of the High Court of Parliament, and by members of each House individually, without which they could not discharge their functions, and which exceed those possessed by other bodies or individuals " (1).
According to the same author " privilege, though part of the law of the land, is to a certain extent an exemption from the ordinary law ".
The privileges of Parliament are of two kinds, namely, (i) those which are common to both Houses and (ii) those which are peculiar either to the House of Lords or to the House of Commons (2 ).
The privileges of the Commons, as distinct from the Lords, have been defined as " the sum of the fundamental rights of the House and of its individual members as against the prerogatives of the Crown, the authority of the ordinary courts of law and the special rights of the House of Lords (3).
Learned Solicitor General appearing for the respondents claims that the Legislative Assembly, like the House of Commons, has the power and privilege, if it so desires, to prohibit totally the publication of any debate or proceedings that may take place in the House and at any rate to prohibit the publication of inaccurate or garbled versions of it.
In other words, it is claimed that the House of Commons has the power and privilege to prohibit the publication in any newspaper of even a true and faithful report of its proceedings and certainly the publication of any (1) Sir Thomas Erskine May 's Parliamentary Practice, 16th Edn., Ch.
III, P. 42.
(2) Halsbury 's Laws of England, 2nd Edn., Vol.
24, article (3) Redlich and Ilbert on Procedure of the House of Commons, Vol.
106 842 portion of speeches or proceedings directed to be expunged from the official record.
As pointed out in May 's Parliamentary Practice, 16th Edn., p. 151, in the early days of British History the maintenance of its privileges was of vital importance to the House of Commons.
They were necessary to preserve its independence of the King and the Lords and, indeed, to its very existence.
The privileges of the House of Commons have been grouped under two heads, namely, (1) those demanded of the Crown by the Speaker of the House of Commons at the commencement of each Parliament and granted as a matter of course and (2) those not so demanded by the Speaker.
Under the first heading come (a) freedom from arrest (claimed in 1554), (b) freedom of speech (claimed in 1541), (c) the right of access to the Crown (claimed in 1536) and (d) the right of having the most favourable construction placed upon its proceedings.
The second head comprises (i) the right to the due composition of its own body, (ii) regulate its own proceedings, (iii) the right strangers, (iv) the right to prohibit publication of its debates and (v) the right to enforce observation of its privileges by fine, imprisonment and expulsion (1).
Admonition and reprimand are milder forms of punishment.
The privileges of the House of Commons under the first head are claimed at the commencement of every Parliament by the Speaker addressing the Lord Chancellor on behalf of the Commons.
They are claimed as " ancient and undoubted " and are, through the Chancellor " most readily granted and confirmed by the Crown (2).
Of the three things thus claimed, two, namely, the freedom of the person and the freedom of speech and certain consequential rights like the right to exclude strangers from the House and the control or prohibition of publication of the debates and proceedings are common to both Houses (3).
(1) Ridge 's Constitutional Law, 8th Edn., p. 61; also Halsbury 's Laws of England, 2nd Edn., Vol.
(2) Anson 's Law and Custom of the Constitution, Vol. 1, Ch.
4,p. 162.
(3) Halsbury 's Laws of England, 2nd Edn., Vol.
24, p. 346.
843 For a deliberative body like the House of Lords or the House Commons, freedom of speech is of the utmost importance.
A full and free debate is of the essence of Parliamentary democracy.
Although freedom of speech was claimed and granted at the commencement of every Parliament, it was hardly any protection against the autocratic Kings, for the substance of the debates could be and was frequently reported to the King and his ministers which exposed the members to the royal wrath.
Secrecy of Parliamentary debates was, therefore, considered necessary not only for the due discharge of the responsibilities of the members but also for their personal safety. " The original motive for secrecy of debate was the anxiety of the members to protect themselves against the action of the. sovereign, but it was soon found equally convenient as a veil to hide their proceedings from their constituencies " (1).
This object could be achieved in two ways, namely, (a) by prohibiting the publication of any report of the debates and proceedings and (b) by excluding strangers from the House and holding debates within closed doors.
These two powers or privileges have been adopted to ensure the secrecy of debates to give full play to the members ' freedom of speech and therefore, really flow, as necessary corollaries, from that freedom of speech which is expressly claimed and granted at the commencement of every Parliament.
As to (a): " The history of Parliamentary privilege is to a great extent a story of the fierce and prolonged struggle of the Commons to win the rights and freedoms which they enjoy to day " (2).
The right to control and, if necessary, to prohibit the publication of the debates and proceedings has been claimed, asserted and exercised by both Houses of Parliament from very old days.
In 1628 and again in 1640 the clerk was forbidden to make notes of " particular men 's speeches " or to " suffer copies to go forth of (1) Taswell Langmead 's Constitutional History, 10th Edn., p. 657.
(2) Encyclopaedia of Parliament by Norman Widling and Laundy,p.
451. 844 any arguments or speech whatsoever The House of Commons of the Long Parliament in 1641 framed a standing order " that no member shall either give a copy or publish in print anything that he shall speak in the House " and " that all the members of the House are enjoined to deliver out no copy or notes of anything that is brought into the House, or that is propounded or agitated in this House ".
In that critical period it was a necessary precaution.
So strict was the House about this privilege that for printing a collection of his own speeches without such leave, Sir E. Derring was expelled from the House and imprisoned in the Tower and his book was ordered to be burnt by the common hangman.
This standing order has not up to this date been abrogated or repealed.
In 1680 to prevent inaccurate accounts of the business done, the Commons directed their " votes and proceedings, without any reference to the debates, to be printed under the direction of the Speaker.
After the Revolution of 1688 frequent resolutions were passed by both Houses of Parliament from 1694 to 1698 to restrain newsletter writers from " intermeddling with their debates or other proceedings " or " giving any account of minute of the debates ".
But such was the craving of the people for political news that notwithstanding these resolutions and the punishment of offenders imperfect reports went on being published in newspapers or journals.
Amongst the papers were Boyer 's " Political State of Great Britain ", " London Magazine ", and " Gentleman 's Magazine " in which reports of debates were published under such titles as " Proceedings of a Political Club " and " Debates in the Senate of Magna Lilliputia ".
In 1722 the House of Commons passed the following resolutions: " Resolved, That no News Writers do presume in their Letters, or other Papers, that they disperse as Minutes, or under any other Denomination, to intermeddle with the Debates, or any other Proceedings, of this House.
Resolved, That no Printer or Publisher of any printed News Papers, do presume to insert in any such (1) Hatsell 265 quoted in May 's Parliamentary Practice, 16th Edn.
55. 845 Papers any Debates, or any other Proceedings of this House, or any Committee thereof" (1).
In 1738 the publication of its proceedings was characterised in another resolution of the House of Commons as " a high indignity and a notorious breach of privilege The publication of debates in the " Middlesex Journal" brought down the wrath of the House of Commons on the printers who were ordered to attend the House.
The printers not having been found warrants were issued for their arrest and one printer was arrested and brought before Alderman John Wilkes who immediately discharged him on the ground that no crime had been committed.
Another printer was arrested and brought before another Alderman who, likewise, discharged the prisoner inasmuch as he was not accused of having committed any crime.
By way of reprisal the House of Commons imprisoned the Lord Mayor and an Alderman, both of whom were the members of the House.
Both men, on their release, were honoured in a triumphal procession from the Tower of London to the Mansion House.
After this political controversy, debates in both Houses continued to be reported with impunity, although technically such reporting was a breach of privilege.
Accurate reporting was, however, hampered by many difficulties, for the reporters had no accommodation in the House and were frequently obliged to wait for long periods in the halls or on the stairways and were not permitted to take notes.
The result was that the reports published in the papers were full of mistakes and misrepresentations.
After the House of Commons was destroyed by fire in 1834, galleries in temporary quarters were provided for the convenience of reporters, and in the new House of Commons a separate gallery was provided for the Press.
In 1836 the Commons provided for the publication of parliamentary papers and reports, which led to the conflict between the House of Commons and the courts, which was decided in Stockdale vs Hansard (2), where Lord Chief Justice Denman held that (1) 20 journals of the House of Commons, p. 99; quoted in Frank Thayer 's Legal Control of the Press, pp. 28 29.
(2) Moody and Robson, 9. ; ; also see (1839) 9 A. & E. Reports, Eng.
Q.B. 1; 112 Eng.
Rep. 1112.
846 the fact of the House of Commons having directed Messrs. Hansard to publish all their parliamentary reports was no justification for their or for any other bookseller publishing a parliamentary report, containing a libel against any man.
Subsequently the House retaliated by committing Stockdale and his attorney and also the sheriff to prison.
The deadlock thus brought about was at length removed by the passing of the Parliamentary Papers Act, 1840 (3 and 4 Vic. c. 9).
Learned advocate for the petitioner has drawn our attention to the judgment of Cockburn, C. J., in the celebrated case of Wason vs Walter (1).
The plaintiff in that case had presented a petition to the House of Lords charging a high judicial officer with having, 30 years before, made a statement false to his own know.
ledge, in order to deceive a committee of the House of Commons and praying enquiry and the removal of the officer if the charge was found true.
A debate ensued on the presentation of the petition and the charge was utterly refuted.
Allegations disparaging to the character of the plaintiff had been spoken in the course of the debate.
A faithful report of the debate was published in the Times and the plaintiff proceeded against the defendant, who was a proprietor of the Times, for libel.
It was held that the debate was a subject of great public concern on which a writer in a public newspaper had full right to comment, and the occasion was, therefore, so far privileged that the comments would not be actionable so long as a jury should think them honest and made in a fair spirit, and such as were justified by the circumstances as disclosed in an accurate report of the debate.
Learned advocate for the petitioner contends that this decision establishes that the Press had the absolute privilege of publishing a report of the proceedings that take place in Parliament, just as it is entitled to publish a faithful and correct report of the proceedings of the courts of justice, though the character of individuals may incidentally suffer and that the publication of such accurate reports is privileged and entails neither criminal nor civil responsibility.
This argument overlooks (1) (1868) L.R. IV Q.B. 73. 847 that the question raised and actually decided in that case, as formulated by Cockburn, C. J., himself at p. 82, was simply this: " The main question for our decision is, whether a faithful report in a public newspaper of a debate in either House of Parliament, containing matter disparaging to: the character of an individual, as having been spoken in the course of the debate, is actionable at the suit of the party whose character has thus been called in question.
" The issue was between the publisher and the person whose character had been attacked.
The question of the privilege, as between the House and the newspaper, was not in issue at all.
In the next place, the observations relied upon as bearing on the question of privilege of Parliament were not at all necessary for deciding that case and, as Frank Thayer points out at p. 32 of his Legal Control of the Press, ',this part of the opinion is purely dictum ".
In the third place, the following observations of the learned Chief Justice clearly indicate that, as between the House and the Press, the privilege does exist: "It only remains to advert to an argument urged against the legality of the publication of parliamentary proceedings, namely, that such publication is illegal as being in contravention of the standing orders of both houses of parliament.
The fact, no doubt, is, that each house of parliament does, by its standing orders, prohibit the publication of its debates.
But, practically each house not only permits, but also sanctions and encourages, the publication of its proceedings, and actually gives every facility to those who report them.
Individual members correct their speeches for publication in Hansard or the public journals, and in every debate reports of former speeches contained therein are constantly referred to.
Collectively, as well as individually, the members of both houses would deplore as a national misfortune the withhold ing their debates from the country at large.
Practically speaking, therefore, it is idle to say that the publication of parliamentary proceedings is prohibited by parliament.
The standing orders which prohibit 848 it are obviously maintained only to give to each house the control over the publication of its proceedings, and the power of preventing or correcting any abuse of the facility afforded.
Independently of the orders of the houses, there is nothing unlawful in publishing reports of parliamentary proceedings.
Practically, such publication is sanctioned by parliament; it is essential to the working of our parliamentary system, and to the welfare of the nation.
Any argument founded on its alleged illegality appears to us, therefore, entirely to fail.
Should either house of parliament ever be so ill advised as to prevent its pro ceedings from being made known to the country which certainly never will be the case any publication of its debates made in contravention of its orders would be a matter between, the house and the publisher.
For the present purpose, we must treat such publication as in every respect lawful, and hold that, while honestly and faithfully carried on, those who publish them will be free from legal responsibility, though the character of individuals May incidentally be injuriously affected.
" With the facilities now accorded to the reporters, the practice of reporting has improved, and the House, sensible of the advantage which it derives from a full and clear account of its debates, has even encouraged the publication of reports of debates and proceedings that take place in the House.
From this it does not at all follow that the House has given up this valuable privilege.
The following passage in Anson 's Law and Custom of the Constitution at p. 174 is significant and correctly states the position : " We are accustomed, therefore, to be daily informed, throughout the Parliamentary Session, of every detail of events in the House of Commons; and so we are apt to forget two things.
The first is, that these reports are made on sufferance, for the House can at any moment exclude strangers and clear the reporter 's gallery ; and that they are also published on sufferance, for the House may at any time resolve that publication is a breach of privilege and deal with it accordingly.
849 The second is, that though the privileges of the House confer a right to privacy of debate.
they do not confer a corresponding right to the publication of debate." Frank Thayer at pp.
31 32 expresses the same view in the following terms: " Parliamentary privilege as part of the unwritten English Constitution is the exclusive right of either House to decide what constitutes interference with its duties, its dignity, and its independence.
Its power to exclude strangers so as to secure privacy of debate closely follows the right of Parliament to prevent the publication of debates.
Attendance at Parliamentary debates and the publication of debates are by sufferance only, although it is now recognized that dissemination of information on debates and Parliamentary proceedings is advantageous to English democracy and, in fact, necessary to public safety.
By judicial dictum it has been stated that there is a right to publish fair and accurate reports of Parliamentary debates, but actually the traditional privilege of Parliament continues in conflict with judicial opinion.
There is still a standing order forbidding the publication of Parliamentary debates, an order that by custom and the right of sufferance has become practically obsolete; yet the threat of such an order and the possibility of a contempt citation for its abuse, should Parliament deem it advantageous to withhold some particular discussion, serve as a check upon careless reporting and distorted comment.
" May in his Parliamentary Practice, 16th Edn., p. 118 puts the matter thus: " Analogous to the publication of libels upon either House is the publication of false or perverted, or of partial and injurious reports of debates or proceedings of either House or committees of either House or misrepresentations of the speeches of particular members.
But as the Commons have repeatedly made orders forbidding the publications of the debates or other proceedings of their House or any committee thereof which, though not renewed in any subsequent 107 850 session, are considered to be still in force, it has been ruled that an alleged misrepresentation is not in itself a proper matter for the consideration of the House, the right course being to call attention to the report as an infringement of the orders of the House, and then to complain of the misrepresentation as an aggravation of the offence.
" The fact that the House of Commons jealously guards this particular privilege is amply borne out by the fact that as late as May 31, 1875, when Lord Hartington sponsored a motion in the House of Commons " that this House will not entertain any complaint in respect of the publication of the debates or proceedings of the House, or of any committee thereof, except when such debates or any proceedings shall have been conducted within closed doors or when such publication shall have been expressly prohibited by the House or any committee or in case of wilful misrepre sentation or other offence in relation to such publication " the House of Commons rejected the same outright.
The conclusion deducible from this circumstance is thus summarised in May 's Parliamentary Practice at p. 118: " So long as the debates are correctly and faithfully reported, the orders which prohibit their publication are not enforced; but when they are reported mala fide the publishers of newspapers are liable to punishment.
" Several instances are given in May 's Parliamentary Practice at pp.
118 19 where proceedings have been taken for breach of privilege including a case of the publication in 1801 of a proceeding which the House of Lords had ordered to be expunged from the journal.
It is said that that was a case of privilege of the House of Lords and not a case of privilege of the House of Commons and it is pointed out that there has been no instance of such a claim of privilege having been made by the House of Commons for over a century.
In the first place, it should be remembered that this privilege, as stated in Halsbury 's Laws of England, 2nd Edn., Vol.
24, p. 351, is a common privilege claimed by both Houses and, if the House of 851 Lords could assert and exercise it in 1801, there is no reason to suppose that the House of Commons will not be able to do so if any occasion arises for its assertion or exercise.
If the House of Commons has not done so for a long time it must rather be assumed that no occasion had arisen for the assertion and exercise of this power than that it had ceased to have the power at all (Cf.
the observations in Wason vs Walter) (1) and In re: Banwarilal Roy (2)).
Further the fact that the House of Commons in 1875 rejected Lord Hartington 's motion referred to above also clearly indicates that the House of Commons is anxious to preserve this particular privilege.
It is interesting also to note the new point that arose in the House of Commons regarding the publication of certain proceedings in August 1947.
A Committee of Privileges found that one Mr. Evelyn Walkden, member for Doncaster, had revealed the proceedings of a private party meeting to a newspaper.
The Committee thought that the practice of holding party meetings of a confidential character had become well established and must be taken as a normal and everyday incident of parliamentary procedure.
The Committee felt that attendance at such meetings within the precincts of the Palace of Westminster during the session was part of the member 's normal duties and the publication by the handing out of a report of the proceedings amounted to a breach of the privilege of the House.
It is true that the House only resolved that Mr. Walkden was guilty of dishonourable conduct, but did not expel him but it also passed a resolution that in future any person offering payment for the disclosure of such information would incur the House 's grave displeasure (3).
In this case the inquiry was with regard to the conduct of a member for having committed a breach of the privilege of the House by publishing the pro ceedings to an outsider.
The point, however, to note is that whatever doubts there might have been as to whether the proceedings of the private party meetings could be equated with the regular proceedings of (1) (1868) L.R. IV Q.B. 73.
(2) , 787.
(3) Ridge 's Constitutional Law, 8th Edn., P. 70 and May 's Parliamentary Practice, 16th Edn., P. 52. 852 the House of Commons, there was, nevertheless, no question or doubt about the existence of the power or privilege of the House to forbid publication of the proceedings of the House.
This case also shows that the House of Commons had not only not abandoned its power or privilege of prohibiting the publication of its proceedings proper but also considered the question of applying this power or privilege to the publication by a member of the proceedings that took place in a private party meeting held within the precincts of the House.
As to (b): It has already been said that the freedom of speech claimed by the House and granted by the Crown is, when necessary, ensured by the secrecy of the debate which in its turn is protected by prohibiting publication of the debates and proceedings as well as by excluding strangers from the House.
Any member could in the old days " spy a stranger " and the Speaker had to clear the House of all strangers which would, of course, include the Press reporters.
This right was exercised in 1849 and after 20 years in 1870 and again in 1872 and 1874.
In 1875, however, this rule was modified by a resolution of the House only to this extent, namely, that, on a member spying a stranger, the Speaker would put the matter to the vote of the House (1).
This right was exercised in 1923 and again as late as on November 18, 1958 (2).
This also shows that there has been no diminution in the eagerness of the House of Commons to protect itself by securing the secrecy of debate by excluding strangers from the House when any occasion arises.
The object of excluding strangers is to prevent the publication of the debates and proceedings in the House and, if the House is tenaciously clinging to this power or privilege of excluding strangers, it is not likely that it has abandoned its power or privilege to prohibit the publication of reports of debates or proceedings that take place within its precincts.
The result of the foregoing discussion, therefore, is that the House of Commons had at the commencement (1) Taswell Langmead, p. 660.
(2) The Statesman dated November 20, 1958.
853 of our Constitution the power or privilege of prohibiting the publication of even a true and faithful report of the debates or proceedings that take place within the House.
A fortiori the House had at the relevant time the power or privilege of prohibiting the publication of an inaccurate or garbled version of such debates or proceedings.
The latter part of article 194(3) confers all these powers, privileges and immunities on the House of the Legislature of the States, as article 105(3) does on the Houses of Parliament.
It is said that the conditions that prevailed in the dark days of British history, which led to the Houses of Parliament to claim their powers, privileges and immunities, do not now prevail either in the United Kingdom or in our country and that there is, therefore, no reason why we should adopt them in these democratic days.
Our Constitution clearly provides that until Parliament or the State Legislature, as the case may be, makes a law defining the powers, privileges and im munities of the House, its members and Committees, they shall have all the powers, privileges and immunities of the House of Commons as at the date of the commencement of our Constitution and yet to deny them those powers, privileges and immunities, after finding that the House of Commons had them at the relevant time, will be not to interpret the Constitution but to re make it.
Nor do we share the view that it will not be right to entrust our Houses with these powers, privileges and immunities,, for we are well persuaded that our Houses, like the House of Commons, will appreciate the benefit of publicity and will not exercise the powers, privileges and immunities except in gross cases.
Re. II: Assuming that the petitioner, as a citizen and an editor of a newspaper, has under article 19(1)(a) the fundamental right to publish a true and faithful report of the debates or proceedings that take place in the Legislative Assembly of Bihar and granting that that Assembly under article 194(3) has all the powers, privileges and immunities of the House of Commons which include, amongst others, the right to prohibit the publication of any report of the debates or proceedings, 854 whose right is to prevail ? Learned advocate for the petitioner contends that the powers, privileges and immunities of the Legislative Assembly under article 194(3) must give way to the fundamental right of the petitioner under article 19(1)(a).
In other words, article 194 (3), according to him, is subject to article 19 (1) (a).
Learned advocate for the petitioner seeks to support his client 's claim in a variety of ways which may now be noted, seriatim : (i) that though cl.
(3) of article 194 has not, in terms, been made "subject to the provision of the Constitution ", it does not necessarily mean that it is not so subject, and that the several clauses of article 194 or article 105 should not be treated as distinct and separate provisions but should be read as a whole and that, so read, all the clauses should be taken as subject to the provisions of the Constitution, which, of course, would include article 19(1)(a); (ii) that article 194(1), like article 105(1), in reality operates as an abridgement of the fundamental right Of freedom of speech conferred by article 19(1)(a) when exercised in Parliament or the State Legislatures respectively, but article 194(3) does not, in terms, purport to be an exception to article 19(1)(a) ; (iii) that article 19, which enunciates a transcendental principle and confers on the citizens of India indefeasible and fundamental rights of a permanent nature,, is enshrined in Part III of our Constitution, which, in view of its subject matter, is more important, enduring and sacrosanct than the rest of the provisions of the Constitution, but that the second part of article 194(3) is of the nature of a transitory provision which, from its very nature, cannot override the fundamental rights; (iv) that if, in pursuance of the provisions of article 105(3), Parliament makes a law under entry 74 in List I to the Seventh Schedule defining the powers, privileges and immunities of the House or Houses of Parliament and its members and committees or if, in pursuance of the provisions of article 194(3), the State Legislature makes a law under entry 39 in List II to 855 the Seventh Schedule defining the powers, privileges and immunities of the House or Houses of the Legislature of a State and its members and committees and if, in either case, the powers, privileges and immunities so defined and conferred on the House or Houses are repugnant to the fundamental rights of the citizens, such law will, under article 13, to the extent of such repugnancy, be void and that such being the intention of the Constitution makers in the earlier part of article 194(3) and there being no apparent indication of a different intention in the latter part of the same clause, the powers, privileges and immunities of the House of Commons conferred by the latter part of cl.
(3) must also be taken as subject to the fundamental rights; (v) that the observations in Anand Bihari Mishra vs Ram Sahay (1) and the decision of this Court in Gunupati Keshavram Reddy vs Nafisul Hasan (2) clearly establish that article 194(3) is subject to the fundamental rights.
The arguments, thus formulated, sound plausible and even attractive, but do not bear close scrutiny, as will be presently seen.
Article 194 has already been quoted in extenso.
It is quite clear that the subject matter of each of its four clauses is different.
Clause (1) confers on the members freedom of speech in the Legislature, subject, of course, to certain provisions therein referred to.
Clause (2) gives immunity, to the members or any person authorised by the House to publish any report etc.
from legal proceedings.
Clause (3) confers certain powers.
Privileges and immunities on the House of the Legislature of a State and on the members and the committees thereof and finally el.
(4) extends the pro visions of cls.
(1) to (3) to persons who are not members of the House, but who, by virtue of the Constitution, have the right to speak and otherwise to take part in the proceedings of the House or any committee thereof.
In the second place, the fact that cl.
(1) has been expressly made subject to the provisions of the Constitution but cls.
(2) to (4) have not been stated to (1) A.1.R. (1952) M.B. 31, 43.
(2) A.I.R. (1954) S.C. 636.
856 be so subject indicates that the Constitution makers did not intend cls.
(2) to (4) to be subject to the provisions of the Constitution.
If the Constitution makers wanted that the provisions of all the clauses should be subject to the provisions of the Constitution, then the Article would have been drafted in a different way, namely, it would have started with the words: " Subject to the provisions of this Constitution and the rules and standing orders regulating the procedure of the Legislature " and then the subject matter of the four clauses would have been set out as sub cls.
(i), (ii), (iii) and (iv) so as to indicate that the overriding provisions of the opening words qualified each of the subclauses.
In the third place, in may well be argued that the words " regulating the procedure of the Legislature " occurring in cl.
(1) of article 194 should be read as governing both " the provisions of the Constitution " and " the rules and standing orders ".
So read freedom of speech in the Legislature becomes subject to the provisions of the Constitution regulating the procedure of the Legislature, that is to say, subject to the Articles relating to procedure in Part VI including articles 208 and 211, just as freedom of speech in Parliament under article 105(1), on a similar construction, will become subject to the Articles relating to procedure in Part V including articles 118 and 121.
The argument that the whole of article 194 is subject to article 19(1)(a) overlooks the provisions of cl.
(2) of article 194.
The right conferred on a citizen under article 19(1)(a) can be restricted by law which falls within cl.
(2) of that Article and he may be made liable in a court of law for breach of such law, but el.
(2) of article 194 categorically lays down that no member of the Legislature is to be made liable to any proceedings in any court in respect of anything said or any vote given by him in the Legislature or in committees thereof and that no person will be liable in respect of the publication by or under the authority of the House of such a Legislature of any report, paper or proceedings.
The provisions of cl.
(2) of article 194, therefore, indicate that the freedom of speech referred to in el.
(1) is different from the freedom of speech and expression guaranteed 857 under article 19(1)(a) and cannot be cut down in any way by any law contemplated by cl.
(2) of article 19.
As to the second head of arguments noted above it has to be pointed out that if the intention of cl.
(1) of article 194 was only to indicate that it was an abridgement of the freedom of speech which would have been available to a member of the Legislature as a citizen under article 19(1)(a), then it would have been easier to say in cl.
(1) that the freedom of speech conferred by article 19(1)(a), when exercised in the Legislature of a State, would, in addition to the restrictions permissible by law under cl.
(2) of that Article, be further subject to the provisions of the Constitution and the rules and standing orders regulating procedure of that Legislature.
There would have been no necessity for conferring a new the freedom of speech as the words " there shall be freedom of speech in the Legislature of every State " obviously intend to do.
Learned advocate for the petitioner has laid great emphasis on the two parts of the provisions of cl.
(3) of article 194, namely, that the powers, privileges and immunities of a House of the Legislature of a State and of the members and committees thereof shall be such as may from time to time be defined by the Legislature by law and that until then they shall be those of the House of Commons of the Parliament of the United Kingdom and of its members and committees.
The argument is that a law defining the powers, privileges and immunities of a House or Houses and the members and committees thereof can be made by Parliament under entry 74 in List I and by the State Legislature under entry 39 of List 11 and if a law so made takes away or abridges the right to freedom of speech guaranteed under article 19(1)(a) and is not protected under article 19(2), it will at once attract the operation of the peremptory provisions of article 13 and become void to the extent of the contravention of that Article.
But it is pointed out that if Parliament or the State Legislature does not choose to define the powers, privileges and immunities and the Houses of Parliament or the House or Houses of the State Legislature 108 858 or the members and committees thereof get the powers, privileges and immunities of the House of Commons, there can be no reason why, in such event, the last mentioned powers, privileges and immunities should be independent of and override the provisions of article 19 (1)(a).
The conclusion sought to be pressed upon us is that that could not be the intention of the Constitution makers and, therefore, it must be held that the powers, privileges and immunities of the House of Commons and of its members and committees that are conferred by the latter part of article 105(3) on each House of Parliament and the members and committees thereof and by the latter part of article 194(3) on a House of the Legislature of a State and the members and committees thereof must be, like the powers, privileges and immunities defined by law, to be made by Parliament or the State Legislature as the case may be, subject to the provisions of article 19(1)(a).
We are unable to accept this reasoning.
It is true, that a law made by Parliament in pursuance of the earlier part of article 105(3) or by the State Legislature in pursuance of the earlier part of article 194(3) will, not be a law made in exercise of constituent power like the law which was considered in Sankari Prasad Singh Deo vs Union of India (1) but will be one made in exercise of its ordinary legislative powers under article 246 read with the entries referred to above and that consequently if such a law takes away or abridges any of the fundamental rights it will contravene the peremptory provisions of article 13(2) and will be void to the extent of such contravention and it may well be that that is precisely the reason why our Parliament and the State Legislatures have not made any law defining the powers, privileges and immunities just as the Australian Parliament had not made any under section 49 of their Constitution corresponding to article 194(3) up to 1955 when the case of The Queen vs Richards (2) was decided.
It does not, however, follow that if the powers, privileges or immunities conferred by the latter part of those Articles are repugnant to the fundamental rights, they must also be void to the (1) ; , go.
(2) 859 extent of such repugnancy.
it must not be overlooked that the provisions of article 105(3) and article 194(3) are constitutional laws and not ordinary laws made by Parliament or the State Legislatures and that, therefore, they are as supreme as the provisions of Part III.
Further, quite conceivably our Constitution makers, not knowing what powers, privileges and immunities Parliament or the Legislature of a State may arrogate and claim for its Houses members or committees, thought fit not to take any risk and accordingly made such laws subject to the provisions of article 13 ; but that knowing and being satisfied with the reasonableness of the powers, privileges and immunities of the House of Commons at the commencement of the Constitution, they did not in their wisdom, think fit to make such powers, privileges and immunities subject to the fundamental right conferred by article 19(1)(a).
We must, by applying the cardinal rules of construction ascertain the intention of the Constitution makers from the language used by them.
In this connection the observations made in Anantha Krishnan vs State of Madras (1) by Venkatarama Aiyar, J., appear to us to be apposite and correct: "As against this the learned Advocate for the petitioner urges that the fundamental rights are under the Constitution in a paramount position, that under article 13 the Legislatures of the country have no power to abrogate or abridge them, that the power to tax is the power to destroy and that, therefore, part 12 is inoperative in respect of the rights conferred under Part 111.
I am unable to agree.
article 13 on which this argument is mainly founded does not support such a wide contention.
It applies in terms only to laws in force before the commencement of the Constitution and to laws to be enacted by the States, that is, in future.
It is only those two classes of laws that are declared void as against the provisions of Part 111.
It does not apply to the Constitution itself It does not enact that the other portions of the Constitution should be void as against the provisions in Part III and it would be surprising if it did, seeing that all of them (1) A.I.R. (1952) Mad, 395, 405. 860 are parts of one organic whole.
Article 13, therefore, cannot be read so as to render any portion of the Con stitution invalid.
This conclusion is also in accordance with the principle adopted in interpretation of statutes that they should be so construed as to give effect and operation to all portions thereof and that a construction which renders any portion of them inoperative should be avoided.
For these reasons I must hold that the operation of Part 12 is not cut down by Part III and that the fundamental rights are within the powers of the taxation by the State." Article 19(1)(a) and article 194(3) have to be reconciled and the only way of reconciling the same is to read article 19(1)(a) as subject to the latter part of article 194(3), just as article 31 has been read as subject to article 265 in the cases of Ramjilal vs Income tax Officer, Mohindargarh (1) and Laxmanappa Hanumantappa vs Union of India (2), where this Court has held that article 31(1) has to be read as referring to deprivation of property otherwise than by way of taxation.
In the light of the foregoing discussion, the observations in the Madhya Bharat case (3) relied on by the petitioner, cannot, with respect, be supported as correct.
Our decision in Gunupati Keshavram Reddy vs Nafisul Hasan (4), also relied on by learned advocate for the petitioner, proceeded entirely on a concession of counsel and cannot be regarded as a considered opinion on the subject.
In our judgment the principle of harmonious construction must be adopted and so construed, the provisions of article 19(1)(a), which are general, must yield to article 194(1) and the latter part of its el.
(3) which are special.
Seeing that the present proceedings have been initiated on a petition under article 32 of the Constitution and as the petitioner may not be entitled, for reasons stated above, to avail himself of article 19(1)(a) to support this application, learned advocate for the petitioner falls back upon article 21 and contends that the proceedings before the Committee of Privileges threaten to deprive him of personal liberty otherwise (1) ; (3) A.I.R. (1952) M.B. 31, 43, (2) ; (4) A.I.R. (1954) S.C. 636. 861 than in accordance with procedure established by law.
The Legislative Assembly claims that under article 194(3) it has all the powers, privileges and immunities enjoyed by the British House of Commons at the commencement of our Constitution.
If it has those powers, privileges and immunities, then it can certainly enforce the same, as the House of Commons can do.
Article 194(3) confers on the Legislative Assembly those powers, privileges and immunities and article 208 confers power on it to frame rules.
The Bihar Legislative Assembly has framed rules in exercise of its powers under that Article.
It follows, therefore, that article 194(3) read with the rules so framed has laid down the procedure for enforcing its powers, privileges and immunities.
If, therefore, the Legislative Assembly has the powers, privileges and immunities of the I louse of Commons and if the petitioner is eventually deprived of his personal liberty as a result of the proceedings before the Committee of Privileges, such deprivation will be in accordance with procedure established by law and the petitioner cannot complain of the breach, actual or threatened, of his fundamental right under article 21.
We now proceed to consider the other points raised by learned counsel for the petitioner.
He argues that assuming that the Legislative Assembly has the powers, privileges and immunities it claims and that they override the fundamental right of the petitioner, the Legislative Assembly, nevertheless, must exercise those privileges and immunities in accordance with the standing orders laying down the rules of procedure governing the conduct of its business made in exercise of powers under article 208.
Rule 207 lays down the conditions as to the admissibility of a motion of privilege.
According to cl.
(ii) of this rule the motion must relate to a specific matter of recent occurrence.
The speech was delivered on May 30,1957, and Shri Nawal Kishore Sinha M.L.A. sent his notice of motion on June 10, 1957, that is to say, 10 days after the speech had been delivered.
The matter that occurred 10 days prior to the date of the submission of the notice of motion cannot be said to be a specific matter of recent 862 occurrence.
It is impossible for this Court to prescribe a particular period for moving a privilege motion so as to make the subject matter of the motion a specific matter of recent occurrence.
This matter must obviously be left to the discretion of the Speaker of the House of Legislature to determine whether the subject matter of the motion is or is not a specific matter of recent occurrence.
The copies of the proceedings marked as Annexure D in Annexure III to the petition do not disclose that any objection was taken by any member on the ground that the matter was not a specific matter of recent occurrence.
We do not consider that there is any substance in this objection.
Reference is then made to rr. 208 and 209 which lay down the procedure as to what is to happen if any objection is taken to leave being granted to the mover to move his motion.
It is said that Shri Ramcharitra Sinha M.L.A. had raised an objection to leave being granted to Shri Nawal Kishore Sinha to move the privilege motion.
This allegation in the petition does not appear to be borne out by the account of proceedings in the House to which reference has been made.
Shri Ramcharitra Sinha only wanted to know the convention relating to the question of admissibility of such a motion and the Speaker accordingly read out el.
(ii) of r. 208.
After that Shri Ramcharitra Sinha did not say anything further.
The Speaker then said that he understood that there was no opposition in the matter and, therefore, the Hon 'ble member was to be understood as having received the leave of the House and called upon him to say what be wanted to say.
Thereupon, as stated earlier, Shri Karpuri Thakur wanted to know what had been published in the Searchlight of May 31, 1957, and what ought not to have been published.
The Speaker thereupon read out the notice submitted by Shri Nawal Kishore Sinha which concisely referred to the subject matter of the motion and contained a reference to the issue of the Searchlight of May 31, 1957, a copy of which was filed along with the notice.
After the notice had been read the Speaker permitted Shri Nawal Kishore Sinha to move his privilege motion, which the latter did.
There 863 was no amendment proposed and the Speaker then stated what the question before the House was, Nobody having indicated his opposition, he declared the motion to be carried.
There was, in the circumstances, no non compliance with the provisions of r. 208 read with r. 209.
The next argument founded on non compliance with the rules is based on r. 215.
Clause (i) of that rule provides that the Committee of Privileges should meet as soon as may be after the question has been referred to it and from time to time thereafter till a report is made within the time fixed by the House.
In this case the House admittedly did not fix a time within which the report was to be made by the Committee of Privileges.
This circumstance immediately attracts the proviso, according to which where the House does not fix any time for the presentation of the report, the report has to be presented within one month of the date on which the reference to the Committee was made.
Learned advocate for the petitioner argues that one month 's time had long gone past and, therefore, the Committee of Privileges became functus officio and cannot, under the rules, proceed with the reference.
There is no substance in this contention, because the second proviso to cl.
(i) of r. 215 clearly provides that the House may at any time on a motion being made direct that the time for the presentation of the report by the Committee be extended to a date specified in the motion.
The words " at any time " occurring in the second proviso quite clearly indicate that this extension of time may be within the time fixed by the House or, on its failure to do so, within the time fixed by the first proviso or even thereafter, but before the report is actually made or presented to the House (Cf.
Raja Har Narain Singh vs Chaudhrain Bhagwant Kuar) (1).
Further, the question of time within which the Committee of Privileges is to make its report to the House is a matter of internal management of the affairs of the House and a matter between the House and its Committee and confers no right on the party whose conduct is the subject matter of investigation (1) (1891) L.R. 18 I.A. 55, 58. 864 and this is so particularly when the House has the power to extend time " at any time ".
The next argument is that the Committee cannot proceed to investigate what has not been referred to it.
Reference is made to the resolution of the Committee (Annexure 11 to the petition) and the notice issued to the petitioner (Annexure I to the petition).
It is said that while the Committee 's resolution speaks of publishing " a perverted and unfaithful report of the proceedings of the Assembly relating to the speech of Maheshwar Prasad, Narayan Sinha M.L.A." including the expunged portion thereof, the notice simply refers to " a question involving breach of privilege of the Bihar Legislative Assembly arising out of the publication of the news item " and calls upon the petitioner to show cause why appropriate action should not be recommended against him " for breach of privilege of the Speaker and the Assembly ".
We fail to perceive how the two documents can be read as re ferring to two different charges.
The notice served on the petitioner is couched in terms which cover the matters referred to in the Committee 's resolution.
The effect in law of the order of the Speaker to expunge a portion of the speech of a member may be as if that portion bad not been spoken.
A report of the whole speech in such circumstances, though factually correct, may, in law, be rewarded as perverted and unfaithful report and the publication of such a perverted and unfaithful report of a speech, i.e., including the expunged portion in derogation to the orders of the Speaker passed in the House may, prima facie, be regarded as constituting a breach of the privilege of the House arising out of the publication of the offending news item and that is precisely the charge that is contemplated by the Committee 's resolution and which the petitioner is by the notice called upon to answer.
We prefer to express no opinion as to whether there has, in fact, been any breach of the privilege of the House, for of that the House alone is the judge; The next argument urged by learned advocate for the petitioner is that, after the House had referred the matter to the committee of privileges, nothing was 865 done for about one year, and after such a lapse of time the committee has suddenly woke up and resuscitated the matter only with a view to penalise the petitioner.
In paragraph 17 of the petition the charge of mala fides is thus formulated: " 17.
That the Committee of Privileges aforesaid is proceeding against the petitioner mala fide with a view to victimise and muzzle him since the petitioner has been through his newspaper unsparingly criticising the administration in the State of Bihar of which opposite party No. 1 is the Chief Minister.
" It will be noticed that the allegation of mala fides is against the Committee of Privileges and not against the Chief Minister and, therefore, to controvert this allegation an affidavit affirmed by the Secretary to the Bihar Legislative Assembly has been filed.
In the affidavit in reply reference is made to certain issues of the Searchlight indicating that charges were being made by the paper against the Chief Minister and the suggestion is that it is at the instance of the Chief Minister that the Committee has now moved in the matter.
This is a new allegation.
That apart, the Chief Minister is but one of the fifteen members of the Committee and one of the three hundred and nineteen members of the House.
The Committee of Privileges ordinarily includes members of all parties represented in the House and it is difficult to expect that the Committee, as a body, will be actuated by any mala fide intention against the petitioner.
Further the business of the Committee is only to make a report to the House and the ultimate decision will be that of the House itself.
In the circumstances, the allegation of bad faith cannot be readily accepted.
It is also urged that the Chief Minister should not take part in the proceedings before the Committee because he has an interest in the matter and reference is made to the decision in Queen vs Meyer (1).
The case of bias of the Chief Minister (respondent 2) has not been made anywhere in the petition and we do not think if would be right to permit the petitioner to raise this question, for it depends (1) 109 866 on facts which were not mentioned in the petition but were put forward in a rejoinder to which the respondents had no opportunity to reply.
Finally, the petitioner denies that the expunged portions have been published.
We do not think we should express any opinion on this controversy, at any rate, at this stage If the Legislature Assembly of Bihar has the powers and privileges it claims and is entitled to take proceedings for breach thereof, as we hold it is, then it must be left to the House itself to determine whether there has, in fact, been any breach of its privilege.
Thus, it will be for the House on the advice of its Committee of Privileges to consider the true effect of the Speaker 's directions that certain portions of the proceedings be expunged and whether the publication of the speech, if it has included the portion which had been so directed to be expunged in the eye of the law, tantamount to publishing something which had not been said and, whether such a publication cannot be claimed to be a publication of an accurate and faithful report of the speech.
It will, again, be for the House to determine whether the Speaker 's ruling made distinctly and audibly that a portion of the proceedings be expunged amounts to a direction to the Press reporters not to publish the same, and whether the publication of the speech, if it has included the portion directed to be so expunged, is or is not a violation of the order of the Speaker and a breach of the privilege of the House amounting to a contempt of the Speaker and the House.
For reasons stated above we think that this petition should be dismissed.
In the circumstances, there will be no order for costs.
SUBBA RAO, J.
I have had the advantage of perusing the well considered judgment of my.
Lord the Chief Justice.
It is my misfortune to differ from him and my learned brethren.
I would not have ventured to do so but for my conviction that the reasoning adopted therein would unduly restrict and circumscribe the wide scope and content of one of the cherished fundamental rights, namely, the freedom of speech in its application to the Press.
867 This is an application under Article 32 of the Constitution for quashing the proceedings before the Committee of Privileges of the Bihar Legislative Assembly I and for restraining the respondents, i.e., the Chief Minister of Bihar and the said Committee of Privileges, from proceeding against the petitioner for the s publication in the issue of the " Searchlight " dated May 31, 1957, an account of the debate in the House (The Legislative Assembly, Bihar) on May 30, 1957, and for other incidental reliefs.
The petitioner, Pandit M. section M. Sharma, is the editor of the " Searchlight ", an English daily newspaper published from Patna in the State of Bihar.
On May 30, 1957, Shri Maheswara Prasad Narayan Singh, a member of the State Assembly made a bitter attack in the Assembly on the Chief Minister, Shri Sri Krishna Sinha, and on Shri Mahesh Prasad Sinha, a minister in the previous cabinet, who was defeated at the last General Elections.
It is said that in regard to that speech the Speaker gave a ruling that certain portions thereof should be expunged from the proceedings.
In the issue of the " Searchlight" dated May 31, 1957, an accurate and faithful account of the, proceedings of the Bihar Legislative Assembly of May 30, 1957, was published under the caption "BITTEREST ATTACK ON CHIEF MINISTER ".
It was also indicated in the report that the Speaker had disallowed the member to name Mr. Mahesh Prasad Sinha in respect of the Ministry formation and confined him to his remarks in regard to his chairmanship of the Khadi Board.
It is alleged in the affidavit that till May 31, 1957, it was not known to any member of the staff of the " Searchlight ", including the petitioner, that any portion of the debate in question had been expunged from the official record of the Assembly proceedings of May 30, 1957, and that in fact the petitioner did not publish the expunged remarks.
This fact was denied by the respondents in their counter, but it was not alleged that the Speaker made any specific order or gave any direction prohibiting the publication of any part of the proceedings of the Assembly in any newspaper.
On June 10, 1957, Shri Nawal Kishore Sinha moved a privilege motion 868 in the House and it was carried, as, presumably, :no one had opposed it.
On the same day, the House referred the matter to the Committee of Privileges without fixing any date for the presentation of the report a of the Committee.
The Committee in due course held its meeting presided over by the Chief Minister and found that a prima facie case of breach of privilege had been made out against the petitioner.
Then, the Secretary to the Legislative Assembly issued a notice to the petitioner informing him of the fact that the Committee had found a prima facie case of breach of privilege made out against him and asking him to show cause, if any, on or before September 8, 1958, why appropriate action should not be taken against him.
Along with that notice, a copy of the motion as adopted by the Committee of Privileges in its meeting held on August 10, 1958, and a copy of a booklet containing a collection of the papers relating to the privilege motion moved by Shri Nawal Kishore Sinha, M.L.A., on June 16, 1957, were enclosed for ready reference.
The booklet accompanying the notice contained the motion moved in the House, the report published in the "Searchlight " dated May 31, 1957, and the rules of the Assembly relating to the Committee of Privileges.
Though there was some argument on the construction of the terms of the resolution passed by the Committee on account of the unhappy language in which it was couched, it is manifest that the breach of privilege pleaded was that the petitioner, by including the expunged portion of the speech of Maheshwar Prasad Narayan Singh, published a perverted and unfaithful report of the proceedings of the Assembly.
The petitioner, thereafter, filed a petition under article 32 of the Constitution for the aforesaid reliefs.
On the aforesaid facts, the learned Counsel for the petitioner, raised the following points in support of the petition : (1) The petitioner, as a citizen of India, has the fundamental right under article 19 (1) of the Constitution to freedom of speech and expression, which includes the freedom of propagation of ideas and their publication and circulation; and the Legislature of a State cannot claim a privilege in such a 869 way as to infringe that right.
This contention is put in two ways: (i) The privilege conferred on the Legislature of a State is subject to the freedom conferred on a citizen under article 19 (1) of the Constitution ; and (ii) that even if the privilege was not expressly made subject to the fundamental right under article 19 (1), having regard to the nature of the fundamental right and the rules of interpretation, this Court should so construe the provisions as to give force to both the provisions.
(2) Even if article 194 (3) overrides the provisions of article 19, the powers, privileges and immunities of the House of Legislature are only those of the House of Commons of the Parliament of the United Kingdom, at the commencement of the Constitution, i.e., January 26, 1950; and the House of Commons on that date had no privilege to prevent the publication of its proceedings or portion expunged by the Speaker in respect of the proceedings.
(3) Under article 21 of the Constitution, no person is to be deprived of his personal liberty except in accordance with the procedure established by law and that the Privilege Committee, by calling upon the petitioner to appear at the Bar of the Legislature after making an enquiry in violation of the rules, particularly the rr. 207 (2), 208 (3) and 215 of the rules of the Assembly relating to the Committee of Privileges, has infringed his right under that Article.
(4) Mr. Maheshwara Prasad Narayan Singh made a bitter attack on the Chief Minister and that report was published in the " Searchlight ".
The Chief Minister, who has admittedly control over the Legislature or at any rate over the majority of the members of the Assembly, was actuated by mala fides in securing the initiation of the, proceedings against the petitioner for breach of privilege, and therefore his presiding over the meeting of the Sub Committee would vitiate its entire proceedings.
(5) The Committee of Privileges enquired into an allegation not referred to it by the House.
The learned Solicitor General, appearing for the respondents, countered the said arguments and his contentions may be summarized thus: Under the Constitution, no particular Article has more sanctity than the other, even though that 870 Article deals with fundamental rights.
Article 194 (3) is not made subject to article 19 of the Constitution, and, therefore, if the House of Commons of the Parliament of the United Kingdom has the power or privilege to prevent the publication of its proceedings, or at any rate of the expunged portions of it, the Legislature of a State in India, has also a similar privilege or power and it can exercise it, notwithstanding the fact that it infringes the fundamental right of a citizen.
The House of Commons of the United Kingdom has such a privilege and therefore the Legislature of Bihar can exercise it and take action against the person committing a breach thereof.
While a Court of Law can decide on the question of the existence and the extent of the privilege of a House, it has no power or jurisdiction to consider whether a particular person in fact committed a breach thereof.
The Legislature in this case has not broken any of the rules of the Assembly relating to the Committee of Privileges, and even if it did, by reason of article 212 (1) of the Constitution, the validity of its proceedings cannot be questioned on the ground of any alleged irregularity of the procedure.
There was no allegation in the petition that the Committee or the Assembly was actuated by mala fides and even if the Chief Minister was acting with mala fides which fact was denied , the proceedings of the Committee or of the Legislature, which is the final authority in the matter of deciding whether there was a breach of privilege, would not de vitiated.
It was also denied that the Committee of Privileges enquired into any allegation not referred to it by the House.
At the outset it would be convenient to clear the ground of the subsidiary ramifications falling outside the field of controversy and focus on the point that directly arises in this case.
We are not concerned here with the undoubted right of a State Legislature to control and regulate its domestic affairs.
In " Cases in Constitutional Law " by Keir and Lawson, it is stated, at page 126, as follows: "The undoubted privileges of the House of Commons are of three kinds.
They include (i) exclusive 871 jurisdiction over all questions which arise within the walls of the house, except, perhaps, in case of felony. . . . . . (ii) Certain personal privileges which attach to members of Parliament.
The most important of these are freedom of debate, and immunity from civil arrest during the sitting of Parliament and for forty days before and after its assembling. . . . . ' That the freedom of speech and debates or proceedings in Parliament ought not to be impeached or questioned in any Court or place out of Parliament '.
(iii) The power of executing decisions on matters of privilege by committing members of Parliament, or any other individuals, to imprisonment for contempt of the House.
" Nor we are called upon to decide on the scope of a Court 's jurisdiction to set aside the orders of contempt made by the Legislature or warrants issued to implement the said orders.
Reported decisions seem to suggest that if the order committing a person for contempt or the warrant issued pursuant thereto discloses the reasons, the Court can decide whether there is a privilege and also its extent; but, when it purports to issue a bald order, the Court has no power to decide, on the basis of other evidence, whether in fact a breach of privilege is involved.
As this question does not arise in this case, I need not express any opinion thereon.
The stand taken by the Legislature, as disclosed in the notice issued, the enclosed records sent to the petitioner, in the counter affidavit filed and the arguments advanced by the respondents, is that the Legislature of a State has the privilege to prevent any citizen from publishing the proceedings of the Legislature or at any rate such portions of it as are ordered to be expunged by the Speaker, and therefore it has a right to take action against the person committing a breach of such a privilege.
The main question, therefore, that falls to be decided is whether the Legislature has such a privilege.
If this question is answered against the Legislature, no other question arises for consideration.
872 The powers, privileges, and immunities of a State Legislature are governed by article 194 of the Constitution and the freedom of propagation of ideas, their publication and circulation by article 19(1)(a) thereof.
For convenience of reference, both these articles may be read in juxtaposition.
Article 19 reads: " (1) All citizens shall have the right (a) to freedom of speech and expression . . . . . . . . . . (2) 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.
" Article 194 states: " (1) Subject to the provisions of this Constitution and to the rules and standing orders regulating the procedure of the Legislature, there shall be freedom of speech in the Legislature of every State.
(2) No member of the Legislature of a State shall be liable to any proceedings in any court in respect of anything said or any vote given by him in the Legislature or any committee thereof, and no person shall be so liable in respect of the publication by or under the authority of a House of such a Legislature of any report, paper, votes or proceedings.
(3) In other respects, the powers, privileges and immunities of a House of the Legislature of a State, and of the members and the committees of a House of such Legislature, shall be such as may from time to time be defined by the Legislature by law, and, until so defined, shall be those of the House of Commons of the Parliament of the United Kingdom and of its members and committees, at the commencement of this Constitution.
873 (4) The provisions of clauses (1), (2) and (3) shall apply in relation to persons who by virtue of this Constitution have the right to speak in, and otherwise to take part in the proceedings of, a House of the Legislature of a State or any committee thereof as they apply in relation to members of that Legislature." In Romesh Thappar vs The State of Madras (1), this Court ruled that freedom of speech and expression includes freedom of propagation of ideas and that freedom is ensured by the freedom of circulation.
This freedom is, therefore, comprehensive enough to take in the freedom of the press.
The said view is accepted and followed in Brij Bhushan vs The State of Delhi (2).
To the same effect is the decision of this Court in Express Newspapers Ltd. vs Union of India (3), where Bhagwati, J., delivering the judgment of the Court, held that freedom of speech and expression includes within its scope the freedom of the Press.
In Srinivasan vs The State of Madras (4) it was held, on the basis of the view expressed by this Court, that the terms " freedom of speech and expression " would include the liberty to propagate not only one 's own views but also the right to print matters which are not one 's own views but have either been borrowed from someone else or are printed under the direction of that person.
I would, therefore, proceed to, consider the argument advanced on the basis that the freedom of speech in article 19(1)(a) takes in also the freedom of the Press in the comprehensive sense indicated by me supra.
The importance of the freedom of speech in a democratic country cannot be over emphasized, and in recognition thereof, cl.
(2) of article 19 unlike other clauses of that Article, confines the scope of the restrictions on the said freedom within comparatively narrower limits.
Clause (2) enables the State to impose reasonable restrictions on the exercise of the said right in the interest of the security of the State, friendly relations with foreign States, public order, decency or (1) ; (2) ; (3) , 118.
(4) A.I.R. (1951) Mad.
110 874 morality, or in relation to contempt of Court defamation or incitement to an offence.
The said Article finds place in Part III under the heading " Fundamental Rights ".
Article 13 makes laws that are inconsistent with or in derogation of the fundamental rights void and clause (2) thereof expressly prohibits the State from making laws in contravention of the said rights.
In the words of Patanjali Sastri, C. J., the said rights in Part III are " rights reserved by the people after delegation of the rights by the people to the institutions of government ".
It is true, and it cannot be denied, that notwithstanding the transcendental nature of the said rights, the Constitution may empower the Legislature to restrict the scope of the said rights within reasonable bounds, as in fact it did under cls.
(2) to (6) of article 19.
Such restrictions may be by express words or by necessary implication.
But the Court would not and should not, having regard to the nature of the rights, readily infer such a restriction unless there are compelling reasons to do so.
The Constitution adopted different and well understood phraseology to resolve conflicts and prevent overlapping of various provisions.
Some Articles are expressly made subject to the provisions of the Con stitution vide articles 71(3), 73(1), 105, 131, etc. , and some to specified Articles vide articles 81, 107(1), 107(2) 114(3), 120(1), etc.
Some Articles are made effective notwithstanding other provisions in the Constitution vide articles 120(1), 136(1), 143(2), 169(1), etc.
Where the Constitution adopts one or other of the said two devices, its intention is clear and unambiguous; but, there are other Articles which are not expressly made subject to provisions of the Constitution or whose operation is not made effective notwithstanding any other provisions.
In such cases, a duty is cast upon the Court to ascertain the intention of the Constituent Assembly.
Cooley in his " Constitutional Law " points out that " however carefully constitutions may be made, their meaning must be often drawn in question ".
He lays down, at page 427, the following rule, among others, as a guide to the construction of these instruments: 875 "The whole instrument is to be examined, with a view of determining the intention of each part.
Moreover, effect is to be given, if possible, to the whole instrument, and to every section and clause.
And in interpreting clauses it must be presumed that words have been used in their natural and ordinary meaning.
The rule may also be stated in a different way: If two Articles appear to be in conflict, every attempt should be made to reconcile them or to make them to co exist before excluding or rejecting the operation of one.
Article 194(3) of the Constitution, with which we are concerned, does not in express terms make that clause subject to the provisions of the Constitution or to those of article 19.
Article 194 has three clauses.
The first clause declares that there shall be freedom of speech in the Legislature of every State and that freedom is expressly made subject to the provisions of the Constitution and to the rules and the standing orders regulating the procedure of the Legislature.
Clause (2) gives protection to members of the Legislature of a State from any liability to any proceedings in any Court in respect of anything said or any vote given by him in the Legislature or any committee thereof and to every person in respect of the publication by or under the authority of a House of such a Legislature of any report, paper, votes or procedure.
The third clause, with which we are now directly concerned, confers upon a House of the Legislature of a State and of the members and the committees thereof certain powers, privileges and immunities.
It is in two parts.
The first part says that the powers, privileges and immunities of a House of the Legislature of a State and of the members and the committees of a House of such Legislature shall be such as may from time to time be defined by the Legislature by law; and the second part declares that until so defined, they shall be those of the House of Commons of the Parliament of the United Kingdom and its members and committees, at the commencement of the Constitution.
The question is whether 876 this clause confers on the Legislature powers, privileges and immunities so as to infringe the fundamental right of a citizen under article 19(1)(a) of the Constitution.
The first thing to be noticed is that while article 19(1)(a) of the Constitution deals with the freedom of Speech and expression of a citizen, article 194(1) declares that there shall be freedom of speech in the Legislature of every State.
While article 19(1) is general in terms and is subject only to reasonable restrictions made under clause (2) of the said Article, article 194(1) makes the freedom of speech subject to the provisions of the Constitution and rules and standing orders regulating the procedure of the Legislature.
Clause (2) flows from cl.
(1) and it affords protection from lia bility to any proceedings in a Court for persons in respect of the acts mentioned therein.
But these two provisions do not touch the fundamental right of a citizen to publish proceedings which he is entitled to do under article 19(1) of the Constitution.
That is dealt with by el.
That clause provides for powers, privileges and immunities of a House of the Legislature of a State and of the members and the committees of a House, other than those specified in cl.
it is not expressly made subject to the provisions of the Constitution.
I find it difficult to read in that clause the opening words of el.
(1), viz.,, " subject to the provisions of this Constitution ", for two reasons: (i) cl.
(3) deals with a subject wider in scope than cl.(1) and therefore did not flow from cl.
(1); and (ii) grammatically it is not possible to import the opening words of cl.
(1) into cl.
Therefore, I shall proceed on the basis that cl.
(3) is not expressly made subject to article 19 or expressly made independent of other Articles of the Constitution.
We must, therefore, scrutinize the provisions of that clause in the context of the other provisions of the Constitution to ascertain whether by necessary implication it excludes the operation of article 19.
The first thing to be noticed in cl.
(3) of article 194 is that the Constitution declares that the powers, privileges and immunities of a House of Legislature of a State and of the members and com mittees of a House of such Legislature are such as 877 defined by the Legislature by law.
In the second part, as a transitory measure, it directs that till they are so defined, they shall be those of the House of.
Commons of the Parliament of the United Kingdom and of its members and committees, at the commencement of the Constitution.
I find it impossible to accept the contention that the second part is not a transitory provision; for, the said argument is in the teeth of the express words used therein.
It is inconceivable that the Constituent Assembly, having framed the Constitution covering various fields of activity in minute detail, should have thought fit to leave the privileges of the Legislatures in such a vague and nebulous position compelling the Legislatures to ascertain the con tent of their privileges from those obtaining in the House of Commons at the commencement of the Constitution.
The privilege of the House of Commons is an organic growth.
Sometimes a particular rule persists in the record but falls into disuse in practice.
Privileges, just like other branches of common law, are results of compromise depending upon the particular circumstances of a given situation.
How difficult it is to ascertain the privilege of the House of Commons and its content and extent in a given case is illustrated by this case.
Reliance is placed upon other Articles of the Constitution in support of the contention that the second part of cl.
(3) is not intended to be transitory in nature.
Under article 135 of the Constitution, until Parliament by law otherwise provides, the Supreme Court shall have certain appellate jurisdiction.
Under article 137, subject to the provisions of any law made by Parliament or any rules made under article 145, the Supreme Court shall have power to review any judgment pronounced or order made by it.
Article 142(2) says: "Subject to the provisions of any law made in this behalf by Parliament, the Supreme Court shall, as respect the whole of the territory of India, have all and every power to make any order for the purpose of securing the attendance of any person, the discovery or production of any documents, or the investigation or punishment of any contempt of itself." Article 145 878 reads:"Subject to the provisions of any law made by Parliament, the Supreme Court may from time to time, with the approval of the President, make rules for regulating generally the practice and procedure of the Court. . .
Under article 146(2), "Subject to the provisions of any law made by Parliament, the conditions of service of officers and servants of the Supreme Court shall be such as may be prescribed by rules made by the Chief Justice of India or by some other Judge or officer of the Court authorised by the Chief Justice of India to make rules for the purpose." Under article 187(3), " Until provision is made by the Legislature of the State under clause (2), the Governor may, after consultation with the Speaker of the Legislative Assembly or the Chairman of the Legislative Council, as the case may be, make rules regulating the recruitment, and the conditions of service of persons appointed, to the secretarial staff of the Assembly or the Council, and any rules so made shall have effect subject to the provisions of any law made under the said clause ".
Clause (2) of article 210 says " Unless the Legislature of the State by law otherwise provides, this article shall, after the expiration of a period of fifteen years from the commencement of this Constitution, have effect as if the words I or in English ' were omitted therefrom.
" I do not see any analogy between the first part of article 194(3) and the provisions of the aforesaid Articles.
Firstly, the said Articles do not import into India the law of a foreign country; secondly, they either make the existing law subject to the provisions of any law made by Parliament, or declare a particular law to be in force unless modified by Parliament; whereas in article 194(3) the Constitution expressly declares that the law in respect of powers, privileges and immunities is that made by a House of the Legislature from time to time and introduces a rider as a transitory measure that till such law is made, the powers, privileges and immunities of the House of Commons should be those of the Legislature also.
I have no doubt, therefore, that part two of cl. (3) of article 194 is intended to be a transitory provision and ordinarily, 879 unless there is a clear intention to the contrary, it cannot be given a higher sanctity than that of the first part of cl.
The first part of el.
(3) reads: In other respects, the powers, privileges and immunities of a House of the Legislature of a State, and of the members and the committees of a House of such Legislature, shall be such as may from time to time be defined by the Legislature by law. . .
Article 245 enables a State to make laws for the whole or any part of the State.
Article 246(3) pro vides that the Legislature of any State has exclusive power to make laws with respect to any of the matters enumerated in List II in the Seventh Schedule (in the Constitution referred to as the " State List ").
Item 39 of List II of the Seventh Schedule enumerates the following matters among others: " Powers, privileges and immunities of the Legislative Assembly and of the members and the committees thereof. . .
Clause (2) of article 13, which is one of the Articles in Part III relating to fundamental rights, prohibits the State from making any law which takes away or abridges the rights conferred by that Part and declares that any law made in contravention of that clause shall to the extent of the contravention be void.
It is, therefore, manifest that the law made by the Legislature in respect of the powers, privileges and immunities of a House of the Legislature of a State, would be void to the extent the law contravened the provisions of article 19(1)(a) of the Constitution, unless it is saved by any law prescribing reasonable restrictions within the ambit of article 19(2).
So much is conceded by the learned Solicitor General.
Then, what is the reason or justification for holding that the second part of that clause should be read in a different way as to be free from the impact of the fundamental rights.
When the Constitution expressly made the laws prescribing the privileges of the Legislature of a State of our country subject to the fundamental rights, there is no apparent reason why they should have omitted that limitation in the case of the privileges of the Parliament of the United Kingdom in their application to a State Legislature.
We cannot assume that 880 the framers of the Constitution thought that the privileges of the House of Commons were subject to the fundamental rights in that country; for, to assume that is to impute ignorance to them of the fact that the Parliament of the United Kingdom was supreme and there were no fetters on its power of legislation.
The contention also, if accepted, would lead to the anomaly of a law providing for privileges made by Parliament or a Legislature of our country being struck down as infringing the fundamental rights, while the same privilege or privileges, if no law was made, would be valid.
Except the far fetched suggestion that the Constitution makers might have thought that all the privileges of the House of Commons, being the mother of Parliaments, would not in fact offend the fundamental rights and that, therefore, they designedly left them untouched by Part III as unnecessary or the equally untenable guess that they thought that for a temporary period the operation and the extent of the said privileges need not be curtailed, no convincing or even plausible reason is offered for the alleged different treatment meted out to the said privileges in the said two parts of el.
If the Constitution intended to make the distinction, it would have opened the second part of cl.
(3) with the words " Notwithstanding other provisions of the Constitution or those of article 19 ".
I cannot also appreciate the argument that article 194 should be preferred to article 19(1) and not vice versa.
Under the Constitution, it is the duty of this Court to give a harmonious construction to both the provisions so that full effect may be given to both, without the one excluding the other.
There is no inherent inconsistency between the two provisions.
Article 19(1) (a) gives freedom of speech and expression to a citizen, while the second part of article 194(3) deals with the powers, privileges and immunities of the Legislature and of its members and committees.
The Legislature and its members have certainly a wide range of powers and privileges and the said privileges can be exercised without infringing the rights of a citizen, and particularly of one who is not a member of the Legislature.
881 When there is a conflict, the privilege should yield to the extent it affects the fundamental right.
This construction gives full effect to both the Articles.
A This Court in Gunupati Keshavram Reddy vs Nafisul Hasan (1) held that the order of arrest of Mr. Mistry and his detention in the Speaker 's custody was a breach of the provisions of article 22(2) of the Constitution.
In that case, the said Mistry was directed by the Speaker of the U. P. Legislative Assembly to be arrested and produced before him to answer a charge of breach of privilege.
Though the question was not elaborately considered, five judges of this Court un animously held that the arrest was a clear breach of the provisions of article 22(2) of the Constitution indicating thereby that article 194 was subject to Articles of Part III of the Constitution.
I am bound by the decision of this Court.
In the result, I hold that the petitioner has the fundamental right to publish the report of the proceedings of the Legislature and that, as no reasonable restrictions were imposed by law on the said fundamental right, the action of the respondents infringes his right entitling him to the relief asked for.
This case does not, as it is supposed or suggested illustrate any conflict between the Legislature and the Court, but it is one between the Legislature and the citizens of the State whose representatives constituted the Legislature.
I yield to none in my respect for that august body, the Legislature of the State; but, we are under a duty, enjoined on this Court by article 32 of the Constitution, to protect the rights of the citizens who in theory reserved to themselves certain rights and parted only the others to the Legislature.
Every institution created by the Constitution, therefore ' should function within its allotted field and cannot encroach upon the rights of the people who created the institutions.
It may not be out of place to suggest to the appropriate authority to make a law regulating the powers, privileges and immunities of the Legislature instead of keeping this branch of law in a nebu lous state, with the result that a citizen will have to (1) A.I.R. (1954) S.C. 636. 882 make a research into the unwritten law of the privileges of the House of Commons at the risk of being called before the Bar of the Legislature.
The said conclusion would be sufficient to dispose of this petition.
But as it was argued at some length, it would be as well that I expressed my opinion on the question of the existence and the extent of the relevant privileges of the House of Commons at the commencement of the Constitution.
Before considering that question, it would be convenient to notice briefly the scope of a Court 's jurisdiction to investigate the nature and the extent of the privilege claimed by the House of Commons.
It is often said that each House of Parliament is the sole judge of its own privileges.
But early in the history of British Parliament the question of the scope of that equivocal statement was raised and it was contended that the House 's jurisdiction was confined only within the limits of the privileges as defined by the Courts of Common Law.
The said question was raised and decided in Ashby vs White (1), Paty 's Case (2), Stockdale vs Hansard (3) and in the Case of the Sheriff of Middlesex(1).
In the said cases, the Common Law rights of a citizen were threatened by the House of Commons on the ground that the person concerned committed a breach of the privilege of the House.
The combined effect of these decisions is that " the Courts deny to the Houses the right to determine the limits of their privileges, while allowing them within those limits exclusive jurisdiction " In Anson 's Law and Custom of the Constitution, the principle has been neatly stated, at page 190, thus: " The Privileges of Parliament, like the prerogative of the Crown, are rights conferred by law, and as such their limits are ascertainable and determinable, like the limits of other rights, by the Courts of Law.
" As the learned Solicitor General conceded the said legal position, it would be unnecessary to pursue the matter further or consider the decisions in greater detail.
The main question, therefore, that falls to be decided is the existence and the extent of the privilege (1) ; (3) (1839) 9 A. & F. (2) ; (4) ; 883 claimed by the respondents.
As the privilege claimed by the respondents is in derogation of the fundamental right of a citizen, the burden lies heavily upon them to establish by clear and unequivocal evidence that the House of Commons possessed such a privilege.
In the words of Coke " as the privilege is part of the law of custom of the Parliament, they must be collected out of the rolls of Parliament and other records and by precedent and continued experience ".
They can be found only in the Journals of the House compiled in the Journal Office from the manuscript minutes and notes of proceedings made by the clerks at the table during the sittings of the House.
Decided cases and the text books would also help us to ascertain the privileges of the Houses.
The words " at the commencement of the Constitution " indicate that the privileges intended to be attracted are not of the dark and difficult days, when the House of Commons passed through strife and struggle, but only those obtaining in 1950, when it was functioning as a model Legislature in a highly democratized country.
In the circumstance, a duty is cast upon the respondents to establish with exactitude that the House of Commons possessed the particular privilege claimed at the com mencement of the Constitution.
The respondents claimed two privileges: (i) that the House of Commons has the privilege of preventing the publication of its proceedings ; and (ii) that it has the privilege to prevent the publication of that part of the proceedings directed by the Speaker to be expunged.
Indeed the second privilege is in fact comprehended by the first, which is larger in scope.
A history of the said privilege is given in May 's Parliamentary Practice as well as in Halsbury 's Laws of England.
In Halsbury 's Laws of England, 2nd Edition, Volume 24 (Lord Hailsham 's Edition), it is stated at pages 350 351 as follows: It is within the power of either House of Parliament, should it deem it expedient, to prohibit the publication of its proceedings.
In the House of Lords, it is a breach of privilege for any person to print or publish anything relating to 884 the proceedings of the House without its permission.
The House of Commons, upon many occasions, has declared the publication of its proceedings without the authority of the House to be a breach of privilege, and the House has never formally rescinded the orders which from time to time it has made with regard to this subject.
At the present time, however, neither House will consider a report of its proceedings in a newspaper or other publication to be a breach of its privileges, unless such report is manifestly inaccurate or untrue.
" At page 350 in the foot note (d) the history of the said privilege is given thus: " The jealousy of the House of Commons with regard to the privacy of its proceedings dates from the Long Parliament, and was due to the antagonism which existed between that assembly and the King.
The object of the House at that time was to prevent its own members or officers from supplying the King with information which might incriminate its mem bers; see Resolutions of the House of Commons of July 13, 1641 (Journals of the House of Commons, 1641, Vol.
II, page 209).
It was not until after the Revolution of 1689 that the House came in contact with unofficial reporters who furnished, for the news letters of the day, reports, often prejudicial and generally inaccurate, of the proceedings of the Commons.
In 1738 the House passed a resolution stating that it was " an high indignity to, and a notorious breach of privilege of, this House, for any news writer, in letters or other papers (as minutes, or under any other denomination), or for any printer or publisher of any printed newspaper of any denomination to insert in the said letters or papers, or to give therein any account of the debates or other proceedings Of this House or any committee thereof, as well during the recess, as the sitting of Parliament; and that this House will proceed with the utmost severity against such offenders (Journals of the House of Commons, 1738, Vol.
XXIII, p. 148; Parliamentary History, Vol.
X, pp. 799 811).
This resolution was repeated in 1753 and 1762; see Journals of the House of 885 Commons, 1753, Vol.
XXVI, p. 754; 1762, Vol.
XXIX, pp. 206, 207.
But, in spite of the attitude of the House, unofficial reports of the proceedings of the House of Commons were still published, and in 1771, during the disturbances caused by John Wilkes, the claim of the House to forbid the publication of its debates led to a struggle between the Commons and the City of London which, although it resulted in the committal to prison of the Lord Mayor and two alder.
men, practically put an end to the attempts of the House of Commons to prevent the publication of its debates.
" Much to the same effect it is stated in May 's Parliamentary Practice: at page 54, the learned author, under the heading " Right to control publication of Debates and Proceedings", observes: " Closely ' connected with the power to exclude strangers, so as to obtain, when necessary, such privacy as may secure freedom of debate, is the right of either House to prohibit the publication of debates or proceedings.
The publication of the debates of either House has been repeatedly declared to be a breach of privilege, and especially false and perverted reports of them; and no doubt can exist that if either House desire to withhold their proceedings from the public, it is within the strictest limits of their jurisdiction to do so, and to punish any violation of their orders.
" After tracing the history of the privilege, the practice obtaining in modern times is described thus: " The repeated orders made by the House forbidding the publication of the debates and proceedings of the House, or of any committee thereof, and of comments thereon, or on the conduct of Members in the House, by newspapers, newsletters, or otherwise, and directing the punishment of offenders against such rules, have long since fallen into disuse.
Indeed, since 1909, the debates have been reported and issued by an official reporting staff under the authority of Mr. Speaker, and are sold to the public by Her Majesty 's Stationery Office.
" The same idea is repeated at page 56 as follows: 886 " So long as the debates are correctly and faithfully reported, however, the privilege which prohibits their publication is waived." At page 118, the same result is described in different words thus: "So long as the debates are correctly and faithfully reported, the orders which prohibit their publication are not enforced ; but when they are reported mala fide, the publishers of newspapers are liable to punishment." Then the following eight instance of misconduct, in connection with the, publication of the debates which is generally treated as a breach of privilege of the House are given by the learned author : (i) Publishing a false account of proceedings of the House of Lords; (ii) Publishing scandalous misrepresentation of what had passed in either House or what had been said in debate; (iii) Publishing gross or wilful misrepresentations of particular Members, speeches; (iv) Publishing under colour of a report of a Member 's speech a gross libel on the character and conduct of another Member; (v) Suppressing speeches of particular Members (vi) Publishing a proceeding which the House of Lords had ordered to the expunged from the journals; (vii) Publishing a libel on counsel appearing before a committee under colour of a report of the proceedings of such committee; and (viii) Publishing a forged paper, publicly sold as His Majesty 's speech to both Houses.
It would be seen from the instances that mala fides is a necessary ingredient of the publication to attract the doctrine of privilege and that the instances given are of the period between 1756 to 1893.
One of the instances on which strong emphasis is laid by the learned Solicitor General is the publishing of a proceeding which the House of Lords bad ordered to be expunged from the Journals.
Apart from the fact that the instance in question relates to the House of Lords, the Journal is not available for us to ascertain 887 under what circumstances the publication was made Further the instance was of the year 1801 and no other instances of that kind appear to have occurred from 1801 to 1950.
In the circumstances, on the authority of May, it may be accepted that the House of Lords asserted the privilege in 1801 when its proceedings were published mala fide, though they were expressly ordered to be expunged.
Cockburn, C. J., in Wasan vs Walter(1) forcibly pointed out the irrelevance of the privilege claimed in the modern democratic set up.
At page 89, the learned Chief Justice observed : " It seems to us impossible to doubt that it is of paramount public and national importance that the proceedings of the houses of Parliament shall be communicated to the public, who have the deepest interest in knowing what passes within their walls, seeing that on what is there said and done, the welfare of the community depends.
Where would be our confidence in the government of the country or in the legislature by which our laws are framed, and to whose charge the great interests of the country are committed, where would be our attachment to the Constitution under which we live, if the proceedings of the great council of the realm were shrouded in secrecy and concealed from the knowledge of the nation ? How could the communications between the representatives of the people and their constituents, which are so essential to the working of the representative system, be usefully carried on, if the constituencies were kept in ignorance of what their representatives are doing? What would become of the right of petitioning on all measures pending in Parliament, the undoubted right of the subject, if the people are to be kept in ignorance of what is passing ID either house? Can any man bring himself to doubt that the publicity given in modern times to what passes in Parliament is essential to the maintenance of the relations subsisting between the government, the legislature, and the country at large ? It may, no doubt, be said that, while it may be necessary as a matter of national interest that the (1) 888 proceedings of Parliament should in general be made public, yet that debates in which the character of individuals is brought into question ought to be suppressed.
But to this, in addition to the difficulty in which parties publishing parliamentary reports would be placed, if this distinction were to be enforced and every debate had to be critically scanned to see whether it contained defamatory matter, it may be further answered that there is perhaps no subject in which the public have a deeper interest than in all that relates to the conduct of public servants of the State, no subject of parliamentary discussion which more requires to be made known than an inquiry relating to it".
At page 95, dealing with the contention based upon the Standing Orders of both the Houses of Parliament prohibiting the publication of the proceedings, the learned Chief Justice proceeded to state as follows: " The fact, no doubt, is, that each house of Parliament does, by its standing orders, prohibit the publication of its debates.
But, practically, each house not only permits, but also sanctions and encourages, the publication of its proceedings, and actually gives every facility to those who report them.
Individual members correct their speeches for publication in Hansard or the public journals, and in every debate reports of former speeches containing therein are constantly referred to.
Collectively, as well as individually, the members of both houses would deplore as a national misfortune the withholding their debates from the country at large.
Practically speaking, therefore, it is idle to say that the publication of Parliamentary proceedings is prohibited by Parliament.
The standing orders which prohibit it are obviously maintained only to give to each house the control over the publication of its proceedings, and the power of preventing or correcting any abuse of the facility afforded.
" I have given the said passages in extenso as they give neatly and graphically not only the extent of the privilege in modern times, but the reasons for and the process by which the larger concept of the privilege has been gradually reduced to its present form.
These 889 are weighty observations and, if they were appropriate to the conditions obtaining in the 19th century, they would be more so in 1950, when the parliamentary system of government was perfected in England.
Jennings in his book on " The British Constitution states at page 82 thus: " All this assumes, of course, that the House debates in public.
Government and Opposition speak to each other, but for the education of the people.
The criticisms brought against the Government are the criticisms of ordinary individuals; the answers of the Government are formally answers to the Opposition, but substantially they are replies to the questions raised in the factory, the railway carriage and the office.
The members of the House of Commons were not elected for their special qualifications, but because they supported the policies which the majority, of their constituents were prepared to accept.
They have no authority except as representatives, and in order that their representative character may be preserved they must debate in public.
Secret sessions were suited to the oligarchic government of the eighteenth century.
They are the negation of democratic principles.
No doubt there are exceptional occasions when secrecy is justified.
" This passage succinctly gives the principles underlying the doctrine that in a democratic country, debates in Parliament are public and there should not be any prohibition against the publication of the said debates.
The extent of the privilege of the House of Commons in regard to the publication of its proceedings may be stated thus: In the seventeenth century, the House of Commons made standing orders prohibiting the publication of its proceedings.
But that was a necessary precaution in that critical period when the representatives of the people were in conflict with the crown and they were careful that their proceedings should not reach the ear of the Crown.
In the aristocratic eighteenth century, the opposition to publication was founded not only on the fear of misrepresentation, 112 890 but on impatience of the pressure of public opinion.
But gradually and imperceptibly, as a result of conflicts and compromises and as Parliamentary form of government became perfect and broad based, not only publication was allowed but actually encouraged by the House of Commons.
In the year 1950, it would be unthinkable and indeed would have been an extraordinary phenomenon for the House Of Commons claiming the privilege of preventing the publication of its proceedings.
The said orders, though not expressly repealed or modified, were no longer enforced in accordance with their tenor; but were in effect modified by practice and precedents.
The stringent part of the orders had fallen into disuse and in practice it was restricted to mala fide publication of the proceedings.
1, therefore, hold that in the year 1950, the House of Commons had no privilege to prevent the publication of the correct add faithful reports of its proceedings save those in the case of secret sessions held under exceptional circumstances and had only a limited privilege to prevent mala fide publication of garbled, un faithful or expunged reports of the proceedings.
It follows from my view, namely, that the petitioner 's fundamental right under article 19(1) is preserved despite the provisions of article 194(3) of the Constitution, that the petitioner is entitled to succeed.
I am further of the opinion that even if article 194(3) of the Constitution excludes the operation of article 19(1), the petitioner in the circumstances of the present case would not be in a worse position.
That apart, the charge as disclosed either in the notice served on the petitioner or in the enclosures annexed thereto does not impute any mala fide intention to the petitioner.
The notice only says that the Committee of Privileges, on the basis of the publication of the news item in the " Searchlight ", found that a prima facie case of breach of privilege has been made out against the petitioner.
The resolution enclosed therein indicates that the petitioner committed a breach of privilege by printing the expunged portion of the speech of Maheshwara Prasad Narayan Singh and thereby published a perverted and unfaithful report of the proceedings.
Other documents 891 enclosed with the notice contained a motion moved in the House by another member charging the petitioner for publishing the expunged portion of the speech.
The petitioner in his petition states that till May 31, it was not known to any member of the staff of the " Searchlight ", including the petitioner, that any portion of s the debate in question had been expunged from the official record of the Assembly.
Though in the official record of the proceedings, portions of the speech reported have been expunged, no order of the Speaker expunging any portions of the speech made on May 30, has been produced.
Admittedly there was no order of the Speaker prohibiting the publication of the expunged portion of the speech.
In the counter affidavit filed by the respondents, they did not allege any mala fides to the petitioner but they took their stand on the fact that the Legislature had the privilege of preventing the petitioner from publishing the expunged por tion of the speech.
In the circumstances, neither the notice nor the documents enclosed with the notice disclose that the petitioner published the speech, including the expunged portion mala fide, or even with the knowledge that any portion of the speech was directed to be expunged.
As I have pointed out, the Legislature has the privilege of preventing only mala fide publication of the proceedings of the Legislature and, as in this case the petitioner is not alleged to have done so, the Legislature has no power to take any action in respect of the said publication.
In the result, the petition is allowed.
A Writ of Prohibition will issue restraining the respondents from proceeding against the petitioner for the alleged breach of privilege by publishing in the issue of the " Searchlight ", dated May 31, 1957, an account of the debate of the House (Legislative Assembly, Bihar) of May 30, 1957.
ORDER In view of the judgment of the majority, the petition is dismissed.
There will be no order as to costs.
| The petitioner, the Editor of the English daily newspaper Searchlight of Patna, was called upon by the Secretary of the Patna Legislative Assembly to show cause before the Committee of Privileges of the Assembly why appropriate action should not be taken against him for the breach of privileges of the Speaker and the Assembly for publishing in its entirety a speech delivered in the Assembly by a member thereof, portions of which were directed to be expunged by the Speaker.
It was contended on behalf of the Petitioner that the said notice and the proposed action by the Committee were in violation of his fundamental right to freedom of speech and expression under article 19(1)(a) and of the protection of his personal liberty under article 21 of the Constitution, and that, as an editor of a newspaper, he was entitled to all the benefits of the freedom of the Press.
The respondents relied on article 194(3) Of the Constitution and claimed that the proceedings in the House as those in the British House of Commons were not usually meant to be published, and in no circumstances was it permissible to publish the parts of a 807 speech which were directed to be expunged and, therefore, formed no part of the official report and such publication was in clear breach of the privileges of the Assembly.
The points for determination were: (1) Could the British House of Commons entirely prohibit the publication of its proceedings or even of such portions of them as had been directed to be expunged ? (2) Assuming that the British House of Commons had such power and consequently the State Legislature also had such power under Article 194(3), could the privileges of the Legislature under that Article prevail over the fundamental right guaranteed by article 19(1)(a)? The Bihar Legislature not having admittedly made any law governing its powers and privileges under Entry 39 of List II of the Seventh Schedule to the Constitution, the question naturally was as to what were the powers, privileges and immunities of the British House of Commons at the commencement of the Constitution.
Held (per Das, C. J., Bhagwati, Sinha and Wanchoo, jj.) that there could be no doubt that the liberty of the Press was implicit in the freedom of speech and expression guaranteed to a citizen under article 19(1)(a) of the Constitution and that must include the freedom of propagation of ideas ensured by the freedom of circulation.
Romesh Thappar vs State of Madras, ; , Brijbhushan vs The State of Delhi, ; and Express Newspaper Ltd. vs Union of India, , relied on.
The liberty of the Press in India flowed from this freedom of speech and expression of a citizen and stood on no higher footing and no privilege attached to the Press as such.
Arnold vs King Emperor, (1914) L.R. 41 I.A. 149, referred to.
A survey of the evolution of Parliamentary privileges in England showed beyond doubt that at the commencement of the Indian Constitution, the British House of Commons had the power or privilege of prohibiting the publication of even a true and faithful report of the debates or proceedings that took place in the House, and with greater reason, the power and privilege of prohibiting publication of an inaccurate or garbled version of such debates and proceedings.
These were the powers and privileges that article 194(3) conferred on State Legislatures and article 05(3) conferred on the Houses of Parliament in India.
It would not be correct to contend that article 19(1)(a) of the Constitution controlled the latter half of article 194(3) or of article 105(3) Of the Constitution and that the powers, privileges and immunities conferred by them must yield to the fundamental right of the citizen under article 19(1)(a).
As articles 194(3) and 105(3) stood in the same supreme position as the provisions of Part III of the Constitution and could not be affected by article 13, the principle of harmonious construction must be adopted.
808 So construed, the provisions of article 19(1)(a), which were general, must yield to article 194(1) and the latter part of its cl.
(3), which are special, and article 19(1)(a) could be of no avail to the petitioner.
Ramjilal vs Income tax Officer, Mohindergarh, [1951] S.C.R. a 127 and Laxamanappa Hanumantappa vs Union of India, ; , applied.
Anand Bihayi Mishra vs Ram Sahay, A.I.R. (1952) M.B. 31, disapproved.
Gunapati Keshavyam Reddy vs Nafisul Hasan, A.I.R. (1954) S.C. 636 explained as having proceeded on concession by counsel.
Nor could the petitioner complain of any breach, actual or threatened, of his fundamental right under article 21 of the Constitution since article 194(3) read with the rules, framed by the Bihar Legislative Assembly in exercise of its power under article 208 of the Constitution, laid down the procedure for enforcing its powers, privileges and immunities under that Article and any deprivation of his personal liberty as a result of the proceedings before the Committee of Privileges would be in accordance with procedure established by law.
Held, further, that it was not for this Court to prescribe any particular period for moving a privilege motion so as to make the subject matter of the motion a specific matter of recent occurrence within the meaning of the said rules.
This was a matter for the speaker alone to decide.
The time within which the Committee of privileges was to submit its report was a matter between the House and its Committee and the party whose conduct was the subject matter of investigation could have no say in the matter.
The effect in law of the order of the Speaker to expunge a portion of the speech of a member might be as if that portion had not been spoken and a report of the whole speech despite the speaker 's order might be regarded as a perverted and unfaithful report and Prima facie constitute a breach of the privilege of the Assembly.
Whether there had in fact been a breach of the privilege of the Assembly was, however, a matter for the Assembly alone to judge.
Per Subba Rao, J. The second part of article 194(3) was clearly a transitory provision and had no higher sanctity than that of the first.
While a law when made by the State Legislature under the first part would, by virtue of article 13(2), be void to the extent it contravened the provisions of 19(1)(a), unless saved by article 19(2), there could be no reason why the powers, privileges and immunities conferred under the second part should be free from the impact of the fundamental rights.
As there was no inherent inconsistency between articles 19(1)(a) and the second part of article 194(3), full effect must be given to them both on the principle of harmonious construction.
The 809 wide powers and privileges enjoyed by the Legislature and its members should, therefore, be so exercised as not to impair the fundamental rights of the citizen, particularly of one who was not a member of the Legislature.
In case of a conflict, article 19(1)(a) must prevail over article 194(3) and not vice versa and the privilege must yield to the extent it affected the fundamental right.
Gunupati Keshavarm Reddy vs Nafisul Hasan, A.I.R. (1954) S.C. 636, applied.
At the commencement of the Constitution the House of Commons had no privilege to prevent the publication of a correct and faithful report of its proceedings, save those in respect of secret sessions held under exceptional circumstances, and had only a limited privilege to prevent mala fide publications of garbled, unfaithful and expunged reports of the proceedings.
In the instant case, neither the notices nor the documents enclosed therewith disclosed any mala fides on the part of the petitioner or that he had knowledge that any portion of the speech had been expunged by the Speaker.
Consequently, even supposing article 194(3) prevailed over article 19(1)(a), the petitioner was entitled to succeed.
Wasan vs Walter, , relied on.
|
Summarize this legal judgement text concisely | minal Appeal No. 203 of 1956.
Appeal by special leave from the judgment and order dated December 14, 1955, of the Assam High Court at Gauhati in Criminal Appeal No,.
54 of 1955, arising out of the judgment and order dated May 23, 2 1955, of the Court of the Special Judge, Lower Assam Districts at Dhubri in Special Case No. 2 of 1954.
Nur ud Din Ahmad and K. R. Chaudhury, for the appellant.
Naunit Lal, for the respondent.
January 13.
The Judgment of the Court was delivered by KAPUR, J.
This appeal by special leave is directed against the judgment and order of the High Court of Assam.
The appellant before us was tried for an offence under section 165A of the Indian Penal Code for having abetted one Khalilur Rahman in the conimission of an offence by the latter under section 161, Indian Penal Code.
Both the appellant and Khalilur Rahman were convicted of the offences with which they were charged and sentenced to one.
year 's rigorous imprisonment.
On appeal the High Court acquitted Khalilur Rahman but maintained the conviction and sentence of the appellant.
The facts of this appeal are that on May 9, 1952, the complainant Narendra Nath Brahma was taking two carts carrying 25 Mds.
of paddy for sale to Billashiparabazar along the path which runs by the side of the river Gauranga.
When he had gone only a short distance he was stopped by the paddy checking Inspector, Khalilur Rahman, who was accompanied by the appellant and three others.
Khalilur Rahman demanded Rs. 200 as bribe and threatened the com plainant that unless the amount demanded was paid his cart and paddy would be seized.
In this he was supported by the appellant and three others.
The complainant expressed his inability to give that much amount but ultimately he agreed to pay Rs. 150.
He borrowed Rs. 100 from one Surajmal Oswal out of which he offered Rs. 80 to Khalilur Rahman who asked him to hand them over to the appellant who counted the money and made it over to Khalilur Rahman.
The complainant was also forced to execute a promissory note for a sum of Rs. 70 in favour of the appellant and he promised that the money would be paid the following day after the paddy was sold.
The 3 complainant learnt in the bazar that another person Happa ram Rai had been similarly treated but he had only paid Rs. 15.
On May 11, 1952, the complainant approached the appellant for the refund of his money and the return of his pronote and although the appellant promised he did not do so.
The same day there was a meeting at Futkibari Middle English School where the Deputy Commissioner was present.
The complainant presented to him a written complaint describing how he was forced to pay Rs. 80 and made to execute a pronote for Rs. 70.
Thereupon both Khalilur Rahman and the appellant were prosecuted, the former under section 161, Indian Penal Code, read with section 5(2) of the Prevention of Corruption Act, 1947 (2 of 1947) and the latter under section 165A and they were convicted and sentenced by the Special Judge as already stated.
The evidence of the complainant was that before Rs. 200 was demanded from him, the appellant and Khalilur Rahman " went aside and had some talks and coming together accused Khalilur Rahman demanded Rs. 200 ".
He also stated " I told them that I managed to procure Rs. 80 somehow and I wanted to hand over to accused Khalilur Rahman who directed me to hand over to accused Faguna, saying he would take counting, accused Faguna counted the money and then made over the entire money to accused Khalilur Rahman saying that Rs. 80 would not do and I should execute a handnote for the balance of Rs. 70 promising to pay on the following Saturday ".
According to the complainant it was Khalilur Rahman who tore out a page from his note book and handed over the same to the complainant and also lent him his fountain pen and after the pronote was executed both the pen and the pronote were handed over to Khalilur Rahman.
The Special Judge found: "I am fully convinced that a sum of Rs. 80 was realised from the complainant for forbearing from seizing of the paddy by the accused Khalilur Rahman, being helped and abetted by the accused Faguna Kanta Nath.
" 4 He therefore convicted Khalilur Rahman under section 161, Indian Penal Code, but acquitted him of an offence under section 5(2) of the Prevention of Corruption Act, 1947, and convicted the appellant for abetment of that offence.
On appeal Deka, J., held that from the complaint made by the complainant it was not clear that any payment was made to Khalilur Rahman.
He said: It may be that Khalilur Rahman was a party to squeezing out some money from a dealer in paddy who tried to evade the law, but that falls far short of proving that he had accepted the money through Fagunakanta Nath as alleged now in Court ".
The learned Judge accepted the complainant 's story that money was paid to the appellant but he was of the opinion that the evidence was not strong enough to prove payment to Khalilur Rahman and therefore he was "prepared to give the benefit of doubt to Khalilur Rahman and direct that his conviction tinder section 161, Indian Penal Code be set aside ".
As to the appellant he was of the opinion that money was taken by him for payment to Khalilur Rahman as illegal gratification and whether he actually paid it to him or not the offence fell under section 165A and therefore he held the appellant guilty under that section.
Thus according to the learned Judge the case against Khalilur Rahman was not proved and as money had been paid to the appellant he was guilty of abetment under section 165A, Indian Penal Code.
The appellant has come to this Court by special leave.
The main argument raised on behalf of the appellant is that as Khalilur Rahman has been acquitted, on the facts and circumstances of this case the conviction of the appellant for abetment cannot be sustained.
The evidence of the complainant on which the conviction is based was that the money was demanded by Khalilur Rahman and at his instance it was made over to the appellant who counted the money and handed it over to Khalilur Rahman.
The pronote was also written at the instance of Khalilur Rahman and was handed over to him.
The part played by the appellant according to the story of the 5 complainant was that before the demand of bribe both Khalilur Rahman and the appellant "went aside" and held a conference and Khalilur Rahman then demanded Rs. 200.
Rs. 80 was brought by the complainant and paid to the appellant at the instance of Khalilur Rahman for the purpose of counting and he in turn gave it to Khalilur Rahman who put it in his trouser 's pocket.
About this portion of the evidence the trial Court said " it may not be fully true " and the finding of the High Court was that the money re mained with him and was not paid to Khalilur Rahman; the question is whether in these circumstances the offence of abetment can be held to have been made out.
Under the Indian law for an offence of abetment it is not necessary that the offence should have been committed.
A man may be guilty as an abettor whether the offence is committed or not.
Section 165A is as follows: section 165A " Whoever, abets any offence punishable under section 161 or section 165, whether or not that offence is committe in consequence of the abetment, shall be punished with imprisonment of either description for a term which may extend to three years or with fine or with both ".
Therefore for a person to be guilty of abetment of an offence under section 161, it is not necessary that the offence should have been committed.
Abetment is defined in section 107 arid a person abets the doing of a thing when (1)he instigates any person to do that thing or (2)engages with one or more other person or persons in any conspiracy for the doing of that thing. . or (3) intentionally aids, by any act or illegal omission the doing of that thing.
Explanation (2) to section 107 is as follows: " Whoever, either prior to or at the time of the commission of an act, does anything in order to facilitate the commission of that act, and thereby facilitates the commission thereof, is said to aid the doing of that act.
" It is not suggested that there was any instigation by the appellant for the commission of the offence.
6 Further the circumstances proved against the appellant did not bring the case under the second part of section 107 because it is not alleged that there was any conspiracy and a charge of conspiracy must necessarily fail if the other alleged conspirator is acquitted: See The King vs Plummer (1) which has received the approval of this Court in Topandas vs State of Bombay (2).
In either of these cases it is immaterial hether the person instigated commits the offence or not or the persons conspiring together actually carry out the object of conspiracy.
There then remains the third part of section 107 that is abetment by aid.
A person abets by aiding when by the commission of an act lie intends to facilitate and does facilitate the commission thereof By the acquittal of Khalilur Rahman the High Court must be deemed to have held that there was no offence under section 161.
But it was contended on behalf of the respondent that the acquittal of Khalilur Rahman was wrong and this Court should hold that a wrong acquittal does not prevent the conviction of the appellant for the offence of abetment.
Counsel for the respondent referred to Dalip Singh vs State of Punjab (3) where at p. 156 Bose, J., said: " We have taken into consideration the fact that the High Court considers that the portion of Mst.
Punnan 's story regarding the lambardars has been falsely introduced by the police, also that both courts have rejected the evidence about the dying declaration.
Despite that, we agree with the learned Sessions Judge that Mst.
Punnan and Mst.
Charni are to be believed regarding the main facts and that they correctly named all seven accused as the assailants.
On that finding the conviction under section 302 read with section 149 can be sustained.
We accordingly uphold these convictions.
The acquittals in the other three cases will of course stand but the mere fact that these persons have, in our opinion, been wrongly acquitted cannot affect the conviction in other cases ".
In that case although the High Court had acquitted three accused persons of an offence under section 302 read (1) (2) (3) ; 7 with section 149, Indian Penal Code, yet as in the opinion of this Court the acquittal was wrong section 149 was held applicable in the case of four others who had been convicted by the High Court of section 302 read with section 149.
The decision in that case must be circumscribed to the peculiar circumstances of that case.
In the present case the person who demanded the illegal gratification for allowing the carts to proceed was Khalilur Rahman who had the authority to do or not to do a particular act and all that the appellant is alleged to have done was to receive the money at the instance of Khalilur Rahman for counting and then paid the money to him.
It is not the prosecution case that the appellant abetted the offence by instigating Khalilur Rahman to demand the illegal ratification; nor has the prosecution set up or proved a case of conspiracy between the appellant and Khalilur Rahman for the commission of an offence under section 161.
On the findings of the Court the appellant received the money for and on behalf of Khalilur Rahman and the evidence of the complainant is that Khalilur Rahman had asked him to hand over the money to the appel lant.
If Khalilur Rahman is acquitted and therefore the offence under section 161 is held not to have been committed, then in this case no question of intentionally aiding by any act or omission the commission of the offence arises.
It may be as counsel for the respondent contended that the acquittal of Khalilur Rahman is wrong and it appears and we say so with respect that the findings of the High Court are inconsistent but as the matter of Khalilur Rahman is not before us by way of appeal against acquittal we do not express any opinion on that question.
We are of the opinion that on the facts found and circumstances established in this case and as Khalilur Rahman has been acquitted the appellant 's conviction cannot be upheld.
We therefore allow this appeal and set aside the order of conviction.
The bail bonds shall also stand discharged.
Appeal allowed.
| The appellant was tried for an offence under section 165A of the Indian Penal Code for having abetted K, an Inspector in charge of checking paddy, in the commission of an offence by the latter under section 161 of the Code.
The prosecution case was that while the complainant was taking paddy for sale K demanded Rs. 200/as bribe and threatened him that unless the money was paid the paddy would be seized, that at the instance of K the complainant handed over the bribe money to the appellant for being counted and that the latter after checking the money paid it to K.
The Special judge who tried the case accepted the prosecution story and convicted K under section 161 of the Indian Penal Code and the appellant for abetment of the offence.
On appeal, the High Court was of the opinion that the evidence was not strong enough to prove payment to K, and set aside his conviction, but confirmed that of the appellant on the ground that money was taken by him for payment to K as illegal gratification and whether he actually paid it to him or not the offence fell under section 165A. Held, that the conviction of the appellant for abetment under section 165A of the Indian Penal Code must under the circumstances be set aside.
On the facts found, the appellant received the money in the presence of and for and on behalf of K and if K was acquitted on the ground that no offence under section 161 was committed, then no question of intentionally aiding by any act or omission the commission of the offence arose.
Consequently, the appellant 's conviction for the offence of abetment wag not maintainable.
Dalip Singh vs State of Punjab, ; , distinguished.
|
Summarize this legal judgement text concisely | Appeal No. 145 of 1955.
Appeal from the judgment and decree dated the February 10, 1953, of the Bombay High Court in 65 Appeal No. 742 of 1951 from Original Decree, arising out of the judgment and decree dated July 31, 1951,, of the Court of the Senior Civil Judge, Poona, in Special ' Suit No. 89 of 1950.
H. D. Banaji, R. A. Gagrat and G. Gopalakrishnan, for the appellant.
H. N. Sanyal, Additional Solicitor General of India, H. J. Umrigar and R. H. Dhebar, for the respondent.
January 16.
The Judgment of the Court was delivered by DAS, C. J.
This is an appeal from the judgment and decree of the High Court of Bombay dated February 10, 1953, setting aside the judgment and decree of the Court of Civil Judge, Senior Division, Poona dated July 31, 1951, in Special Suit No. 89 of 1950 and dismissing the appellant 's suit against the respondent with costs throughout.
This appeal has been filed under a certificate of fitness granted by the High Court of Bombay.
The facts leading up to this appeal may shortly be stated.
The appellant is a public limited company registered under the Indian Companies Act, 1913.
It is a lessee of two cinema Houses known respectively as " West End " and " Capitol " situated within the limits of Poona cantonment area.
It exhibits in the said two Houses cinematograph films, both foreign and Indian.
On March 20, 1947, a notice was issued by the respondent whereby, in exercise of the powers conferred on it by section 60 of the (11 of 1924), the respondent proposed to make, with the previous sanction of the Central Government, certain amendments in the notification of the Government of Bombay in the General Department No. 4160 dated June 17, 1918, and intimated that the draft amendments would be considered by the respondent on or after April 21, 1947, and invited objection in writing within 30 days from the publication of that notice.
One of the items of amendments was as follows: "(ii) 'V Tax on Entertainments ' 9 66 1.
Cinemas, Talkies or Rs. 5 0 0 per dramas Rs. 10 0 0 show 2.
Circus Rs. 20 0 0 per show 3.
Horse Races Rs. 100 0 0 per day of race meeting. 4.
Amusement park Rs. 20 0 0 per day provided as follows: 1.
The said tax shall be levied at the rate of Rs. 10 0 0 per show in the case of the West End and Capitol Talkies and at the rate of Rs. 5 0 0 per show in other cases ".
It appears that the Cinematograph Exhibitors Association of India submitted certain objections to the proposals.
The Cantonment Executive Officer, Poona, by his letter dated July 8, 1947, informed the Secretary of the Cinematograph Exhibitors Association of India that the latter 's letter had been submitted to the Government of India in original along with the respondent 's proposals and that the imposition of the entertainments tax on cinemas had been approved by the Government of India, Defence Department notification No. 1463 dated May 7, 1947.
On June 17,1948, a notification was issued by the Government of Bombay to the effect that in supersession of the notifications of Government noted on the margin and of all other notifications on the same subject, the Governor in Council, with the previous sanction of the Governor General in Council was pleased to impose certain taxes in the Cantonment of Poona with effect from July 15, 1948.
One of the taxes thus imposed was as follows: " V Tax on entertainments.
Cinemas, Talkies or dramas Rs. 10.0 0 :in the case of the West End per show and Capitol In other cases Rs. 5 0 0 per show 2.
Circus Rs. 2 0 0 per show 3.
Horse Races Rs. 100 0 0 per day of race meetings. 4.
Amusement park Rs. 20 0 0 per day.
" 67 The appellant paid the tax under protest and on or about April 19, 1950, filed a suit (being suit No. 89 of 1950) against the respondent in the Court of the Civil Judge, Senior Division, Poona for a declaration that the levy, collection or recovery of the said tax by the respondent was illegal and invalid, for a permanent injunction restraining the respondent from levying, collecting or recovering the said tax, for refund of the sum of Rs. 45,802 0 0 being the total amount of tax collected from the appellant, for costs and interest on judgment.
By its judgment dated July 31, 1951, the trial court decreed the suit in full.
The respondent preferred an appeal before the High Court against the said judgment and decree of the trial court and the High Court by its judgment and decree dated February 10, 1953, allowed the appeal and dismissed the appellant 's suit with costs throughout.
The High Court, however, granted to the appellant a certificate of fitness for appeal to this Court and hence this final appeal questioning the validity of the said tax.
At all times material to this appeal the respondent was governed by the (Act 11 of 1924).
Section 60 of that Act runs as follows: " 60(1) The Board may, with the previous sanction of the local Government, impose in any Cantonment any tax which, under any enactment for the time being in force, may be imposed in any municipality in the province wherein the Cantonment is situated.
(2) Any tax imposed under this section shall take effect from the date of its notification in the official gazette ".
The enactment under which shortly after the date of passing of the , tax could be imposed by the municipal boroughs in the province of Bombay was the Bombay Municipal Boroughs Act, 1925 (Bom.
XVIII of 1925).
Therefore the powers of the respondent to.
levy and collect taxes under the provisions of the were co extensive with the powers of the Borough Municipalities under the Bombay Municipal Boroughs Act, 1925.
Section 73 of the last mentioned Act specified the taxes which 68 might be imposed by a municipality.
The relevant portions thereof, prior to its present adaptation, were as follows: " Subject to any general or special orders which the Provincial Government may make in this behalf and to the provisions of sections 75 and 76, a municipality may impose for the purposes of this Act any of the following taxes, namely: (xiv) any other tax (not being a toll on motor vehicles and trailers.
, save as provided by section 14 of the Bombay Motor Vehicles Tax Act, 1935) which under the Government of India Act, 1935, the provincial Legislature has power to impose in the province.
" The question is whether the provincial legislature of Bombay had power to impose the tax which is under consideration in this appeal.
Under section 100 of the Government of India Act, 1935 read with entry 50 in Sch.
VII thereto the provincial legislature had power to make law with respect to " taxes on luxuries, including taxes on entertainments, amusements, betting and gambling ".
Learned counsel for the appellant contends that the impugned tax is not covered by this entry at all.
This entry, according to him, contemplates a law imposing taxes on persons who receive or enjoy the luxuries or the enter tainments or the amusements and, therefore, no law made with respect to matters covered by this entry can impose a tax on persons who provide the luxuries, entertainments or amusements, for the last mentioned persons themselves receive or enjoy no luxury or entertainment or amusement, but simply carry on their profession, trade or calling.
Learned counsel urges that the impugned law is really one with respect to matters specified in entry 46, namely, taxes on professions, trades, callings and employments and, there fore, cannot exceed Rs. 100 per annum under section 142A of the Government of India Act, 1935 and Rs. 250 per annum under article 276(2) of the Constitution.
We are unable to accept this argument as sound.
69 As pointed out by this ' Court in Navinchandra Mafatlal vs The Commissioner of Income Tax, Bombay City (1), following certain earlier decisions referred to therein, the entries in the legislative list should not be read in a narrow or restricted sense and that each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended in it.
It has been accepted as well settled that in construing such an entry conferring legislative powers the widest possible con struction according to their ordinary meaning must be put upon the words used therein.
In view of this well established rule of interpretation, there can be no reason to construe the words " taxes on luxuries or entertainments or amusements " in entry 50 as having a restricted meaning so as to confine the operation of the law to be made thereunder only to taxes on persons receiving the luxuries, entertainments, or amusements.
The entry contemplates luxuries, entertainments, and amusements as objects on which the tax is to be imposed.
If the words are to be so regard ed, as we think they must, there can be no reason to differentiate between the giver and the receiver of the luxuries, entertainments, or amusements and both may, with equal propriety, be made amenable to the tax.
It is true that economists regard an entertainment tax as a tax on expenditure and, indeed, when the tax is imposed on the receiver of the entertainment, it does become a tax on expenditure, but there is no warrant for holding that entry 50 contemplates only a tax on moneys spent on luxuries, entertainments or amusements.
The entry, as we have said, contemplates a law with respect to these matters regarded as objects and a law which imposes tax on the act of entertaining is within the entry whether it falls on the giver or the receiver of that entertainment.
Nor is the impugned tax a tax imposed for the privilege of carrying on any trade or calling.
It is a tax imposed on every show, that is to say, on every instance of the exercise of the particular trade, calling or employment.
If there is no show, there is no tax.
A (1) [1955] 1 S.C.R. 829.
70 lawyer has to pay a tax or fee to take out a license irrespective of whether or not he actually practises.
That tax is a tax for the privilege of having the right to exercise the profession if and when the person taking out the license chooses to do so.
The impugned tax is a tax on the act of entertainment resulting in a show.
In our opinion, therefore, section 73 is a law with respect to matters enumerated in entry 50 and not entry 46 and the Bombay legislature had ample power to enact this law.
The only other point urged before us is that the notification is violative of the equal protection clause of our Constitution in that it has picked out the appellant 's cinema houses for discriminatory treatment by imposing on it a tax at the rate of Rs. 10 per show, while a tax of only Rs. 5 per show is imposed on other cinema houses.
The meaning, scope, and effect of the provisions of article 14 of our Constitution have been fully dealt with, analysed and laid down by this Court in Budhan Choudhury vs The State of Bihar (1) and Shri Rama Krishna Dalmia vs Shri Justice section R. Tendolkar (2).
It appears, however, from the record that no issue was raised and no evidence was adduced by the appellant before the trial court showing that there were other cinema Houses similarly situate as that of the appellant 's cinema Houses.
It may not be unreasonable or improper if a higher tax is imposed on the shows given by a cinema house which contains large seating accommodation and is situate in fashionable or busy localities where the number of visitors is more numerous and in more affluent circumstances than the tax that may be im.
posed on shows given in a smaller cinema house containing less accommodation and situate in some localities where the visitors are less numerous or financially in less affluent circumstances, for the two cannot, in those circumstances, be said to be similarly situate.
There was, however, no material on which the trial court could or we may now come to a decision as to whether there had been any real discrimination in the facts and circumstances of this case.
It (1) (2) ; 71 may be that the appellant may in some future proceeding adduce evidence to establish that there are other cinema houses similarly situate and that the imposition of a higher tax on the appellant is discriminatory as to which we say nothing; but all we need say is that in this suit the appellant has not discharged the onus that was on him and, on the material on record, it is impossible for us to hold in this case that there has been any discrimination in fact.
For reasons stated above this appeal must be dismissed with costs.
| The appellant, a public limited company, was the lessee of wo cinema houses, " West, End " and " Capitol " situated within the Poona cantonment area.
, By a notification dated June 17, 1948, the Bombay Government with the sanction of the Governor General in Council imposed certain taxes in the cantonment of Poona including an entertainment tax of Rs. 10 per show on the appellant 's cinema houses and Rs. 5 per show on others.
The appellant, who paid the tax under protest, brought the suit, out of which the present appeal arose, for a declaration that the 64 imposition of the said tax by the respondent was illegal, for a permanent injunction restraining it from levying the tax and for the refund of Rs. 45,802, paid as tax by the appellant.
The trial Court decreed the suit but the High Court, on appeal by the respondent, reversed the decision of the trial Court and dismissed the suit. ' Under section 60(1) of the (11 Of 1924), read with section 73 (xiv) Of the Bombay Municipal Boroughs Act, 1925 (Bom.
XVIII of 1925), the respondent had the power to impose any other tax which the Bombay Provincial Legislature could impose on the province.
The question, therefore, was whether the Bombay Legislature had the power to impose the tax in question.
It was contended on behalf of the appellant that although the Provincial Legislature had undoubtedly the power under section 100 of the Government of India Act, 1935, read with Entry 50 in Sch.
VII thereto, to make law with respect to " taxes on luxuries, including taxes on entertainments, amusements, betting and gambling ", the said entry contemplated a law imposing taxes on persons who enjoyed the luxuries, entertainments or amusements and not on persons who provided them.
Such a tax, if levied on the latter would be one on profession, trade or calling as contemplated by Entry 46 of the said Schedule and could not exceed Rs. 100 per annum under section 142A of the Government of India Act, 1935, and Rs. 250 per annum under article 276(2) of the Constitution.
Held, that the contention must be negatived.
It is well settled that in construing an entry conferring legislative powers, the widest possible construction according to their ordinary meaning must be given to the words used.
There could be no reason, therefore, in construing Entry 50, to differentiate between the giver and the receiver of the luxuries, entertainments or amusements and both must be held to be amenable to the tax.
Navinchandra Mafatlal vs The Commissioner of Income tax, Bombay City, , referred to.
Although an entertainment tax was regarded as a tax on expenditure, there was no warrant for holding that Entry 50 contemplated only a tax on moneys spent on luxuries, entertainments or amusements.
What it had in view were these matters, and not either the giver or the receiver of them, as the real objects of legislation.
The impugned tax was distinguishable from a tax on a pro fession or calling.
It was a tax imposed on an actual show, and not on a profession or calling whether there was an exercise of it or not.
|
Summarize this legal judgement text concisely | Appeal No. 191 of 1955.
Appeal by special leave from the judgment and decree dated July 31, 1953, of the Calcutta High Court in First Appeal No. 88 of 1950, arising out of the judgment and decree dated May 18, 1950, of the Arbitrator, 24 Parganas, Alipore, in L. A. Case No. 71 of 1944.
A.V. Viswanatha Sastri and Naunit Lal, for the appellant.
B.Sen, P. K. Ghose for P. K. Bose, for the respondent.
December 16.
The Judgment of the Court was delivered by KAPUR, J.
This is an appeal pursuant to special leave granted by this Court against the judgment and order of the High Court of Calcutta varying the order of the arbitrator in regard to compensation for compulsory requisitioning of the premises in dispute.
The appellant before us is the owner of the premises in dispute which at the relevant time consisted of four storeys, the ground floor and three upper floors and the respondent is the State of West Bengal which was the opposite party before the arbitrator.
This building (No. 9 Chittaranjan Avenue) was constructed before July 28, 1940, and was taken on a registered lease for three years by the Bengal Central Public Works Division on a rental of Rs. 1,950 per mensem inclusive of taxes.
On the termination of the lease the building was requisitioned by the West Bengal Government and taken possession of on July 30, 1943.
The Land 924 Acquisition Officer offered Rs. 2,200 per mensem inclusive of taxes in the form of rent as compensation.
As the appellant did not agree to this compensation the matter was referred under section 19 of the Defence of India Act to an arbitrator Mr. J. De.
He held that Rs. 2,200 per mensem fixed by the Land Acquisition Collector was a fair compensation.
Against this order the appellant took an appeal to the High Court who set aside the order of the arbitrator, remanded the case to the arbitrator and laid down the following principle for the ascertainment of compensation : " therefore, in deciding upon a fair rent, for the purpose of section 23 of the Land Acquisition Act, it must be a notional fair rent of a hypothetical tenant, and the assessment of such notional fair rent must be based upon a consideration which does not take into account restrictions temporarily imposed by any restrictive executive order or legislation like Rent Control Order, etc.
The assessment in practice should be as if it was of a house of like nature let out for the first time to a tenant who is not compelled to let it out.
The practical method will be to assess rent as if it was a new house for the first time let out on that date ".
On remand the appellant who had previously claimed Rs. 3,998 as compensation plus Rs. 125 for working and maintaining the lift, increased his demand to Rs. 7,700 per mensem exclusive of municipal taxes, and also Rs. 125 for the use of the lift.
He stated in his application that the amount previously claimed by him " was unduly low and was made through mistake and miscalculation and misconception of things and principle and moreover it was due to the want of proper information at the time ".
After the remand he examined further evidence and the respondent also examined some witnesses.
The new arbitrator Mr. J. C. Mazumdar held that the matter must be decided according to the rent prevailing in the locality in 1943 for similar buildings with similar accommodation and amenities and proceeding on this basis he awarded compensation of Rs. 2,581 8 per mensem inclusive of all taxes, cost of normal and essential 925 repair, cost of the upkeep of the lift and potential value of the building in an important commercial locality having regard to the fact that the period of requisition was indefinite.
This sum was to be paid as from August 1, 1943.
This order did not satisfy the appellant and against it he took an appeal to the High Court who fixed the compensation at Rs. 16 per hundred sq.
for the ground floor and Rs. 13 per hundred sq.
for the 1st floor and Rs. 12 per hundred sq.
for the second floor and Rs. 11 per hundred sq.
for the third floor and thus calculating for the total floor area i.e. 5333 sq.
per floor it held the compensation to be Rs. 2,773 per mensem.
It rejected the additional award of 10% on account of potential value but allowed Rs. 77 per mensem on account of the lift and thus it awarded a total compensation of Rs. 2,850 per mensem.
The High Court however observed : " We must make it clear further that in making the above calculation of the monthly compensation at, Rs. 2,850 we have also taken into consideration the additional advantages due to the special adaptability of the disputed premises for the purposes of the Controller of the Army Factory Accounts and his possible willingness to pay a somewhat higher rent for the same (Vide 66 I.A. 104) ".
Against this judgment the appellant has brought this appeal by special leave.
It was argued on behalf of the appellant that the method adopted by the High Court for arriving at the figure of compensation was erroneous because it proceeded on wrong principles in that it took averages of rent paid for the premises No. 5 Chittaranjan Avenue and for No. 22 Chittaranjan Avenue and ignored the expert opinion of witness U. P. Malik according to which the rent for ground floor should have been Rs. 23 per hundred sq.
and Rs. 17 8 per hundred sq.
for other floors and also that the potentialities of the building had not been taken into consideration.
The High Court found that premises No. 22 Chittaranjan Avenue was a little better than the premises 926 in dispute and they (premises in dispute) were " somewhat better than the premises No. 5 Chittaranjan Avenue ".
In these circumstances it cannot be said that the High Court committed any error of principle in taking an average of the two premises No. 22 and 5 Chittaranjan Avenue.
The evidence of U. P. Malik was merely an opinion unsupported by any reasons and in the circumstances of this base the High Court has rightly not placed any reliance upon it.
It was then urged that the High Court had erred in taking into consideration the rent payable for the premises No. 22 Chittaranjan Avenue, as recitals with regard to premises No. 22 in exhibit D, which was an award for premises No. 31 were inadmissible in evidence.
This document has not been printed and we do not know what its contents are or its language is.
No objection was taken to its admissibility either before the arbitrator or before the High Court.
It was referred to in the evidence of the witness for the respondent, Nanibhushan Sen Gupta who stated that Rs. 2,200 would be a fair rent for the premises and in coming to this conculsion he based his calculation it on the award in L. A. Case No. 61 of 1944 in respect of premises Nos. 22 and 31 Chittaranjan Avenue and exhibit D was the judgment of that case ".
In these circumstances no objection as to the admissibility of this document can be allowed to be raised at this stage.
It was then argued that the High Court in arriving at the amount of compensation had ignored the potential value of the premises in dispute in an important commercial locality which the arbitrator Mr. J. C. Mazumdar had evaluated at 10% of the amount determined by him.
This contention is well founded.
The High Court disallowed this award of 10% without assigning any reason.
It said: " and although we are not wholly accepting his additional award of 10% on account of so called potentialities, etc., including the lift, we 'are inclined to assess this further compensation on account of the lift at Rs. 77 per month 927 The principles on which compensation is to be ascertained under the provisions of section 19 of the Defence of India Act are the same as those given in section 23(1) of ' the Land Acquisition Act, 1894, and one of the principles of ascertaining compensation is to evaluate the potentialities of the land or the premises as the case may be which differ under different circumstances.
; The arbitrator in evaluating the potentialities said: " In 1943, when the building was first requisitioned, the Controller of Army Factory Accounts had already his office in the neighbouring house of 5 Chittaranjan Avenue.
This building had, therefore, a special value to the Controller as it would certainly be more advantageous to him if he could locate his office in the premises in question.
This gave greater bargaining power to the landlord and, therefore, the potential value to him was greater.
It has also been conceded that the requisition is for an indefinite period.
The Municipal assessment valuation (exhibit B series) was based purely upon the rental which the building was fetching prior to 1943 and did not take into account the potential value, the value which will be maintained for a long period of lease and the additional burden on the lift.
For all these three factors, I allow an additional 10 p. c. compensation of Rs. 234 12 As per mensem.
" The value of potentialities is to be ascertained by the arbitrator as best as he can from the materials before him.
In Vyricherla Narayana Gajapatiraju vs The Revenue Divisional Officer (1), Lord Romer said: " The truth of the matter is that the value of the potentiality must be ascertained by the arbitrator on such materials as are available to him and without indulging in feats of the imagination.
" Another objection taken was in regard to compensation for the lift.
The High Court awarded Rs. 77 but on what basis it is not clear.
In our opinion this claim of Rs. 125 per mensem was not excessive considering that two departments of the Government were using this lift, which is clear from the fact that an overhead bridge had been constructed for going from (1)(1939) L.R. 66 I.A. 104, 118.
928 premises No. 9 Chittaranjan Avenue to the other building which the Government had also requisitioned.
This will work out to Rs. 3,175.
In the circumstances Rs. 3,200 per mensem would be a fair compensation and we would therefore enhance the compensation to that figure and the appeal would be allowed to that extent.
Although the appellant has not succeeded in getting the whole of his claim decreed, there is no reason for depriving him of his costs proportionate to his success.
We accordingly allow proportionate costs.
Appeal partly allowed.
| The four storied premises in suit belonging to the appellant were requisitioned by the respondent for the purposes of the Controller of Army Factory Accounts who already had his office in a neighbouring house.
The arbitrator, to whom the question of compensation was referred, awarded compensation of Rs. 2,581, 8 0 according to the rent prevailing in the locality for similar buildings with similar accommodation and amenities.
This included an additional award of 10%` for the potentialities of the premises consisting of the special value of the premises for the Controller, the indefinite period of the requisition and additional burden on the lift.
On appeal by the appellant the 923 High Court held the compensation to be Rs. 2,773/ per mensem.
It rejected the additional award of 10% for potential value.
Held, that the High Court was wrong in ignoring the poten tial value of the premises which had been evaluated at 10% by the arbitrator.
The principles for the award of compensation are the same under section 19 Defence of India Act as under section 23 Land Acquisition Act, and one of them is to evaluate the potentialities of the premises which differ under different circumstances.
Such value is to be ascertained by the arbitrator as best as he can from the materials before him.
Vyricherla Narayana Gajapatiraju vs The Revenue Divisional Officer, (1939) L.R. 66 I.A. 104, followed.
|
Summarize this legal judgement text concisely | No. 119 of 1957.
Writ Petition, under Article 32 of the Constitution of India for the enforcement of Fundamental Rights.
Achhru Ram, J. P. Goyal and K. L. Mehta, for the petitioners.
H. N. Sanyal, Additional Solicitor General of India, K.L. Misra, Advocate General for the State of U. P. and Gopi Nath Dixit, for the respondent.
December 17.
The Judgment of the Court was delivered by WANCHOO, J.
This petition under article 32 of the Constitution challenges the constitutionality of the 117 930 U.P. Consolidation of Holdings Act, (U. P. V of 1954), as amended by U. P. Acts No. XXVI of 1954, No. XIII of 1955, No. XX of 1955, No. XXIV of 1956 and No. XVI of 1957, (hereinafter called the Act).
The applicants are four brothers holding land in village Banat, tahsil Kairana, District Muzaffarnagar.
A notification was issued under section 4 of the Act in respect of 223 villages in tahsil Kairana, declaring that the State Government had decided to make a scheme of consolidation in that area.
This was followed up by necessary action under the various provisions of the Act resulting in a statement of proposals under section 19.
Objections to these proposals were filed by the petitioners and others, which were decided in April 1956.
The petitioners went in appeal to the Settlement Officer (Consolidation), which was decided in August 1957.
It was thereafter that the present petition was filed in this Court.
The petitioners challenge the constitutionality of the Act on various grounds, of which the following five have been urged before us: (1)Section 6 read with section 4 of the Act gives arbitrary powers to the State Government to accord discriminatory treatment to tenure holders in different villages by placing some villages under consolidation while excluding others, thus offending article 14 of the Constitution.
(2)Sections 8, 9 and 10 read with section 49 of the Act provide a procedure for the correction and revision of revenue records for villages under consolidation, which is vitally different from that applicable to villages not under consolidation, and there is thus discrimination which offends article 14 of the Constitution ; (3)Sections 14 to 17 read with section 49, confer arbitrary powers on the consolidation authorities under which they can deprive a tenure holder of his land or rights therein and the tenure holder has been deprived of the protection of courts available to other tenure holders in villages not under consolidation, thus creating discrimination which offends article 14. 931 (4)Sections 19 to 22, read with section 49, again create discrimination on the same grounds as sections 14 to 17, and are, therefore, hit by article 14; and (5)Section 29 B, which provides for compensation gives inadequate compensation and is, therefore, hit by article 31(2) of the Constitution.
Before we take these points seriatim, it is useful to refer to the background of this legislation.
As far back as 1939, the U. P. Consolidation of Holdings Act No. VIII of 1939, was passed.
It was, however, of little effect, because it could only be applied when more than one third of the proprietors of the cultivated area of a village applied for an order of consolidation of the village.
It was, therefore, felt that some kind of compulsion would be necessary in order to achieve consolidation of holdings in villages.
That consolidation would result in improving agricultural production goes without saying and it was with the object of encouraging the development of agriculture that consolidation schemes with a compulsory character were taken up in various States, after the recommendation of The Famine Inquiry Commission, 1944, in its Final Report; (Seepage 263).
The State of Bombay.
was the first to pass an Act called the Bombay Prevention of Fragmentation and Consolidation of Holdings Act, (Bom.
LXII of 1947).
This was followed by the impugned Act in Uttar Pradesh.
The object of the Act is to allot a compact area in lieu of scattered plots to tenure holders so that large scale cultivation may be possible with all its attendant advantages.
Thus ' by the reduction of boundary lines saving of land takes place and the number of boundary disputes is reduced.
There is saving of time in the management of fields inasmuch as the farmer is saved from travelling from field to field, which may be at considerable distances from each other. ' Proper barriers such as fences, hedges and ditches can be erected around a compact area to prevent trespassing and thieving.
It would further be easier to control irrigation and drainage and disputes over water would be reduced considerably where compact areas are allotted to tenure holders.
Lastly, the control of pests, insects 932 and plant disease is made easier where farmers have compact areas under cultivation.
These advantages resulting from consolidation of holdings are intended to encourage the development of agriculture and larger production of food grains, which is the necessity of the day.
With these objects in mind, the Act was passed by the U. P. Legislature in 1953 and received the assent of the President on March 4, 1954.
It was published in the gazette on March 8, 1954, and declarations under section 4 were made for the major part of the State of Uttar Pradesh, including the petitioners ' village, in July, 1954.
The scheme of the Act is as follows: When consolidation of a village is taken up, the first thing that is done is to correct the revenue records, and sections 7 to 12 deal with that.
Then comes the second stage of preparing what are called statements of principles ; (see sections 14 to 18).
Objections to these principles are entertained and decided and thereafter the principles are confirmed under section 18.
Then comes the third stage (vide sections 19 to 23), which deals with the preparation of the statement of proposals.
Objections to this are also invited and disposed of, and then proposals are confirmed under section 23.
After the proposals have been confirmed, we come to the last stage in which the confirmed proposals are enforced; (see sections 24 onwards).
It will be clear therefore from the objects of the Act and the advantages that accrue from its implementation that it is a piece of legislation, which should be a boon to the tenure holders in a village and should also lead to the development of agriculture and increase of food production.
It is in this setting that we have to examine the attack that has been made on the constitutionality of the Act.
Re. 1 : Section 6 of the Act gives power to the State Government at any time to cancel the declaration made under section 4 in respect of the whole or any part of the area specified therein.
When such declaration is made the area ceases to be under consolidation operations and section 5 which provides for the effect of a declaration ceases to operate.
It is urged that section 4 933 gives arbitrary power to the State Government to cancel the declaration, even with respect to a part of the area covered by it and thus discriminates between villages which are under consolidation and those which are not under consolidation.
The learned Additional Solicitor General counters this argument in two ways: (i) Section 6 is nothing more than a restatement of the power which the State Government otherwise possessed under the General Clauses Act; and (ii) the high status of the authority to whom the power is given, namely, the State Government, and the rules framed under the Act laying down a standard for the Government to follow, remove any flavour of arbitrariness which the terms of the section might import.
It is not necessary to express any opinion in this case on the said contention, for, even if it be accepted, the result would be only that section 6 would be struck down.
The petitioners would be in the same position with section 6 on the Statute or without it.
It may be that, if a citizen in whose favour an order of consolidation has been made but subsequently cancelled, comes to court with a grievance that the order of consolidation was for his benefit but was cancelled in exercise of a power under a void section, this question might arise for consideration.
It may also be that the petitioners ' right might be infringed if section 6 were not severable from the other provisions of the Act which enable the Government to direct consolidation of holdings.
The power of cancellation cannot be said to be so inextricably mixed up with the power to order consolidation as to prevent the operation of one section without the other.
Nor can it be said that the Legislature would not have conferred the power on the Government to consolidate holdings without at the same time conferring on them the power to cancel the said order of consolidation.
The said provisions are clearly severable.
In the circumstances, as the petitioners ' case is not affected by section 6 of the Act, we leave this open to be decided in an appropriate case.
Re. 2: This deals with the first stage of revision and correction of maps and records, which has to take place before the actual consolidation scheme is put 934 into force.
Section 7 provides for the examination of the revenue records by the Assistant Consolidation Officer and he is enjoined to test the accuracy of the village map, khasra and the current annual registers by making a partal in accordance with the procedure to be prescribed.
After he has done the partal, he is to prepare a statement showing the mistakes discovered in the map, khasra and khatauni, 'and the number and nature of disputes pertaining to land records under the U. P. Land Revenue Act, 1901.
Then under section 8 he submits a report to the Settlement Officer (Con solidation) in this connection with his opinion whether any revision of such maps and records is needed.
On receipt of this report, the Settlement Officer may either order the Assistant Consolidation Officer to proceed with the correction of maps and records, which we presume he will order when there are not too many mistakes, or recommend to the State Government for revision of maps or records in accordance with the provisions of Ch.
IV of the U. P. Land Revenue Act, 1901, which he will presumably do if there are too many mistakes found.
If the Assistant Consolidation Officer is ordered to make the corrections he will make a further partal, if necessary, and correct the map or the entries in annual register in accordance with the procedure to be prescribed.
The procedure is prescribed in r. 22 and among other things it lays down that the Assistant Consolidation Officer shall issue a notice to all persons affected by the provisional entries proposed by him; objections are invited and parties are examined and heard and their evidence taken and then the Assistant Consolidation Officer makes the corrections.
His order is open to appeal within twentyone days under section 8(4) to the Consolidation Officer, and the order of the latter is made final.
It is urged that this procedure is vitally different from the procedure prescribed under the U. P. Land Revenue Act and that under section 49 of the Act the jurisdiction of the civil and revenue courts with respect to any matters arising out of consolidation proceedings is barred, thus depriving those affected by the orders of the Consolidation Officer the right to file a suit as they 935 could have done under the provisions of the U. P. Land Revenue Act; (see sections 40, 41, 51 and 54).
There is no doubt that there is some difference between the procedure provided under the Act and that which the tenure holders 'Would have been entitled to if their village was not under consolidation.
But if consolidation is a boon to the tenure holders of a village, as we hold it is, and if it is to be put through within a reasonable period of time, it is necessary to have a procedure which would be shorter than the ordinary procedure under the U. P. Land Revenue Act or through a suit in a civil or revenue court.
The procedure that has been provided cannot by any means be said to be arbitrary or lacking in the essentials of principles of natural justice.
The Assistant Consolidation Officer gives notice to the persons affected, hears their objections and gives them an opportunity to produce evidence.
Thereafter he decides the objections and one appeal is provided against his order.
This should, in our opinion, be enough in the special circumstances arising under the Act to do justice to those who object to the correction of records.
All that has happened is that the number of appeals is out down to one and that in our opinion is not such a violent departure from the ordinary procedure as to make us strike down the provisions contained in Ch.
II of the Act as discriminatory, in the peculiar circumstances arising out of a scheme of consolidation which must, if it has to be of any value, be put through within a reasonable period of time.
Whatever difference there may be may well be supported as a permissible classification on an intelligible differentia having a reasonable relation to the object sought to be achieved by the Act.
Further section 12 provides that where there is dispute as to title and such question has not already been deter.
mined by any competent Court, the Consolidation Officer has to refer the question for determination to the Civil Judge who thereafter will refer it to the arbitrator.
The arbitrator then proceeds in the manner provided by r. 73 and gives a bearing to the parties and takes evidence both oral and documentary before making his award; and section 37 of the Act makes the 936 Arbitration Act applicable to the proceedings before the arbitrator in the matter of procedure.
Taking, therefore, the scheme of Ch.
11 and remembering that if consolidation is to be put through there must be a more expeditious procedure, there is in our opinion rational basis for classification which justifes the procedure under Ch.
11 of the Act read with the Rules in villages where consolidation scheme is to be effective.
The attack, therefore, under article 14 of the Constitution on the provisions of Ch.
II fails.
Re. 3 and 4: The contentions on these heads may be taken together.
They attack the provisions of Ch.
III dealing with the Statement of Principles and Statement of Proposals.
The statement of principles is first published and objections are invited.
Under section 17 the Assistant Consolidation Officer decides the objections after hearing the parties, if necessary, and taking into account the view of the Consolidation Committee.
He then submits a report to the Consolidation Officer who after hearing the objectors and taking such evidence as may be necessary passes final order and confirms the statement of principles; (see r. 43 B).
Similarly, when statements of proposals are published, objections are invited to them, and the same procedure is followed in the decision of these objections as in the case of the objections to the statement of principles.
In the case of the statement of proposals also, there is similar provision to refer disputed question of title to the Civil Judge, who, in his turn, refers it to the arbitrator.
Section 22 also provides that where such question has been referred to the arbitrator, all suits or proceedings in the court of first instance, appeal, reference or revision, in which the question of title to the same land has been raised, shall be stayed.
Section 22(3) makes the decision of the arbitrator final.
There is no provision for appeal in Ch.
III though in fact two persons hear the matter, namely, the Assistant Consolidation Officer and the Consolidation Officer.
But the main attack is on the provisions of section 22(2) on account of which it is said that even where a party has obtained a decree which might be under appeal, the jurisdiction of the ordinary 937 courts is taken away and the decision of the arbitrator is made final.
That is undoubtedly so.
But if the consolidation scheme has to be put through in a reasonable period of time such a provision is, in our opinion, necessary; but for it the consolidation schemes may never be really put through for there will be little purpose in making consolidation where a large number of disputes are pending in the courts.
Reasons which we have given in dealing with the second point apply with equal force to these two points also, and we are of opinion that there is a rational basis for a classification which has a nexus with the object of the Act, and therefore, the attack under article 14 on the provisons of Chapter III also must fail.
Re. 5.
Under this head,, the inadequacy of compensation provided under section 29 B of the Act is raised.
It may be mentioned that the Act, as originally passed, did not contain any provision for compensation.
There were a number of writ applications in the Allahabad High Court and that court held that inasmuch as some property was taken away under section 14(1) (ee) for public purposes and no compensation was provided, that provision was void under article 31 (2) as it stood before the Constitution (Fourth Amendment) Act, 1955 (hereinafter called the Fourth Amendment,).
Appeals by the State Government from that decision of the Allahabad High Court are pending before us and we shall deal with them separately.
The legislature then enacted section 29 B laying down the principles on which compensation would be paid for lands taken away under section 14 (1) (ee) after the decision of the Allahabad High Court.
This section was put by Act XVI of 1957 in the original Act with retrospective effect from the date from which the original Act was enforced.
It is urged that the compensation provided therein is inadequate, and, therefore, the provision should be struck down under article 31 (2), as it was before the Fourth Amendment.
Arguments were also addressed on the question whether section 29 B would be saved by the 118 938 Fourth Amendment.
We, however, think it unnecessary to go into these arguments for we have come to the conclusion that in the circumstances of this case the compensation provided under section 29 B is adequate.
Assuming that the case is governed by article 31 (2) as it was before the Fourth Amendment, section 29 B provides for payment of cash compensation equal to four times the value determined at hereditary rates to a bhumidar and two times the value to a sirdar.
The difference between the two rates has not been attacked for the rights of a bhumidar are much higher than the rights of a sirdar.
The bhumidar is the owner of the land while the sirdar is merely a tenant; but the argument is that the amount provided is inadequate, and that it is certainly not the fair market value of the land.
Let us see what section 14 (1) (ee) provides.
It lays down the basis on which the tenure holder will contribute towards the land required for public purposes and the extent to which vacant land may be utilised for the said purpose.
We are here concerned with the first part, namely, the contribution of tenure holders towards land required for public purposes.
In this case the petitioners had lands in one chak of the rental value of Rs. 20 6 0 and they have been allotted lands of the rental value of Rs. 20 5 0 instead.
In another chak, in place of land the rental value of which is Rs. 148 10 0 they have been allotted land of the rental value of Rs. 147 13 0.
Thus out of the land valued at Rs. 169 0 0, they have been allotted land of the value of Rs. 168 2 0, and land valued at Annas 0 14 0 has gone to the common pool.
The percentage is just over a half per cent.
it hardly ever exceeds one per cent.
Thus the land which is taken over is a small bit, which sold by itself would hardly fetch anything.
These small bits of lands are collected from various tenure holders and consolidated in one place and added to the land which might be lying vacant so that it may be used for the purposes of section 14 (1) (ee).
A compact area is thus created and it is used for the purposes of the tenure holders themselves and other villagers.
Form CH 21 framed under r. 41 (1) shows the purposes to which this land would be applied, 939 namely, (1) plantation of trees, (2) pasture land, (3) manure pits, (4) threshing floor, (5) cremation ground, (6) graveyards, (7) primary or other school, (8) playground, (9) panchayatghar, and (10) such other objects.
These small bits of land thus acquired from: tenure holders are consolidated and used for these purposes, which are directly for the benefit of the tenure holders.
They are deprived of a small bit and in place of it they are given advantages in a much larger area of land made up of these small bits and also of vacant land.
The question then is whether in these circumstances it can be said that the tenureholders have been given adequate compensation by.
section 29 B for the small bits of land acquired from them for public purposes.
This case must be distinguished from other cases where lands are acquired under the Land Acquisition Act, for here the benefit is direct to the tenure holders while in ordinary cases of land acquired for public purposes, if there is any benefit to the person from whom the land is acquired, it is indirect and remote.
It is contended on behalf of the State in the circumstances that the compensation which the tenure holders get is not merely the cash compensation which they receive under section 29 B but also the advantage which they receive by these small bits taken from them being consolidated into a larger area of land in which they will have benefits, the nature of which is indicated in form CH 21, over and above the advantage of having their scattered holdings consolidated into a compact block.
The question, therefore, is whether in these circumstances the provision of actual cash compensation under section 29 B can be said to be inadequate.
We are of opinion that taking into account the peculiar conditions in cases of this kind and remembering that the land taken from each individual tenure holder may be a small bit and it is then consolidated into a large area by adding some other lands taken from other tenure holders, and the whole is then used for the advantage of the whole body of tenure holders, it cannot be said that the cash compensation, added to the advantages which the tenure holders get in the 940 large area of land thus constituted and on account of getting a compact block for themselves, is inadequate.
Therefore, assuming that article 31 (2) applies as it was before the Fourth Amendment, it cannot be said that the compensation which the tenure holders will get under section 29 B is inadequate in the circumstances.
This ground of attack also therefore fails.
There is no force in this petition and it is hereby dismissed with costs.
Petition dismissed.
| The petitioners challenged the constitutional validity of the U.P. Consolidation of Holdings Act (U .
P. V of 954), as amended by the amending Acts, which was intended to encourage the development of agriculture by the allotment of compact areas to tenure holders in lieu of scattered plots so that large scale cultivation might be possible with all its attendant advantages.
A notification was issued under section 4 Of the impugned Act declaring the decision of the State Government to formulate a scheme of ' consolidation in respect of the area where the petitioners held their lands.
This was followed up by a statement of proposals under section 19.
The petitioners objected to these proposals and thereafter appealed to the Settlement Officer (Consolidation) but to no effect.
It was contended, inter alia, on their behalf that (1) the provisions of sections 8, 9 and 10 read with those Of s 49 Of the impugned Act were discriminatory in that they laid down a procedure for correction and revision of revenue records for 929 villages under consolidation that was vitally different from that applicable to other villages under the U.P. Land Revenue Act, 1901; (2) that sections 14 to 17 as also sections 19 to 22 read with section 49 conferred arbitrary powers on the consolidation authorities in respect of the lands of the tenure holder and his rights therein and deprived him of the protection of courts available to other tenure: holders and that (3) section 29B which provided for compensation, by giving inadequate compensation, offended article 31(2) Of the Con stitution.
Held, that the contentions must fail.
Although the procedure laid down by the impugned Act was to some extent different from that under the U.P. Revenue Act, 1901, it was by no means arbitrary or devoid of natural justice.
Regard being had to the advantages that consolidation conferred on the tenure holder such difference was supportable as a permissible classification on an intelligible differentia reasonably connected with the object of the Act.
The expeditious procedure for effectuating consolidation laid down by ch.
II of the Act read with the Rules, therefore, could not be said to violate article 14 Of the Constitution.
Nor could for similar reasons the provisions of ch.
III of the Act be said to violate article 14 Of the Constitution.
The provision Of section 22(2) Of the Act which made the decision of the arbitrator final by ousting the jurisdiction of ordinary courts even where a party had obtained a decree which might be under appeal, was necessary in the interest of expedition.
Having regard to the peculiar conditions in cases of this kind and the advantages a scheme of consolidation offered to the entire body of tenure holders, it could not be said that the cash compensation for tenure holders provided by section 29B of the impugned Act was inadequate, even assuming that article 31(2) applied to the case.
|
Summarize this legal judgement text concisely | minal Appeals Nos.
25 27 of 1955.
Appeals from the judgments and order dated February 1, 1955, of the Punjab High Court (Circuit Bench), Delhi in Cr.
Appeals Nos.
5 D, 6 D and 13 D of 1952, arising out of the judgments and orders dated December 22, 1951, of the 1st Class Magistrate, New Delhi in Criminal Cases Nos. 220/2, 221/2 and 223/2 of 1949.
89 Ram Lal Anand and section N. Anand, for the appellant.
H. J. Umrigar and T. M. Sen, for the respondent.
January 20.
The Judgment of the Court was delivered by GAJENDRAGADKAR J.
These three appeals have, been filed with certificates granted by the High Court of Punjab under article 134(1) (c) of the Constitution and they arise from three criminal cases filed against the appellant.
The appellant Gopi Chand was the chief cashier, and Hukam Chand was an assistant cashier, in the United Commercial Bank Ltd., New Delhi.
They were charged with the commission of offences under section 409 in three separate cases.
In the first case No. 223/2 of 1949, the prosecution case was that on or about April 8, 1948, both had agreed to commit, or cause to be committed, criminal breach of trust in respect of the funds of the Bank where they were employed; and in pursuance of the said agreement they had committed criminal breach of trust in respect of the total amount of Rs. 1,65,000.
They were thus charged under sections 408, 409 and 120B of the Indian Penal Code.
The appellant was convicted of the offence under section 409 read with section 120 and sentenced to rigorous imprisonment for seven years.
Against this order of conviction and sentence he preferred an appeal to the High Court of Punjab (No. 5 D of 1952).
The High Court confirmed his conviction but altered the sentence imposed on him by directing that he should suffer four year 's rigorous imprisonment and pay a fine of Rs. 10,000 or in default suffer rigorous imprisonment for fifteen months.
The order of conviction and sentence thus passed gives rise to Criminal Appeal No. 25 of 1955 in this Court.
In the second case (No. 221/2 of 1949) the appellant was charged with having committed an offence under sections 408 and 409 of the Indian Penal Code in that he had committed criminal breach of trust in respect of an amount of Rs. 23,772 8 6.
The trial magistrate ,convicted the appellant of the said offence and sentenced him to suffer rigorous imprisonment for five years.
12 90 On appeal (No. 6 D of 1952) the order of conviction was confirmed but the sentence imposed on him was reduced to three years ' rigorous imprisonment.
This order has given rise to Criminal Appeal No. 26 of 1955 in this Court.
In the third case (No. 220/2 of 1949) the appellant, Hukam Chand and Ganga Dayal were charged with having committed an offence under section 409/408 read with section 120B of the Indian Penal Code in that all of them had agreed to commit criminal breach of trust in respect of the sum of Rs. 10,000 belonging to the Bank and that in pursuance of the said agreement they had committed the criminal breach of trust in respect of the said amount.
The trial magistrate convicted the appellant of the offence charged and sentenced him to four year 's rigorous imprisonment.
On appeal (No. 13 D of 1952) the High Court confirmed the conviction but reduced the sentence to two years ' rigorous imprisonment.
From this order arises Criminal Appeal No. 27 of 1955 in this Court.
The appellant has obtained a certificate from the High Court under article 134(1) (c) of the Constitution because he seeks to challenge the validity of the order of conviction and sentence passe against him in the three cases on the ground that the proceedings in all the said cases are void.
He contends that, whereas the charges framed against him had to be tried according to the procedure prescribed for the trial of warrant cases, the learned trial magistrate tried all the cases according to the procedure prescribed for the trial of summons cases and that makes void all the proceedings including the final orders of conviction and the sentences.
The point arises in this way.
The East Punjab Public Safety Act, 1949 (Punj.
5 of 1949), hereinafter called the Act, which came into force on March 29, 1949, was passed to provide for special measures to ensure public safety and maintenance of public order.
It is common ground that the offences with which the appellant was charged would normally have to be tried under the procedure prescribed by ch.
XXI of the Code of Criminal Procedure for the trial of warrant 91 cases but in fact they have been tried under the procedure prescribed by ch.
XX for the trial of summons cases.
The summons procedure differs from the warrant procedure in some material points.
Under the former procedure a charge is not to be framed while under the latter a charge has to be framed under section 254 of the Code.
Similarly an accused person gets( only one chance of cross examining the prosecution witnesses under the summons procedure whereas under the warrant procedure he is entitled to cross examine the said witnesses twice, once before the framing of the charge and again after the charge is framed.
The appellant concedes that the cases against him were tried according to the summons procedure by reason of section 36 of the Act and the notification issued under it; but be contends that the relevant provisions of the Act are ultra vires and he alternatively argues that the proceedings in respect of a substantial part were continued under the summons procedure even after the Act had expired and the relevant notifications had ceased to be operative.
That is how the validity of the trial and of the orders of conviction and sentence is challenged by the appellant.
It would be relevant at this stage to refer to the material provisions of the Act and the relevant notifications issued under it.
The Act came into force on March 29, 1949.
It was passed to provide for special measures to ensure public safety and maintenance of public order.
Section ' 36 of the Act prescribes the procedure for the trial of specified offences; under sub section
(1) all offences under this Act or under any other law for the time being in force in a dangerously disturbed area, and in any other area all offences under this Act and any other offence under any other law which the Provincial Government may certify to be triable under this Act, shall be tried by the courts according to the procedure prescribed by the Code, provided that in all cases the procedure prescribed for the trial of summons cases by ch.
XX of the Code shall be adopted, subject, in the case of summary trials, to the provisions of sections 263 to 265 of the Code.
For the avoidance of doubt sub section (2) provided that 92 the provisions of sub section
(1) shall apply to the trial of offences mentioned therein committed before the com mencement of this Act, and in a dangerously disturbed area committed before the date of the notification under section 20, in respect of it.
Under section 20 the Provincial Government is authorised by notification to declare that the whole or any part of the Province as may be specified in the notification to be a dangerously disturbed area.
Four notifications were issued under section 20.
By the first notification issued on July 8, 1949, the whole of the Province of Delhi was declared to be a dangerously disturbed area by the competent authority.
It appears that on September 28, 1950, the said authority issued the second notification cancelling the first notification with effect from October 1, 1950.
This notification was followed by the third notification on October 6, 1950, which purported to modify it by inserting the words " except as respect things done or omitted to be done before the date of this notification after the words " with effect from October 1, 1950 in other words, this notification purported to introduce an exception to the cancellation of the first notification caused by the second, and in effect it purported to treat the Province of Delhi as a dangerously disturbed area in respect of things done or omitted to be done before the date of the said notification.
The last notification was issued on April 7, 1951.
This notification was issued by the Chief Commissioner of Delhi in exercise of the powers conferred by sub section
(1) of section 36 of the Act, and by it he certified as being triable under the said Act in any area within the State of Delhi not being a dangerously disturbed area the following offences, viz., any offence under any law other than the aforesaid Act of which cognisance had been taken by any magistrate in Delhi before October 1, 1950, and the trial of it according to the procedure prescribed in ch.
4 of the said Act was pending in any court immediately before the said date and had not concluded before the date of the certificate issued by the notification.
Let us now mention the facts about the trial of the 93 three cases against the appellant about which there is no dispute.
, The First Information Report was filed against the appellant on June 30, 1948.
The trial commenced on July 18, 1949, and it was conducted according to the procedure prescribed by ch.
XX of the Code '.
Some prosecution witnesses were examined and cross examined before January 26, 1950, and the ' whole of the prosecution evidence was recorded before August 14, 1951.
The evidence for the defence was recorded up to November 14, 1951, and the learned magistrate pronounced his judgments in all the cases on December 22, 1951.
For the appellant, Mr. Ram Lal Anand contends that section 36(1) of the Act is ultra vires because it violates the fundamental right of equality before law guaranteed by article 14 of the Constitution.
His argument is that since offences charged against the appellant were triable under the warrant procedure under the Code, the adoption of summons procedure which section 36(1) authorised amounts to discrimination and thereby violates article 14.
It is the first part of sub section
(1) of section 36 which is impugned by the appellant.
The effect of the impugned provisions is that, after an area is declared to be dangerously disturbed, offences specified in it would be tried according to the summons procedure even though they have ordinarily to be tried according to warrant procedure.
The question is whether in treating the dangerously disturbed areas as a class by themselves and in providing for one uniform procedure for the trial of all the specified offences in such areas the impugned provision has violated article 14.
The point about the construction of article 14 has come before this Court on numerous occasions, and it has been consistently held that article 14 does not forbid reasonable classifications for the purpose of legislation.
In order that any classification made by the Legislature can be held to be permissible or legitimate two tests have to be satisfied.
The classification must be based on an intelligible differentia which distinguishes persons or things grouped together in one class from others left out of it, and the differentia must have a 94 reasonable or rational nexus with the object sought to be achieved by the said impugned provision.
It is true that, in the application of these tests uniform approach might not always have been adopted, or, in dealing with the relevant considerations emphasis might have shifted; but the validity of the two tests that have to be applied in determining the vires of the impugned statute under article 14 cannot be doubted.
In the present case the classification has obviously been made on a territorial or geographical basis.
The Legislature thought it expedient to provide for the speedy trial of the specified offences in areas which were notified to be dangerously disturbed areas ; and for this purpose the areas in the State have been put in two categories, those that are dangerously disturbed and others.
Can it be said that this classification is not founded on an intelligible differentia.? In dealing with this question it would be relevant to recall the tragedy of the holocaust and the savage butchery and destruction of property which afflicted several parts of the border State of Punjab in the wake of the partition of India.
Faced with the unprecedented problem.
presented by this tragedy, the Legislature thought that the dangerously disturbed areas had to be dealt with on a special footing; and on this basis it provided inter alia for the trial of the specified offences in a particular manner.
That obviously is the genesis of the impugned statute.
That being the position, it is impossible to hold that the classification between dangerously disturbed areas of the State on the one hand and the non_ disturbed areas on the other was not rational or that it was not based on an intelligible differentia.
Then again, the object of the Act was obviously to ensure public safety and maintenance of public order; and there can be no doubt that the speedy trial of the specified offences had an intimate rational relation or nexus with the achievement of the said object.
There is no doubt that the procedure prescribed for the trial of summons cases is simpler, shorter and speedier; and so, when the dangerously disturbed areas were facing the problem of unusual civil commotion and strife, the Legislature was justified 95 in enacting the first part of section 36 so that the cases against persons charged with the commission of the specified offences could be speedily tried and disposed of.
We are, therefore, satisfied that the challenge to the vires of the first part of sub section
(1) of section 36 cannot be sustained.
In this connection we may refer to the recent decision of this Court in Ram Krishna Dalmia vs Justice Tendolkar (1).
The judgment in that case has considered the previous decisions of this Court on article 14, has classified and explained them, and has enumerated the principles deducible from them.
The application of the principles there deduced clearly supports the validity of the impugned provisions.
It is, however, urged by Mr. Ram Lal Anand that the decision of this Court in Lachmandas Kewalram Ahuja vs The State of Bombay (2) supports his contention that section 36(1) is invalid.
We are not impressed by this argument.
In Ahuja 's case (2) the objects of the impugned Act were the expediency of consolidating and amending the law relating to the security of the State, maintenance of public order and maintenance of supplies and services essential to the community in the State of Bombay.
These considerations applied equally to both categories of cases, those referred to the Special Judge and those not so referred; and so, on the date when the Constitution came into force, the classification on which section 12 was based became fanciful and without any rational basis at all.
That is why, according to the majority decision section 12 contravened article 14 of the Constitution and as such was ultra vires.
It is difficult to see how this decision can help the appellant 's case.
The impugned provision in the present case makes no distinction between one class of cases and another, much less between cases directed to be tried according to the summons procedure before January 26, 1950, and those not so directed.
The summons procedure is made applicable to all offences under the Act or under any other law for the time being in force; in other words, all criminal offences are ordered to be tried according to the summons procedure in the dangerously disturbed areas.
That being (1) ; (2) ; , 731.
96 so, we do not think that the decision in Ahuja 's case (1) has any application at all.
Thus we feel no difficulty in holding that the impugned provision contained in the first part of section 36(1) is constitutional and valid.
Then it is urged that the Act which came into force on March 29, 1949, was due to expire and did expire on August 14, 1951, and so the proceedings taken against the appellant under the summons procedure after the expiration of the temporary Act were invaid.
It is argued that, in dealing with this point, it would not be permissible to invoke the provisions of section 6 of the General Clauses Act because the said section deals with the effect of repeal of permanent statutes.
This argument no doubt is well founded.
As Craies has observed, " as a general rule, unless it contains some special provisions to the contrary, after a temporary Act has expired no proceedings can be taken upon it and it ceases to have any further effect " (2).
This principle has been accepted by this Court in Krishnan vs The State of Madras (3).
" The general rule in regard to a temporary statute is ", observed Patanjali Sastri J., " that, in the absence of special provision to the contrary, proceedings which are being taken against a person under it will ipso facto terminate as soon as the statute expires".
It is true that the Legislature can and often enough does avoid such an anomalous consequence by enacting in the temporary statute a saving provision, and the effect of such a saving provision is in some respects similar to the effect of the provisions of section 6 of the General Clauses Act.
As an illustration, we may refer to the decision in Wicks vs Director of Public Prosecutions (4).
In that case ail offence against Defence (General) Regulations made under the Emergency Powers (Defence) Act, 1939, was committed during the currency of the Act and the offender was prosecuted and convicted after the expiry of the Act.
The contention raised by the offender that his prosecution and conviction were invalid because, at the relevant time, the temporary (1) ; , 731.
(2) Craies on " Statute Law ", 5th Ed., P. 377.
(3) ; , 628.
(4) [1947] A.C. 362.
97 Act had expired was rejected in view of the provisions of.,;.
11, sub section
3 of the Act.
This sub section had provided that the expiry of the Act shall not affect the operation thereof as respects things previously done or omitted to be done.
The House of Lords agreed with the view expressed by the Court of Criminal Appeal and held that it was clear that Parliament( did not intend sub section 3 to expire with the rest of the Act and that its presence in the statute is a provision which preserved the right to prosecute after the date of its expiry.
Since the impugned Act does not contain an appropriate saving section the appellant would be entitled to contend that, after the expiration of the Act, the procedure laid down in it could no longer be invoked in the cases then pending against the appellant.
We would like to add that, in the present case, we are not called upon to consider whether offences created by a temporary statute cease to be punishable on its expiration.
For the respondent, Mr. Umrigar, however, contends that the appellant is wrong in assuming that the Act in fact expired on August 14, 1951.
He has invited our attention to the provisions of Act No. I of 1951 by which the President extended some of the provisions of the earlier temporary Act in exercise of the powers conferred by section 3 of the Punjab State Legislature (Delegation of Powers) Act, 1951 (46 of 1951), The provisions of that Act extended to the whole of the State of Punjab and came into force on September 13, 1951.
Mr. Umrigar relied on section 16 of Act 46 of 1951 which repealed the East Punjab Public Safety Act, 1949 (Punj.
5 of 1949) and the East Punjab Safety (Amendment) Ordinance, 1951 (5 of 1951) but provided that notwithstanding such repeal any order made, notification or direction issued, appointment made or action taken under the said Act and in force immediately before the commencement of this Act shall, in so far as it is not inconsistent therewith, continue in force and be deemed to have been made, issued or taken under the corresponding provisions of this Act.
It must, however, be pointed out that this 13 98 Act does not continue the material provisions of the impugned Act such ass. 20 and section 36 ; and so section 16 cannot be invoked for the purpose of validating the continuation of the subsequent proceedings against the appellant in the cases then pending against him.
Besides, it is necessary to recall that section 36(1) of the Act prescribed the application of the summons procedure in the trial of specified offences only in dangerously disturbed areas; and so, unless it is shown that the relevant area could be treated as a dangerously disturbed area at the material time, section 36(1) would be inapplicable.
In other words, the adoption of the summons procedure would be justified only so long as the area in question could be validly treated ,as a dangerously disturbed area and it is therefore pertinent to enquire whether at the relevant time the area in question was duly and validly notified to be a dangerously disturbed area.
We have already referred to the four notifications issued by the competent authority.
The second notification purported to cancel with effect from October 1, 1950, the first notification which had declared the whole of the Province of Delhi as a dangerously disturbed area.
A week thereafter, the third notification sought to introduce an exception to the cancellation as notified by the second notification.
Apart from the question as to whether, after the lapse of a week, it was competent to the authority to modify the second notification, it is difficult to understand how it was within the jurisdiction of the notifying authority to say that the whole of the Province of Delhi had ceased to be a dangerously disturbed area " except as respects things done or omitted to be done before the date of this notification ".
Section 20 of the Act under which this notification has been issued authorised the Provincial Government to declare that the whole or any part of the Province was a dangerously disturbed area.
The notification could declare either the whole or a part of the Province as a dangerously disturbed area; but section 20 does not empower the notifying authority to treat any area as being dangerously disturbed in respect of certain things and not dangerously disturbed 99 in regard to others.
Authority to ' declare areas as dangerously disturbed has no doubt been validly delegated to the Provincial Government; but no authority has been conferred on the delegate to treat any area as disturbed for certain things and not disturbed for others.
We have, therefore, no doubt that in introducing the exception to the cancellation effected by the second notification the third notification has gone outside the authority conferred by section 20 and is clearly invalid.
If that be so, it must be held that the whole of the Province of Delhi ceased to be a dangerously disturbed area as from October, 1, 1950.
It was probably realised that the third notification would be invalid and hence the fourth notification was issued on April 7, 1951.
This purports to be a certificate issued by the competent authority under the second part of section 36, sub section (1).
This certificate seeks to achieve the same result by declaring that though the State of Delhi was not a dangerously disturbed area, the offences specified in the notification would nevertheless continue to be tried according to the summons procedure.
This notification is clearly not authorised by the powers conferred by the second part of section 36, sub section
What the Provincial Government is authorised to do by the second part of section 36(1) is to direct that in areas other than those which are dangerously disturbed all offences under the Act and any other offence under any other law should be tried according to the summons procedure.
It is clear that the notification which the Provincial Government is authorised to issue in this behalf must relate to all offences under the Act and any other offence under any other law.
In other words, it is the offences indicated which can be ordered to be tried under the summons procedure by the notification issued by the Provincial Government.
The Provincial Government is not authorised to issue a notification in regard to the trial of any specified case or cases; and since it is clear that the notification in question covers only pending cases and has no reference to offences or class of offences under the Indian Penal Code,, it is outside the 100 authority conferred by the second part of section 36(1).
It is obvious that the third and the fourth notifications attempted to cure the anomaly which it was apprehended would follow in regard to pending cases in the absence of a saving section in the Act.
If through inadvertence or otherwise the Act did not contain an appropriate saving section, the defect could not be cured by the notifications issued either under section 20 or under section 36(1) of the Act.
In issuing the said notifications the competent authority was taking upon itself the functions of the Legislature and that clearly was outside its authority as a delegate either under section 20 or under section 36(1) of the Act.
Mr. Umrigar, then, argues that the competent authority was entitled to modify the notification issued by it because the power to issue a notification must also involve the power either to cancel, vary or modify the same; and in support of this argument Mr. Umrigar relies on the provisions of section 19 of the Punjab General Clauses Act, 1898 (Punj. 1 of 1898) which in substance corresponds to cl. 21 of the (10 of 1897).
In our opinion, this argument is not well founded.
Section 19 of the Punjab , like section 21 of the , embodies a rule of construction, the nature and extent of the application of which must inevitably be governed by the relevant provisions of the statute which confers the power to issue the notification.
The power to cancel the notification can be easily conceded to the competent authority and so also the power to modify or vary it be likewise conceded; but the said power must inevitably be exercised within the limits prescribed by the provision conferring the said power.
Now section 20 empowers the Provincial Government to declare the whole or any part of the Province to be a dangerously disturbed area; and if a notification is issued in respect of the whole or any part of the Province it may be either cancelled wholly or may be modified restricting the declaration to a specified part of the Province.
The power to cancel or modify must be exercised in reference to the areas of the Province which it is competent for the Provincial 101 Government to specify as dangerously disturbed.
The power to modify cannot obviously include the power to treat the same area as dangerously disturbed for persons accused of crimes committed in the past and not disturbed for others accused of the same or similar A, offences committed later.
That clearly is a legislative function which is wholly outside the authority conferred on the delegate by section 20 or section 36(1).
We must, therefore, hold that the third and the fourth notifications are invalid and as a result of the second notification the whole of the Province of Delhi ceased to be a dangerously disturbed area from October 1, 1950.
This position immediately raises the question about the validity of the proceedings continued against the appellant in the three cases pending against him under the summons procedure.
So long as the State of Delhi was validly notified to be a dangerously disturbed area the adoption of the summons procedure was no doubt justified and its validity Could not be impeached; but, with the cancellation of the relevant notification section 36(1) of the Act ceased to apply and it was necessary that as from the stage at which the cases against the appellant then stood the warrant procedure should have been adopted; and since it has not been adopted the trial of the three cases is invalid and so the orders of conviction and sentence imposed against him are void.
That in brief is the alternative contention raised before us by Mr. Ram Lal Anand.
Mr. Umrigar, urges that since the trial had validly commenced under the summons procedure, it was unnecessary to change the procedure after October 1, 1950, and his case is that the trial is not defective in any manner and the challenge to the validity of the impugned orders of conviction and sentence should not be upheld.
In support of his argument Mr.
Umrigar has invited our attention to some decisions which may now be considered.
In Srinivasachari vs The Queen (1) the accused was tried by a Court of Sessions in December 1882 on charges some of which were triable by assessors and others by jury.
Before the trial was concluded the Code of Criminal Procedure, 1882, came into force (1) Mad.
336. 102 and under section 269 of the Code all the said charges became triable by jury.
Section 558 of the Code had provided that the provisions of the new Code had to be applied, as far as may be, to all cases pending in any criminal court on January 1, 1883.
The case against the accused which was pending on the date when the new Act came into force was submitted to the High Court for orders; and the High Court directed that by virtue of section 6 of the the trial must be conducted under the rules of procedure in force at the commencement of the trial.
It is clear that the decision of the High Court was based both on the specific provisions of section 558 which provided for the application of the new Code to pending cases only as far as may be and on the principles laid down in section 6 of the .
That is why that decision cannot assist the respondent since section 6 of the is inapplicable in the present case.
The decision on Mukund vs Ladu (1) is also inapplicable for the same reasons.
It was a case where one act was repealed by another and so the question as to the applicability of the provisions of the latter act had to be considered in the light of the provisions of section 6 of the .
The judgment in terms does not refer to section 6 but the decision is obviously based on the principles of the said section.
Then Mr.Umrigar relied on Gardner vs Lucas (2).
In that case section 39 of the Conveyancing (Scotland) Act, 1874, with which the court was dealing affected not only the procedure but also substantive rights; and so it was held that the said section was not retrospective in operation.
This decision is wholly inapplicable and cannot give us any assistance in the present case.
Mr. Umrigar also placed strong reliance on a decision of the Full Bench of the Punjab High Court in Ram Singh vs The Crown (3).
That decision does lend support to Mr. Umrigar 's contention that the continuation of the trial under the summons procedure did not introduce any infirmity and was in fact appropriate (1) (2) (3) A.I.R. 1950 East Punjab 25. 103 and regular.
The case against Ram Singh had been sent to the Court of Session under the provisions of section 37 (1) of the Punjab Public Safety Act, 1948 (Punj. 2 of 1948) at a time when Luahiana District was declared to be a dangerously disturbed area; before, however, the trial in the Court of Session actually commenced the District ceased to be a ' dangerously disturbed area.
Even so, it was held that the Sessions Judge should continue with the trial under the provisions of section 37 (1) of the Act and not under the ordinary provisions of the Code regarding sessions trial, and should follow the procedure prescribed for the trial of summons cases.
It appears that the judgment in the case proceeded on the assumption that the principles enacted by section 6 of the were applicable, and so, since at the commencement of the proceedings the adoption of the summons procedure was justified under section 37 (1) of the Act, the trial could continue under the same procedure even after the area had ceased to be a dangerously disturbed area.
In our opinion, it is erroneous to apply by analogy the provisions of section 6 of the to cases governed by the provisions of a temporary Act when the said Act does not contain the appropriate saving section.
Failure to recognise the difference between cases to which section 6 of the applies and those which are governed by the provisions of a temporary Act which does not contain the appropriate saving section has introduced an infirmity in the reasoning adopted in the judgment.
Besides, the learned judges, with respect, were in error in holding that the application of the ordinary criminal procedure was inadmissible or impossible after the area ceased to be dangerously disturbed.
No doubt the learned judges recognised the fact that ordinarily the procedural law is retrospective in operation, but they thought that there were some good reasons against applying the ordinary procedural law to the case, and that is what influenced them in coming to the conclusion that the summons procedure had to be continued even after the area ceased to be dangerously disturbed.
In this connection the learned 104 judges referred to the observation in Maxwell that " the general principle, however, seems to be that alterations in procedure are retrospective, unless there be some good reason against it (1) ; and they also relied on the decision of the Privy Council in Delhi Cloth and General Mills Co., Ltd. vs Income tax Commissioner, Delhi (2) in which their Lordships have referred with approval to their earlier statement of the law in the Colonial Sugar Refining Co. vs Irving (3) that " while provisions of a statute dealing merely with matters of procedure may properly, unless that construction be textually inadmissible, have retrospective effect attributed to them".
The learned judges took the view that these principles justified their conclusion that "where the provisions of a statute dealing with matters of procedure are inapplicable to a certain proceeding pending at the time the statute came into force, they must be regarded as textually inadmissible so far as those proceedings are concerned ".
We are disposed to think that this view is not sound.
We do not think that the adoption of the ordinary warrant procedure was either inadmissible or inapplicable at the stage where the trial stood in the case against Ram Singh (4).
It was wrong to assume that the ses sions procedure would be inapplicable for the reason that the provisions of the Code in regard to the commitment of the case to the Court of Session had not been complied with.
With respect, the learned judges failed to consider the fact that the procedure adopted in sending the case to the Court of Session under section 37(1) of the relevant Act was valid and the only question which they had to decide was what procedure should be adopted after Ludhiana ceased to be a dangerously disturbed area.
Besides, it was really not a case of retrospective operation of the procedural law; it was in fact a case where the ordinary procedure which had become inapplicable by the provisions of the temporary statute became applicable as soon as the area in question ceased to be dangerously disturbed.
(1) Maxwell on " Interpretation of Statutes ", 9th Ed.
,P. 226.
(2) (3) (4) A.I.R. (1950) East Punjab 25. 105 In this connection it is relevant to refer to the decision of this Court in Syed Qasim Razvi vs The State of Hyderabad (1).
In that case this Court was dealing with the regulation called the Special Tribunal Regulation (V of 1358 Fasli) which had been promulgated by the Military Governor of the Hyderabad State.
The said regulation had provided that the( Military Governor may, by general or special order, direct that any offence or class of offences should be tried by such tribunal, and the procedure for trial laid down by it differed from the provisions of the Hyderabad Criminal Procedure Code in several material particulars.
The cases against the accused were directed to be tried by the Special Tribunal on October 6, 1949.
The accused were convicted in September 1950 and their conviction on some of the charges was upheld by the High Court in appeal in April, 1951.
The accused then appealed to this Court and also applied under article 32 of the Constitution for quashing the orders of conviction and sentence on the ground that the Special Tribunal Regulation became void on January 26, 1950, as its provisions contravened articles 14 and 21 of the Constitution which came into force on that date, and the continuation of the trial and conviction of the accused after that date was illegal.
It is true that the final decision in the case, according to the majority view, proceeded on the footing that the accused had substantially the benefit of a normal trial though there were deviations in certain particulars and so his conviction could not be set aside merely because the Constitution of India came into force before the termination of the trial.
As we will presently point out, the relevant facts in this case in regard to the deviation from the normal procedure are different from those in Syed Qasim Razvi 's case (1), but that is another matter.
What is important for our purpose is the view expressed by this Court that the regulation issued by the Military Governor of Hyderabad State could not be impeached and so the Special Tribunal must be deemed to have taken cognisance of (1) 14 106 the case quite properly and its proceedings up to the date of the coming in of the Constitution would also have to be regarded as valid.
Dealing with this point, Mukherjea, J., who delivered the judgment of the Court, quoted with approval the observations made in Lachmandas Kewalram Ahuja vs The State of Bombay(1) that ,as the Act was valid in its entirety before the date of the Constitution, that part of the proceedings before the Special Judge, which, up to that date had been regulated by the special procedure cannot be questioned ".
Unfortunately this aspect of the matter was not properly placed before the Full Bench of the Punjab High Court in the case of Ram Singh (2).
If the learned judges had proceeded to deal with the question referred to them on the basis that the initial submission of the case to the Court of Session under section 37(1) of the Act was valid they would not have come to the conclusion that the sessions procedure was inadmissible or inapplicable to the continuation of the case after Ludhiana had ceased to be a dangerously disturbed area.
That is why we think that the view taken by the Full Bench is erroneous.
The position then is that as from October 1, 1950, the three cases against the appellant should have been tried according to the warrant procedure.
It is clear that, at the stage where the trial stood on the material date, the whole of the prosecution evidence had not been led and so there was no difficulty in framing charges against the appellant in the respective cases and thereafter continuing the trial accord ing to the warrant procedure.
Having regard to the nature of the charges framed and the character and volume of evidence led, it is difficult to resist the appellant 's argument that the failure to frame charges has led to prejudice; and it is not at all easy to accept the respondent 's contention that the double opportunity to cross examine the prosecution witnesses which is available to an accused person under the warrant procedure is not a matter of substantive and valuable benefit to him.
The denial of this opportunity must, (1) ; , 731, (2) A.I.R. 1950 East Punjab 25.
107 in the circumstances of the present cases, be held to have caused prejudice to him.
We must accordingly hold that the continuation of the trial of the three cases against the appellant according to the summons procedure subsequent to October 1, 1950, has vitiated the trial and has rendered the final orders of conviction and sentence invalid.
We must accordingly set aside the orders of conviction and sentence passed against the appellant in all the three cases.
That takes us to the question as to the final order which should be passed in the present appeals.
The offences with which the appellant stands charged are of a very serious, nature; and though it is true that he has had to undergo the ordeal of a trial and has suffered rigorous imprisonment for some time that would not justify his prayer that we should not order his retrial.
In our opinion, having regard to the gravity of the offences charged against the appellant, the ends of justice require that we should direct that he should be tried for the said offences de novo according to law.
We also direct that the proceedings to be taken against the appellant hereafter should be commenced without delay and should be disposed of as expeditiously as possible.
Appeal allowed.
Retrial ordered.
| Section 36(1) of the East Punjab Public Safety Act, 1949, (Punj.
5 Of 1949), which was passed in the wake of the partition disturbances in India with a view to ensure public safety and the maintenance of public order, provided that offences mentioned therein land committed in the area declared to be dangerously disturbed under section 20 Of the Act, should be tried under the summons procedure prescribed by Ch.
XX of the Code of Criminal Procedure.
By the first notification issued under section 2o of the Act, the whole of the Province of Delhi was declared to be a dangerously disturbed area; subsequently the second notification purported to cancel the first.
The third notification then sought to modify the second by inserting into it the words "except as respect things done or omitted to be done before this notification ".
The fourth and last notification issued under section 36(1) of the Act sought to save proceedings thereunder pending after the cancellation of the first notification.
The appellant who was put up for trial in three cases for offences ordinarily triable under the warrant procedure, was tried under the summons procedure according to section 36(1) of the Act and the first notification and the trials were continued even after the expiry of the Act in respect of substantial parts of them under the same procedure and ended in his conviction which was affirmed by the High Court in appeal.
The Act was a temporary Act and contained no provision saving pending proceedings. 'It was contended on behalf of the appellant that the first part of section 36(1) of the Act in treating the disturbed areas as a class by themselves and providing a uniform procedure for the trial of specified offences violated article 14 Of the Constitution and that the continuance of the trials under the summons procedure even after the expiry of the Act was invalid.
Held, that the two tests of the validity of the classification made by the Legislature were, (1) that the classification must be based on an intelligible differentia and (2) that this differentia must be reasonably connected with the object of the legislation.
Thus tested, there could be no doubt, in the present case, that the classification on a geographical basis made by the impugned 88 Act between areas that were dangerously disturbed and other areas, in the interest of speedy trial of offences, was perfectly justified.
Ram Krishna Dalmia vs justice Tendolkar; , , relied on.
Lachmandas Kewalram Ahuja vs The State of Bombay, ; , held inapplicable.
But since the impugned Act was a temporary Act and contained no appropriate provision saving the summons procedure prescribed by it, that procedure could not, on the expiry of the Act, apply to the cases pending against the appellant.
Krishnan vs The State of Madras, ; , relied on.
Wicks vs Director of Public Prosecutions, [1947] A.C. 362, referred to.
The third and the fourth notifications, obviously intended to cure the absence of a saving provision in the Act, were 'wholly outside the authority conferred on the delegate by section 2o or section 36(1) of the Act and must be held to be invalid.
With the issue of the second notification, therefore, the entire province of Delhi ceased to be a dangerously disturbed area.
It was erroneous to apply by analogy the provisions of section 6 of the General Clauses Act to cases governed by a temporary Act, such as the one in question, which did not contain the appropriate saving provision and contend that since the trials had commenced validly, their continuance under the same procedure even after the declaration had ceased to operate and subsequent orders of conviction and sentence passed therein were valid as well.
Srinivasachari vs The Queen, Mad. 336, Mukund vs Ladu, and Gardner vs Lucas, , held inapplicable.
Ram Singh vs The Crown, A.I.R. 1950 East Punjab 25, dis approved.
Syed Qasim Razvi vs The State of Hyderabad, [1953] S.C.R. 589, referred to and distinguished.
|
Summarize this legal judgement text concisely | Appeal No. 480 of 1958.
Appeal by special leave from the judgment and order dated April 15, 1958, of the Orissa High Court in Misc.
Appeal No. 194 of 1957, arising out of the judgment and order dated October 26, 1957, of the Election Tribunal, Puri, in Election Case No. 1/67 of 1957.
Veda Vyasa and A. V. Viswanatha Sastri, R. Patnaik and Ratnaparkhi, A. G., for the appellant.
H.Mahapatra and P. K. Chatterjee for G. C. Mathur, for respondent No. 1. 1958.
December 18.
The Judgment of the Court was delivered by IMAM, J.
The appellant and the respondent No. 1 were, amongst others, candidates for election to the Orissa Legislative Assembly from the Daspalla doublemember constituency in which a seat was reserved for a scheduled caste candidate.
We are not concerned with the election of the scheduled caste candidate.
120 954 For the general seat the election was contested by the appellant, respondent No. 1 and respondent No. 3.
The appellant obtained 17,700 votes, respondent No. 1 15,568 votes and respondent No. 3 3,589 votes.
The election was held on February 27, 1957, and the appellant was declared elected on March 5, 1957.
Respondent No. 1 filed an election petition questioning, on various grounds, the election of the aPpellant.
The Election Tribunal dismissed the petition holding that no grounds had been established to invalidate the election.
Respondent No. 1 appealed to the High Court of Orissa against the order of the Election Tribunal.
One of the grounds, amongst the many grounds, taken by Respondent No. 1 to invalidate the election of the appellant was that the nomination of respondent No. 3 was improperly accepted as he was disqualified from contesting the election being a Sarbarakar of the 10 villages in the, district of Nayagarh mentioned in the schedule to the petition.
The High Court held that the office of Sarbarakar was an office of profit under the State Government of Orissa.
Respondent No. 3 was accordingly disqualified from being a member of the Assembly.
It, however, held that the acceptance of the nomination of respondent No. 3 had not materially affected the election of the returned candidate under el.
(d) of sub section (1) of section 100 of the Representation of the People Act, 1951, hereinafter referred to as the Act.
Three grounds were urged before the High Court in support of the contention that the appellant had been guilty of corrupt practice.
One was that of bribery; the second was that the appellant and his agents had published a pamphlet, Exbt. 8, containing statements which were false and which he knew or believed to be false in relation to the personal character and conduct of respondent No. 1 and in relation to his candidature; and the third was, the obtaining and procuring by respondent No. 1 of assistance for the furtherance of the prospects of his election from Sarpanches of certain Grama Panchayats.
With regard to the first two grounds the High Court held that the same 955 had not been established.
With reference to the third ground the High Court was of the opinion that a Sarpanch of the Grama Panchayat, though not a Government servant appointed by the Government, was none the less a person in the service of the Government as he performed many of the governmental duties and was also removable by the Government and such a person came within the provisions of section 123(7)(f) of the Act.
A Sarpanch exercised under the Orissa Grama Panchayats Act, 1948, hereinafter referred to as the Orissa Act, mostly governmental functions like collection of taxes, maintenance of public accounts, etc.
It thought that if such a person was not brought under section 123(7)(f) there would be " a lot of undue influence exercised on the voters by these persons who in the village exercised a lot of influence considering the nature of their powers and the ideas of the village people ".
The High Court accordingly allowed the appeal and set aside the appellant 's election but was of the opinion that although its finding resulted in the appellant being disqualified for membership of Parliament and the Legislature of every State for six years under section 140 of the Act, this was a fit case for the removal of the disqualification by the Election Commission under section 144 of the Act.
The appellant applied to the High Court for a certificate that this was a fit case for appeal to this Court.
The certificate was granted, but one of the learned Judges was in some doubt whether this was a case in which the provisions of article 133(1)(c) of the Constitution applied.
On behalf of respondent No. 1 an objection had been taken that article 133(1)(c) of the Constitution did not apply and the High Court could not have certified that this was a fit case for appeal to this Court.
It seems to us unnecessary to decide whether in a case of this kind the provisions of article 133(1)(c) applied because, in our opinion, even if they did not apply and the High Court could not have issued a certificate, this was just the kind of case where we would have granted special leave to appeal under article 136 of the Constitution because the appeal raised a point of law of considerable public importance.
956 In order to remove all doubts in the matter, we grant the appellant special leave to appeal against the decision of the High Court of Orissa and proceed to deal with the appeal on that basis.
The Act was amended in 1956.
Before the amendment the relevant portion of section 123 for the purpose of this appeal was contained in sub section
(8) which % as as follows : " (8) The obtaining or procuring or abetting or attempting to obtain or procure by a candidate or his agent or, by any other person with the connivance of a candidate or his agent, any assistance for the furtherance of the prospects of the candidate 's election from any person serving under the Government of India or the Government of any State other than the giving of vote by such person.
Explanation For the purposes of this clause (a) a person serving under the Government of India shall not include any person who has been declared.
By the Central Government to be a person to whom the provisions of this clause shall not apply ; (b) a person serving under the Government of any State shall include a patwari, chaukidar, dafedar, zaildar, shanbagh, karnam, talati, talari, patil, village munsif, village headman or any other village officer, by whatever name lie is called, employed in that State, whether the office be holds is a whole time office or not, but shall not include any person (other than any such village officer as aforesaid) who has been declared by the State Government to be a person to whom the provisions of this clause shall not apply." After the amendment the relevant portion of section 123 is in sub section (7) which reads as follows: " (7) The obtaining or procuring or abetting or attempting to obtain or procure by a candidate or his agent or, by any other person, any assistance (other than giving of vote) for the furtherance of the prospects of that candidate 's election from any person in the service of the Government and belonging to any of the following classes, namely: (a) gazetted officers; (b) stipendiary judges and magistrates; 957 (c) members of the armed forces of the Union; (d) members of the police forces; (e) excise officers; (f) revenue officers including village accountants, such as, patwaris, lekhpals, talatis, karnams and the like but excluding other village officers; and (g) such other class of persons in the service of the Government as may be prescribed.
Explanation (I) In this section the expression "agent " includes an election agent, a polling agent and any person who is held to have acted as an agent in connection with the election with the consent of the candidate.
(2)For the purposes of clause (7), a person shall be deemed to assist in the furtherance of the prospects of a candidate 's election if he acts as an election agent, or polling agent or a counting agent of that candidate.
" There is a material difference between the phraseology of section 123(8) before it was amended and section 123(7) as now contained in the Act.
Under the former provision there was a prohibition against obtaining any assistance for the furtherance of the prospect of a candidate 's election from any person serving under the Government of India or the Government of a State other than the giving of a vote by such person.
The Explanation, however, gave authority to the Central Government to declare any person serving under it to be a person to whom these provisions would not apply.
In other words, unless there was such a declaration these provisions covered every person serving tinder the Government of India.
Clause (b) of the Explanation further widened the meaning of any person serving under the Government of a State by including the persons specified therein and any other village officer, by whatever name he may be called, employed in that State, but the State Government was authorized to declare that any such person, other than any such village officer, to be a person to whom these provisions did not apply.
The language of the provisions of section 123(8) covered a wide field and referred to every person serving under the Government of India or a 958 State unless such 'Person was declared to be one to whom the provisions would not apply.
After the amendment, however, the provisions of section 123(7) are narrower in scope.
These provisions apply to any person in the service of the Government belonging to the classes specified in cls.
(a) to (g) and none else.
For the purpose of this appeal it is el.
(f) which will have to be considered, as the other clauses cannot in any case apply.
The principal question for consideration is whether a Sarpanch of a Grama Panchayat constituted under the Orissa Act is a person in the service of the Government of the State of Orissa and belongs to the class specified in cl.
(f) of section 123(7).
Obviously, two things will have to be established before the provisions of section 123(7)(f) can apply to a Sarpanch of a Grama Panchayat constituted under the Orissa Act: (1) That such a person is in the service of the Government and (2) that he comes within the class specified in cl.
It would not be enough to establish only one of these conditions.
It is necessary, therefore, to decide, in the first instance, whether a Sarpanch of a Grama Panchayat under the Orissa Act is a person in the service of the Government of the State of Orissa.
For this purpose, it will be necessary to consider whether any of the provisions of the Orissa Act relating to the Grama Panchayat and the duties to be discharged by the Sarpanch indicate that the Sarpanch is in the service of the Government, because independent of those provisions there is no material upon which any such conclusion can be arrived at.
It was urged on behalf of the appellant that under the Orissa Act a Grama Sasan can be constituted by notification by the State Government.
The Grama Sasan is to be a body corporate having perpetual succession and a common seal with power to acquire and hold property, to transfer any property held by it and to enter into contracts and to do all other things necessary for the purpose of carrying out the provi sions of the Orissa Act and to sue and be sued in its corporate name.
For every Grama Sasan there shall be a Grama Panchayat and the functions of the 959 Grama Sasan shall be exercised, performed and discharged by the Grama Panchayat.
The Executive power of the Grama Panchayat shall be exercised by the Sarpanch elected under section 10, who shall act under the authority of the said Grama Panchayat.
The Grama Sasan shall elect, in the prescribed manner, from amongst its members an Executive Committee which will be known as the Grama Panchayat and the Grama Panchayat shall elect, in the prescribed manner, a Sarpanch.
The appointment of a Sarpanch, therefore, was not by the Government.
The Sarpanch was elected by the Grama Panchayat which in turn was elected by the Grama Sasan and the Grama Sasan consisted of a village or a group of contiguous villages and its members were the population residing in the Grama.
As the appointment of the Sarpanch is Dot by Government, this would be one of the factors in holding that the Sarpanch was not in the service of the Government.
Under section 8, the Sarpanch has to act under the authority of the Grama Panchayat.
Prima facie, this would also be a factor to discountenance the theory that a Sarpanch was in the service of the Government.
Another factor which would militate against the theory that a Sarpanch was in the service of the Government was that he received no remunera tion from the Government.
The power to remove a Sarpanch by the State Government is stated in section 16 but the removal can only be for negligence, inefficiency or misbehaviour.
This restricted power of removal was not a conclusive factor on the question whether a Sarpanch was in the service of the Government.
It was accordingly urged that three important factors to be taken into consideration in deciding whether a person was in the service of the Government, namely, appointment of the person, such a person to act under the authority of the Government and one who received remuneration from Government were lacking in the case of a Sarpanch.
The restricted power of removal by the Government was not a conclusive factor ' Instances were not lacking in the Municipal Acts of various States where the State Government had vested in it the power of removal of 960 a Chairman of the Municipality, but it could not be said that the members of the Municipality or their Chairman were in the service of the Government.
On behalf of respondent No. 1 it was urged that the expression in service of Government" had a wider concept than the expression serving under the Government ".
Exercise of governmental functions would amount to being in Government 's service.
A Sarpanch could be equated with a patwari, Lekhpal, talati, karnam, etc., and it was not necessary to consider whether he was in service of Government because the word " and " before the words " belonging to any of the following classes " should be read as " or He referred to the various provisions of the Orissa Act in support of his submission that a Sarpanch must be regarded as one in service of Government.
Under section 10(2) the District Magistrate was to decide the manner in which the local area of any Grama Sasan shall be divided into electoral wards and the number of members to be returned for each of such wards.
Under sub section
(4) of this section the number of members of a Grama Panchayat shall be fixed by the District Magistrate.
Under sub section
(6) if in an election the requisite number of members of a Grama Panchayat is not elected, the State Government shall appoint persons to fill up the vacancies and the Grama Panchayat so constituted, consisting of elected and appointed members, shall elect a Sarpanch from amongst its members.
Under sub section
(8) the State Government was empowered by notification for sufficient cause to extend the term of office of any Grama Panchayat for a period of one year.
Under a. 11 the State Government may by notification direct that general election of members of a Grama Panchayat be held at any time before the expiration of the term of office of such members includ ing its Sarpanch.
Under section 14 the State Government is authorized to decide any dispute or difficulty arising out of the interpretation of any of the provisions of the Orissa Act or any rule made thereunder or any difficulty which arises in the working of the Act.
Under section 16 the State Government is empowered 961 to remove a Sarpanch on the ground of negligence, inefficiency, or misbehaviour.
Under section 17 a Sarpanch shall give effect to the decision of the Grama Panchayat; provided that if in his opinion any such decision is subversive of peace and order in the locality or results in manifest injustice or unfairness to an individual or body of individuals or a particular community or is generally against public interest, he shall refer the matter to the Sub divisional Magistrate and thereafter act according to such directions as be may receive from such Magistrate.
Under sub section
(2) of this section, the Sub divisional Magistrate may, on his own motion or on the representation by the Sarpanch, set aside a decision of the Grama Panchayat, if he finds that the decision is of the nature as stated above.
Under sub section
(3) of section 18 the Sub divisional Magistrate may nominate any member of the Grama Panchayat to carry on the duties of the Sarpanch till a new Sarpanch is elected on the resignation of the former.
Under section 22 a Grama Panchayat may, if a majority of its members so decide, with the previous approval of the Government and if the Provincial Government so direct undertake within its area the control and administration of and be responsible in the matters mentioned in cls.
(a) to (y).
Clause (x) refers to the doing of anything the expenditure on which is declared by the Provincial Government or by a District Board with the sanction of the Provincial Government to be an appropriate charge on the Grama Sasan 's funds.
Even in the matter of appointing staff to a Grama Panchayat, under section 32 the Grama Panchayat has to prepare a scheme containing its proposals for the employment of whole time or part time staff, for their salaries and allowances and shall submit the same to the prescribed authority who shall have the power to approve or modify or reject the scheme.
Section 35 refers to the liability of the members of the Grama Panchayat or of any Joint Committee or any other Committee constituted under the Orissa Act and provides for the institution of suits against them for loss, waste or misapplication of any property belonging to the 121 962 Grama Panchayat as the result of direct consequence of his neglect or misconduct while a member of the Grama Panchayat, Joint Committee or other Committee.
Under sub section
(3) the Provincial Government has the power to institute such a suit on its own initiative.
Under section 36 all members of the Grama.
Panchayat shall be deemed to be public servants and in the definition of " legal remuneration " in section 161 of the Indian Penal Code" the word " Government" for the purpose of this section shall be deemed to include a Grama Sasan or a Grama Panchayat.
Under section 44(2) a Grama Panchayat with the previous sanction of the State Government may impose a tax, toll, fee or rate on matters referred to in cls.
(a) to (n).
Under sub section
(4) the District Magistrate is authorized to review or revise the tax, toll, fee or rate imposed by Grama Panchayat.
Under sub section
(5) the District Magistrate may by an order in writing require the Grama Panchayat to levy or increase any tax, toll, fee or rate specified in sub section
(2) subject to the conditions 'and restrictions contained therein, if in his opinion the income of the Grama Panchayat is or is likely to be inadequate for the proper discharge of the duties imposed under section 21 or undertaken under section 22.
Under section 97 the District Magistrate is authorized to exercise general powers of inspection, supervision and control over the performance of the administrative duties of the Grama Panchayat.
Section 98 contains the general powers of the District Magistrate and section 99 contains the emergency powers of the District Magis trate in relation to a Grama Panchayat whereby he may by an order in writing prohibit the execution or further execution of a resolution or ail order passed or made by it.
Under section 117 A the State Government may delegate any of its powers.
except the power to make rules, to be exercised or discharged by any officer subordinate to State Government, It was urged on behalf of respondent No. 1 that the above provisions of the Orissa Act clearly made the Grama Panchayat come under the control and supervision of the State Government and that the duties and functions of the Grama Panchayat to be performed by its 963 Sarpanch were governmental duties.
It was further urged that in considering whether a Sarpanch was a person in the service of Government the essential elements to be borne in mind were the control and supervision over him by the State Government and its power to remove him from his office.
Neither the absence of appointment by the State Government nor the non payment of remuneration by it would be factors indicating that he was not in the service of the Government.
In our opinion, there is a distinction between I serving under the Government ' and I in the service of the Government ', because while one may serve under a Government, one may not necessarily be in the service of the Government; under the latter expression one not only serves under the Government but is in the service of the Government and it imports the relationship of master and servant.
There are, according to Batt (On the Law of Master and Servant), two essentials to this relationship: (1) The servant must be under the duty of rendering personal services to the master or to others in his behalf and (2) the master must have the right to control the servant 's work either personally or by another servant or agent and, according to him, " It is this right of control or interference, of being entitled to tell the servant when to work (within the hours of service) or when not to work, and what work to do and how to do it (within the terms of such service), which is the dominant characteristic in this relation and marks off the servant from an independent contractor, or from one employed merely to give to his employer the fruits or results of his labour.
In the latter case, the contractor or performer is not under his employer 's control in doing the work or effecting the service; he has to shape and manage his work so as to give the result he has contracted to effect.
Consequently, a jobbing gardener is no more the servant of the person employing him than the doctor employed by a local authority to act as visiting physician to its fever hospital".
None of the provisions of the Orissa Act suggest that as between the State Government and the Grama 964 Panchayat and its Sarpanch any such relationship exists.
It is true that the State Government, the District Magistrate and the Sub divisional Magistrate have been given certain powers of control and supervision over the Grama Panchayat but those powers of control and supervision are in relation to the administrative functions of the Grama Panchayat and the Sarpanch.
The Grama Panchayat is an autonomous body exercising functions conferred under the statute.
It can hardly be said that the Grama Panchayat in so functioning is in the service of the Government.
Its administrative functions are akin to the functions generally performed by Municipalities and District Boards.
It would be a conception hitherto unknown to suppose that any Municipality or District Board was in the service of the Government merely because it exercised administrative functions and to some extent was under the control of the Government.
Co operative societies generally are very much under the control and supervision by the State Government or one of its officers authorized in that behalf.
It would be difficult to accept the suggestion that because of that a Cooperative society and its members must be regarded as in the service of the Government.
Even with respect to companies, progressively, legislation has been giving power to the Government to control and supervise them.
Under section 259 of the Indian , in certain circumstances, any increase in the number of its directors must be approved by the Central Government and shall become void if it is disapproved.
Under section 269, in the case of a public company or a private company which is a subsidiary of a public company, the appointment of a managing or whole time director for the first time after the commencement of this Act in the case of an existing company, and after the expiry of three months from the date of its incorporation in the case of any other company, shall not have any effect unless approved by the Central Government; and shall become void if, and in so far as, it is disapproved by the Central Government.
Under section 408 the Government has the power to prevent mismanagement in the affairs of the 965 Company and under the proviso in lieu of passing any order under sub section
(1) the Central Government may, if the company has not availed itself of the option given to it under section 265, direct the company to amend its Articles in the manner provided in that section and make fresh appointments of directors in pursuance of the Articles as so amended, within such time as may be specified in that behalf by the Central Government.
Section 409 empowers the Central Government to prevent change in the number of directors likely to affect the company prejudicially.
It could not be said, because of these provisions, that a company was in the service of the Government.
It seems to us, therefore, that the mere power of control and supervision of a Grama Panchayat exercising administrative functions would not make the Grama Panchayat or any, of its members a person in the service of the Government.
Even if it could be said that the Grama Panchayat in the exercise of its administrative functions exercised duties in the nature of Governmental duties it could not thereby be said that its Sarpanch was in the service of the Government.
So far as the Sarpanch is concerned, he is merely the executive head of the Grama Panchayat which carries out its functions through him.
He is not appointed by the Government.
He is not paid by the Government.
He does not exercise his functions as one in the service of the Government and he can only be removed on the ground of negligence, inefficiency or misbehaviour.
We have been unable to find a single provision of the Orissa Act from which we could say that a Sarpanch is a person in the service of the Government.
Reference had been made on behalf of the respondent No. 1 to section 31 of the Orissa Act which authorizes the Grama Panchayat to enter into a contract with the State Government to collect all or any class of taxes or dues payable to the Government at a prescribed percentage as collection charges.
As the Grama Sasan is a body corporate and the Grama Panchayat is its executive authority, the statute enabled the Grama Panchayat by provisions of section 31 to enter into a contract with the State Government to collect its taxes and its dues.
It 966 cast no obligatory duty upon the Grama Panchayat to collect such taxes or dues of the Government.
No provision of the Orissa Act has been placed before us by which the State Government could order a Grama Panchayat to collect its taxes or its dues.
Furthermore, under el.
(b) to section 31, a Grama Panchayat is authorized to enter into similar contracts with proprietors or land holders to collect their rents.
The provisions of section 31 militate against the theory that the Grama Panchayat is in the service of the Government.
There would be no occasion for such a provision if the Grama Panchayat was in the service of the Government in which case it would have to carry out the orders of the Government to collect its taxes or its dues.
Even if on a reasonable construction of the provisions of the Orissa Act it could be held that a Sarpanch of the Grama Panchayat was a person in the service of the Government, it would have to be further held that he was of the class of officers mentioned in section 123(7)(f).
Clause (f), in the first instance, speaks of a person in the service of the Government who is a revenue officer and then further extends the class to village accountants.
The words " such as patwaris, lekhpals, talatis, karnams and the like " are merely descriptive of the words " Revenue officers including village accountants".
Under cl.
(f) it is essential that a person in the service of the Government must be a revenue officer or a village accountant, by whatever name such officer or village accountant may be described.
The exclusion of every other village officer from the provisions of cl.
(f) compels the conclusion that before this clause can apply to a Sarpanch of the Grama Panchayat under the Orissa Act it must be proved that he is either a revenue officer or a village accountant.
The mere fact that under section 31 of the Orissa Act a Grama Panchayat is enabled to enter into a contract with the State Government to collect its taxes or its dues cannot convert a Sarpanch into a revenue officer.
No doubt a Grama Panchayat would have to supervise and maintain village and field boundary marks and village records if required to do 967 so by the State Government under section 21(r) of the Orissa Act.
In the present case there is no proof that the Grama Panchayats in question were required to do any such thing by the Government.
It is significant that under section 54(1)(xiv) of the Orissa Act it is a choukidar appointed under that Act by the District Magistrate on whom a statutory duty is cast to keep watch over boundary marks and report to the Grama Panchayat any loss or damage caused to the boundary marks defining villages.
The Grama Panchayat, however, has not been assigned positively any functions under the Orissa Act which are discharged by a revenue officer.
The provisions of section 21(r) would not by itself convert a Sarpanch of a Grama Panchayat into a revenue officer.
Similarly, there is no provision of the Orissa Act which shows that a Sarpanch is a village accountant.
It had been suggested on behalf of respondent No. 1 that if it could be established that a Sarpanch was a revenue officer or a village accountant, then the very fact that he was such a person made him a person in the service of the Government.
It is doubtful whether any such necessary conclusion arises, but there is no need to make further reference to this submission as, in our opinion, a Sarpanch of the Grama Panchayat under the Orissa Act is neither a revenue officer nor a village accountant.
It follows, therefore, that in the present case the two essential elements that a Sarpanch must be a person in the service of the Government and that he belongs to the class mentioned in cl.
(f) of sub section
(7) of section 123 have not been established.
Even if one of them had been established and not the other the provisions of section 123(7) would not apply to such a person.
In our opinion, the High Court erred in supposing that because a. Sarpanch of a Grama Panchayat under the Orissa Act exercised governmental duties he must be regarded as a person in the service of the Government.
The High Court did not give any clear finding that a Sarpanch, even if a person in the service of the Government, was either a revenue officer or a village accountant.
In our opinion, the provisions of section 123(7) do not apply to him.
Therefore, it cannot.
be said that 968 any corrupt practice under section 123 had been established in the case and the election of the appellant could not be set aside on the only ground on which his election had been set aside by the High Court.
The appeal is accordingly allowed with costs and the election petition of 'respondent No. 1 is dismissed.
Appeal allowed.
| The appellant was declared elected to the Orissa Legislative Assembly and the first respondent filed an election petition challenging the election, inter alia, on the ground that the appellant had committed the corrupt practice under section 123(7)(f) Representation of the People Act, 1951, by obtaining the assistance of Sarpanches of certain Grama Panchayats for the furtherance of the prospects of his election.
The petition was dismissed by the Election Tribunal but on appeal., was allowed by the High Court and the election was set aside.
The High Court held that a Sarpanch was a person in the service of the Government with in the meaning of section I23(7)(f) Of the Act.
Held, that a Sarpanch of Grama Panchayat in Orissa was not one of the persons contemplated by section I23(7)(f) and consequently the appellant was not guilty of any corrupt practice in obtaining assistance of Sarpanches.
Two conditions must co exist before S123(7)(f) could apply to a Sarpanch: (i) that he was in the service of the Government, and (ii) that he fell within the class 953 specified in cl.
There was a distinction between " serving under the Government " and " in the service of the Government "; while one may serve under a Government one may not necessarily be in the service of the Government; under the latter expression one not only served under the Government but was in the service of the Government and this imported the relationship of master and servant.
None of the provisions of the Orissa Grama Panchayats Act, 1948, suggested that as between the State Government and the Grama Panchayat and its Sarpanch any such relationship existed.
The mere power of control and supervision of Government over a Grama Panchayat exercising administrative functions or performing duties of governmental nature could not make the Grama Panchayat or its Sarpanch a person in the service of the Government.
The Sarpanch was the executive head of the Grama Panchayat : he was neither appointed nor paid by the Government; he could only be removed by Government on grounds of negligence, inefficiency or misbehaviour.
He was not under the control of the Government while discharging his functions and could not be said to be in service of the Government.
The second condition also did not exist as a Sarpanch was neither a revenue officer nor a village accountant and as such was not one of the class of officers mentioned in cl.
(f) of section 123(7).
|
Summarize this legal judgement text concisely | iminal Appeals Nos. 81 and 82 of 1958.
Appeals by special leave from the judgment and order dated February 28, 1958, of the Allahabad High Court in Criminal Appeal No. 1809 of 1957 and Referred No. 138 of 1957 arising out of the judgment and order dated November 28, 1957, of the Court of Sessions at Farrukhabad in Sessions Trial No. 61 of 1957.
Jai Gopal Sethi and B. C. Misra, for the appellants.
G. C. Mathur, and C. P. Lal for the respondent.
942 1958.
December 18.
The Judgment of the Court was delivered by KAPUR, J.
These are two appeals which arise out of the same judgment and order of the High Court at Allahabad and involve a common question of law.
Appellants Tej Singh and Mizaji are father and son, Subedar is a nephew of Tej Singh, Machal is Tej Singh 's cousin and Maiku was a servant of Tej Singh.
They were all convicted under section 302 read with section 149 of the Indian Penal Code and except Mizaji who was sentenced to death, they were all sentenced to imprisonment for life.
They were also convicted of the offence of rioting and because Tej Singh and Mizaji were armed with a spear and a pistol respectively, they were convicted under section 148 of the Indian Penal Code and sentenced to three years ' rigorous imprisonment and the rest who were armed with lathis were convicted under section 147 of the Indian Penal Code and sentenced to two years ' rigorous imprisonment.
All the sentences were to run concurrently but Mizaji 's term of imprisonment was to come to an end after " he is hanged ".
Against this order of conviction the appellants took an appeal to the High Court and both their convictions and sentences were confirmed.
The offence for which the appellants were convicted was committed on July 27, 1957, at about sunrise and the facts leading to the occurrence were that field No. 1096 known as Sukhna field was recorded in the revenue papers in the name of Banwari who was recorded as in possession as tenant in chief Sometime in 1949 he mortgaged this plot of land to one Lakhan Singh.
In 1952 this field was shown as being under the cultivation of Rameshwar, the deceased and four others persons, Ram Sarup who was the uncle of Rameshwar, Jailal his brother, Sita Ram and Saddon.
The record does not show as to the title under which these persons were holding possession.
The mortgage was redeemed sometime in 1953.
The defence plea was that in the years 1954, 1955, 1956 possession was shown as that of Banwari.
But if there were any such entries, they were corrected in 1956 and possession was shown in the revenue papers as that of 943 Rameshwar, and four others abovenamed.
These entries showing cultivating possession of the deceased and four others were continued in 1957.
On April 18, 1957, Banwari sold the field No. 1096 to Tej Singh appellant who made an application for mutation in his favour but this was opposed by the deceased and four other persons whose names were shown as being in possession.
In the early hours of July 27, 1957, the five appellants came armed as above stated.
Mizaji 's pistol is stated to have been in the fold (phent) of his dhoti.
A plough and plank known as patela and bullocks were also brought.
The disputed field had three portions, in one sugarcane crop was growing, in the other Jowar had been sown and the rest had not been cultivated.
Maiku started ploughing the Jowar field and overturned the Jowar sown therein while Tej Singh with his spear kept watch.
Bateshwar P. W. 7 seeing what was happening gave information of this to Ram Sarup who accompanied by Rameshwar, Jailal and Israel came to the Sukhna field but unarmed.
Ram Sarup inquired of Tej Singh as to why he was damaging his field and Tej Singh replied that he had pur chased the field and therefore would do " what he was doing " which led to an altercation.
Thereupon, the four persons cutting the sugarcane crop i.e. Mizaji, Subedar, Machal and Maiku came to the place where Tej Singh was and upon the instigation of Tej Singh, Mizaji took out the pistol and fired which hit Rameshwar, who fell down and died I hour later.
The accused, after Rameshwar fell down, fled from the place.
Ram Sarup, Jailal and Israel then went to the police station Nawabgunj and Ram Sarup there made the first information report at about 7 30 a. m., in which all the five accused were named.
When the police searched for the accused they could not be found and proceedings were taken under sections 87 and 88 of the Code of Criminal Procedure, but before any process was issued Subedar, Tej Singh and Machal and Maiku appeared in court on August 3, 1957, and Mizaji on August 14, 1957, and they were taken into custody.
The prosecution relied upon the evidence of the eyewitnesses and also of Bateshwar who carried the 944 information to the party of complainant as to the coming of Tej Singh and others.
The defence of the accused was a total denial of having participated in the occurence and as a matter of fact suggested that Rameshwar was killed in a dacoity which took place at the house of Ram Sarup.
The learned Sessions Judge accepted the story of the prosecution and found Ram Sarup to be in possession of the field; he also found that the appellants formed an unlawful assembly " the common object of which was to take forcible possession of the field and to meet every eventuality even to the extent of causing death if they are interfered with in their taking possession of the field " and it was in prosecution of the common object of that assembly that Mizaji had fired the pistol and therefore all were guilty of the offence of rioting and of the offence under section 302 read with section 149, Indian Penal Code.
The High Court on appeal held that the appellants were members of an unlawful assembly and had gone to the Sukhna field with the object of taking forcible possession and " there is also no doubt that the accused had gone there fully prepared to meet any eventuality even to commit murder if it was necessary for the accomplishment of their common object of obtaining possession over the field.
There is also no doubt that considering the various weapons with which the accused had gone armed they must have known that there was likelihood of a murder being committed in prosecution of their common object ".
The High Court also found that all the appellants had gone together to take forcible possession and were armed with different weapons and taking their relationship into consideration it was unlikely that they did not know that Mizaji was armed with a pistol and even if the common object of the assembly was not to commit the murder of Rameshwar or any other member of the party of the complainants II there can be no doubt that the accused fully knew, considering 'the nature of weapons with which they were armed, namely, pistol and lathis, that murder was likely to be committed in their attempt to take forcible possession over the disputed land ".
The High Court further 945 found that the accused had gone prepared if necessary to commit the murder in prosecution of their common object of taking forcible possession.
They accepted the testimony of Matadin and Hansram who stated that all the accused had asked Ram Sarup and his companions to go away, otherwise they would finish all of them and when they resisted Mizaji accused fired the pistol at them and thus in view of the nature of the weapons with which they had gone to the disputed piece of land, " they knew that murder was likely to be committed in prosecution of their object ".
Another finding given by the High Court was that the appellants wanted to forcibly dispossess the complainants and with that object in view they went to the disputed field to take forcible possession and that the complainant 's party on coming to know of it went to the field and resisted.
Mizaji fired the pistol and thus caused the death of Rameshwar.
The High Court also held : " We are also of the opinion that the act of the accused was premeditated and well designed and that the accused considering the circumstances of the case and the weapons with which they were armed, knew that murder was likely to be committed in accomplishment of their common object.
" For the appellants it was contended that the High Court was not justified in drawing the inference that other members of the party of the appellants had knowledge of the existence of the pistol.
There is no doubt that on the evidence the father Tej Singh must have known that the son, Mizaji, had a pistol.
And in the circumstances of this case the High Court cannot be said to have erroneously inferred as to the knowledge of the rest as to the possession of pistol by Mizaji.
The question for decision is as to what was the common object of the unlawful assembly and whether the offence of murder was committed in prosecution of the common object or was such an offence as the members of the unlawful assembly knew was likely to be committed in prosecution of the common object.
It was argued on behalf of the appellants that the 119 946 common object was to take forcible possession and that murder was committed neither in prosecution of the common object of the unlawful assembly nor was it such as the members of that assembly knew to be ,.likely to be committed.
That the common object of the unlawful assembly was to take forcible possession of the Sukhana field cannot be doubted.
Can it be said in the circumstances of this case that in prosecution of the common object the members of the unlawful assembly were prepared to go to the extent of committing murder or they knew that it was likely to be committed ? One of the members of the assembly Tej Singh was armed with a spear.
His son Mizaji was armed with a pistol and others were carrying lathis.
The extent to which the members of the unlawful assembly were prepared to go is indicated by the weapons carried by the appellants and by their conduct, their collecting where Tej Singh was and also the language they used at the time towards the complainant 's party.
The High Court has found that the appellants " had gone prepared to commit murder if necessary in the prosecution of their common object of taking forcible possession of the land ", which it based on the testimony of Matadin and Hansraj who deposed that when the complainant 's party arrived and objected to what the appellants were doing they (the appellants) " collected at once " and asked Ram Sarup and his companions to go away otherwise they would finish all of them and when the latter refused to go away, the pistol was fired.
That finding would indicate the extent to which the appellants were prepared to go in the prosecution of their common object which was to take forcible possession of the Sukhana field.
The High Court also found that in any event the case fell under the second part of section 149, Indian Penal Code in view of the weapons with which the members of the unlawful assembly were armed and their conduct which showed the extent to which they were prepared to go to accomplish their common object.
Counsel for the appellants relied on Queen vs Sabid Ali (1), and argued that section 149 was inapplicable.
There (1) Cr. 947 the learned Judges constituting the full bench gave differing opinions as to the interpretation to be put on section 149, Indian Penal Code.
That was a case where the members of an unlawful assembly went to take forcible possession of a piece of land.
The view of the majority.
of the Judges was that finding unexpected opposition by one member of the party of the complainants and also finding that they were being over.
powered by him, one of the members of the unlawful assembly whose exact time of joining the unlawful assembly was not proved fired a gun killing one of the occupants of the land who were resisting forcible dis possession.
It was also held that the act had not been done with a view to accomplish the common object of driving the complainants out of the land, but it was in consequence of an unexpected counter attack.
Ainslie, J., was of the opinion that the common object of the assembly was not only to forcibly eject the occupants but to do so with show of force and that common object was compounded both of the use of the means and attainment of the end and that it extended to the committing of murder.
Phear, J., said that the offence committed must be immediately connected with that common object by virtue of the nature of the object.
The members of the unlawful assembly must be prepared and intend to accomplish that object at all costs.
The test was, did they intend to attain the common object by means of murder if necessary ? If events were of sudden origin, as the majority of the learned Judges held them to be in that case, then the responsibility was entirely personal.
In regard to the second part he was of the opinion that for its applica tion it was necessary that members of the assembly must have been aware that it was likely that one of the members of the assembly would do an act which was likely to cause death.
Couch, C. J., was of the opinion that firing was not in prosecution of the common object of the assembly and that there was not much difference between the first and the second part of section 149.
He said : " At first there does not seem to be much difference between the two parts of the section and I think the 948 cases which would be within the first, offences committed in prosecution of the common object, would be, generally, if not always, within the second, namely, offences which the parties knew to be likely to be committed in the prosecution of the common object.
But I think there may be cases which would come within the second part and not within the first.
" Jackson, J., held in the circumstances of that case that the assembly did not intend to commit nor knew it likely that murder would be committed.
Pontifex, J., interpreted the section to mean that the offence committed must directly flow from the common object or it must so probably flow from the prosecution of the common object that each member might antecedently expect it to happen.
In the second part "know" meant to know that some members of the assembly had previous knowledge that murder was likely to be committed.
This section has been the subject matter of interpretation in the various High Court of India, but every case has to be decided on its own facts.
The first part of the section means that the offence committed in prosecution of the common object must be one which is committed with a view to accomplish the common object.
It is not necessary that there should be a preconcert in the sense of a meeting of the members of the unlawful assembly as to the common object; it is enough if it is adopted by all the members and is shared by all of them.
In order that the case may fall under the first part the offence committed must be connected immediately with the common object of the unlawful assembly of which the accused were members.
Even if the offence committed is not in direct prosecution of the common object of the assembly, it may yet fall under section 149 if it can be held that the offence was such as the members knew was likely to be committed.
The expression I know ' does not mean a mere possibility, such as might or might not happen.
For instance, it is a. matter of common knowledge that when in a village a body of heavily armed men set out to take a woman by force, someone is likely to be killed and all the members of the unlawful assembly must be aware of that likelihood and would be guilty 949 under the second part 'of section 149.
Similarly, if a body of persons go armed to take forcible possession of the land, it would be equally right to say that they have the knowledge that murder is likely to be committed if the circumstances as to the weapons carried and other conduct of the members of the unlawful assembly clearly point to such knowledge on the part of them all.
There is a great deal to be said for the opinion of Couch, C. J., in Sabid Ali 's case (1) that when an offence is committed in prosecution of the common object, it would generally be an offence which the members of the unlawful assembly knew was likely to be committed in prosecution of the common object.
That, however, does not make the converse proposition true; there may be cases which would come within the second part, but not within the first.
The distinction between the two parts of section 149, Indian Penal Code cannot be ignored or obliterated.
In every case it would be an issue to be determined whether the offence committed falls within the first part of section 149 as explained above or it was an offence such as the members of the assembly know to be likely to be committed in prosecution of the common object and falls within the second part.
Counsel for the appellants also relied on Chikkarange Gowde vs State of Mysore (2).
In that case there were special circumstances which were sufficient to dispose of it.
The charge was a composite one mixing up common intention and common object under sections 34 and 149, Indian Penal Code and this Court took the view that it really was one under section 149, Indian Penal Code.
The charge did not specify that three of the members had a separate common intention of killing the deceased, different from that of the other members of the unlawful assembly.
The High Court held that the common object was merely to chastise the deceased, and it did not hold that the members of the unlawful assembly knew that the deceased was likely to be killed in prosecution of that common object.
The person who was alleged to have caused the fatal injury was acquitted.
This Court held that on the findings (1) Cr.
(2) A.I.R. 1956 S.C. 731.
950 of the High Court there was no liability under section 34 and further the charge did not give proper notice nor a reasonable opportunity to those accused to meet that charge.
On these findings it was held that conviction under section 302 read with section 149 was not justified in law nor a conviction under section 34.
It was next argued that the appellants went to take possession in the absence of the complainants who were in possession and therefore the common object was not to take forcible possession but to quietly take possession of land which the appellants believed was theirs by right.
In the first place there were proceedings in the Revenue Department going on about the land and the complainants were opposing the claim of the appellants and then when people go armed with lethal weapons to take possession of land which is in possession of others, they must have the knowledge that there would be opposition and the extent to which they were prepared to go to accomplish their common object would depend on their conduct as a whole.
The finding of the High Court as we have pointed out was that the appellants had gone with the common object of getting forcible possession of the land.
They divided themselves into three parties, Maiku appellant was in the field where jowar was sown and he was ploughing it, Mizaji, Subedar and Machal were in the sugar field and cutting the crop.
Tej Singh was keeping watch.
When the party of the complainants on being told of what the appellants were doing came, they protested to Tej Singh.
Thereupon, all the members of Tej Singh 's party gathered at the place where Tej Singh was and asked the complainants " to go away otherwise they would be finished ", but they refused to go.
Thereupon Tej Singh asked Mizaji to fire at them and Mizaji fired the pistol which he was carrying in the fold of his dhoti as a result of which Rameshwar was injured, fell down and died I hour later.
It was argued on behalf of the appellants that in these circumstances it cannot be said that the offence was committed in prosecution of the common object of the assembly which was clear from the fact 951 that the party had divided itself into three parts and only Mizaji used his pistol and the other appellants did not use any weapon and just went away.
Both the Courts below have found that the pistol was fired by Mizaji and thus he was responsible for causing the death of Rameshwar which would be murder and also there is no doubt that Tej Singh would be guilty of abetment of that offence.
But the question is whether section 149 is applicable in this case and would cover the case of all the appellants ? This has to be concluded from the weapons carried and the conduct of the appellants.
Two of them were armed one with a spear and the other with a pistol.
The rest were armed with lathis.
The evidence is that when the complainants ' party objected to what the appellants did, they all collected together and used threats towards the complainants ' party telling them to go away otherwise they would be finished and this evidence was accepted by the High Court.
From this conduct it appears that members of the unlawful assembly were prepared to take forcible possession at any cost and the murder must be held to be immediately connected with the common object and therefore the case falls under section 149, Indian Penal Code and they are all guilty of murder.
This evidence of Hansram and Matadin which relates to a point of time immediately before the firing of the pistol shows that the members of the assembly at least knew that the offence of murder was likely to be committed to accomplish the common object of forcible possession.
It was then contended that Mizaji did not want to fire the pistol and was hesitating to do so till be was asked by his father to fire and therefore penalty of death should not have been imposed on him.
Mizaji carried the pistol from his house and was a member of the party which wanted to take forcible possession of the land which was in possession of the other party and about which proceedings were going on before the Revenue Officer.
He fully shared the common object of the unlawful assembly and must be taken to have carried the pistol in order to use it in the prosecution of the common object of the assembly and he did use 952 it.
Merely because a son uses a pistol and causes the death of another at the instance of his father is no mitigating circumstance which the courts would take into consideration.
In our opinion the courts below have rightly imposed the sentence of death on Mizaji.
Other appellants being equally guilty under section 149, Indian Penal Code, have been rightly sentenced to imprisonment for life.
The appeals Must therefore be dismissed.
Appeals dismissed.
| Early one morning the five appellants, Tej Singh armed with a spear, his son Mizaji armed with a pistol which he carried in the folds of his dhoti, his nephew Subedar, his cousin Machal and his servant Maiku armed with lathis went to take forcible possession of a field which was in the cultivatory possession of Rameshwar and others.
While Tej Singh stood guard, Maiku started ploughing and overturning the jowar that had been sown in one portion of the field and the others started cutting the sugarcane which stood in another portion.
When Rameshwar and others arrived they protested to Tej Singh, whereupon all the accused gathered near Tej Singh and asked the complainants to go away otherwise they would be finished.
On their refusal to go, Tej Singh asked Mizaji to fire at them and Mizaji shot Rameshwar dead.
The Courts below found that the common object of the unlawful assembly was to take forcible possession of the field and to meet every eventuality even to the extent of causing death if interfered with.
It accordingly convicted the appellants under section 302 read with section 149, Indian Penal Code, and sentenced Mizaji to death and the others to imprisonment for life.
The appellants contended that the other appellants could not have the knowledge that Mizaji carried a pistol in the folds 941 of his dhoti, that the murder was not committed in prosecution of the common object to take forcible possession nor did the other appellants know that murder was likely to be committed in furtherance of the common object.
Held, that the appellants had been rightly convicted and sentenced under section 302 read with section 149 Indian Penal Code.
The extent to which the members of the unlawful assembly were prepared to go in prosecution of the common object, is indicated by the weapons carried by them and their conduct.
The circumstances show that the appellants must have known that Mizaji was carrying a pistol.
The appellants were prepared to take forcible possession at any cost and the murder was immediately connected with the common object.
Under the first part Of section I49 the offence committed in prosecution of the common object must be one which was committed with a view to accomplish the common object and must be connected immediately with the common object of the unlawful assembly of which the accused were members.
Even if the offence committed was not in direct prosecution of the common object of the assembly, it would yet fall under section I49 if it could be shown that the offence was such as the members knew was likely to be committed.
The expression 'know ' does not mean a mere possibility, such as might or might not happen.
Queen vs Sabid Ali, Cr., Chikkarange Gowde vs State of Mysore, A.I.R. (1956) S.C. 731, referred to.
The fact that the appellants went to take possession in the absence of the complainants did not show that the common object was not to take forcible possession as proceedings were going on between the parties in the Revenue Court for possession over the field and the appellants had gone armed with lethal weapons prepared to overcome the opposition which they knew they would meet.
Mizaji was rightly given the sentence of death.
He shared the common object of the unlawful assembly and carried the pistol from his house to use it in prosecution of the object and did use it.
The fact that he used the pistol at the instance of his father was not a mitigating circumstance.
|
Summarize this legal judgement text concisely | No. 134 of 1958.
Writ Petition under Article 32 of the Constitution of India for the Enforcement of Fundamental Rights.
N. C. Chatterjee, K. P. Mukherjee, P. D. Himatsinghka and B. P. Maheshwari, for the petitioners.
M. C. Setalvad, Attorney General for India, B. Sen and R. H. Dhebar, for the respondent.
K. P. Khaitan, K. P. Mukherjee and B. P. Maheshwari, for Interveners 1 to 10.
G. section Pathak, K. P. Mukherjee and B. P. Maheshwari, for Interveners 11 to 13.
January 23.
The Judgment of the Court was delivered by , WANCHOO, J.
This petition under article 32 of the Constitution challenges the legality of the notification dated July 30, 1958, (hereinafter called the impugned notification), issued by the Government of India fixing the ex factory price per maund of sugar produced in Punjab, Uttar Pradesh and North Bihar.
It has been supported by two sets of interveners consisting of sugar factories in these areas who did not join the petition.
The case of the petitioners is that the (X of 1955).
(hereinafter called the Act), was passed by Parliament in 1955, for the control of the production, supply and distribution of, and trade and commerce in, certain commodities, which included sugar.
By section 3 of the Act, the Central Government was given the power, if it was of opinion that it was necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and 125 availability at fair prices, to provide by order for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein.
Section 3(2) further provided inter alia for controlling the price at which any essential commodity might be bought or sold.
In exercise of these powers, the Central Government promulgated the Sugar (Control) Order, 1955, (hereinafter called the Order), on August 27, 1955.
Clause 5 of the Order gave power to the Central Government, by notification in the Official Gazette, to fix the price or the maximum price at which any sugar might be &old or delivered, and different prices might be fixed for different areas factories or different types or grades of sugar.
Such price or maximum price had to be fixed with due regard to various factors, with which we shall deal later.
On June 27, 1958, the Central Government promulgated the Sugar Export Promotion Ordinance, No. V of 1958, empowering it to appoint an export agency for carrying out the work of buying sugar in the Indian market and exporting the same to foreign markets and fixing the quantity of sugar for export.
The Central Government was also authorised by that Ordinance to fix quotas apportioning the quantity of sugar to be supplied by each factory for export and levy an additional excise duty at the rate of Rs. 17 per maund on any factory failing to deliver its quota of sugar for export.
On the same day, three notifications were issued: (i) fixing 50,000 tons of sugar as the quantity to be exported out of India during the period ending October 31, 1958, (2) appointing the Indian Sugar Mills Association, Calcutta, as the export agency, and (3) delegating the powers conferred on the Central Government to the Chief Director of Sugar and Vanaspati, Ministry of Food and Agriculture also.
Then followed the impugned notification fixing ex factory prices of sugar produced by the factories in Punjab, Uttar Pradesh and North Bihar.
It is being challenged on the ground that the price fixed is considerably below the cost of production and ignores various factors affecting the cost of production and distribution of sugar including charges incidental to sale and 126 distribution.
The impugned notification is also attacked on the ground that it did not fix any price at which the persons purchasing sugar from the mills would sell it, so that it was open to the middleman who bought sugar from the factories to sell it at any price, thus creating discrimination between factories and factories and between the producers selling sugar and the middlemen who buy sugar selling the same in their turn.
It is also alleged that fixing of the price was arbitrary and did not take into account the cost of production of a large number of units in the country and did not provide for a fair and equitable distribution of sugar in the country at a price in any way related to the price at which the factories were compelled to sell their products.
Consequently, the petitioners prayed for an appropriate order, direction or writ in the nature of mandamus or any other writ quashing the Sugar (Control) Order, 1955, and all orders made in pursuance of it including the impugned notification.
The petition has been, opposed by the Central Government.
It is contended on their behalf that the entire object of fixing the price of sugar was (a) to make it available at a reasonable price to the consumer, and (b) to ensure adequate and smooth flow and supply of sugar which is an essential commodity for the life of the people to all parts of the country according to their needs and requirements, checking the speculative tendency of the market and destroying the creation of an artificial shortage by unscrupulous persons.
Prices of sugar were first put under control as far back as 1942 and this control continued up to 1947, when it was withdrawn on December 8, 1947.
It was, however ' found that internal prices were raised during the de control period on the pretext of subsidizing export, which never materialised.
In consequence,, control was again imposed on September 2, 1949; but it was lifted in 1952, when it was found that there was sufficient stock available at the end of the 1951 52 season.
In 1953 54, however, production fell and control had again to be imposed for that season.
It was, however, lifted a year later.
In November 1956 127 there was a considerable surplus of sugar and the Central Government permitted export of 1.53 lakh of metric tons in 1957.
The Central Government was again approached in 1958 to make the export of sugar a permanent feature and it agreed to allow export during 1958 in view of the carry over from the previous season and also for earning foreign exchange in the interest of the country.
Therefore, the Central Government promulgated the Sugar Export Promotion Ordinance, No. V of 1958, on June 27, 1958.
But as this Ordinance was expected, a tendency developed 'in the sugar industry to push up prices after the month of April 1958.
As a result of this tendency, prices went up by about a rupee per maund in May and June 1958, and it was feared that they might go up further in view of the quota for export announced on June 27, 1958.
In view of this apprehension, the industry assured Government that the sugar factories would offer to sell their released stocks freely at prices prevalent before the export policy was announced, i.e., in the week before June 27, 1958.
In spite, however, of this assurance, there was a general rise in prices during the four weeks preceding the impugned notification.
This rise was particularly marked in Northern India.
It was in these circumstances that the Government decided to control ex factory prices of sugar in Punjab, Uttar Pradesh and North Bihar.
The Government took all relevant factors into account in fixing the price.
This was done in the interest of the general public in order that sugar might be available at fair prices.
As Uttar Pradesh and North Bihar are the main surplus areas and feed the deficit areas of the country, it was not necessary to control prices elsewhere; nor was it necessary to control prices beyond the ex factory stage as the prices in the whole.
sale or the retail markets are governed by ex factory prices.
There was in the circumstances no question of discrimination or any unreasonable restriction on carrying on trade in sugar.
The Government did not admit that the price fixed was below the cost of production generally.
Consequently, it was prayed that the petition should be dismissed.
128 the interveners raise the following points in support of their contention that the impugned notification is illegal and invalid (1) (a) The impugned notification is beyond the ambit of authority conferred on the Central Government under section 3 of the Act and clause 5 of the Order, and in any case it is bad as it cannot possibly subserve the purposes of the Act ensuring equitable distribution of the commodity to the consumer at a fair price; (b) The impugned notification merely fixes ex factory prices and is bad, firstly, on the ground that the Act and the Order do not authorise the Central Government to fix ex factory prices, and, secondly, on the ground that even if ex factory prices can be Axed under the Act and the Order, the impugned notification is still bad as it fails to fix prices for the ultimate consumer which must be done under the Act; (2) The impugned notification imposes an unreasonable restriction on the right to trade under Article 19 (1) (g), inasmuch as (i) it compels factories to sell sugar at a loss, (ii) it fixes the price arbitrarily, and (iii) there is no reasonable safeguard against the, abuse of power and no provision for a check by way of appeal or otherwise; (3) The impugned notification is bad inasmuch as it is discriminatory because it fixes ex factory prices only for factories in Punjab, Uttar Pradesh and North Bihar and not for factories in other parts of India and there is no reasonable classification discernible on any intelligible differentia on the basis of which prices 'have been controlled in certain regions only.
(1) (a).
The Act deals with essential commodities which have been defined therein.
The preamble shows that it has been passed in the interest of the general, public for the control of the production, supply and distribution of and trade and commerce in, certain commodities.
Section 3 of the Act gives power to the Central Government to pass orders under the Act if it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing 129 their equitable distribution and availability at fair prices.
No attack has been made on the vires of the Act; but the vires of the Order relating to sugar passed under the Act and particularly of the impugned notification fixing ex factory prices in Punjab, Uttar Pradesh and North Bihar have been attacked.
The Order in our opinion merely carries out the purposes of the Act and cl. 5 thereof gives the ambit of the powers of the Central Government in fixing prices, and lays down the manner in which it should be done and the factors which should be taken into consideration in doing so.
Though in the petition, the Order was attacked on the ground that it gave 'uncontrolled, unguided and unfettered ' power to the executive and imposed unreasonable restrictions on the right to carry on trade, no arguments were addressed to us on the constitutionality of the Order itself.
We are in this case concerned only with that part of the Order which deals with the fixation of price.
Clause 5 provides for factors that the Government will take into account in fixing prices and these are: (i) price or minimum price fixed for sugarcane, (ii) manufacturing cost, (iii) taxes, (iv) reasonable margin of profit for producer and/or trade, and (v) any incidental charges.
It is amply clear from this that price is to be fixed after taking into account all reasonable factors which go into the consideration of price fixation.
In view of this it cannot be said that the Order gives 'uncontrolled, unguided and unfettered ' power to the executive to fix prices arbitrarily.
We shall proceed therefore on the basis that the Act and the Order so far as they are concerned with the fixation of price are valid.
This brings us to the question whether the impugned notification is beyond the authority conferred on the Central Government by section 3 of the Act and clause 5 of the Order. ' Reading section 3 of the Act with the preamble, it would be obvious that the object of the Act is to provide for control of the production, supply and distribution of, trade and commerce in, essential commodities in the interests of the general public, so that the 17 130 supplies of such commodities may be maintained or increased, their equitable distribution secured and they may be available to the general public at fair prices.
Considering the history of sugar control and the trends which appeared in the market from April, 1958, it cannot possibly be said that the impugned notification does not subserve the purposes of the Act and the Order.
There can be little doubt that fixation of ex factory prices of sugar mills in the main surplus areas would have the effect of stabilising sugar prices for the general public, which is the consumer, at a fair level and make sugar available at fair prices.
In the affidavit filed on behalf of the Government it is stated that as a result of this action prices have come down to normal levels.
This is demonstrable proof, if such was needed, that the impugned notification subserves the purposes of the Act.
This contention, therefore, fails.
(1) (b).
The argument under this head is two fold.
It is said that in the first instance ' section 3 of the Act requires that prices for the consumer only should be fixed.
The object of section 3 is undoubtedly to secure essential commodities at fair prices for the general public, i.e., the consumer.
It is well known that there are three kinds of prices prevalent in the market for a commodity like sugar, namely, ex factory price, wholesale price and retail price.
It is the last that the consumer has to pay.
It is urged that when section 3 provides for availability of essential commodities at fair prices to the general public it means that price can only be fixed at the stage where the consumer is the purchaser.
In particular, our attention was invited to clause (c) of section 3 (2), which provides for control of price at which any essential commodity may be bought or sold.
Now there is no doubt that the object of the Act is to secure essential commodities for the consumer, i.e., the general public, at fair prices; but it does not follow from this that this object can only be achieved if retail prices are fixed and that there is no other way of achieving it.
In any case, clause (c) of section 3 (2) which speaks specifically of control of price is very general 131 in terms.
It provides for fixation of price at which any essential commodity may be bought or sold ; it does not specify the stage at which the price should be fixed.
Therefore, we are of opinion that the control provided under clause (c) of section 3 (2) is control at any of the three stages mentioned above.
There is no reason to cut down the generality of the words used in clause (c) so as to make them applicable only to the last stage, namely, the retail price.
This contention, therefore, that section 3 only authorises the Central Government to fix the retail price, i.e., the price for the consumer, fails.
It is then urged that even if the power is there to fix prices at all stages, the Act requires that the price must be fixed for the consumer, whether it is fixed at an earlier stage or not.
There are no words in section 3 (1) or section 3 (2) (c) of the Act, which compel such an interpretation.
It is true that the object of the Act is to ensure fair prices for the consumer; but if fair prices for the consumer can be ensured by fixing the ex factory price, there is no reason why the Government should go on also to fix the wholesale or retail price.
It is well known that the wholesale and retail prices depend upon ex factory price, in the case of a commodity like sugar.
Therefore if fixation of price at the ex factory level is enough to ensure a fair price for the consumer, there is no reason why the Government should not stop at that and should go on also to fix wholesale and retail prices.
It is urged that the middleman who buys from the factory is not controlled and he can sell at any price; and, therefore, the object of the Act may not be achieved.
Theoretically this may be so and a middleman may abuse his position.
If he does so, we have no doubt that the Government will intervene as it has ample power to fix wholesale and retail prices also.
But if the purpose is served by merely fixing the ex factory price, we see no reason why the Government must fix wholesale and retail prices also.
The petitioners have not even alleged that as a matter of fact the wholesalers and retailers are profiteering and making it impossible for sugar to be available for the general public at a fair 132 price.
In the circumstances, it was not necessary in fact for the Government to fix wholesale or retail prices.
In law, we see no warrant for holding that under section 3 (1) and section 3 (2) (c) of the Act, the Government must not only fix ex factory prices but also wholesale and retail prices.
What prices the Government will fix depend upon their estimate of the situation, which would serve the object of the Act.
We are, therefore, of opinion that there is no force in this contention either.
The contention under this head is that the impugned notification is invalid as it is an unreasonable restriction on the petitioners ' right to carry on trade under article 19 (1) (g).
The argument is urged in three ways; namely, (i) factories are being compelled to sell at below the cost of production, (ii) the price fixed is arbitrary, and (iii) there is no safeguard Against abuse of power.
The argument that the factories are being compelled to sell at below the cost of production is put in two ways.
It is said that the press note issued by the Government on July 30, 1958, shows that the Government was of the view that prices should be pegged at the level at which they were in the week preceding June 27, 1958, and inasmuch as they fixed prices below that level or even below the level at which they were at the end of May, 1958, the prices were below the cost of production.
We must say that this is a complete misunderstanding of the press note of July 30, 1958.
All that that press note said was that prices had risen even before June 27, 1958, in expectation of a large export quota.
Thereafter, the Government were assured by the industry that prices would not rise further after June 27 ; but this assurance was not kept and prices went up further by one rupee per maund by the end of July.
It was in these circumstances that the Government intervened.
There was, however, no commitment in this press note by the Government that if they intervened they would fix prices at what they were either in the week before June 27 1958, or in the last week of May; nor is there anything in the press note to suggest that the 133 prices prevalent on either of these two days were proper prices and that any price below them would not even meet the cost of production.
The press, note had nothing to do with the cost of production; nor were the Government bound to fix the prices at the level of the end of June or the end of May.
When they eventually decided to intervene at the end of July, they were free to take action under the Act and the Order and so long as the prices fixed were in accordance therewith, the action could not be challenged on the ground that it was an unreasonable restriction on the right to carry on trade under article 19 (1) (g).
Clause 5 of the Order lays down the factors which have to be taken into consideration in fixing prices.
These factors include among other things a reasonable margin of profit for the producer and/or trade and any incidental charges.
This was kept in mind when prices were fixed by the impugned notification.
The petitioners have certainly filed with their affidavit a schedule giving the cost of production.
According to them, their cost of production is above the price fixed by the impugned notification.
This schedule has not been admitted by the Government.
We see no reason to accept the ipse dixit of the petitioners as to their cost of production.
The sugar crushing season begins about the end of October and finishes about the end of May, so that fixation of price in July, 1958, would be on the basis of the 1957 58 season.
Market prices were available to the Government when they fixed the prices by the impugned notification.
In the case of the three States ' namely, Punjab, Uttar Pradesh and North Bihar, the prices fixed by the impugned notification were above the prices prevalent in the beginning of April and also above the average prices for the month of April, though in the: case of Punjab and West Uttar Pradesh they were slightly below the prices of the 30th of April.
These prices were prevalent in the free market and must certainly have taken account of a fair margin of profit for the producer, though in the case of an individual factory due to factors for which the producer might himself be responsible, the cost of production might have been a little more.
134 Therefore, the prices fixed by the Government by the impugned notification can in no circumstances be said to have been proved to be below the cost of production.
The petitioners were also not unaware of this state of affairs, and therefore, in the rejoinder came out with the story of distress sales by the mills in the early part of the crushing season.
We are not impressed by this story, and in any case there could hardly be any question of distress sales in April when the crushing season was almost coming to an end.
We see therefore no reason to hold that the prices fixed were below the cost of production and were therefore an unreasonable restriction on the petitioners ' right to carry on trade under article 19(1)(g).
This also disposes of the second ground of argument under this Head, namely, that the prices were arbitrary.
All relevant factors prescribed under el.
5 of the Order were apparently taken into consideration and the prices fixed themselves show that they were not arbitrary.
The last argument in this connection is that there is no reasonable safeguard against the abuse of power and no check by way of appeal or otherwise is provided against the order of the Central Government.
It is enough to say that we are here dealing with the power of the Central Government to fix prices in the interests of the general public.
It is in these circumstances absurd to expect that there would be some provision by way of appeal or otherwise against this power of the Central Government.
So long as the Central Government exercises its power in the manner provided by the Act and the Order and this is what it appears to have done , it cannot be said that any further safeguard is necessary in the form of an appeal or otherwise.
The safeguards are to be found in el.
5 itself, namely, that the Central Government must give consideration to the relevant factors mentioned therein before fixing the price, and thus these factors are a check on the power of the Central Government if it is ever minded to abuse the power.
We are therefore of opinion that the impugned notification is not an unreasonable restriction on the peti tioners ' right to carry on trade under Art, 19(1)(g).
135 Re.
said that price control is imposed on factories in Punjab, Uttar Pradesh and North Bihar and that there is no reasonable basis for such clasSification ; factories in other parts of India are left uncontrolled with the result that there is discrimination.
From the material supplied it appears that there are 97 sugar factories in Punjab, Uttar Pradesh and North Bihar while there are 50 sugar factories in the rest of India, of which as many as 18 are in the State of Bombay.
In the other States there are very few factories.
, the lowest being in West Bengal, Orissa and Kerala with one factory each and the highest being in Madhya Pradesh with seven factories.
We also understand that the major part of production of sugar in this country is from the factories in Punjab, Uttar Pradesh and North Bihar.
Of the 97 factories which have been controlled, as many as 90 are in Uttar Pradesh and North Bihar and it is these two areas which are what are called mainly surplus areas.
The price of sugar in India depends upon the price of the factories in Uttar Pradesh and Bihar.
The contention of the Government is that as soon as the price is controlled in Punjab, Uttar Pradesh and Bihar the price for the whole of India is fixed, for other States are deficit and import sugar from these States, particularly Uttar Pradesh and North Bihar.
In these circumstances if price is fixed in this area, price all over India is practicalLy fixed, and it is not necessary to fix prices separately so far as factories in other States which are said to be mainly deficit, are concerned.
In the circumstances we are of opinion, that though in form prices are fixed for factories only in Punjab, Uttar Pradesh and North Bihar, in effect they are fixed for the whole of India, once the production of these three regions is controlled.
There is, therefore, in our opinion no discrimination in effect by the fixation of prices in these three regions.
The argument that there is discrimination is purely theoretical, in view of the economic factors which control the price of sugar in, this country.
Thus in fact there is no discrimination after the control of sugar 136 prices in these three regions and the contention that the factories in the other areas are left free to sell at any price is specious and does not merit a moment 's consideration.
We are therefore of opinion that in effect the impugned notification brought about no discrimination between different regions or between producers and middlemen in view of what we have said already in Re. 1 (b), and consequently, it is not necessary to consider the last part of the submission under this head.
There is in fact no discrimination by the impugned notification and this contention fails on that ground.
There is no force therefore in this petition and it is hereby dismissed with costs.
Petition dismissed.
| In exercise of the powers under section 3 Of the Essential Com modities Act, 1955, and under cl. 5 of the Sugar (Control) Order, 1955, the Government of India issued a notification dated July 30, 1958, fixing the ex factory price per maund of sugar produced in Punjab, Uttar Pradesh and North Bihar.
The petitioners challenged the legality of the notification on the grounds (1) that it was beyond the ambit of authority conferred on the Central Government under section 3 of the Essential Commodities Act, 955, and clause 5 Of the Sugar (Control) Order, 1955, and that, in any case, it was bad as it could not subserve the purposes of the Act ensuring equitable distribution of the commodity to the consumer at a fair price, (2) that the Act and the Order did not authorise the Central Government to fix ex factory prices, and,, in any case, the notification failed to fix prices for the ultimate consumer, (3) that it imposed an unreasonable restriction on the right to trade under article 10(1)(g), inasmuch as it fixed the price arbitrarily, and there was no reasonable safeguard against the abuse of power, and (4) that it was discriminatory because it fixed ex factory prices only for factories in Punjab, Uttar Pradesh and North Bihar and not for factories in other parts of India and there was no reasonable classification discernible on any intelligible differentia on the basis of which prices had been controlled in certain regions only.
Held, (1) The notification dated July 30, 1958, is within the authority conferred on the Central Government by section 3 Of the , and cl. 5 of the Sugar (Control) Order,1955.
(2) Section 3 of the Act which provides for control of price is very general in terms and authorises the Central Government to fix the ex factory price of sugar without fixing the wholesale or retail prices; and, since fair prices for the consumer are ensured by fixing the ex factory price, the notification in question subserves the purposes of the Act, and is valid.
(3) Clause 5 of the Sugar (Control) Order, 1955, lays down the factors which have to be taken into consideration in fixing prices, and as the prices were fixed in accordance therewith, the 124 action taken by the Government in the interests of the general public could not be challenged on the ground that it was an unreasonable restriction on the right to carry on trade under article 19(1)(g) of the Constitution.
(4) Though under the notification prices are fixed for fac tories only in Punjab, Uttar Pradesh and North Bihar, in effect, they are fixed for the whole of India, as the other States are deficit ; consequently, the notification brought about no discrimination between different regions.
|
Summarize this legal judgement text concisely | minal Appeal No. 141 of 1958.
Appeal by special leave from the judgment and order dated November 28, 1957, of the Madhya Pradesh High Court in Criminal Revision No. 78 of 1957, arising out of the judgment and order dated August 21, 1957, of the Court of Special Judge at Gwalior in File No. 2/57 Special Case.
G. C. Mathur and R. H. Dhebar, for the appellant.
The respondent did not appear.
February 3.
The Judgment of the Court was delivered by SUBBA RAO, J.
This is an appeal by special leave against the, Judgment of the High Court of Madhya Pradesh at Jabalpur directing the Special Judge, Indore, to order the Deputy Superintendent of Police to carry on the investigation afresh.
The facts are simple.
One Shri Mohinder Nath Bhalla was the manager of Daisy Sewing Machine Co. Ltd., Bhopal.
On January 11, 1955, between 12 and 1 p. m., he contacted the Sub Inspector of Police, Special Police Establishment, Gwalior, and gave him the following information: The company had opened their stall in the Gwalior Mela and he (Shri Bhalla) had to book empty wooden cases of machine and machine parts from Gwalior Mela, to Now Delhi.
When lie went to the station to enquire for booking the said cases, the Station Master demanded annas ten for each case as illegal gratification, but he did not agree to it.
Subsequently, the Assistant Station Master agreed to accept annas eight for each case and asked him to bring the wooden cases between 2 and 4 p. m. on the same day, i.e., January 11, 1955.
On this allegation lie requested the police to take action " to stop the said sort of 204 corruption ".
The police officer went along with the informant to his stall at Gwalior Mela and saw the twenty wooden cases twelve big and eight small ready for booking.
The said Shri Bhalla gave the police officer a typed complaint signed by him and duly attested by two witnesses.
With the assistance of the police officer, a trap was laid.
The numbers of the rupee notes intended to be given as bribe to the Assistant Station Master were entered in a memorandum which was attested by witnesses.
The said rupee notes were given to Shri Bhalla in the presence of the witnesses.
Shri Bhalla was instructed to pay the amount to the Assistant Station Master when demanded by him in such a manner that the witnesses could overhear the conversation and also see the Assistant Station Master taking the bribe.
He was also told that on his giving a signal, the police would come on the scene.
The plan was carried out in detail as agreed.
The Assistant Station Master, after some bargaining, took the bribe, and after the act of bribery was completed, Shri Bhalla gave the prearranged signal.
The Sub Inspector then went to the Station Office and disclosed his identity to the Assistant Station Master in the presence of witnesses and asked him to produce the money taken by him as bribe.
The Assistant Station Master, when questioned by the Sub Inspector, gave him his name and also produced the notes which he had kept in his pocket.
The police officer took those notes and counted them.
The numbers on those notes tallied with those noted in the memorandum.
He then searched the person of the Assistant Station Master and secured the articles found on him.
He also searched the person of Shri Bhalla and took from his shirt two currency notes, which he did not give to the Assistant Station Master, as the bargain was struck at a smaller amount, and secured the same.
The numbers of those notes also tallied with the corresponding numbers noted in the memorandum.
Thereafter, a memorandum of the articles recovered was prepared in the presence of the witnesses and was duly attested by them.
The forwarding note, together with the record copy of the 205 R/R prepared in respect of the booking of the twenty wooden cases to New Delhi, was taken possession of and another memorandum was prepared in regard to them.
An inventory of the twenty wooden cases lying on the platform near the weighing machine as booked by the Assistant Station Master was also prepared and the same was attested by the witnesses.
The Sub Inspector, having regard to the aforesaid facts, came to the conclusion that the facts disclosed offences punishable under sections 120 B and 161 of the Indian Penal Code and section 5(2) of the Prevention of Corruption Act, 1947 (2 of 1947), had been committed by the Assistant Station Master, Shri Mubarak Ali, and the pointsman, Shri Mool Chand, of Golakamandir railway station.
On the same day he sent a report of the aforesaid facts to the Special Police Establishment Office, Madhya Bharat.
The office registered it on January 14, 1955, in its register.
Seven days thereafter, on January 21, 1955, the Sub Inspector filed an application before the Additional District Magistrate (Judicial), Gwalior, asking for permission to investigate the offence under the aforesaid sections.
The record does not disclose what further steps were taken by the Sub Inspector after he obtained the said permission from the Additional District Magistrate.
On October 1, 1955, a charge sheet was filed before the Special Judge, Anti Corruption, Indore.
It appears from the record that soon after the case was taken up for trial, the respondent filed objections questioning, inter alia, the validity of the order of the Additional District Magistrate giving permission to the Sub Inspector to make the investigation.
But the scope of the objections is not clear as they have not been placed before us.
It appears that the Special Judge intended to take evidence on the question of delegation of power of investigation, but the prosecution applied for adjournment on the ground that an appeal had been filed in the High Court against a similar order directing the prosecution to give evidence on the said question and the same was pending there.
The learned Special Judge, though inclined not to give the adjournment, made an order giving an adjournment 206 of three weeks on December 3, 1955, on the ground that " the Special Police Establishment Office might not have any grievance on that account ".
We do not know what transpired between December 3, 1955, and the date of disposal of the objections by the Special Judge, i. e., August 21, 1957.
On August 21, 1957, the learned Special Judge made an order discharging Shri Mool Chand, the pointsman, and charging Shri Mubarak Ali, the Assistant Station Master, under section 161 of the Indian Penal Code.
By the said order the learned Judge, presumably an officer different from the one who gave the adjournment in 1955, disallowed the objection of the accused on the ground that on the date when the Magistrate gave the sanction, there were many papers in connection with a case against the accused, on observing which the Magi strate could have satisfied himself whether there was a prima facie case or not against the accused and that there was no reason to believe that at the time of giving the sanction, the Magistrate did not peruse the papers.
The accused preferred a Revision against the said order to the High Court of Madhya Pradesh.
The High Court came to the conclusion that the Sub Inspector applied for permission ten days after investigation had started and that the Magistrate did not satisfy himself that there were good and sufficient reasons for authorising the officer of a lower rank to conduct the investigation but had given the permission as a mere matter of routine.
In the result, the High Court set aside the order of the Special Judge with a direction that in order to rectify the defects and cure the illegality he should order the Deputy Superintendent of Police to carry on the investigation himself while the case remains pending on his file ".
The State, preferred the present appeal against the said order of the High Court.
Learned Counsel, appearing for the State, raised before us two points: (i) the High Court was not justified in holding that the Magistrate gave the permission as a mere matter of routine without satisfying himself as to the advisability of giving such permission; (ii) the High Court was wrong in holding 207 that the investigation started ten days prior to the obtaining of permission of the Magistrate by the Sub Inspector.
To appreciate the first contention, it is necessary to set out some of the relevant provisions of The Prevention of Corruption Act, 1947 (2 of 1947), hereinafter referred to as the Act.
Section 3 (as it stood before the Prevention of Corruption (Amendment) Act, 1955 (50 of 1955): "An offence punishable under section 161 or section 165 or section 165A of the Indian Penal Code (Act 45 of 1860) shall be deemed to be a cognizable offence for the purposes of the Code of Criminal Procedure, 1898 (Act 5 of 1898), notwithstanding anything to the contrary contained therein ".
Section 4. " (1) Where in any trial of an offence punishable under section 161 or section 165 of the Indian Penal Code (Act 45 of 1860), it is proved that an accused person has accepted or obtained, or has agreed to accept or attempted to obtain, for himself or for any other person, any gratification (other than legal remuneration) or any valuable thing from any person, it shall be presumed unless the contrary is proved that he accepted or obtained, or agreed to accept or attempted to obtain, that gratification or that valuable thing, as the case may be, as a motive or reward such as is mentioned in the said section 161, or, as the case may be, without consideration or for a consideration which he knows to be inadequate ".
The Act was passed, as the preamble indicates, to make more effective provisions for the prevention of bribery and corruption among public servants.
It introduced a definition of the offence of criminal misconduct in discharging an official duty and new rules of presumption against accused in the case of the said offence.
But in the year 1952, by Act 59 of 1952, presumably on the basis of the experience gained, section 5A was inserted in the Act to protect the public servants against harassment and victimization.
If it was in the interest of the public that corruption should be eradicated, it was equally in the interest of the public that honest public servants should be able to 208 discharge their duties free from false, frivolous and malicious accusations.
To achieve this object, sections 5A and 6 introduced the following two safeguards: (1) no police officer below the rank (a) in the presidency towns of Madras and Calcutta, of an assistant commissioner of police, (b) in the presidency town of Bombay, of a superintendent of police and (c) elsewhere, of a deputy superintendent of police, shall investigate any offence punishable under section 161, section 165 or section 165A of the Indian Penal Code or under sub section
(2) of section 5 of the Act, without the order of a presidency magistrate or a magistrate of the first class, as the case may be, or make any arrest therefor without a warrant see section 5A; (2) no court shall take cognizance of an offence punishable under section 161 or section 164 or section 165 of the Indian Penal Code or under section 5(2) of the Act, alleged to have been committed by a public servant, except with the previous sanction, of the appropriate Government see section 6.
These statutory safeguards must be strictly complied with, for they were conceived in public interests and were provided as a against frivolous and vexatious prosecutions.
While in the case of an officer of assured status and rank, the legislature was prepared to believe them implicitly, it prescribed an additional guarantee in the case of police officers below that rank, namely, the previous order of a presidency magistrate or a magistrate of the first class, as the case may be.
The magistrate 's status gives assurance to the bonafide8 of the investigation.
In such circumstances, it is self evident that a magistrate cannot surrender his discretion to a police officer, but must exercise it having regard to the relevant material made available to him at that stage.
He must also be satisfied that there is sufficient reason, owing to the exigencies of administrative convenience, to entrust a subordinate officer with the investigation.
This Court in H. N. Rishbud and Inder Singh vs The State of Delhi (1) emphasised the necessity to adhere strictly to the provisions of section 5A of the Act.
Jagannadhadas, J., who delivered the judgment of the Court, observed at p. 1159: (1) ; 209 " When, therefore, the Legislature thought fit to remove the protection from the public servants, in so far as it relates to the investigation of the offences of corruption comprised in the Act, by making them cognisable, it may be presumed that it was considered necessary to provide a substituted safeguard from undue harassment by requiring that the investigation is to be conducted normally by a police officer of a designated high rank.
Having regard therefore to the peremptory language of subsection (4) of section 5 of the Act as well as to the policy apparently underlying it, it is reasonably clear that the said provision must be taken to be mandatory ".
After adverting to the argument advanced on behalf of the State,learned Judge closed the discussion thus at p. 1162: "We are, therefore clear in our opinion that section 5(4) and provisoto section 3 of the Act and the corresponding section 5 A of Act LIX of 1952 are mandatory and not directory and that the investigation conducted inviolation thereof bears the stamp of illegality".
This Court again considered the scope of section 6 of the Act in Biswabhusan Naik vs The State of Orissa (1).
One of the questions raised there was that the sanction given by the Government was invalid.
In rejecting that contention Bose, J., observed at p. 95 : " The judgment of the Judicial Committee relates to clause 23 of the Cotton Cloth and Yarn (Control) Order, 1943, but the principles apply here.
It is no more necessary for the sanction under the Prevention of Corruption Act to be in any particular form, or in writing or for it to set out the facts in respect of which it is given than it was under clause 23 of the Order which their Lordships were considering.
The desirability of such a course is obvious because when the facts are not set out in the sanction proof has to be given aliunde that sanction was given in respect of the facts constituting the offence charged, but an (1)[1955] 1 S.C.R. 92. 27 210 omission to do so is not fatal so long as the facts can be, and are provided in some other way ".
While the former decision emphasises the importance of the protection given by the Act to public servants against harassment, the latter decision points out the desirability of giving all the necessary facts in an order giving sanction the same applies to an order of a Magistrate and also the necessity of proof aliunde of the said facts in case the facts are not disclosed in the sanction.
Applying the said two principles, we must hold that in a case where an officer other than the designated officer, seeks to make an investigation, he should get, the order of a Magistrate empowering him to do so before he proceeds to investigate and it is desirable that the order giving the permission should ordinarily, on the face of it, disclose the reasons for giving the permission.
For one reason or other, if the said salutary practice is not adopted in a particular case, it is the duty of the prosecution to establish, if that fact is denied, that the Magistrate in fact has taken into consideration the relevant circumstances before granting the permission to a subordinate police officer to investigate the case.
In the present case, though objection was taken by the accused at the earliest stage in 1955 on the ground that the order giving permission was invalid no attempt was made by the prosecution, though years have elapsed between the date of the petition and that of the order of the Sessions Judge, to adduce any evidence to support the contention that the Magistrate gave the permission to the Sub Inspector only after satisfying himself on the advisability of doing so on the material placed before him.
The only material that was placed before the Sessions Judge was the application filed by the Sub Inspector before the Magistrate seeking the said permission and the order made by him thereon.
In that application the Sub Inspector stated that he had been deputed to investigate the case and therefore permission might be given to him to do so under section 5 A of the Act.
On that application, the Magistrate passed the order " permission given ".
Neither the application 211 nor the order made thereon discloses that any material was placed before the Magistrate on the basis of which he gave the permission.
Ex facie, it appears to us, just like it appeared to the High Court, that the Magistrate did not realise the significance of his order giving permission, but only mechanically issued the order on the basis of the application which did not disclose any reason, presumably because he thought that what was required was only a formal compliance with the provisions of the section.
A request was made before the High Court that an opportunity should be given to the prosecution to enable them to produce the necessary evidence to support the order of the Magistrate.
But the learned Judge of the High Court rightly did not accede to that belated request.
We, therefore, without any hesitation, agree with the High Court that the provisions of section 5A of the Act have not been strictly complied with in this case.
In this view no other question arises for consideration.
But as the learned Counsel appearing for the State contended that the observations of the learned Judge of the High Court that permission of the Magistrate was obtained ten days after the investigation was started was wrong, it would be as well that we considered the argument briefly.
Section 4(1) of the Code of Criminal Procedure defines " investigation as to include all the proceedings under that Code for the collection of evidence conducted by the police officer or other persons other than a Magistrate who is authorised by the Magistrate in this behalf.
Chapter XIV of the Code prescribes the procedure for investigation.
Investigation starts after the police officer receives information in regard to an offence.
Under the Code " investigation consists generally of the following steps: (i) proceeding to the spot; (ii) ascertainment of the facts and circumstances of the case; (iii) discovery and arrest of the suspected offender; (iv) collection of evidence relating to the commission of the offence which may consist of (a) the examination of various persons (including the accused) and the reduction of their statements into writing, if 212 the officer thinks fit, (b) the search of places of seizure of things considered necessary for the investigation and to be produced at the trial; and (v) formation of the opinion as to whether on the material collected there is a case to place the accused before a Magistrate for trial and if so taking the necessary steps for the same by the filing of a charge sheet under section 173."See H. N. Rishbud and Inder Singh vs The State of Delhi (1).
From the narration of facts given supra, it would be seen that in the present case Shri Bhalla gave information to the Sub Inspector on January 11, 1955, as regards the attempt by the Station Master as well as the Assistant Station Master to take bribe from him.
Under section 5 of the Act, attempt to obtain from any person for himself or for any other person any gratification is in itself an offence and therefore the information certainly related to an offence.
Thereafter, the Sub Inspector, after assisting Shri Bhalla to trap the accused, came on the scene, questioned the accused, searched his person and recovered the marked notes and other articles from him ; he searched the person of the informant and recovered the other notes marked but not given to the accused ; he took possession of the twenty wooden boxes intended to be booked and the forwarding note together with the record copy of the R/R; he got prepared relevant memoranda for the aforesaid recoveries and got them duly attested by witnesses; and thereafter on the basis of his investigation he sent a report to the Special Police Establishment Office, Indore.
We do not know on the material placed before us what further things he did in the matter of investigation between the 14th and 21st when be obtained the permission of the District Magistrate.
In the circumstances, we must hold, agreeing with the High Court that the investigation in this case was started by the Sub Inspector on the 11th, i.e., ten days prior to his obtaining permission of the Magistrate.
The appeal fails and is dismissed.
Appeal dismissed.
(1)[1955] 1 S.C.R. 1150.
| Section 5A of the Prevention of Corruption Act, 1947, pro vided: " No police officer below the rank of a deputy Superintendent shall investigate any offence punishable under section 161, section 165 or section 165A of the Indian Penal Code or under section 5(2) of the Act without the order of a magistrate of the first class . . ".
(1) (1880) L.R. 7 I.A. 107.
26 202 On January 11, 1955, B, the manager of a company, gave information to the Sub Inspector of Police, Special Police Establishment, that the respondent, an Assistant Station Master, was demanding a bribe for sending the goods belonging to the company by rail.
The Sub Inspector, after assisting B to trap the respondent, came on the scene, questioned the latter, searched his person and recovered the marked notes and other articles from him.
The Sub Inspector filed an application before the District Magistrate, stating that he had been deputed to investigate the case and the permission might be given to him to do so under section 5A of the Act.
On the application the Magistrate passed the order "permission given.
" Neither the application nor the order made thereon disclosed that any material was placed before the Magistrate on the basis of which he gave permission.
A charge sheet was filed before the Special judge.
The respondent filed objections questioning, inter alia, the validity of the Magistrate giving permission to the Sub Inspector to make the investigation.
The Special judge disallowed the objection.
On revision, the High Court set aside the order of the Special judge with a direction that " in order to rectify the defects and cure the illegality " he should order the Deputy Superintendent of Police to carry on the investigation himself while the case remained pending on his file.
The State preferred an appeal against the order of the High Court by special leave: Held, that the statutory safeguards under section 5A of the Prevention of Corruption Act must strictly be complied with for they were conceived in public interest and were provided as a guarantee against frivolous and vexatious prosecutions.
A Magistrate cannot surrender his discretion to a police officer, but must exercise it having regard to the relevant material made available to him at the stage of granting permission.
He must also be satisfied that there is sufficient reason owing to the exigencies of the administrative convenience to entrust a subordinate officer with the investigation.
Where an officer other than the designated officer seeks to make an investigation, he should get order of a Magistrate empowering him to do so before he proceeds to investigate, and it is desirable that the order giving the permission should ordinarily on the face of it disclose the reasons for giving permission.
Where objection is taken by the accused that the order giving permission was invalid, the prosecution, at the earliest opportunity, must adduce evidence to support the contention that the Magistrate gave the permission only after having satisfied himself on the advisability of doing so on the material placed before him.
H. N. Rishbud & Inder Singh vs State of Delhi, ; and Viswabhusan Naik vs The State of Orissa, ; , relied on.
203 Held, further, that an investigation starts after the police officer receives information in regard to an offence, and that as under section 5 Of the Act attempt to obtain from any person any gratification is in itself an offence, any steps taken by the Sub Inspector after the information was given to him amounted to investigation.
|
Summarize this legal judgement text concisely | Appeal No. 674 of 1957.
Appeal by special leave from the judgment and decree dated August 10, 1955, of the Bombay High Court in C. R. Application No. 1213 of 1953, arising out of the judgment and decree dated April 25, 1953, of the Assistant Judge, Thana, in C. A. No. 97 of 1952, against the judgment and decree dated January 31, 1952, of the Court of the Civil Judge, J. D. Kalyan, in Suit No. 153 of 1949.
Purshottam Tricumdas, Rameshwar Nath and section N. Andley, for the appellant.
H. J. Umrigar, Ratnaparkhi Anant Govind and W. P. Oka, for the respondent.
February 16.
The Judgment of the Court was delivered by KAPUR, J.
This is an appeal by special leave against the judgment of the High Court of Bombay confirming the order of ejectment passed by the Assistant Judge, Thana.
The tenant who was the defendant in the suit is the appellant and the landlord who was the plaintiff is the respondent.
The facts giving rise to this litigation shortly stated are that the appellant was a tenant for about 20 years in the premises known as " Fida Ali Villa " in Kalyan.
This building was purchased by the respondent who gave notice to the appellant to vacate, as he wanted to construct a new building on the site of the old building.
The appellant agreed to vacate and the respondent let to him a portion of his new building which 219 was riot far from " Fida Ali Villa ".
The appellant had four sub tenants, three of them also shifted to the new premises which were let to the appellant by the respondent.
Although it was disputed, the courts below have found that they occupied the same position qua the appellant.
The 4th, a Bohri, was fixed up by the respondent in some other place.
There was some dispute as to the date when these new premises were let to the appellant, the appellant alleging that they were let on July 1, 1948, and the respondent that they were let on June 1, 1948.
The trial Court found that they were let on June 1, 1948.
The terms of the lease are contained in a document dated June 7,1948, which is a letter in Marathi written by the respondent to the appellant and contains the following terms as to sub tenancy: " In the shops in the old chawl which are with you you have kept sub tenants.
We are permitting you to keep sub tenants in the same manner, in this place also ".
The parties were not agreed as to the correctness of the translation of this term.
The submission of the appellant was that the word 'sub tenant ' should be in the plural and of the respondent that it should be in the singular but whether it is in the singular or plural it does not make any difference to the principal argument advanced in this Court.
On January 3, 1949, the respondent gave notice to the defendant to vacate the premises on the ground of nonpayment of rent and sub letting which it was alleged had resulted in the termination of the tenancy.
On April 20, 1949, the respondent brought a suit for ejectment on the ground of non payment of rent and sub letting of the premises.
The defence of the appellant was that under the terms of the lease he had the right to sub let the premises.
As to the claim on the ground of non payment of rent be deposited the arrears of rent in court.
The trial Court held that subletting was lawful in spite of section 15 of Bombay Hotel and Lodging Houses Rates Control Act, 1947 (Bom.
57 of 1947).
He also held that the appellant did not occupy the premises on the same terms and conditions on which he occupied the old premises in " Fida Ali 220 Villa".
He passed a decree for Rs. 445 on account of rent remaining due and dismissed the respondent 's suit for ejectment.
On appeal the Assistant Judge at Thana reversed the decree holding that section 15 of the Act completely prohibited sub letting and under section 13(1)(e) of the Act the landlord bad the right to evict the tenant on account of sub letting.
The appellant then went in revision to the High Court of Bombay, but it affirmed the order of ejectment.
The appellant has come to this Court by special leave.
Counsel for the appellant urged that there was no new tenancy after the coming into force of the Act and therefore sections 13(1)(e) and 15 of the Act did not apply; (2) that the tenant had not sub let the premises to the sub tenants and they were merely licensees of the landlord; (3) that no new sub tenancy had been created ; (4) that section 15 was confined to 'any other law '; it did not apply to contracts between the landlord and tenant and therefore it did not preclude an agreement between the parties as to sub letting; (5) that the parties were in pari delicto and therefore the plaintiff respondent could not succeed.
He also raised a new ground which had not been raised in the courts below or in the grounds of appeal or in the statement of case in this Court, that the respondent had waived his right in regard to the prohibition against sub tenancy and the provision in section 13(1)(e) was for the protection of his rights which he was entitled to waive.
The courts below have held that the tenancy by the letter of June 7,1948, was a new tenancy and not a continuation of the old and that the sub tenants were tenants of the appellant and not licensees of the respondent and in this Court no serious argument was addressed on these points.
The previous tenancy was of a different building called I Fida Ali Villa ' which came to an end when the appellant vacated those premises and entered into a new agreement of lease in regard to the premises in dispute.
There ",as no privity between the respondent and the sub tenants of the appellant and they could not be termed his licensees.
These contentions are without substance and have rightly been rejected.
221 It was then argued that under section 15 of the Act there is no prohibition against a contract of sub letting, the non obstante clause being confined to other laws.
The section when quoted runs as follows: " Notwithstanding anything contained in any law it shall not be lawful after the coming into operation of this Act for any tenant to sub let the whole or any part of the premises let to him or to assign or transfer in any other manner his interest therein: Provided that the (State) Government may, by notification in the Official Gazette, permit in any area the transfer of interest in premises held under such leases or class of leases and to such extent as may be specified in the notification ".
This section prohibits sub letting and makes it un lawful for a tenant to assign or to transfer his interest in the premises let to him.
The non obstante clause would mean that even if any other law allowed subletting, e. g., section 108 of the Transfer of Property Act, the sub letting would, because of section 15, be unlawful.
This would appy to contracts also as all contracts would fall under the provisions of the law relating to contracts, i. e., Contract Act.
An agreement contrary to the provisions of that section (section 15) would be unenforceable as being in contravention of the express provision of the Act which prohibits it.
It is not permissible to any person to rely upon a contract the making of which the law prohibits (section 23 of the Contract Act).
Counsel for the appellant contended that the view of the Bombay High Court in P. D. Aswani vs Kavashah Dinshah Mulla (1) was erroneous and that the correct rule was laid down by that Court in Cooper V. Shiavax Cambatta (2).
That was a case under section 10 of Bombay Rents, Hotel Rates and Lodging Houses Rates (Control) Act (Bom.
VII of 1944) which in ex press terms allowed sub letting as follows : " Notwithstanding anything to the Contrary in any law for the time being in force, a tenant may sublet any portion of his premises to a sub tenant, provided be forthwith intimates in writing to his landlord (1) (2) A.I.R. 1949 Bom.
222 the fact of his having so sub let the premises and also the rent at which they have been sub let ".
It was contended that the non obstante clauses in section 10 of Act VII of 1944 and of section 15 of the Act being similar in language must be similarly interpreted.
The non obstante clause has to be read in conjunction with the rest of the section.
Section 10 of the Act of 1944 permitted sub letting on certain conditions.
By section 9 of that Act provision was made for a Contract between the landlord and the tenant prohibiting sub letting and in Cooper vs Shiavax Cambatta (1) the two provisions were reconciled by saying that, a contract under section 9 prevailed over the permission given by section 10.
But section 15 expressly prohibits subletting and therefore a contract to the contrary cannot neutralise its prohibitory effect.
The non obstante clause of the two sections, section 10 of the Act of 1944 and of section 15 of the Act therefore cannot be said to have the same effect.
The respondent 's suit for ejectment was brought under section 13(1)(e) which provides: " Notwithstanding anything contained in this Act (but subject to the provisions of section 15), a landlord shall be entitled to recover possession of any premises if the Court is satisfied (e) that the tenant has, since the coming into operation of this Act, sub let the whole or part of the premises or assigned or transferred in any other manner his interest therein ; ".
It was contended that section 13(1)(e) had to be read separately and not in conjunction with section 15 of the Act.
The section itself makes it quite clear that it is subject to the provision of section 15 and the two sections must therefore be read together.
The appellant pleaded that under the agreement between him and the ' respondent he was entitled to sub let the premises.
Such an agreement, in our opinion is void because of the provisions of section 15 of the Act and section 23 of the Contract Act and enforcement of the agreement would produce the (1) A.I.R. 1949 Bom.
very result which the law seeks to guard against and to prevent and by sustaining the plea of the appellant the Court would be enforcing an agreement which is prohibited and made illegal.
The appellant relied on the maxim in pari delicto potior est conditio posidentis to support his plea that the respondent could not enforce his right under section 13 (1)(e).
But this maxim " must not be understood as meaning that where a transaction is vitiated by illegality the person left in possession of goods after its completion is always and of necessity entitled to keep them.
Its true meaning is that, where the circumstances are such that the Court will refuse to assist either party, the consequence must, in fact, follow that the party in possession will not be disturbed ".
(Per Du Parcq, L. J., in Bowmakers Ltd. vs Barnet Instruments Ltd. (1).
The respondent in the present case did not call upon the Court to enforce any agreement at all.
When the instrument of lease was executed and possession given and sub letting done it received its full effect; no aid of the Court was required to enforce it.
The respondents ' suit for ejectment was not brought for the enforcement of the agreement which recognised sub letting but he asked the Court to enforce the right of eviction which flows directly from an infraction of a provision of the Act (section 15) and for which the Act itself provides a remedy.
There is thus a manifest distinction between this case where the plaintiff asked the Court to afford him a remedy against one who by contravening section 15 of the Act has made himself liable to eviction and those cases where the Court was called upon to assist the plaintiff in enforcing an agreement the object of which was to do an illegal act.
The respondent is only seeking to enforce his rights under the statute and the appellant cannot be permitted to assert in a Court of justice any right founded upon or growing out of an illegal transaction.
Gibbs & Sterret Manufacturing Co. vs Brucker (2).
In our opinion section 15 of the Act is based on public policy and it has been hold that if public policy demands it even an equal participant in the (1) [1945] I K.B. 65, 72.
(2) (1884) III U.S. 597; ; 224 illegality is allowed relief by way of restitution of res cission, though not on the contract.
It was next contended that section 13(1)(e) is a provision for the protection of private rights of the landlord and unless there is in the Act itself any provision to the contrary such rights as far as they were personal rights may be parted with or renounced by the landlord.
In other words the right of the respondent to sue for ejectment on the ground of subletting being a personal right for his benefit, the landlord must be taken to have waived it as by an express contract he had allowed the tenant to sub let and consequently he could not evict the appellant under section 13(1)(e) of the Act.
The plea of waiver was taken for the first time in this Court in arguments.
Waiver is not a pure question of law but it is a mixed question of law and fact.
This plea was neither raised nor considered by the courts below and therefore ought not to be allowed to be taken at this stage of the proceedings.
But it was argued on behalf of the appellant that according to the law of India the duty of a pleader is to set up the facts upon which he relied and not any legal inference to be drawn from them and as he had set up all the circumstances from which the plea of waiver could be inferred lie should be allowed to raise and argue it at this stage even though it had not been raised at any previous stage not even in the statement of case filed in this Court and he relied upon Gouri Dutt Ganesh Lal Firm vs Madho Prasad (1).
Assuming that to be so and proceeding on the facts found in this case the plea of waiver cannot be raised because as a result of giving effect to that plea the Court would be enforcing an illegal agreement and thus contravene the statutory provisions of section 15 based on public policy and produce the very result which the statute prohibits and makes illegal.
In Surajmull Nargoremull vs Triton Insurance Co. (2), Lord Sumner said: " No Court can enforce as valid that which competent enactments have declared shall not be valid, nor is obedience to such an enactment a thing from (1) A.I.R. 1943 P. C. 147.
(2) (1924) L.R. 52 I. A. 126.
225 which a Court can be dispensed by the consent of the parties, or by a failure to plead or to argue the point at the outset: Nixon vs Albion Marine Insurance Co. (1).
The enactment is prohibitory.
It is not confined to affording a party a protection of which he may avail himself or not as he pleases.
It is not framed solely for the protection of the revenue and to be enforced solely at the instance of the revenue officials, nor is the prohibition limited to cases for which a penalty is exigible In the instant case the question is not merely of waiver of statutory rights enacted for the benefit of an individual but whether the Court would aid the appellant in enforcing a term of the agreement which section 15 of the Act declares to be illegal.
By enforcing the contract the consequence will be the enforcement of an illegality and infraction of a statutory provision which cannot be condoned by any conduct or agreement of parties.
Dhanukudhari Singh vs Nathima Sahu (2).
In Corpus Juris Secundum, Vol.
92, at p. 1068, the law as to waiver is stated as follows: ". . a waiver in derogation of a statutory right is not favoured, and a waiver will be inoperative and void, if it infringes on the rights of others, or would be against public policy or morals. . .
In Bowmakers Limited vs Barnet Instruments Ltd. (3) the same rule was laid down.
Mulla in his Contract Act at page 198 has stated the law as to waiver of an illegality as follows: " Agreements which seek to waive an illegality are void on grounds of public policy.
Whenever an illegality appears, whether from the evidence given by one side or the other, the disclosure is fatal to the case.
A stipulation of the strongest form to waive the objection would be tainted with the vice of the original contract and void for the same reasons.
Wherever the contamination reaches, it destroys ".
This, in our opinion, is a correct statement of the law and is supported by high authority.
Field, J., in (1) ; (2) , 852.
(3) [1945] 1 X.B. 65, 72.
29 226 Oscanyan vs Winchester Arms Company (1) quoted with approval the observation of Swayne, J., in Hall vs coppell (2) " The principle is indispensable to the purity of its administration.
It will not enforce what it has forbidden and denounced.
The maxim Ex dolo malo non oritur actio, is limited by no such qualification.
The proposition to the contrary strikes us as hardly worthy of serious refutation.
Wherever the illegality appears, whether the evidence comes from one side or the other, the disclosure is fatal to the case.
No consent of the defendant can neutralise its effect.
A stipulation in the most solemn form, to waive the objection, would be tainted with the vice of the original contract, and void for the same reasons.
Wherever the contamination reaches, it destroys ".
Waiver is the abandonment of a right which normally everybody is at liberty to waive.
A waiver is nothing unless it amounts to a release.
It signifies nothing more than an intention not to insist upon the right.
It may be deduced from acquiescence or may be implied.
Chitty on Contract, 21st Ed., p. 381 : Stackhouse vs Barnston (3).
But an agreement to waive an illegality is void on grounds of public policy and would be unenforceable.
In Mytton vs Gilbert(4) Ashurst, J., said: " Besides, there is still further reason why the trustees should not be estopped ; for this is a public Act of Parliament, and the Courts are bound to take notice that the trustees under this Act had no power to mortgage the toll houses.
This deed therefore cannot operate in direct opposition to an Act of Parliament, which negatives the estoppel ".
Vaughan Williams, L. J., in Norwich Corporation vs Norwich Electric Tramways Company(5) said : " The case is not like that of a provision in an agreement which is for the benefit of one of the parties and which he may waive.
This is a provision in an Act of Parliament, which, though to some extent (1) ; ; (2) 7 Wallace 542.
(3) ; ; (4) ; (1787) 2 T.R. 171 ; (5) , 124.
227 it may be for the benefit of the parties to the difference, must be regarded as inserted in the interest of the public also In that case there was a provision made by the Legislature that disputes mentioned in the section of the Act were to be determined by an Expert nominated by the Board of Trade and it was contended that though not in the strict technical sense estoppel, it was a waiver of the provisions introduced into the Statute for the benefit of private rights.
No doubt that was a case which proceeded on a question of jurisdiction but the judgment proceeded on the principle of waiver of a statutory provision inserted in public interest.
Thus the plea of waiver is unsustainable.
In our opinion, therefore, the judgment of the High Court is sound and the appeal must therefore be dismissed with costs.
Appeal dismissed.
| The appellant was a tenant originally in the old building but after it was purchased by the respondent he vacated it and became a tenant under the respondent in the new premises.
In the old building the appellant had sub tenants, who shifted to the new premises along with the appellant when the latter occupied those premises.
One of the terms of the lease which were contained in a letter dated June 7, 1948, written by the respondent to the appellant provided: " In the shops in the old chawl which are with you, you have kept sub tenants.
We are permitting you to keep sub tenants in the same manner, in this place also.
" On April 20, 1949, the respondent brought a suit for ejectment against the appellant on the ground, inter alia, that section 15 of the Bombay Hotel and Lodging Houses Rates Con trol Act, 1947, prohibited sub letting and under section 13(1)(e) of the Act the landlord has the right to evict the tenant on account of sub letting.
The appellant 's defence was (1) that section 15 of the Act was confined to "any other law ", that it did not apply to contracts between the landlord and tenant and therefore it did not preclude an agreement between the parties as to sub letting, (2) that the parties were in pari delicto and therefore the respondent could not succeed, and (3) that the right of the respondent to sue for ejectment on the ground of sub letting being a personal right for his benefit, he must be taken to have waived it as he had allowed the appellant to sub let and, consequently, he could not evict him under section 13(1)(e) of the Act.
Held : (1) that the non obstante clause " Notwithstanding anything contained in any law " in section 15 of the Bombay Hotel and Lodging Rates Control Act, 1947, applies to contracts also as they would fall under the provisions of the law relating to contracts; (2) that the respondent was entitled to sue for ejectment, though the agreement recognised sub letting, as the suit was brought not for the enforcement of the agreement but to enforce the right of eviction which flowed directly from an infraction of the provisions of section 15 of the Act and for which the Act itself 28 218 provided a remedy.
The section is based upon public policy, and where public policy demands, even an equal participant in an illegality is allowed relief by way of restitution or rescission, though not on the contract; and, (3) that the plea of waiver which the appellant relied on cannot be sustained because as a result of giving effect to that plea the court would be enforcing an illegal agreement and thus contravene the statutory provisions Of section 15 Of the Act.
An agreement to waive an illegality is void on grounds of public policy and would be unenforceable.
Case law reviewed.
|
Summarize this legal judgement text concisely | Appeals Nos. 713 to 715 of 1957.
Appeals by special leave from the judgment and order dated May 25, 1956, of the Labour Appellate Tribunal of India (Lucknow Bench) in Appeals Nos. 111 272, 282 and 327 of 1955, arising out of an Award dated August 18, 1955, of the Additional Industrial Tribunal, Delhi.
M. C. Setalvad, Attorney General for India, B. Sen and section N. Mukherjee, for the appellants.
A. V. Viswanatha Sastri and Janardan Sharma, for the respondents.
February 2.
The Judgment of the Court was delivered by section K. DAS, J.
These are three appeals by special leave.
The appellant in all the three appeals is a company called Messrs. Lipton Ltd., London, having an office at Asaf Ali Road, New Delhi (hereinafter referred to as the Lipton, Ltd.).
The respondents are the employees of the Delhi office of the said Lipton, Ltd. represented by the Lipton Employees Union (hereinafter referred to as the Union).
On April 14, 1958, a petition was filed on behalf of the appellant for an amendment of the cause title of the three appeals, wherein it was stated that as a matter of internal arrangement the Board of Directors of the 153 Lipton Ltd., London, decided to separate the export side of its business from its internal trade in respect of its branch in India and on April 4, 1957, a separate sterling company called Lipton (India) Ltd., was incorporated in the United Kingdom and this new Company took over the internal side of the business in India on and from January 5, 1958, but the export side of the business continued to be a branch of the Lipton Ltd., London.
Pursuant to the aforesaid arrangement, the employees of the Delhi office of the Lipton, Ltd., were notified of the formation of the new Company and on and from January 5, 1958, their services were transferred to Lipton (India) Ltd., on condition that their services would be treated as continuous, uninterrupted and on the same terms as before.
On the aforesaid statements, the appellant made a prayer that the cause title of the three appeals should be amended by substituting Lipton (India) Ltd. in place of Lipton, Ltd. We directed that Lipton (India) Ltd. be added as one of the appellants without prejudice to either party on the merits of the case.
Two of the appeals (Civil Appeals Nos. 713 and 714 of 1957) were consolidated by an order of this Court, and they raise certain common questions with regard to (1) fixation of grades and scales of pay of the respondent employees and (2) bonus for the year 195 1.
The third appeal (Civil Appeal No. 715 of 1957) raises a somewhat different question with regard to overtime payment and is directed against an order of the Additional Industrial Tribunal, Delhi, dated October 15, 1955, by which the Tribunal made a modification in its award dated August 18, 1955, in respect of overtime payment.
It will be convenient if Civil Appeal No. 715 of 1957 is dealt with separately from the other two appeals.
It is necessary now to state very briefly some of the facts which have given rise to these three appeals.
The Lipton, Ltd., is a company incorporated in England having its registered office in London.
Its business in the United Kingdom consists of stores and groceries, including tea which represents only about 20 154 10% of its business there.
Its operations in India are carried on by a branch with its head office in Calcutta.
This branch, which may be conveniently called the Indian branch, has been operating in this country for more than 60 years.
The company is principally interested in the sale of " packeted " tea throughout India together with small sales of imported tinned milk and also in the export of tea to all parts of the world.
The Lipton, Ltd., does not own any tea gardens in India and has no financial interest in the producing side of the industry.
All the teas which are sold in India or which are exported are purchased from producers in India, either through public auctions in Calcutta and Cochin or by private contract.
It has factories in Calcutta, Allahabad and Conoor in which teas are blended and packed into retail packets for sale throughout India.
It sells tea direct to retail dealers and, with relatively minor exceptions, does not operate through wholesalers.
Dealers are supplied by the company 's own salesmen each of whom has a sales depot at which he maintains stocks of the company 's products.
The salesman sells these teas at the company 's wholesale prices to dealers for cash and remits the cash through banking channels to Calcutta.
The sales Organisation is controlled through six offices, one of which is located at Delhi.
The Delhi office controls the salesmen and other employees employed in the Punjab, Delhi State, Rajasthan and Uttar Pradesh on its.
business; but the Delhi office has no connexion with the export side of the business.
So far as the export business is concerned, it consists of two different types of trade activities.
In some foreign countries the Indian branch sells packet tea under the Lipton label on which it is able to make a profit; these profits appear in the accounts of the Indian branch, which are separately maintained and audited.
This type of trade activity is mostly confined to Burma, Iraq, Iran and certain small Middle East countries.
The greater part of the export trade, however, consists of purchases made at the Calcutta auctions on behalf of overseas buyers, who utilise the services of Lipton 's expert tea tasting staff in Calcutta 155 to buy tea on their account at the auctions and the Indian branch is remunerated for this service by the payment of a commission of one per cent.
The Indian branch has no subscribed capital nor any reserves.
A. W. Samuel, Administrator, Lipton, Ltd., thus explained the position with regard to the capital of the Indian branch in his evidence: " Our Company has no subscribed capital in India nor any reserves.
The capital used in India is money advanced from the company 's fund in England, and the amount of this advance at the balance sheet date is shown as the balance of the current account with the Liptons Ltd., London.
We have also to resort to overdraft on the local banks to meet the working capital demand in India ".
It appears that an account is maintained which is known as the London General Account and the capital which enables the Indian branch to operate in India is recorded as the balance of the current account in the Indian books and to determine the amount of capital employed in India a daily average of the current account has to be taken and the working capital of the Indian branch is the amount by which the fixed current assets exceed the total liabilities.
The Delhi office of the Indian branch employs peons, sweepers, van workers, godown workers, village salesmen, drivers,.
junior clerks, godown keepers, senior clerks, stenographers, divisional salesmen and other categories of workers, details whereof need not be set out in full at this stage.
The case of the Union was that as far back as June, 1951, the workers of the Delhi office had made a representation for an increase in pay; the representation was repeated in April, 1952.
As the management did not accede to their request a union of Lipton employees was formed in September 1953.
This Union framed a charter of demands and submitted it in December, 1953.
The charter of demands consisted of a large number of items and as the management contended that it %,as not in a position to meet the demands, certain conciliation proceedings followed.
They, however, came to nothing and on October 1, 1954, the industrial dispute 156 between the Lipton, Ltd., and the Union was referred to the Additional Industrial Tribunal, Delhi, for adjudication.
The reference set forth in a sub joined schedule the matters upon which adjudication was necessary, and the schedule contained twenty terms of reference out of which the two items with which we are now concerned related to (a) fixation of grades and scales of pay including the question whether the new scales should be given retrospective effect from January 1, 1953, and (b) bonus for each of the years 1951, 1952 and 1953.
After hearing the parties the Tribunal made its award on August 18, 1955.
It disallowed the claim of bonus, but as to the fixation of grades and scales of pay it allowed an increase of about 20 per cent.
to all workers over their present wages and proportionate increase in the dearness allowance, details whereof we shall state at a later stage.
As to overtime payment which was item No. 8 of the terms of reference the Tribunal said: " Since the company is allowed by law to take 48 hours work in a week from its employees, it is only fair that if a worker puts in over time work in any week within a total of 48 working hours, he should be only paid at the single rate for all over time work that he puts in between 39 and 48 hours in the week.
If the over time work done by the worker brings his total working, hours during the week to more than 48 hours, any excess over time work above 48 hours should be paid at double the rate.
I direct accordingly.
" It may be stated here that there was a dispute about the working hours also and the Tribunal changed the working hours from 9 30 a.m. 5 p.m. to 10 a.m.5 p.m. on week days with half an hour 's interval for lunch, and 10 a.m. to I p.m. on Saturdays thus bringing the total to 36 hours in a week,.
The question of over time arose only if a workman was asked to Work in excess of the working hours fixed by the Tribunal.
On October 12, 1955, the Union made an application in which it stated that the figure " 39 " occurring in paragraph 24 of the award relating to over time payment was obviously a mistake for " 36 "; because the 157 learned Tribunal had fixed.
in paragraph 23 of the award that the working hours of a workman should be 36 hours a week.
The learned Tribunal considered this application without any notice to the present appellant and corrected the error by amending the figure 39 to 36.
The Tribunal proceeded on the footing that the mistake was a clerical error due to an accidental slip which could be corrected under r. 23 of the Industrial Disputes (Central) Rules, 1947.
Against the award of the Industrial Tribunal three appeals were taken to the Labour Appellate Tribunal (Lucknow Bench).
The two main appeals before the Appellate Tribunal, namely, No. 272 of 1955 and No. 282 of 1955, were filed by the Lipton, Ltd., and the Union respectively and related to the various items of the terms of reference on which the Industrial Tribunal had given its decision.
The third appeal, No. 327 of 1955, related to the subsidiary matter of over time payment regarding which the Industrial Tribunal had amended its award.
So far as the two items with which in Civil Appeals Nos. 713 and 714 of 1957 we are now concerned, the Labour Appellate Tribunal in its decision dated May 25, 1956, upheld the decision of the Industrial Tribunal as respects fixation of grades and scales of pay comprised in the term of reference numbered 1 (a); it also upheld the decision of the Industrial Tribunal to give retrospective effect to the new scales of pay from January 1, 1954, which was covered by the term of reference numbered I (b).
As to bonus, which was item 4 of the terms of reference, the Appellate Tribunal upheld the decision of the Industrial Tribunal with regard to the years 1952 and 1953 but for 1951 it awarded an extra two months salary as bonus for that year in addition to the bonus of one month 's salary which the Lipton, Ltd., had already granted ex gratia to the workmen.
As to the subsidiary appeal relating to the over time payment, the Appellate Tribunal agreed with the view of the Industrial Tribunal that there was an error in computing the working hours and the error being of a clerical nature, it was open to the Tribunal to correct it.
From the decision of the Labour Appellate Tribunal 158 in the three appeals in question, the appellant obtained special leave to appeal to this Court on June 27, 1956, and in pursuance of the order of this Court granting such special leave, the present appeals have been preferred.
Civil Appeal No. 715 of 1957.
It is now convenient to dispose of Civil Appeal No. 715 of 1957.
We have no doubt in our mind that the error in computing the working hours with regard to over time payment was due to an 'accidental slip in making the calculation; it was nothing but a clerical error which the Industrial Tribunal was entitled to correct even without notice to the appellant.
The learned Attorney General who appeared for the appellant in these three appeals has not pressed Appeal No. 715 of 1957.
This appeal must accordingly be dismissed with costs.
Civil Appeals Nos. 713 and 714 of 1957.
We now turn to the other two appeals, namely, Civil Appeals 713 and 714 of 1957.
We have already stated that the only points which survive for decision are those relating to items 1(a), 1(b) and 4 of the terms of reference.
These items relate to fixation of grades and scales of pay, whether retrospective effect should be given to the new scales of pay, and bonus for 1951.
The other items of the award relating to City compensatory allowance, leave, holidays, etc., have not been challenged before us.
We are, therefore, saying nothing about those items of the award, which must necessarily stand.
It may be made clear, however, at this stage that one of the points taken before the Industrial Tribunal on behalf of the Lipton, Ltd., was that the Industrial Tribunal had no jurisdiction to make an award in respect of employees of the Delhi office who were employed outside the State of Delhi.
This point of jurisdiction was decided against the appellant and the Industrial Tribunal pointed out that all the workmen of the Delhi office, whether they worked in Delhi or not, received their salaries from the Delhi office; they were controlled from the Delhi office in the matter of leave, transfer, supervision, etc., and, therefore, the Delhi State Government was the appropriate Government within the meaning of section 2 of the Industrial 159 Disputes Act, 1947, relating to the dispute which arose between the Lipton, Ltd., and the Union and under section 18 of the said Act the award made by the Tribunal was binding on all persons employed in the Delhi office.
The Appellate Tribunal upheld the decision of the Industrial Tribunal on this point and though this question of jurisdiction was raised in the appeals before us, it was not seriously pressed by the learned AttorneyGeneral.
We are of the view that the Industrial Tribunal had jurisdiction to adjudicate on the dispute between the Lipton, Ltd., and its workmen of the Delhi office.
Now, we go on to the two main points urged on behalf of the appellant.
We take up first the question of bonus.
Item 4 of the terms of reference related to bonus and the claim of the Union was made in two parts.
Item 4 reads thus: " Bonus: (a) Whether every workman be, paid bonus at the rate of 5 months ' salary for each of the years 1951, 1952 and 1953 and what other directions are necessary in this respect ? (b) Whether special bonus equivalent to three months salary should be paid to all workmen in honour of the company 's Diamond Jubilee celebration for the year 1953 ? " Before the Industrial Tribunal the claim of the Union was that the total global profits of the Lipton, Ltd., should be the basis for determining the claim to bonus ; the contention on behalf of the Lipton, Ltd., was that the profits of the Indian business only should be taken into account in assessing any available surplus for the payment of bonus.
The Industrial Tribunal held that as both labour and capital contributed to the earnings of an industrial concern, labour must have its legitimate share of the profits to which it has contributed; since, however, the employees of the Lipton, Ltd., in India do not by any stretch of reasoning contribute to the profits which accrue to the Lipton, Ltd., in respect of its trading activities outside India, the employees in India cannot claim bonus on account of any profits which the Lipton, Ltd., derive from its ex India business.
On this footing the 160 Industrial Tribunal considered the question of bonus and held that for 1951 there was no available surplus for distribution as bonus to the employees in India in accordance with the formula evolved by the Full Bench of the Labour Appellate Tribunal in Millowner 's Association, Bombay vs Rashtriya Mill Mazdoor Sangh (1) generally though not completely approved by this Court in Muir Mills Co ' Ltd. vs Suti Mills Mazdoor Union, Kanpur (2).
For 1952 and 1953 the claim of the Union for bonus, the Industrial Tribunal held, was still weaker, because in those years there was still less available surplus for distribution as bonus to its workers, and so far as the second part of the claim of the Union, namely, Diamond Jubilee bonus, was concerned the Industrial Tribunal rejected it outright.
The Labour Appellate Tribunal substantially affirmed the decision of the Industrial Tribunal and gave several reasons why the global profits of the Lipton, Ltd., could not be taken into account for the payment of bonus to its workers in India.
After having given those reasons, the Labour Appellate Tribunal referred to the auditors ' report dated March 17, 1952, with regard to the profit and loss account and balance sheet of the Indian business as on January 5, 1952.
In that report which related to the year 1951 it was stated that the value of the stocks of tea held at the end of 1951 had been written down below cost by Rs. 9,93,824 5 3.
The auditors ' report then said: " We estimate the net realisable value of the total stocks of tea as on January 5, 1952, to be in excess of their cost and, therefore, in our opinion, such stocks have been undervalued to the extent of the above reduction below cost.
" Relying on this report the Labour Appellate Tribunal added back Rs. 9,93,824 to the available surplus of Rs. 9,66,654 which the profit and loss account of the Indian business for the year 1951 showed.
Adding the two figures the Labour Appellate Tribunal opined that the available surplus at the end of 1951 was Rs. 19,60,478.
After deducting therefrom the (1) (2) ; 161 legitimate prior charges on account of (a) rehabilitation, (b) a four per cent.
return on capital and (c) one month 's bonus already paid to the workers, the Labour Appellate Tribunal came to the conclusion that there was a clear available surplus of Rs. 4,11,478 for distribution of extra bonus over and above the bonus of one month 's salary.
which the Lipton, Ltd., had already paid to its workers.
It has been contended before us, and rightly in our opinion, that the Labour Appellate Tribunal committed a manifest error with regard to the sum of Rs. 9,93,824 and odd.
It is true that the auditors in their report referred to the under valuation of the stock of tea available at the end of 1951 by a sum of Rs. 9,93,824 and odd.
An explanation of such undervaluation was given in the written statement of the Lipton, Ltd., dated February 8, 1955.
It was stated therein: " It is a well recollected fact and the Court will not need evidence in support of this that the tea market dropped rapidly and in a catastrophic fashion to,wards the end of 1951.
As a result of this the Company apprehended severe losses on the stocks which it was carrying and provision for this loss was made in the 1951 accounts by an adjustment to the value of stocks of tea on hand at the end of December, 1951.
The amount of this adjustment was Rs. 9,93,824.
As a result of this, the profits made during 1951 were understated in the company 's accounts and overstated in the accounts for 1952.
It should be noted that the Income tax Department insisted that these profits were made in 1951 and not in 1952 and the Company was taxed accordingly.
" What is worthy of note is that when the Income tax Department insisted that the sum of Rs. 9,93,824 should be treated as the profits of 1951, the said amount was added back in the summarised profit and loss account of the Indian branch and the available surplus of Rs. 9,66,654 was shown therein after having taken into consideration the sum of Rs. 9,93,824.
This is clear from the summarised profit and loss account 21 162 of the Indian branch.
It is clear, therefore, that the 1951 profit and loss account took into consideration the sum of Rs. 9,93,824 and after adding back that sum to the profits of 1951, the available surplus of Rs. 9,66,654 was arrived at.
The Labour Appellate Tribunal was, therefore, manifestly in error in adding back the sum of Rs. 9,93,824; because that amount had already been added back in arriving at the available surplus of 1951.
Thus, the main reason which the Labour Appellate Tribunal gave for its decision to award the payment of extra bonus for 1951 disappears, and it is not disputed that if the available surplus for 1951 was only Rs. 9,66,654, then after making the necessary deduction for prior charges, nothing would be left for payment as extra bonus in 1951 to the workers in India.
So far as the other two years, 1952 and 1953, are concerned, it is unnecessary to consider the profits of those two years, because there is no appeal before us on behalf of the Union.
On behalf of the Union, however, it has been very strongly contended that the bonus for 1951 as awarded by the Labour Appellate Tribunal can be justified, if the global profits of the Lipton, Ltd., are taken into consideration, and it has been argued before us that there is no reason why the Lipton, Ltd., should not be treated as one integrated industry which has trading activities in various countries and, for the purpose of the payment of bonus, why the total global profits of the Lipton, Ltd., should not be taken into consideration.
We do not think that the Union is justified in asking for bonus for a particular year on the basis of the world profits of the Lipton, Ltd. The true nature of a claim for bonus has been the subject of many decisions in Labour Tribunals and Courts.
It has been judicially recognised that bonus is not deferred wage, and the justification for a demand of bonus as an " industrial claim " arises when wages fall short of the living wage and the industry makes sufficient profits to which both labour and capital have contributed.
Substantially, the claim for bonus is a claim which is paid out of the available surplus from the profits of an 163 industrial undertaking, to which both labour and capital have contributed.
This aspect of bonus was considered in.
Muir Mills Co. Ltd. vs Suti Mills Mazdoor Union, Kanpur (1).
It has also been said in some cases that bonus is a temporary and partial filling up of the gap that exists between a living wage and the actual wage paid: where the goal of living wage has been attained, bonus is a mere cash incentive to greater efficiency and production, but where an industry has not the capacity to pay a living wage or its capacity varies or is expected to vary from year to year so that the industry cannot afford to pay a living wage, the payment of bonus may be looked upon as a temporary satisfaction, wholly or in part, of the needs of the employees.
Learned counsel for the Union has emphasised this latter aspect and has contended that there is nothing unfair in considering the global profits of the Lipton, Ltd., in awarding a temporary satisfaction, in part, of the needs of its Indian employees.
We do not think that it is necessary or advisable to lay down any inflexible, general rule as to the basis of a claim for bonus by some of its employees in an industrial undertaking which carries on trade activities in several countries or even in different parts of the same country.
So far as foreign countries are concerned, many considerations such as restrictions on foreign remittances and other trade restrictions may have to be taken into account in determining the question, as in Ganesh Flour Mills vs Employees of Ganesh Flour Mills (2).
There are a number of decisions of Labour Tribunals, most of which were noticed in Ganesh Flour Mills Co. Ltd. vs Employees of Ganesh Flour Mills (2), where a distinction has been made between a parent concern and subsidiary concerns or even between different units of the same concern, and, speaking generally, the test laid down for the payment of bonus in such cases is (1) if the different units are so connected together or integrated that the payment of bonus to one section of employees will violate the principle that all workers should share in the prosperity to which they have jointly contributed, or (2) the (1) ; (2) A.I.R. 1958 S.C. 382.
164 different units are so separated or unconnected that the trade activity of one and the contribution of labour made in the profits thereof has no necessary connexion with the trade activity and profits of the other units.
In the former case the undertaking has been treated as a whole as in Burn and Co., Calcutta vs Their Employees (1); and Baroda Borough Municipality vs Its Workmen(2) ; in the latter, it has been held that each unit must rest its claim for bonus on the profits made by that unit.
Whether a particular case comes under the former category or the latter must depend on its own facts and circumstances, and we may readily agree that the more keeping of separate accounts may not in all cases be the proper criterion for determining whether the different units are integrated or not.
For the purpose of these appeals it is sufficient, however, to state that in view of the findings arrived at by the Tribunals below, it will be unfair and unjust to grant bonus to the Indian workers on the global profits of the Lipton, Ltd. The Tribunals below have clearly found that the Indian workmen do not in any way contribute to the profits which the Lipton, Ltd., derive from its ex India business.
As a matter of fact, even the nature of the trade activity is not quite the same ; tea represents only about 10 per cent.
of the trading activities of the Lipton, Ltd., in the United Kingdom, whereas tea is the main commodity of the trading activity of the Indian branch.
The Indian branch maintains separate accounts which have been audited and accepted by the Income tax authorities as showing the profit and loss of the Indian branch of the business.
The Labour Appellate Tribunal has very clearly found that though, at the relevant time, the Lipton, Ltd., was one legal entity and the capital of the Indian branch came from London, the Indian branch was treated as a separate entity for all practical purposes.
It said: " Lipton, London never interferes with the trading operations of Lipton, India, in India.
Lipton, India buys vast quantity of tea amounting to millions (1) ; (2) ; 165 of tons at auctions in India and sells the same loose or in packets at a profit in the markets of India.
Profits thus made go entirely to the credit of the Indian concern.
No part of the profits is diverted to England.
Lipton, India also purchases tea for export.
Trading results of Lipton, India must be regarded to be restricted to the earning of commission on tea exported and returns on sale of tea loose or in packets in the internal markets in India.
Lipton, India has got ,to pay income tax to the Government of India on the basis of its earnings on those two heads.
Workmen of the Indian Organisation have to work mainly for purchase of tea at auctions in India, for sale of tea at profit in Indian markets and for export of tea on commission to a lesser extent.
Therefore, the returns on these heads are the only things upon which the staff of the Indian Organisation may depend for bonus.
" In the appeals before us the claim for bonus was made really on the basis of an available surplus of profits, and we agree with the Labour Appellate Tribunal that the Indian workers can claim bonus if there is an available surplus of profits out of the Indian business.
In the circumstances in which the Lipton, Ltd., operated in India at the relevant time, it would be unjust to award bonus to the Indian work men on the basis of the global profits of the Lipton, Lid.
It is not disputed that the Lipton, Ltd., is a very big Organisation and has huge reserves which were built up in previous years out of its world profits.
There is no evidence to show to what extent, if any, the Indian business contributed to those profits.
On the finding of the Labour Appellate Tribunal that no part of the profits made in India is diverted to England and on the further finding that the Indian business depends on its own trading results, we are of the view that the Tribunals below correctly held that the global profits of the Lipton, Ltd., could not be the basis for awarding bonus to its Indian workmen.
There was some argument before us as to whether the 1% commission which the Indian branch earned on the export of tea correctly represented the proper remuneration payable to the Indian business.
That, 166 however, is a question which we do not think is open to enquiry in the present appeals.
The Income tax authorities accepted as correct the returns of the Lipton, Ltd., as to their Indian business.
It was not suggested that anything more than 1% was in fact taken as commission by the Indian branch, or that the accounts were " cooked " in that respect.
Whether the 1% commission was the normal market rate of commission for purchases on behalf of overseas buyers was not investigated ; on the contrary, the accounts filed by the Lipton, Ltd., in this respect were accepted as correct.
That being the position, it is not open to the respondent to contend that the available surplus should be determined on mere speculation as to what the Indian branch should have earned in the export side of its business.
On a consideration of all the relevant factors, we are of the view that the Labour Appellate Tribunal was in error in awarding an extra two months ' bonus for 1951 and the decision of the Industrial Tribunal was correct.
Therefore, the award in so far as it directs the payment of extra two months ' bonus for 1951 must be set aside.
We now go to the more difficult question of fixation of grades and wages.
What the Union demanded in the matter of fixation of grades and scales of pay will appear from the terms of reference.
These terms were: " Fixation of grades and scales of pay: 1(a) Whether the following pay scales should be adopted and what directions are necessary in this respect: Peon, Sweeper, Van Mazdurs and God .
60 3 90 4 130 5 155.
own Mazdurs.
Village salesmen.
70 5 120 7 1/2 195 10 245.
Drivers. . .Rs.
90 71/2 150 10 250 15 325.
Junior Clerks, Typ ists, Salesmen and Assistant Godown.
90 71/2 150 10 250 15 325.
Keepers.
Godown Keepers.
120 10 200 12 320 20 460.
167 Senior Clerks, Steno graphers, Compto. .
150 10 250 15 400 20 500.
meter operator and Div.
Salesmen.
(b) Whether pay scales as stated in 'a ' above should come into effect retrospectively from 1 1 53 and what should be the method of adjustments while fixing the actual pay in the revised scale? " The Industrial Tribunal gave an increase of 20% to all workers and set out in tabular form the category of workers, their present grades, and the revised grades which the Tribunal was allowing on the basis of a 20% increase.
It is necessary to set out the tabular form here: "CATEGORY PRESENT REVISED GRADE GRADE Peons, Sweepers, Van Mazdoors and Godown Mazdoors.
27 2 45 35 2 55 Village Salesman.
40 0 50 50 2 60 Drivers.
65 3 95 78 3 114 Junior Clerks and Typists.
70 5 125 84 6 150 Salesman.
50 0 75 60 5 90 Godown Keepers Gr.
1 70 5 130 84 6 150 2 125 8 200 150 9 240 3 195 10 235 230 10 280 Senior Clerks and Comptometer Operators.
120 8 200 140 10 240 Stenographers.
125 8 205 150 10 240 Divisional Salesman 80 0 125 100 10 150.
" As to the date from which the revised grades were to take effect, the Tribunal directed that they should have retrospective effect from January 1, 1954, instead of January 1, 1953, as claimed by the Union.
This direction the Tribunal gave because the Union had presented its demands to the Lipton, Ltd., for the first time towards the end of December, 1953.
The Tribunal also gave certain directions as to how the present employees should be brought into the 168 new scales and what adjustments should be made therefor.
The Tribunal proceeded on the footing that the existing wage structure, though not far below what it called the minimum fair wage, was far below the standard of a living wage, the progressive attainment of which (the Tribunal said) is the aim of all labour laws.
The Tribunal then considered the question of financial capacity of the Lipton, Ltd., to bear a higher wage structure and expressed itself as follows : " Since as remarked before, the existing wage level of the company 's employees cannot be said to be far below the minimum fair wage level obtaining in this country, this wage level can be increased only if it can be found that the company is in a financially sound position to bear the additional burden.
This again brings us face to face with the question whether it is the company 's capacity to pay on an all world basis that should be considered for this purpose or only the prosperity of its Indian branch.
So far as bonus is concerned, since bonus according to the latest theory represents a due share of the labour in the profits of business so largely contributed to by it, profit accruing from foreign business does not come into the picture in distributing bonus.
The same principle cannot be extended to the fixing of the wage level of the workers for all the employees in India are of course employees of the parent company. . . . .
The company 's global resources cannot, therefore, be disregarded in determining its capacity to pay.
At the same time, the company 's overall balance sheet and state of business cannot furnish the sole criterion for the fixing of the upper limit of the fair wage in India, for if a burden is imposed upon the company which is out of all proportion to the income that it derives from the business in India, the company may very well be tempted to close down its business in India and employ the capital thus released elsewhere.
No one can be happy over a situation like this, the company 's employees least of all.
While, therefore, the company 's global capacity to pay cannot be kept 169 out of consideration in fixing the wage level of its Indian employees, any increase in the wages cannot be granted on a level that would not leave it worth while for the company to continue its business in India.
In other words, while the company 's overall prosperity may be considered in fixing the wage level in India, I should see to it that the increase should not be such that it drives the company out of India altogether.
" The Tribunal pointed out that according to the last balance sheet filed in the case the share capital of the Lipton, Ltd., amounted in 1954 to pound 2,75,000 (but the balance sheet however shows pound 2,500,000) while the reserve capital stood at pound 3,60,417.
The Tribunal expressed the view that having regard to its global resources, the Lipton, Ltd., was financially able to bear a slightly higher wage structure in order to bridge the gap, in part at least, between the existing wage structure and the living wage standard.
The Tribunal also referred to the circumstance that though the Lipton, Ltd., had incurred losses in 1949 and 1950, it bad turned the corner in 1951 and the Company having overhauled its system of sales, there was a rea sonable expectation of larger profits in future years.
The Tribunal said that in the course of arguments before it, it put to the parties whether an overall increase of five lakhs of rupees in the wage structure on an all India basis could be borne by the company.
The Tribunal then said: " Mr. Samuel was prepared to accept this additional burden on the condition that in future there will be no liability on the Company to, pay bonus to their workers on an ex gratia basis, which they have been paying so far to their workers every year at the rate of one month 's basic salary." On the aforesaid grounds, the Tribunal came to the conclusion that the Lipton, Ltd., could easily stand an additional burden to the tune of five or six lakhs of rupees over the wages and dearness allowance at present paid to its employees all over India, and as the total annual wage bill of the Indian workmen was 22 170 in the neighbourhood of about twenty lakhs, an increase of 20% allowed to all workers over their present wages and proportionate increase in the dearness allowance would not exceed six lakhs.
On this basis the Industrial Tribunal gave its award.
The Labour Appellate Tribunal substantially affirmed the reasons given by the Industrial Tribunal and said that the two questions which arose for determination were (1) whether the existing scales of pay required revision and (2) whether the revised scales as fixed by the Industrial Tribunal were unwarranted and beyond the financial capacity of the Lipton, Ltd. Both these questions the Appellate Tribunal answered in favour of the respondent workmen.
In the appeals before us, the learned AttorneyGeneral appearing for the Lipton, Ltd., has very strongly contended that the reasons given by the Tribunals below for a revision of the wage structure are unsound in principle and unjustified on facts ; he has particularly laid stress on the contradiction involved in taking the global financial resources of the Lipton, Ltd., in support of an increase in wages while holding that the Indian branch is a separate entity dependent on its own profits for the payment of bonus.
He has also submitted that the financial resources of the Indian branch do not show any capacity to pay higher wages; nor was there, according to him, any reliable evidence to show that the existing wage structure required revision if it was compared to the wage structure in similar industries in the Delhi region.
He pointed out that the Tribunal was wrong in thinking that the Lipton, Ltd., turned the corner in 1951 and that there was a reasonable expectation of larger profits in future years, and in support of his contention, he referred to the appellant 's statement of the case, wherein the appellant stated in the following chart from the profit and loss figures of.
the Indian branch from 1949 to 1957 in the context of its average capital: 171 1949 1950 1951 1952 1953 1954 1955 1956 1957 (in lakhs of rupees) 1 2 year.
Average Capital (re presenting 162 158 167 209 195 235 245 193 165 Head office Current Ac count).
Net Profit (after taxa 8.2 3.6 2.4 6.3 7.08.2 2.8 10.6 6.6 tion) (loss)(loss) (loss) (loss) Percen tage of Net Profit/Loss 5.1 2.3 1.4 3.0 3.6 3.5 1.0 5.5 3.6 to the Aver (loss) (loss) (loss) (loss) age Capital The learned Attorney General then referred to the alleged admission of Samuel as to the capacity of the Lipton, Ltd., to bear an additional burden of about five lakhs and drew our attention to the affidavit of section K. Choudhury, personnel officer of the Lipton Ltd., made before the Appellate Tribunal, in which it was stated that Samuel never agreed that the appellant was able to bear an additional burden of five lakhs in the wage structure.
On these submissions, the learned Attorney General has very strongly contended that the Tribunals below were wrong, in principle as well as on facts, in disturbing the present wage structure.
We think that, in the main, three questions arise for consideration: (1) were the Tribunals below wrong in having regard to the global financial resources of the Lipton Ltd., in fixing the wage structure whereas for the payment of bonus the profits of the Indian branch only were taken into consideration; (2) did the existing wage structure require revision and was there any reliable evidence to show the wage structure of any comparable industry in the same region, on the assumption that the capacity to pay should be gauged on the industry cum region basis; and (3) has Lipton Ltd., financial capacity to bear the additional burden on its Indian resources ? 172 It is necessary first to state that there is a distinction between bonus and wage a distinction to which we had earlier adverted in this judgment.
Bonus comes out of profits and can claim no priority over dividend or other prior charges; bonus is paid if after meeting prior charges, there is an available surplus.
Wages stand on a somewhat different footing; wages primarily rest on contract and are determined on a long term basis and are not necessarily dependent on profits made in a particular year.
The distinction between the two has been adverted to in two recent decisions of this Court: Messrs. Crown Aluminium Works vs Their Workmen (1) and Express Newspapers (Private) Ltd. vs The Union of India (2).
In the Crown Aluminium Works (1) this Court has observed: " The old principle of the absolute freedom of contract and the doctrine of laissez faire have yielded place to new principles of social welfare and common good.
Labour naturally looks upon the constitution of wage structures as affording ' a bulwark against the dangers of a depression, safeguard against unfair methods of competition between employers and a guarantee of wages necessary for the minimum requirements of employees '.
There can be no doubt that in fixing wage structures in different industries, industrial adjudication attempts,.
gradually and by stages though it may be, to attain the principal objective of a welfare state to secure 'to all citizens justice, social and economic To the attainment of this ideal the Indian Constitution has given a place of pride and that is the basis of the new guiding principles of social welfare and common good to which we have just referred.
" In so far as bare minimum wage is concerned, it has been held that no industry has the right to exist unless it is able to pay its workmen at least a bare minimum wage; in other words, minimum wage is the first charge on an industry.
In the later decision of the Express NewsPapers (Private) Ltd. (2) the three concepts of the minimum wage, fair wage and living wage have been examined, and it has been pointed out that (1) ; , 660.
(2) 173 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.
The present case is not one of payment of the minimum wage; it is a case of payment of a fair wage which still falls short of a living wage.
For the payment of a fair wage as for a living wage, the financial capacity of the industry is undoubtedly a relevant consideration.
The question before us is how is the financial capacity of the Lipton, Ltd., to be judged? The question of the capacity of the industry to pay a fair wage has been considered in the Express Newspapers (Private) Ltd. (1) (at p. 89) and the following observations are apposite " 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.
The Committee on Fair Wages had said (pp. 13 15 of the report) : " 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.
" This is known as the industry cum region basis for the fixation of wages.
In the Express Newspapers (Private) Ltd. (1) this Court has laid down the following principles for the fixation of wages (at p. 92): " The principles which emerge from the above discussion are: (1) that in the fixation of rates of wages which include within its compass the fixation of scales of wages also, the capacity of the industry to pay is one (1) 174 of the essential circumstances to be taken into con sideration except in cases of bare subsistence or mini.
mum 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.
" We do not think that it is necessary to decide in the present case whether the Tribunals below were right in having regard to the global resources of the Lipton, Ltd., in the matter of the revision of the wagestructure; because we consider that on an application of the principle of industry cum region, the revision of the wage structure made by the Tribunals below cannot be said to be unjustified on the financial resources of the Lipton, Ltd., as disclosed by its trading results in India.
The learned Attorney General has referred to certain larger considerations: he has suggested that if the global resources of a company like the Lipton, Ltd., which operates in several countries are taken into consideration in determining the wage structure, it way result in disparity of wages in different regions giving rise to industrial unrest and it may also have the effect of stopping new industries in this country and thereby increase unemployment.
These are matters which may require serious consideration in a more appropriate case; but in the present case we may examine the problem from the narrower point of view, namely, the trading results in India if the Lipton, Ltd. We may first.
dispose of a subsidiary but connected 175 point.
In the Industrial Tribunal the case proceeded on the footing that the Lipton, Ltd., had a uniform system of wages in India and if the wage structure of the Delhi employees was revised it would mean revising the wage structure of the employees in other Indian offices as well.
It was further suggested that if the wage structure was uniformly revised at all other places, then the cost of the increase in wages taken along with the cost of other reliefs granted by the Industrial Tribunal, would be much more than five or six lakhs.
We do not think that this would be a good ground for setting aside the award.
The Industrial Tribunal, Delhi, had jurisdiction to make an award in respect of the employees of the Delhi office only ; it had no jurisdiction to make an all India award.
Moreover, if the true principle for fixation of wages is region cum industry, then there is no reason why the Delhi award should automatically apply to all the other regions.
It has not been disputed before us that the existing wage of the Delhi employees is far below the living wage.
The first question is was there any reliable evidence to show that in comparable industries in the same region, the wages were higher and, therefore, the wage structure required revision to the extent allowed by the Industrial Tribunal.
On behalf of the Union evidence was given about the scales of pay of employees in the Delhi office of a number of industrial undertakings, such as the Standard Vacuum Oil Company, Thomas Cook (Continental) Overseas, Burma Shell, Lever Brothers (India) Ltd. and Associated Companies, and Marshall Sons and Co. (India) Ltd.
On behalf of the appellant it has been contended that none of the above are comparable industries; some are oil companies, some engineering concerns and some manufacturing concerns.
On behalf of the Union, it has been pointed out that so far as the drivers, sweepers, peons, clerks, godown keepers, typists, stenogra phers and the like are concerned, and these form the bulk of the employees, their nature of work is about the same in all the aforesaid industries and, therefore, there was a basis for comparison on which the 176 Tribunals below could proceed.
We are of the view that it is impossible to say in this case that there was no evidence on which the Tribunals could proceed to revise the wage structure; on the contrary there was evidence accepted by the Tribunals below which justified a revision of the wage structure.
The Appellate Tribunal also referred to the scales of pay obtaining in Brooke Bond, India, and opined that the appellant 's scales of pay were lower than the Brooke Bond scales.
This opinion of the Appellate Tribunal has been challenged before us; firstly, it has been contended that though Brooke Bond has a similar trading activity in tea, it is not a comparable industry because it owns tea gardens in India; secondly, it has been pointed out that no evidence of the Brooke Bond 's scales of pay was given and the opinion of the Appellate Tribunal was a mere surmise.
It appears that no evidence was given before the Industrial Tribunal about the Brooke Bond 's scales of pay, but some additional evidence was offered at the appellate stage; this was not, however, accepted.
In the circumstances, we do not think that the Brooke Bond 's scales of pay can be taken into consideration.
But as we have earlier said, there was other evidence on which a comparison could be and was made by the Tribunals below.
That comparison justified an increase in the The next question is do the trading results in India of the Lipton, Ltd., show that it has the financial capacity to bear the burden of the wave increase? The statement, in chart form, of the profit and loss figures from 1949 1957 to which we have earlier referred, shows that net profits in 1952 exceeded six lakhs, in 1953 seven lakhs, in 1954 eight lakhs and in 1956 ten lakhs.
We have said earlier that wages do not necessarily come out of the net profits of a particular year, and it cannot be said that a fair wage must inevitably be postponed till a fair return on capital is obtained.
Wages are fixed on a long term basis and depend also on the cost of living and the needs of workmen.
Judging the trading results of the Indian business of the Lipton, Ltd., over a period of years, 177 we cannot say that the Tribunals below committed any error in revising the wage structure.
It is germane to point out here that Samuel 's evidence showed that the managerial staff of the Indian business, recruited in England, receive very high salaries.
Samuel said that the General Manager, who is the Chief Executive Officer of the Indian branch of the Lipton, Ltd., gets a salary of Rs. 5,000 per month.
The next officer is the Administrator whose pay is Rs. 4,250 per month.
The third man, who is the Manager of the Tea Depart ment, gets the same pay as the Administrator.
The fourth is the Accountant of the company and his pay is Rs. 3,800 per month.
The fifth is the Marketing Controller whose pay is Rs. 3,650 per month.
The Factory Manager gets Rs. 3,350 per month.
There are several other officers who also get a very high salary and the total number of covenated Executive Officers consists of 32 Europeans and 17 Indians.
Now, the point taken on behalf of the Union is that the wage structure of the Indian branch is top heavy, in the sense that the higher administrative officers get a salary which is out of all proportion to the wage scale of the employees with whom we are now concerned.
It is further contended that the high salaries paid to the superior Executive show (1) that the wage structure of the lower employees requires revision and (2) that the financial capacity of the Indian branch is not as negligible as the appellant wants to make out.
We think, however, that it is not the duty of a Labour Tribunal or Court to dictate to an industrial concern what salaries should be paid to superior executive officers who are not workmen within the meaning of the Industrial,Disputes Act, 1947.
We have pointed out, however, in the Express Newspapers (Private) Ltd. (1) that " 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 must be considered in conjunction with the elasticity of demand for the product (1) 23 178 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 ".
This is an aspect of the matter which the Tribunals below had considered and the Industrial Tribunal had particularly said that the increase in the wage structure was not such as would drive the Lipton, Ltd., out of its Indian business.
Our attention has been drawn to the financial implications of the award and it has been pointed out that the total annual cost to the company of the increase in the wage structure of the employees in the Delhi office would be in the neighbourhood of Rs. 49,721 per year; on an all India basis it would be in the neighbourhood of Rs. 2,71,000 and odd.
Having regard to the evidence which Samuel gave it cannot be said that the burden of the increased rate was such as would be beyond the financial resources of the Lip ton, Ltd., on its trading results in India or was such as would drive the Lipton, Ltd., out of India.
Even on the basis of all the reliefs granted by the award, the total cost to the company for the Delhi office would be in the neighbourhood of Rs. 1,15,000 and on an all India basis Rs. 6,34,000.
We have said earlier that the award was not an all India award, and so far as the fixation of wages is concerned, it must be judged on the principle of industry cum region.
So judged, we do not think that the increase is beyond the financial resources of the Lipton, Ltd., as disclosed by its trading results in India.
On behalf of the appellant, it has been submitted that one of the tests for measuring the capacity of the industry to pay the increased wage is, amongst others, the selling price of the product and it has been pointed out that by reason of the imposition in 1953 of an excise duty of three annas per pound of packet tea, there is serious competition from those who sell tea in loose form and any further increase in price will give rise to consumers ' resistance and ultimately result in lesser sale and lesser profits.
In our opinion the industrial Tribunal rightly pointed out that the moderate increase in the wage scale proposed by it would only 179 be a very small fraction of the overall cost of production of a packet of tea and would have very little repercussion in its price.
Lastly, our attention was drawn to an award of the Special Industrial Tribunal, Madras, dated October 15, 1956, between the management of the Lipton, Ltd., Madras and its workers employed in Madras where on more or less similar facts the Industrial Tribunal repelled the argument on behalf of the workmen that the global financial position of the Lipton, Ltd., should be taken into account in considering the capacity of the company to pay higher salaries and dearness allowance, and it was held that the Lipton, Ltd., could not be burdened with any additional liability and the employees must wait for better days.
That award is not the subject of the present appeals and we consider it unnecessary, and indeed inadvisable, to make any pronouncement as to the correctness or otherwise of that award.
The only other point which requires consideration is the question of the date from which the new scales of pay should come into effect.
The Industrial Tribunal fixed January 1, 1954, on the ground that the Union had presented its charter of demands to the appellant for the first time towards the end of December 1953.
We are unable to agree with the Tribunals below that the circumstance that a charter of demands was presented in December 1953 is a good ground for giving retrospective effect to the new scales of pay.
The charter of demands presented by the Union consisted of 20 items and in the matter of the wage scale what the Union demanded was in some cases more than 50 to 75% increase on the existing scales of pay.
Obviously, the demands were exorbitant and the management was justified in refusing to accept the demands in toto.
We are, therefore, unable to agree that retrospective effect should be given to the new scales of pay from January 1, 1954.
The award was made on August 18, 1955, and it was published on October 6, 1955.
We think that it will be more just to bring the new scales of pay with effect from November 1, 1955, and we direct accordingly. ' The other directions given 180 by the Industrial Tribunal to bring the present employees into the new scales of pay will stand subject to the necessary modification that instead of January 1, 1954, the relevant date should be November 1, 1955.
The result, therefore, is as follows: Appeal No. 715 of 1957 is dismissed with costs.
Appeals Nos. 713 and 714 of 1957 are allowed to the extent indicated above.
The order for the grant of bonus for 1951 is set aside and the new scales of pay will take effect from November 1, 1955, instead of from January 1, 1954.
There will be no order for costs in these two appeals.
Appeals Nos. 713 and 714 allowed in part.
Appeal No. 715 dismissed.
| The appellant company was incorporated in the United Kingdom, with its registered office in London and its business in the United Kingdom consisted of stores and groceries, including tea which represented only about 10% of its business there.
Its operations in India were carried on by a branch with its head office in Calcutta, and the business there consisted mainly in the sale of " packeted " tea throughout India.
The Delhi office of its Indian branch controlled the salesmen and other employees employed in the Punjab, Delhi State, Rajasthan and Uttar Pradesh, but had no connexion with the export side of the business.
The Indian Branch had no subscribed capital nor any reserves, and the capital used in India was money advanced from the company 's fund in England.
The dispute between the respondents who were the employees of the Delhi office and the company related, inter alia, to (1) fixation of grades and scales of pay; (2) whether retrospective effect should be given to the new scales of, pay; and (3) bonus for the year 1951.
The respondents contended that the total global profits of the appellant company should form the basis for determining the claim to bonus on the ground that it was an integrated industry which had trading activities in various countries.
The Tribunal found that the Indian workmen did not in any way contribute to the profits which the appellant company derived from its ex India business, that the Indian branch maintained separate accounts which had been audited and accepted by the Income tax authorities as showing the profit and loss of the Indian branch of the business, and that though, at the relevant time, the appellant company was one legal entity and the capital of the Indian branch came from London, the Indian branch was treated as a separate entity for all practical purposes.
The Tribunal also found that for 195 I there was no available surplus for distribution as bonus to the employees in India.
In the matter of fixation of grades and scales of pay, the Tribunal found that the existing scale of wages of the Delhi employees was far below the standard of a living wage, and for fixing the wage level it took into consideration the company 's global capacity to pay and came to the conclusion that having regard to its global 151 resources the company was financially able to bear a slightly higher wage structure.
Accordingly, the Tribunal revised the grades by giving an increase of 20% to all workers.
As to the date from which the revised grades were to take effect, the Tribunal directed that they should have retrospective effect from January 1, 1954, instead of January 1, 1953, as claimed by the Union.
The appellant contended that the Tribunal erred in taking into consideration the global financial resources of the company in support of an increase in wages while holding that the Indian branch was a separate entity for the payment of bonus, that the financial resources of the Indian branch did not show any capacity to pay higher wages, and that, in any case, there was no reliable evidence to show that the existing wage structure required revision if it was compared to the wage structure in similar industries in the Delhi region.
A question was also raised as to whether the Industrial Tribunal, Delhi, had jurisdiction to make an award in respect of employees of the Delhi office who were employed outside the State of Delhi.
Held: (1) that on the finding that the Delhi office controlled all its employees in the matter of appointment, leave, transfer, supervision, etc., whether employed in Delhi State or outside it, the Industrial Tribunal, Delhi, had jurisdiction to adjudicate on the dispute between the appellant company and its workmen of the Delhi office, as the Delhi State Government was the appropriate Government within the meaning of section 2 of the , and under section 18 of the Act the award made by the Tribunal was binding on all persons employed in the Delhi office; (2) that in the circumstances in which the appellant com pany operated in India at the relevant time and on the finding that no part of the profits made in India was diverted to England and that the Indian business depended on its own trading results the global profits of the company could not be made the basis for awarding bonus to Indian workmen, and that the latter can claim bonus only if there was an available surplus of profits of the Indian business; Muir Mills Co. Ltd. vs Suti Mills Mazdoor Union, Kanpur, ; , Ganesh Flour Mills Co. Ltd vs Employees of Ganesh Flour Mills, A.I.R. 1958 S.C. 382, Burn and Co., Calcutta vs Their Employees, ; and Baroda Borough Municipality vs Its workmen; , , referred to.
(3) that in determining the question of a revision of the wage scale, the relevant considerations were : (1) whether the existing wage structure required revision by reason of its being below the standard of living wage, and (2) whether the industry could bear the additional burden of an increase in the wage scale on the basis of industry cum region by reason of its financial resources in India ; that judged by the considerations stated 152 above, it could not be said that the Tribunal erred in revising the wage structure on the basis of the evidence adduced before it ; and that the increase in the wages was not beyond the financial resources of the company as disclosed by its trading results in India.
There is a distinction between bonus and wage.
Bonus comes out of profits and is paid, if after meeting prior charges, there is an available surplus.
Wages primarily rest on contract and are determined on a long term basis and are not necessarily dependent on profits made in a particular year.
Crown Aluminium Works vs Their Workmen, ; and Express Newspapers (Private) Ltd. vs The Union of India, , relied on.
(4) that the new scales of pay should be brought into effect from November 1, 1955, instead of January 1, 1954, as directed by the Tribunal.
|
Summarize this legal judgement text concisely | Appeals Nos. 384 and 385 of 1957.
Appeal by special leave from the Order dated November 28, 1952, of the Income tax Appellate 303 Tribunal (Calcutta Bench) in I.T.A. No. 4067 and E.P.T. Appeal No. 391 of 1951 52.
N. C. Chatterjee, B. Sen Gupta and B. P. Maheshwari, for the appellant.
K. N. Rajagopala Sastri, R. H. Dhebar and D. Gupta, for the respondents.
March 2.
The Judgment of the Court was delivered by KAPUR, J.
These two appeals pursuant to special leave are brought against two orders of the Incometax Appellate Tribunal (Calcutta Bench) dated November 28, 1952, passed in appeal No. 1.
T. A. 4067 of 1951 52 in respect of income tax assessment for the assessment year ending 31st March, 1944, and in appeal No. E. P. T. A. 391 of 1951 52 in respect of Excess Profits tax assessment of the appellant for the chargeable accounting period ending March 31, 1943.
The original assessee was R. B. Seth Teomal who was the manager of a Hindu undivided family.
On Seth Teomal 's death on May 30, 1944, Seth Ottanmal became the manager.
He is now the appellant representing the Hindu undivided family.
He will be termed as the appellant in these appeals.
Seth Teomal was carrying on the businesss of a railway contractor at Lalmonirhat in the district of Rangpur which is now in Pakistan.
In April 1943 a notice was served on him under section 22(2) of the Income tax Act (hereinafter called the Act).
He filed the return on February 28, 1944.
The Income tax Officer,Rangpur, served notices on him under sections 22(4) and 23(2) for production of books, etc.
It appears that assessment proceedings continued before the Income tax Officer Rangpur, but no final assessment was made.
According to an affidavit which has now been filed in this Court the Central Board of Revenue by an order passed under sub section
(2) of section 5 of the Act assigned the appellant 's case along with some other assessment cases to the Commissioner of Income tax (Central), Calcutta.
The order contains the following endorsements which give an indication of the reason for the case being assigned to the Commissioner of Income.
tax (Central): 304 " Copy forwarded to (1). . . . . . . . . . (2) Commissioner of Income tax (Central), Calcutta.
These cases are reported to have E. P. T. liabilities ".
Thus the appellant 's case which was before an incometax Officer within the area in charge of the Commissioner of Income tax, Bengal (Mofissil) was withdrawn from him and was assigned to the Commissioner of Income tax (Central), Calcutta.
On February 11, 1948, the Income tax Officer District N C (I. T. cum E.P.T.) to whom it appears the appellant 's assessment case was assigned issued notice again under sections 22(4) and 23(2) of the Act.
That officer after making the usual enquiries made the assessment order on March 15, 1948.
The order for Excess Profits Tax assessment was made on March 30,1948.
Against these orders two appeals were taken to the Appellate Assistant Commissioner on April 30, 1948.
In the appeal against income tax assessment the appellant inter alia raised the following two grounds in regard to the jurisdiction of the Income tax Officer, Calcutta: " 5.
For that the petitioner is not aware of any order passed for the transfer of the case from Rangpur to Calcutta and it is submitted that without such an order and communication of such order the assessment is challengeable for want of jurisdiction ".
For that the appellants challenge the jurisdiction as there was no proper order of transfer and the business was carried on outside Calcutta and assessments had never before been made in Calcutta".
But no such ground was taken in the appeal against Excess Profits Tax assessment.
The Appellate Assistant Commissioner dismissed both these appeals.
In regard to jurisdiction he held: " It however appears from records on band that the principal place of business of the concern was at Rangpur and as the income attracted E. P. T. liability the case was transferred to Calcutta under Orders of C. B. R.
Hence there is no substance in the contention of the learned Advocate which fails 305 The appellant then took two appeals to the Incometax Appellate Tribunal.
In the appeal against incometax assessment he took two objections in regard to jurisdiction : " For that the objection taken before the learned A. A. C. on jurisdiction should not have been summarily disposed of by passing reference to an order of transfer of the case from Rangpur to Calcutta without at the same time discussing when the question of jurisdiction was seriously raised and how and under what circumstances and to, whom was the case transferred and for what purpose " 2.
For that the appellant begs leave to repeat that transfer was not legal or proper and was not made by any proper authority to legalise such transfer ".
In the Excess Profits Tax appeal also this time an objection was taken as to jurisdiction : " For that the assessment is bad in law having been made without jurisdiction ".
The Appellate Tribunal held against the appellant in a short paragraph: " So far as the first objection is concerned, in our opinion, it is not within our jurisdiction to go into this matter.
The objection relates to the place of assessment.
As held in Brothers, & Co. Ltd vs Commissioner of Income tax, Bombay, Sind and Baluchistan, Federal Court) the question as to the proper place of assessment is not one for adjudication by a Court or by any Appellate Authority.
Consequently we overrule the first contention of the Assessee.
" The Tribunal thus held that as the objection related to the place of assessment the Tribunal was not competent to go into that question.
Upon this the appellant applied for a reference to be made under section 66(1) of the Act and prayed for five questions to be referred.
The two questions relating to jurisdiction were: (1)" Had the Income tax Officer (Non Companies Income tax cum Excess Profits Tax ' District, Calcutta, jurisdiction to make the assessment ? 39 306 (2)Was the Income tax Appellate Tribunal correct in the circumstances in holding that it has no jurisdiction to determine the competence of the Income tax Officer in making the assessment ?" In the " facts of the case " attached to the grounds of Appeal it was stated that the accounts were produced before the Income tax Officer, Calcutta, under protest because the jurisdiction of that officer was being challenged.
In reply to this the Commissioner after referring to Wallace Brothers ' case (1) stated that it did not appear from the assessment record that the assessee ever raised any objection to the jurisdiction of the Income tax Officer and if it had been taken the matter would have been referred by the Income tax Officer to the Commissioner as required by law.
This application under section 66(1) was dismissed on the ground that the question of jurisdiction could not arise out of the order of Tribunal and reliance was placed on Wallace Brothers ' case (1) and Seth Kanhaiyalal vs Commissioner of Income tax (2 ).
The appellant applied to the High Court under section 66 (2) of the Act and prayed for the following two questions and some others to be referred : (i)" Had the Income tax Officer (N. C. 1.
T. Cum E. P. T. District Calcutta) jurisdiction to make the assessment ? (ii)Was the Income tax Appellate Tribunal correct in the circumstances in holding that it had no jurisdiction to determine the competence of the Income tax Officer in making the assessment?" The High Court dismissed this application on July 23, 1954.
No appeal has been filed in this Court against the order of the High Court but an appeal has been filed against the order passed by the Income tax Appellate Tribunal.
On behalf of the Revenue a preliminary objection was taken that as no appeal had been filed against the order of the High Court that order had become final and this Court, therefore, should not entertain the appeal against the order of the Tribunal and reliance was placed on the observations of Venkatarama (1) ; (2) 307 Aiyar, J., in Govinda Rajulu Mudaliar vs Commissioner of Income tax (1).
At p. 810 it was observed: " The present appeal is against the decision of the Tribunal itself It is no doubt true that this Court has decided in Dhakeswari Cotton Mills Ltd. vs Commissioner of Income tax, West Bengal (2) that an appeal lies under article 136 of the Constitution of India to this court against a decision of the Appellate Tribunal under the Indian Income tax Act.
But seeing that in this case the appellant had moved the High Court and a decision has been pronounced adverse to him and this has become final, obviously it would not be open to him to question the correctness of the decision of the Tribunal on grounds which might have been taken in an appeal against the judgment of the High Court.
All the points urged before us were taken in the reference under section 66 (2) of the Indian Income tax Act.
It would therefore follow that these grounds are not open to the appellant".
But counsel for the appellant relied on Dhakeswari Cotton Mills Ltd. vs Commissioner of Income tax (2) where the scope of appeals under article 136 were set out by the learned Chief Justice.
In this case however it is not necessary to go into this question because in our opinion there is little substance in the appeal itself.
Counsel for the appellant has urged two grounds in support of his appeal: (1) that his place of business was Lalmonirhat and under section 64 (1) and (2) of the Act he was entitled to be assessed by the Income tax Officer of that area and (2) that assessment by the Income tax Officer of Calcutta was an illegal assumption of jurisdiction and therefore he was entitled to have the order of assessment quashed.
In order to decide these questions reference has to be made to the scheme.
of the Act.
The provisions relevant to the issue of jurisdiction are sections 5 and 64.
The former is headed " Income tax authorities " and the latter " Place of assessment ".
Assessment is made by the Income tax Officer under section 23 (3).
Against an order of assessment or the liability to be assessed an appeal (1) , 810.
(2) ; , 949.
308 lies under section 30 to the Appellate Assistant Commissioner and a further appeal to Income tax Appellate Tribunal under section 33 of the Act.
And then a reference can be made by the Tribunal to the High Court under section 66 (1) of the Act and if the Tribunal does not make such reference the High Court can under section 66 (2) be moved and it can then direct that such reference be made.
The heading of section 64 is " Place of assessment ".
Sub section (1) of section 64 provides that the assessee shall be assessed by the Income tax Officer of the area in which he carries on his business.
Sub section (2) lays down that in all other cases an assessee shall be assessed by the Income tax Officer of the area in which he resides.
Under these two sub sections therefore the appellant, because he was carrying on business at Lalmonirhat, had to be assessed by the Income tax Officer of that area, i.e., by the Income tax Officer of Rangpur.
Sub section (3) of that section provides that if a question as to the place of assessment arises, it is to be determined by the Commissioner of Income tax or by Central Board of Revenue according as the case may be.
Under the first proviso to this sub section before the question as to the place of assessment is determined the assessee has to have an opportunity of representing his views and under the second proviso the place of assessment cannot be called into question by the assessee if he has made a return in response to the notice under sub section
(1) of section 22 and has stated therein the principal place where he carries on his business or if he has not made such a return, the time specified in the notice has expired.
The third proviso to this subsection is: " Provided further that if the place of assessment is called in question by an assessee the Income Tax Officer shall, if Dot satisfied with the correctness of the claim, refer the matter for determination under this sub section before assessment is made ".
Thus under section 64(3) the question of determination as to the place of assessment only arises if an objection is taken by the assessee and the Income Tax Officer has any doubts as to the matter.
But the determination 309 is to be by the Commissioner of Income Tax or the Central Board of Revenue.
The Act does not 'contemplate any other authority.
It was contended on behalf of the assessee that he produced his accounts before the Income Tax Officer at Calcutta under protest.
There is no mention of this protest in the assessment file and that is what was stated by the Commissioner of Income Tax in his reply which he gave on March 3, 1953, before the Income tax Appellate Tribunal and which has been set out above.
If such an objection had been raised the question would have been referred by the Income tax Officer to the Commissioner as required under section 64(3).
That stage never arose because the objection does not seem to have been taken at the stage when it should have been taken, i.e., before the Income tax Officer, Calcutta.
But it is contended by counsel for the appellant that in the present case there is an illegal assumption of jurisdiction as the officer who made the assessment had no jurisdiction at all to make the assessment.
It was also contended that if the Central Board of Revenue wanted to transfer the assessment proceedings from the Income tax Officer, Rangpur, to the Income tax Officer at Calcutta, it could only exercise that jurisdiction by making an order under section 5(7A) and not under section 5(2) of the Act.
He relied on Taylor vs Taylor (1) where it was held that if a mode of exercise of power is laid down in the statute it has to be exercised in that way and no other.
He also relied on Nazir Ahmad vs The King Emperor (2).
He further contended that this was not a case which fell under section 5(2) of the Act.
Section 5(7A) gives to the Central Board of Revenue the power to transfer any case from one Income tax Officer to another which can be mad6 at any stage of the proceedings and does not necessitate the reissuing of a notice under section 22(2) if it had already been issued by the Income tax Officer from whom the case is transferred and in the explanation the word ' case ' in relation to any person whose name is specified in the order of transfer means (1) , 431 (2) (1936) L.R. 63 I.A. 372.
310 all proceedings under the Act which may be pending on the date of the transfer and includes all proceedings which may be commenced after the date of the transfer.
Section 5 although headed I Income tax authorities ' also gives to the Central Board of Revenue and the Commissioners of Income tax certain powers in regard to withdrawing of cases from one area into other and from one Income tax Officer to another.
Sub section (2) of this section gives power to the Central Government to appoint as many Commis sioner 's of Income tax as it thinks fit and they have to perform their functions in respect of different areas, persons and bases or classes thereof.
The relevant portion of the sub section is as follows: S.5(2) " The Central Government may appoint as many Commissioners of Income tax as it thinks fit and they shall perform their functions in respect of such areas or of such persons or classes of persons or of such incomes or classes of incomes or of such cases or classes of cases as the Central Board of Revenue may direct. . . ." In the present case there are more than one Commissioner of Income tax in Bengal and the Central Board of Revenue assigned certain cases including the case of the appellant to the Commissioner of Income tax (Central) at Calcutta for the exercise of his functions as Commissioner.
Now this is a power which the Central Board of Revenue did possess under sub section
(2) of section 5.
As to which Income tax Officer was to deal with that case was for the Commissioner of Incometax to designate.
Sub section 7A of section 5 confers on the Central Board of Revenue the power to transfer any case from one Income tax Officer to the other which can be done at any state of the proceedings.
This sub section is not a provision which in any way modifies or cuts down the power given to the Central Board of Revenue under section 5(2).
The two sub sections are complementary and operate in two separate spheres.
Sub section (2) is for the purpose of specifying as to which of the Commissioners would perform functions in respect of 311 different areas, persons, incomes or cases or classes thereof.
It was argued that section 7A is a special provision and it necessarily excludes the operation of sub section
(2) but as we have said above the two sections are not mutually exclusive.
They operate in two different spheres, their areas of operation are different and therefore the power which the Central Board of Revenue exercised in the present case cannot be said to be illegal .
It was not transferring the appellant 's case from the Income tax Officer, Rangpur, to the Income tax Officer, Calcutta.
It directed the Commissioner of Incometax (Central), Calcutta, to exercise his functions in respect of certain cases including the case of the appellant and that falls under section 5(2) and not under section 5(7A).
Reference was made to Pannalal Binjraj vs Union of India (1).
But that was a case in which the question raised was of constitutional validity of sub section
7A of section 5 and it was held that it was a measure of administrative convenience and was valid and neither infringed the fundamental rights under article 14 nor under article 19(1)(g).
There are no observations in that case which militate against the view that sub sections (2) & (7A) operate in different areas nor did that question arise in that case.
The contention there raised was that sub section
7A conferred arbitrary and uncontrolled powers of transfer and was discriminatory and violative of the provisions of article 14 and imposed an unreasonable restriction on the right to carry on trade or business in contravention of article 19 (1)(g).
Counsel referred to Bidi Supply Co. vs Union of India (2) But that case also does not deal, with the matter now before us.
The simple question to be decided is whether the Income tax Officer, Calcutta, could make the assessment in the appellant 's case.
The submission that there was illegal assumption of jurisdiction by the Income tax Officer of Calcutta is not well founded.
If the Central Board of Revenue had the power to direct the Commissioner of Incometax (Central), Calcutta, to exercise his functions in (1) ; , 266.
(2) ; 312 respect of several cases including the appellant 's mentioned in the order dated November 29, 1946, as indeed it had under section 5(2), then neither that order could be challenged nor the power of the Income tax Officer, Calcutta, to make the assessment.
After an order by the Central Board of Revenue under section 5(2) of the Act the provisions of sub sections
(1) and (2) of section 64 have no application because of sub section
(5a) of section 64 which is as follows : Sub section
5 " The provisions of sub section (1) and subsection (2) shall not apply and shall be deemed never at any time to have applied to any assessee (a)on whom an assessment or reassessment for the purposes of this Act has been, is being or is to be made in the course of any case in respect of which a Commissioner of Income tax appointed without reference to area under sub section (2) of section 5 is exercising the functions of a Commissioner of Income tax".
In view of this provision no objection can be taken on the ground of sub sections (1) and (2) of section 64.
Counsel for the appellant relied on a judgment of the Bombay High Court in Dayaldas Kushiram vs Commissioner of Income tax (Central) (1), where it was held that section 64 was intended to ensure that as far as practicable the assessee should be assessed locally, i. e., by the Income tax Officer of the area in which the assessee carries on business and there must, so far as the exigencies of the case allow, be some reasonable relation to the place where the assessee carries on business or resides.
In that case the assessee was carrying on business in C Ward and the proper officer under section 64 to assess him was the Income tax Officer of that Ward.
As a result of the coming into force of section 5(2) the Commissioner of Income tax (Central) was created without reference to the area.
The case of the assessee on whom the notice had been served but had not been assessed in due course assigned to the Commissioner of Income tax (Central) who designated an Income tax Officer for assessment of the assessee.
The assessee thereupon made an application under section 45 of (1)[1939] 313 the Specific Relief Act and prayed for direction to the Commissioner of Income tax (Central) and the Incometax Officer to whom his case had been assigned to forbear from continuing the proceedings on the grounds that the Income tax Officer had no jurisdiction having regard to section 64 of the Act.
It was held that the Income tax Officer was not the Income tax Officer of the area in which the assessee was carrying on business.
It was also held that in spite of the insertion of section 5(2) of the Act such assessment was without jurisdiction because there was no amendment of section 64.
As a result of this judgment Ordinance IX of 1939 was promulgated which subsequently was enacted as subs.
5 of section 64.
After the Ordinance the assessee Dayaldas Kushiram was assessed by the same Officer and after unsuccessful appeals to the Commissioner of Income tax and the Appellate Tribunal he made an application under section 66(1) on three questions: (1) Whether the order passed by the Commissioner of Incometax deciding the place of assessment of the assessee could be the subject matter of appeal to the Incometax Appellate Tribunal; (2) Whether the Tribunal had the power to entertain an appeal on the question as to the place of assessment of an assessee even in the absence of the order of Commissioner of Income tax and (3) whether the question ,as to the place of assessment is a question of law arising out of the order of the Appellate Tribunal.
It was held that the order of the Commissioner was made under section 5(2) and not under section 64(3) and as the Ordinance had retrospective effect these questions did not arise and that the assessment of the assessee was validly made by the Income tax Officer and the Ordinance removed the invalidity of the orders made prior to the passing of the Ordinance so far as they related to the assessee.
Beaumont, C. J., held that the Income tax Act did not determine the place of assessment but the officer who had to assess and that there could be no appeal under the Act against the order of the Commissioner as to the place of assessment, but only against the order of assessment of the Income tax Officer.
40 314 Counsel for the appellant also relied 'on the judgment of the Allahabad High Court in Dina Nath Hem Raj vs Commissioner of Income tax (1).
In that case the assessee was carrying on business at Calcutta and he was sought to be assessed at Kanpur and an objection was taken to the Income tax Officer, Kanpur, making the assessment.
The Income tax Officer did not proceed in accordance with section 64(3) and therefore it was held that assessment made by him was without jurisdiction.
In the present case no question has been raised as to the jurisdiction of the Income tax Officer who made the assessment and apart from that the order was made by the Central Board of Revenue under section 5(2) of the Act and section 64(5) becomes operative and sub sections
(1) and (2) of section 64 are inoperative.
See also Seth Kanhaiyalal vs Commissioner of Incometax (2).
The question then arises whether the objection as to the place of assessment, i. e., by the Income tax Officer of Calcutta could be challenged in appeal to the Appellate Assistant Commissioner and then before the Appellate Tribunal.
In our opinion it could not be.
The scheme of the Act shows that no appeal in regard to the objection to the place of assessment is contemplated under the Act.
Under section 64(3) of the Act a question as to the place of assessment, when it arises, is determined by the Commissioner.
Any such order cannot be made a ground of appeal to the Appellate Assistant Commissioner under section 30 of the Act which provides for appeals against orders of assessment and other orders enumerated in section 30 but no appeals is there provided against orders made under section 64(3).
Similarly appeals to the Appellate Tribunal which lie under section 33 of the Act also do not provide for any appeal on the question of the place of assessment.
In Wallace Brothers ' case (3) at p. 79 Spens, C. J., after referring to section 64(3) and the proviso thereto said: " These provisions clearly indicate that the matter is more one of administrative convenience than of (1) All. 616.
(2) (.3) 315 jurisdiction and in any event it is not one for adjudication by the Court. . .
This confirms us in the view that the scheme of the Act does not contemplate an objection as to the place of assessment being raised on an appeal against the assessment after the assessment has been made.
As we have already pointed out, the objection was not raised in the present case even before the Appellate Income tax Officer but only before the Appellate Tribunal ".
There is nothing in the Bidi Supply case (1) which in any way detracts from the efficacy of the decision of the Federal Court in Wallace Brothers ' case (2).
We have already said that Bidi Supply case (1) deals with the vires of section 5(7A).
In this view of the matter the question as to the place of assessment does not arise out of the order of the Income tax Appellate Tribunal and therefore no question of law could be referred nor could the High Court make such order under section 66(2).
In our opinion, the High Court rightly dismissed the appellant 's application for directing the case to be stated under section 66(2) of the Act.
The appeals therefore fail and are dismissed with costs.
In the circumstances of the case there will be only one set of costs.
Appeals dismissed.
| The appellant was carrying on the business of a railway contractor in a place in the district of R.
In April 1943, the Income tax Officer of R which was under the charge of the Commissioner of Income tax, Bengal (Mufassil), served a notice under section 22(2) of the Indian Income tax Act, 1922, on the appellant who in pursuance of the notice filed the return on February 28, 1944.
The Income tax Officer then served notices on him under SS.
22(4) and 23(2) Of the Act for the production of books, etc., but before the final assessment was made, the Central Board of Revenue by an order passed under section 5(2) of the Act, transferred the appellant 's case along with some other assessment cases, to the Commissioner of Income tax (Central), Calcutta.
On February 11, 1948, the Income tax Officer, Calcutta, to whom the appellant 's case was assigned, issued notices again under SS.
22(4) and 23(2) of the Act and after making the usual enquiries made the assessment order on March 15, 1948.
The appellant 's appeals to the Appellate Assistant Commissioner and then to the Appellate Tribunal raising objections to the legality of the transfer of his case to Calcutta and to the jurisdiction of the Income tax Officer, Calcutta, were dismissed.
The Appellate Tribunal held that as the objection related to the place of assessment it was not competent for the Tribunal to go into that question.
The appellant then made an application to the Commissioner of Income tax for reference under section 66(1) of the Act, but this was dismissed on the ground that the assessee never raised any objection before the Income tax Officer to his jurisdiction and that, in any case, the question of jurisdiction could not arise out of the order of the Tribunal.
An application filed by the appellant to the High Court under section 66(2) of the Act was dismissed and though the order of dismissal was not taken up on appeal, the appellant filed an appeal to the Supreme Court against the order of the Appellate Tribunal.
It was contended for the appellant that under section 64(1) and (2) of the Act he was entitled to be assessed by the Income tax Officer of the area within which the place of his business was situate, that the 302 assessment by the Income tax Officer of Calcutta was illegal assumption of jurisdiction and that, in any case, the order of transfer by the Central Board of Revenue under section 5(2) of the Act was not valid because, if it wanted to transfer the assessment proceedings from the file of one Income tax Officer to another it could be done only under section 5(7A) and not under section 5(2).
Held : (1) Sub section (7A) of section 5 which confers on the Central Board of Revenue the power to transfer any case from one Income tax Officer to another is not a provision which in any way modifies or cuts down the power given to the Central Board of Revenue under sub section 2 of section 5 which enables it to specify as to which of the Commissioners would perform functions in respect of different areas, persons, incomes or cases or classes thereof.
The two sub sections are complementary and operate in two separate spheres.
Pannalal Binjraj vs Union of India, ; and Bidi Supply Co. vs Union of India, ; , distinguished.
In the present case, the Central Board of Revenue directed the Commissioner of Income tax (Central), Calcutta, to exercise his functions in respect of certain cases including the case of the appellant and that fell under section 5(2) and not under section 5(7A).
The order of transfer was, therefore, valid.
(2)The jurisdiction of the Income tax Officer, Calcutta, to make the assessment on the appellant cannot be challenged, in view of sub section 5(a) of section 64 of the Act, under which sub sections
(1) and (2) of section 64 have no application to an assessee in respect of whom anorder has been made by the Central Board of Revenue under S.5(2) of the Act.
(3) Objections as to the place of assessment cannot be raised in appeal either before the Appellate Assistant Commissioner or before the Appellate Tribunal.
Wallace Brothers & Co. Ltd. vs Commissioner of Income tax, Bombay, Sind and Baluchistan, and Seth Kanhaiyalal vs Commissioner of Income tax, [1936] 5 I.T.R. 739, relied on.
Dayaldas Kushiram vs Commissioner of Income tax (Central), and Dina Nath Hem Raj vs Commissioner of Income tax, All. 616, distinguished.
Consequently, as the question as to the place of assessment could not arise out of the order of the Appellate Tribunal no such question of law could be referred to the High Court.
|
Summarize this legal judgement text concisely | Appeal No. 361 of 1958.
Appeal by special leave from the judgment and order dated December 11, 1957, of the Mysore High Court in Civil Revision No. 702 of 1956, against the judgment and order dated August 10, 1956, of the Court of the Second Extra Assistant Judge, Belgaum, in Misc.
Appeal No. 36 of 1955, arising out of the order dated September 1, 1955, of the 1st Joint Civil Judge, Junior Division, Belgaum, in Regular Civil Suit No. 197 of 1955.
M. M. Gharekhan and I. N. Shroff, for the appellant.
D. D. Chawla and G. Gopalakrishnan, for the respondent.
B. Sen and T. M. Sen, for the intervener (Attorney General of India).
February 13.
The Judgment of the Court was delivered by SARKAR, J.
This is an appeal from the judgment passed by the High Court at Bangalore on a petition in revision.
The question is whether a certain suit should be stayed under section 34 of the . 214 The appellant carries on business as a supplier of electrical energy in Belgaum.
It obtained a licence from the Government under section 3 of the , authorising it to supply the energy in that area.
The respondent, who is the plaintiff in the suit, obtained supply of electricity from the appellant.
The respondent felt that he was being overcharged by the appellant for the electricity so supplied.
He thereupon filed a suit in the Court of the Civil Judge, Belgaum, on or about the 8th of June, 1955, claiming a refund of the amount paid in excess of what he thought was the legitimate charge.
The appellant then applied under section 34 of the for a stay of the suit on the ground that the matter was referable to arbitration under the provisions of the .
The application was dismissed by the Civil Judge and his decision was confirmed by the Extra Assistant Sessions Judge on appeal and lastly, by the High Court in revision.
The appellant has now come to this Court.
The appellant contends that this matter is referable to arbitration under the provision contained in cl.
XVI of the Sixth Schedule of the Act of 1948.
A few of the provisions of these Acts will now have to be referred to.
Under the Act of 1910 the business of supplying electrical energy can be carried on only with the sanction of the Government.
Section 3 of that Act makes provision for the grant of a licence for supplying electrical energy.
The appellant obtained a licence in 1932.
A form of the licence is set out in the rules framed under the Act of 1910 and that form prescribes the maximum limit which a licensee is entitled to charge a consumer for the electrical energy supplied.
The Act of 1948 made a somewhat different provision with regard to these charges.
It provided by section 57 as follows: "section 57.
(1) The provisions of the Sixth Schedule and the Table appended to the Seventh Schedule shall be deemed to be incorporated in the licence of every licensee, not being a local authority, from the date of the commencement of the licensee 's next succeeding 215 year of account, and from such date the licensee shall comply therewith accordingly and any provisions of, such licence or of the , or ' any other law, agreement or instrument applicable to the licensee shall, in relation to the licensee, be void and of no effect in so far as they are inconsistent with the provisions of this section and the said schedule and Table.
(2). . . . . . . . . .
This section had therefore the effect of incorporating in the licence the terms of these two Schedules and provided that they would prevail over the terms of any previously granted licence or the provisions of the Act of 1910, or any other law, agreement or instrument inconsistent with these Schedules.
The Sixth Schedule made new provisions about the charges that a licensee was entitled to realise for the current supplied.
Clause XVI of that Schedule contains a provision for arbitration and it is on that that the appellant relies.
That clause is in these terms: Any dispute or difference as to the interpretation or any matter arising out of the provisions of this Schedule shall be referred to the arbitration of the Authority.
" The appellant contends that the dispute covered by the respondent 's suit is one of the kind mentioned in this clause and therefore must be referred to arbitration under its terms.
We will assume that the dispute is of the kind mentioned in cl.
XVI of the Sixth Schedule.
We are however unable to see that it is a dispute which is referable to arbitration under that clause.
It is not the appellant 's case that el.
XVI is a clause in any contract between it and the respondent.
That being so, the only other way in which it is possible for the appellant to contend that the respondent is bound to refer the dispute to arbitration under this clause is by showing that it is a statutory provision for arbitration.
No doubt if it were so, then in view of the provisions of section 46 of the the 'appellant would be entitled to apply for a stay of the suit under section 34 of that Act.
We are however wholly unable to agree that cl.
XVI is such a statutory provision.
The only 216 statutory provision that we find on the subject is that contained in section 57 and its effect is that the terms of cl.
XVI and the other clauses in the Sixth Schedule are to be deemed incorporated in a licence granted by the Government under section 3 of the Act of 1910 and the licensee is to comply with the terms of that Schedule.
Therefore all that we get is that the licence which is granted by the Government to a supplier of electricity, like the appellant, is to contain a clause that certain disputes would be referred to arbitration.
The licence is an 'engagement between the Government and the licensee, binding the parties to it to its provisions.
It is unnecessary to decide whether this engagement is contractual or statutory, for, in either case it is between the two of them only.
An arbitration clause in an instrument like this can only be in respect of disputes between the parties to it.
Such an arbitration clause does not contemplate a dispute between a party to the instrument and one who is not such a party.
We are unable to read section 57 as making cl.
XVI in the Sixth Schedule a statutory provision by which certain disputes between any and every person have to be referred to arbitration.
It was said on behalf of the appellant that the licence is a statutory document ' That, in our view, is a loose way of putting the thing.
By that the utmost that can be meant is that it is issued under the terms of a statutory provision and must comply with the provisions thereof.
But that cannot convert it into a statutory provision for reference to arbitration of disputes irrespective of the parties between whom the disputes may exist.
In our view, therefore, cl.
XVI of the Sixth Schedule of the Act of 1948 contains no provision for arbitration, statutory or otherwise, for reference of the dispute of the nature we have before us, between a licensed supplier of electricity and a consumer of it from him.
In the result, this appeal fails and is dismissed with costs.
Appeal dismissed.
| The arbitration clause incorporated by section 57(1) of the , in a licence granted by the Government for the supply of electrical energy to the consumers is not available for adjudicating upon a dispute between the licensee and the consumer, for the licence is an engagement between the licensee and the Government and the arbitration clause in it refers only to disputes between them.
Section 57(1) does not make the arbitration clause a statutory provision by virtue of which disputes between any and every person may be referred to arbitration.
|
Summarize this legal judgement text concisely | l Appeals Nos. 181 and 181 A of 1955.
Appeals from the judgment and decree dated September 30, 1952, of the former Nagpur High Court in Second Appeals Nos. 699 and 700 of 1946, arising out of the judgment and decree dated February 21, 1946, of the court of First Additional District Judge, Nagpur, in Civil Appeals Nos.
22 A and 23 A of 1946, against the judgment and decree dated January 2, 1945, of the Court of Second Subordinate Judge, Nagpur, in Civil Suit No. 143 A of 1944.
H. J. Umrigar, Ratnaparkhi A. O and Shankar Anand Zinj arde,for the appellants.
W. section Barlingay and B. H. Dhebar, for the respondent.
February 2.
The Judgment of Jafer Imam and section K. Das, JJ., was delivered by section K. Das, J. Kapur, J., delivered a separate judgment.
section K. DAS, J.
These two appeals arise out of a litigation which has had a chequered career in the courts below.
The short facts are these.
The suit out of which the appeals arise was instituted on January 13, 1941, but the plaint was amended on May 4, 1942.
The amended plaint was to the effect that in or about the year 1905 the defendant, the then Provincial Government of the Central Provinces and Berar, Nagpur, " opened up " an area known as the Craddock Town Area which was originally called the Sitabuldi Extension Area or Dhantoli Area.
Due to the scarcity of residential accommodation in the city of Nagpur, the then Provincial Government along with some prominent members of the Nagpur Municipal Committee devised a scheme to extend residential accommodation by acquiring agricultural land and making it available for residential purposes.
With that object in view, the area in question was acquired and building sites of the average size of about 10,000 sq.
each were carved out.
These were leased out on a premium of Rs. 350 and an annual rent of Rs. 3 8 0 each.
The indenture of lease in each case contained a clause to the following effect: 183 " III.
And the lessor does further covenant that he will at the end of the term of 30 years hereby granted and so on from time to time thereafter at the end of each successive further term of years as shall be granted at the request of the lessee execute to him a renewed lease of the land hereby demised for the term of 30 years; Provided that the rent of the land hereby demised shall be subject to such fair and equitable enhancement as the lessor shall determine on the grant of every renewal: Provided also that every such renewed lease of the land shall contain such of the covenants, provisions and conditions in these presents contained as shall be applicable and shall always contain a covenant for further renewal of the lease.
" One of the leases was executed on May 24, 1909, and some other leases near about that year.
By the year 1939 the first 30 years ' period of some of the leases came to an end.
The original plaintiffs, who were two in number and who sued in their individual right as also representing the members of an association known as the Craddock Town Plot holders Association alleged that on the expiry of the terms of the leases in question, during which period some of the lessees had built houses on the leasehold property, the then Provincial Government proposed an enhancement of Rs. 21 14 0 from Rs. 3 8 0 as annual rent and also the insertion of some new terms in the renewed deeds of lease.
The plaintiffs, on the contrary, said that Rs. 7 per plot was the fair and equitable enhancement.
Various representations to the relevant authorities having proved unavailing, the plaintiffs instituted the suit in which they prayed (a) that the enhancement of rent from Rs. 3 8 0 to Rs. 21 14 0 per plot was not fair and equitable within the meaning of el.
III of the deed of lease; (b) that the offer of Rs. 7 as annual rent made by the association was fair and reasonable; (c) that the defendant do insert in the renewed deeds of lease only such conditions as were to be found in the original deed and not to add to them to the detriment of the lessees ' interest; and (d) that in the event of this Court not agreeing that 184 Rs. 7 was a fair and, reasonable rent, a fair and equitable rent should be fixed by it.
The suit was contested by the defendant on several grounds, with most of Which we are not now concerned.
The learned Subordinate Judge of Nagpur, who dealt with the suit in the first instance, took up certain preliminary issues for decision and by a judgment dated April 13, 1942, he disposed of those preliminary issues.
One such issue material for our purpose was in these terms: ,In case of dispute as to what is fair and equitable rent, has the civil court no right to, determine what is fair rent?" On this preliminary issue, he found " that under the terms of cl.
III of the indenture of lease, the defendant was entitled to fix a fair and equitable rent; but the civil court has jurisdiction to enquire whether the rent fixed by the defendant is fair and equitable within the meaning of cl.
III ".
We need not refer to the other preliminary issues on which the learned Subordinate Judge gave his decision, because those issues no longer survive.
On the disposal of the aforesaid preliminary issue, the plaint was amended and some more lessees were added, the 30 years ' period of whose leases had also expired ; therefore the position was that the plaintiffs were those lessees, the 30 years ' period of whose leases had expired and as respects the renewal of whose leases the defendant had proposed an enhancement of Rs. 21 14 0.
The defendant claimed that it had been very reasonable in fixing the enhanced rent and it further claimed the right of withdrawing the offer of Rs. 21 14 0 and of making a fresh demand at a much higher rent if the lessees did not agree to the terms originally proposed by the defendant.
The defendant further denied that the offer of Rs. 7, that is, twice the original rent, made by the lessees was a reasonable and fair enhancement.
After the disposal of the preliminary issues the learned Subordinate Judge proceeded to try the suit on merits and on January 2, 1945, he found on issue No. 4 that Rs. 14 per year would be the fair and equitable enhanced rent for each plot of about 10,000 sq.
and he fixed that rent for the next term of 30 years to 185 which the lessees were entitled under cl.
III; he further directed the grant of a rebate of 25 per cent.
to those lessees who agreed to a renewal for a term ending in 1948.
From the decision of the learned Subordinate Judge two appeals, one by the plaintiffs, and the other by the defendant, were taken to the District Judge and they were heard by the Additional District Judge of Nagpur, who by his Judgment dated February 21, 1946, affirmed the decision of the learned Subordinate Judge that under cl.
III of the indenture of lease it was open to the Subordinate Judge to determine what was the fair and equitable rent.
The learned Additional District Judge, however, reversed the finding of the learned Subordinate Judge as to the quantum of the fair and equitable rent.
He came to the conclusion that the enhancement of rent should not exceed Rs. 7, as any increase over that amount would not be a fair and equitable one within the meaning of cl.
III of the indenture of lease.
From the decision of the learned Additional District Judge, two appeals were taken to the then High Court of Judicature at Nagpur by the defendant Government.
The appeals were first placed before a single Judge who directed that they should be heard by a Division Bench.
The appeals were then heard by B. P. Sinha, C. J. (as he then was) and Mudholkar, J.
The learned Chief Justice came to the conclusion that the suit must fail on the ground that the authority of the court had been invoked in a matter which really lay in contract and the civil court had no jurisdiction to determine the fair and equitable rent.
Mudholkar, J., came to a contrary conclusion and held that the suit was maintainable and the courts below could determine the fair and equitable rent.
On the question of what should be the fair and equitable rent, the learned Chief Justice gave no finding except saying that " the decision of the lower appellate, court on the question of assessment of fair and equitable rent was not satisfactory, because it had gone more by the rule of the thumb than upon the evidence adduced in the 24 186 case or upon any other sound basis.
" Mudholkar, J., however, said that he saw no adequate ground for differing from the view taken by the lower appellate court with regard to the quantum of fair and equitable rent.
On this difference of opinion between the learned Chief Justice and Mudholkar, J., the case was referred to a third Judge, namely, Hemeon, J., who agreed with the view of the learned Chief Justice that, on a proper construction of cl.
III of the indenture of lease, the civil court had no jurisdiction to determine the fair and equitable rent and the parties had consciously and deliberately stipulated to abide by the lessor 's fixation of a fair and equitable enhancement of rent; and in that view of the matter, he expressed no opinion as to what should be the fair and equitable rent.
In accordance with the opinion of the majority of Judges, the appeals in the High Court were allowed and the suit was dismissed with costs.
The plaintiffs, who are the appellants here, then asked for a certificate of fitness under article 133(1)(c) of the Constitution of India.
The High Court granted the necessary certificate by an order dated October 23, 1953, and the present appeals have been filed in pursuance of that certificate.
The area in question being now within the State of Bombay, the State of Bombay has been substituted as the respondent before us.
The principal question before us is one of construction of el.
III of the indenture of lease.
On behalf of the appellants it has been argued that the construction put upon the clause by the majority of Judges in the High Court is not correct inasmuch as it gives no effect to the words " fair and equitable enhancement " occurring therein.
On behalf of the respondent, it has been submitted that the expression " subject to such fair and equitable enhancement as the lessor shall determine " is tantamount to saying " subject to such enhancement as the lessor shall determine to be fair and equitable " ; in other words, the argument of learned counsel for the respondent is that the parties had deliberately chosen to abide by whatever was determined to be fair and equitable enhancement by 187 the lessor.
Mudholkar, J., had proceeded on the footing that the primary intention of the parties was that the enhancement must be fair and equitable and the adjectival clause ,as the lessor shall determine " following the word I enhancement ' being subordinate to the primary intention of the parties could be ignored.
Learned counsel for the respondent has very strongly submitted that this view is not correct.
We think that the clause should be read as a whole and every effort should be made to give effect to all the words used therein.
The relevant portion of the clause states " such fair and equitable enhancement as the lessor shall determine ".
If the construction is that whatever the lessor determines as fair and equitable enhancement must be treated as binding on the lessee, then the words 'fair and equitable ' are not given the meaning and sense which they have according to the ordinary acceptation of those words.
I Fair ' and I equitable ' mean fair and equitable in fact, and not what the lessor subjectively considered to be fair and equitable.
The words I fair ' and 'equitable ' both mean I just or unbiased ' (see the Concise Oxford Dictionary, 4th Edn., p. 426 and p. 402).
If the intention was to leave the enhancement to the subjective determination of the lessor, the clause would have more aptly said 'such enhancement as the lessor shall determine '.
We consider that the words I fair and equitable ' must be given their due meaning and proper effect.
The question then asked is what meaning is to be given to the words 'such. as the lessor shall determine '.
It is indeed true that these words constitute an adjectival clause to the expression ' fair and equitable enhancement ', but we consider that the meaning of the adjectival clause is merely this: the lessor must first determine what it considers to be fair and equitable enhancement; but if in fact it is not so, it is open to the lessee to ask the Court to determine what is fair and equitable enhancement.
We do not think that on a proper construction of the clause, the intention was to oust the jurisdiction of the Court and make the determination of the enhancement by the lessor final and binding on the lessee.
We think that 188 the conclusion at which Mudholkar, J., arrived on this point was correct, though not exactly for the reasons given by him.
If the construction stated above is the correct con struction, then no further difficulty is presented by cl. 111.
The learned Judges of the High Court unanimously expressed the view that the lease 'Was not void for uncertainty, and in that view we concur.
There is authority in support of the view that a covenant to settle land I at a proper rate ' or I upon such terms and conditions as should be judged reasonable ' is not void for uncertainty (see The New Beerbhoom Coal Company Limited vs Boloram Mahata and others (1) and Secretary of State, for India in Council vs Volkart Brothers (2)).
In the former case, Sir Barnes Peacock who delivered the judgment of their Lordships said : " The High Court affirmed the decision, but not for reasons which their Lordships consider to be correct.
They affirmed it upon the ground that it was impossible to determine what was a reasonable rate.
Their Lordships cannot think that in the present case the Court, upon a proper inquiry, would have been unable to determine it.
There might have been considerable difficulty in fixing the rate; but difficulties often occur in determining what is a reasonable price or a reasonable rate, or in fixing the amount of damages which a man has sustained under particular circumstances.
These are difficulties which the Court is bound to overcome.
" Our attention has been drawn to some English decisions in which the point arose if a contract which appoints a way of determining the price can be specifically enforced.
There are two lines of decisions.
In Milnes V. Grey (3) the contract provided that the price shall be valued by two different persons to be nominated and if they happened to disagree then those two persons shall choose a third person whose determination shall be final.
The question was whether such a contract could be specifically performed and the (1) (1880) L.R. 7 I.A. 107.
(2) Mad.
(3) (18O7) ; ; 189 answer given by the Master of the Rolls can be best put in his own words: " The more I have considered this case, the more I am satisfied, that, independently of all other objections, there is no such agreement between the parties, as can be carried into execution.
The only agreement, into which the Defendant entered, was to purchase at a price, ' to be ascertained in a specified mode.
No price having ever been fixed in that mode, the parties have not agreed upon any price.
Where then is the complete and concluded contract, which this Court is called upon to execute ? " In Taylor vs Brewer (1) a claim to compensation was founded on the resolution of a committee which provided that" such remuneration be made as should be deemed right ".
It was held that the engagement was merely an engagement of honour and no claim could be made on it.
An example of the other line of decisions is furnished by Gourlay vs The Duke of Somerset (2).
In that case the agreement provided for " all such usual and proper conditions, reservations, and agreements, as shall be judged reasonable and proper by John Gale, land surveyor, and in case of his death, by some other proper and competent person to be mutually agreed upon by the said parties ".
The plaintiff came to court and the question arose whether the reference to settle the lease to be made by the defendant to the plaintiff should be to the Master or to Mr. Gale, the defendant contending that the court decreeing specific performance will take the whole subject to itself and determine by its own officer, not by a particular individual, what are usual and proper covenants.
Sir William Grant, Master of the Rolls, said: " When the agreement is, that the price of the estate shall be fixed by arbitrators, and they do not fix it, there is no contract as the price is of the essence of a contract of sale, and the Court cannot make a contract, where there is none; but, where the Court has determined, that the agreement is binding and (1) ; ; (2) ; ; 190 concluded and such as ought to be executed, it does not require foreign aid to carry the details into execution.
Gale 's agency is not of the essence of this con tract. .
If the parties had gone to Gale, and got him to settle a lease, and one of them had objected to the covenants as improper, and the Bill had been filed by the other, the Court would have inspected the lease; and if it were found unreasonable, would not have decreed an execution of the agreement.
" We consider that the present case comes within the rule laid down in Gourlay vs The Duke of Somerset (1).
Learned counsel for the respondent placed strong reliance on Collier vs Mason (2 ).
That was a case in which the defendant had agreed to purchase a property at a valuation to be made by AB; the Court, though it considered AB 's valuation very high and perhaps exorbitant, 'decreed specific performance, there appearing neither fraud, mistake or miscarriage.
The case was decided on the footing that the contract provided that the property shall be purchased at such a price or sum as should be fixed by reference to AB, and it was pointed out that there being no evidence of fraud, mistake or miscarriage the parties were bound by the contract they had made.
There was no question in that case of the court stepping in, under the terms of the contract, to determine what was fair and reasonable.
Learned counsel for the respondent also relied on Tekchand Kapurchand vs Mt. Birzabai (3).
The principle laid down therein was that a contract binds the parties to it and their representatives and the court 's power to interfere with contracts is limited to such cases as fraud, undue influence or mistake and relief against penalty or forfeiture.
Indeed, we agree that if the contract in the present case was that whatever the lessor determined as the enhanced rent would be binding on the parties, then the court has no power to interfere with that contract unless it is vitiated by fraud, undue influence, mistake, etc.
If, however, the proper construction of el.
III of the contract is what (1) ; ; (2) ; ; (3) A.I.R. 1942 Nag.
191 we have held it to be, then the contract itself provides that the enhanced rent though determined by the lessor in the first instance, must be fair and equitable.
On such a construction the determination of the enhancement by the lessor would not be final and it would be open to the court to determine what is fair and equitable enhancement.
We say this with respect, but the Patna decisions (Secretary of State for India in Council vs Nistarini Annie Mitter (1) and Secretary of State vs Babu Rajendra Prasad (2)), referred to by the learned Chief Justice in his judgment are not in point.
Those decisions were not concerned with interpreting a clause in the agreement like the one before us and it was rightly held that in the absence of a contract between the parties, the court had no power to impose upon the parties a bargain not of their own making.
For the reasons given above, we hold that the decision of the majority of the learned Judges of the High Court with regard to the interpretation of cl.
III of the indenture of lease is not correct and these appeals must go back for a fresh hearing by the High Court in accordance with law for determination of what should be the fair and equitable enhancement.
On that point there was no concluded finding by the majority of the learned Judges of the High Court, but learned counsel for the appellants submitted that the finding of the learned Additional District Judge on the quantum of fair and equitable enhancement was a finding of fact and therefore binding in second appeal.
At this stage we express no opinion on such a submission, nor do we express any opinion whether the courts below or any of them have gone wrong in principle in determining what should be the fair and equitable enhancement and whether on merits it should be Rs. 7 or Rs. 14 or Rs. 21 14 0, or even a higher sum.
All these points must be considered afresh by the High Court.
There is a further point which must also be dealt with in the High Court.
The learned Subordinate Judge decided on issue No. 7 with regard to the conditions for a renewal of the lease that the Government (8) Pat. 446.
(9) A.I.R. 1937 Pat.
192 were not entitled to make any alterations in the clauses relating to re entry and notice of demand as contained in cl.
II of the original lease.
The learned Addl.
District Judge said: " As regards the new form of lease, it is clear that the clause regarding building would be deleted if it is found to be superfluous or redundant.
While that in respect of right of lessor to enter on the land without a demand of ground rent (in case of failure to pay it on the appointed date) it is not necessary to interfere as it would amount to making a contract for the parties.
It is better to leave the matter to the parties and their legal advisers.
" Whether the view of the learned Subordinate Judge or of the District Judge is correct or not was not considered by the High Court and as the appeals are going back on remand this point should also be dealt with by the High Court.
Accordingly, we allow the appeals and set aside the judgment and decree of the High Court dated September 30, 1952.
The appeals must go back for a fresh hearing by the High Court in accordance with law and in the light of the observations made above.
In the peculiar circumstances of this case, there will be no order for costs of the hearing of the appeals in this Court.
Costs incurred in the two courts below and costs incurred in the High Court, both before and after remand, will be dealt with by the High Court when finally disposing of the appeals.
KAPUR, J.
I regret I am unable to agree in the proposed judgment that it is open to the Court in the circumstances of this case to go into the question of the valuation and to determine as to what, in its opinion would be fair and equitable enhancement in rent and to interfere with the enhancement as determined by the lessor under the terms of the indenture of lease executed on May 24, 1909.
The original lease was for a term of 30 years with a provision for renewal for another 30 years with the proviso that the rent of the land demised was " subject to such fair and equitable enhancement as the lessor shall determine 193 The facts are set out in the judgment of my learned brother, section K. Das, J., and it is not necessary to repeat them.
Plots of land measuring about 10,000 sq.
ft. were given on lease by the Government to the appellants and others, for which the premium to be paid was Rs. 350 and the rent Rs. 3 8 0 per annum or Re. 1 per cent.
of the premium.
Lease deeds were executed in 1909 under clause III of which the lessor determined the enhanced rent at Rs. 21 14 0 and thus raised it from Rs. 3 8 0 per plot to Rs. 21 14 0.
The appellants brought a suit for declaration that the enhancement proposed was excessive and the fair and equitable rent should be Rs. 7 per plot and if the Court was of the opinion that Rs. 7 was not a fair and equitable rent then it should fix such sum as it considered fair and equitable.
The respondent pleaded that such a suit was incompetent.
The question for decision is what is the effect of using the adjectival words " fair and equitable ".
For the appellants it was argued that because in the lease deed the enhancement contemplated was qualified by the words " fair and equitable " the determination became clothed with a qualification which made it subject to judicial review and determination because it was for the Court to say whether the determined enhancement conformed to the standard prescribed in the disputed clause or not.
The respondent contended on the other hand that the rule applicable to determinations by valuers is that it is conclusive and cannot be overhauled except upon proof of fraud and imposition of gross misconduct.
Thus according to the submission of the appellant the clause in dispute means such enhancement as the lessor shall determine and which determination shall, in the opinion of the Court, be fair and equitable and according to the respondent it means that the amount of enhancement shall be fair and equitable but what is fair and equitable shall be determined by the lessor, such determination being conclusive.
The appellants do not contend that the lessor is not a valuer and that if the qualifying words " fair and equitable " had not been used then 25 194 the enhancement determined would not be conclusive but the contention is that by using these words the quality and the quantity of enhancement is no longer in the sole determination of the lessor but the final determination must be of the Court because otherwise any fanciful amount would have to be accepted as fair and equitable and that the parties intended that the lessor was not the final determiner of the quality and quantity of enhancement and his determination was not conclusive but the lessee if dissatisfied could get the matter reviewed by the Court.
In my view the correct interpretation to be put on this clause of the lease deed is what is contended for by the respondent.
The lessor was given the authority to determine the enhancement but such enhancement was to be fair and equitable and what would be fair and equitable in any particular case was also to be determined by the lessor.
The lease deed entered into between the parties is dated May 24, 1909.
In the first clause are given the usual obligations of the lessee as to payment of rent, the purpose of the building to be constructed, the period in which it was to be completed, the design of the building and keeping it in proper condition.
In the second clause of the agreement the lessor covenanted peaceful possession subject to the right of the lessor to recover rent as arrears of land revenue and other remedies for non observance of the obligations contained in the first clause with a provision for re entry upon failure of certain conditions.
I In the third clause the lessor covenanted for grant of lease for further periods of 30 years at the request of the lessee with the following proviso : " Provided that the rent of the land hereby demised shall be subject to such fair and equitable enhancement as the lessor shall determine on the grant of every renewal ".
This is the disputed clause.
Now it appears that this further covenant was for the benefit of the lessee and the reservations made are couched in such language which left the discretion in regard to enhancement of rent to the lessor.
What the enhancement was to be and what would be fair and equitable was left to the 195 determination of the lessor.
It is not an unusual provision in a lease for a long term of years with provision for renewal to leave the question of rent to be determined by the lessor or an outside valuer and it s would not, in my respectful opinion, be a correct interpretation to say that the enhancement by a valuer would be unchallengeable if the adjectival words " fair and equitable " are not used but would be subject to court 's review if these words are employed.
That is going contrary to the very notion of valuations and their legal incidence.
The extent of the power of courts over valuations by valuers has been stated in text books and in certain decided cases.
In Williston on Contracts, Vol. 3, section 802, at p. 2252 the law is stated thus: " In the absence of fraud or mistake, the price fixed by aGreed valuers is conclusive upon the parties.
Though an excessively large or an unreasonably small price involves some element of penalty or forfeiture, the possibility of this is not enough to overcome the express terms of the contract in the absence at least of fraud, gross mistake, or such arbitrary conduct as is outside what the parties could have reasonably contemplated ".
And it is not a far step to say that in all cases of valuation the parties do contemplate a fair and equitable amount to be fixed or determined and not any price fanciful or otherwise.
In Collier vs mason (1) the defendant agreed to purchase a property at a valuation to be made by a third party.
The defendant repudiated the value as exorbitant and refused to complete his contract and the plaintiff vendor instituted a suit for specific performance.
The Court held that the valuation was very high and perhaps exorbitant but it decreed specific performance of the contract as there appeared no fraud, mistake or miscarriage.
It was said by the Master of the Rolls " It may have been improvident as between these parties to enter into a contract to buy and sell property at a price to be fixed by another person, but that cannot avoid the contract.
(1) ; ; 196 Here the referee has fixed the price, which is said to be evidence of miscarriage, but this Court, upon the principle laid down by Lord Eldon, must act on that valuation, unless there be proof of some mistake, or some improper motive, I do not say a fraudulent one; as if the valuer had valued something not included, or had valued it on a wholly erroneous principle, or had desired to injure one of the parties to the contract ; or even, in the absence of any proof of any of these things, if the price were so excessive or so small as only to be explainable by reference to some such cause; in any one of these cases the Court would refuse to act on the valuation ".
It does not appear that in that case the words "fair and equitable " were used but that is implied in every reference for valuation to be made by an agreed referee.
He cannot act in a fanciful or a corrupt manner or with puerile motives nor can he make a valuation which be (toes not consider to be fair and equitable.
In cases of transfer of property the form of contract to buy and sell may make a provision and very often such a provision is made that the price payable shall be that which a certain valuer shall fix.
Such a requirement is an express condition or a condition implied in fact qualifying the obligation of the buyer to pay the price and such a contract cannot be performed unless the valuation first takes place.
Such a condition is a necessary condition or an inherent condition.
Williston on Contracts, Vol. 3, section 800 ; Firth vs Midland Railway Co. (1).
In such contracts it must be assumed that the parties laid weight on the parti cular individuality of the valuer.
Accordingly if the valuer dies or refuses to act the buyer cannot be compelled to pay the price.
A similar condition is common in long term leases and in provisions for renewal of leases and where the parties choose to abide by the determination of a valuer and that valuation is not acceptable to one of the parties, Courts will not interfere, the only exception being fraud, mistake or misconduct.
In Vickers vs Vickers (2) which was a suit for specific (1) , 112.
(2) 197 performance of a contract enforcing an option of purchase where the stock was to be valued in the usual way by two valuers and one of the valuers was not allowed to proceed, it was held that there was no contract between the parties which the Court could specifically enforce.
Sir W. Page Wood, V. C., said at p. 535: " If a nomination of that kind fails, or if the two persons named do not make their award, this Court has said there is no constat of the price; the contract is not a complete contract, and there is nothing on which it can act ".
In Weekes vs Gallard (1) where a contract was entered into for the sale of certain property, the price to be fixed by two valuers who afterwards valued the property at inadequate price, it was held that in the abence of fraud or collusion on the part of the valuer, the buyer was entitled to specific performance of the contract.
Lord Romilly said : " The court has really no discretion in the matter.
The discretion of the court is bound, as Lord Ellenborough says, by fixed rules.
In one case of this kind a house and furniture were valued at three times their value, and yet there was a decree for specific performance.
The only defence to such a suit would be fraud or collusion ".
A valuer may, in one sense, be called an arbitrator but not in the proper legal sense of the term.
Per Lindley, L. J., In re Carus Wilson & Greene (2).
But there is this difference between arbitration and valuation that the object of the former is to settle a dispute which has arisen and of the latter to avoid a dispute arising.
The arbitrator is called in to settle judicially any matter in controversy between the parties and the valuer by the exercise of his knowledge and skill has to make a valuation the object being to prevent disputes from arising.
A valuer like an arbitrator is required to act fairly and diligently.
He cannot act in a fanciful or a perverse manner and his determination must be fair and equitable whether the authority given to him uses these words or not.
But once a (1) (2) 198 valuation is properly made the valuation is conclusive as between the parties and the Court in the absence of fraud, mistake or collusion can no more go into whether it is fair and equitable than a Court can sit in appeal against the award of an arbitrator as to what would be fair amount of damages in a particular case of breach of contract.
See also Emery vs Wase (1).
The decision in Gourlay vs Somerset (Duke of) (2) was relied upon by the appellants in support of their case.
That does not, in my opinion, deal with the matter now before us.
There the suit was for specific performance of an agreement to grant a lease.
One of the conditions of the contract was that the farm was to be let on conditions, reservations and agreements " as shall be judged reasonable and proper by John Gale .
" The Court was of the opinion that Gale 's agency was not of the essence of the contract and that it could not be contended that the contract was to end if Gale refused to settle a lease.
The Court said : " Suppose the reference is made to Gale ; is his decision liable to exception ? If it is, the decision with regard to the propriety of the lease will ultimately be that of the Court.
If not, the Court may be carrying into execution a lease, which it may think extremely unreasonable and improper.
If the parties had gone to Gale, and got him to settle a lease, and one of them had objected to the covenants as improper and the Bill had been filed by the other, the Court would have inspected the lease; and if it were found unreasonable, would not have decreed an execution of the agreement ".
That was a case relating to covenants other than fixation of price.
With regard to the valuation or fixation of price it was said that if an agreement was that the price of the estate would be fixed by arbitrators and they did not fix it there was no contract of sale as the contract as to the mode of fixing the price was of the essence of the contract of sale and the Court could not make a contract where there is none.
Similarly it may be said that where the valuation is fixed by a valuer (1) , 847, 848 ; ; (2) ; ; 199 the court will hold it conclusive in the absence of fraud or mistake or misconduct.
The Court will not enter into the propriety of the valuation made or substitute its own valuation in place of that determined by the valuer because that will not be an execution of the contract of the parties but making a contract for them.
The Transfer of Property Act contains no provision by which the Court is empowered to fix rent of premises demised although by legislation in the case of agricultural holdings certain tribunals have been set up to make such determinations.
The appellant relied on The New Beerbhoom Coal Company vs Boloram Mahata (1).
The covenant between the parties was: Within that aforesaid mouzah we will not give a pottah, let give settlement to anybody.
If you take possession according to your requirement of extra land over and above this pottah, and we shall settle any such lands with you at a proper rate ".
A suit was brought by the lessees against the lessor to obtain specific performance to execute a permanent lease of a large area of land claiming benefit of the covenant above given and contended that the defendants were bound to let them the land whenever called upon to do so.
The appellant company stated that they had negotiated with the lessor for lease of the adjoining land (not of land which they had agreed to lease) upon the terms that they were to pay Rs. 1 8 0 for waste land and Rs. 3 for cultivable land and the suit was for the grant of specific performance of the agreement by compelling the lessor to grant them the lease at those rates and if the Court would not order the lease at those rates then at such rates as the Court shall think reasonable.
The trial Court held that apart from 51 bighas mentioned in the covenant the lessor could not be compelled to grant a lease for the remaining land of the mouzah.
The High Court affirmed this decision but on the ground that it was impossible to determine what was the reasonable rate.
Sir Barnes Peacock said: (1) (1880) L.R. 7 I.A. 107.
200 " Their Lordships cannot think that in the present case the court, upon a proper inquiry, would have been unable to determine it (proper rent).
There might have been considerable difficulty in fixing the rate ; but difficulties often occur in determining what is a reasonable price or a reasonable rate, or in fixing the amount of damages which a man has sustained under particular circumstances.
These are difficulties which the Court is bound to overcome ".
These observations of the Privy Council are relied upon by the appellants to support the argument that it is open to the Court to determine what the reasonable rate would be.
This was not a case where any question of valuation arose nor was it a case where a valuation made by a valuer was sought to be reviewed as not being proper and apart from the fact that the observations are mere obiter this case is no authority for saying that the determination of a valuer is subject to review by courts.
Another case which the appellant relied upon was The Secretary of State for India vs Volkart Brothers (1).
There, in a deed of lease granted for 99 years by the East India Company there was a clause for renewal for another like period on the lessee paying a sum of money and " upon such terms and conditions as should be judged reasonable ".
The Secretary of State assigned a major portion of the holding to a third party and Volkart Brothers before the expiry of the original lease period tendered the due amount and asked for renewal of the lease which the Secretary of State refused to renew and sued to eject the lessees and the latter sued for specific performance of the covenant for renewal.
It was held by a majority that the covenant was not unenforceable on account of uncertainty.
Krishnan, J., was of the opinion that such a covenant was too vague and uncertain and unenforceable because the clauses to be inserted in the contract were themselves uncertain and the contract could not be enforced.
Venkatasubba Rao, J., was of the opinion that if the parties would not agree to a reasonable rent the Court will intervene and fix it; The New Beerbhoom (1) Mad.
201 Coal Company vs Boloram Mahata (1) was relied upon.
Courts Trotter, C. J., was also of the opinion that the covenant was not too vague to be enforced.
But this again was a case not of interfering with the determination of a valuer but of specific performance of a contract of renewal and it was held that by taking evidence even a vague and indefinite covenant relating to renewal could be made definite.
In my opinion, therefore, the Court cannot go into the question of correctness or otherwise of the determination of the lease and the appeal should therefore be dismissed with costs.
By COURT.
In view of the opinion of the majority, the appeals are allowed, setting aside the judgment and decree of the High Court dated September 30, 1952.
No order as to costs of the hearing in this Court.
| In 1909, for the purpose of residential accommodation, plots of land were given on lease by the Government to the appellants and others for which a premium of Rs. 350 and an annual rent of Rs. 3 8 0 for each plot had to be paid.
Clause III of the deed of lease in each case provided: " And the lessor does further covenant that lie will at the end of the term Of 30 years hereby granted and so on from time to time thereafter at the end of each successive further term of years as shall be granted at the request of the lessee execute to him a renewed lease of the land hereby demised for the term Of 30 years: Provided that the rent of the land hereby demised shall be subject to such fair and equitable enhancement as the lessor shall determine on the grant of every renewal: Provided also that every such renewed lease of the land shall contain such of the covenants, provisions and conditions in these presents contained as shall be applicable and shall always contain a covenant for further renewal of the lease." 181 By the year 1939 the first 30 years ' period of some of the leases came to an end, and the Government sought to enhance the annual rent from Rs. 3 8 0 to Rs. 21 14 0 per plot and also to insert some new terms in the renewed deeds of lease.
The appellants brought a suit inter alia for a declaration that the enhancement proposed was not, fair and equitable within the meaning of Clause III of the deed of lease, that the fair and equitable rent should be Rs. 7 per plot and that if the court was of the opinion that Rs. 7 was not a fair and equitable rent then it should fix such sum as it considered fair and equitable.
The respondent pleaded that such a suit was incompetent.
The question was whether the civil court had jurisdiction to enquire whether the enhancement of the rent determined by the lessor was fair and equitable within the meaning of cl.
III of the deed of lease, and whether, in any case, the lease was void for un certainty.
Held, (per jafer Imam and section K. Das, jj.), that the lease is not void for uncertainty; that the expression " fair and equitable " in the clause in question means fair and equitable in fact, and not what the lessor subjectively considered to be fair and equitable; and, that reading the clause as a whole and giving effect to all the words used therein, the meaning is that the lessor must first determine what it considers to be fair and equitable enhancement, but, if in fact it is not so, it is open to the lessee to ask the court to determine what is fair and equitable enhancement.
Accordingly, the suit was maintainable.
The rule laid down in Gourlay vs The Duke of Somerset, (18I5) ; ; , held applicable.
The New Beerbhom Coal Company Limited V. Boloram Mahata and others, (1880) L.R. 7 I.A. 107 and Secretary of State for India in Council vs Volkart Brothers, Mad.
595, relied on.
Collier vs Mason, ; ; and Tekchand Kapurchand vs Mt. Birzabai, A.I.R. 1942, Nag. 119, distinguished.
Per Kapur, J. The correct interpretation to be put on cl.
III of the deed of lease is that the lessor was given the authority to determine the enhancement of rent but such enhancement was to be fair and equitable and what would be fair and equitable in any particular case was also to be determined by the lessor.
The rule applicable to the present case is that relating to valuation or fixation of prices that where the valuation is fixed by a valuer the court will hold it conclusive in the absence of fraud or mistake or misconduct and the court will not enter into the propriety of the valuation made or substitute its own valuation in place of that determined by the valuer because that will not be an execution of the contract of the parties but making a contract for them.
Case law discussed.
|
Summarize this legal judgement text concisely | Appeal No. 152 of 1955.
Appeal by special leave from the judgment and order dated March 25, 1953, of the Jammu and Kashmir High Court in Civil First Appeal No. 4 of 2009.
N.C. Chatterjee, Gopi Nath Kunzru and Naunit Lal, for the appellants.
H.N. Sanyal, Additional Solicitor General of India, Jaswant Singh, Advocate General for the State of Jammu and Kashmir, R. H. Dhebar and T. M. Sen, for the respondent.
March 2.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J.
This appeal by special leave arises from a suit filed by the appellant in a representative capacity (Civil Suit No. 4 of 2008) against the State of Jammu & Kashmir praying for a declaration that the Jammu & Kashmir Big Landed Estate Abolition Act, XVII of 2007 (hereinafter called the Act) is void, inoperative and ultra vires of Yuvaraj Karan Singh who enacted it and for a further declaration that the appellant was entitled to retain the peaceful possession of his lands.
273 It appears that the validity of the Act was similarly challenged by Maghar Singh by his suit filed on the Original Side of the High Court of Jammu & Kashmir (Civil Suit No. 59 of 2007); and Mr. Justice Kilam who had heard the said suit had rejected the plaintiff 's contentions and held that the Act was valid.
When the appellant ' suit came for trial before the District Court it was conceded on his behalf that the points raised by him against the validity of the Act had been decided by Mr. Justice Kilam and that, in view of the said decision, the appellant could not usefully urge anything more before the District Court.
The learned District Judge who was bound by the decision of Mr. Justice Kilam applied it to the suit before him and held that the Act was valid and that the appellant was not entitled to the two declarations claimed by him.
In the result the appellant 's suit was dismissed.
Against this decree the appellant preferred an appeal in the High Court of Jammu & Kashmir (Civil Appeal No. 4 of 2009).
Maghar Singh whose suit had been dismissed by Mr. Justice Kilam had also preferred an appeal (No. 29 of 2008) before the High Court.
The two appeals were heard together by a Division Bench of the High Court which held that the Act was valid and that the appellants were not entitled to any declaration claimed by them.
Both the appeals were accordingly dismissed.
Against the decree passed by the High Court dismissing his appeal the appellant applied to the High Court for leave to appeal to this Court.
The said application was, however, dismissed.
Thereupon the appellant applied for, and obtained, special leave to appeal to this Court.
In dealing with this appeal it is necessary to narrate in some detail the events which took place in Kashmir and the constitutional changes which followed them in order to appreciate fully the background of the impugned legislation.
A clear understanding of this background will help us to deal with the appellant 's case in its proper perspective.
In 1925 Maharaja 35 274 Hari Singh succeeded Maharaja Pratap Singh as the Ruler of Kashmir.
It appears that for some time prior to 1934 there was public agitation in Kashmir for the establishment of responsible government.
Presumably as a sequel to the said agitation Maharaja Hari Singh issued Regulation 1 of 1991 (1934).
The Regulation began with the statement of policy that it was the declared intention of the Maharaja to provide for the association of his subjects in the matter of legislation and the administration of ' the State and that it was in pursuance of the said intention that the Regulation was being promulgated.
This Regulation consisted of 46 sections which dealt with the legislative, executive and judicial powers of the Maharaja himself, referred to the subjects which should be reserved from the operation of the Regulation, made provision for the constitution of the Legislature of the State, conferred authority on the Council to make rules for specified purposes and referred to other relevant and material topics.
It is relevant to refer to only two sections of this Regulation.
Section 3 provides that all powers legislative, executive and judicial in relation to the State and its government are hereby declared to be, and to have been always, inherent in and possessed and retained by His Highness the Maharaja of Jammu & Kashmir and nothing contained in the Regulation shall affect or be deemed to have affected the right and prerogative of His Highness to make and pass regulations, proclamations and ordinances by virtue of his inherent power.
Section 30 lays down that Do measure shall be deemed to have been passed by the Praja Sabha until and unless His Highness has signified his assent thereto.
The Regulation leaves it to the absolute discretion of His Highness whether to assent to such a measure or not.
Five years later the Maharaja promulgated the Jammu & Kashmir Constitution Act 14 of 1996 (1939).
From the preamble to this Constitution it appears that, before its promulgation, the Maharaja had issued a proclamation on February 11, 1939, in which he had announced his decision as to the further steps to 275 be taken to enable his subjects to make orderly progress in the direction of attaining the ideal of active co operation between the executive and the Legislature of the State in ministering to the maximum happiness of the people.
In accordance with this desire the text of the Constitution contained in Regulation 1 of 1991 was thoroughly overhauled and an attempt was made to bring the amended text into line with that of similar Constitutions of its type.
This Con stitution is divided into six parts and includes 78 sections.
Part 1 is introductory.
Part 2 deals with the executive; Part 3 with the Legislature; Part 4 with the Judicature; Part 5 contains miscellaneous provisions; and Part 6 provides for repeal and saving and includes transitional provisions.
It is significant that section 5 of this Act, like section 3 of the earlier Regulation, recognises and preserves all the inherent powers of His Highness, while section 4 provides that the State was to be governed by and in the name of His Highness, and all rights, authority and jurisdiction which appertain or are incidental to the government of the State are exercisable by His Highness except in so far as may be otherwise provided by or under the Act or as may be otherwise directed by His Highness.
The other provisions of the Act are all subject to the over riding powers of His Highness specifically preserved by section 5.
As we will point out later on, in substance the Constitutional powers of the Maharaja under the present Act were exactly the same as those under the earlier Act.
While the State of Jammu & Kashmir was being governed by the Maharaja and the second Constitution as amended from time to time was in operation, political events were moving very fast in India and they culminated in the passing of the Indian Independence Act, 1947.
Under section 7 (1) (b) of this Act the suzerainty of His Majesty over the Indian States lapsed and with it lapsed all treaties and agreements in force at the date of the passing of the Act between His Majesty and the Rulers of the Indian States, all obligations of His Majesty existing at that date towards Indian States or the Rulers thereof, and all powers, 276 rights, authority or jurisdiction exercisable by His Majesty at that date in or in relation to Indian States by treaty, grant, usage, sufferance or otherwise.
The proviso to the said section, however, prescribed that, notwithstanding anything in para.
(b), effect shall, as nearly as may be, continue to be given to the provisions of any such agreement as therein referred to in relation to the subjects enumerated in the proviso or other like matters until the provisions in question are denounced by the Ruler of the Indian State on the one hand or by the Dominion or Province concerned on the other hand, or are superseded by subsequent agreements.
Thus, with the lapse of British paramountcy the State of Jammu & Kashmir, like the other Indian States, was theoretically free from the limitations imposed by the said paramountcy subject to the provisions of the proviso just mentioned.
On October 22, 1947, the tribal raiders invaded the territory of the State; and this invasion presented a problem of unprecedented gravity before the Maharaja.
With the progress of the invading raiders the safety of the State was itself in grave jeopardy and it appeared that, if the march of the invaders was not successfully resisted, they would soon knock at the doors of Srinagar itself.
This act of aggression set in motion a chain of political events which ultimately changed the history and political constitution of Kashmir with unexpected speed.
On October 25, 1947, the Maharaja signed an Instrument of Accession with India which had then become an Independent Dominion.
By the First Clause of the Instrument the Maharaja declared that he had acceded to the Dominion of India with the intent that the Governor General of India, the Dominion, Legislature, the Federal Court and any other Dominion Authority established for the purpose of the Dominion shall, by virtue of the Instrument of Accession, subject always to the terms thereof and for the purposes only of the Dominion, exercise in relation to the State of Jammu & Kashmir such functions as may be vested in them by or under the Government of India Act, 1935, as in force in the Dominion of India on August 15, 1947.
277 We may usefully refer to some other relevant clauses of this Instrument.
By el. 3 the Maharaja agreed that the matters specified in the Schedule attached to the Instrument of Accession were the matters with respect to which the Dominion Legislature may make laws for this State.
Clause 5 provides that the Instrument shall not be varied by any amendment of the Government of India Act, 1935, or of the Indian Independence Act, 1947, unless such amendment is accepted by the Maharaja by an Instrument supplementary to the original Instrument of Accession.
By el. 7 it was agreed that the Maharaja would not be deemed to be committed to the acceptance of any future Constitution of India nor would his discretion be fettered to enter into agreements with the Government of India under any such future Constitution.
Clause 8 is very important.
It says that nothing in the Instrument affects the continuance of the Maharaja 's sovereignty in and over his State, or, save as provided by or under the Instrument, the exercise of any powers, authority and rights then enjoyed by him as Ruler of the State, or the validity of any law then in force in the State.
The Schedule attached to the Instrument refers to four topics, defence, external affairs, communications and ancillary, and under these topics twenty matters have been serially enumerated as those in respect of which the Dominion Legislature had the power to make laws for the State.
Thus, by the Instrument of Accession, the Maharaja took the very important step of recognising the fact that his State was a part of the Dominion of India.
Meanwhile,, the invasion of the State had created tremendous popular fervour and patriotic feelings in resisting the act of aggression and this popular feeling inevitably tended to exercise pressure on the Maharaja for introducing responsible and popular government in the State.
The Maharaja tried to pacify the popular demand by issuing a proclamation on March 5, 1948.
By this proclamation he stated that in accordance with the traditions of his dynasty he had from time to time provided for increasing association of his people with the administration of the State with the object of 278 realising the goal of full responsible government at as early a date as possible, and he added that he had noted with gratification and pride the progress made so far and the legitimate desire of his people for the immediate establishment of a fully democratic constitution based on adult franchise with a hereditary Ruler from his dynasty as the constitutional head of an executive responsible to the Legislature.
It appears that before this proclamation was issued the Maharaja had already appointed Sheikh Mohammed Abdullah who was then the popular leader of the people as the head of the emergency administration.
By the pro clamation the Maharaja replaced the emergency administration by a popular interim government and provided for its powers, duties and functions pending the formation of a fully democratic constitution.
Clause 1 of the proclamation provides for the composition of the Ministry, whereas by cl. 2 the Prime Minister and other ministers are required to function as a cabinet and act on the principle of joint responsibility.
A Dewan appointed by the Maharaja is to be a member of the Cabinet.
Clause 4 provides that the Council of Ministers shall take appropriate steps, as soon as resto ration of normal conditions has been completed, to convene a National Assembly based on adult franchise having due regard to the principle that the number of representatives from each voting area should, as far as practicable, be proportionate to the population of that area.
Clause 5 then lays down that the Constitution to be framed by the National Assembly shall provide adequate safeguards for the minorities and contain appropriate provisions guaranteeing freedom of conscience, freedom of speech and freedom of assembly.
Clause 6 states that when the work of framing the Constitution is completed by the National Assembly the Constitution would be submitted through the Council of Ministers to the Maharaja for his acceptance.
The proclamation ended with the expression of hope that the formation of a popular interim government and the inauguration in the near future of a fully democratic Constitution would ensure the contentment, happiness and the moral and material advancement 270 of the people of the State.
Through under this proclamation a popular interim government was set up, the constitutional position still was that the popular government had theoretically to function under the Constitution of 1939.
It appears that before the popular government was thus installed in office the Maharaja had deputed four representatives of the State to represent the State in the Constituent Assembly called in the Dominion of India to frame the Constitution of India.
After the popular interim government began to function the political events in the State gathered momentum and the public began to clamour for the framing of a democratic Constitution at an early date.
When the atmosphere in the State was thus surcharged, the Maharaja issued his final proclamation on June 20, 1949, by which he entrusted to Yuvaraj Karan Singh Bahadur all his powers and functions in regard to the government of the State because he had decided for reasons of health to leave the State for a temporary period.
" Now therefore I hereby direct and declare ", says the proclamation, " all powers and functions whether legislative, executive or judicial which are exercisable by me in relation to the State and its government including in particular my right and prerogative of making laws, of issuing proclamations, orders and ordinances, or remitting, commuting or reducing sentences and of pardoning offenders, shall, during the period of my absence from the State, be exercisable by Yuvaraj Karan Singh Bahadur ".
As subsequent events show this was the last official act of the Maharaja before he left the State.
After Yuvaraj Karan Singh took the Maharaja 's place and began to function under the powers assigned to him by the said proclamation, the interim popular government installed earlier was functioning as before.
On November 25, 1949, Yuvaraj Karan Singh issued a proclamation by which he declared and directed that the Constitution of India shortly to be adopted by the Constituent Assembly of India shall, in so far as it is applicable to the State of Jammu & Kashmir, govern the constitutional relationship between 280 the State and the contemplated Union of India and shall be enforced in the State by him, his heirs and successors in accordance with the tenor of its provisions.
He also declared 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 were then in force in the State.
The preamble to this proclamation shows that it was based on the conviction that the best interests of the State required that the constitutional relationship established between the State and the Dominion of India should be continued as be tween the State and the contemplated Union of India; and it refers to the fact that the Constituent Assembly of India which had framed the Constitution of India included the duly appointed representatives of the State and that the said Constitution provided a suitable basis to continue the constitutional relationship between the State and the contemplated Union of India.
On January 26, 1950, the Constitution of India came into force.
This proclamation was followed by the Constitution (Application to Jammu & Kashmir) Order, 1950 (C. O. 10) which was issued on January 26, 1950, by the President in consultation with the Government of Jammu & Kashmir and in exercise of the powers conferred by cl.
(1) of article 370 of the Constitution.
It came into force at once.
Clause (2) of this order provides that for the purposes of sub cl.
(i) of article 370 of the Constitution, the matters specified in the First Schedule to the Order correspond to matters specified in the Instrument of Accession governing the accession of the State of Jammu & Kashmir to the Dominion of India as the matters with regard to which the Dominion Legislature may make laws for that State; and accordingly the power of Parliament to make laws for that State shall be limited to the matters specified in the said First Schedule.
Clause (3) provides that, in addition to the provisions of article 1 and article 370 of the Constitution the only other provisions of the Constitution which shall apply to the State of Jammu & Kashmir shall be those specified in the 281 Second Schedule to the Order and shall so apply subject to the exceptions and modifications specified in the said Schedule.
The First Schedule to the Order specified 96 items occurring in the Union List; while the Second Schedule set out the Articles of the Constitution made applicable to the State together with the exceptions and modifications.
Later on we will have occasion to refer to some of these Articles on which the appellant has relied.
It appears that, after the interim popular Government took office, the Revenue Minister made a statement of policy at a meeting of the special staff of revenue officers held in the Governor 's office on August 13, 1950.
The Minister stated that whatever the difficulties, the Cabinet was determined to go ahead and transfer the proprietorship of the land to the tiller.
The main idea underlying the proposed agricultural reform was that a land lord shall not possess more than 20 acres of agricultural land.
In addition, he would be allowed 8 kanals for his use and Sagzar and 4 kanals for his second house if in existence, and 10 kanals for Bedzar or Safedzar.
It was contemplated that a committee would be appointed to settle the details and other matters incidental to the said agricultural plan.
It was presumably in pursuance of this plan adopted by the interim Cabinet that the Act was promulgated by Yuvaraj Karan Singh on October 17, 1950.
The preamble to the Act shows that it was promulgated because no lasting improvement in agricultural production and efficiency was possible without the removal of the intermediaries between the tiller of the soil and the State, and so for the purpose of improving agricultural production, it was expedient to provide for the abolition of such proprietors as own big landed estates and to transfer the land held by them to the actual tiller.
The Yuvaraj enacted the law in exercise of the powers vested in him under section of the.
Constitution Act of 1996 and the 'proclamation issued by Maharaja Hari Singh on June 20, 1949.
The Act consists of 47 sections and purports to, carry out its 36 282 policy of improving the agricultural production of the State by providing for the extinction of the proprietors ' titles and the transfer of the lands to the tillers, and by setting up a self contained machinery for the carry ing out of the scheme of the Act and for settlement of all incidental disputes arising thereunder.
For the purpose of this appeal, however, it is necessary to refer to a few relevant sections which deal with the broad features of the extinction of the proprietors ' rights and the transfer of lands to the tillers.
section 2 of the Act inter alia defines land, proprietor and tiller, while section 3 excludes certain specified lands from the operation of the Act.
Section 4, sub section
(1) provides for the extinction of the right of ownership in certain lands and it lays down that not withstanding anything contained in any law for the time being in force, the right of ownership held by a proprietor in land other than the land mentioned in sub section
(2) shall, subject to the other provisions of the Act, extinguish and cease to vest in him from the date the Act comes into force.
Sub section (2) of section 4 enumerates lands which are excluded from the operation of sub section
They are (a) units of land not exceeding 182 kanals including residential sites, Bedzars and Safedzars, (b) Kahikrishmi areas, Araks, Kaps and unculturable wastes including those used for raising fuel or fodder, and (c) orchards.
The proviso to sub section
(2) gives government the power to dispose of lands mentioned in cl.
(b) in such a manner as may be recommended by the committee to be set up for that purpose.
Section 26 of the Act deals with the question of payment to the proprietors.
It provides that there shall, until the Constituent Assembly of the State settles the question of compensation, with respect to the land expropriated under this Act, be paid by the government to every proprietor who has been expropriated, an annuity in the manner indicated in the section.
In other words, subject to the final decision of the Constituent Assembly, section 26 contemplates the payment of annuity to the expropriated proprietors according to the scale prescribed in the section.
With the rest of the sections we are not concerned in the present appeal.
283 After the Act was enacted by the yuvaraj he issued a proclamation on April 20, 1951, directing that a Constituent Assembly consisting of representatives of the people elected on the basis of adult franchise shall be constituted forthwith for the purpose of framing a Constitution for the State of Jammu & Kashmir.
The proclamation sets out the manner in which members of the said Constituent Assembly would be elected and makes provisions for the holding of the said elections.
It also authorised the Constituent Assembly to frame its own agenda and make rules for regulating its procedure and the conduct of its business.
The preamble to this proclamation shows that the Yuvaraj was satisfied that it was the general desire of the people that a Constituent Assembly should be brought into being for the purpose of framing a Constitution for the State and that it was commonly felt that the convening of the said Assembly could no longer be delayed without detriment to the future well being of the State.
The Yuvaraj also felt no doubt that the proclamation issued by the Maharaja on March 5, 1948, in regard to the convening of the national assembly as per cls.
4 to 6 no longer met the requirements of the situation in the State.
Thus this proclamation was intended to meet expeditiously the popular demand for the framing of a democratic constitution ; and it indicates that a decisive stage bad been reached in the political history of the State.
In accordance with this proclamation a Constituent Assembly was elected and it framed the Constitution for the State.
By the Constitution thus framed the hereditary rule of the State was abolished, and a provision was made for the election of a Sadar i Riyasat to be at the head of the State.
On November 13, 1952, the Yuvaraj was elected to the office of the Sadar i Riyasat and with his election the dynastic rule of Maharaja Hari Singh came to an end.
On November 15, 1952, the Constitution (Application to Jammu & Kashmir) Second Amendment Order, 1952 (C. O. 43) was issued; and it came into force on November 17, 1952.
By this Order the earlier Order of 1950 was amended as a result of which all references 284 in the said Order to the Rajpramukh shall be construed as references to the Sadar i Riyasat of Jammu & Kashmir.
Similarly in the Second Schedule to the said Order some amendments were made.
On the ,same day a Declaration (C. O. 44) was made by the President under article 370, sub article
(3) of the Constitution that from November 17, 1952, the said article 370 shall be operative with the modification that for the explanation in el.
(1) thereof the new explanation shall be substituted.
The effect of this new explanation was that the government of the State meant the person for the time being recognised by the President, on the recommendation of the Legislative Assembly of the State, as the Sadar i Riyasat of Jammu & Kashmir acting on the advice of the Council of Ministers of the State for the time being in force.
On November 18, 1952, Yuvaraj Karan Singh was recognised as the Sadar i Riyasat of Jammu & Kashmir.
On May 14, 1954, another Constitution (Application to Jammu & Kashmir) Order (C. O. 48) was made by the President which inter alia applied article 31A and 31B to the State with certain modifications and included the Act in the Ninth Schedule of the Constitution.
The last two Orders were issued subsequent to the enactment of the Act and so they would have no bearing on the decision of the points raised before us.
We have briefly referred to them for the sake of completing the narrative of the material events.
The validity of the Act is impeached mainly on the ground that Yuvaraj Karan Singh had no authority to promulgate the said Act.
It is this argument which has been urged before us by Mr. Chatterjee in different and alternative forms that needs careful examination.
The first attack against the competence of Yuvaraj Karan Singh proceeds on the assumption that at the time when Maharaja Hari Singh conveyed his powers to Yuvaraj Karan Singh by his proclamation of June 20, 1949, he was himself no more than a constitutional monarch and as such he could convey to Yuvaraj Karan Singh no higher powers.
Let us first deal with this argument.
Prior to the passing of the Independence Act, 1947, the sovereignty of Maharaja 285 Hari Singh over the State of Jammu & Kashmir was subject to such limitations as were constitutionally imposed on it by the paramountcy of the British Crown and by the treaties and agreements entered into between the Rulers of the State and the British Government.
It cannot be disputed that so far as the internal administration and governance of the State were concerned Maharaja Hari Singh, like his predecessors, was an absolute monarch ; and that all powers legislative, executive and judicial in relation to his State and its governance inherently vested in him.
This position has been emphatically brought out by section 3 of Regulation 1 of 1991 (1934).
Though by this Regulation Maharaja Hari Singh gave effect to his intention to provide for the association of his subjects in the matter of legislation and administration of the State, by section 3 he fully preserved in himself all of his pre existing legislative, executive and judicial powers.
Section 3 not only preserves the said powers but expressly provides that nothing contained in the Regulation shall affect or be deemed to have affected the right and prerogative of His Highness to make and pass regulations, proclamations and ordinances by virtue of his inherent authority.
It is thus clear that the rest of the provisions of the Regulation were subject to the overriding powers preserved by His Highness.
It is, however, urged that this constitutional position was substantially altered by the subsequent Constitution Act of 1996 (14 of 1996).
We are unable to accept this argument.
Sections 4 and 5 of this Act in terms continue to preserve all the powers legislative, executive and judicial as well as the right and prerogative of His Highness just as much as section 3 of Regulation 1 of 1991.
It is significant that the provisions of Pt.
II which deals with the executive, like those of Pt.
III which deals with the Legislature, begin with the express provision that they are subject to the provisions of sections 4 and 5.
In other words, the powers conferred on the executive and the Legislature, limited and qualified as they are, are made expressly subject to the overriding powers of His Highness, 286 Besides, there are specific provisions in the Act which clearly emphasise the preservation of the said powers.
Section 24 which enumerates the reserved matters over which the Praja Sabha had no authority to legis late provides by cl.
(i) that the provisions of the Act and the rules made thereunder and their repeal or modifications constitute reserved matters.
Besides cl.(j) confers on His Highness the authority to add other specified matters to the list of reserved matters from time to time.
These provisions make it clear that his Highness could enlarge the list of reserved matters thereby limiting the jurisdiction of the Praja Sabha.
Similarly the legislative procedure prescribed by section 31, sub sections
(2) and (3) clearly shows that it is only such bills as received the assent of His Highness that be came law, His Highness 's power to assent or not to assent to the bills submitted to him being absolutely unfettered.
The ordinances issued by His Highness under section 38 cannot be repealed or altered by the Praja Sabha by virtue of section 39 ; and lastly section 72 expressly preserves the inherent power and prerogative of His Highness.
Thus there can be no doubt that though this Act marked the second step taken by His Highness in actively associating his subjects with the ad ministration of the State, it did not constitute even a partial surrender by His Highness of his sovereign rights in favour of the Praja Sabha.
So far as the said powers are concerned, the constitutional position under this Act is substantially the same as under the earlier Act.
It is contended by Mr. Chatterjee that the prerogative rights which are preserved by sections 5 and 72 of this Act represent only such rights as had not been entrusted to the Praja Sabha and in support of this contention he referred us to the observation made by Dicey that " the discretionary authority of the Crown originates generally not in Act of Parliament, but in the prerogatives term which has caused more perplexity to students than any other expression referring to the constitution.
The prerogative appears to be both historically and as a matter of actual fact nothing else than the residue of discretionary or arbitrary 287 authority, which it any given time is legally left in the hands of the Crown"(1).
This observation has been cited with approval by the House of Lords in the case of Attorney General vs De Keyser 's Royal Hotel Ltd. (2).
We do not see how this statement can assist us in determining the constitutional status, and the extent of the powers, of Maharaja Hari Singh in relation to the governance of the State.
The said discussion in Dicey 's treatise has reference to the special features of the history of English constitutional development; and it would naturally be of no relevance in dealing with the effect of the Constitution of 1996 with which we are concerned.
As we have just indicated this Constitution emphatically brings out the fact that the Maharaja was an absolute monarch and in him vested all the legislative, executive and judicial powers along with the prerogative rights mentioned in sections 5 and 72.
Whilst this was the true constitutional position the Independence Act, 1947, was passed by the British Parliament; and with the lapse of the British paramountcy the Rulers of Indian States were released from the limitations imposed on their sovereignty by the said paramountcy of the British Crown and by the treaties in force between the British Government and the States; this was, however, subject to the proviso prescribed by section 7 of the Independence Act under which effect had to be given to the provisions of the agreements specified in the proviso, until they were denounced by the Rulers of the States or were superseded by subsequent agreements.
In the result, subject to the agreements saved by the proviso, Maharaja Hari Singh continued to be an absolute monarch of the State, and in the eyes of international law he might conceivably have claimed the status of a sovereign and independent State.
But it is urged that the sovereignty of the Maharaj was considerably affected by the provisions of the Instrument of Accession which he signed on October 25, 1947.
This argument is clearly untenable.
It is true that by cl.
I of the (1) Dicey on " Law of the Constitution ", 9th Ed., P. 424.
(2) ; , 526.
288 Instrument of Accession His Highness conceded to the authorities mentioned in the said clause the right to exercise in relation to his State such functions as may be vested in them by or under the Government of India Act, 1935, as in force in the said Dominion on August 15, 1947, but this was subject to the other terms of the Instrument of Accession itself; and el. 6 of the Instrument clearly and expressly recognised the continuance of the sovereignty of His Highness in and over his State.
We must, therefore, reject the argument that the execution of the Instrument of Accession affected in any manner the legislative, executive and judicial powers in regard to the government of the State which then vested in the Ruler of the State.
There is one more argument which has been urged before us on the question of Maharaja Hari Singh 's powers.
It is said that when Maharaja Hari Singh issued his proclamation on March 5, 1948, replacing the emergency administration by a popular interim government headed by Sheikh Mohammad Abdullah and constituting a Council of Ministers who were to function as a Cabinet and act on the principle of joint responsibility, he virtually introduced a popular democratic government in the State, surrendered his sovereign rights, and became a constitutional monarch.
There is no substance in this argument.
The proclamation merely shows that, under pressure of public opinion and as a result of the difficult and delicate problem raised by the tribal raid, the Maharaja very wisely chose to entrust the actual administration of the government to the charge of a popular Cabinet; but the description of the Cabinet as a popular interim government did not make the said Cabinet a popular Cabinet in the true constitutional sense of the expression.
The Cabinet had still to function under ,the Constitution Act 14 of 1996 (1939) and whatever policies it pursued, it had to act under the overriding powers of His Highness.
It is thus clear that until the Maharaja issued his proclamation on June 20, 1949, all his powers legislative, executive and judicial as well as his right and prerogative vested in him as before.
That is why the argument that Maharaja, 289 Hari Singh had surrendered his sovereign powers in favour of the Praja Sabha and the popular interim government, thereby accepting the status of a constitutional monarch cannot be upheld.
The next point which calls for our decision is .
What was the effect of the proclamation issued by Maharaja Hari Singh in favour of Yuvaraj Karan Singh on June 20, 1949 ? The terms of this proclamation have already been set out by us.
There is no doubt that, during the temporary period that the Maharaja wanted to leave the State for reasons of health, he conferred on Yuvaraj Karan Singh all his powers and functions in regard to the government of the State.
Since the Maharaja was himself an absolute monarch, there was no fetter or limitation on his power to appoint somebody else to exercise all or any of his powers.
There was no authority or tribunal in the State which could question his right or power to adopt such a course.
As Chief Justice Kania has observed in Re: (1) " A legislative body which is sovereign like an autocratic Ruler has power to do anything.
It may, like a Ruler, by an individual decision, direct that a certain person may be put to death or a certain property may be taken over by the State.
A body of such character may have power to nominate someone who can exercise all its powers and make all its decisions.
This is possible to be done because there is no authority or tribunal which can question the right or power of the authority to do so ".
Similarly, Mahajan, J., has observed in the same case that " The Parliament being a legal omnipotent despot, apart from being a legislature simpliciter, it can in exercise of its sovereign power delegate its legislative functions or even create new bodies conferring on them power to make laws "; and the learned Judge added that " whether it exercises its power of delegation of legislative power in its capacity as a mere legislature or in its capacity as an omnipotent despot, it is not possible to test it on the touchstone of judicial precedent or judicial scrutiny as courts of justice in England cannot inquire into it ".
In his judgment Mukherjea J., has also made similar (1)[1951] S.C.R. 747.
766, 889, 969.
37 290 observations after quoting the words of Sir Edward Coke in regard to the " transcendent and absolute power and jurisdiction of Parliament ".
What is true of the British Parliament would be truer about an absolute and despotic monarch, the exercise of whose J. paramount power as a sovereign is not subject to any popular and legislative control.
If that be the true position, the proclamation issued by Maharaja Hari Singh authorising Yuvaraj Karan Singh to exercise all his powers would clothe him with all such powers and he would be in the same position as his father so long as the proclamation stood.
Besides, it would be permissible to observe that though the proclamation purports to have been issued on the ground that Maharaja Hari Singh was leaving the State for a temporary period for reasons of health, it was clear even then that the temporary departure of the Maharaja really meant his permanent retirement from the State.
It was realised by him as much as by his subjects that to face the stress and strain caused by the unusual problems raised by the act of aggression against the State, it was necessary that he should quit and young Yuvaraj Karan Singh should take his place.
Thus considered the proclamation really amounted to his abdication and installation by him of Yuvaraj Karan Singh as the Ruler of the State.
It is, however, not necessary to consider any further this aspect of the matter in dealing with the authority of Yuvaraj Karan Singh, because, as we have just held, Maharaja Hari Singh was competent to delegate his powers to Yuvaraj Karan Singh for a temporary period as his proclamation purported to do; and by virtue of such delegation, Yuvaraj Karan Singh was clothed with all the authority which his father possessed as the Ruler of the State until the proclamation was revoked.
Therefore the argument that Maharaja Hari Singh 's proclamation issued on June 20, 1949, did not confer on Yuvaraj Karan Singh the specified powers cannot be accepted.
The next contention is that the powers of Yuvaraj Karan Singh were substantially limited by the proclamation issued by him on November 25, 1949.
We are not impressed even by this argument.
By this 291 proclamation Yuvaraj Karan Singh purported to make applicable to his State the Constitution of India which was shortly going to be adopted by the Constituent Assembly of India in so far as was applicable; in other words, this proclamation did not carry the constitutional position any further than where it stood after and as a result of the execution of the Instrument of Accession by Maharaja Hari Singh.
It is thus clear that the proclamation did not affect Yuvaraj Karan Singh 's authority and powers as the Ruler of the State which had been conferred on him by the proclamation of his father issued in that behalf.
Mr. Chatterjee, however, has very seriously pressed before us his contention that, as a result of the application of certain specified articles of the Constitution to the State of Jammu & Kashmir, all vestiges of sovereignty which Yuvaraj Karan Singh could have claimed had vanished; and in consequence he had become merely a constitutional monarch of the State without any legislative authority or powers.
Indeed it is this part of the case on which Mr. Chatterjee placed considerable emphasis.
In this connection, it would be relevant to recall that by the Constitution Order 10, in addition to the provisions of article 1 and article 370, certain other provisions of the Constitution were made applicable to the State with exceptions and modifications as specified in the Second Schedule.
Articles 245, 254 and 255 as well as article 246 as modified from Pt.
XI of the Constitution were applied to the State.
Similarly from Pt.
XIX article 366 was applied, and from Pt.
XXI articles 370 and 385 were applied.
In this connection it is also necessary to bear in mind that Pt.
VI which deals with the States in Pt.
A of the First Schedule has not been applied, nor has Pt.
VII which consisted of article 238 been applied.
article 238 provides for the application of provisions of Pt.
VI to States in Pt.
B of the First Schedule.
Schedule Seven which consists of the three Legislative Lists has also not been applied.
It is thus clear that though by the application of article I the State became a part of the territory of India and con stituted a State under Part B, the provisions of 292 Pt.
VI and Pt.
VII did not apply to it nor did the Schedule prescribing the three Legislative Lists.
This fact is of considerable importance and significance in dealing with the appellant 's contention.
Since Mr. Chatterjee has strongly relied on the application of article 370 of the Constitution to the State in support of his argument that the Yuvaraj bad ceased to hold the plenary legislative powers, it is necessary to examine the provisions of this Article and their effect.
This Article was intended to make temporary provisions with respect to the State of Jammu & Kashmir.
It reads thus: " article 370: (1) Notwithstanding anything in this Constitution, (a)the provisions of article 238 shall not apply in relation to the State of Jammu & Kashmir; (b)the power of Parliament to make laws for the said State shall be limited to (i)those matters in the Union List and the Con current List which, in consultation with the Government of the State, are declared by the President to correspond to matters specified in the Instrument of Accession governing the accession of the State to the Dominion of India as the matters with respect to which the Dominion Legislature may make laws for that State; and (ii)such other matters in the said Lists as, with the concurrence of the Government of the State, the President may by order specify.
Explanation.
For the purposes of this article, the Government of the State means the person for the time being recognised by the President as the Maharaja of Jammu and Kashmir acting on the advice of the Council of Ministers for the time being in office under the Maharaja 's Proclamation dated the fifth day of March, 1948; (c)the provisions of article I and of this article shall apply in relation to that State; (d)such of the other provisions of this Constitution shall apply in relation to that State subject to such exceptions and modifications as the President may by order specify; 293 Provided that no such order which relates to the matters specified in the Instrument of Accession of the State referred to in paragraph (i) of sub clause (b) shall be issued except in consultation with the Government of the State: Provided further that no such order which relates to matters other than those referred to in the last preceding proviso shall be issued except with the concurrence of that Government.
(2) If the concurrence of the Government of the State referred to in paragraph (ii) of sub clause (b) of clause (1) or in the Second proviso to sub clause (d) of that clause be given before the Constituent Assembly for the purpose of framing the Constitution of the State is convened, it shall be placed before such Assembly for such decision as it may take thereon.
(3)Notwithstanding anything in the foregoing provisions of this article, the President may, by public notification, declare that this article shall cease to be operative or shall be operative only with such exceptions and modifications and from such date as he may specify: Provided that the recommendation of the Constituent Assembly of the State referred to in clause (2) shall be necessary before the President issues such a notification.
" Clause (1) (b) of this Article deals with the legislative power of the Parliament to make laws for the State; and it prescribes limitation in that behalf.
Under paragraph (1) of sub cl.
(b) of cl.
(1) Parliament has power to make laws for the State in respect of matters in the Union List and the Concurrent List which the President in consultation with the Government of the State declares to correspond to matters specified in the Instrument of Accession; whereas in regard to other matters in the said Lists Parliament may, under paragraph (ii), have power to legislate for the State after such other matters have been specified by his order by the President with the concurrence of the Government of the State.
It is significant that paragraph (i) refers to consultation with the Government of the State while paragraph (ii) requires its concurrence, 294 Having thus provided for consultation with, and the concurrence of, the Government of the State, the explanation shows what the Government of the State means in this context.
It means according to the ,appellant, not the Maharaja acting by himself in his own discretion, but the person who is recognised as the Maharaja by the President acting on the advice of the Council of Ministers for the time being in office.
It is on this explanation that the appellant has placed considerable reliance.
Sub clauses (c) and (d) of cl.
(1) of the Article provide respectively that the provisions of article I and of the present Article shall apply in relation to the State; and that the other provisions of the Constitution shall apply in relation to it subject to exceptions and modifications specified by the Presidential order.
These provisions are likewise made subject to consultation with, or concurrence of, the Government of the State respectively.
Having provided for the legislative power of the Parliament and for the application of the Articles of the Constitution to the State, Art .
370, el.
(2) prescribes that if the concurrence of the Government of the State required by the relevant sub cls. of cl.
(1) has been given before the Constituent Assembly of Kashmir has been convened, such concurrence shall be placed before such Assembly for such decision as it may take thereon.
This clause shows that the Constitution makers attached great importance to the final decision of the Constituent Assembly, and the continuance of the exercise of powers conferred on the Parliament and the President by the relevant temporary provisions of article 370(1) is made conditional on the final approval by the said Constituent Assembly in the said matters.
(3) authorises the President to declare by public notification that this article shall cease to be operative or shall be operative only with specified exceptions or modifications; but this power can be exercised by the President only if the Constituent Assembly of the State makes recommendation in that behalf.
Thus the proviso to el.
(3) also emphasises the importance 295 which was attached to the final decision of the Constituent Assembly of Kashmir in regard to the relevant matters covered by article 370.
The appellant contends that the scheme of this Article clearly shows that the person who would be recognised by the President as the Maharaja of Jammu & Kashmir was treated as no more than a constitutional Ruler of the State.
In regard to matters covered by this Article he could not function or decide by himself and in his own discretion.
The con sultation contemplated by this Article had to be with the Maharaja acting on the advice of the Council of Ministers and the concurrence prescribed by it had to be similarly obtained and given, and that brings out the limitations on the powers of the Maharaja.
It is also urged that the final decision in these matters has been deliberately left to the Constituent Assembly which was going to be convened for the framing of the Constitution of the State, and that again emphasises the limitations imposed on the powers of the Maharaja.
This argument assumes that under the explanation to article 370(1) it is the person recognised by the President as the Maharaja who has to act on the advice of ' the Council of Ministers in relation to matters covered by article 370.
But, it is possible to take the view that the said clause really indicates that in recognising any person as the Maharaja of the State the President has to act on the advice of the Council of Ministers for the time being in office under the Maharaja 's proclamation dated March 5, 1948.
If that be the true construction of the explanation, then the argument that, before the Maharaja is consulted or his concurrence is obtained, he must act on the advice of his Ministers would not be valid.
We would, however, like to deal with the argument even on the assumption that the construction put by the appellant on the explanation is right.
On the said construction the question which falls to be determined is: Do the provisions of article 370(1) affect the plenary powers of the Maharaja in the matter of the governance of the State ? The effect of the application of the present Article has to be judged in 296 the light of its object and its terms considered in the context of the special features of the constitutional re lationship between the State and India.
The Constitution makers were obviously anxious that the said relationship should be finally determined by the Constituent Assembly of the State itself; that is the main basis for, and purport of, the temporary provisions made by the present Article ; and so the effect of its provisions must be confined to its subject matter.
It would not be permissible or legitimate to hold that, by implication, this Article sought to impose limitations on the plenary legislative powers of the Maharaja.
These powers had been recognised and specifically provided by the Constitution Act of the State itself; and it was not, and could not have been, within the contemplation, or competence of the Constitution makers to impinge even indirectly on the said powers.
It would be recalled that by the Instrument of Accession these powers have been expressly recognised and preserved and neither the subsequent proclamation issued by Yuvaraj Karan Singh adopting, as far as it was applicable, the proposed Constitution of India, nor the Constitution Order subsequently issued by the President, purported to impose any limitations on the said legislative powers of the Ruler.
What form of government the State should adopt was a matter which had to be, and naturally was left to be, decided by the Constituent Assembly of the State.
Until the Constituent Assembly reached its decision in that behalf, the constitutional relationship between the State and India continued to be governed basically by the Instrument of Accession.
It would therefore be unreasonable to assume that the application of article 370 could have affected, or was intended to affect, the plenary powers of the Maharaja in the matter of the governance of the State.
In our opinion, the appellant 's contention based on this Article must therefore be rejected.
The application of articles 245, 254 and 255, and of article 246 as modified,, does not seem to have any bearing on the question of the authority and powers of the Ruler of the State.
Their application merely serves to provide for the legislative powers of the Parliament 297 to make laws in respect of matters covered by article 370.
Incidentally we may point out that the application of articles 246 and 254 as provided by the Constitution Order 10 of 1950 has been subsequently modified by the Constitution Order 48 of 1954.
Similarly article 255 which was originally applied by the first Order has been deleted by the latter Order.
This shows that it was subsequently realised that the original application of the said Articles prescribed by the earlier Order was more anticipatory and notional and required either suitable modification or cancellation.
The appellant has then relied upon the provisions of article 385.
It provides: " article 385.
Until the House or Houses of the Legislature of a State specified in Part B of the First Schedule has or have been duly constituted and summoned to meet for the first session under the provisions of this Constitution, the body or authority functioning immediately before the commencement of this Constitution as the Legislature of the corresponding Indian State shall exercise the powers and perform the duties conferred by provisions of this Constitution on the House or Houses of the Legislature of the State so specified.
" It is difficult to see how this Article supports the appellants contention.
In fact it is not easy to appreciate what the application of this Article to the State really meant.
As we have already pointed out the application of the specified Articles to the State was not intended to affect, and constitutionally could not have affected, the form of the government prevailing in the State and the plenary legislative powers of the Maharaja in regard to the government of the State.
As in regard to the application of articles 245, 254 and 255, so in regard to this Article as well, it was subsequently realised that the application of the Article was purely notional and could serve no purpose.
That is why by C. O. 48 of 1954 this Article has been deleted from the list of Articles applied to the State.
It seems to us that the initial formal application of this Article cannot justify the appellant 's case that the plenary legislative powers vesting in the Ruler of the State 38 298 were not only affected but, as the appellant contends, completely extinguished.
The constitutional position in regard to the government of the State continued to be the same despite the application of this Article.
In dealing with the application of this Article and articles 245, 254 and 255, it would be permissible to rely on the rule of construction set out in Maxwell that " a thing which is within the letter of a statute is generally to be considered as not within the statute unless it is also the real intention of the Legislature It is evident that the Constitution makers have treated the problem of Kashmir on a special basis and that though the association of Kashmir with India which began with the Instrument of Accession has been steadily and gradually growing closer and closer on a democratic basis, it still presents features not common to any other State included in the Union of India.
We have no doubt that at the time when the Act was passed the plenary legislative powers of the Yuvaraj had not been affected in any manner.
The result is that Yuvaraj Karan Singh was competent to enact the Act in 1950 and so the challenge to the validity of the Act on the ground that he did not possess legislative competence in that behalf cannot succeed.
It is clear that the validity of the Act cannot be chal lenged on the ground that the Act did not provide for the payment of compensation.
For one thing section 26 of the Act did contemplate the payment of compensation.
Besides, as the law of the State then stood, there was no limitation on the legislative power of the Ruler such as is prescribed by article 31 of the Constitution; and article 31 had not been then applied to the State.
Subsequently when article 31(2) was extended to the State the Act no doubt became the existing law and it has been saved by the new and modified cl.
(5) of the said Article.
There is another aspect of the matter to which reference must be made.
Section 26 of the Act had left the final decision on the question of the payment of compensation to the Constituent Assembly of the State; and it is common ground that the Constituent Assembly has decided not to pay any compensation.
Mr. Chatterjee contends that this decision is (1) Maxwell on " Interpretation of Statutes ", 10th Ed., P. 17.
invalid because the Constituent Assembly itself was, not properly called and constituted.
There is no substance in this argument.
After Yuvaraj Karan Singh was put in charge of the duties of governing the State by Maharaja Hari Singh by his proclamation issued on June 20, 1949, he began to function as a Ruler and was entitled to exercise all his powers in that behalf He realised that the original plan of Maharaja Hari Singh to call a national assembly which he announced on March 5, 1948, would not meet the requirements of the situation which had radically changed; and the Yuvaraj thought that a Constituent Assembly on a broader basis should be called and should be entrusted with the task of framing a Constitution without any delay.
It is idle to suggest that the Yuvaraj was bound to convene the national assembly on the same lines as were laid down by Maharaja Hari Singh in his proclamation and with the same object, for the same purpose, and subject to the same conditions.
It was for the Yuvaraj to consider the situation which confronted him and it was within his competence to decide what solution would satisfactorily meet the requirements of the situation.
We have no doubt that the Yuvaraj was perfectly competent to issue the proclamation on April 20, 1951, under which the Constituent Assembly ultimately came to be elected and convened.
If the Constituent assembly was properly constituted and it decided not to pay any compensation to the landlords it is difficult to understand how the validity of this decision can be effectively challenged.
That leaves only one question to be considered.
It is contended that the Act is invalid under article 254 of the Constitution because it is inconsistent with the two earlier Acts, No. 10 of 1990 and No. 4 of 1977.
It is unnecessary to enquire whether there is any repugnancy between the Act and the earlier Acts to which the appellant refers.
In our opinion the argument based on the provisions of article 254 must be rejected on the preliminary ground that it is impossible to invoke the assistance of this Article effectively because in terms the essential conditions for its application are absent in the present case.
This argument assumes that under article 254(1) if there is repugnancy between 300 any provision of a law made by the Legislature of a State and any provision of an existing law with respect to One of the matters enumerated in the Concur rent List, then subject to the provisions of cl.
(2), the law made by the Legislature of the State was to the extent of the repugnancy void.
The appellant concedes that there is no scope for applying the provisions of el.
(2) of article 254 which deals with cases where the subsequent law has been reserved for the consideration and assent of the President; but this aspect of the matter itself shows that the whole Article would in substance be inapplicable to the State.
Clause (2) of article 254, which is its integral and important part, postulates that the Legislature of the State, in enacting a law on the relevant matter may reserve it for consideration of the President and his assent, and thereby save the consequences of cl.
(1) ; and cl.
(2) was clearly inapplic able to the State.
Besides, it is clear that the essential condition for the application of article 254(1) is that the existing law must be with respect to one of the matters enumerated in the Concurrent List; in other words, unless it is shown that the repugnancy is between the provisions of a subsequent law and those of an existing law in respect of the specified matters, the Article would be inapplicable; and, as we have already pointed out, Schedule Seven which contains the three Legislative Lists was not then extended to the State; and it is, therefore, impossible to predicate that the matter covered by the prior law is one of the matters enumerated in the Concurrent List.
That is why article 254 cannot be invoked by the appellant.
On this view, it is not necessary to consider whether the construction sought to be placed by the appellant on this Article is otherwise correct or not.
The result is that all the grounds urged by the appellant against the validity of the Act fail, and so it must be held that the High Court was right in taking the view that the plaintiff had not shown that the Act was ultra vires.
The appeal accordingly fails and is dismissed with costs.
Appeal dismissed.
| This appeal challenged the validity of the Jammu and Kashmir Big Landed Estate Abolition Act, XVII Of 2007 which was enacted by Yuvaraj Karan Singh on October 17, 1950, in exercise of the powers vested in him by section 5 of the Jammu and Kashmir Constitution Act 14 of 1996 (1930) and the final proclamation issued by Maharaja Hari Singh on June 20, 1949, by which he entrusted all his powers and function to the Yuvaraj.
The object of the Act was to improve agricultural production by abolishing big landed estates and transferring land to the actual tillers of the soil.
The suit out of which the present appeal arises was brought by the appellant in a representative capacity for a declaration that the Act was void, inoperative and ultra vires and that he was entitled to retain peaceful possession of his lands.
Both the trial Court as also the High Court in appeal found against him and dismissed the suit.
Hence this appeal by special leave.
The validity of the Act was challenged mainly on the ground that Yuvaraj Karan Singh had no authority to promulgate the Act.
It was contended that (i) when Maharaja Hari Singh conveyed his powers to the Yuvaraj by his proclamation of June 20, 1949, he was himself a constitutional monarch and could convey no higher powers, (2) the said proclamation could not confer on the Yuvaraj the powers specified therein, (3) the powers of the Yuvaraj were substantially limited by his own proclamation issued on November 25, 1949, by which he sought to make applicable to his State the Constitution of India, that was soon to be adopted by its Constituent Assembly, in so far as it was applicable, (4) as a result of the application of certain specified Articles, including article 370 of the Constitution of India to the State of Jammu Kashmir, the Yuvaraj became a constitutional monarch without any legislative authority or powers and (5) the decision of the Constituent Assembly of the State not to pay compensation was invalid since the Assembly itself was not properly constituted.
Held, that Yuvaraj Karan Singh, when lie promulgated the Act, had the power to do so and its validity was beyond question.
271 It was indisputable that prior to the passing of the Independence Act, 1947, Maharaja Hari Singh like his predecessors, was an absolute monarch so far as the internal administration of his State was concerned.
Section 3 Of the Regulation 1 of 1991 (1934) issued by the Maharaja not only preserved all his preexisting powers but also provided that his inherent right to make any regulation, proclamation or ordinance would remain unaffected.
The Constitution Act 14 of 1996 (1939) promulgated by him did not alter the position.
Sections 4 and 5 of that Act preserved all the powers that he had under section 3 of the Regulation 1 of 1991 and section 72 preserved his inherent powers so that he remained the same absolute monarch as he was before.
With the lapse of British paramountcy on the passing of the Independence Act, 1947, the Maharaja continued to be the same absolute monarch, subject to the agreements saved by the proviso to section 7 Of the Act, and in the eyes of international law could conceivably claim the status of an independent sovereign.
It was unreasonable to suggest that the provisions of the Instrument of Accession signed by the Maharaja on October 25, 1947, affected his sovereignty, in view of cl. 6 thereof, which expressly recognised its continuance in and over his State.
There was no substance in the argument that as a result of his proclamation issued on March 5, 1948, which replaced the emergency administration by a popular interim Government headed by Sheik Mohammad Abdullah and constituted a Council of Ministers who were to function as a cabinet, the Maharaja became a constitutional monarch.
The cabinet had still to function under the Constitution Act 14 of 1996 (1939) under the overriding powers of the Maharaja.
When the Maharaja on June 20, 1949, therefore, issued the proclamation authorising the Yuvaraj to exercise all his powers, although for a temporary period, it placed the Yuvaraj in the same position as his father till the proclamation was revoked.
The Maharaja was himself an absolute monarch and there could be no question as to his power of delegation.
In Re. ; , , referred to.
The proclamation issued by the Yuvaraj on November 25, 1949, did not vary the constitutional position as it stood after the execution of the Instrument of Accession by the Maharaja nor could it in any way affect the authority conferred on the Yuvaraj by his father.
The contention that the application of certain specified Articles of the Indian Constitution to the State by the Constitution (Application to Jammu and Kashmir) Order (C. O. 10) issued by the President on January 26, 1950, affected the sovereign powers of the Yuvaraj was not correct.
Neither the scheme of article 370 nor the explanation to cl.
(1) of that Article Contemplated that the Maharaja was to be a constitutional ruler.
The temporary provisions of that Article were 272 based on the assumption that the ultimate relationship between India and the State should be finally determined by the Constituent Assembly of the State itself.
So, that Article could not, either expressly or by implication, be intended to limit the plenary legislative powers of the Maharaja.
Till the Constituent Assembly of the State, therefore, made its decision, the Instrument of Accession must hold the field.
The initial formal application of article 385, which was sub sequently deleted from the list of Articles applied to the State, could not justify the conclusion that it had adversely affected the legislative powers of the Yuvaraj.
There was no substance in the contention that the decision of the Constituent Assembly not to pay compensation was invalid as the Assembly itself was not properly called or constituted.
There could be doubt that the Yuvaraj was perfectly competent to issue the proclamation dated April 20, 1951 in variation of the Maharaja 's, under which the Assembly was ultimately constituted, and so the Assembly was properly convened.
|
Summarize this legal judgement text concisely | Appeal No. 239 of 1955.
Appeal from the Judgment and Decree dated the 30th November, 1953, of the former Nagpur High Court in First Appeal No. 118 of 1947, arising out of the Judgment and Decree dated the 12th August, 109 1947, of the Court of the Additional District Judge, Wardha, in Civil Suit No. 9 A of 1946.
M. C. Setalvad, Attorney General for India, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the appellants.
M. Adhikari, Advocate General for the State of Madhya Pradesh and 1.
N. Shroff, for the respondent.
January 21.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J.
This is an appeal by the widow, and the minor son of Mangilal, defendant 1, and it has been filed with a certificate by the High Court of Judicature at Nagpur.
It arises out of a suit filed by the respondent Shrimati Lilabai w/o Vrijpalji, for the specific performance of a contract to lease or in the alternative for damages and for a declaration against defendant 2, the daughter of defendant 1 that she has no right, title or interest in the property in suit.
The respondent 's case was that defendant I had executed an instrument (exhibit P 1) in favour of the respondent by which he had contracted to lease to her in perpetuity in occupany right his four khudkasht lands admeasuring 95.19 acres situated in Mouza Mohammadpur in consideration of the debt of Rs. 8,700.
According to the respondent the instrument had provided that, if defendant 1 did not repay to her the said debt on June 1, 1944, the said contract of lease would be operative on and from that date.
Defendant 1 did not repay the loan by the stipulated date and so he became liable to perform and give effect to the said contract of lease on June 1, 1944.
The respondent repeatedly called upon defendant 1 to perform the said contract, but defendant I paid no heed to her demands and so she had to file the present suit for specific performance.
The respondent had been and was still ready and willing to specifically perform the agreement and to accept a deed of lease for the lands in question in lieu of the said debt of Rs. 8,700.
Defendant 1, however, had been guilty of gross and unreasonable delay in performing his part of the con tract and that had caused the respondent the loss of 110 the benefit of the lease and consequent damage.
On these allegations the respondent claimed specific performance of the contract and an amount of Rs. 2,340 as compensation or in the alternative damages amounting to Rs. 11,080.
To this suit Mst.
Durgabai, the daughter of defendant I had been impleaded as defendant 2 on the ground that she was setting up her own title in respect of the lands in suit and a declaration was claimed against her that she had no right, title or interest in the said lands.
Defendant 2 filed a written statement contesting the respondent 's claim for a declaration against her but she did not appear at the trial which proceeded exparte against her.
In the result defend ant 1 was the only contesting defendant in the proceedings.
Several pleas were raised by defendant I against the respondent 's claim.
He denied the receipt of the consideration alleged by her and he pleaded that the document (exhibit P 1) was a bogus, sham and collusive document which had been brought into existence for the purpose of shielding his property from.
his creditors and it was not intended to be acted upon.
It was also urged by him that the said document, if held to be genuine, was an agreement to lease under section 2(7) of the Indian , and since it was not registered it was inadmissible in evidence.
The learned trial judge framed appropriate issues on these pleadings and found against defendant I on all of them.
Accordingly a decree was passed ordering defendant 1 to execute a lease deed in respect of the fields mentioned in the plaint on a proper stamp paper in occupancy right in favour of the respondent and to put her in possession of them.
A decree for the payment of Rs. 2,316 by way of compensation was also passed against him.
The declaration claimed by respondent against defendant 2 was likewise granted.
This decree was challenged by defendant 1 by his appeal before the High Court of Judicature at Nagpur.
Pending the appeal defendant I died and his widow and his minor son came on the record as his 111 legal representatives and prosecuted the said appeal.
The High Court held that the document was supported by consideration, that it was not an agreement to lease under section 2(7) of the Indian and therefore it did not require registration and was admissible in evidence.
In the result the decree passed by the trial court was confirmed and defendant 1 's appeal was dismissed.
The present appellants then applied to the High Court for leave to appeal to this Court and the High Court granted leave because it held that the basic question involved in the decision of the appeal was the legal effect of exhibit P 1 and that the construction of a document of title is generally regarded as a substantial question of law.
It is with this certificate that the present appeal has come before this Court, and it raises two questions for our decision: Is the document (exhibit P 1) an agreement to lease under section 2(7): If not, does it require registration under section 17 of the said Act ? All other issues which arose between the parties in the courts below are concluded by concurrent findings and they have not been raised before us.
Before dealing with these points, we must first consider what the expression " an agreement to lease " means under section 2(7) of the Indian , hereinafter referred to as the Act.
Section 2(7) provides that a lease includes a counterpart, kabuliyat, an undertaking to cultivate and occupy and an agreement to lease.
In Hemanta Kumari Debi vs Midnapur Zamindari Co. Ltd. (1) the Privy Council has held that " an agreement to lease, which a lease is by the sta tute declared to include, must be a document which effects an actual demise and operates as a lease ".
In other words, an agreement between two parties which entitles one of them merely to claim the execution of a lease from the other without creating a present and immediate demise in his favour is not included under section 2, sub section
In Hemanta Kumari Debi 's case (1) a petition setting out the terms of an agreement in compromise of a suit stated as one of the (1) (1919) L. R. 46 1. A. 240.
112 terms that the plaintiff agreed that if she succeeded in another suit which she had brought to recover certain land, other than that to which the compromised suit related, she would grant to the defendants a lease of that land upon specified terms.
The petition was recited in full in the decree made in the compromised suit under section 375 of the Code of Civil Procedure, 1882.
A subsequent suit was brou ght for specific performance of the said agreement and it was resisted on the ground that the agreement in question was an agreement to lease under section 2(7) and since it was not registered it was inadmissible in evidence.
This plea was rejected by the Privy Council on the ground that the document did not effect an actual demise and was outside the provisions of section 2(7).
In coming to the conclusion that the agreement to lease under the said section must be a document which effects an actual demise the Privy Council has expressly 'approved the observations made by Jenkins, C. J., in the case of Panchanan Bose vs Chandra Charan Misra (1) in regard to the construction of section 17 of the Act.
The document with which the Privy Council was concerned was construed by it as " an agreement that, upon the happening of a contingent event at a date which was indeterminate and, having regard to the slow progress of Indian litigation, might be far distant, a lease would be granted "; and it was held that " until the happening of that event, it was impossible to determine whether there would be any lease or not ".
This decision makes it clear that the meaning of the expression " an agreement to lease " " which, in the context where it occurs and in the statute in which it is found, must relate to some document that creates a present and immediate interest in the land ".
Ever since this decision was pronounced by the Privy Council the expression " agreement to lease " has been consistently construed by all the Indian High Courts as an agreement which creates an immediate and a present demise in the property covered by it.
It would be relevant now to refer to the observations (1) Cal.
113 of Jenkins, C. J., in the case of Panchanan Bose (1).
In that case, a solehnama by which no immediate interest in immoveable property was created was held not to amount to a lease within the meaning of cl.
(d) of section 17 of the Act but merely an agreement to create a lease on a future day.
" Such a document ", it was observed, " fell within cl.
(h) of section 17 and as such was admissible in evidence without registration ".
Jenkins, C. J., held that " on a fair reading of the document, no immediate interest was created, there was no present demise, and the document was merely an agreement to create a lease on a future day, the terms of which were to be defined by documents to be thereafter executed ".
" This being so ", said the learned C. J., " I think the appellants I rave rightly contended before us that the document was admissible in evidence as it falls within cl.
(h) of section 17 of the Indian ".
This decision would show that an agreement which creates no immediate or present demise was not deemed to be a lease under section 2(7) and so it was hold to fall within section 17(h) of the Act and this view has been specifically affirmed by the Privy Council in Hemanta Kumari Debi 's case (2).
It is true that in Narayanan Chetty vs Muthiah Servai (3) a Full Beach of the Madras High Court had held that an agreement to execute a sub lease and to get it registered at a future date was a lease within section 3 of the Indian of 1877 (III of 1877) and was compulsorily registrable under el.
(d) of section 17.
Such an agreement to grant a lease which requires registration, it was held, affects immoveable property and cannot be received in evidence in a suit for specific performance of an agreement.
The question which was referred to the Full Bench apparently assumed that the agreement in question required registration and the point on which the decision of the Full Bench was sought for was whether such an agreement can be received in evidence in a suit for specific performance (1) where possession is given in pursuance of an agreement, and (2) where it is not; and the Full Bench (1) Cal. 808.
(2) [1919] L.R. 46 I.A. 240.
(3) Mad.
15 114 answered this question in the negative. " An agreement to lease ", it was observed in the judgment of the Full Bench, " is expressly included in the definition of the lease in the while it cannot be suggested that an agreement to sell falls within any definition of sale ".
It is clear that the question about the construction of the words " agreement to lease " was not specifically argued before the Full Bench, and the main point considered was the effect of the provisions of section 49 of the Act.
In that connection the argument had centred round the effect of the provisions of cl.
(h) of section 17 of the and section 54 of the Transfer of Property Act.
The Full Bench took the view that in enacting section 49 of the Act the Legislature meant to indicate that the instrument should not be received in evidence even where the transaction sought to be proved did not amount to a transfer of interest in immoveable property but only created an.
obligation to transfer the property.
A contract to sell immovable property in writing, though it may affect the property without passing an interest in it, is exempted from registration by clause (h) (now cl. 2 (v)) of section 17 but an agreement in writing to let, falling within cl.
(d) of section 17, is not.
That is why, according to the Full Bench, such an agreement cannot be received in evidence of the transaction which affects the immovable property comprised therein.
Thus this decision does not directly or materially assist us in construing the expression " agreement to lease ".
Besides, the said decision has not been followed by the Madras High Court in Swaminatha Mudaliar vs Ramaswami Mudaliar (1) on the ground that it can no longer be regarded as good law in view of the decision of the Privy Council in Hemanta Kumari Debi 's case(2), and, as we have already pointed out, all the other High Courts in India have consistently followed the said Privy Council decision.
The learned Attorney General has, however, contended before us that the correctness of the decision of the Privy Council in Hemanta Kumari Debi 's case (2) is open to doubt and he has suggested that we (1) Mad. 399.
(2) (1919) L.R. 46 I A. 240.
115 should re examine the point on the merits afresh.
We do not think there is any substance in this contention because, if we may say so with respect, the view taken by the Privy Council in the said case is perfectly right.
Section 17(1) of the Act deals with documents of which registration is compulsory.
It is obvious that the documents falling under cls.
(a), (b), (c) and (e) of sb section
(I ') are all documents which create an immediate and present demise in immovable properties mentioned therein.
The learned Attorney General 's argument is that cl.
(d) which deals with leases does not import any such limitation because it refers to leases of immoveable properties from year to year or any term exceeding one year or reserving a yearly rent; and the Act deliberately gives an inclusive definition of the term 'lease ' in section 2(7).
This argument, however, fails to take into account the relevant provisions of the Transfer ' of Property Act.
Section 4 of the said Act provides that section 54, paragraphs 2 and 3, 59, 107 and 123 shall be read as supplemental to the Indian .
Section 107 is material for our purpose.
Under this section a lease of immoveable property from year to year or for any term exceeding one year or reserving a yearly rent can be made only under a registered instrument.
This section also lays down that where a lease of immoveable property is made by a registered instrument, such instrument, or, where there are more instruments than one, each instrument, shall be executed by both the lessor and the lessee.
It would be noticed that if section 107 has to be read as supplemental to the Act, the definition of the word I lease ' prescribed by section 105 would inevitably become relevant and material; and there is no doubt that under section 105 a lease of immoveable property is a transfer of right to enjoy such property made in the manner specified in the said section.
Therefore, it would not be right to assume that leases mentioned in cl.
(d) of section 17, sub section
(1), would cover cases of documents which do not involve a present and immediate transfer of leasehold rights.
It would thus be reasonable to hold that, like the instruments mentioned in cls.
(a), (b) and (c) of section 17(1), leases also are instruments 116 which transfer leasehold rights in the property immediately and in presenti.
We have already referred to the requirement of section 107 of the Transfer of Property Act that a lease must be executed both by the lessor and the lessee.
It may be pertinent to point out that an instrument signed by the lessor alone which may not be a lease under section 107 may operate as an agreement to lease under section 2(7) of the Act.
The legislative history of the provisions of section 17(2)(v) may perhaps be of some assistance in this connection.
Section 17(h) of Act III of 1877 which ,corresponds to the present section 17(2) (v) did not appear in the earlier Registration Acts of 1864,1866 and 1871.
Its introduction in Act III of 1877 became necessary as a result of the decision of the Privy Council in Fati Chand Sahu vs Lilambar Singh Das (1) in which it was held that an agreement to sell immoveable property for Rs. 22,500 coupled with an acknowledgment of the receipt of Rs. 7,500 and a promise to execute a sale deed on the payment of the balance was compulsorily registrable under section 17 of the Act (2).
Section 17(h) was therefore enacted in 1877 to make it clear that a document which does not itself create an interest in the immoveable property does not require registration even if it expressly contemplates and promises the creation of that interest by a subsequent document; in other words, contracts of sale and purchase of which specific performance would be granted under certain circumstances fall within this provision and would no longer be governed by the said decision of the Privy Council in the case of Fati Chand Sahu vs Lilambar Singh Das (1).
Thus the policy of the Legislature clearly is to exclude from the application of cls.
(b) and (c) of section 17(1) agreements of the said character.
On principle, there is no difference between such agreements of sale or purchase and agreements to lease.
Under both classes of documents no present or immediate demise is made though both of them may lead to a successful claim for a specific performance.
That is why the Privy Council observed in the (1) ; 14 M. L. A. 129.
(2) Act XX of 1866.
117 case of Hemanta Kumari Debi (1) that the context and the scheme of the statute justified the view taken by Jenkins, C. J., in the case of Panchanan Bose (2).
It may also be relevant to bear in mind that the other documents which are included within the word I lease ' by section 2(7) of the Act support the same conclusion.
A counterpart, as it is usually understood, is a writing by which a tenant agrees to.
pay a specified rent for the property let to him and signed by him alone.
It is thus in the nature of a counterpart of a lease and as such it is included within the meaning of the word I lease ' under section 2(7).
Same is the position of a kabuliyat and an undertaking to cultivate or occupy.
In other words, it is clear that all the four instruments which, under the inclusive definition of section 2(7), are treated as leases satisfy the test of immediate and present demise in respect of the immoveable property covered by them.
We must, therefore, hold that the expression " an agreement to lease " covers only such agreements as create a present demise.
Let us now proceed to deal with the question as to whether the document (exhibit P 1) constitutes " an agreement to lease "It purports to be a receipt executed in favour of the respondent by defendant I and bear a four anna revenue stamp.
" I have this day giver to you ", says the document, " the land described below which is owned by me.
Now you have become occupancy tenant of the same.
You may enjoy the same in any way you like from generation to generation.
My estate and heirs or myself shall have absolutely no right thereto.
You shall become the owner of the said land from date 1 6 1944.
1 will have absolutely no right thereto after the said date ".
The the document proceeds to mention the properties and describes them in detail, and it adds " all the above fields are situate at Mouza Mohammadpur, mouz No. 312, tahsil Arvi, district Wardha.
The estat described above has been given to you in lieu of you Rs. 8,700 due to you, subject to the condition that case your amount has not been paid to you on date 1 6 1944, you may fully enjoy the estate describe, (1) (1919) L.R. 46 I.A. 240.
(2) Cal.
118 above in any way you like from generation to generation ".
The question for our decision is: Does this document amount to an agreement to lease under section 2(7) of the Act ? In construing this document it is necessary to remember that it has been executed by laymen without legal assistance, and so it must be liberally construed without recourse to technical considerations.
The heading of the document, though relevant, would not determine its character.
It is true that an agreement would operate as a present demise although its terms may commence at a future date.
Similarly it may amount to a present demise even though parties may contemplate to execute a more formal document in future.
In considering the effect of the document we must enquire whether it contains unqualified and unconditional words of present demise and includes the essential terms of a lease.
Generally if rent is made payable under an agreement from the date of its execution or other specified date, it may be said to create a present demise.
Another relevant test is the intention to deliver possession.
If possession is given under an agreement and other terms of tenancy have been set out, then the agreement can be taken to be an agreement to lease.
As in the construction of other documents, so in the construction of an agreement to lease, regard must be had to all the relevant and material terms; and an attempt must be made to reconcile the relevant terms if possible and not to treat any of them as idle surplusage.
The learned Attorney General contends that this document is not a contingent grant of lease at all.
According to him it evidences a grant of lease subject to a condition and that shows that a present demise is itended by the parties.
He naturally relies upon the opening recitals of the document.
According to him, when the document says that defendant I has given to the respondent the land described below and that the respondent has become occupancy tenant of the same, it amounts to a clear term of present demise.
A similar recital is repeated in the latter part of the document where it is stated that the estate described 119 above has been given to the respondent in lieu of Rs. 8,700 due to her.
In our opinion, it would be unreasonable to construe these recitals by themselves, apart from, the other recitals in the document.
We cannot lose sight of the fact that the document expressly states that the respondent shall become the owner of the land from 1 6 1944 and that defendant I ' would have no title over it after that date.
This recital also is repeated in the latter part of the document; and it makes the intention of the parties clear that it is only if the amount of debt is not rapid by defendant I on the date specified that the agreement was to come into force.
In other words, reading the document as a whole it would be difficult to spell out a present or immediate demise of the occupancy rights in favour of the respondent.
In this connection the fact that the document is described as a receipt may to some extent be relevant.
It is clear that by executing this document the defendant wanted to comply with the respondent 's request for acknowledging the receipt of the amount coupled with the promise that the amount would be repaid on 1 6 1944.
The defendant also wanted to comply with the respondent 's demand that, if the amount was not repaid on the said date, he would convey the occupancy rights in his lands to her.
Besides, it is significant that the document does not refer to the payment of rent and does not contemplate the delivery of possession until 1 6 1944.
If the document had intended to convey immediately the occupancy rights to the respondent it would undoubtedly have referred to the delivery of possession and specified the rate at which, and the date from which. the rent had to be paid to her.
The stamp purchased for the execution of the document also incidentally shows that the document was intended to be a receipt and nothing more.
Under section 2 of the Central Provinces Land Revenue Act, 1917 (C. P. II of 1917) an agricultural year commences on the first day of June and it is from this date that the agreement would have taken effect if defendant I had not repaid the debt by then.
It is clear that the respondent was not intended to be treated as an 120 occupancy tenant between the date of the document and June 1, 1944.
During that period the agreement did not come into operation at all.
In other words, it is on the contingency of defendant 's failure to repay the amount on June 1, 1944, that the agreement was to take effect.
We have carefully considered the material terms of the document and we are satisfied that it was not intended to, and did not, effect an actual or present demise in favour of the respondent.
In our opinion, therefore, the High Court was right in holding that the document was not an agreement to lease under section 2(7) of the Act and so did not require registration.
We would now briefly refer to some of the decisions on which the learned Attorney General relied in support of his construction of the document.
In Purmananddas Jiwandas vs Dharsey Virji (1), the agreement between the parties had expressly provided that the lease in question was to commence from October 1, 1882, though the agreement was executed seven days later, that the rent was to commence from that day and the rent then due was to be paid by the next day.
It is in the light of these specific terms that the Bombay High Court held that the relevant words in the document operated as an actual demise.
None of these conditions is present in the document with which we are concerned.
Similarly in Pool vs Bentley (2), by the instrument in question, Poole had agreed to let unto Bentley, and Bentley had agreed to take, all that piece of land described for the term of 61 years at the yearly rent of pound 120 free and clear of all taxes, the said rent to be paid quarterly, the first quarter 's rent within 15 days after Michaelmas 1807, and that in consideration of the lease, Bentley had agreed within the space of four years to expend and lay out in 5 or more houses of a third rate or class of building 2000 and Poole had agreed to grant a lease or leases of the said land and premises as soon as the said 5 houses were covered in.
In dealing with the construction of this document Lord (1) Bom.
(2) ; ; 121 Ellenborough, C. J., observed that the rule to be collected from the relevant decisions cited before him was that the intention of the parties as described by the words of the instrument must govern the construction and that the intention of the parties to the document before him appeared to be that the tenant, who was to have spent so much capital upon the premises within the first four years of the term, should have a present legal interest in the term which was to be binding upon both parties; though, when certain progress was made in the building, a more formal lease or leases might be executed.
This decision only shows that if the intention is to effect a present demise the fact that a further formal document is contemplated by the parties would not detract from the said intention.
It would, however, be noticed that the document in that case contained a stipulation for the payment of the rent and the tenant was to be let into possession immediately.
This case also does not assist the appellant.
In Satyadhyantirtha Swami vs Raghunath Daji (1) the contract of lease was contained in two documents which showed that the lands were being cultivated by Appaji and Ravji who had signed the first document.
and that they were authorised to continue ' in occupation of the lands on terms mentioned in the first document.
The argument that a part of the agreement would not come into operation till some years later, it was held, did not operate to make the document other than a present demise.
It is difficult to appreciate how this decision can assist us in construing the present document.
In Balram vs Mahadeo (2) the Nagpur High Court was dealing with an instrument which purported to be a receipt and the terms of which seemed to contemplate the execution of a sale deed in respect of the properties covered by it.
Even so, the material clause was that "I it is agreed to give to you both the above fields in occupancy rights ".
It was held that, on a fair and reasonable construction, the document was (1) A.I.R. 1926 Bom.
(2) I.L.R. 16 122 intended to affect a transfer of the occupancy right in presenti and was as such an agreement to lease.
No doubt, as observed by Bose, J., " on a superficial view of the document it would not appear to be an agreement to lease.
But in construing a transaction one has to look beneath the verbiage and ascertain what are the real rights which are being transferred.
When that is done, we consider that this document is an agreement to lease despite the fact that it calls itself a receipt and speaks throughout of a sale ".
It is unnecessary to consider the merits of the conclusion rea ched by the Nagpur High Court in this case.
It would be enough to say that the said decision would not afford any assistance in construing the document before us.
Besides it is obvious that in construing documents, the usefulness of the precedents is usually of a limited character; after all courts have to consider the material and relevant terms of the document with which they are concerned; and it is on a fair and reasonable construction of the said terms that the nature and character of the transaction evidenced by it has to be determined.
In our opinion, the High Court was right in holding that the instrument (exhibit P 1) was not an agreement to lease under section 2(7) of the Act.
The result is the appeal fails and must be dismissed with costs.
Appeal dismissed.
| A document purporting to be a receipt and bearing a four anna revenue stamp was executed by M in favour of the respondent and recited, inter alia, as follows: " I have this day given 108 to you the land described below which is owned by me.
Now you have become occupancy tenant of the same.
You may enjoy the same in any way you like from generation to generation.
My estate and heirs or myself shall have absolutely no right thereto.
You shall become the owner of the said land from date 1 6 44.
I will have absolutely no right thereto after the said date. .
The estate. has been given to you in lieu of your Rs. 8,700 due to you, subject to the condition that in case your amount has not been paid to you on date 1 6 44, You may fully enjoy the estate in any way you like from generation to generation.
" The respondent instituted a suit against M for the specific performance of a contract to lease alleging that under the document he had contracted to lease to her in perpetuity in occupancy right his lands in consideration of the debt of Rs. 8,7oo and as the amount was not paid within the due date, he was liable to perform and give effect to the said contract.
M contended, inter alia, that the document was an agreement to lease under section 2(7) of the Indian , and that as it was not registered it was inadmissible in evidence.
Held, that an agreement to lease under section 2(7) of the Regis tration Act, 1908, must be a document which effects an actual demise and operates as a lease.
An agreement between two parties which entitles one of them merely to claim the execution of a lease from the other without creating a pre sent and immediate demise in his favour is not an agreement to lease within the meaning of section 2(7) of the Act.
Held, further, that on a construction of the document in question, it was not intended to, and did not, effect an actual or present demise in favour of the respondent and consequently it was not an agreement to leaseunders.
2(7) Of the Act.
Accordingly, the document did not require registration and was admissible in evidence.
Hemanta Kumari Devi vs Midnapuy Zamindari Co., Ltd., (1919) L.R. 46 I.A. 240, relied on.
Panchanan Bose vs Chandya Charan Misra, Cal. 808, approved.
Narayanan Chetty vs Muthia Servai, Mad. 63, Purmananddas jiwandas vs Dharsey Kirji, Bom.
101, Balram vs Mahadeo, I.L.R. and Poole vs Bently, ; ; , distinguished.
|
Summarize this legal judgement text concisely | Appeal No. 88 of 1959.
Appeal by special leave from the judgment and order dated May 6, 1958, of the Industrial Tribunal, Delhi, in 0.
P. No. 54 of 1958.
M.C. Setalvad, Attorney General for India, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellant.
Janardan Sharma, for the respondent.
March 10.
The Judgment of the Court was delivered by WANCHOO, J.
This is an appeal by special leave in an industrial matter.
The appellant is a company carrying on the manufacture of textiles.
The respondent Kushal Bhan was in the employ of the company as a peon.
It appears that the cycle of Ram Chandra, Head Clerk of the Folding Department was stolen on August 24, 1957.
The matter was reported to the police.
Sometime later, the cycle was recovered from the railway station cycle stand at the instance of the respondent who took the police there and picked out 229 the stolen cycle from among 50/60 cycles standing there.
This matter was apparently brought to the notice of the company in October 1957 and thereupon a charge sheet was served on the respondent to the effect that he had stolen the cycle of Ram Chandra, Head Clerk, that it had been recovered at his instance and that a criminal case was pending against him with the police.
He was asked to show cause why he should not be dismissed for misconduct.
The respondent submitted his explanation on October 13, 1957.
As his explanation was unsatisfactory, November 14, 1957, was fixed for enquiry.
The respondent appeared before the enquiry committee but stated that as the case was pending against him, he did not want to produce any defence till the matter was decided by the court.
He further stated that he did not want to take part in the enquiry and was not prepared to give any answers to questions put to him.
When questions were put to him at the enquiry he refused to answer them and eventually he left the place.
The company, however, completed the enquiry and directed the dismissal of the respondent on the ground that the misconduct had been proved against him.
Thereafter an application was made under section 33(2) of the Industrial Disputes Act, No. 14 of 1947, by the company to the tribunal for approval of the action taken against the respondent.
The matter came before the tribunal on May 6, 1958.
In the meantime, the respondent had been acquitted by the criminal court on April 8, 1958, on the ground that the case against him was not free from doubt.
The copy of the judgment of the criminal court was produced before the tribunal and it refused to approve the order of dismissal.
The company thereupon applied for special leave to this Court resulting in the present appeal.
The main contention on behalf of the appellant company is that the company was not bound to wait for the result of the trial in the criminal court and that it could, and did, hold a fair enquiry against the respondent, and if the respondent refused to participate in it and left the place where the enquiry was being held, the company could do no more than to complete it and come to such conclusion as was 230 possible on the evidence before it.
Learned counsel for the respondent, on the other hand, urges that principles of natural justice require that an employer should wait at least for the decision of the criminal trial court before taking disciplinary action, and that inasmuch as the employer did not do so in this case the employee was justified in not taking part in the disciplinary proceedings which dealt with the very same matter which was the subject matter of trial in the criminal court.
It is true that very often employers stay enquiries pending the decision of the criminal trial court& and that is fair; but we cannot say that principles of natural justice require that an employer must wait for the decision at least of the criminal trial court before taking action against an employee.
In Shri Bimal Kanta Mukherjee vs Messrs. Newsman 's Printing Works (1), this was the view taken by the Labour Appellate Tribunal.
We may, however, add that if the case is of a grave nature or involves questions of fact or law, which are not simple, it would be advisable for the employer to await the decision of the trial court, so that the defence of the employee in the criminal case may not be prejudiced.
The present, however, is a case of a very simple nature and so the employer cannot be blamed for the course adopted by him.
In the circumstances, there was in our opinion no failure of natural justice in this case and if the respondent did not choose to take part in the enquiry, no fault can be found with that enquiry.
We are of opinion that this was a case in which the tribunal patently erred in not granting approval under section 33(2) of the Industrial Disputes Act.
Besides it is apparent that in making the order under appeal, the tribunal has completely lost sight of the limits of its jurisdiction under section 33(2).
We therefore allow the appeal and setting aside the order of the tribunal grant approval to the order of the appellant dismissing the respondent.
In the circumstances we pass no order as to costs.
Appeal allowed.
| The appellant company served a charge sheet on the res pondent who was one of its employees alleging that he had stolen the cycle of the company 's Head Clerk.
A criminal case relating 228 to the theft was pending against him then.
He was asked to show cause why he should not be dismissed for misconduct, and as his explanation was unsatisfactory a certain date was fixed for enquiry.
The respondent appeared before the enquiry committee but refused to participate in the enquiry by answering questions put to him as he did not want to produce any defence till the matter was decided by the Court.
The company,however,after completing the enquiry directed the dismissal of the respondent on the ground that misconduct had been proved against him.
The company thereafter made an application under section 33(2) Of the Industrial Disputes Act to the Industrial Tribunal for approval of the disciplinary action taken against the respondent.
In the meantime the respondent was acquitted by the Criminal Court. 'The judgment of the Criminal Court was produced before the tribunal which refused to approve the order of dismissal of the respondent.
On appeal by the company by special leave : Held, that the principles of natural justice do not require that an employer must wait for the decision of the Criminal Trial Court before taking disciplinary action against an employee.
Shri Bimal Kanta Mukherjee vs Messrs. Newsman 's Printing Works, , approved.
If a case is of a grave nature involving questions of fact and law which are not simple it would be advisable for the employer to await the decision of the Criminal Trial Court but in a simple case like the present the tribunal erred in not granting approval under section 33(2) of the Industrial Disputes Act.
|
Summarize this legal judgement text concisely | 433 of 1955 and 40 41 of 1956.
Petitions under Article 32 of the Constitution of India for enforcement of Fundamental Rights.
M.C. Setalvad, Attorney General for India, M. K. Nambiyar, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the petitioners.
T. M. Sen, for the State of Madras.
K. V. Suryanarayana Iyer, Advocate General for the State of Kerala and T. M. Sen, for the State of Kerala.
M. R. Krishna Pillai, for respondents Nos.
Purshottam Tricumdas and M. R. Krishna Pillai, for respondent No. 12 in Petitions Nos. 40 and 41 of 1956.
K.R. Krishnaswami, for respondents Nos. 11, 13 17 in Petn.
No. 443 of 55.
Purshottam Tricumdas and K. R. Krishnaswami, for respondent No. 12 in Petn.
No. 443 of 55.
A.V. Viswanatha Sastri and M. R. Krishna Pillai, for Intervener No. 1.
Sardar Bahadur, for Intervener No. 2.
M. R. Krishna Pillai, for Intervener No. 3. 1959.
March 4.
The Judgment of Das, C. J., Bhagwati, Sinha and Subba Rao, JJ., was delivered by Das, C. J. Wanchoo, J., delivered a separate Judgment.
DAS, C. J.
The circumstances leading up to the presentation of the above noted three petitions under article 32, which have been heard together, may be shortly stated : In pre British times the Kavalappara Moopil Nair, who was the senior most male member of Kavalappara Swaroopam of dynastic family, was the ruler of the Kavalappara territory situate in Walluvanad 320 Taluk in the district of South Malabar.
He was an independent prince or chieftain having sovereign rights over his territory and as such was the holder of the Kavalappara sthanam, that is to say, " the status and the attendant property of the senior Raja ".
Apart from the Kavalappara sthanam, which was a Rajasthanam the Kalvappara Moopil Nair held five other sthanams in the same district granted to his ancestors by the superior overlord, the Raja of Palghat, as reward for military services rendered to the latter.
He also held two other sthanams in Cochin, granted to his ancestors by another overlord, the Raja of Cochin, for military services.
Each of these sthanams has also properties attached to it and such properties belong to the Kavalappara Moopil Nair who is the sthanee thereof.
On the death in 1925 of his immediate predecessor the petitioner in Petition No. 443 of 1955 became the Moopil Nair of Kavalappara and as such the holder of the Kavalappara sthanam to which is attached the Kavalappara estate and also the holder of the various other sthanams in Malabar and Cochin held by the Kavalappara Moopil Nair.
The petitioner in Petition No. 443 of 1955 will hereafter be referred to as " the sthanee petitioner ".
According to him all the properties attached to all the sthanams belong to him and respondents 2 to 17, who are the junior members of the Kavalappara family or tarwad, have no interest in them.
The Madras Marumakkattayam Act (Mad. XXII of 1932) passed by the Madras Legislature came into force on August 1, 1933.
This Act applied to tarwads and not to sthanams and section 42 of the Act gave to the members of a Malabar tarwad a right to enforce partition of tarward properties or to have them registered as impartible.
In March 1934 respondents 10 to 17, then constituting the entire Kavalappara tarwad, applied under section 42 of the said Act for registration of their family as an impartible tarwad.
In spite of the objection raised by the sthanee petitioner, the SubCollector ordered the registration of the Kavalappara tarwad as impartible.
The sthanee petitioner applied to the High Court of Madras for the issue of a writ to 321 quash the order of the Sub Collector, but the High Court declined to do so on the ground that the sthanee petitioner had no real grievance as the said order did not specify any particular property as impartible property.
While this decision served the purpose of the sthanee petitioner, it completely frustrated the object of respondents 10 to 17.
On April 10, 1934, therefore, respondents 10 to 17 filed O. section No. 46 of 1934 in the court of the Subordinate Judge of Ottapalam for a declaration that all the properties under the management of the defendant (meaning the sthanee petitioner) were tarwad properties belonging equally and jointly to the plaintiffs (meaning the respondents 10 to 17 herein) and the defendant, i.e., the sthanee petitioner, and that the latter was in management thereof only as the Karnavan and manager of the tarwad.
The sthanee petitioner contested the suit asserting that he was the Kavalappara Moopil Nair and as such a sthanee and that the properties belonged to him exclusively and that the plaintiffs (the respondents 10 to 17 herein) had no interest in the suit properties.
By his judgment pronounced on February 26, 1938, the Subordinate Judge dismissed the O. section 46 of 1934.
The plaintiff (the respondents 10 to 17 herein) went up in appeal to the Madras High Court, which, on April 9, 1943, allowed the appeal and reversed the decision of the Subordinate Judge and decreed the suit.
That judgment will be found reported in Kuttan Unni vs Kochunni (1).
The defendant, i.e., the sthanee petitioner herein carried the matter to the Privy Council and the Privy Council by its.
judgment, pronounced on July 29, 1947, reversed the judgment of the High Court and restored the decree of dismissal of the suit passed by the Subordinate Judge.
In the meantime in 1946 respondents 10 to 17 had filed a suit (O. section 77 of 1121) in the Cochin Court claiming similar reliefs in respect of the Cochin sthanam.
After the judgment of the Privy Council was announced, respondents 10 to 17 withdrew the Cochin suit.
The matter rested here for the time being.
(1) (1943) I.LR.
41 322 On February 16, 1953, respondents 10 to 17 took the initiative again and presented a Memorial to the Madras Government asking that legislation be undertaken to reverse the Privy Council decision.
The Government apparently did not think fit to take any action on that Memorial.
Thereafter a suit was filed in the court of the Subordinate Judge at Ottapalam by respondents 2 to 9 who were then the minor members of the tarwad claiming Rs. 4,23,000 as arrears of maintenance and Rs. 44,000 as yearly maintenance for the future.
The suit was filed in forma pauperism There were some interlocutory proceedings in this suit for compelling the defendant (i.e., the sthanee petitioner) to deposit the amount of the maintenance into court which eventually came up to this Court by special leave but to which it is not necessary to refer in detail.
During the pendency of that paper suit, the sthanee petitioner, on August 3, 1955, executed two deeds of gift, one in respect of the Palghat properties in favour of his wife and two daughters who are the petitioners in.
Petition No. 40 of 1956 and the second in respect of the Cochin properties in favour of his son who is the petitioner in Petition No. 41 of 1956.
Meanwhile respondents 2 to 17 renewed their efforts to secure legislation for the reversal of the decree of the Privy Council and eventually on August 8, 1955, procured a private member of the Madras Legislative Assembly to introduce a Bill (L. A. Bill No. 12 of 1955) intituled " The Madras Marumakkathayam (Removal of Doubts) Bill, 1955 " with only two clauses on the allegation, set forth in the statement of objects and reasons appended to the Bill, that certain decisions of courts of law had departed from the age old customary law of Marumakkathayees with regard to stha nams and sthanam properties and that those decisions were the result of a misapprehension of the customary law which governed the Marumakkathayees from ancient times and tended to disrupt the social and economic structure of several ancient Marumakkathayam families in Malabar in that Karnavans of tarwad were encouraged to claim to be sthanees and thus deny the legitimate rights of the members of tarwads 323 with the result that litigation had arisen or were pending.
It was said to be necessary, in the interests of harmony and well being of persons following the Marumakkathayam law, that the correct position of customary law governing sthanams and sthanam properties should be clearly declared.
This Bill came before the Madras Legislative Assembly on August 20, 1955, and was passed on the same day.
The Bill having been placed before the Madras Legislative Council, the latter passed the same on August 24, 1955.
The assent of the President to the Bill was obtained on October 15, 1955, and the Act intituled "the Madras Murumakkathayam (Removal of Doubts) Act, 1955 " being Madras Act 32 of 1955 and hereinafter referred to as the impugned Act, was published in the official gazette on October 19, 1955.
Section I of the impugned Act is concerned with the short title and its application.
Section 2, which is material for our purposes, is expressed in the following terms: " 2.
Certain kinds of sthanam properties declared to be tarwad properties: Notwithstanding any decision of Court, any sthanam in respect of which (a) there is or had been at any time an intermingling of the properties of the sthanam and the properties of the tarwad, or (b)the members of the tarwad have been receiving maintenance from the properties purporting to be sthanam properties as of right, or in pursuance of a custom or otherwise, or (c)there had at any time been a vacancy caused by there being no male member of the tarwad eligible to succeed to the sthanam, shall be deemed to be and shall be deemed always to have been a Marumakkathayam tarwad and the properties appertaining to such a sthanam shall be deemed to be and shall be deemed always to have been properties belonging to the tarwad to which the provisions of the Madras Marumakkathayam Act, 1932, (Madras Act XXII of 1933), shall apply.
Explanation All words and expressions used in this Act shall bear the same meaning as in the Madras 324 Marumakkathayam Act, 1932 (Madras Act XXII of 1933).
" Almost immediately after the publication of the impugned Act in the gazette, respondents 2 to 17 published notices in " Mathrubumi ", a Malayalam daily paper with large circulation in Malabar, Cochin and Travancore, to the effect that by reason of the passing of the impugned Act, Kavalappara estate had become their tarwad properties and that rents could be paid to the sthanee petitioner only as the Karnavan of the properties and not otherwise.
The notices further stated that the donees under the two deeds of gift executed by the sthanee petitioner were not entitled to the properties conveyed to them and should not be paid any rent at all.
After the passing of the impugned Act one of the respondents filed another suit, also in forma pauperis, in the same court.
It is also alleged by the petitioners that respondents 2 to 17 are contemplating the filing of yet another suit for partition, taking advantage of the provisions of the impugned Act.
It was in these circumstances detailed above that the Kavalappara Moopil Nair, i.e., the sthanee petitioner, on December 12, 1955, filed the present petition No. 443 of 1955 under article 32 of the Constitution.
This was followed by Petition No. 40 of 1956 by his wife and two daughters and Petition No. 41 of 1956 by his son.
Both the last mentioned petitions were filed on February 3, 1956.
The first respondent in all the three petitions is the State of Madras and respondents 2 to 17 are the members of the sthanee petitioner 's tarwad.
In his petition the sthanee petitioner prays " that a writ of Mandamus or any other proper ,writ, order or directions be ordered to issue for the purpose of enforcing his fundamental rights, directing the respondents to forbear from enforcing any of the provisions of the Madras Act 32 of 1955 against the petitioner, his Kavalappara sthanam and Kavalappara estate, declaring the said Act to be unconstitutional and invalid ".
The prayers in the other two petitions are mutatis mutandis the same.
Shri Purshottam Tricumdas appearing for some of 325 the respondents has taken a preliminary objection as to the maintainability of the petitions.
The argument in support of his objection has been developed and elaborated by him in several ways.
In the first place, he contends that the petitions, in so far as they pray for the issue of a writ of Mandamus, are not maintainable because the petitioners have an adequate remedy in that they can agitate the questions now sought to be raised on these petitions and get relief in the pauper suit filed by one of the respondents after the passing of the impugned Act.
This argument overlooks the fact that the present petitions are under article 32 of the Constitution which is itself a guaranteed right.
In Rashid Ahmed vs Municipal Board, Kairana (1) this Court repelled the submission of the Advocate General of Uttar Pradesh to the effect that, as the petitioner had an adequate legal remedy by way of appeal, this Court should not grant any writ in the nature of the prerogative writ of Mandamus or Certiorari and observed: " There can be no question that the existence of ,an adequate legal remedy is a thing to be taken into consideration in the matter of granting writs, but the powers given to this Court tinder article 32 are much wider and are not confined to issuing prerogative writs only." Further, even if the existence of other adequate legal remedy may be taken into consideration by the High Court in deciding whether it should issue any of the prerogative writs on an application under article 226 of the Constitution, as to which we say nothing now this Court cannot, on a similar ground, decline to entertain a petition under article 32, for the right to move this Court by appropriate proceedings for the enforcement of the rights conferred by Part III of the Constitution is itself a guaranteed right.
It has accordingly been held by this Court in Romesh Thappar vs The State of Madras (2) that under the Constitution this Court is constituted the protector and guarantor of fundamental rights and it cannot, consistently with the responsibility so laid upon it, (1) ; (2) ; 326 refuse to entertain applications seeking the protection of this Court against infringement of such rights, although such applications are made to this Court in the first instance without resort to a High Court having concurrent jurisdiction in the matter.
The mere existence of an adequate alternative legal remedy cannot per se be a good and sufficient ground for throwing out a petition under article 32, if the existence of a fundamental right and a breach, actual or threatened, of such right is alleged and is prima facie established on the petition.
The second line of argument advanced by learned counsel is that the violation of the right to property by private individuals is not within the purview of article 19(1)(f) or article 31(1) and that a person whose right to property is infringed by a private individual must, therefore, seek his remedy under the ordinary law and not by way of an application under article 32.
In support of this part of his argument, learned counsel relies on the decision of this Court in P. D. Shamdasani vs Central Bank of India Ltd. (1).
In that case the respondent Bank had, in exercise of its right of lien under its articles of association, sold certain shares belonging to the petitioner and then the latter started a series of proceedings in the High Court challenging the right of the Bank to do so.
After a long lapse of time, after all those proceedings had been dismissed, the petitioner instituted a suit against the Bank challenging the validity of the sale of his shares by the Bank.
The plaint was rejected by the court under O. 7, r. 11(d) of the Code of Civil Procedure as barred by limitation.
Thereupon the petitioner filed an application under article 32 of the Constitution praying that all the adverse orders made in the previous proceedings be quashed and the High Court be directed to have " the above suit set down to be heard as undefended and pronounce judgment against the respondent or to make such orders as it thinks fit in relation to the said suit ".
It will be noticed that the petitioner had no grievance against the State as defined in article 12 of the Constitution and his petition (1)[1952] S.C.R. 391.
327 was not founded on the allegation that his fundamental right under article 19(1)(f) or article 31(1) had been infringed by any action of the State as so defined or by anybody deriving authority from the State.
The present position is, however, entirely different, for the gravamen of the complaint of the sthanee petitioner and the other petitioners, who claim title from him, is directly against the impugned Act passed by the Madras Legislature, which is within the expression" State " as defined in article 12.
Therefore in the cases now before us the petitions are primarily against the action of the State and respondents 2 to 17 have been impleaded because they are interested in denying the petitioner 's rights created in their favour by the impugned Act.
Indeed by means of suits and public notices, those respondents have in fact been asserting the rights conferred upon them by the impugned Act.
In these circumstances, the petitioners ' grievance is certainly against the action of the State which by virtue of the definition of that term given in article 12 of the Constitution, includes the Madras Legislature and it cannot certainly be said that the subject matters of the present petitions comprise disputes between two sets of private individuals unconnected with any State action.
Clearly disputes are between the petitioners on the one hand and the State and persons claiming under the State or under a law made by the State on the other hand.
The common case of the petitioners and the respondents, therefore, is that the impugned Act does affect the right of the petitioners to hold and enjoy the properties as sthanam properties; but, while the petitioners contend that the law is void, the respondents maintain the opposite view.
In our opinion these petitions under article 32 are not governed by our decision in P. D. Shamdasani 's case (1) and we see no reason why, in the circumstances, the petitioners should be debarred from availing themselves of their constitutional right to invoke the jurisdiction of this Court for obtaining redress against infringement of their fundamental rights.
(1)[1952] S.C.R. 391, 328 The third argument in support of the preliminary point is that an application under article 32 cannot be maintained until the State has taken or threatens to take any action under the impugned law which action, if permitted to be taken, will infringe the petitioners ' fundamental rights.
It is true that the enactments abolishing estates contemplated some action to be taken by the State, after the enactments came into force, by way of issuing notifications, so as to vest the estates in the State and thereby to deprive the proprietors of their fundamental right to hold and enjoy their estates.
Therefore, under those enactments some overt act had to be done by the State before the proprietors were actually deprived of their right, title and interest in their estates.
In cases arising under those enactments the proprietors could invoke the jurisdiction of this Court under article 32 when the State did or threatened to do the overt act.
But quite conceivably an enactment may immediately on its coming into force take away or abridge the, fundamental rights of a person by its very terms and without any further overt act being done.
The impugned Act is said to be an instance, of such enactment.
In such a case the infringement of the fundamental right is complete eo instanti the passing of the enactment and, therefore, there can be no reason why the person so prejudicially affected by the law should not be entitled immediately to avail himself of the constitutional remedy under article 32.
To say that a person, whose fundamental right has been infringed by the mere operation of an enactment, is not entitled to invoke the jurisdiction of this Court under article 32, for the enforcement of his right, will be to deny him the benefit of a salutary constitutional remedy which is itself his fundamental right.
The decisions of this Court do not compel us to do so.
In the State of Bombay vs United Motors (India) Limited (1) the petitioners applied to the High Court on November 3, 1952 under article 226, of the Constitution challenging the validity of the Bombay Sales Tax Act, 1952, which came into force on November 1, 1952.
No notice had (1) ; 329 been issued, no assessment proceeding had been started and no demand had been made on the petitioners for the payment of any tax under the impugned Act.
It should be noted that in that petition one of the grounds of attack was that the Act required the dealers, on pain of penalty, to apply for registration in some cases and to obtain a license in some other cases as a condition for the carrying on of their business, which requirement, without anything more, was said to have infringed the fundamental rights of the petitioners under article 19(1)(g) of the Constitution and no objection could, therefore, be taken to the maintainability of the application.
Reference may also be made to the decision of this Court in Himmatlal Harilal Mehta vs The State of Madhya Pradesh (1).
In that case, after cotton was declared, on April 11, 1949, as liable to sales tax under the Central Provinces and Berar Sales Tax Act, 1947, the appellant commenced paying the tax in respect of the purchases made by him and continued to pay it till December 31, 1950.
Having been advised that the transactions (lone by him in Madhya Pradesh were not " sales " within that State and that consequently he could not be made liable to pay sales tax in that State, the appellant declined to pay the tax in respect of the purchases made during the quarter ending March 31, 1951.
Apprehending that he might be subjected to payment of tax without the authority of law, the appellant presented an application to the High Court of Judicature at Nagpur under article 226 praying for an appropriate writ or writs for securing to him protection from the impugned Act and its enforcement by the State.
The High Court declined to issue a writ and dismissed the petition on the ground that a mandamus could be issued only to compel an authority to do or to abstain from doing some act and that it was seldom anticipatory and was certainly never issued where the action of the authority was dependent on some action of the appellant and that in that case the appellant had not even made his return and no demand for the tax could be made from him.
(1) ; 42 330 Being aggrieved by that decision of the High Court, the petitioner in that case came up to this Court on appeal and this Court held that a threat by the State to realise the tax from the assessee without the authority of law by using the coercive machinery of the impugned Act was a sufficient infringement of his fundamental right which gave him a right to seek relief under article 226 of the Constitution.
It will be noticed that the Act impugned in that case had by its terms made it incumbent on all dealers to submit returns, etc., and thereby imposed restrictions on their fundamental right to carry on their businesses under article 19(1) (g).
The present case, however, stands on a much stronger tooting.
The sthanee petitioner is the Kavalappara Moopil Nair and as such holds certain sthanams and the petitioners in Petitions Nos. 40 and 41 of 1956 derive their titles from him.
According to the petitioners, the sthanee petitioner was absolutely entitled to all the properties attached to all the sthanams and respondents 2 to 17 had no right, title or interest in any of the sthanam properties.
Immediately after the passing of the impugned Act, the Madras Marumakkathayam Act, 1932, became applicable to the petitioners ' sthanams and the petitioners ' properties became subject to the obligations and liabilities imposed by the last mentioned Act.
On the passing of the impugned Act, the sthanee petitioner immediately became relegated from the status of a sthanee to the status of a Karnavan and manager and the sthanam properties have become the tarwad properties and respondents 2 to 17 have automatically become entitled to a share in those properties along with the petitioners.
The right, title or interest claimed by petitioners in or to their sthanam properties is, by the operation of the statute itself and without anything further being done, automatically taken away or abridged and the impugned Act has the effect of automatically vesting in respondents 2 to 17 an interest in those properties as members of the tarwad.
Indeed respondents 2 to 17 are asserting their rights and have issued public notices on the basis thereof and have also instituted a suit on the strength of the rights 331 created in them by the impugned Act.
Nothing fur; the remains to be done to infringe the petitioners right to the properties as sthanam properties.
It is true that the sthanee petitioner or the other petitioners deriving title from him are still in possession of the sthanam properties, but in the eye of law they no longer possess the right of the sthanee and they cannot, as the sthanee or persons deriving title from the sthanee, lawfully claim any rent from the tenants.
In view of the language employed in section 2 quoted above and its effect the petitioners can legitimately complain that their fundamental right to hold and dispose of the sthanam properties has been injured by the action of the Legislature which is " State " as defined in article 12 of the Constitution.
In the premises, the petitioners are prima facie entitled to seek their fundamental remedy under article 32.
The next argument in support of the objection as to the maintainability of these petitions is thus formulated: The impugned Act is merely a piece of a declaratory legislation and does not contemplate or require any action to be taken by the State or any other person and, therefore, none of the well known prerogative writs can afford an adequate or appropriate remedy to a person whose fundamental right has been infringed by the mere passing of the Act.
If such a person challenges the validity of such an enactment, he must file a regular suit in a court of competent jurisdiction for getting a declaration that the law is void and, therefore, cannot and does not effect his right.
In such a suit he can also seek consequential reliefs by way of injunction or the like, but he cannot avail himself of the remedy under article 32.
In short, the argument is that the proceeding under article 32 cannot be converted into or equated with a declaratory suit under section 42 of the Specific Relief Act.
Reference is made, in support of the aforesaid contention, to the following passage in the judgment of Mukherjea, J., as he then was, in the case of Chiranjit Lal Chowdhuri vs The Union of India(1) : " As regards the other point, it would appear from (1)[1950] S.C.R. 869, 900.
332 the language of article 32 of the Constitution that the sole object of the article is the enforcement of fundamental rights guaranteed by the Constitution.
A proceeding under this article cannot really have any affinity to what is known a,; a declaratory suit".
But further down on the same page his Lordship said: Any way, article 32 of the Constitution gives us very wide discretion in the matter of framing our writs to suit the exigencies of particular cases, and the application of the petitioner cannot be thrown out simply on the ground that the proper writ or direction has not been prayed for ".
It should be noted that though in that case the petitioner prayed, inter alia, for a declaration that the Act complained of was void under article 13 of the Constitution it was not thrown out on that ground.
The above statement of the law made by Mukhekjea, J., is in accord with the decision of this Court in the earlier case of Rashid Ahmed vs Municipal Board, Kairana (1).
The passage from our judgment in that case, which has already been quoted above, also acknowledges that the powers given to this Court by article 32 are much wider and are not confined to the issuing of prerogative writs only.
The matter does not rest there.
In T. C. Basappa vs T. Nagappa (2) Mukherjea, J., again expressed the same view: (Page 256).
" The language used in articles 32 and 226 of our Constitution is very wide and the powers of the Supreme Court as well as of all the High Courts in India extend to issuing of orders, writs or directions including writs in the nature of habeas corpus, mandamus, quo warranto, prohibition and certiorari as may be considered necessary for enforcement of the fundamental rights and in the case of the High Courts, for other purposes as well.
In view of the express provisions of our Constitution we need not now look back to the early history or the procedural technicalities of these writs in English law, nor feel oppressed by any difference or change of opinion expressed in particular cases by English Judges ".
(1) ; (2) ; , 256. 333 In Ebrahim Vazir Mayat vs The State of Bombay (1) the order made by the majority of this Court was framed as follows: " As a result of the foregoing discussion we declare section 7 to be void under Article 31(1) in so far as it conflicts 'which the fundamental right of a citizen of India under article 19(1) (e) of the Constitution and set it aside.
The order will, however, operate only upon proof of the fact that the appellants are citizens of India.
The case will, therefore, go back to the High Court for a finding upon this question.
It will be open to the High Court to determine this question itself or refer it to the court of District Judge for a finding ".
That was a case of an appeal coming from a High Court and there was no difficulty in remanding the case for a finding, on an issue, but the fact to note is that this Court did make a declaration that section 7 of the Act was void.
We are not unmindful of the fact that in the case of Maharaj Umeg Singh vs The State of Bombay(2) which came up before this Court on an application under article 32, the petitioner had been relegated to filing a regular suit in a proper court having jurisdiction in the matter.
But on a consideration of the authorities it appears to be well established that this Court 's powers under article 32 are wide enough to make even a declaratory order where that is the proper relief to be given to the aggrieved party.
The present case appears to us precisely to be an appropriate case, if the impugned Act has taken away or abridged the petitioners ' right under article 19(1) (f) by its own terms and without anything more being done and such infraction cannot be justified.
If, therefore, the contentions of the petitioners be well founded, as to which we say nothing at present, a declaration as to the invalidity of the impugned Act together with the consequential relief by way of injunction restraining the respondents and in particular respondents 2 to 17 from asserting any rights under the enactment so declared void will be the only appropriate reliefs which the petitioners will be entitled to get.
Under article 32 we must, in appropriate cases, exercise our discretion and (1) ; , 941 (2) ; 334 frame our writ or order to suit the exigencies of this case brought about by the alleged nature of the enactment we are considering.
In a suit for a declaration of their titles on the impugned Act being declared void, respondents 2 to 17 will certainly be necessary parties, as persons interested to deny the petitioners ' title.
We see no reason why, in an application under article 32 where declaration and injunction are proper reliefs, respondents 2 to 17 cannot be made parties.
In our opinion, therefore, there is no substance in the argument advanced by learned counsel on this point.
The last point urged in support of the plea as to the non maintainability of these applications is that this Court cannot, on an application under article 32, embark upon an enquiry into disputed question of fact.
The argument is developed in this, way.
In the present case the petitioners allege, inter alia, that the impugned Act has deprived them of their fundamental right to the equal protection of the law and equality before the law guaranteed by article 14 of the Constitution.
Their complaint is that they, have been discriminated against in that they and their sthanam properties have been singled out for hostile treatment by the Act.
The petitioners contend that there is no other sthanam which comes within the purview of this enactment and that they and the sthanams held by them are the only target against which this enactment is directed.
The res pondents, on the other hand, contend that the language of section 2 is wide and general and the Act applies to all sthanams to which one or more of the conditions specified in section 2 may be applicable and that this Court cannot, on an application under article 32, look at any extraneous evidence but must determine the issue on the terms of the enactment alone and that in any event this Court cannot go into disputed questions of fact as to whether there are or are not other sthanees or sthanams similarly situate as the petitioners are.
In support of his contention Shri Purshottam Tricumdas refers us to some decisions where some of the High Courts have declined to entertain applications under article 226 of the Constitution involving disputed 335 questions of fact and relegated the petitioners to regular suits in courts of competent jurisdiction.
We are not called upon, on this occasion, to enter into a discussion or express any opinion as to the jurisdiction and power of the High Courts to entertain and to deal with applications under article 226 of the Constitution where disputed questions of fact have to be decided and we prefer to confine our observations to the immediate problem now before us, namely, the limits of the jurisdiction and power of this Court *hen acting under article 32 of the Constitution.
Shri Purshottam Tricumdas concedes that the petitioners have the fundamental right to approach this Court for relief against infringement of their fundamental right.
What he says is that the petitioners have exercised that fundamental right and that this fundamental right goes no further.
in other words he maintains that nobody has the fundamental right that this Court must entertain his petition or decide the same when disputed questions of fact arise in the case.
We do not think that that is a correct approach to the question.
Clause (2) of article 32 confers power on this Court to issue directions or orders or writs of various kinds referred to therein.
This Court may say that any particular writ asked for is or is not appropriate or it may say that the petitioner has not established any fundamental right or any breach thereof and accordingly dismiss the petition.
In both cases this Court decides the petition on merits.
But we do not countenance the proposition that, on an application under article 32, this Court may decline to entertain the same on the simple ground that it involves the determination of disputed questions of fact or on any other ground.
If we were to accede to the aforesaid contention of learned counsel, we would be failing in our duty as the custodian and protector of the fundamental rights.
We are not unmindful of the fact that the view that this Court is bound to entertain a petition under article 32 and to decide the same on merits may encourage litigants to file many petitions under article 32 instead of proceeding by way of a suit.
But that consideration cannot, by itself, be a cogent reason 336 for denying the fundamental right of a person to approach this Court for the enforcement of his fundamental right which may, prima facie, appear to have been infringed. 'Further, questions of fact can and very often are dealt with on affidavits.
In Chiranjitlal Chowdhuri 's case (1) this Court did not reject the petition in limine on the ground that it required the determination of disputed questions of fact as to there being other companies equally guilty of mismangement.
It went into the facts on the affidavits and held, inter alia, that the petitioner had not discharged the onus that lay on him to establish his charge of denial of equal protection of the laws.
That decision was clearly one on merits and is entirely different from a refusal to entertain the petition at all.
In Kathi Raning Rawat vs The State of Saurashtra (2) the application was adjourned in order to give the respondent in that case an opportunity to adduce evidence before this Court in the form of an affidavit.
An affidavit was filed by the respondent setting out facts and figures relating to an increasing number of incidents of looting, robbery, dacoity, nose cutting and murder by marauding gangs of dacoits in certain areas of the State in support of the claim of the respondent State that " the security of the State and public peace were jeopardised and that it became impossible to deal with the offences that were committed in different places in separate courts of law expeditiously ".
This Court found no difficulty in dealing with that application on evidence adduced by affidavit and in upholding the validity of the Act then under challenge.
That was also a decision on merits although there were disputed questions of fact regarding the circumstances in which the impugned Act came to be passed.
There were disputed questions of fact also in the case of Ramkrishna Dalmia vs Shri Justice section R. Tendolkar (3).
The respondent State relied on the affidavit of the Principal Secretary to the Finance Ministry setting out in detail the circumstances which lead to the issue of the impugned notification and the matters (1) ; , 900.
(2) ; (3) ; 337 recited therein and the several reports referred to in the said affidavit.
A similar objection was taken by learned counsel for the petitioners in that case as has now been taken.
It was urged that reference could not be made to any extraneous evidence and that the basis of classification must appear on the face of the notification itself and that this Court should not go into disputed questions of fact.
This Court overruled that objection and held that there could be no objection to the matters brought to the notice of the Court by the affidavit of the Principal Secretary being taken into consideration in order to ascertain whether there was any valid basis for treating the petitioners and their companies as a class by themselves.
As we have already said, it is possible very often to decide questions of fact on affidavits.
If the petition and the affidavits in support thereof are not convincing and the court is not satisfied that the petitioner has established his fundamental right or any breach thereof, the Court may dismiss the petition on the ground that the petitioner has not discharged the onus that lay on him.
The court may, in some appropriate cases, be inclined to give an opportunity to the parties to establish their respective cases by filing further affidavits or by issuing a commission or even by setting the application down for trial on evidence, as has often been done on the original sides of the High Courts of Bombay and Calcutta, or by adopting some other appropriate procedure.
Such occasions will be rare indeed and such rare cases should not in our opinion, be regarded as a cogent reason for refusing to entertain the petition under article 32 on the ground that it involves disputed questions of fact.
For reasons given above we are of opinion that none of the points urged by learned counsel for the respondents in support of the objection to the maintainability of these applications can be sustained.
These applications will, therefore, have to be heard on merits and we order accordingly.
The respondents represented by Shri Purshottam Tricumdas must pay one set of costs of the hearing Of this preliminary objection before us to the petitioners, 43 338 WANCHOO, J.
I have read the judgment just delivered by my Lord the Chief Justice, with which my other brethren concur, with great care.
With the utmost respect for my brethren for whom I have the highest regard, I must state that if these applications were based only on the infringement of article 14 of the Constitution, I would have no hesitation in dismissing them as not maintainable.
I need riot elaborate my reasons in this case and shall content myself by observ ing that where the law, as in this case, is general in terms and there is no question of its direct enforcement by the State in the form, for example, of grant of licences, issue of notices, submission of returns, and so on, actually resulting in wholesale abuse of its provisions, this Court will not permit an applicant under article 32 to lead evidence to show that the law was meant to hit him alone.
However, the applicants also rely on the infringement of the fundamental right guaranteed under article 19(1)(f).
As to that, I have doubts whether an application under article 32 challenging a general law of this kind, which affects one or other.
of the fundamental rights guaranteed under article 19, can be maintained, in the absence of any further provision therein for direct enforcement of its provisions by the State in the form already indicated above, by a person who merely apprehends that he might in certain eventualities be affected by it.
However, on the present occasion, I do not propose to press my doubts to the point of dissent and therefore concur with the proposed order.
Preliminary objection overruled.
| The petitioner in Petition No. 143 was the Moopil Nair of the Kavalappara sthanam and, as the sthanee, claimed to be the sole proprietor of the sthanam properties.
The respondents Nos. 2 to 17, who were the junior members of the Kavalappara tarward or family, resisted the claim on the ground that the properties were tarward properties and they had rights in them.
There was litigation between the parties and ultimately the Privy Council held in favour of the petitioner.
The petitioner transferred some of the properties to his wife and two daughters and son and they were the petitioners in the two other petitions.
The parties were governed by the Marumakkathayam Law and in 1955 the Madras Legislature, purporting to remove certain misapprehensions evident in decisions of courts, passed the Madras Marumakkathayani (Removal of Doubts) Act, 1955 (Act 32 of 1955) which by section 2 provided as follows: " 2.
Certain kinds of sthanam properties declared to be tarward properties : Notwithstanding any decision of Court, any sthanam in respect of which (a)there is or had been at any time an intermingling of the properties of the sthanam and the properties of the tarward, or (b)the members of the tarwad have been receiving main tenance from the properties purporting to be sthanam properties as of right, or in pursuance of a custom or otherwise, or (c)there had at any time been a vacancy caused by there being no male member of the tarwad eligible to succeed to the sthanam, shall be deemed to be and shall be deemed always to have been a Marumakkathayam tarwad and the properties appertaining to such a sthanam shall be deemed to be and shall be deemed always to have been properties belonging to the tarwad to which the provisions of the Madras Marumakkathayam Act, 1932, (Madras Act XXII Of 1932), shall apply." 317 Immediately after the publication of the Act, the respondents Nos. 2 to 17, published notices in the press that by reason of the passing of the Act, Kavalappara estate had become their tarwad property and that rents could be paid to the sthanee only as the Karnavan of the properties and not otherwise.
The notices further stated that the donees under the two deeds of gift executed by the sthanee were not entitled to the properties conveyed to them and should not be paid any rents at all.
One of the respondents filed a partition suit and others also contemplated doing the same.
The petitioners sought for a writ of mandamus or any other writ or order directing the respondents to forbear from enforcing the impugned Act against the sthanee and the sthanam estate and declaring the Act to be unconstitutional and invalid.
Preliminary objection was raised on behalf of some of the respondents as to the maintainability of the petitions and it was contended that (1) the prayer for a writ of mandamus Was not maintainable since there was an adequate remedy in the partition suit filed by one of the respondents ; (2) that violation of right of property by private individuals was not within the purview of article 19(1)(f) or article 31(1) and the remedy was not by way of application under article 32; (3) that no application under article 32 could be maintained until the State had taken or threatened to take any action under the impugned law that would infringe fundamental rights; (4) that the proceeding under article 32 could not be converted into or equated with a declaratory suit under section 42 Of the Specific Relief Act in and (5) that this court could not, on an application under article 32, embark upon an enquiry into disputed questions of fact.
Held (per Das, C. J., Bhagwati, Sinha and Subba Rao, jj.), that all the contentions must be negatived and all the preliminary objections must fail.
The right to enforce a fundamental right conferred by the Constitution was itself a fundamental right guaranteed by article 32 of the Constitution and this court could not refuse to entertain a petition under that Article simply because the petitioner might have any other adequate, alternative, legal remedy.
Rashid Ahmed vs Municipal Board, Kairana, ; and Romesh Thappar vs The State of Madras, [1950] S.C.R. 594, referred to.
In the instant cases as the grievance of the petitioners was primarily against the impugned Act passed by the Madras Legislature, which was a State as defined by article 12 of the Constitution and the dispute was not one between two sets of private individuals but between the petitioners on the one hand and the State and persons claiming under a law made by the State on the other, article 32 must apply.
P.D. Shamdasani vs Central Bank of India Ltd., [1952] S.C.R. 391, distinguished and held inapplicable.
Where an enactment such as the impugned Act, unlike 318 others that contemplated some further action to be taken by the State after the enactment had come into force, automatically took away or abridged a person 's fundamental rights immediately it came into force, there was no reason why the aggrieved person should not immediately be entitled to seek the ' remedy under article 32 Of the Constitution.
State of Bombay vs United, Motors (India) Limited, ; and Himmatlal Harilal Mehta vs The State of Madhya Pradesh, , referred to.
In view of the language used in section 2 of the impugned Act and its effect, there could be no doubt that the petitioners could legitimately complain that their fundamental right to hold and dispose of the sthanam properties have been violated by the action of the Legislature.
Article 32 of the Constitution conferred wide powers on this Court and such powers were not confined to the issuing of prerogative writs alone.
In appropriate cases, this court had the right in its discretion to frame its writs or orders suitable to the exigencies created by enactments.
It was clear on the authorities that this Court could, where the occasion so required, make even a declaratory order with consequential relief under article 32 of the Constitution.
Chiranjit Lal Chowdhury vs The Union of India, [1950] S.C.R. goo, Rashid Ahmed vs Municipal Board, Kairana, [1950] S.C.R. 566, T. C. Basappa vs T. Nagappa, ; and Ebrahim Vazir Marat vs The State of Bombay, [1954] S.C.R. 933, relied on.
Maharaj Umeg Singh vs The State Of Bombay, [1955] 2 S.C.R. 164, considered.
This court would fail in its duty as the custodian and pro tector of the fundamental rights if it were to decline to entertain a petition under article 32 simply because it involved the determination of disputed questions of fact.
Clause (2) of article 32 conferred on this court the power to issue directions or orders or writs of various kinds mentioned therein and in dismissing a petition, it had either to hold that any particular writ asked for was not appropriate to the occasion or that the petitioner had failed to establish a fundamental right or its breach .
In either case, however, it had to decide the petition on merits.
Chiranjit Lal Chowdhuri vs The Union of India, [1950] S.C.R. 869,Kathi Raning Rawat vs The State of Saurashtra, ; and Ramkrishna Dalmia vs Shri ' justice section R. Tendolkar; , , referred to.
In appropriate cases opportunity might also be given to the parties to establish their cases by further affidavits, or by issuing a commission or even by setting the application down for trial on evidences.
Per Wanchoo, J. If the petitions were based solely on the infringement of article 14, there could be no doubt that they would not be maintainable.
Even though they were based on the 319 infringement of article 19(1)(f) also, their maintainability would still be in doubt in the absence of any further provision in the impugned Act for its direct enforcement by the State.
|
Summarize this legal judgement text concisely | ppeals Nos. 125 and 164 of 1958.
Appeals by special leave from the Award dated August 26, 1957, of the Fifth Industrial Tribunal at West Bengal in Case No. VIII 264/56.
section C. Issacs and section N. Mukherjee, for the Appellants in C. A. No. 125/58 and Respondents in C. A. No. 164/58.
N. C. Chatterjee and Dipak Datta Choudhri, for the.
Respondents in C. A. No. 125/58 and Appellants in C. A. No. 164/58.
January 28.
The Judgment of the Court was delivered by SUBBA RAO, J.
These appeals are by Special Leave from the Award by Shri G. Palit, Judge, Fifth Industrial Tribunal, West Bengal, in the matter of a dispute between Messrs. Bengal Chemical & Pharmaceutical Works Limited, Calcutta, and their employees, represented by Bengal Chemical Mazdoor Union, Calcutta.
The Government of West Bengal by its order dated September 13, 1956, referred the following dispute between the parties referred to above to the Second Industrial Tribunal under section 10 of the (Act 14 of 1947), hereinafter referred to as the Act.
" Is the demand of the employees for increase in Dearness Allowance justified ? If so, at what rate?".
The said Act was amended by the 139 Industrial Disputes (Amendment & Miscellaneous Provisions) Act, 1956 (36 of 1956), which came into force on August 28, 1956.
On April 9, 1956, the ' Government made ail order transferring the said dispute from the file of the Second Industrial Tribunal to that of the Fifth Industrial Tribunal.
The Fifth Industrial Tribunal, after making the necessary inquiry, made the award on August 26,1957, and it was duly notified in the Calcutta Gazette on September 26, 1957.
As a mistake had crept in, the award was modified by the Tribunal by its order dated the 29th November, 1957; and the modified award was published in the Calcutta Gazette on the 29th November, 1957.
Under the award the Tribunal held that there was a rise in the cost of living index and that to neutralise the said rise the employees should get an increase of Rs. 7 in dearness allowance on the pay scale up to Rs. 50 and Rs. 5 on the pay scale above Rs. 50.
On that basis the dearness allowance payable to the employees was worked out and awarded.
The correctness of the award is questioned in these appeals.
The Company preferred Civil Appeal No. 125 of 1958 against the award in so far it was against it and the Union preferred Civil Appeal No. 164 of 1958 in so far it went against the employees.
For convenience of reference, the parties will be referred to in the course of the judgment as the Company and the Union.
Learned Counsel for the Company raised before us the following points: (1) The order dated April 9, 1957, made by the Government transferring the dispute from the file of the Second Industrial Tribunal to that of the Fifth Industrial Tribunal was illegal; (2) the previous award made by the Tribunal between the same parties on April 26, 1951, and confirmed by the Labour Appellate Tribunal by its order dated August 30, 1951, had not been terminated in accordance with the provisions of section 19(6) of the Act and therefore the present reference was bad in law and without jurisdiction; (3) there was no change in the circumstances obtaining at the time the previous award was made and those prevailing at the time of the present reference as to justify making out a new award; (4) the Tribunal 140 went wrong in taking the rise in the cost of living index between the years 1954 and 1957 instead of taking the fluctuating rate in the index between the date of the earlier award, i.e., August 30, 1951, and the date of the present reference in the year 1957 ; (5) the Tribunal went wrong in so far as it based its decision on the Second Engineering Award of 1950 which was already considered by the Tribunal in its earlier award of the year 1951; and (6) in any event, in computing the amount, the Tribunal applied wrong criteria.
We shall consider the above contentions seriatim.
But before doing so, it will be convenient to refer briefly to the scope of jurisdiction of this Court under article 136 of the Constitution vis a vis the awards of Tribunals.
Article 136 of the Constitution does not confer a right of appeal to any party from the decision of any tribunal, but it confers a discretionary power on the Supreme Court to grant special leave to appeal from the order of any tribunal in the.
territory of India.
It is implicit in the discretionary reserve power that it cannot be exhaustively defined.
It cannot obviously be so construed as to confer a right to a party where he has none under the law.
The is intended to be a self contained one and it seeks to achieve social justice on the basis of collective bargaining, conciliation and arbitration.
Awards are given on circumstances peculiar to each dispute and the tribunals are, to a large extent, free from the restrictions of technical considerations imposed on courts.
A free and liberal exercise of the power under article 136 may materially affect the fundamental basis of such decisions, namely, quick solution to such disputes to achieve industrial peace.
Though article 136 is couched in widest terms, it is necessary for this Court to exercise its discretionary jurisdiction only in cases where awards are made in violation of the principles of natural justice, causing substantial and grave injustice to parties or raises an important principle of industrial law requiring elucidation, and final decision by this Court or discloses such other exceptional or special circumstances which merit the consideration of this Court.
The points raised by the 141 learned Counsel, except perhaps the first point , do not stand the test of any one of those principles.
Learned Counsel for the Company, however, says that, though the ' said principles might be applied at the time of granting leave, once leave is given no such restrictions could be imposed or applied at the time of the final disposal of the appeal.
The limits to the exercise of the power under article 136 cannot be made to depend upon the appellant obtaining the special leave of this Court, for two reasons, viz., (i) at that stage the Court may not be in full possession Of all material circumstances to make up its mind and (ii) the order is only an ex parte one made in the absence of the respondent.
The same principle should, therefore, be applied in exercising the power of interference with the awards of tribunals irrespective of the fact that the question arises at the time of granting special leave or at the time the appeal is disposed of.
It would be illogical to apply two different standards at two different stages of the same case.
The same view was expressed by this Court in Pritam Singh vs The State of Madras (1), Hem Raj vs State of Ajmer(1) and sadhu Singh vs State of Pepsu(3) The first question turns upon the construction of the relevant provisions of the Act as amended by the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956.
The relevant provisions inserted by the Amending Act read as follows: "Section 2(r) : I Tribunal ' means an Industrial Tribunal constituted under section 7A." " 7 A. Tribunals. (1) The appropriate Government may, by notification in the official Gazette, constitute one or more Industrial Tribunals for the adjudication of industrial disputes relating to any matter, whether specified in the Second Schedule or the Third Schedule.
(2) A Tribunal shall consist of one person only to be appointed by the appropriate Government.
(3) A person shall not be qualified for appointment as the presiding officer of a Tribunal unless (1) ; (2) (3) A.I.R. 1954 S.C. 271.
142 (a) he is, or has been, a Judge of a High Court; or (b) he has held the office of the Chairman or any other member of the Labour Appellate Tribunal constituted under the Industial Disputes (Appellate Tribunal) Act, 1950 (48 of 1950), or of any Tribunal, for a period of not less than two years.
(4) The appropriate Government may, if it so thinks fit, appoint two persons as assessors to advise the Tribunal in the proceeding before it." "33B. (1) The appropriate Government may, by order in writing and for reasons to be stated therein, withdraw any proceeding under this Act pending before a Labour Court, Tribunal, or National Tribunal, ' as the case may be, for the disposal of the proceeding and the Labour Court, Tribunal or National Tribunal to which the proceeding is so transferred may, subject to special directions in the order of transfer, proceed either de novo or from the stage at which it was so transferred : Provided that where a proceeding under section 33 or section 33A is pending before a Tribunal or National Tribunal, the proceeding may also be transferred to a Labour Court.
" Section 30 of the Amending Act reads: " If immediately before the commencement of this Act, there is pending any proceeding in relation to an industrial dispute before a Tribunal constituted under the (14 of 1947), as in force before such commencement, the dispute may be adjudicated and the proceeding disposed of by the Tribunal after such commencement, as if this Act has not been passed." Section 7, before the Amendment ran thus: " The appropriate Government may constitute one or more Industrial Tribunals for the adjudication of industrial disputes in accordance with the provisions of this Act.
(2) A Tribunal shall consist of such number of members as the appropriate Government thinks fit.
Where the Tribunal consists of two or more members, one of them shall be appointed as chairman.
143 (3) Every member of the Tribunal shall be an independent person, (a) who is or has been a Judge of a High Court or a District Judge, or (b) is qualified for appointment as a Judge of a High Court: Provided that the appointment to a Tribunal of any person not qualified under part (a) shall be made in consultation with the High Court of the Province in which the Tribunal has or is intended to have, its usual place of sitting.
" It will be seen from the aforesaid provisions that the Amending Act, which came into force on August 28, 1956, changed the constitution of a tribunal to some extent and conferred a power for the first time on the Government to transfer a proceeding pending before a tribunal to another tribunal; or in the case of a proceeding under section 33 or 33A pending before a tribunal to another tribunal or to a Labour Court.
Section 30 of the Amending Act expressly saves a pending proceeding before a tribunal constituted under the Act before the Amending Act came into force and directs that such dispute shall be adjudicated and the proceeding disposed of by that tribunal after the commencement of the Amending Act as if that Act had not been passed.
A combined and fair reading of the aforesaid provisions, it is argued, was that section 33B, inserted in the Act by the Amending Act, was prospective in operations i.e., it would apply only to proceedings initiated in the tribunal constituted Under the amended Act and that proceedings pending before the tribunals constituted under the Act before the commencement of the Amending Act would be disposed of as if the Amending Act had not been passed.
The Parliament, presumably to clarify the position, brought out another Amending Act styled the Industrial Disputes (Amendment) Act, 1957 (18 of 1957), whereunder among other things, a new definition of " Tribunal " was given in substitution of that in section 2(r) of the Act.
The substituted definition reads: " 'Tribunal ' means an Industrial Tribunal constituted under section 7A and includes an Industrial 144 Tribunal constituted before the 10th day of March, 1957, under this Act.
" Sub section (2) of section I of the Amending Act 18 of 1957 says that section 2 shall be deemed to have come into force on the 10th day of March, 1957.
The result is that section 33B should be read along with the definition of a " Tribunal " inserted by the Amendment Act 18 of 1957, as if that definition was in the Act from March 10, 1957.
If that definition of a " Tribunal " 'be read in place of the word ,Tribunal" in section 33B, the relevant part of that section reads: " (1) The appropriate Government may, by order in writing and for reasons to be stated therein, withdraw any proceeding under this Act pending before a Tribunal constituted before the 10th day of March, 1957, and transfer the same to another Tribunal constituted under section 7A of the Act." So construed it follows that in respect of proceedings pending in a tribunal constituted before the 10th day of March, 1957, the Government has the power to transfer them from that date to any other tribunal.
It is said that this construction would make section 30 of the Amending Act 36 of 1956 otiose or nugatory.
That section contained only a saving clause and it was not inserted in the Act; it served its purpose, and even if it ceased to have any operative force after the Amendment of 1957, that circumstance cannot have any bearing on the impact of the amendment of the definition of " Tribunal " on the provisions of section 33B of the Act.
In the present case, the Government made the order of transfer on April 9, 1957, i.e., after section 2 of Amendment Act 18 of 1957 was deemed to have come into force.
It must, therefore, be held that the Government acted well within its powers in transferring the dispute pending before the Second Industrial Tribunal, to the Fifth Industrial Tribunal.
The second contention, namely, that the Award of 1951 was not terminated in accordance with law, does not appear to have been pressed before the Tribunal.
The governing section is section 19(6) which says: " Notwithstanding the expiry of the period of operation under sub section (3), the award shall 145 continue to be binding on the parties until a period of two months has elapsed from the date on which notice is given by any party bound by the award to the other party or parties intimating its intention to terminate the award '.
" In the first written statement filed by the Company before the Tribunal, no plea was taken based upon section 19(6) of the Act.
In the second written statement filed by the Company on December 20, 1956, a contention was raised to the effect that the award dated June 21, 1951, was not terminated under section 19(6) of the Act, that the said award was binding between the parties and therefore the reference was bad in law.
Notwithstanding the said allegation, the award dis closes that no issue was raised on that count and no argument was advanced in support thereof.
This attitude might have been adopted by the Company either because it did not think fit to rely upon a technical point but had chosen to get a decision of the Tribunal on merits, or it might be that there was no basis for the contention, as the company might have received notice under the said section.
Though it may not be quite relevant, it may be mentioned that even in 1951 when the dispute between the parties was referred to the Industrial Tribunal, though a similar contention was open to the Company and indeed was suggested by the Tribunal, it moved the Tribunal to give an award on the merits of the matter.
If this plea had been seriously pressed, the Tribunal would have raised a separate issue and the Union would have been in a position to establish that notice had been served on the Company as required by section 19(6) of the Act.
As the question raised depends upon elucidation of further facts, we do not think that we would be justified in allowing the Company to raise the plea before us, and we, therefore, do not permit them to do so.
The fourth point turns on the construction of the terms of the agreement entered into between the parties on September 15, 1954.
The dispute between the parties had an earlier origin and apart from the 19 146 present reference, there were as many as four references and four awards, and the last of them was dated April 3, 1951.
The Company preferred an appeal against that award to the Labour Appellate Tribunal , Calcutta, which, with some modification, confirmed the award of the Tribunal on August 30, 1957.
That award as modified by the Appellate Tribunal fixed the basic wages and the rate of dearness allowance payable to the employees.
The employees were not satisfied with the award and they placed before the.
Company a new charter of demands claiming higher rates of dearness allowance and wages, but the dispute was compromised and the parties entered into an agreement dated September 15, 1954, by virtue of which, the Company introduced the incremental scale in the wage structure.
As regards the dearness allowance, it was stated in cl. 1 1 of the agreement as follows: "The existing rate of D. A. will prevail unless there is a substantial change in the working class cost of living index,in which case the rate will be suitably adjusted." On the construction of this clause depends the question of the Union 's right to claim enhanced dearness allowance.
It is common case that if the cost of living index in the year 1951 was taken as the basis, there was a fall in the rate of working class cost, of living index in 1957.
On the other hand, if the cost of living index in 1954 was the criterion, there was a substantial increase in the cost of living index in 1957.
The question, therefore, is what did the parties intend to agree by the aforesaid clause in the agreement.
To ascertain the intention of the parties, we should con sider the circumstances under which the said agreement was entered into between the parties.
Exhibit 6 is the said agreement.
The preamble to the agreement reads : " The Company and the Union came to a settlement in respect of the Pay Scales and Grades in the Charter of Demands dated 25th June, 1953, at the intervention of Shri A. R. Ghosh, Asstt.
Labour Commissioner during the Conciliation proceedings ending on the 30th August, 1954.
" 147 The preamble indicates that the entire situation obtaining on the date of the agreement was reviewed and the parties agreed to the terms of the settlement mentioned therein.
Under clause (1) of the agreement, pay scale and grade as given in annexure B was agreed upon for the time being for a period of three years as an experimental measure, to be reviewed, modified or suspended or withdrawn after three years, depending upon the Company 's business and financial condition.
By el.
(2), the employees agreed not to raise any dispute involving any further financial burden on the Company during the next three years in respect of pay scale and grade.
Clauses (3) to (5) deal with increments and the age of retirement.
Clause (6) provides for the piece rated (contract) workers in respect of their increments.
Clause (7) is in respect of increment for the daily rated workers.
Clause (8) is in respect of the grade and scale of pay and increments of Chemists, Engineers and Doctors, etc.
Clause (9) is to the effect that the employees who would be made permanent thence forward would be grouped under two divisions for the purposes of giving effect to the scale of pay.
Clause (11) which we have already extracted above relates to the dearness allowance.
Clause (12) says " barring the question of bonus for 1358 and 1359 B. S.the Union withdraws its claim in respect of other items in the Charter of Demands dated 25th June, 1953.
" We have given the agreement in extenso only for the purpose of showing that all the disputes between the parties arising out of the charter of demands dated June, 25, 1953, were settled between them and reduced to writing.
The agreement was self contained and started a new chapter regulating the relationship of the parties to the dispute in respect of matters covered by it.
The award must be deemed to have been superseded by the new agreement.
In this context the crucial words " existing rate of D. A. ", on which both the learned Counsel relied, could have only one meaning.
Do the words " existing rate " refer to the date of the agreement or to the date of the award ? It is true that the existing rate of D. A. had its origin in the award and was made to prevail 148 under the agreement, that is to say that the rate was accepted by the parties as reasonable on the date of "the agreement, till there was a substantial change in the working class cost of living index.
If the contention of the learned Counsel for the Company should prevail, the agreement would not be self contained, but only to be construed as modifying the earlier award to some extent.
We are satisfied that in regard to matters covered by it, the agreement replaced the earlier award and therefore the date of the agreement is the crucial one for ascertaining whether there was substantial change in the working class cost of living index in the year 1957.
We, therefore, reject this contention.
Contentions 3, 5 and 6 raise pure questions of fact.
The Tribunal, on the consideration of the entire material placed before it, came to the conclusion that there was change of circumstances which entitled the employees to claim an increase in their dearness allowance.
It has also fixed the rate of increase in the dearness allowance on the basis of the rise in the cost of living index.
In doing so, it also took into consideration the difficulties facing the industry and the repercussion of the rise in the dearness allowance on the consumers in general.
Having regard to the overall picture, it came to the conclusion that full neutralisation of the deficiency as a result of rise in the cost of living index by dearness allowance could not be permitted and therefore allowed them only 75 per cent.
of the increase in the dearness allowance to which they would have otherwise been entitled on the basis of the rise in the cost of living index.
The finding given by the Tribunal is one on fact and we do not see any permissible ground for interference with it in this appeal by special leave.
Before closing, one point strenuously pressed upon us by the learned Counsel for the Company which is really another attempt to attack the finding of fact given by the Tribunal from different angle must be mentioned; it was that the Tribunal wrongly relied upon Exhibit 3, corrected on the basis of the information given by the State Statistical Bureau, West Bengal, for ascertaining the working class cost of living index since August 1954 up to March 1957.
On the 149 basis of Exhibit 3, the Tribunal held that the working class cost of living index stood at 344.1 in August 1954 and it rose to 400.6 in May 1957, with the result that there was a rise of 56 points, a substantial rise in the cost of living index.
Exhibit 3 certainly supports the finding of the Tribunal.
The learned Counsel for the Company points out with reference to the relevant entries in the Monthly Statistical Digest, West Bengal, that the said figures relate only to working class menials and the corresponding entries in regard to the working class cost of living index do not indicate so much increase as in the case of the menial class.
Learned Counsel has also taken us through the relevant figures.
The relevant entries in the Monthly Statistical Digest were not filed before the Tribunal.
Indeed when the Union 's witness, Shri Satyaranjan Sen, was examined before the Tribunal, he was not cross examined with a view to elicit information that Exhibit 3 did not relate to the working class cost of living index.
When Shri Chatterjee, the Assistant Manager of the Company, who was examined after Shri Sen, gave evidence, he not only did not object to the entries in Exhibit 3 but stated that he was not aware of any substantial increase in the working class cost of living index and complained that similar entries for all the relevant years had not been produced.
Even before the Tribunal it does not appear that any argument was advanced contesting the relevancy of Exhibit 3 on the ground that it did not refer to the working class cost of living index.
In the circumstances, we do not think that we are justified to allow the learned Counsel for the Company to make out a new case for the first time before us, upsetting the Tribunal 's basis for calculation and involving further and different calculations.
In the result, we confirm the award of the Tribunal and dismiss the appeal with costs.
The learned Counsel, appearing for the Union, did not press the appeal No. 164 of 1958, filed by the Union, and therefore it is also dismissed with costs.
Appeals dismissed.
| Aggrieved by an Award of 195, the employees placed before the Company a fresh charter of demands which was mutually settled by a written agreement which provided, inter alia, that the existing rate of dearness allowance should prevail which was adjustable to any future substantial change in the cost of living index of the working class.
As the cost of living increased disputes arose, and in spite of the said Award of 1951, 137 which was not terminated according to law, the dispute arising out of the said written agreement was referred for adjudication by the Government to the Second Industrial Tribunal, Calcutta, in September, 1956.
In April 1957, the Government transferred the dispute from the Second Industrial Tribunal to the Fifth Industrial Tribunal.
The Company, inter alia, contended that the Government had no power to transfer the dispute from one Tribunal to another and that the reference was bad as the 1951 Award had not been duly terminated.
The Industrial Disputes (Amendment and Miscellaneous Provisions) Act (36 of 1956) amending the Industrial Disputes Act (14 Of 1947) came into force on August 28, 1956, giving authority to the Government to transfer a reference from one Tribunal to another, which was followed by a further amending Act, being Industrial Disputes (Amendment) Act (18 of 1957) whereunder among other things a new definition of 'Tribunal ' was given, whereby the Industrial Tribunal constituted prior to March 10, 1957, under section 7A of Act 14 Of 1947 was included.
Held, that as a result of the amendments to the , the Government had authority to transfer a case from one Tribunal to another. 'Tribunal ' as defined by section 2(r) of the , as amended by Act 36 of 1956, read with amending Act 18 of 1957, empowers the Government to transfer a reference from one Tribunal to another.
Where, in spite of a previous award, the employees after raising fresh demands entered into a new agreement with the employer which started a fresh chapter regulating the relationship of the parties, the previous award, though not terminated in accordance with the provisions of law, must be deemed to have been superseded.
Held, further, that though article 136 of the Constitution is couched in the widest terms and confers a discretionary power, (which cannot exhaustively be defined) on the Supreme Court to grant special leave to appeal from the order of a tribunal, but it is necessary for the Supreme Court to exercise its said discretionary jurisdiction only in cases (a) where there is a violation of the principle of natural justice, (b) raises an important principle of industrial law requiring elucidation and final decision by the Supreme Court, or (c) discloses such other exceptional or special circumstances which merit the final decision by the Supreme Court.
Such discretionary reserve power cannot obviously be so construed as to confer a right of appeal to any party from the decision of a Tribunal, where he has none under the law.
is intended to be a self contained one and it seeks to achieve social justice on the basis of collective bargaining, conciliation and arbitration.
Awards are given on circumstances peculiar to each dispute and the Tribunals are to a 18 138 large extent free from restrictions of technical considerations imposed on courts.
A free and liberal exercise of the discretionary powers by the Supreme Court may materially affect the fundamental basis of the decision, namely, quick solution to such disputes to achieve industrial peace.
Where an Industrial Tribunal on the consideration of the entire material placed before it and having regard to the overall picture, came to a conclusion of facts, the Supreme Court will not interfere with such finding of fact nor will it be justified to allow to make a new case for the first time before it.
Pritam Singh vs State of Madras, ; ; Hem Raj vs State of Ajmer, and Sadhu Singh vs State of PEPSU, A.I.R. 1954 S.C. 272, referred to.
|
Summarize this legal judgement text concisely | Appeal No. 37 of 1958.
Appeal by special leave from the judgment and order dated September 14, 1956, of the Madras High Court in Writ Appeal No. 64 of 1956, arising out of the judgment and order dated May 1, 1956, of the said High Court in Writ Petition No. 852 of 1955.
G. section Pathak, R. Ganapathy lyer and O. Gopalakrishnan, for the appellant.
A. V. Viswanatha Sastri, J. B. Dadachanji and section N. Andley, for respondent No. 4. 1959.
February 18.
The judgment of Imam and Subba Rao, JJ., was delivered by Subba Rao, J. Sarkar, J., delivered a separate judgment.
SUBBA RAO, J.
This appeal by Special Leave against the judgment of the High Court of Judicature at Madras raises the question of interpretation of section 43A of the (IV of 1939), as amended by the Motor Vehicles (Madras Amendment) Act, 1948 (Mad. XX of 1948), hereinafter referred to as the Act.
On February 19, 1955, the Regional Transport Authority, Tanjore, Madras State, the second respondent herein, called for applications under section 57(2) of the Act for grant of a stage carriage permit on the Saliamangalam Kodavasal route.
The appellant and the fourth respondent, K. M. Shanmugam, Proprietor, K. M. section Transport, Ammapet, Tanjore District, along with others, applied for the grant of the said permit.
The Regional Transport Authority 230 at its meeting held on April 19, 1955, after hearing the representations of the applicants, granted the permit to the appellant.
The fourth respondent and two others preferred appeals against the said order to the Central Road Traffic Board, Madras, the third respondent herein.
The Central Road Traffic, Board by its order dated June 25, 1955, set aside the order of the Regional Transport Authority and granted the permit to the fourth respondent.
The appellant preferred a Revision Petition against that order to the first respondent, the State of Madras, but the first respondent rejected the petition by its order dated October 14, 1955.
Thereafter, the appellant filed a Writ Petition (No. 852 of 1955) in the High Court of Madras under article 226 of the Constitution to quash the orders of the Central Road Traffic Board and the State of Madras.
Rajagopalan, J., of the said High Court by his order dated May 1, 1956, quashed the order of the Government and directed the State Transport Appellate Tribunal which had been constituted in place of the Central Road Traffic Board to dispose of the appeal in accordance with law.
Against the judgment of the learned Judge, the fourth respondent preferred an appeal under the Letters Patent and the Appellate Bench of that High Court, consisting of Rajamannar, C. J., and Ramaswami, J., set aside the order of RajagopaIan, J., and restored the order of the Central Road Traffic Board.
The appellant with special leave filed the present appeal against that judgment of the High Court.
Mr. Pathak, appearing for the appellant, raised before us the following two points: (i) The appeal filed by the fourth respondent against the order of the Regional Transport Authority to the Central Road Traffic Board was barred by limitation and the Board acted illegally in disposing of the appeal without deciding the question of limitation; and (ii) the appellant had the fundamental right to carry on the business of transport subject to reasonable restrictions imposed by law as on the date he applied for a permit or at any rate when the Regional Transport Authority issued the permit to him, and that the Central Road 231 Traffic Board committed an error, evident on the face of the record, in disposing of the appeal in accordance with the new restrictions imposed by law made pending the appeal before it.
Stated as a legal proposition, the contention is that the appellant had acquired a vested right to carry on the business of transport and that the same could not be defeated by a subsequent law made pending the appeal, which was only prospective in character.
The first argument need not detain us, for the learned Counsel, in view of the finding of the High Court that as a matter of fact the appeal to the Central Road Traffic Board was not barred, fairly did not press it before us.
This leaves us with the second and the only argument in the case.
To appreciate the contention it is necessary to set out some more relevant facts: On March 28, 1953, the Government made an order, G. O. Ms. No. 1037 Home, purporting to be under section 43A of the Act.
The material part of that order reads: " (1) That additional buses should not be permitted to ply on existing routes unless there is a clear need for increase in the number of buses plying on a particular route and wasteful competition should be discouraged but healthy competition where there is room should be encouraged and, (2)that the transport authorities while granting stage carriage permits should work up to the minimum of 5 permits with a spare bus for each operator and the issue of permits should be so regulated as not to encourage benamidars on one hand and inefficient operators on the other." On November 15, 1954, in supersession of paragraph 2 of the above order, the Government issued an order, G. O. Ms. No. 3353 Home, to the following effect: " The Governor of Madras hereby directs that each viable stage carriage unit in this State shall consist of not less than 10 buses and that in the matter of grant of stage carriage permits, other things being equal, and with a view to build up such viable units, the following shall be the order of preference 232 (1)Operators with less than 10 buses but nearer the mark of 10.
(2) Operators with 10 and more buses.
(3) Others including new entrants.
The Government also directs that in order to facilitate the amalgamation of existing small units into viable units transfer of permits shall be allowed liberally.
" On June 15, 1955, the Government issued another order, G. O. Ms. No. 1689 Home, whereby the Central Road Traffic Board was informed that pending further orders of Government after re examination of the question of formation of viable units of stage carriages, the orders in para.
(2) of G. O. Ms. No. 1037 Home dated 28th March, 1953, would be in force.
The effect of this order was that the first order was restored pending final orders.
When the Regional Transport Authority issued the permit in favour of the appellant, G. O. Ms. No. 3353 Home dated 15th November, 1954, was in force, and when the Central Road Traffic Board made the order giving the permit to the fourth respondent, G. O. Ms. No. 1689 Home dated 15th June, 1955, was in operation.
Apart from other considerations, the Regional Transport Authority relied upon the former G. O. in preferring the appellant to other applicants, while the Central Road Traffic Board referred to G. O. Ms. No. 1037 Home dated 28th March, 1953, which was restored by the later G. O. in preferring the fourth respondent to the appellant.
We shall give further details of the orders of the Regional Transport Authority and the Appellate Tribunal in the context of another argument, but, for the present, the aforesaid facts would suffice.
It would be convenient at this stage, before entering into the controversial question, to state briefly some of the well established principles relevant to the question raised: (i) A citizen has a fundamental right to ply motor vehicles on public pathways under article 19(1)(g) of the Constitution, and any infringement of that right by the State can be justified only if it falls within the scope of article 19(6) thereof See C. section section 233 Motor Service, Tenkasi vs The State, of Madras (1) and Saghir Ahmad vs The State of U. P. (2); (ii) proceedings before tribunals issuing permits are of quasi judicial in character See C. section section Motor Service, Tenkasi vs The State of Madras (1) and New Prakash Transport Co. Ltd. vs New Suwarna Transport Co. Ltd. (3) ; (iii) a new law which takes away or impairs vested rights acquired under existing laws must be deemed to be intended not to have retrospective operation, unless such law makes it retrospective expressly or by implication See Maxwell on the Interpretation of Statutes, p. 215; Garikapatti Veeraya vs N. Subbiah Chowdhury (4 ) and Seth Gulab Chand vs Kudilal (5); and (iv) the same principle applies to a law made pending an appeal before an appellate Court See P. M. Seshadri vs Province of Madras (6).
So much is not, and cannot, de disputed.
We shall assume that the said principles apply to a law made pending an appeal against an order of a quasi judicial tribunal.
The main controversy centres round the fact whether the orders made and the directions issued by the State Government under section 43A of the Act are " laws " as to attract the operation of the aforesaid principles.
While Mr. Pathak says that the said directions are as much laws as those of the provisions of a statute or rules made thereunder, Mr. A. Viswanatha Sastri contends that, having regard to the scheme of the and the different sections of the Act vesting powers in the State Government with regard to different matters dealt with by the Act, the power conferred on the State Government under section 43A is a power to make orders or issue directions in respect of administrative matters regulating the relationship between the State Government and the Transport Authorities and that such orders do not affect the legality or the validity of judicial acts of the said authorities.
To appreciate the rival contentions, it is necessary to consider the relevant provisions of the Act.
(1) I.L.R. , 330, 334.(2) [1955] 1 S.C.R. 707, 719.
(3) , 118.(4) ; , 515.
(5) ; , 322.(6) A.I.R 1954 Mad.
30 234 The Act, which is a Central Act, was passed in the year 1939 and subsequently it was amended from time to time both by Parliament and also by the local legislatures.
The main object of the Act is to regulate the motor traffic in every provisions relating to licensing of drivers of motor vehicles.
Chapter III prescribes for the registration of motor vehicles.
Chapter IV provides for the control of transport vehicles.
Chapter V lays down the general provisions regarding construction, equipment and maintenance of motor vehicles.
Chapter VI regulates the control of traffic.
Chapter VIII deals with the insurance of motor vehicles against third party risks.
Chapter IX defines the offences, lays down the penalties and prescribes the procedure for detecting offences and enforcing penalties.
Chapter X deals with miscellaneous matters.
Every Chapter contains a specific provision conferring a power on the State Government to make rules for the purpose of carrying into effect the provisions of that Chapter.
To carry out the objects of the Act, the State Government is authorized to create a hierarchy of officers such as the State Transport Authority, the Regional Transport Authority, the Registering Authority, etc.
Such Authorities are entrusted with administrative as well as quasi judicial functions.
Chapter IV with which we are now concerned follows the same pattern.
Its general heading is " Control of Transport Vehicles ".
Section 42 prohibits the owners of transport vehicles from using them in any public place without permits.
Section 43 empowers the State Government to control road transport.
Section 44 enables the State Government to constitute Transport Authorities to exercise and discharge the specified powers and functions.
Under section 44(4) the State Transport Authority is authorized to issue directions to any Regional Transport Authority and the latter shall be guided by such directions.
Sections 46, 47, 48, 57, 60 and 64 prescribe the procedure for issue of permits and also create a hierarchy of Tribunals for hearing of applications and disposal of appeals.
The said procedure is clearly quasi judicial in character and has 235 been held to be so by this Court.
Sections 67 and 68 confer a power on the State Government to make rules to regulate the operation of transport carriages and also to make rules for the purpose of carrying into effect the provisions of this Chapter.
Under the aforesaid provisions and the rules made thereunder, the State Transport Authority is made the administrative head of all the other Transport Authorities functioning in the State, and the Central Road Traffic Board the appellate authority in the hierarchy of Tribunals constituted under the Act.
As the administrative head the State Transport Authority is authorized under section 44(4) of the Act to issue directions to any Regional Transport Authority, who shall be guided by such directions.
As an appellate tribunal the Central Road Traffic Board is empowered to dispose of the appeals preferred against the orders made by the subordinate authorities under the Act in respect of specified matters.
But the Central Act did not make any provision enabling the State Governments to control either the quasi judicial or the administrative wings of the machinery provided under the Act.
While the State Transport Authority could issue directions to other Transport Authorities constituted under the Act, a State Government could not likewise issue any directions either to the State Transport Authority or to its subordinate authorities.
So too, while the Central Road Traffic Board could in its appellate jurisdiction set aside or modify the orders of the subordinate tribunals, the State Government was not in a position to set aside the improper orders of the tribunals under the Act.
Presumably, therefore, to bring the said authorities under its control, both on the judicial and the administrative wings, Motor Vehicles (Madras Amendment) Act, 1948 ((Mad. XX of 1948), was passed and it became law on December 21, 1948.
Among other amendments, sections 43A and 64A were inserted in the Act.
Section 43A reads: " The State Government may issue such orders and directions of a general character as it may consider necessary,, in respect of any matter relating to road transport, to the State Transport Authority or 236 a Regional Transport Authority; and such Transport Authority shall give effect to all such orders and directions." Section 64A is to the following effect: " The State Government may, on its own motion or on application made to it, call for the records of any order passed or proceeding taken under this Chapter by any authority or officer subordinate to it, for the purpose of satisfying itself as to the legality, regularity or propriety of such order or proceeding and after examining such records, may pass such orders in reference thereto as it thinks fit." So far as section 64A is concerned, in express terms it confers a judicial power on the State Government to keep a subordinate judicial tribunal within bounds.
Section 64A, along with sections 45 to 57, 60 and 64, forms a complete code in respect of the quasi judicial disposals of the issue of permits.
The permits should be issued in accordance with the provisions of the Act and the rules framed thereunder following the judicial procedure.
The words used in section 43A are very wide.
It says that the State Government may issue orders and directions of a general character in respect of any matters relating to road transport.
Divorced from the context and the setting in which the new section appears, it may comprehend any orders or directions of a general character in respect of road transport; and, if so construed, it would not only subvert the other provisions of the Act but also would be vulnerable to attack on the ground of constitutional invalidity.
It would entrust the Government with a naked arbitrary power capable of being used to compel quasi judicial tribunals to dispose of cases in a particular way; it would enable them to couch the order in a general way to induce a tribunal to come to a particular decision in a given case; and it would be destructive of the entire judicial procedure envisaged by the Act and the rules framed thereunder in the matter of disposal of specified questions.
It would be attributing to the legislature an incongruity, for the State Government could issue directions in respect of which it could make rules ignoring the safeguards provided in the 237 making of the rules.
Section 133 lays down that every power to make rules given by the Act is subject to the condition of the rules being made after previous publication.
It also enjoins on the Central and the State Governments to place the said rules for not less than fourteen days before the appropriate legislature and the rules so made shall be subject to such modification as the legislature may make in such session in which they are so laid.
All these salutary precautions can be ignored if the directions given under section 43A are given the status of law; on the other hand, if a restrictive meaning is given as it should be in the context, there would be a happy correlation of the functions of the various bodies under the Act, including the Government.
The Government 's legislative power is recognised under sections 67 and 68 of the Act; its judicial power is maintained under section 64A and its administrative power is affirmed under section 43A.
Chapter IV and the rules made thereunder confer adminis trative powers on the Regional Transport Authorities and the State Transport Authority.
Section 43A enables the State Government to make orders and issue directions of a general character in respect of those functions to implement the provisions of the Act and the rules made thereunder; and the said authorities shall give effect to all such orders and directions.
The context in which and the setting wherein the section is inserted also lend support to the said conclusion.
Section 42 describes the necessity for permits and section 43 confers specific powers on the Government to control road transport.
Section 43A coming thereafter and before the sections conferring quasi judicial powers on tribunals is indicative of the fact that the jurisdiction conferred under section 43A is confined to administrative functions of the Government and the tribunals rather than to their judicial functions; for, if the section was intended to confer legislative power, it should have found its place after section 64A or somewhere near the end of the Chapter.
Though it is not a conclusive test, the placing of the provisions of sections 43A and 64A, which were inserted by the same Amending Act is also a pointer to the intention of the 238 legislature, namely, that section 43A was intended to govern administrative functions of the tribunals.
The terms of the section and the manner of issuing orders and directions thereunder also support the same conclusion.
The legislature used two words in the section: (i) order and (ii) directions.
Whenever it intended to affect the rights of parties, it used the word " rules ", but in this section it designedly used the words appropriate to the control of administrative machinery.
The words " directions and order " are defined in one of the Law Lexicons thus: " Direction contains most of instruction in it; order most of authority.
Directions should be followed; orders obeyed.
It is necessary to direct those who are unable to act for themselves; it is necessary to order those whose business it is to execute the orders. " The said meaning of the words is more appropriate to administrative control rather than to rules of law affecting rights of parties.
Further, the declaration in the section that the orders and the directions under the section shall be binding on the authorities concerned is indicative of the fact that they are not laws, for if they are laws, no such declaration is necessary.
What is more, they need not even be published and may, if the Government so desires, take the form of secret communication to the authorities concerned.
Nor is there any basis for the argument that as the directions are issued under a statutory power, they are " laws ".
The source of the power does not affect the character of the things done in exercise of that power.
Whether it is a law or an administrative direction depends upon the character or nature of the orders or directions authorized to be issued in exercise of the power conferred.
That should be determined on other considerations adverted to by us already.
Our view is in accord with that expressed by a Division Bench of the Madras High Court in C. section section Motor Service, Tenkasi vs The State of Madras (1).
There the constitutional validity of sections 42, 43A, 47, 48 and 64A of the Act was questioned.
In dealing with section 43A, Venkatarama Ayyar, J., who delivered the judgment of the Court, observed at p. 335 thus (1) I.L.R. , 330, 334. 239 "Coming next to section 43A, it is argued that it confers on the Provincial Government wide and unlimited powers to issue all such orders and directions of a general character as they may consider necessary, that the transport authorities are bound under that section to give effect to such orders and directions, that there is nothing to prevent the Government from even issuing directions with reference to the judicial functions which those authorities have to dis charge under the Act, that it could not be expected that such directions would be disregarded by those authorities and that in practice the provisions of section 47 could be evaded.
Reference is also made to the fact that this section was introduced for nullifying the effect of the decision in Sri Rama Vilas Service Ltd. vs The Road Traffic Board, Madras (1) where it was held that the transport authorities had failed in the discharge of their judicial function in meekly giving effect to an order of the Government which was opposed to the provisions of the Act.
Section 43 A appears to be intended to clothe the Government with authority to issue directions of an administrative character and in that view it would be valid.
No specific order or direction of the Government is attacked in these proceedings as invalid and the discussion is largely academic.
The section must itself be held to be valid though particular orders passed thereunder might be open to challenge as unconstitutional.
" From the aforesaid observations, it is manifest that the learned Judge construed section 43A as conferring a power on the State Government to issue directions of an administrative character.
If the construction was otherwise, the learned Judge would have held that the section was constitutionally bad as he had held in regard to other sections.
The High Court of Andhra Pradesh in Gopalakrishna Motor Transport Co. Ltd. vs Secretary, Regional Transport Authority, Krishna District, Vijayawada (2) had also considered the scope of the provisions of section 43A.
There, the State Government issued an order under section 43A of the Act prescribing the manner of checking a bus for over (1) (2) loading.
The procedure prescribed was not followed by the Regional Transport Authority, which was empowered to suspend the permit on the ground of overloading under section 60 of the Act.
One of the contentions raised was that as the mandatory direction given by s the State Government under section 43A was not followed, the Regional Transport Authority in exercising its powers under section 60 should have held that there was no over loading.
In rejecting this plea, the High Court observed at p. 885 thus: " Government has power to frame rules and also to issue administrative directions of a general character under Section 43 A of the Act. . .
In so far as the order was couched in mandatory terms, it is incumbent upon the officers concerned to comply with it.
Any instruction given under Section 43 A cannot override the discretionary power conferred upon the Transport Authority under section 60. .
We, therefore, hold that the order of the Government contained only administrative instructions issued under Section 43 A.
It is true that some of the, administrative instructions impose a mandatory duty on the officers concerned and if they do not discharge their duty, Government may take disciplinary action against them.
But, in our view, non compliance with those directions cannot affect the finding the Authority arrived at on other material on the question of over loading.
" In the present case, the learned Chief Justice, who was a party to the decision in C. section section Motor Service vs The State of Madras (1), presumably on the basis of that judgment observed thus: " In our opinion, these Government orders, which are in the nature of general administrative directions to the transport authorities, do not vest any rights, indefeasible rights in any applicant for a stage carriage permit ".
The result of the discussion may be summarised thus: The appellant had a fundamental right to carry (1) I.L.R. , 334.
241 on his motor transport business subject to reasonable restrictions imposed upon that right by law.
Some of the provisions of Chapter IV of the Act contain reasonable restrictions on the said right.
He was given a permit on the basis of the law imposing the said restrictions on his right.
The orders made and the directions issued under section 43A could cover only the administrative field of the officers concerned and therefore any direction issued thereunder was not law regulating the rights of the parties.
The order made and the directions issued under section 43A of the Act cannot obviously add to the considerations prescribed under section 47 on the basis of which the tribunal is empowered to issue or refuse permit, as the case may be.
There was, therefore, no change in the law pending the appeal so as to affect the appellant 's vested right in this view, the appellant cannot question the validity of the order of the Central Road Traffic Board on the ground that it decided the appeal on a law that was made subsequent to the issue of the permit to him.
The same result could be arrived at by different process of reasoning.
The appellant had a fundamental right to carry on the business of motor transport subject to reasonable restrictions imposed by law under article 19(6) of the Constitution.
The Act imposed reasonable restrictions oil the said right.
One such restriction was that the State Government may issue such orders and directions of a general character as it ' may consider necessary in respect of any matter relating to road transport to the State Transport Authority.
When the appellant applied for a permit, be must be deemed to have bad the knowledge of the fact that his application would be disposed of by the State Transport Authority in accordance with orders and directions of a general character issued, by the State Government.
The directions were not now law that came into existence pending the appeal, but only issued under a law that was in existence even at the time he applied for a permit.
The law was that embodied in section 43A of the Act, namely, that the Government could issue directions binding on the authorities 31 242 concerned and that law was a pre existing one and the application had to be disposed of subject to that law till it was finally terminated by an order of the highest tribunal in the hierarchy.
In this view also there are no merits in the appellant 's contention.
Now coming to the merits of the case, the contentions of the parties may be stated thus: The learned Counsel for the respondents contends that there is no material difference between G. O. Ms. No. 1037 and G. O. Ms. No. 3353, except in regard to one circumstance, which is not material for the present purpose: while in the former G. O., the argument proceeds, the transport authority is directed to work up to a minimum of five units with a spare bus, under the latter G. O., the viable unit fixed is not less than ten buses and the authority concerned is directed to work up to that limit.
It is pointed out that the only difference, is in the measure of a viable unit and that the fourth respondent 's case falls squarely within the first category in the order of preference prescribed in G. O. Ms. No. 3353 of 1954.
The learned Counsel for the appellant contends that the order of preference is based upon the achievement of the object, namely, building up of viable units of ten permits and that the appellant admittedly had only four permits and, therefore, far below the viable unit and he could not be given preference in a competition between him and the appellant, who had more than thirty permits.
The problem presented can only be solved by a reasonable inter pretation of the plain words used in G. O. Ms. No. 3353 of 1954 read along with the expressed object sought to be achieved thereby.
It will be convenient at this stage to read the said order omitting the unnecessary words: G. O. Ms. No. 3353 Home dated 15th November, 1954.
" The Planning Commission has made the following recommendation in respect of Road Transport service : 'It is desirable for the existing private operators ' units to amalgamate, wherever possible, into big viable units to enable them to achieve better returns and maintain better standards of operation 243 The Government considered that it will be in the interests of the public if road transport services are conducted by operators having at least toil stage carriages and they have therefore decided that each viable unit should consist of at least ten stage carriages.
In exercise of the powers conferred by Section 43 A of the (Central Act IV of 1939), and in supersession of the orders issued in paragraph (ii) of G. O. Ms. 1037, Home dated 28th March 1953, the Governor of Madras hereby directs that each viable stage carriage unit in this State shall consist of not less than 10 buses and that in the matter of grant of stage carriage permits, other things being equal, and that with a view to build up such viable units, the following shall be the order of preference 1.
Operators with less than 10 buses, but nearer the mark of ten. 2.
Operators with 10 and more buses.
Others including new entrants.
The Governor also directs that in order to facilitate the amalgamation of existing small units into viable units transfer of permits shall be allowed liberally." The G. O., Was issued to achieve the object of inducing the operators to amalgamate wherever possible, into big viable units to enable them to achieved better returns and maintain better standards of operation.
The Government decided that a unit of at least ten buses would be necessary to achieve that object.
To implement that policy, it directed that each viable stage carriage unit should consist of not less than ten buses and with a view to build up such viable units, it directed that, other things being equal, the order of preference contained therein should be followed.
The order of preference contained three categories, one ex cluding the other.
They did not provide for any rules of preference inter se of operators coming within each one of the categories.
Presumably, that was left to be decided by the transport authorities, having regard to the considerations mentioned in section 47.
The argument 244 of the learned Counsel for the fourth respondent is based upon the first category, which reads: " Operators with less than 10 buses but nearer the mark of 10 ".
He contends that, having regard to the object of the G. O., namely, to build up a viable stage carriage unit of ten, in the absence of an operator with stage carriages nearer to the mark of ten than the fourth respondent, he is entitled to a permit in preference to the appellant provided other things are equal between them.
In respect of this argument, emphasis is laid upon the word "nearer " and it is said that the said word indicates a rule of preference between operators coming within that category, namely, that an operator like the fourth respondent is to be preferred, if there is no other operator nearer than him to the mark of ten.
This argument is attractive, but, in our view, it is inconsistent with the scheme of the order.
It is true that the phraseology of category (1) has not been happily worded and perhaps grammatically not correct.
But the intention is fairly obvious.
For one thing the rule of preference is based upon the achievement of the object, i.e., the building up of a viable unit of ten permits, for the other, the rule of preference is only to govern the three categories mentioned therein and not inter se between those falling in each category.
The word " others " in category (3) becomes meaningless, if operators far below the mark of ten permits fall within the first category.
The more reasonable interpretation and that is in accord with the intention of the State Government is that other things being equal, in a competition between the three categories of operators mentioned in the order, operators nearer the mark of ten shall be preferred.
In the absence of any such operator, operators with ten or more buses should be given the second preference.
In the absence of such operators, others, i. e., operators who are not nearer the mark of ten and new entrants, will have to be preferred.
This rule of preference was not expected to cause any injustice as the restriction on the transfer of permits was removed and the small operators were permitted to amalgamate the existing units into viable units.
245 This policy did not achieve the expected results, but encouraged monopolies; with the result that the Government had to cancel the order of June 15,1955, within about six months from the making of it; but that circumstance does not affect the construction of the clause.
We, therefore, hold that on a strict inter pretation of the G. O. Ms. No. 3353 of 1954, the fourth respondent would not have been entitled to the permit.
But as we have held that the said order was not law but was only an administrative direction, it could not affect the validity of the order of the Central Road Traffic Board, if it made the order, having regard to the consideration laid down in section 47 of the Act.
The main consideration under section 47 of the Act is that the Regional Transport Authority shall, in deciding whether to grant or refuse such carriage permit, have regard to the interest of the public generally.
The Central Road Traffic Board, after having found that the appellant had other advantages such as he operated a three route permit touching the route under appeal, that his record was satisfactory and that he was not inefficient, came to the conclusion that by giving the permit to the fourth respondent, it would be encouraging not only healthy competition but also would be enabling him to work out to the minimum of five permits.
It is true that if the 1954 order should govern the selection, the main reason given by the Board would be wrong.
Whether a small unit or a large unit would be viable or would be in the interest of the public is always a debatable point and it is possible to take conflicting views on the question.
One view is that ail operator who is described as fleet owner will have considerable experience in the business and will be in a position to keep a workshop and additional buses to meet any emergency and therefore he would be in a better position to operate the service without break and keep up the timings in the interest of the public than a stray bus operator.
The alternative view is that encouragement of large viable units will tend to monopoly and the freedom from competition will bring about deterioration in service.
Oil the other hand, new entrants and operators 246 Owning a few buses will incentive to bestow greater attention to tile public needs, particularly in view of the competition from others in the same field.
That both views are possible is evident from the fact that the State Government has been changing its views so often on the subject; and indeed the cancellation of G. O. Ms. No. 3353 of 1954, within six months from the date of its issue, presumably on the basis of the experience gained during that period, is a clear indication that in the opinion of the, Government, encouragement of large units was not in the interest of public.
If that be so, one cannot say that the Central Road Traffic Board acted without jurisdiction when it accepted the view that the smaller units would be more in the interest of the public rather than larger units ; nor the fact that it accepted the prevailing view of the Government on the subject would make it any the less an order within its jurisdiction, provided the said view was germane to one or other matters stated in section 47 of the Act.
As pointed out by us, both the views are possible and the Board was well within its rights in holding that the public interest would be served if the permit was given to the fourth respondent, in the circumstances of the case.
In this view, no other question arises for consideration.
The order of the Madras High Court is correct and the appeal is dismissed with costs.
SARKAR, J.
The appellant before us is a company operating public motor bus services in the State of Madras.
Its grievance is that it has been wrongly refused a permit to run a bus.
Motor bus services transporting passengers on the public highways for consideration, called stage carriage services, are controlled by sections 42 to 68 contained in Chapter IV of the .
The Act provides that no vehicle can be used as a stage carriage save in accordance with a permit granted by a regional Transport Authority set up by the State Government.
Section 47 of the Act lays down certain matters to which a Regional Transport Authority shall have regard in deciding whether to grant or refuse a 247 stage carriage permit, one of which is the interest of the public generally.
Section 68 of the Act authorises the State Government to make rules for the purpose of carrying into effect the provisions of Chapter IV.
The rules framed under this section do not contain anything to guide the Regional Transport Authority in the matter of granting the permits save that r. 150 provides that it " shall in all matters be subject to the orders of the Government and shall give effect to all orders passed by the Government whether on appeal or otherwise.
" Section 43 A of the Act however gives the State Government power to issue orders and directions to the Regional Transport Authority.
That sec tion is in these terms " The State Government may issue such orders and directions of a general character as it may consider necessary, in respect of any matter relating to road transport, to the State Transport Authority or a Regional Transport Authority; and such Transport Authority shall give effect to all such orders and directions.
" We are not concerned with the State Transport Authority in this case.
The Act is a Central Act and section 43 A was introduced into it by an amendment made by the legislature of the Province of Madras.
The Government of Madras from time to time issued orders under this section providing certain considerations for the guidance of the Regional Transport Authorities in deciding applications for the rant of permits for stage carriages.
The appellant 's contention is that the permit was refused to it by applying one of these orders which was not applicable to its case.
Section 64 of the Act permits an appeal to an appellate authority from an order of a Regional Transport Authority refusing to grant a permit.
This appellate authority in the State of Madras is called the Central Road Traffic Board.
Section 64 A which again was introduced into the Act by an amendment of the legislature of the Province of Madras, empowers the Government to look into the records of any case concerning the grant of a permit and pass such order as it thought fit.
Now as to the facts of this case, on March 28, 1953, 248 the Government issued an order tinder section 43 A marked G. O. Ms. No. 1037 laying down certain considerations to be observed in granting permits.
On November 15, 1954, the Government issued another order marked G. O. Ms. No. 3353 superseding the second of G. O. Ms. No. 1037 and substituting fresh provisions in its place.
As I do not consider it necessary to discuss the terms of these orders, it will tend to clarity to proceed on the basis as if G. O. Ms. No. 3353 superseded G. O. Ms. No. 1037 wholly.
The appellant, the respondent No. 4 and eight other persons had applied for the permit for a route for which applications had been invited.
It does not appear from the record when these applications had been made, but it appears that on April 9, 1955, the Regional Transport Authority after hearing all the competing applicants granted the permit to the appellant applying G. O. Ms. No. 3353, this being the order then in force.
Soon thereafter, namely, on May 20, 1955, the Government passed under the same section a fresh order being ( 'J. O. Ms. No. 1403 cancelling G. O. Ms. No. 3353 and on June 15, 1955, it passed another order being G. O. Ms. No. 1689 which, for the purpose of this case it may be said, had the effect of restoring G. O. Ms. No. 1037.
On or about June 23, 1955, the respondent No. 4, who will be referred to as the respondent as he is the only contesting respondent, preferred an appeal to the Central Road Traffic Board against the decision of the Regional Transport Authority.
It may be that some of the other disappointed applicants for the permit also preferred similar appeals but with them we are not concerned.
The Board considered the representations of all the parties before it and made an order on June 25, 1955, setting aside the decision of the Regional Transport Authority and granting the permit to the respondent.
According to the appellant, in making this order the Board followed G. O. Ms. No. 1037.
The complaint of the appellant is that the Board went wrong in doing so as G. O. Ms. No. 1037 was not in force when the appellant 's application was considered by the Regional Transport Authority but had been brought into force subsequently, and as the Board was only hearing an appeal from the Regional Transport Authority it was bound to decide the case according to the order in force when the Regional Transport Authority made its decision and was not entitled to decide it according to an order which came into existence subsequently.
The appellant took the matter up to the Government under section 64 A of the Act but the Government refused to interfere.
The appellant then moved the High Court at Madras for a writ of certiorari quashing the orders of the Board granting the permit to the respondent and of the Government refusing to interfere.
Rajagopalan, J., who heard the application, thought that the Government had failed to exercise its jurisdiction by not deciding a point raised before it, namely, whether the appeal to the Board had been made within the prescribed time.
He, therefore, set aside the order of the Government and sent the case back for reconsideration.
The respondent went up in appeal from the order of Rajagopalan, J.
The appeal was heard by a bench of the same High Court consisting of Rajamannar, C. J., and Ramaswami, J., and was allowed.
The learned Chief Justice who delivered the judgment of the court, held that Rajagopalan, J., was not right in thinking that the Government had failed to decide whether the appeal to the Board had been filed by the respondent within the prescribed time.
He rejected the contention of the appellant that the order of the Board was liable to be set aside inasmuch as it had been made pursuant to G. O. Ms. No. 1037 which was not the order in force when the Regional Transport Authority heard the matter.
He observed, " these Government orders, which are in the nature of general administrative directions to the transport authorities, do not vest any rights, indefeasible rights in any applicant for a stage carriage permit ".
He also held, " It cannot be said that because on the date of the disposal of the application by the Regional Transport Authority a particular G. O. was in force, any one had a vested 32 250 right conferred on him by that G. O.
We think that it was permissible to the Central Road Traffic Board to decide between the claimants on the basis of the G.O. which was in force at the time the appeal was being heard.
" The appellant has now come to this Court by special leave in appeal against this judgment.
Only one point has been argued by Mr. Pathak appearing in support of the appeal.
He said that the Board was a quasi judicial tribunal and an order made by it is therefore liable to be quashed by a writ of certiorari if that order discloses an error apparent on the face of it.
He then said that the order of the Board of June 25, 1955, was erroneous in law as it decided the case by the terms of G. O. Ms. No. 1037, which was brought into force after the date of the decision of the Regional Transport Authority and bad not been given a retrospective operation, and the Board which was hearing an appeal from the Regional Transport Authority, could only decide whether that Authority had gone wrong in the application of the provisions in force at the time of the hearing before it, namely, the provisions contained in G. O. Ms. No. 3353.
He also said that such error was apparent on the face of the record as the Board in its decision stated that it was deciding the case by G. O. Ms. No. 1037.
It has not been contended before us that the Board is not a quasi judicial Tribunal.
It clearly is so.
In view of the many decisions of this Court in similar matters it would be impossible to take a contrary view.
Then again it is a principle firmly established and accepted by this Court that a writ of certiorari can issue where the decision of a tribunal discloses an error of law apparent on its face.
I am also clear in my mind that if it was an error for the Board to have followed G. O. Ms. No. 1037, such error appeared on the face of its decisions for it expressly purported to be guided by G. O. Ms. No. 1037.
The only questions that remain are whether this was an error and an apparent error.
These I now proceed to discuss.
It is true that G. O. Ms. No. 1037 which had been 251 superseded by G. O. Ms. No. 3353 on November 15, 1954, was revived by G. O. Ms. No. 1689 issued on June 15, 1955, i.e., after the date of the decision of the Regional Transport Authority given on April 9, 1955, when G. O. Ms. No. 3353 prevailed.
I will assume now that G. O. Ms. No. 1689 did not bring back G. O. Ms. No. 1037 with retrospective force.
Was the Board then wrong in a plying G. O. Ms. No. 1037 when it decided the appeal from the Regional Transport Authority 's decision ? I do not think so.
It may be that when one regular and ordinary court bears an appeal from the decision of another such court, it cannot, generally speaking, take into consideration a law which has been passed since that decision.
But it is far from clear that the same rule applies when an appeal from the order of a quasi judicial tribunal is heard by another such tribunal, as is the case here.
No authority to warrant such a proposition was cited and as at present advised, I am not prepared to assent to it.
In any case, it can safely be said, and it is enough for the purpose of this case to do so, that it is far from clear that a quasi judicial tribunal like the one before us is not entitled in hearing appeal from another such tribunal to apply a rule which has come into existence since the decision under appeal.
If it is not so clear there of course is no error apparent on the face of the record.
It cannot be overlooked that such a tribunal is not enforcing a vested right which one party has against another or others.
The tribunal is to choose from amongst a number of persons the fittest to be granted a permit.
The overriding interest in the selection is of one who is not a party to the proceedings, namely, the travelling public.
The lower tribunal is entitled to be heard on an appeal under section 64, a procedure which is wholly inapplicable in appeals from the decisions of what are called courts of law.
As a general rule, a court gives effect at the trial to the substantive rights of the parties existing at the date of the writ and it is for this reason that a change in the law cannot ordinarily be taken into account in appeals.
Now such a consideration does not prevail in the 252 present case.
It is not said that a person when he makes an application for a permit acquires a right to have his application decided by the order under the section then in force.
All that is said is that the Transport Authority must consider the applications according to the order in force at the time it hears them.
If this is so, as I think it is, then the basis for saying that the appellate authority cannot consider a Government order issued since the order under appeal was made, completely disappears.
Another reason given for the view that a court of appeal cannot take into consideration a new law is that, " a matter of substantive right which has become res judicata cannot be upset by a subsequent general change of the law": see Re a Debtor, Exparte Debtor (1).
Now it does not seem to me possible to say that an applicant for a permit has a substantive right to the permit vested in him.
Nor is it possible to conceive of the decision of a Regional Transport Authority in granting or refusing to grant a permit as having any operation by way of res judicata.
It therefore seems to me that there is no warrant for applying the general rule applicable to a court of law hearing an appeal from a similar subordinate court which prevents it from taking notice of a new law, to tribunals such as those with which this case is concerned.
I wish to add one thing more on this subject.
Even in the case of appeals strictly so called, the court hearing the appeal may take cognisance of new laws which are made applicable to pending cases: see Quilter vs Mapleson (2).
I have so long been proceeding on the assumption that G. O. Ms. No. 1689 had no retrospective effect at all.
Now it seems to me that there is at least grave doubt if G. O. Ms. No. 1689 which revived G. O. Ms. No. 1037, was not intended to be applied to pending appeals.
It was directed only to the Central Road Traffic Board which heard appeals, and this would indicate that it was intended that the Board would follow it in deciding the appeals that were then pending before it.
It is not therefore clear that G. O. Ms. No. 1689 was not intended to (1) , 243.
(2) 253 have at least this retrospective effect.
If it did, which on the form of the order it may well be said to have done, then that would be another reason for saying that it is not clear that the Board was in error in applying it.
In my view therefore it has not been shown that the Board committed an error apparent on the face of its decision in applying G. O. Ms. No. 1037 to the appellant 's case.
This appeal must therefore fail.
Before leaving the case I wish to express my opinion on a matter which was pressed on behalf of the respondent.
It was said that only administrative orders could be made under section 43 A which orders were not laws, and therefore an error with regard to them would not be an error of law which would warrant the issue of a certiorari.
I am unable to assent to this contention.
To my mind the question is not solved by describing the orders as administrative orders, a term as to the meaning of which, I confess, I am not clear.
So it does not seem to me to be necessary to enquire what kind of orders could be issued under section 43 A.
In my view if an order under the section is one to the observance of which a person is entitled, that would be a law, a mistake of which would justify the issue of the writ at his instance.
The whole justification for a writ of certiorari is to prevent, where no other remedy is available, a patent injustice being allowed to stand.
It would be strange if a person was entitled to the observance of a rule and was held not to have a remedy for its breach.
It can make no difference by what name that rule is called.
I wish to read here as a salutary advice to follow, what Pollock C. B. and Martin B. said in The Mayor of Rochester vs The Queen (1) regarding the writ, " Instead of being astute to discover reasons for not applying this great constitutional remedy for error and mis government, we think it our duty to be vigilant to apply it in every case to which, by any reasonable construction, it can be made applicable." The real question thus is whether the applicants for permits were entitled to the observance of the orders (1) ; ,1033; ; 254 with which we are dealing.
I think they clearly were.
The orders were made under a statutory provision.
That itself would make them binding.
Further, the statute expressly says that the " Transport Authority shall give effect to all such orders and directions ".
The statute applies to all; every one is entitled to the benefit of it.
Any person interested has therefore a right to claim that an order passed under the section shall be observed by the Transport Authorities.
The respondent himself made such a claim and has got the benefit of one of these orders.
It was however said that it is true that the Transport Authorities owed a duty to observe the orders but that was a duty they owed to the Government alone and that a breach of this duty only exposed them to disciplinary action by the Government but did not vitiate their decisions.
I find no words in the section so to limit the scope of the duty imposed by it on the Transport Authorities.
The nature of the orders makes it impossible to think that it was intended to visit a breach by disciplinary action only.
These orders lay down principles to be applied in deciding whether a person should or should not be given a permit.
They affect persons materially ; they affect persons ' living .
I find it very difficult to think that the only sanction for such rules can be disciplinary action.
It seems to me abhorrent that judicial bodies should in the discharge of their functions be subjected to disciplinary action.
Then I think it would certainly be a very unusual statute which sets up quasi judicial tribunals with power to affect people materially and binds the tribunals on pain of disciplinary action only to proceed according to rules made under its authority but gives the persons deeply affected by the tribunal 's decision no right to claim that the rules should be observed.
I am unable to hold that the is a statute of this kind.
I ought to refer to the case of Nagendra Nath Bora vs The Commissioner of Hills Division and Appeals, Assam (1).
That was a case concerning a licensing authority for liquor hops.
It was there said that a (1) [1958] S C.R. 1240.
255 breach of certain executive instructions issued to the licensing authority did not amount to error of law.
I think that case is clearly distinguishable.
It dealt with executive instructions and therefore not such as were issued under a statutory power.
There is nothing to show that it was the bounden duty of the tribunal, the licensing authority, to obey these instructions.
Had it not been that a hierachy of appeals had been provided for, it would perhaps have been held in that case that the authority was not a quasi judicial authority at all.
Furthermore, it was held there that no one had an inherent right to a settlement of a liquor shop.
Therefore it seems to me that that case does not help in deciding the effect of the orders issued under section 43 A.
It is interesting to note that it was said in that case referring to the writ of certiorari at p. 412 that, " 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 law which it was meant to administer.
" The words " law which it was meant to administer " are very significant.
The Transport Authorities in the present case were certainly meant to administer the orders issued under section 43 A.
There is one thing more that I wish to observe in this connection.
It may be that an order which it is the bounden duty of the Transport Authority to obey may give it a certain amount of discretion, but that in my view would riot make the order any the less a law.
If the discretion has been duly exercised, there would be no error of law for the law itself gives the discretion.
It would be the bounden duty of the tribunal to observe that law and so if necessary to exercise the discretion given by it.
For the reasons earlier mentioned, however, I agree that the appeal should be dismissed.
Appeal dismissed.
| The appellant and the fourth respondent along with others were applicants for a stage carriage permit.
The Regional Transport Authority after hearing the applicants granted the permit to the appellant.
On appeal by the fourth respondent the Central Road Traffic Board set aside the order of the Regional Transport Authority and granted the permit to the fourth respondent.
The appellant moved the State Government in revision but to no effect.
He thereafter moved the High Court under article 226 of the Constitution for a writ of certiorari quashing the orders of the Central Road Traffic Board and the State Government.
The single judge who heard the matter quashed 228 the said orders and directed the State Transport Appellate Tribunal, which was constituted in place of the Central Road Traffic Board, to dispose of the appeal according to law.
On a Letters Patent appeal by the fourth respondent, the Appellate Bench of the High Court set aside the order of the single judge and restored the order of the Central Road Traffic Board.
Hence this appeal by special leave.
The point for determination in the appeal was whether the order granting the permit to the appellant made by the Regional Transport Authority on the basis of an order issued by the State Government under section 43A of the , as amended by the Motor Vehicles (Madras Amendment) Act, 1948, could be set aside on the basis of another order imposing new restrictions issued thereunder while the appeal was pending before the Central Road Traffic Board and thus involved the question as to whether an order or direction issued by the State Government under section 43A of the Act had the force of law, so as to create a vested right in the appellant.
Held (per jafer Imam and Subba Rao, jj.), that section 43A of the , as amended by the Motor Vehicles (Madras Amendment) Act, 1948, properly construed, must be given a restricted meaning and the jurisdiction it conferred on the State Government must be confined to administrative functions.
An order or direction made thereunder by the State Government, therefore, could not have the status of law regulating rights of parties and must partake of the character of an administrative order.
C. section section Motor Service, Tenkasi vs The State of Madras, I.L.R. and Gopalakrishnan Motor Transport Co., Ltd. vs Secretary, Regional Transport Authority, Krishna District, Vijayawada, , approved.
Consequently, in the instant case, the appellant could not be said to have acquired a vested right that was defeated by a new law enforced pending the appeal and the order of the Central Road Traffic Board could not be set aside merely on the ground that it had decided the appeal on the basis of an order issued subsequent to the grant of the permit if such order was otherwise in public interest.
Per Sarkar, J. It could hardly be said that the rule that a court hearing an appeal from a decision should not ordinarily take into consideration a law passed subsequent to that decision had application where a quasi judicial tribunal heard an appeal from another such tribunal.
Consequently, in the instant case, it could not be said that there was an error of law apparent on the face of the record so as to attract a writ of certiorari and the appeal must fail on that ground.
No applicant for a permit under the could have a substantive right to the permit vested in him and 229 the granting or refusal of a permit by the Regional Transport Authority could not operate as res judicata.
It was unnecessary for the purpose of the present case to decide what kind of orders could be issued by the State Government under section 43A of the Act, for whatever its nature, administrative or otherwise, if an order under that section entitled a person to its observance, and there was hardly any doubt as to that, it would be a law a mistake of which would justify the issue of a writ of certiorari at his instance.
The Mayor of Rochester vs The Queen, (1858) EL.
& E.L. ; , referred to.
Nagendra Nath Bora vs The Commissioner of Hills Division and Appeals, Assam, ; , distinguished.
|
Summarize this legal judgement text concisely | 26 and 27 of 1954, 24 and 437 of 1955, 256 of 1956, 12, 16, 17 and 73 of 1957.
Petition under Article 32 of the Constitution of India for the enforcement of Fundamental Rights.
M.S. K. Sastri, for the petitioners in Petitions Nos. 26 and 27 of 54 and 24 of 1955.
V.N. Swami and M. section K. Sastri, for the petitioners in Petitions Nos.
437 of 55 and 256 of 56.
341 L.K. Jha, J. M. Thakur, section N. Andley and J. B. Dadachanji, for the petitioner in Petition No. 12 of 1957.
N.S. Bindra and Harbans Singh, for the petitioners in Petitions Nos. 16 and 17 of 1957.
N.S. Bindra and Govind Saran Singh, for the petitioner in Petition No. 73 of 1957.
H. N. Sanyal, Additional Solicitor General of India, H.J. Umrigar and R. H. Dhebar, for the respondent in Petitions Nos. 26 and 27 of 1954, 24 and 437 of 1955, 256 of 1956 and 12 of 1957.
M.Adhikary, Advocate General for the State Of Madhya Pradesh and I. N. Shroff, for the respondent in Petitions Nos. 16, 17 and 73 of 1957.
March 9.
The Judgment of the Court was delivered by HIDAYATULLAH, J.
The judgment in Petition No. 12 of 1957 shall also dispose of petitions Nos. 26 and 27 of 1954, 24 and 437 of 1955, 256 of 1956 and 16, 17 and 73 of 1957.
These petitions under article 32 arise out of alleged agreements by which some of the proprietors in the former State of Madhya Pradesh granted to one or other of the petitioners the right to take forest produce, mainly tendu leaves, from the forests included in Zamindari and Malguzari villages of the grantors.
Government has disclaimed these agreements and auctioned the rights afresh.
The petitioners state that this is an invasion of their fundamental rights.
The dates on which these alleged agreements were entered into, the terms thereof and the periods during which they were to subsist are different from case to case.
It is not necessary in this judgment to recite the terms of these documents, and it is sufficient to group them for purpose of decision on the bases whether the said agreements still subsist, and whether they are incorporated in a registered instrument or not.
Petitions Nos. 437 of 1955 and 256 of 1956 are founded on unregistered documents.
The answering respondent does not admit these documents, and contends that they cannot be looked into to prove their 342 terms, in view of the decision of this Court in Shri mathi Shantabai vs State of Bombay (1).
Petitions Nos. 16, 17 and 73 of 1957 form another group, inasmuch as the period during which the alleged agreements were to operate expired in 1955.
Additionally, the documents on which the 'claim is founded in those petitions are unregistered.
In the last mentioned case, it is pleaded that the answering State Government had recognised the agreements in favour of the petitioner but resiled from that position subsequently, which allegation has been adequately explained by the State Government in its affidavit.
The recognition was not in favour of the petitioner but in favour of one Thakur Kamta Singh, who claimed under an agreement entered into by one Vishwanath Singh on a date when he had already transferred his interest in the Zamindari to his son Onkar Prasad Singh.
This point was therefore not taken before us at the hearing, and nothing more Deed be said about it.
The main objection against these petitions is that the agreements having expired, there is nothing left to enforce either in favour of the petitioners or against the State Government, and the remedy, if any, of the petitioners is to sue the State and/or the proprietors for the breach.
The last group consists of Petitions Nos. 26 and 27 of 1954, 24 of 1955 and the present petition (No. 12 of 1957).
In these petitions, the agreements with the petitioners are made by registered documents and the terms during which they are to operate have yet to expire.
These cases, it is stated, fall outside the rule in Shantabai 's case (1), to which reference has already been made.
They are stated to fall within the decision of this Court reported in Firm Chhotabhai Jethabai Patel and Co. vs The State of Madhya Pradesh (2).
In all these petitions, counsel argue that the view expressed in the last mentioned case is correct, while the view in Shantabai 's case (1) needs further consider ation.
The argument of the petitioners in these several cases is that Government steps into the shoes of the (1) ; (2) ; 343 quondam proprietors, and is bound by the agreements into which the latter had entered, before their proprietary rights were taken over by Government.
They also raise the contention that the petitioners were not proprietors as defined in the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950 (hereinafter called the Act), and thus sections 3 and 4 in terms do not apply to them.
These sections, it is contended, do not apply to profit a prendre, which the petitioners enjoy under these agreements.
In support of this contention, reference is made to the decision of this Court in Chhotabhai 's case (1), and to the definition of ' proprietor ' in the Act.
Reference is also made to some provisions of the C. P. Land Revenue Act to be mentioned hereafter, to prove that the persons on whom the right to collect forest produce was conferred by the proprietors can not be regarded as proprietors even under that Act.
This, in main, is the argument in these cases, and even those petitioners whose agreements are incorporated in unregistered documents or whose agreements have since expired, adopted the same line of argument denying the necessity for registration of such agreements.
The matter in so far as it relates to the first two groups is simple.
It has already been ruled in Shantabai 's case (2) that if the right be claimed on foot of an unregistered agreement, it cannot be entertained.
Such documents were examined from five different angles in that case, and it was held that the document if it conferred a part or share in the proprietary right, or even a right to profit a prendre needed registration to convey the right.
If it created a bare licence, the licence came to an end with the interest of the licensors in the forests.
If proprietary right was otherwise acquired, it vested in the State, and lastly, if the agreements created a purely personal right by contract, there was no deprivation of property, because the contract did not run with the land.
Bose, J., who delivered a separate judgment, also held that in the absence of registration no right was created.
(1) ; (2) ; 344 In view of the clear pronouncement of this Court, the first two groups of petitions must fail.
Petitions Nos. 16, 17 and 73 of 1957 also fail for the added reason that the agreements having expired, the only remedy, if any, is to sue for breach of contract and no writ to enforce expired agreements can issue.
This brings us to the arguments advanced in the last four petitions in the third group which were also adopted by the other petitioners, whose petitions we have just considered.
All these petitioners strongly relied upon Chhotabhai 's case (1).
It is therefore necessary to examine attentively what was decided there.
In that case, it was held at p. 483 that: " The contracts and agreements appear to be in essence and effect licenses granted to the transferees to cut, gather, and carry away the produce, in the shape of tendu leaves, or lac, or timber, or wood." Reference in this behalf was made to a decision of the Privy Council in Mohanlal Hargovind of Jubbalpore vs Commissioner of Income tax, Central Provinces and Berar (2), where it was observed: " The contracts grant no interest in land and no interest in the trees or plants themselves.
They are simply and solely contracts giving to the grantees the right to pick and carry away leaves, which, of course, implies the right to appropriate them as their own property.
The small right of cultivation given in the first of the two contracts is merely ancillary and is of Do more significance than would be, e.g., a right to spray a fruit tree given to the person who has bought the crop of apples.
The contracts are short term contracts.
The picking of the leaves under them has to start at once, or practically at once, and to proceed continuously.
" The Bench next observed that there was nothing in the Act to affect the validity of the several contracts and agreements, and that the petitioners were, neither proprietors within the meaning of the Act, nor persons having " any interest in the proprietary right through the proprietors ".
After quoting from Baden Powell 's (1) ; (2) I.L.R. , 898, 345 Land Systems of British India, Vol.
1,p. 217, as to what was meant by ' proprietorship ' in the Land Revenue Systems in India, it was observed that the definition of ' proprietor ' in the Act conveyed the same sense.
Finally, repelling the argument that the agreements concerned " future goods ", it was held on the basis of a passage in Benjamin on Sale, 8th Edition, page 136, that a present sale of the right to goods having a " potential existence " could be made.
Since possession was taken under the agreements and consideration had also passed, there could be " a sale of a present right to the goods as soon as they come into existence.
" Reference was also made (at pp. 480, 481) to section 6 of the Act, which provides: " (1) Except as provided in sub section (2), the transfer of any right in the property which is liable to vest in the State under this Act made by the pro prietor at any time after the 16th March, 1950, shall, as from the date of vesting, be void.
" It was observed in the case as follows: " The date, 16th March, 1950, is probably the date when legislation on these lines was actively thought of, and sub section (1) hits at transfers made after this date.
This means that transfers before that date are not to be regarded as void.
Even in the case of transfers after the said date, sub section (2) provides that the Deputy Commissioner may declare that they are not void after the date of vesting, provided they were made in good faith and in the ordinary course of management.
The scheme of the Act as can be gathered from the provisions referred to above makes it reasonably clear that whatever was done before 16th March, 1950, by the proprietors by way of transfer of rights is not to be disturbed or affected, and that what vests in the State is what the proprietors had on the vesting date.
If the proprietor had any rights after the date of vesting which he could enforce against the transferee such as a lessee or a licensee, those rights would no doubt vest in the State." 44 346 It was accordingly held that the State Government could not interfere with such agreements but had only the right to enforce rights arising therefrom " standing in the shoes of the proprietors.
" It is clear from the foregoing analysis of the decision in Chhotabhai 's case (1) that on a construction of the documents there under consideration and adopting a principle enunciated by the Privy Council in Mohanlal Hargovind of Jubbalpore vs Commissioner of Incometax, Central Provinces and Berar (2) and relying upon a passage each in Benjamin on Sale and the wellknown treatise of Baden Powell, the Bench came to the conclusion that the documents there under consi deration did not create any interest in land and did not constitute any grant of any proprietary interest in the estate but were merely contracts or licenses given to the petitioners " to cut, gather and carry away the produce in the shape of tendu leaves, or lac , or timber or wood ".
But then, it necessarily followed that the Act did not purport to affect the petitioners ' rights under the contracts or licenses.
But what was the nature of those rights of the petitioners ? It is plain, that if they were merely contractual rights, then as pointed out in the two later decisions, in Ananda Behera vs The State of Orissa (3), Shantabai 's case (4), the State has not acquired or taken possession of those rights but has only declined to be bound by the agreements to which they were not a party.
If, on the other hand, the petitioners were mere licensees, then also, as pointed out in the second of the two cases cited, the licenses came to an end on the extinction of the title of the licensors.
In either case there was no question of the breach of any fundamental right of the petitioners which could support the petitions which were presented under article 32 of the Constitution.
It is this aspect of the matter which was not brought to the notice of the Court, and the resulting omission to advert to it has seriously impaired, if not completely nullified, the effect and weight of the decision in Chhotabhai 's case (1) as a precedent.
(1)[1953] S.C.R. 476.
(3)[1955] 2 S.C.R. 265.
(2) I.L.R. , 898.
(4) ; 347 The argument of counsel in these cases followed the broad pattern of the decision in Chhotabhai 's case (1).
and we next proceed to consider it.
It is contended that what vests in the State is the right which the proprietors had on the date of vesting because section 3 of the Act is not retrospective, and that the agreements are " in essence and effect licenses granted to the transferees to out, gather and carry away the produce in the shape of tendu leaves, or lac or timber or wood ".
These agreements, it is submitted, grant no 'interest in land ' or I benefit to arise out of land ', the object of the agreements can only be described as sale of ' goods ' as defined in the Indian Sale of Goods Act, and the grant of such a right is not comprehended in the firstsub section of section 3 where it says : " . . all proprietary rights in an estate, mahal in the area specified in the notification, vesting in a proprietor of such estate, Mahal or in a person having interest in such proprietary right through the proprietor, shall pass from such proprietor or such other person to and vest in the State for the purposes of the State free of all encumbrances ".
It is finally contended that the interest of these peti tioners is not I proprietary right ' at all but a right to get I goods in the shape of leaves, lac, etc.
We have to examine these contentions critically.
Before we do so, it is necessary to set out in brief the terms of the agreements which have been produced in these cases.
In Petition No. 12 of 1957 there were two agreements, Annexures A and B. The first was executed in 1944 and granted the right from 1947 to 1956; the second was executed in 1946 and granted the right from 1957 to 1966.
These are long term agreements and they are typical from case to case.
Indeed, the second agreement was made even before the first began, and the total period is 20 years.
In addition to the right to the leaves the documents pro vided for many other matters.
It is convenient to quote only from Annexure 'B ': " Before this I had given you a similar contract selling Tendu leaves produce by contract dated (1)[1953] S C.R. 476.
348 7 7 1944 registered on 12 7 1944.
In pursuance of that registered contract, which is for five years from 1947 to 1951 and another for subsequent five years from 1952 to 1956 in all for ten years, you are to remain in possession and occupation of the areas and the Tendu leaves produce till the termination of the year 1956 for which time you continue your possession and thereafter in pursuance of this contract you continue for further period of ten years your possession and occupation from 1957 to 1966 as is usual and customary pruning and coppicing Tendu leaves plants, burning them, and instal Fadis for collection of Tendu leaves and construct Kothas (godowns) for storage of the leaves at your sweet will and choice on any open plot or land within the estate with my permission and you are allowed to take free of all costs any Adjat timber, bamboos, etc., from my forests for constructing them.
I shall charge you no further consideration.
In the same manner, for the purpose of constructing these godowns and such thing you may according to your convenience (you may) manufacture bricks at any place you like in the vicinity of any rivers, rivulet, Nala or pond at your costs.
I shall not receive from you any extra amount as rent for the use and occupation of land that will be used for construction of Kothas, for manufacturing bricks and for locating Fadis (Bidi leaves collection centres).
All those are included in the consideration fixed for this contract.
All these rights are already conferred on you in the previous contract dated 7 7 1944 and under this contract for the entire contract period.
It is also open to you to collect Tendu leaves not only those growing in the summer season but also those growing in Kartik.
During the term of this contract, if for one reason or another it becomes necessary for you to sell the Tendu leaves produce and assign this contract to any other person you can do so.
But you shall be responsible for me to give my consent after inquiring of the fitness of the intended transferee.
However, you shall continue to be responsible to pay to me the agreed amount of instalments on or before the agreed dates; and if the agreed amount of instalment is not paid to me on or 349 before the agreed date, I shall have full right to start proper proceedings in that connection ".
In Petition No. 26 of 1954, the period of the two agreements was from 1944 to 1963.
There too, the rights were similar to those in Petition No. 12 of 1957, and analogous terms are to be found in Petitions Nos. 27 of 1954 and 24 of 1955.
The question that arises is, what is the nature of this right? In English law, distinction was made between easements and profit a prendre and a right to take the produce of the soil was regarded as a profit a prendre.
While easements were not regarded as an interest in land, a right to take the produce of the soil or a portion of it was an interest in land: Fitzgerald vs Fairbanks (1).
Profit a prendre can be the subject of a grant.
Where they take the form of a grant, they are benefits arising from land.
In all these cases, there is not a naked right to take the leaves of Tendu trees together with a right of ingress and of regress from the land; there are further benefits including the right to occupy the land, to erect buildings and to take other forest produce not necessarily standing timber, growing crop or grass.
The right of ingress and of regress over land vesting in the State can only be exercised if the State as the owner of the land allows it, and even apart from the essential nature of the transaction, the State can prohibit it as the owner of the land.
Whether the right to the leaves can be regarded as a right to a growing crop has, however, to be examined with reference to all the terms of the documents and all the rights conveyed thereunder.
If the right conveyed comprises more than the leaves of the trees, it may not be correct to refer to it as being in respect of growing crop ' simpliciter.
We are not concerned with the subtle distinctions made in English law between emblements, fructus naturals and fructus industriales, but we have to consider whether the transaction concerns " goods " or "moveable property " or " immovable property ".
The law is made difficult by the definitions which exist in the General Clauses Act, the Sale of Goods Act, the (1)[1897] 2 Ch.
350 Transfer of Property Act and the Registration Act.
These definitions must be placed alongside one another to get their ambits.
If the definitions are viewed together, it is plain that they do not tell us what " immovable property " ' is.
They only tell us what is either included or not included therein.
One thing is clear, however, that things rooted in the earth as in the case of trees and shrubs, are immovable property both within the General Clauses Act and the Transfer of Property Act, but in the latter, " standing timber ", " growing crop " and " grass " though rooted in earth are not included.
Of these, " growing crop " and " grass form the subjectmatter of the sale of goods, and standing timber " comes within the last part of the definition of ' goods ' in the Indian Sale of Goods Act, to be subject thereto if the condition about severing mentioned in the definition of ' goods ' exists.
It has already been pointed out that the agreements conveyed more than the tendu leaves to the petitioners.
They conveyed other forest produce like timber, bamboos, etc., the soil for making bricks, the right to prune, coppice and burn tendu trees and the right to build on and occupy land for the purpose of their business.
These rights were spread over many years, and were not so simple as buying leaves, so to speak, in a shop.
The expression " growing crop " might appropriately comprehend tendu leaves, but would not include, Adjat timber ', bamboos, nor even tendu plants.
The petitioners were not to get leaves from the extant trees but also such trees as might grow in the future.
They could even burn the old trees, presumably, so that others might grow in their place.
In these circumstances, the agreements cannot be said to be contracts of sale of 'goods ' simpliciter.
It remains now to consider whether the rights enjoyed by the petitioners can be said to fall within section 3(1) of the Act.
That section divests the proprietors of their proprietary rights, as also any other person having an interest in the proprietary right through the proprietor and vests those rights in the State.
That section has to be read with the section which 351 follows, and which sets out the consequences of vesting of such rights in the State.
The rights which vest can be stated briefly to be (a) all proprietary rights in the proprietor, and (b) all proprietary rights in any person having interest in such proprietary rights through the proprietor.
These rights vest in the State free of all encumbrances.
Section 4 of the Act provides inter alia that after the notification has been issued, then, ' notwithstanding anything contained in any contract, grant or document or in any other law for the time being in force and save as otherwise provided in this Act ' the following consequences (among others) shall ensue: " (a) all rights, title and interest vesting in the proprietor or any person having interest in such proprietary right through the proprietor in such area including Land (cultivable or barren), grassland, scrubjungle, forest, trees, fisheries, wells, tanks, ponds, water channels, ferries, pathways, village sites, hats, bazars and melas; and in all subsoil, including rights, if any, in mines and minerals, whether being worked or not, shall cease and be vested in the State for purposes of the State free of all encumbrances; and the mortgage debt or charge on any proprietary right shall be a charge on the amount of compensation payable for such proprietary right to the proprietor under the provisions of this Act; (b)all grants and confirmation of title of or to land in the property so vesting or of or to any right or privilege in respect of such property or land revenue in respect thereof shall, whether liable to resumption or not, determine: ".
If these petitioners can be said to be possessing " an interest in the proprietary right ", then their rights, title and interest in the land determine under the Act, and vest in the State.
The petitioners, therefore, contend that their rights under the agreements cannot be described as 'proprietary right ' or even a share of it.
They rely on the definition of 'proprietor ' in the Act, and refer under the authority of section 2(b) of the Act to the Central Provinces Land Revenue Act, 1917.
The definition in the Act is not exhaustive.
It only 352 tells us who, besides the proprietor, is included in the term 'proprietor '.
Further, the definitions in the Act are subordinate to the requirements of the context and the subject matter of any particular enactment.
From the Act, we know that the proprietor 's interest in forest, trees, shrub, grass and the like passes to the State.
The question thus resolves into two short ones did the former proprietors own proprietary interest in these trees, and did they part with that proprietary interest and convey it to the petitioners ? There is but little doubt that in so far as the Act is concerned, it does contemplate cesser of all proprietary rights in land, grass land, scrub jungle, forest and trees, whether owned by the proprietor or through him by some other person.
The contention of the petitioners is that by the term " proprietor " is meant what that term conveys in the Central Provinces Land Revenue Act, and reference is made for this purpose to various sections therein.
The term " proprietor " is defined in the Central Provinces Land Revenue Act thus: " " Proprietor " except in sections 68, 93 and 94, includes a gaontia of a Government village in Sambalpur Territory.
" This definition does not advance the matter any further.
In several sections, special explanations are added to define " proprietors ".
In all those explanations, the term is not defined, but is said to include 'thekedars or headmen with protected status ', I mortgagee with possession ', I lessees holding under leases from year to year ' and the like.
In addition, there is invariably the inclusion of I a transferee of proprietary, rights in possession ', which again leaves the matter at large.
See sections 2(5), 2(21), 53 and 68.
Counsel faced with this difficulty rely upon the scheme of settlement in Ch.
VI of the Central Provinces Land Revenue Act , and the record of rights which consists of Khewat, a statement of persons possessing proprietary rights in the mahal including inferior proprietors or lessees or mortgagees in possession, specifying the nature and extent of the interest of each; and Khasra or field book and Jamabandi or list of persons 353 cultivating or occupying land in the village.
these documents are prepard separately.
The petitioners contend that by 'proprietary right ' is meant that right which can find, a place or be entered in the Khewat, and the rights enjoyed by the petitioners are not and cannot be entered in the Khewat because thay are not 'proprietary rights '.
They also refer to the schemes of settlement under which proprietors subproprietors etc.
, are determined and offered assessment.
In our opinion, these arguments, though attractive, do not represent the whole of the matter.
What these documents record and what the settlement operations determine are the kinds of ' proprietors ' among whom the entire bundle of rights is shared.
Every proprietor or sub proprietor enjoys proprietary rights over land, forests, etc., falling within his interest.
The right to forest trees, etc., is the consequence of proprietorship, and indeed, under section 47(3) the State Government can declare which rights and interest must be regarded as ' proprietary rights '.
That sub section provides: " The State Government may declare the rights and interests which shall be deemed to be proprietary rights and interests within the meaning of sub section (2).
" The second sub section provides: " The Deputy Commissioner shall cause to be recorded, in accordance with rules made under section 227, all changes that have taken place in respect of, and all transactions that have affected, any of the proprietary rights and interests in any land.
" The matter is made clear if one refers to the provisions of section 202 of the Land Revenue Act.
That section confers on Government the power to regulate the control and management of the forest growth on the lands of any estate or mahal.
A reading of sub sections
(4) to (8) of that section clearly shows that forests belong to the proprietors from whom under those sub sections they can be taken over for management, the profits of the management less expenses being paid to the proprietors or to superior and inferior proprietors as the case may be.
Sub sections (9) and (10) provide 45 354 (9)" No lease, lien, encumbrance or contract with respect to the forest land held under direct manage ment shall be binding upon the Government.
(10)On the expiration of the period fixed for the direct management, the forest land shall be restored to the proprietor thereof" Even here, the term ' proprietor ' is explained by the usual explanation showing the same category of persons as included in the section.
From this, it is quite clear that forests and trees belonged to the proprietors, and they were items of proprietary rights.
The first of the two questions posed by us, therefore, admits of none but an affirmative answer.
If then the forest and the trees belonged to the proprietors as items in their ' proprietary rights ', it is quite clear that these items of proprietary rights have been transferred to the petitioners.
The answer to the second question is also in the affirmative.
Being a 1 proprietary right ', it vests in the State under sections 3 and 4 of the Act.
The decision in Chhotabhai 's case (1) treated these rights as bare licenses, and it was apparently given per incuriam, and cannot therefore befollowed.
Even assuming that the documents in question do not amount to grant of any proprietary right by the proprietors to the petitioners, the latter can have only the benefit of their respective contracts or licenses.
In either case, the State has not, by the Act, acquired or taken possession of such contracts or licenses and consequently, there has been no infringement of the petitioners , fundamental right which alone can support a petition under article 32 of the Constitution.
The result is that these petitions fail, and are dismissed, but in view of the fact that they were filed because of the decision in Chhotabhai 's case (1), there shall be no order about costs.
Petitions dismissed.
| Some of the proprietors of the former State of Madhya Pradesh granted to the several petitioners rights to take forest produce, mainly tendu leaves, from the forests included in the Zamindaris belonging to the proprietors.
The agreements conveyed to the petitioners in addition to the tendu leaves other forest produce like timber, bamboos, etc., the soil for making bricks, and the right to build on and occupy land for the purpose of their business.
These rights were spread over many years, but in the case of a few the period during which the agreements were to operate expired in 1955.
Some of the agreements were registered and the others unregistered.
After the coming into force of the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950, the Government disclaimed the agreements and auctioned the rights afresh, acting under section 3 of the Act under which " all proprietary rights in an estate . . in the area specified in the notification, vesting in a proprietor of such estate. or in a person having interest in such proprietary right through the proprietor, shall pass from such proprietor or such other person to and vest in the State for the purposes of the State free of all encumbrances".
The petitioners filed petitions under article 32 of the Constitution of India challenging the legality of the action taken.
by the Government on the ground that it was an invasion of their fundamental rights.
They contended (1) that the Government stepped into the shoes of the quondam proprietors and was bound by the agreements into which the latter had entered, before their proprietary rights were taken over by the Government, (2) that the petitioners were not proprietors as defined in the Act and therefore sections 3 and 4 of the Act did not apply to them, (3) that the agreements were in essence and effect licenses granted to them to cut, gather and carry away the produce in the shape of 340 tendu leaves, or lac, or timber or wood, (4) that the agreements granted no 'interest in land ' or 'benefit to arise out of land ' and that object of the agreements could only be described as sale of goods as defined in the Indian Sale of Goods Act, and (5) that the interest of the petitioners was not proprietary right but only a right to get goods in the shape of leaves, etc The petitioners relied on the decision in Firm Chhotabhai jethabai Patel and Co. vs The State of Madhya Pradesh; , Held : (1) that the agreements required registration and in the absence of it the rights could not be entertained.
Srimathi Shantabai vs State of Bombay, ; , followed.
(2)that in cases where the period stipulated in the agree ment had expired, the only remedy, if any, was to sue for breach of contract and no writ to enforce expired agreements could issue.
, (3) that on their true construction the agreements in question were not contracts of sale of goods.
(4) that both under the Act in question and the Central Provinces Land Revenue Act, 1917, the forests and trees in the Zamindari area belonged to the proprietors and they were items of proprietary rights.
Consequently, the rights conveyed to the petitioners under the agreements were proprietary rights, which under sections 3 and 4 of the Act, became vested in the State.
(5)that assuming that the agreements did not amount to grant of any proprietary right by the proprietors to the petitioners, the latter could have only the benefit of their respective contracts or licenses.
In either case, the State had not, by the Act, acquired or taken possession of such contracts or licenses and, consequently, there had been no infringement of the petitioners ' fundamental rights which alone could support a petition under article 32 of the Constitution.
Chhotabai jethabai Patel and Co. vs The State of Madhya Pradesh, ; , not followed.
Ananda Behera vs The State of Orissa, [1955] 2 S.C.R. gig, followed.
|
Summarize this legal judgement text concisely | Appeal No. 265 of 1956.
Appeal from the judgment and order dated August 26, 1954, of the Calcutta High Court in Income tax Reference No. 107 of 1952.
S.Mitra, Dipak Choudhry and B. N. Ghosh, for the appellants.
C.K. Daphtary, Solicitor General of India, K. N. Rajagopala Sastri, R. H. Dhebar and D. Gupta, for the respondent.
356 1959.
March 16.
The Judgment of the Court was delivered by HIDAYATULLAH, J.
Messrs.
Mcgregor & Balfour, Ltd., Calcutta (hereinafter called the Company) is a Company incorporated in the United Kingdom.
Its head office is also there.
It, however, does business in India also.
In some of the previous years, the Company was required to pay excess profits tax both in England and in India.
When it did so, it obtained deduction of the amounts from its profits and gains for purposes of the Indian lncome tax Act, under s.12(2) of the Indian Excess Profits Tax Act.
In the assessment year 1947 1948 which corresponded to the accounting year of the Company ending on October 31, 1946, 'it obtained a repayment of Rs. 2,31,009 out of the excess profits tax paid in England.
This was under section 28(1) of 4 & 5, Geo.
VI, Ch. 30.
For purposes of the levy of the Indian Income tax, this sum was included in the taxable profits of the Company by the Income tax Officer.
He purported to act under section 11(14) of the Indian Finance Act, 1946 (hereinafter called the Act).
The income of the Company in India was held to be Rs. 6,34,937 (including the sum of Rs. 2,31,009) while the in ' come outside the taxable territory was held to be Rs. 4,29,620.
Applying section 4A(c)(b) of the Indian Income tax Act, the Income tax Officer assessed the Company on its total world income.
The appeals of the Company made successively to the Appellate Assistant Commissioner and the Incometax Appellate Tribunal were dismissed.
The Tribunal, however, referred the following questions of law to the High Court at Calcutta under section 66 of the Indian Income tax Act: "(1) Whether on the above facts and circumstances of this case the Tribunal was right in holding that the sum of Rs. 2,31,009 was income of the assessee during the assessment year under consideration and was liable to be assessed under the Indian Income tax Act ? and (2)If so, whether this amount could not be taken into consideration for determining the residence of the 357 assessee under section 4A(c)(b) of the Indian Income tax Act ? " This reference was heard by Chakravarti, C. J., and Lahiri, J., who by their judgment dated August 26, 1954, answered the first question in the affirmative and the second in the negative.
They, however, granted a certificate under section 66A of the Indian Income tax Act, read with article 135 of the Constitution to appeal to this Court.
No appeal has been filed on behalf of the Department, and the second of the two questions must be taken to be finally settled in this case.
The contentions of the Company in this appeal, thus, concern only the first question, and they are two: It was said firstly that section 11(14) of the Finance Act could not be made applicable to the assessment year 1947 1948, because the provision was not incorporated in the Indian Income tax Act or repeated in the subsequent Finance Acts.
This argument was not seriously pressed before us, and beyond mentioning it, Mr. Mitra for the Company did not choose to elaborate it.
We think that Mr. Mitra has been quite correct in not pursuing the matter.
The section framed as it is, does apply to subsequent assessment years just as it did to the assessment for 1946 1947, and prima facie, it was not necessary to follow one of the two courses detailed above.
Since the point was not pressed before us, we need not give our reasons here.
It was said nextly that the High Court was in error in construing section 11(14) of the Finance Act as a provision which created a liability proprio vigore, as if it was a charging section.
It was contended that the repayment was not within the taxable territory, and in view of the answer to the second question as to the applicability of section 4A(c)(b), there could be no tax upon it.
On behalf of the Department it was argued that the sub section created a charge by itself and the fiction therein created being sufficient and clear, it was not necessary to consider where the income arose.
Section 11(14) of the Finance Act reads as follows: " Where under the provisions of sub section (2) of 358 section 12 of the Excess Profits Tax Act, 1940 (XV of 1940), excess profits tax payable under the law in force in the United Kingdom has been deducted in computing for the purposes of income tax and supertax the profits and gains of any business, the amount of any repayment under sub section (1) of Section 28 of the Finance Act, 1941, (4 & 5, Geo.
6, c. 30), as amended by Section 37 of the Finance Act, 1942 (5 & 6, Geo 6, c. 21), in respect of those profits, shall be deemed to be income for the purposes of the Indian Income tax Act, 1922, and shall, for the purpose of assessment to income tax and super tax, be treated as income of the previous year during which the repayment is made.
" This section may be compared with R. 4(1) of the Rules which are applicable to cases 1 and 11 of sch.
D of the Income tax Act, 1918 (8 & 9, Geo.
V, c. 40): " Where any person has paid excess profits duty, the amount so paid shall be allowed as a deduction in computing the profits or gains of the year which included the end of the accounting period in respect of which the excess profits duty has been paid; but where any person has received repayment of any amount previously paid by him by way of excess profits duty, the amount repaid shall be treated as profit for the _year in which the repayment is received.
" The English rule above quoted deals first with the deduction of the amount paid as excess profits duty from the profits or gains of the year which includes the end of the accounting period in respect of which the excess profits duty has been paid a matter dealt with in section 12(2) of, the Indian Excess Profits Tax Act, and next with the assessability to tax of the amount repaid from the excess profits duty previously charged a matter dealt with in sub sections (11) and (14) of section 11 of the Finance Act.
The object and purpose of the legislation in each case is the same, and though the two provisions are not ipsissima verbal they are substantially in the same words and also in pari materia.
The concluding words of the English rule " the amount repaid shall be treated as profits of the year in which the repayment is received ", and which have been interpreted by 359 English Courts may specially be compared with the concluding words of sub section
(14) of section 11 of the Finance Act, which run: " any repayment. shall, for the purposes of assessment to income tax and super tax, be treated as the income of the previous year during which the repayment is made.
" There can be no doubt that the intention underlying the two provisions is the same, and the language is substantially similar.
Now, the English rule was interpreted by the English Courts to create a liability irrespective of considerations arising from the general provisions of the income tax law.
In Eglinton Silica Brick Co., Ltd. vs Marrian (1), the assessee company which had gone into voluntary liquidation in 1904 was carried on by the liquidator till 1921 when the business was sold to another company which took it over on October 5, 1921, and the business of the appellant company then ceased.
The income tax assessment for the year 192122 was apportioned between the two companies and inasmuch as the assessee company had suffered a loss, it was reduced to nil in its case.
The assessee company then received pound, 7,224 and pound, 1,150 in 1952 after it had ceased to carry on business as repayments of excess profits duty, and this income was assessed under R. 4(1) above mentioned.
The question was whether this was right.
The case was considered by the Lords of the First Division, and they are their opinion against the assessee firm.
The Lord President (Clyde) with whom Lords Skerrington, Cullen and Sands agreed (Lord Sands dubitans) explained the two parts of the rule as follows: " The principle is obvious.
It is that if a taxpayer has made profits assessable (directly, or indirectly through the operation of the three years ' average) to income tax, and the Revenue takes a share of those profits in the name of Excess Profits Duty, it is only fair that the profits actually assessed to Income Tax should suffer some corresponding deduction. . ." (1)(1924) , 98.
360 The problem which arose in the case of repayment of Excess Profits Duty was different.
Nobody knew or could know how soon, or how late, repayment might fall to be made; nor whether the business whose profits were assessed to Excess Profits Duty would be in the same hands when repayment (if any) came to be made.
By that time the business might have ceased to be in existence.
Repayment might therefore have to be made to a person who was not carrying on the original business.
The original trader might have given up business, died, and an executor might have come in his place.
The solution provided for all these cases is that contained in the second part of the paragraph, according to which the amount repaid to any person is to be I treated as profit for the year in which the repayment is received. ' It is obvious that the amount of the former trading profits so repaid could not actually be trading profits for such year.
None the less, the amount repaid is to be treated as if it were that which in fact it is not, and cannot be.
The amount repaid consists of trading profits which reach the taxpayer out of their proper time.
However belated his fruition of them, they have not lost their original character as trading profits.
In my opinion, this is what explains the position of paragraph (1) of Rule 4 as part of the Rules under Cases I and 11 of Schedule D, which are concerned with the profits of trades and vocations.
That some artificial rule should be formulated was in the circumstances inevitable, and the highly artificial character of the rule adopted is shown by the words in which it is expressed , the amount repaid shall be treated as profit for the year in which the repayment is received.
In short, the amount repaid is deemed to be something that it is not, and could not in the actual circumstances possibly be.
Nor is this in any way unreasonable or contrary to what might be expected, if regard be had to the subject matter.
For, as has been seen, the Excess Profits Duty was itself a part of the trading profits computed by methods familiar under the Income Tax Act.
It was not merely a part of something which entered into the computation of profit; it was actual 361 computed profit.
And, but for the disparity between the ' accounting period ' and the three years ' average, it would have been directly assessable to Income Tax.
" A similar view was taken in the Court of Appeal by Lord Hanworth, M. R., Scrutton, L. J., and Romer, J. (Scrutton, L. J., dubitans) in A. & W. Nesbitt Ltd. vs Mitchell (1).
There too, the assessee company after suffering losses in the accounting period May 1 to November 25, 1920, went into liquidation and ceased to trade.
On April 22, 1924, the repayment of Excess Profits Duty took place, and this was assessed to income tax.
The Master of the Rolls described the amount received as repayment in these words: " But in respect of what is that payment made ? It is not a legacy, it is not a sum which has fallen from the skies ; it, is a sum which is repaid because there was too large a sum paid by the Company to the Revenue Authorities over the whole period during which Excess Profits Duty was paid, and that sum means and is intended to represent a repayment of a sum which was paid by them in respect of the duty charged upon the excess profits of their trading.
It comes back, therefore, not having lost its character but being still the repayment of a sum too much, it is true, but a sum taken out of the profits which were made by the Company in the course of its trading, profits which at the time they were made were subject to Income Tax and subject to Excess Profits Duty, and that is the character of the repayment that has been made.
" Dealing with the rule, the Master of the Rolls observed : "I have pointed out, this is a case where the Company has received payment of an amount previously paid by way of Excess Profits Duty and having that characteristic attaching to it; and we are told by the Statute that when such a sum is repaid it is to be treated as a profit for the year in which the repayment is received.
It is said it may be treated as a (1) 217, 218.
46 362 profit; but it ought not to be treated as an assessable profit.
The answer, to my mind, is that it is paid back not by way of a sum which has no origin or ancestry ; it is a sum which represents a repayment of the amount previously paid by that company in the form of Excess profits duty upon their trading.
If it is to have that character and is to be treated as such a profit, although it be a repayment of sums paid in respect of profits, it is to be treated as a profit for the year in which the repayment is received.
The word ' treated ' indicates that it is to be deemed to be something which in fact it is not, or whether it is so or not it is to be treated as a profit, and therefore it is, to my mind, impossible to discuss the question of whether or not difficulties may arise or whether it may be criticised as financially not quite sound that it should be treated in this method in that particular year; but we are told by the Statute that it is to be treated as a profit for the year in which the repayment is received.
" In a case similar on facts as the ones cited above (Kirke 's Trustees vs The Commissioners of Inland Revenue (1)), the House of Lords Viscount Cave, L. C., Lord Atkinson, Lord Shaw of Dunfermline, Lord Sumner and Lord Carson) placed the same construction upon the latter part of R. 4(1).
The following passage in the speech of Lord Sumner, explaining the extent of the fiction in the latter part of the Rule, is extremely instructive : " The express mandatory terms of the sentence show, in carefully chosen language, that he is to submit to something by reason of his having previously enjoyed this advantage in the shape of repayment of an amount previously paid by way of Excess Profits Duty.
Something which is not a profit, but is only a money repayment, something which may not result in a profit, because although trading goes on there is so great a loss on the year that this repayment does not make up the deficit, something which may not be a trading profit, because trading has ceased altogether, nevertheless is to be treated as profit and as profit for the year.
Treated ' is a, fresh word free from legal technicality.
(1) , 332.
363 It is the widest word that could be chosen.
The Legislature avoided saying 'shall be assessed as ' or I shall be brought into the computation of profit and loss , and simply says that something which is not profit but mere payment shall be treated as profit, which it c may or may not be, and as profit for the year.
I think, therefore, that the word treated is an apt word to impose a charge ".
See also in this connection Olive and Partington Ltd. vs Rose (1).
These cases were relied on by Chakravarti, C. J., and Lahiri, J., in the judgment under appeal, and the learned Judges pointed out that the addition of the words " for the purposes of assessment to income tax and super tax " rather strengthen the reasoning in its application to the words of the Indian Statute.
We agree with this statement.
It is to be noticed that the sub section creates two fictions.
By the first fiction it makes the amount of any repayment ' income ' for the purposes of the Indian Income tax Act, and goes on to say that that ' income ' shall be ' treated ' for purposes of assessment to income tax and super tax, as the income of the previous year.
Mr. Mitra, for the Company contends that no doubt the amount may be treated as 'income ' for the purposes of the Indian Income tax Act, but the Department is still under a duty to prove that the Company is liable to tax at all.
According to him, this will have to be treated as income received outside the taxable territory, because if the fiction contemplated its being treated as 'within the taxable territory ', it would have said so specifically.
In our opinion, this submission cannot be accepted.
That this would have been taxable income but for the provisions of section 12(2) of the Excess Profits Tax Act, goes without saying.
The income character of the receipt is restored by the fiction, and it is to be brought under assessment without any further proof than this that it has been received as repayment of the United Kingdom tax, in respect of which a deduction was made in the earlier years.
The distinction between (1) 364 incomes within and without taxable territories is made unnecessary by demanding that this amount by way of repayment shall be brought to tax and ' treated ' as income within the previous year.
The effect thus is that the sub section charges the said amount with a liability to tax by its own force or to borrow the words of Lord Sumner, is apt to ' impose a charge '.
In our opinion, the amount received as repayment of excess profits tax must be deemed to be 'income ' for the purposes of the Indian Income tax Act and for assessment it must be treated as income of the previous year.
The answer to question No. 1 given by the Calcutta High Court was thus correct.
The appeal fails, and is dismissed with costs.
Appeal dismissed.
| The appellant carried on business in England and in India.
For the previous years it paid excess profits tax in both countries and it obtained deduction of the amounts so paid from its profits and gains for the purposes of the Indian Income tax Act.
In the assessment year 1947 48 it obtained a repayment of RS.
2,31,009 out of the excess profits tax paid in England.
The Income tax authorities acting under section 11(14), Indian Finance Act 1946, included this amount received in England in the taxable profits of the appellant.
The appellant contended that the repayment not being within the taxable territory it could not be taxed.
Held, that the amount received as repayment of the excess profits tax was rightly taxed.
Under section 11(14) the amount of repayment was deemed to be 'income ' for purposes of the Indian Income tax Act and that ' income ' was to be treated as the income for the previous year during which the repayment was made.
Section 11(14) created a liability irrespective of the considerations arising from the general provisions of the income tax law.
The distinction between incomes within and without taxable territories was made unnecessary by section 11(14).
Eglinton Silica Brick Co. Ltd. vs Maryian, (1924) 9 Tax Cas. 92; A. & W. Nesbitt Ltd. vs Mitchell, (1926) " Tax Cas. 217 and Kirke 's Trustees vs The Commissioners of lnland Revenue, , applied.
|
Summarize this legal judgement text concisely | Appeal No. 204 of 1958.
Appeal from the judgment and decree dated January 6, 1956, of the Calcutta High Court in Income tax Reference No. 74 of 1953.
K. N. Rajagopal Sastri, R. H. Dhebar and D. Gupta, for the appellant.
Radha Binod Pal, Panchanan Pal and D. N. Mukherjee, for the respondents.
March 26.
The Judgment of the Court was delivered by SINHA, J.
The question for determination in this appeal on a certificate of fitness granted by the High Court of Calcutta, is whether the respondent 's admitted income tinder certain heads, is chargeable to income tax under the provisions of section 10(6) of the Indian Income tax Act, 1922 (XI of 1922) (hereinafter referred to as the Act).
The Calcutta High Court, by its judgment dated January 6, 1956, answered the question in the negative, disagreeing with the determination of the Income tax Appellate Tribunal by its order dated April 23, 1949.
The facts of this case, upon which the decision of the appeal depends, may shortly be stated as follows: The respondent is a limited liability company incorporated on June 7, 1933, with a view to taking over the assets and liabilities of an unincorporated association called " The Calcutta Stock Exchange Association 461 and to carrying on the affairs of the Stock Exchange which had been founded by that Association.
The principal object of the Respondent Company is to facilitate the transaction of business on the Calcutta Stock Exchange.
In view of that objective, the Company had to make rules and by laws, regulating the mode and the conditions in, and subject to, which the business of the Stock Exchange had to be transacted.
The Company is composed of " members " who may be either individuals or firms, who, except in the case of parties who had been members of the unincorporated Association have to be elected as such, and upon such elections, have to acquire a share of the Company and pay an entrance fee.
The members have to pay a monthly subscription according to the by laws of the Company.
Under the by laws of the Respondent Company, members with a certain standing, are allowed to have "Authorized Assistants ", upto a maximum of six in number.
Such Authorized Assistants are permitted the use of the premises of the Association and to transact business therein in the names and on behalf of the members employing them.
The members have to pay an admission fee for such Authorized Assistants according to the following scale : (a) for the first two Assistants Rs.1,000 (b) for the third Assistant Rs.2,000 (c) for the fourth Assistant Rs.3,000 (d) for the fifth Assistant Rs.4,000 (e) for the sixth Assistant Rs.5,000 (f) for replacement Rs.1,000 The last item of replacement fee of Rs. 1,000/ is meant to cover the fee for substituting one Assistant by another.
Before these by laws were amended with effect from July 10, 1944, a member could have more than six such Assistants, but the number was limited to six by the new amendment which also provided that " Members who have more than six Assistants, at present, shall not be allowed any replacement unless the number of Assistants in their firms has come down to six (maximum fixed).
" Rule (5), as amended, is in these terms: 462 "Every candidate applying for admission as Assistant to a member must serve at least for one year as a probationer in the firm of that member.
A probationer must apply to the Committee (through the member in whose office he will serve as probationer) in such form as may be prescribed by the Committee by paying Rs. 100/ as probationer fee which will not be refunded in any circumstances ".
It would, thus, appear that the rules relating to the admission of members ' Assistants, confer the benefit upon those members only either individuals or firms who are qualified according to the by laws to have such Assistants, and who have paid admission fees and pay a monthly subscription in respect of each of them, besides their own dues, to the Company.
The number of such Assistants has been sought by the by laws to be limited upto a maximum of six, by imposing a progressively enhanced admission fee, apparently, with a view to discouraging the employment of a large crowd of such " Authorized Assistants".
The by laws also provide that "an authorized assistant shall not enter into any contracts on his own behalf and all contracts made by him shall be made in the name of the member employing him and such member shall be absolutely responsible for the due fulfilment of all such contracts and for all transactions entered into by the authorized assistant on his behalf" It is also contemplated by the by laws that tickets have to be issued to the Authorized Assistants, besides the members ' tickets.
The bylaws also contemplate that a member shall give to the prescribed Authority of the Company an immediate notice in writing, of the termination of the employment by him of any Authorized Assistant, and on such termination, the right of the Assistant to use the rooms of the Association, shall cease, and he shall not be at liberty to transact business in the name and on behalf of his employer.
The by laws also make provision for the supervision of the work of the Authorized Assistants to see that they function within the limits of their powers, and do not transact 463 business on behalf of persons or firms other than those employing them.
During the accounting year 1944 45 assessment year 1945 46), the Respondent Company received from its members the sum of Rs. 60,750/ as entrance fees, and the sum of Rs. 15,687/ as subscription in ' respect of the Authorized Assistants.
The Company also received during the aforesaid year, a sum of Rs. 16,000/ as fees for putting the names of companies on the Quotations List.
Unless a particular company 's name is placed on the Quotations List, no dealings in respect of the shares of that company are permitted on the Stock Exchange.
An application has to be made by a member to place on the Quotations List any company not already included in that List, and on approval by the prescribed Authority of the Company, the name of the company thus proposed, is included in the List upon payment of a certain fee.
The companies themselves cannot apply to the Association for such enlistment.
The application has to be made by a member, and has to be accompanied by a fee of Rs. 1,000/ , and it is only after the necessary scrutiny and investigation into the affairs of the proposed company have been made, that the enlistment applied for is granted.
That is another source of income to the Respondent Company.
It is no more necessary to refer to another item of income, which was admitted, during the course of the assessment proceedings in their appellate stage, to be liable to the payment of tax.
We are, thus, concerned in the present controversy with the aforesaid sums of Rs. 60,750/ , Rs. 15,687/ and Rs. 16,000/ which were held by the Income tax Officer, by his order dated March 27, 1946, to be liable to income tax.
The Income tax Officer rejected the contention raised on behalf of the assessee Company that the Authorized Assistants aforesaid were themselves members of the Company, and that therefore, the moneys received from them were exempt from taxation.
He also held that though the Respondent Company was a mutual Association, each one of the three items of income, referred to above, was remuneration definitely related 464 to specific services performed, and was thus, chargeable to tax within the meaning of section 10(6) of the Act.
On appeal, the Appellate Assistant Commissioner, by his order dated June 30, 1947, considered the points at great length, and came to the conclusion that the authorized Assistants were not members or substitute members.
He held that the Authorized Assistants were no more than representatives of the members who employ them, and they transact business on their behalf, and that the Association had framed rules and by laws, regulating the admission, supervision and discontinuance of such Authorized Assistants.
For coming to this conclusion, he relied upon the decision of the Bombay High Court in the case of Native Share and Stock Brokers ' Association vs The Commissioner of Income tax(1).
The case was then taken up in appeal to the Income tax Appellate Tribunal, which dismissed the appeal.
The Tribunal agreed with the finding of the taxing authorities that the Authorized Assistants were not members of the Company within the meaning of the Articles of Association of the Company, and that their position was analogous to that of the " authorised clerks in Native Share and Stock Brokers ' Association at Bombay ".
In the course of its order, the Tribunal observed as follows: " The provision made in the regulations of the company, by which a member can take advantage of sending his authorised assistants to the company for transacting the business in the member name is nothing but giving extra facilities to the members.
By controlling the institution of authorised assistants the company renders specific services to the members and in particular to the member whose assistants work for him.
The amounts received by the company from these sources are clearly covered by the provisions of section 10(6) ".
At the instance of the assessee, the Tribunal stated a case and referred the following questions of law to the High Court for its decision under section 66(1) of the Act: " (1) Whether on the facts of this case the Incometax Appellate Tribunal was right in holding that, (1) 465 Authorised Assistants were not members of the company and as such the amounts of Rs. 15,687/ and 60,750/ received from them as subscriptions and entrance fees respectively should be included in the assessable income.
(2) Were these amounts received for specific services performed by the Association or its members within the meaning of sub section (6) of section 10 of the Indian Income tax Act ? (3)Whether the sums of Rs. 16,000/ and Rs. 600/ were remuneration definitely related to specific services performed by the Association for its members within the meaning of subsection (6) of section 10 ".
The reference was heard by a Division Bench consisting of Sir Trevor Harries, C. J., and Banerjee, J., of the Calcutta High Court.
Before that Bench, certain concessions were made.
It was conceded by Dr. Pal, who also appeared before that Bench, that the Authorised Assistants were not members of the Company.
It was also agreed at the bar, on behalf of both the parties, that the two sums of Rs. 60,750 and 15,687 were not received from the Authorized Assistants, as suggested in the question formulated, and that it was common ground that they were received from members of the Association in respect of their Authorized Assistants.
Therefore, the High Court took the view that the questions framed by the Tribunal did not arise, and that the Tribunal bad proceeded on a wrong basis of facts.
The High Court, therefore, re cast the questions in these terms: " Whether in the facts and circumstances of this case the Income tax Appellate Tribunal was right in holding that (a)the amounts of Rs. 15,687/ and Rs. 60,750/ received from the members of the Association as subscriptions and entrance fees in respect of Authorized Assistants, and (b) the amounts of Rs. 16,000/ and Rs. 600/ received as fees for enlisting names of newly floated companies and for recognition of changes in the styles of firms respectively should be included in the assess.
able income of the assessees 59 466 The Tribunal was asked to re state a case upon the questions as re cast, extracted above.
Accordingly, the Tribunal drew up a fresh statement of the case and re submitted it to the High Court.
On this re statement of the case, the matter was heard by a Bench consisting of Chakravarti, C. J., and Sarkar, J.
The High Court considered the terms of section 10(6) of the Act, and came to the conclusion that the case had not been brought within those terms.
The High Court, in the course of its opinion, observed that though the assessee is undoubtedly a trade association, it did not perform any specific services for its members for remuneration.
It then examined in detail the decision of the Bombay High Court in the case of Native Share and Stock Brokers ' Association vs The Commissioner of Income tax (1), relied upon by the Department, and observed that the differences pointed out between the case in hand and the case decided by the Bombay High Court, were " not vital, though they are not immaterial ", but it was not prepared to take the same view of the facts of this case as had been taken by the Bombay High Court in the case referred to above, or by the Travancore Cochin High Court in the case of Commissioner of Income tax vs Chamber of Commerce, Alleppey (2).
The High Court, accepted the argument of Dr. Pal, which is also addressed to us, that the words " performing specific services for " were far stronger and more definite than the words " render service to ", and that those words meant the actual doing of definite acts in the nature of services.
The Court further observed that those words meant " execute certain definite tasks in the interests and for the benefit of the latter (that is to say, the members) under an arrangement of a direct character ".
It further observed that the words " for remuneration" and " definitely related to those services " meant that " certain specific tasks must be performed or functions of a specific character must be discharged for payment and such payment is to be made to the association as wages for its labour in respect of those tasks or functions ".
In this connection, (1) (2) 467 it may be added that the High Court also made the following observations bearing on the construction of the crucial words of section 10(6): " When section 10(6) speaks of a trade, professional or other similar association performing specific services for its members for remuneration, it contemplates, I think, services in regard to matters outside the mutual dealings for which the Association was formed and for the transaction of which it exists as a mutual association.
If performance of functions even in regard to matters within the objects of the association as a mutual association be performance of specific service within the meaning of the sub section, dis charge of no function can be outside it and everything done would be specific service performed.
That, I do not think, is what the sub section means and intends ".
It is manifest that unless the assessee is brought within the terms of sub section (6) of section 10, the three items of income coming into the hands of the Association, would not be chargeable to income tax.
That subsection is in these terms: " (6) A trade, professional or similar association performing specific services for its members for remu neration definitely related to those services shall be deemed for the purpose of this section to carry on business in respect of those services ' and the profits and gains therefrom shall be liable to tax accordingly ".
It has to be observed at the outset that the performing of the services of the description mentioned in that sub section, may not, but for the words of that section, have amounted to carrying on business in respect of those services.
The use of the word " deemed " shows that the legislature was deliberately using the fiction of treating something as business which otherwise it may not have been.
It is also noteworthy that the sub section is couched in rather emphatic terms.
We have, therefore, to examine the terms of the sub section to see whether the three sums of money in question, or any of them, are or is within the ambit of those terms.
The words " performing specific services ", in our opinion, mean, in the context, " conferring particular benefits " on the members.
The word 468 " services " is a term of a very wide import, but in the context of section 10 of the Act, its use excludes its theolo gical or artistic usage.
With reference to a trade, pro fessional or similar association, the performing of specific services must mean conferring on its members some tangible benefit which otherwise would Dot be available to them as such, except for payment received by the association in respect of those services.
The word " remuneration ", though it includes " wages ", may mean payment, which, strictly speaking, may not be called wages ".
It is a term of much wider import including recompense ", " reward ", " payment ", etc.
It, therefore, appears to us that the learned Chief Justice was not entirely correct in equating " remuneration " with " wages ".
The sub section further requires that the remuneration should be " definitely related " to the specific services.
In other words, it should be shown that those services would not be available to the members or such of them as wish to avail themselves of those services, but for specific payments charged by the association as a fee for performing those services.
After these observations bearing on the interpretation of the crucial words, we shall now examine each of the three items of income, separately, to determine the question whether they answer, or any of them answers, the description of " services " contemplated by the sub section.
Firstly, the sum of Rs. 60,750 has been realised from such members as applied for and obtained permission of the Association to have the use of Authorized Assistants within the precincts of the Stock Exchange.
There cannot be the least doubt that unless those members paid the prescribed entrance fees for one or more Authorized Assistants upto a maximum of six, they could not have the benefit thus conferred upon such members.
Ordinarily, a member has to transact business in the precincts of the Association by himself or by his business partner if there is a firm ; but if that member is a very busy person, and wishes to avail of the services of Authorized Assistants, he has to pay the the prescribed fee.
A member of the Association, with the advantage of mutuality, so long as he transacts 469 business within the precincts of the Association, by himself or by his partner in the case of a firm, is not required to pay any such entrance fee but only the fee payable by every member as such.
The entrance fee, thus, is clearly chargeable only from such of the members as avail themselves of the benefit conferred by the rules of the Association in that behalf.
The entrance fee is, thus, a price paid for the services of the Association in making suitable arrangements for an absentee member to transact business on his behalf and in his name by his representative or agent.
The entrance fee in question, therefore, cannot but be ascribed to the specific services rendered by the Association in respect of Authorized Assistants who thus become competent to transact business on behalf of their principal.
Coming next to the sum of Rs. 15,687 which was realised from the members by way of subscription in respect of their Authorized Assistants, it is clear that this sum consists of the contributions severally made by the members periodically, so as to continue to have the benefit conferred by the Association of having the use of their representative or agent even during their absence.
There cannot be the least doubt that this is a very substantial benefit to those members who found it worth their while to engage the services of Authorized Assistants.
A member is not obliged, as indicated above, to have such an Assistant, but the fact that he chooses to have such an Assistant on payment of the prescribed fee or subscription, itself, is proof positive that a businessman, who ordinarily thinks in terms of money, has found it worth while to have the services of an Assistant by making an additional payment to the Association by way of recompense for the benefit, thus conferred upon him.
Lastly, the sum of Rs. 16,000 represents fees received from members for allowing their application for enlisting the names of companies not already on the Quotations List, so that the shares and stocks of these companies, may be placed on the Stock Market.
As already indicated, it is not the company concerned which has directly to pay this fee, but the fee has to 470 be paid by the member who initiates the proposal and, apparently, finds it worth his while to pay that prescribed fee to the Association.
He would not make the payment unless he found it worth his while to do so Apparently, such a member is interested in placing the stocks of that company on the market.
It cannot, therefore, be denied that that sum of money is definitely related to the specific services performed by the Association, namely, to permit transactions in respect of the shares of the company concerned, which services would not otherwise be available to the members as a body or to the individual member or members interested in that company.
In our opinion, therefore, each one of the three sources of income to the Association, accrues to it on account of its performing those specific services in accordance with its rules and by laws.
Each one of the three distinct sources of revenue to the Association, is specifically attributable to the distinct services performed by the Association for its members or such of them as avail themselves of those benefits.
And each one of those services is separately charged for, according to the rate or schedule laid down by the rules and by laws of the Association.
In our opinion, therefore, the requirements of sub section
(6) of section 10, have been fulfilled in the present case.
But we have yet to deal with the last argument accepted by the High Court, with reference to the terms of sub section
(6) of section 10, namely, that the services contemplated therein, have reference to " matters outside the mutual dealings for which the Association was formed ".
In the first place, there is no warrant for limiting the application of the words used by the legislature, in the way suggested.
Secondly, the mutuality of the Association extends only to such benefits as accrue to every member on the payment made by him to the Association, but even if additional items of payment have to be made for additional services to be performed by the Association only for such of the members as avail themselves of those benefits, it cannot be said that the mutuality extends to those additional benefits also.
It is, in our opinion, 471 equally wrong to suggest that the services in question should have been outside the objects of the Association.
If the Association renders services to such of its members as avail themselves of such services as are not within the scope of the business activities of the Association, those benefits, if any, would not be ' conferred by the Association as such, because the Association has to function within the scope of its objects of incorporation.
Hence, on a true construction of the provisions of the sub section in question, we have come to the conclusion that the facts and circumstances of the present case, bring the three items of income of the Association within the taxing statute.
In our opinion, the decision of the Bench of the Bombay High Court, consisting of Stone, C. J., and Kania, J., (as he then was), in the case of Native Share and Stock Brokers ' Association vs Commissioner of Income tax is correct, and the facts of that case run very parallel to those of the case in band, though there may be minor differences in the rules and by laws of the Association then before the Bombay High Court.
In that case, as in the present one, the rules of the Stock Brokers ' Association (the Bombay Stock Exchange) contemplated a definite scheme for allowing members to employ authorized clerks and for the admission, conduct, control and supervision of those clerks, for the benefit primarily of the members who employed them.
It was held by the High Court that the income received by the Association by way of fees in respect of those authorized clerks, was within the taxing statute and liable to income tax.
After examining in detail the provisions of the rules and the by laws of the Association, Stone, C. J., made the following observations which are equally applicable to the rules and by laws of the Association in the present case : " In my judgment these rules lay down a definite scheme and provide an organised arrangement, controlled and supervised by the Association for the benefit of its members.
In my opinion the carrying (1) 472 of their scheme into effect is performing services for its members by the Association.
No doubt the benefit of the scheme would redound to the benefit of all members since all would have the advantage of disciplined supervision exercised over the authorised clerks and remisiers of the others.
I do not think that because the payment for the carrying of the scheme is provided for only by members who avail themselves of the use of the authorised clerks it makes any difference.
" Kania, J., (as he then was), in a separate but concurring judgment, made the following very pertinent observations: " A perusal of the rules referred to in the judgment of the learned Chief Justice shows that the institution of authorised clerks exists for the benefits only of those who pay remuneration of Rs. 100 instead of going to the market and carrying on their business themselves.
Individual members are permitted to work through an agent.
For that the charge is made.
The rules provide for the application and grant for such permission, registration of the authoris ed clerks on the individuals being recognised as clerks of particular members, supervision over the work of such clerks and particularly to prevent them from registering contracts either in their own name or in the name of another member; and a general supervision over their good behaviour is contemplated. . ".
A question was raised as to whether these are specific services to be performed for particular members or whether the rules amount to performance of duties towards members in general.
It is true that several of the services to be rendered may be helpful to the other members for their business.
Taken as a whole I consider that as a performance of services by the Association for, the benefit of members who pay the remuneration.
" We have made these copious quotations from the judgment of the Bombay High Court, because, in our 473 opinion, they truly apply the provisions of sub section
(6) of section 10 to associations like the one before us.
The other case to which our attention was drawn, is Commissioner of Income tax vs Chamber of Commerce, Alleppey (1).
The facts of that case are not similar to those of the case before us, but the ratio decidendi of that case are relevant.
That case referred to the Alleppey Chamber of Commerce.
The Chamber inaugurated a produce section with the object of promoting the interests of merchants in general, and of those engaged in the produce trade, in particular, of acting as arbitrators and collecting and publishing information relating to the produce trade.
Members were admitted to the produce section on payment of admission fees, monthly fees and contributions at certain prescribed rates.
The question which was referred to the High Court, was whether the receipts by way of fees and contributions, could be chargeable under section 10(6) of the Act, and it was answered in the affirmative.
Though cases in England, by way of precedent for the decision of the case in hand, have not been cited at the Bar, apparently because the scheme of the Income tax law in England is different and the words of the statute are not in parti material yet there are some cases which throw some light on the controversy before us.
For example, the case of The Carlisle and Silloth Golf Club vs Smith (Surveyor of Taxes) (2 ) related to a golf club which was not incorporated.
It was admittedly a bonafide members ' club, but under one of the terms of its lease, it had to admit non members to play on its course on payment of " green fees " at certain prescribed rates.
Those fees were paid by non members.
Receipts from those fees were entered in the general accounts of the Club, thus, showing an annual excess of receipts over expenditure of the Club as a whole.
It was held by Hamilton, J., (as he then was), that the Club carried on a concern or business in respect of which it received remuneration which was assessable to 'income tax.
He pointed out that the (1) (2) 60 474 receipts from non members went to augment the funds of the Club, and the revenue thus received was applied for the purposes of the Club towards its general expenditure.
The case was taken up to the Court of Appeal, and the decision of that Court is reported in the same Volume at p. 198.
The Court of appeal affirmed the decision and dismissed the appeal.
The Judgment of the King 's Bench Division in The Liverpool Corn Trade Association, Limited vs Monks (H. M. Inspector of Taxes) (1) was based on facts which are similar to the facts of the present case.
In that case, the Liverpool Corn Trade Association, Limited, was an incorporated body under the Companies Act, with the object, inter alia, of protecting the interests of the corn trade, and of providing a clearing house, a market, an exchange, and arbitration and other facilities to the trade.
Membership of the Association was confined to persons engaged in the corn trade.
Each member was required to have one share in the company, and had to pay an entrance fee and an annual subscription.
Non members could also become subscribers.
Payments were made to the Association by members and others for services rendered through the clearing house, etc.
The assessee was taxed on the excess of its receipts over expenditure.
On appeal to the Special Commissioners, they upheld the assessment.
One of the points raised before the Special Commissioners, was that transactions with its members were mutual ones, and that any surplus arising from such transactions, was not a profit assessable to income tax.
On appeal, the High Court agreed with the determination of the Special Commissioners, and held that any profit arising from the Association 's transactions with members, was assessable to income tax as part of the profits of its business, and that the entrance fees and subscriptions received from members must be included in the computation of such profits.
It was suggested that the service in this case, if any, was extremely trivial and the remuneration which was large was for that reason not definitely related to the (1) 475 service.
It was held by Upjohn, J., in Bradbury (H. M. Inspector of Taxes) vs Arnold (1) that the extent of the services was of no materiality.
There, the question was being dealt with under Case VI of Schedule D of the Income tax Act, 1918.
The learned Judge observed : " There is no doubt that a contract for services may, and clearly does, form a matter for assessment under Case VI of Schedule D, and not the less so that the services to be rendered are trivial or that they are to be rendered once and for all so that the remuneration may be regarded as a casual profit arising, out of a single and isolated transaction".
The same view was expressed by Harman, J., in Housden (Inspector of Taxes) vs Marshall (2).
In that case, a well known jockey 'contracted with a newspaper company to make available to its nominee " reminiscences of his life and experiences on the turf for the purpose of writing a series of four articles ", and to provide photographs, press cuttings, etc.
He was paid pound 750.
The question was whether this amounted to sale of property, or was a payment for services rendered.
It was held that it was the latter, and that it did not matter if the service rendered was trivial.
In view of what we have said above as to the nature of the service which the Association performed in respect of the Assistants, the payment of the fee was definitely related to that service.
It is, therefore, plain that the case fell within section 10(6) of the Act.
It must, therefore, be held that the question referred to the High Court should have been answered in the affirmative, and that the High Court was in error in giving its opinion to the contrary.
The appeal must, accordingly, be allowed with costs here and below.
(1) , 669.
Appeal allowed.
| By sub section
6 of section 10 of the Indian Income tax Act, 1922: "A trade, professional or similar association performing specific services for its members for remuneration definitely related to those services shall be deemed for the purpose of this section to carry on business in respect of those services, and the profits and gains therefrom shall be liable to tax accordingly.
" The members of the respondent company, whose principal object was to facilitate the transaction of business on the Stock Exchange, were enabled under the by laws to have a certain number of Authorised Assistants so that the latter could use the premises of the company and transact business therein in the names and on behalf of the members who, for that purpose, were required to pay admission fees and monthly subscriptions in respect of each of them.
The by laws of the company also provided that no dealings in respect of the shares of any particular company should be permitted on the Stock Exchange, unless an application made by a member of the respondent company and accompanied by a fee of Rs. 1000, for putting the name of that company on the Quotations List was approved by the prescribed Authority of the respondent company.
During the accounting year in question the company received from its members admission fees and subscriptions in respect of the Authorized Assistants and fees for putting the names of companies on the Quotations List.
The question was whether the aforesaid amount was liable to be taxed under section 10(6) of the Indian Income tax Act, 1922.
Held, that with reference to a trade, professional or similar association, the performing of specific services under section 10(6) of the Indian Income tax Act, 1922, mean conferring on its members some tangible benefit which otherwise would not be available to them as such, except for payment received by the association in respect of those services.
460 Accordingly, the income received by the respondent company towards the admission fees and the subscriptions in respect of the Authorized Assistants, being the price paid for the services of the respondent company in making suitable arrangements for an absentee member to transact business on his behalf and in his name by his representative or agent within the Stock Exchange, as well as the fees received from members for enlisting the names of companies not already on the Quotations List so as to permit transactions in respect of the shares of the companies concerned, was remuneration definitely related to specific services performed by the respondent for its members within the meaning of s.10(6) of the Indian Income tax Act, 1922, and was assessable to income tax.
Native Share and Stock Brokers ' Association vs The Commissioner of Income tax, Bombay , approved.
|
Summarize this legal judgement text concisely | ivil Appeal No. 65 of 1956.
Appeal from the judgment and order dated August 31, 1954, of the Calcutta High Court in Income tax Ref.
No. 57 of 1953.
N. C. Chatterjee and B. P. Maheshwari, for the appellant.
K. N. Rajagopala Sastri, R. H. Dhebar and D. Gupta, for the respondent.
March 26.
The Judgment of the Court was delivered by HIDAYATULLAH, J.
Messrs.
Howrah Trading Company, Ltd., Calcutta (hereinafter called the assessee) obtained on April 28, 1955, a certificate under section 66A(2) of the Indian Income tax Act from the Calcutta High Court, to appeal to this Court against the judgment dated August 31, 1954, in Income tax Reference No. 57 of 1953.
The Divisional Bench (Chakravarti, C. J., and Lahiri, J.) in the judgment under appeal merely followed their earlier judgment delivered the same day in Income tax Reference No. 22 of 1953, since reported as Hindustan Investment Corporation vs Commissioner of Income tax (1).
It is the latter judgment which gives the reasons for the decision.
The facts of the case have been stated with sufficient fulness, yet briefly, in the statement of the case submitted by the Income tax Appellate Tribunal (Calcutta Bench) and may be conveniently set out in its own words: (1) 57 450 " The applicant had received sums of Rs. 3,831, Rs. 6,606, Rs. 7,954 and Rs. 8,304 in the four assessment years, 1944 45, 1945 46, 1946 47 and 1947 48 as income from dividends.
The shares in respect of which this dividend income was received were the property of the Applicant but in the books of the various companies these stood in the names of other persons.
It appears that these shares were purchased by the Applicant from other persons under a blank transfer but the transfers had not been registered with the various companies.
The Applicant 's claim in these income tax proceedings was that these shares although not registered in the name of the applicant were the property of the applicant.
It was further claimed that this dividend income should be grossed up under section 16(2) and credit for the tax deducted should be allowed to the Applicant under section 18(5).
" The Income tax Officer did not accept this claim, and the appeals of the assessee were rejected by the Appellate Assistant Commissioner of Income tax, Calcutta, " A " Range and by the Appellate Tribunal.
The Tribunal, however, on being moved, referred the following question to the High Court: " Whether in the facts and circumstances of this case, the Applicant (the assessee) was entitled to have this dividend income grossed up under section 16(2) and claim credit for tax deducted at source under section 18(5) of the Income tax Act? " The High Court answered the question in the negative, thus affirming the decisions of the Department and the Appellate Tribunal.
The assessee contends that the decision of the High Court is erroneous, and that it is entitled to have the dividend income I grossed up ' under section 16(2) and also to claim credit for tax deducted at source, under s.18(5) of the Income tax Act.
The relevant sections are as follows: " 16(2) : For the purposes of inclusion in the total income of an assessee any dividend shall be deemed to be income of the previous year in which it is paid, credited or distributed or deemed to have been 451 paid, credited or distributed to him, and shall be increased to such amount as would, if income tax (but not super tax) at the rate applicable to the total income of the company without taking into account any rebate allowed or additional income tax charged for the financial year in which the dividend is paid, credited or distributed or deemed to have been paid, credited or distributed, were deducted therefrom, be equal to the amount of the dividend: (proviso omitted).
18 (5): Any deduction made and paid to the account of the Central Government in accordance with the provisions of this section and any sum by which a dividend has been increased under sub section (2) of section 16 shall be treated as a payment of incometax or super tax on behalf. . of the shareholder and credit shall be given to him therefor on the production of the certificate furnished under. .section 20 . in the assessment, if any, made for the following year under this Act: (proviso omitted).
49B(1): Where any dividend has been paid, credited or distributed or is deemed to have been paid, credited or distributed to any of the persons specified in section 3 who is a shareholder of a company which is assessed to income tax in the taxable territories or elsewhere, such person shall, if the dividend is included in his total income, be deemed in respect of such dividend himself to have paid income tax (exclusive of super tax) of an amount equal to the sum by which the dividend has been increased under sub section (2) of section 16.
" It was contended in the High Court that inasmuch as section 16(2) referred to an I assessee, the assessee company was entitled to have the dividend 'grossed up ' by the addition of income tax paid by the various companies at source and consequently to have the benefit of the credit allowed under the two remaining sections.
In the opinion of the High Court, an assessee whose name was not in the register of members of the companies was not entitled to the benefit of these provisions.
The learned Judges of the High Court were of the opinion that the word " shareholder " in 452 s.18(5) had the same signification as the word " member " used in the Indian Companies Act; and that the assessee was not qualified to be considered as a shareholder, even though by a blank transfer it had ,purchased the relevant shares.
In our opinion, the High Court was right in its conclusion.
A company when it pays income tax, does not do so on behalf of the shareholders.
It is itself chargeable under the Act, In Cull vs Inland Revenue Commissioners (1), Lord Atkin stated the law (which in substance is also the law in our country) thus: My Lords, it is now clearly established that in the case of a limited company the company itself is chargeable to tax on its profits, and that it pays tax in discharge of its own liability and not as agent for its shareholders. .
At one time it was thought that the company, in paying tax, paid on behalf of the shareholder; but this theory is now exploded by decisions in this House, and the position of the shareholders as to tax is as I have stated it.
" When the company pays its own income tax and declares a dividend from the balance of its profits, it deducts from such dividend a proportionate part of the amount of the tax paid by it.
This principle is explained in another English case, and it is substantially also the law in this country.
In Inland Revenue Commissioners vs Blott (2), Viscount Cave stated the law in these words: " Plainly, a company paying income tax on its profits does not pay it as agent for its shareholders.
It pays as a tax payer, and if no dividend is declared, the shareholders have no direct concern in the payment.
If a dividend is declared, the company is entitled to deduct from such dividend a proportionate part of the amount of the tax previously paid by the company; and, in that case, the payment by the company operates in relief of the shareholder.
But no agency, properly so called, is involved.
" The share holders, however, get the benefit of the payment of the tax by the company.
Though under (1) , 56 ; , 636.
(2) , 201.
453 s.16(2) of the Act their dividend is increased by a proportionate amount of tax paid by the company, the payment of the tax by the company is deemed tinder sections 18(5) and 49B(1) to be payment by the shareholders.
The rates of income tax applicable to the company are, in most instances, higher than the rates applicable to the individual shareholders, and by this process of 'grossing up ', as it is commonly called, the recipient of the dividend gets some benefit.
The position of a shareholder who gets dividend when his name stands in the register of members of the company causes no difficulty whatever.
But transfers of shares are common, and they take place either by a fully executed document such as was contemplated by Regulation 18 of Table A of the Indian Companies Act 1913, or by what are known as blank transfers '.
In such blank transfers, the name of the transferor is entered, and the transfer deed signed by the transferor is handed over with the share scrip to the trans feree, who, if he so chooses, completes the transfer by entering his name and then applying to the company to register his name in place of the previous holder of the share.
The company recognises no person except one whose name is on the register of members, upon whom alone calls for unpaid capital can be made and to whom only the dividend declared by the company is legally payable.
Of course, between the transferor and the transferee, certain equities arise even on the execution and handing over of 'a blank transfer ', and among these equities is the right of the transferee to claim the dividend declared and paid to the transferor who is treated as a trustee on behalf of the transferee.
These equities, however, do not touch the company, and no claim by the transferee whose name is not in the register of members can be made against the company, if the tranferor retains the money in his own hands and fails to pay it to him.
A glance at the scheme of the Indian Companies Act, 1913, shows that the words " member ", " shareholder " and " holder of a share " have been used interchangeably in that Act.
Indeed, the opinion of most of the writers on the subject is also the same.
454 Buckley on the Companies Act, 12th Edition, page 803 has pointed out that the right of a transferee is only to call upon the company to register his name and no more.
No rights arise till such registration ,takes place.
Section 2(16) of the Indian Companies Act, 1913, defines " share " as " share in the share capital of the company Section 5 deals with the mode of forming incorporated companies, and in the case of companies limited by shares, the liability of the members is limited to the amounts, if any, unpaid on the shares respectively held by them.
By section 18, Table A is made applicable to companies, unless by the Articles of any company the terms of Table A have been excluded or modified.
Regulation 18 of Table A reads as follows: " The instrument of transfer of any share in the company shall be executed both by the transferor and transferee, and the transferor shall be deemed to remain holder of the share until the name of the transferee is entered in the register of members in respect thereof.
" The words " holder of a share " are really equal to the word shareholder and the expression " holder of a share denotes, in so far as the company is concerned, only a person who, as a shareholder, has his name entered on the register of members.
A similar view of the Companies Clauses Consolidation Act, 1845, was taken in Nanney vs Morgan(1).
The learned Lord Justices held that under section 15 of that Act, the transferee bad not the benefit of a legal title till certain things were done, which were indicated by Lopes, L.J., in the following passage: " Therefore the transferor, until the delivery of the deed of transfer to the secretary, is subject to all the liabilities and entitled to all the rights which belong to a shareholder or stockholder, and, in my opinion until the requisite formalities are complied with, he continues the legal proprietor of the stock or shares subject to that proprietorship being divested, which it may be at any moment, by a compliance with the requisite formalities.
(1) , 356.
455 The same position obtains in India, though the completion of the transaction by having the name entered in the register of members relates it back to the time when the transfer was first made.
See Nagabushanam vs Ramachandra Rao (1).
During the period that the transfer exists between the transferor and the transferee without emerging as a binding document upon the company, equities exist between them, but not between the transferee and the company.
The transferee can call upon the transferor to attend the meeting, vote according to his directions, sign documents in relation to the issuance of fresh capital, call for emergent meetings and inter alia, also compel the transferor to pay such dividend as he may have received.
See E. D. Sassoon & Co. Ltd. vs Patch (2) approved in Mathalone vs Bombay Life Assurance Co. Ltd. (3 ).
But these rights though they, no doubt, clothe the transferee with an equitable ownership , are not sufficient to make the transferee a full owner, since the legal interest vis a vis the company still outstands in the transferor; so much so, that the company credits the dividends only to the transferor and also calls upon him to make payment of any unpaid capital, which may be needed.
The cases in Black vs Homersham (4) or Wimbush, In re Richards vs Wimbush (5) hardly advance the matter further than this.
The position, therefore, under the Indian Com panies Act, 1913, is quite clear that the expression " shareholder " or " holder of a share " in so far as that Act is concerned, denotes no other person except a " member ".
The question that arises in the present case is whether by reason of sections 16(2) and 18(5) the assessee, who was a transferee on a blank transfer ' is entitled to the benefits of the grossing up of the dividend income.
Learned counsel for the assessee strenuously contends that the assessee being an owner in equity of the shares and thus also of the dividend is entitled to this benefit.
He refers to the use of the word I assessee in section 16(2).
The Department, on the (1) Mad. 537.
(3) ; (2) (4) (1878 79) L. R. (5) 456 other hand, says that the dividend can be increased under section 16(2) and credit allowed under section 18(5) if the assessee is a 'shareholder ', because the benefit of section 18(5) can go only to the shareholder, i. e., a person with his name on the register of members, and not to a person holding an equity against such shareholder.
The assessee contends that the word " shareholder " includes even a person who holds a share as a result of a blank transfer, and does not necessarily mean a member of the company, whose name is on the register of members.
Authorities on this point are not wanting, and indeed, in the judgment of the Calcutta High Court they have all been referred to.
They are all against the assessee.
See Shree Shakti Mills Ltd. vs Commissioner of Income tax (1), Jaluram Bhikulal vs Commissioner of Income tax (2), Arvind N. Mafatlal vs Incometax Officer (3) and Bikaner Trading Co. vs Commissioner of Income tax (4).
The question that falls for consideration is whether the meaning given to the expression "shareholder" used in section 18(5) of the Act by these cases is correct.
No valid reason exists why " shareholder " as used in section 18(5) should mean a person other than the one denoted by the same expression in the Indian Companies Act, 1913.
In In re Wala Wynaad Indian Gold Mining Company (5), Chitty, J., observed: " I use now myself the term which is common in the Courts, I a shareholder ', that means the holder of the shares.
It is the common term used, and only means the person who holds the shares by having his name on the register.
" Learned counsel for the assessee cited a number of authorities in which the ownership of the dividend was in question, and it was held that the transferee whose name was not registered, was entitled to the dividend after transfer had been made.
These cases are Commissioners of Inland Revenue vs Sir John Oakley (6), Spence vs Commissioners of Inland Revenue (7) (1) (3) (5) , 854.
(2) (4) (6) , (7) 457 and others cited at page 367 in Multipar Syndicate, Ltd. vs Devitt (1).
No one can doubt the correctness of the proposition in these cases, but from an equitable right to compel the transferor to give up the dividend to the transferee, to a claim to the dividend by him as a " shareholder " against the company is a wide jump.
In so far as the company is concerned, it does not even issue the certificate under section 20 of the Income tax Act in the name of an unregistered transferee but only in the name of the transferor whom it recognises, because his name is borne on its books.
Section 20 lays down: " The principal officer of every company shall, at the time of distribution of dividends, furnish to every person receiving a dividend a certificate to the effect that the company has paid or will pay income tax on the profits which are being distributed, and specifying such other particulars as may be prescribed.
" The meaning of section 20 as also of section 18(5) is clear if they are read with section 19A, under which information regarding dividends has to be supplied by the company when demanded by the Income tax Officer.
It lays down: " The principal officer of every company . shall, on or before the 15th day of June in each year, furnish to the prescribed officer a return in the prescribed form and verified in the prescribed manner of the names and of the addresses, as entered in the register of shareholders maintained by the company, of the shareholders to whom a dividend or aggregate dividends exceeding Such amount as may be prescribed in this behalf has or have been, distributed during the, preceding year and of the amount so distributed to each such shareholder. " (Italics supplied).
Section 19A makes it clear, if any doubt existed, that by the term " shareholder " is meant the person whose name and address are entered in the register of " shareholders " maintained by the company.
There is but one register maintained by the Company.
There (1) 58 458 is no separate register of " shareholders " such as the assessee claims to be but only a register of " members ".
This takes us immediately to the register of members, and demonstrates that even for the purpose of the Indian Income tax Act, the words ',member and " shareholder " can be read as synonymous.
The words of section 18(5) must accordingly be read in the light in which the word " shareholder " has been used in the subsequent sections, and read in that manner, the present assessee, notwithstanding the equitable right to the dividend, was not entitled to be regarded as a "shareholder" for the purpose of section 18(5) of the Act.
That benefit can only go to the person who, both in law and in equity, is to be regarded as the owner of the shares and between whom and the company exists the bond of membership and ownership of a share in the share capital of the company.
In view of this, we are satisfied that the answer given by the Calcutta High Court on the question posed by the Tribunal was correct.
The appeal fails, and is dismissed with costs.
Appeal dismissed.
| The assessee acquired shares in certain companies under "blank transfers " without getting the transfers registered with the companies and it received dividends in respect of these shares.
It claimed that the dividend income should be grossed up under section 16(2) Income tax Act and that it should be allowed credit under section 18(5) for the tax deducted at source on the dividend in the hands of the companies.
Held, that, the assessee was not entitled to the benefits of sections 16(2) and 18(5) as its name was not in the register of members of the companies.
The benefit of section 18(5) could only go to a shareholder; and a shareholder in that section meant the same thing as in the Indian Companies Act, 1913, i. e., a " member having his name on the register.
The scheme of the Indian Companies Act, 1913, shows that the words " member ", " shareholder " and " holder of a share " have been used interchangeably.
The words "holder of a share" are really equal to the word "shareholder" and the expression " holder of a share " denotes only a person who, as a shareholder, has his name entered on the register of members.
In re Wala Wynaad Indian Gold Mining Company, (1882) 21 Ch.
D. 849, Shree Shakti Mills Ltd. vs Commissioner of Income tax, , jaluram Bhikulal vs Commissioner of Income tax, , Arvind N. Mafatlal vs Incometax Officer, [1957] 32 I.T .
R. 350, Bikaner Trading Co. vs Commissioner of Income tax, , referred to.
A company when it pays income tax does not do so on behalf of the shareholders, but the shareholders get the benefit of such payment.
The rates of income tax applicable to the company are, in most instances, higher than the rates applicable to individual shareholders and by the process of grossing up the recipient of the dividend gets some benefit.
Cull vs Inland Revenue Commissioners, and Inland Revenue Commissioners vs Blott, , referred to.
440 In blank transfers the transfer deed signed by the transferor is handed over with the share scrip to the transferee who may complete the transfer by entering his name and applying to the company for registration of his name.
The company only recognises those persons whose names are on the register of members and they alone are legally entitled to the dividend declared.
In the case of a blank transfer equities exist between the transferor and the transferee and the transferee has a right to claim the dividend from the transferor who holds it in trust for him, but the company is only liable to the transferor and not to the transferee.
Though the transferee is clothed with an equitable ownership he is not a full owner, since the legal interest vis a vis the company still outstands in the transferor.
|
Summarize this legal judgement text concisely | Appeals Nos. 220 to 223 of 1953.
Appeals from the Judgment and decrees dated April 14,1943, of the Bombay High Court in Appeals Nos. 183, 184, 185 and 186 of 1942, arising out of the judgments and decrees dated February 16, 1942, of the Court of the 1st Class Sub Judge, Poona, in Suits Nos.
900/37, 392/35, 875/36 and 1202/33.
V. P. Rege and Naunit Lal, for the appellants.
N. C. Chatterjee, K. V. Joshi and Ganpat Rai, for respondents Nos.
1 to 6 (In all the Appeals).
478 1959.
March 26.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J.
These four appeals represent the last stage of a long and tortuous litigation between the appellants Waghmares (also called Guravs) who claim the rights of hereditary worshippers in the Shree Dnyaneshwar Maharaj Sansthan, Alandi, and respondents 1 to 6 who are the trustees of the said Sansthan.
Alandi , which is a small town situated on the banks of the river Indrayani at a dis tance of about 14 miles from Poona, is regarded as a holy place of pilgrimage by thousands of Hindu devotees.
In the last quarter ' of the 13th century Shree Dnyaneshwar Maharaj, the great Maharashtra Saint and Philosopher, lived at Alandi.
He was a spiritual teacher and reformer; by his saintly life and his inspiring and illuminating commentary on the Bhagvad Gita, known as Dnyaneshwari, he helped to create a popular urge and fervour for religious and social revolution which led to the foundation of a devotional cult; the followers of this cult are known as Warkaris in Maharashtra.
They refuse to recognise any barriers of caste or class; and amongst them prevails a feeling of real and genuine spiritual brotherhood.
Every year, in the months of July and November, thousands of them proceed on pilgrimage on foot and accompany the annual palanquin procession from Alandi to Pandharpur.
Pandharpur is the chief centre of pilgrimage in Maharashtra and it is regarded by devotees as the Banares of Southern India.
About 1300 A. D. Shree Dnyaneshwar Maharaj took Samadhi at Alandi and since then Alandi also has become a place of pilgrimage.
In or about 1500 A. D. a big temple was erected in front of the idol of Shiva called Siddeshwar where the said Shree Dayaneshwar Maharaj took his Samadhi.
In due course the Mahratta Kings and the Peshwas of Poona granted the village of Alandi in inam for the upkeep of the temple and the Samadhi.
About 1760 A. D. Peshwa Balaji Baji Rao framed a budget called Beheda or Taleband in order to regulate the management and worship of the shrine and provided for proper 479 administration of its annual revenue amounting to Rs. 1,725.
The appellants claim that their ancestors were then in possession of the temple and management of its affairs especially the worship of the shrine.
The budget framed by the Peshwa shows that out of the sum of Rs. 1,725 an amount of Rs. 361 was assigned to the worshippers for some of their services.
After the fall of the Mahratta power the management of Alandi passed into the hands of the East India Company which continued the old arrangement without any interference.
In 1852, under orders from the Government of Bombay the Collector of Poona drew up a yadi or memorandum appointing six persons as Punchas (trustees) with directions to them for the management of the temple in accordance with the old tradition and practice as well as for the administration of the revenue of the village subject to the control and sanction of the Collector.
This arrangement came to be described as " the scheme of 1852".
In 1863 the Religious Endowment Act was passed, and inconsequence, in 1864 the Government of Bombay withdrew their superintendence over the affairs of the Alandi Sansthan; and the trustees continued to manage the affairs of the temple without any supervision on the part of the Government.
It was during this period that the appellants ' ancestors began to assert that they were the owners of the shrine while the trustees insisted on treating them as the servants of the shrine.
This conflict inevitably led to several disputes between the worshippers and the trustees.
Matters appear to have come to a crisis in 1911 when the trustees dismissed eleven Guravs from the temple service on the ground that they were found guilty of gross misconduct.
The Guravs nevertheless asserted that they were the owners of the shrine and that the trustees had no authority or power to dismiss them.
Taking their stand on their ownership of the shrine some of the dismissed Guravs filed Civil Suit No. 485 of 1911 in the Court of the Subordinate Judge, Poona, against the trustees and this was the beginning of the long drawn out litigation which followed between the parties.
In that suit the Guravs 480 claimed a declaration that they were the owners of the temple and not the servants of the temple committee; and as owners they were entitled to perform the worship at the shrine and to appropriate the offerings made to the idol of the Saint.
This claim was resisted by the trustees who pleaded that the Guravs were merely the servants of the temple committee and not the owners at all.
On April 20, 1917, the learned trial judge dismissed the suit because he held that the Guravs were not the owners of the shrine and were not entitled to the declarations claimed by them.
Against this decision the Guravs preferred several appeals but these appeals were dismissed on August 3, 1921.
While dismissing their appeals the High Court incidentally expressed the view that it was open to the Guravs to come to terms with the temple committee and that the terms on which the Guravs could be reinstated can be decided appropriately in a suit filed under section 92 of the Code of Civil Procedure.
It was also observed by the High Court in its judgment that the temple committee did not dispute the fact that the Guravs were the hereditary pujaris and that they had some rights in that capacity.
No doubt the committee claimed that under the scheme framed in 1852 it was competent to dismiss hereditary servants for a substantial cause such as gross misconduct.
It appears that instead of adopting the course indicated in the judgment of the High Court and filing a suit under section 92 of the Code, the Guravs chose to take the law into their own hands, and obtained forcible possession of the temple premises on July 25, 1922, and began to perform the puja and to take the offerings placed before the deity as they had been doing prior to their dismissal.
This was followed by a suit filed by the trustees on September 12, 1922 (Suit No. 1075 of 1922) under section 9 of the Specific Relief Act.
This suit terminated in a decree in favour of the committee on November 4, 1922.
In pursuance of this decree the committee recovered possession of the temple on November 16, 1922.
Thus the Guravs had occupied the temple precincts for about three and a half months.
481 When the Guravs were thus dispossessed by the committee in execution of the decree obtained by it, some of them proceeded to file Suit No. 19 of 1922 in the District Court of Poona; this suit purported to be one under section 92 of the Code but it claimed the same reliefs as had been claimed by the Guravs in theirs earlier suit of 1911.
On April 25, 1927, the District A Court dismissed this suit on the ground that the Guravs could not reagitate the same questions over again.
it was held that their claim was barred by the deci sion of the earlier Suit No. 485 of 1911.
Against this decision the Guravs appealed to the High Court (First Appeal No. 507 of 1927); but the High Court agreed with the conclusion of the District Court and dismissed the Guravs" appeal on June 20, 1933.
It was held by the High Court that the suit as framed was not properly constituted under section 92 of the Code.
It was at this stage that a properly constituted suit, No. 7 of 1934, was filed under section 92 of the Code by the general public of Alandi along with two Guravs in the District Court at Poona.
This suit claimed that a proper scheme should be framed for the management of the temple.
Even so, one of the allegations made in the plaint referred to the Guravs ' rights as hereditary worshippers.
It was apparently apprehended that this allegation would be treated as outside the scope of a scheme suit under section 92 and so the Guravs took the precaution of filing four separate suits on behalf of four branches in the Waghmare family one after the other.
These suits were numbered as 1202 of 1933, 392 of 1935, 875 of 1936 and 900 of 1937; the plaintiffs in these suits were respectively the members of the third, the fourth, the first and the second branch of the Waghmare family '.
It appears that the hearing of these suits were stayed by an order of the District Judge pending the final decision of the scheme suit which was being tried by him.
The scheme suit was taken, up for hearing in 1937.
As many as 22 issues were framed in this suit and voluminous evidence Was recorded.
In the result the learned judge substantially confirmed the original 61 482 scheme of 1852, though he issued certain directions modifying it.
This decree was passed on December 11, 1937.
The trustees felt aggrieved by this decree and challenged its propriety by preferring an appeal, No. 92 of 1938, in the Bombay High Court.
On November 16, 1939, the High Court dismissed the appeal though it made some amendments in the scheme framed by the District Judge by consent of the parties.
After the scheme suit was thus disposed of by the High Court, the four suits filed by the pujaris were taken up for trial by the learned Subordinate Judge, First Class, Poona.
In all these suits the appellants claimed their rights as hereditary vatandar Pujari Gurav Servants of the Sansthan.
They alleged that they were under a duty to perform worship according to certain rites in Shree Dayaneshwar Sansthan and that they were also under an obligation to perform other incidental duties enumerated by them in their plaints.
Likewise they claimed that for remuneration they were entitled to receive coins and perishable articles offered by the devotees and the committee as well as yearly emoluments from the committee.
On these allegations the appellants claimed a declaration about their respective rights and an injunction permanently restraining the trustees from obstructing the appellants in the exercise of the said rights.
They also claimed accounts from the trustees in regard to the offerings prior to the institution of the suit as well as those made after the institution of the suit and before the passing of the decree.
These allegations were denied by respondents 1 to 6.
Their case was that the appellants were the servants of the temple committee and as such had no hereditary rights set up, by them.
In the alternative, it was pleaded by them that even if the appellants had any hereditary rights the same had been lost by their misconduct and had been otherwise extinguished by limitation.
Against the appellants ' claim pleas of res judicata and estoppel were also raised.
On these pleadings as many as 21 issues were framed in the trial court.
The trial court found in favour 483 of the appellants on all the issues.
The learned judge held that the Guravs had established the hereditary rights set out by them and he was inclined to take the view that the respondents could not deprive the appellants of their hereditary rights of service because of the misconduct of some of their ancestors.
He also found that there was no substance in the plea of estoppel or res judicata and that the suits were not barred by limitation.
In the result the appellants ' suits were decreed on February 16, 1942.
Thereupon the respondents challenged these decrees by preferring appeals against them in the Bombay High Court.
The four suits accordingly gave rise to First Appeals Nos.
183, 184, 185 and 186 of 1942 respectively.
In these appeals the High Court agreed with the trial court in holding that on the merits the appellants had established their case and that their claim was not barred either by res judicata or by estoppel.
However, on the question of limitation the High Court took the view that the appellants ' suits were governed by article 120 of the Limitation Act and that they had been filed beyond the period of six years prescribed by the said article.
That is why the High Court set aside the decrees passed by the trial court, allowed the respondents ' appeals and dismissed the appellants ' suits.
However, in view of the special facts of the case the High Court directed that each party should bear its own costs throughout.
This judgment was pronounced on April 14, 1943.
Like the trial court the High Court also dealt with all the four cases by one common judgment.
It appears that after this judgment was pronounced by the High Court but before it Was signed, the appellants moved the High Court on July 2, 1943, for a rehearing of one of the appeals (No. 186 of 1942).
It was urged before the High Court that even if article 120 applied the claim made by the appellant in the said appeal (which arose from Suit No. 1202 of 1933) could not be held to be barred by limitation.
The High Court was not impressed by this plea and so the motion for rehearing was discharged.
Subsequently a Civil Application, No. 1039 of 1944, 484 was made by the appellant in the said appeal seeking to raise the same point over again but this application was rejected by the High Court on September 12, 1944.
The appellants then applied for leave to appeal to the Privy Council on August 15, 1944.
Their applications were heard together and were disposed of by an order passed on March 26, 1946, whereby leave was granted to them to appeal to the Privy Council and their prayer for consolidating all the appeals was also allowed.
These appeals could not, however, be disposed of by the Privy Council before the jurisdiction of the Privy Council to deal with Indian appeals came to an end and so they ultimately came to this Court and were numbered as Appeals Nos. 220 to 223 of 1953.
It may be convenient to state that these appeals arise respectively from Suits Nos.
907 of 1937, 392 of 1935, 875 of 1936 and 1202 of 1933.
It would thus be seen that the litigation which began between the parties in 1911 has now reached its final stage before us in the present appeals.
As we have already indicated, both the courts below have found in favour of the appellants on most of the issues that arose in the present litigation; but the appellants have failed in the High Court on the ground of limitation.
In the trial court the respondents had urged that the present suits were governed by article 124 of the Limitation Act and that since the Guravs had been dismissed from service in 1911 and other Guravs refused to serve in 1913 and 1914 limitatation began to run against them at least from 1914 and so the suits were beyond time.
The learned trial judge held that article 124 was inapplicable.
He also found alternatively that, even if the said article applied, the trustees did not have continuous possession of the suit properties from 1911 or 1914 for twelve years and so the suits were not barred by time.
According to him the case was really covered by section 23 of the Limitation Act, and so the plea of limitation could not succeed.
The High Court has agreed with the trial court in holding that article 124 is inapplicable.
It has, however, 485 come to the conclusion that the suits are governed by article 120 of the Limitation Act, and, according to its findings, limitation began to run against the appellants either from September 12, 1922, when the trustees filed their suit under section 9 of the Specific Relief Act, or, in any case from November, 1922 when, in execution of the decree passed in the said ' suit, the appellants were driven out of the temple precincts by the trustees.
The High Court has also held that section 23 can have no application to the present case.
That is how the High Court has reached the conclusion that the appellants ' suits are barred by time under article 120.
The question which arises for our decision in the present appeals, therefore, is one of limitation; it has to be considered in two aspects: Was the High Court right in holding that article 120 applies and that the cause of action accrued more than six years before the dates of the institution of the present suits ?; Was the High Court also right in holding that section 23 does not apply to the suits ? On behalf of the appellants Mr. Rege has contended that in substance, in their present suits the appellants have made a claim for possession of an hereditary office and as such they would be governed by article 124 of the Limitation Act.
In this connection he has referred us to the relevant allegations in the plaint to show that the appellants ' prayer for a declaration about their hereditary rights and for a consequential permanent injunction amount to no more and no less than a claim for possession of the said hereditary office.
In support of this argument reliance has been placed on the decision of the Bombay High Court in Kunj Bihari Prasadji vs Keshavlal Hiralal (1).
In that case the plaintiff had made a claim to the gadi of the Swaminarayan temple at Ahmedabad and had asked for a declaration that the will of the last Acharya which purported to appoint defendant 14 as his adopted son and successor was null and void.
As a consequence a perpetual injunction was also claimed restraining the defendants from offering any obstruction to the plaintiff in occupying the said gadi.
The (1) Bom.
567. 486 principal point which was decided in the case had reference to the effect of the provisions of section 42 of the Specific Relief Act.
, The plaintiff 's suit had been dismissed in the courts below on the ground that he had omitted to ask for further relief as he was bound to do under section 42 of the said Act and the High Court held that the section did not empower the court to dismiss the suit under the said section.
In considering the nature of the claim made by the plaintiff Jenkins, C. J., observed that " in the plaintiff 's view the suit was not one of possession of land appertaining to the gadi but to determine who was to occupy the gadi and thus as gadinishin become the human agent of the deity.
If that was so, then the injunction restraining all interference with the occupancy by the plaintiff of the gadi secures in the most complete manner to him the rights he claims ".
The learned Chief Justice also observed that " the plaintiff might in terms have asked for possession of the office he said was his ", but be asked " how would practical effect be given to an award of possession of office otherwise than by preventing interference with the rights of which it was made up ".
Even so, having reversed the decree passed by the courts below, when the High Court remanded the case for retrial, the plaintiff was advised to amend his plaint and to define more precisely the terms of the injunction he sought.
It is urged that, in the present appeals also, by asking for a declaration of their rights and for an appropriate injunction against the respondents, the appellants were in effect asking for possession of the hereditary office.
It is doubtful if the claims made by the appellants in their respective suits are exactly analogous to the claim made by the plaintiff in Kunj Bihari Prasad 's case (1).
The appellants have not only asked for an injunction but also for an account of the income received by the trustees from July 23, 1933, up to the date of the suit as well as for similar account from the date of the suit until the date of the decree.
A claim for accounts in the form in which it is made may not be quite consistent with the appellants ' contention that their suits are for nothing more than possession (1) Bom.
567. 487 of the hereditary office ; but in dealing with the present appeals we are prepared to assume that they have in substance claimed possession of the office.
The question which then arises is: Does this claim for possession attract the application of article 124 of the Limitation Act ? Article 124 governs suits for possession of an hereditary office.
The period of limitation prescribed by the article is twelve years and the said period begins to run when the defendant takes possession of the office adversely to the plaintiff.
This is explained to mean that the hereditary office is possessed when the profits thereof are usually received or (if there are no profits) when the duties thereof are usually performed.
It is clear that before this article can apply it must be shown that the suit makes claim for possession of an office which is hereditary; and the claim must be made against the defendant who has taken possession of the said hereditary office adversely to the plaintiff.
Unlike article 142 the fact that the plaintiff, is out of possession of the hereditary office for more than twelve years before the date of his suit would not defeat his claim for possession of the said office.
What would defeat his claim is the adverse possession of the said office by the defendant for the prescribed period.
As the explanation makes it clear usually the receipt of the profits may amount to the possession of the office; but if the defendant merely receives the profits but does not perform the duties which are usually performed by the holder of the office, the receipt of the profits by itself may not amount to the possession of office.
The cause of action for possession in suits falling under article 124 is the wrongful dispossession of the plaintiff and the adverse possession by the defendant of the office in question.
Claims for possession of hereditary offices which attract the application of this article are usually made by holders of the said offices against persons who claim adverse possession of the said offices; in other words, in suits of this kind, the contest is usually between rival claimants to the hereditary office in question.
In the present appeals the claim for possession is 488 made by the appellants against the trustees of the Sansthan.
It is significant that the persons who are actually performing the duties of the worshippers are not impleaded ; and they do not claim to hold office as hereditary officers either.
They have been appointed by the trustees as servants of the institution and they perform the duties of worship as such servants.
The trustees, on the other hand, cannot be said to have taken possession of the office themselves adversely to the appellants.
They do not take the profits themselves nor do they perform the duties associated with the said office.
They have, in exercise of their authority and power as trustees, dismissed the appellants ' predecessors from office and have made fresh appointments of servants to perform the worship at the Sansthan; and in making the said appointments, have in fact destroyed the hereditary character of the office.
The dispute in the present appeals is between the worshippers who claim hereditary rights and the trustees of the institution who claim to have validly terminated the services of some of the predecessors of the appellants and to have made valid appointments to the said office.
It is, therefore, impossible to accept the argument that the claim made by the appellants in their respective suits attracts the provision& of article 124.
It is conceded by Mr. Rege that if article 124 does, not apply, the suits would be governed by article 120 which is a residuary article.
It may prima facie appear somewhat strange that whereas a suit against a person claiming to hold the hereditary office adversely to the plaintiff is governed by a period ' of twelve years, a claim against the trustees like the respondents in the present appeals who have dismissed the hereditary worshippers should be governed by a period of six years.
It may be possible to suggest that there is a substantial difference in the nature of the two disputes ; but apart from it, it is well known that the artificial provisions of limitation do not always satisfy the test of logic or equity.
Mr. Rege, however, argued that in determining the scope of article 124 we need not consider the provisions of col. 3 to the said article.
His contention appears 489 to be that once it is shown that the suit is for possession of an hereditary office, article 124 must apply though the claim for possession may not have been made ,against a person who has taken possession of the office adversely to the plaintiff.
He also urged alternatively that the trustees should be deemed to have, taken possession of the office adversely to the appellants.
We have already held that the conduct of the trustees shows that they have not taken possession of the office adversely within the meaning of col. 3 of article 124; and we do not think it is possible, to ignore the provision of col. 3 in deciding whether or not article 124 applies.
It is true that in Jalim Singh Srimal vs Choonee Lall Johurry (1), while holding that the adjustment on which the plaintiff 's claim was based in that case was in time both under articles 115 and 120, Jenkins, C. J, has observed that the function of the third column of the second schedule is not to define causes of action but to fix the starting point from which the period of limitation is to be counted ; but this observation does not support the appellants ' case that article 124 would govern the suit even though the third column is wholly inapplicable to it.
That obviously is not the effect of the observations made in Jalim Singh 's case (1).
The question about the nature and scope of the provisions of article 124 has been considered by the Madras High Court in Thathachariar vs Singarachariar (2).
" If we take into consideration the terminology used in the three columns of article 124 ", observed Srinivasa Aiyangar, J., in that case, " it is clear that the nature of the suit intended to be covered by that article must be a suit filed by a plaintiff who claims the office from a person who at that time holds the office himself ".
In our opinion this view is correct.
We may also refer to another decision of the Madras High Court in which this question has been considered.
In Annasami vs Adivarachari (3) a Full Bench of the Madras High Court was dealing with a suit in (1) (2) A.I.R. 1928 Mad, 377.
(3) I.L.R. 62 490 which the plaintiff had claimed an injunction restraining the trustee and the archakas of the Sri Bhuvarabaswami temple at Srimushnam from interfering with the performance of the duties of his office of mantrapushpam of the temple.
This suit had been filed in 1929.
The office of mantrapushpam was a hereditary office and the plaintiff had succeeded to it on the death of his father in 1906.
The emoluments of the office consisted of a ball of cooked rice per them and twelve annas per month.
It appears that the plaintiff was a Vadagalai while the archakas of the temple were Thengalais and there was animosity between them; and as a result of this animosity the plaintiff bad never been able to perform the duties of his office.
It was common ground that the plaintiff was the lawful holder of the office and that he had been receiving its emoluments month by month until 1927.
The archakas who resisted the plaintiff 's claim did not claim that they were in possession of the office or that they had performed the duties of the said office.
The Full Bench held that, where a person is admittedly the lawful holder of the office and he is enjoying its emoluments, he must in law be regarded as being in possession of the office itself, especially where no one else is performing the duties of the said office; and so under article 124 it was enough for the plaintiff to show that he had been in receipt of the emoluments of the office to save his claim from the bar of limitation.
The Full Bench also rejected the contention that under article 120 the suit was barred because it was held that every time the trustee and the archakas prevented the plaintiff from performing his duties as a hereditary officer a. fresh cause of action arose and so there can be no bar of limitation under article 120.
It would be noticed that the basis of this decision was that, in the eyes of law, the plaintiff was in possession of the hereditary office since he was receiving the emoluments of the said office month by month, and so every act of obstruction on the part of the archakas and the trustee was in the nature of a continuing wrong which gave rise to a fresh cause of action to the plaintiff from time to time.
In other words, on the facts the Full Bench held that 491 s.23 helped the plaintiff and saved his suit from the bar of limitation.
As we will presently point out there is no scope for applying section 23 to the facts of the present cases, and so the decision in Annasami Iyengar 's case (1) cannot assist the appellants.
In this connection it is relevant to consider the decision of the Privy Council in Jhalandar Thakur vs, Jharula Das (2) in which it was held that article 124 was inapplicable.
The defendant Jharula Das had obtained a decree for money on a mortgage which bad been executed in his favour by Mst.
Grihimoni, the widow of the shebait of the temple.
In execution of the said decree the defendant had caused 3 1/2 as.
share of the judgment debtor including her right in the nett income of the daily offerings made before the idol to be put up for sale and had himself purchased it at the auction sale.
As such purchaser he was in possession of the income of the said share.
The judgment debtor attempted to challenge the said sale by two suits but her attempts failed and the ' auction purchaser continued to be in possession of the income.
On the death of Mst.
Grihimoni, Bhaiaji Thakur, who succeeded to the office of the shebait, sued the defendant for possession of certain lands and claimed a declaration that he was entitled to receive the 3 1/2 as.
share of the nett income from the offerings to the temple with other reliefs.
This claim was resisted by the defendant Jharula Das.
In regard to the plaintiff 's claim in respect of the said 3 1/2 as share, the High Court had held that article 124 applied and that the claim was barred under the said article.
That is why the decree passed by the trial court in favour of the plaintiff in respect of the said income was reversed by the High Court.
This decision was challenged by the plaintiff before the Privy Council and it was urged on his behalf that article 124 did not apply.
The Privy Council upheld this contention.
It was clear that the office of the shebait of the temple was a hereditary office which could not be held by anyone who was not a Brahmin Panda.
Jharula Das was not a Brahmin Panda.
He was of an inferior caste and was not (1) I.L.R. (2) Cal.
492 competent to hold the office of the shebait of the temple, or to provide for the performance of the duties of that office.
On these facts the Privy Council held that the appropriation from time to time by Jharula Das of the income derivable from the said 3 1/2 as share did not deprive Mst.
Grihimoni, and after her death, Bhaiaji Thakur, of the possession of the office of the shebait although that income was receivable by them .in right of the shebaitship.
The basis of this decision is that, on each occasion on which Jharula Das received and wrongfully appropriated to his own use a share of the income to which the shebait was entitled, he committed a fresh actionable wrong in respect of which a suit could be brought against him by the shebait; but it did not constitute him a shebait for the time being or affect in any way the title of the office.
Thus this decision emphasises that for the application of article 124 it is essential that the defendant to the suit must be in adverse possession of the hereditary office in question.
We must, therefore, hold that article 124 does not apply to the suits filed by the appellants; and as we have already observed, if.
article 124 does not apply, article 120 does.
The next point which arises for our decision is whether under article 120 the suits are barred by limitation.
Under article 120 time begins to run against the plaintiffs when the right to sue accrued to them, and that naturally poses the question as to when the right to sue accrued to the appellants.
In deciding this question it would be necessary to recall briefly the material facts in regard to the past disputes between the appellants and the trustees.
These disputes began in 1911.
On January 31, 1911, the trustees wrote a yadi (memorandum) to the Collector of Poona asking his permission to dismiss eleven Guravs from service.
They set out in detail several items of misconduct of which the said Guravs were guilty; and they expressed their opinion that for the proper management of the affairs of the institution it was necessary to terminate the services of the off ending Guravs (exhibit 407).
On April 1, 1911, the Collector sent a reply to the trustees and told them that, as a result of the Government 493 Resolution No. 4712 passed on November 29,1864, it was unnecessary for the trustees to obtain the Collector 's sanction because it was competent to the trustees to settle their own affairs without any such sanction.
The trustees then met in a committee on September 18, 1911, and decided to dismiss from service the said eleven Guravs.
In its resolution the committee stated that the Guravs were violent and arrogant and it was likely that they may commit riot at the time when the committee would seek to take charge from them.
The committee also apprehended that the rest of the Guravs would make a common cause with those who had been dismissed from service and would refuse to serve the Sansthan.
Even so the committee decided to appoint six Brahmins temporarily to perform the service, because the committee was prepared to allow the rest of the Guravs to render service to the Sansthan if they were ready to act according to the orders of the committee and were willing to enter into a formal agreement in that behalf.
In accordance with this resolution the committee served notice on the eleven Guravs on October 13, 1911, terminating their services and calling upon them to hand over to the committee all articles in their charge and forbidding them from entering the temple in their capacity as servants.
Notice was likewise served on the rest of the Guravs calling upon them to agree to serve the Sansthan on conditions specified in the notice.
These terms were not acceptable to the Guravs and so, on behalf of two Guravs Eknath and his brother Ramachandra, notice was served on the trustees on October 26, 1911, complaining against the trustees ' conduct in forcibly removing the Guravs from the temple and thereby wrongfully denying their rights.
The notice warned the trustees that unless they retraced their steps and gave possession to the Guravs as claimed in the notice legal steps would be taken against them.
This notice was followed by the Guravs ' Suit No. 485 of 1911.
In the suit the plaintiffs claimed declaration about their rights of ownership and asked for consequential reliefs.
This claim was denied by the 494 trustees who claimed the right to dismiss the Guravs.
It was alleged on their behalf that some of the plaintiffs had been dismissed and others had resigned their employments and so all of them had lost their rights.
This suit was seriously contested but in the end the Guravs lost and their suit was dismissed on January 31, 1918.
The Guravs then preferred appeals in the High Court but these appeals were also dismissed on August 3, 1921.
We have already pointed out that, while dismissing the said appeals, the High Court made certain observations about the Guravs ' hereditary rights of worship and suggested that these rights could be adjudicated upon in a suit filed under section 92 of the Code.
Thus at the time when the Guravs ' appeals were dismissed the position was that the claim of ownership set up by them had been rejected; but the question as to whether they were entitled to the lesser rights of hereditary worshippers was left open.
The Guravs then obtained forcible possession of the temple and that led to the trustees ' suit under section 9 of the Specific Relief Act, No. 1075 of 1922, on September 12, 1922.
In this suit the trustees specifically alleged that the relationship of the defendants as servants of the Sansthan had ceased as from September, 1911, and they averred that the defendants had therefore no right to obtain possession of the temple.
The defendants no doubt disputed this claim and pleaded that they were the hereditary vatandar pujari servants but their claim was negatived and a decree for possession was passed on November 4, 1922.
In execution of this decree the defendants were dispossessed.
On these facts the High Court has held in favour of the appellants, and rightly we think, that it was difficult to accept the respondents ' contention that the cause of action for the present suits which were expressly based upon the status of the Guravs as hereditary servants arose in 1911.
But, the High Court felt no doubt that the cause of action to file the present suits had accrued either on September 12, 1922, when the trustees filed their suit under section 9 of the Specific Relief Act or in any event on November 4, 495 1922, when the said suit was decreed and the Guravs were consequently dispossessed.
In our opinion this conclusion is also right.
One of the Guravs who was examined in the present litigation has stated that, " if in any year when it is the turn of any takshim to serve, if a person outside the Gurav family is appointed by the trustees, all the takshims have a right to , object ".
There is also no dispute that since the dismissal of eleven Guravs in 1911 till the institution of, the present suits none from the Gurav family has served the temple except for 3 1/2 months in 1922 when the Guravs had wrongfully obtained possession of the temple.
In 1922 the Guravs knew that their claim of ownership had been rejected and that the only right which they could set up was as hereditary worshippers of the temple and not its owners.
This right was specifically denied by the trustees in their plaint while it was specifically set up in defence by the Guravs in their written statement; and the decree that followed upheld the trustees ' case and rejected the defendant 's claim.
On these facts the conclusion is irresistible that the right to sue accrued to the Guravs at the latest on November 4, 1922, when a decree was passed under section 9 of the Specific Relief Act.
If not the plaint in the suit, at least the decree that followed clearly and effectively threatened the Guravs ' rights as hereditary worshippers and so the cause of action to sue on the strength of the said rights clearly and unambiguously arose at that time.
If that be the true position it follows that the present suits which have been filed long after the expiration of six years from 1922 are barred by time under article 120.
It is then contended by Mr. Rege that the suits cannot be held to be barred under article 120 because section 23 of the Limitation Act applies; and since, in the words of the said section, the conduct of the trustees amounted to a continuing wrong, a fresh period of limitation began to run at every moment of time during which the said wrong continued.
Does the conduct of the trustees amount to a continuing wrong under section 23 ? That is the question which this contention raises for our decision.
In other words, did the 496 cause of action arise de die in them as claimed by the appellants ? In dealing with this argument it is necessary to bear in mind that section 23 refers not to a continuing right but to a continuing wrong.
It is the very essence of a continuing wrong that it is an act which creates a continuing source of injury and renders the 'doer of the act responsible and liable for the continuance of the said injury.
If the wrongful act causes an injury which is complete, there is no continuing wrong even though the damage resulting from the act may continue.
If, however, a wrongful act is of such a character that the injury caused by it itself continues, then the act constitutes a continuing wrong.
In this connection it is necessary to draw a distinction between the injury caused by the wrongful act and what may be described as the effect of the said injury.
It is only in regard to acts which can be properly characterised as continuing wrongs that section 23 can be invoked.
Thus considered it is difficult to hold that the trustees ' act in denying altogether the alleged rights of the Guravs as hereditary , worshippers and in claiming and obtaining possession from them by their suit in 1922 was a continuing wrong.
The decree obtained by the trustees in the said litigation had injured effectively and completely the appellants ' rights though the damage caused by the said decree subsequently continued.
Can it be said that, after the appellants were evicted from the temple in execution of the said decree, the continuance of their dispossession was due to a recurring act of tort committed by the trustees from moment to moment ? As soon as the decree was passed and the appellants were dispossessed in execution proceedings, their rights had been completely injured, and though their dispossession continued, it cannot be said that the trustees were committing wrongful acts or acts of tort from moment to moment so as to give the appellants a cause of action de die in diem.
We think there can be no doubt that where the wrongful act complained of amounts to ouster, the resulting injury to the right is complete at the date of the ouster and so there would be no scope for the application of section 23 in such a case.
That is 497 the view which the High Court has taken and we see no reason to differ from it.
We would now like to refer to some of the decisions which were cited before us on this point.
The first case which is usually considered in dealing with the application of section 23 is the decision of the Privy Council in Maharani Rajroop Koer vs Syed Abdul Hossein (1) In order to appreciate this decision it is necessary to refer, though briefly, to the material facts.
The plaintiff had succeeded in establishing his right to the pyne or an artificial watercourse and to the use of the water flowing through it except that which flowed through the branch channel; he had, however, failed to prove his right to the water in the tal except to the overflow after the defendants as owners of mouzah Morahad used the water for the purpose of irrigating their own land.
It was found that all the obstructions by the defendants were unauthorised and in fact the plaintiff had succeeded in the courts below in respect of all the obstructions except two which were numbered No. 3 and No. 10.
No. 3 was a khund or channel cut in the side of the pyne at a point below the bridge whereas No. 10 was a dhonga also below the bridge and it consisted of hollow palm trees so placed as to draw off water in the pyne for the purpose of irrigating the defendants ' lands.
It was in regard to these two obstructions that the question about the continuing wrong fell to be considered; and the Privy Council held that the said obstructions which interfered with the flow of water to the plaintiff 's mehal were in the nature of continuing nuisance as to which the cause of action was renewed de die in them so long as the obstructions causing such interference were allowed to continue.
That is why the Privy Council allowed the plaintiff 's claim in respect of these two obstructions and reversed the decree passed by the High Court in that behalf.
In fact the conduct of the defendant showed that whenever he drew off water through the said diversions he was in fact stealing plaintiff 's water and thereby committing fresh wrong every time.
Thus this is clearly not a case of exclusion or ouster.
(1) (1880) L.R. 7 I.A. 240.
63 498 Similarly, in Hukum Chand vs Maharaj Bahadur Singh (1) the Privy Council was dealing with a case where the defendants ' act clearly amounted to a continuing wrong and helped the plaintiff in getting the benefit of section 23.
The relevant dispute in that case arose because alterations had been made by the Swetambaris in the character of the charans in certain shrines and the Digambaris complained that the said alterations amounted to an interference with their rights.
It had been found by the courts in India that the charans in the old shrines were the impressions of the footprints of the saints each bearing a lotus mark.
"The Swetambaris who preferred to worship the feet themselves have evolved another form of charan not very easy to describe accurately in the absence of models or photographs which shows toe nails and must be taken to be a representation of part of the foot.
This the Digambaris refused to worship as being a representation of a detached part of the human body ".
The courts had also held that the action of the Swetambaris in placing the charans of the said description in three of the shrines was a wrong of which the Digambaris were entitled to complain.
The question which the Privy Council had to consider was whether the action of the Swetambaris in placing the said charans in three of the shrines was a continuing wrong or not; and in answering this question in favour of the plaintiffs the Privy Council referred to its earlier decision in the case of Maharani Rajroop Koer (2 ) and held that the action in question was a continuing wrong.
There is no doubt that the impugned action did not amount to ouster or complete dispossession of the plaintiffs.
It was action which was of the character of a continuing wrong and as such it gave rise to a cause of action de die in diem.
In our opinion, neither of these two decisions can be of any assistance to the appellants.
On the other hand the decision of the Patna High Court in Choudhury Bibhuti Narayan Singh vs Maharaja Sir Guru Mahadev Asram Prasad Sahi Bahadur(3) (1) (1933) L.R. 60 I.A. 313.
(2) (1880) L.R. 7 I.A. 240.
(3) Pat. 208.
499 as well as that of the Full Bench of the Punjab High Court in Khair Mohammad Khan vs Mst.
Jannat support the respondents ' contention that where the s, impugned act amounts to ouster there is no scope for the application of section 23 of the Limitation Act.
We are, therefore, satisfied that there is no substance in the appellants ' contention that section 23 helps to save limitation for their suits.
The result no doubt is unfortunate.
The appellants have succeeded in both the courts below in proving their rights as hereditary worshippers; but their claim must be rejected on the ground that they have filed their suits beyond time.
In this court an attempt was made by the parties to see if this long drawn out litigation could be brought to an end on reasonable terms agreed to by them, but it did not succeed.
In the result the appeals fail and are dismissed.
We would, however, direct that the parties should bear their own costs throughout.
Appeals dismissed.
| The appellants who were the hereditary worshippers, called Guravs, of the Shree Dnyaneshwar Sansthan of Alandi, claimed to be its owners.
The respondents as trustees of the said Sansthan dismissed eleven of the Guravs in 1911, served a notice on the rest calling upon them to agree to act according to the orders of the Temple committee and appointed six Brahmins to carry on the services of the Sansthan.
The Guravs did not agree and sued the respondents for a declaration of their rights of ownership and consequential reliefs.
That litigation ended in the High Court in 1921 with the result that their claim of ownership stood rejected but their rights as hereditary worshippers were left open.
Thereafter the Guravs took forcible possession of the temple on July 25,1922.
The trustees brought a suit under section 9 of the Specific Relief Act on September 12, 1922, and obtained a decree on November 4, 1932.
In execution of that decree the Guravs were dispossessed.
The suits, out of which the present appeals arise, were filed by the appellants against the trustees for declaration of their rights as hereditary servants of the Sansthan, a permanent injunction restraining the trustees from obstructing them in the exercise of the said rights and accounts.
The respondents claimed that the appellants were servants of the Temple committee and had no hereditary rights as claimed by them; even if they had, their claim to such rights was barred by limitation.
The trial Court decreed the suits.
In appeal the High Court, while agreeing with the trial court on the merits, disagreed on the question of limitation, held the suits to be barred by limitation under article 120 Of the Limitation Act, the cause of action arising either on the filing of the section 9 suit by the respondents or, in any event, on the date when the said suit was decreed, section 23 of the Act having no application, and allowed the appeals.
It was contended on behalf of the appellants in this Court that the suits were governed by article I24 Of the Limitation Act, and even if article 120 applied, section 23 saved limitation.
Held, that the High Court was right in holding that article 120 and not article 124, of the Limitation Act applied and that section 23 had no application to the suits in question.
477 Article 124 Of the Limitation Act applies only where the cause of action for the suit is wrongful dispossession of the plaintiff and adverse possession by the defendant in respect of the hereditary office in question.
In such suits, the contest usually is between rival claimants to the hereditary office and not between such claimants and trustees.
It is impossible to ignore the provision Of Col. 3 to that article in deciding its applicability.
Kunj Bihari Prasadji vs Keshavlal Hiralal, Bom.
567 and jalim Singh Srimal vs Choonee Lall Johurry, , held inapplicable.
Thathachariar vs Singarachariar, A.I.R. 1928 Mad. 377, ap proved.
Annasami vs Advarachari, I.L.R. , distin guished.
Jhalandar Thakur vs jharula Das, Cal. 2444, referred to.
Section 23 Of the Limitation Act refers not to a continuing right but to a continuing wrong.
A continuing wrong is essentially one that creates a source of continuing injury as opposed to one that was complete and makes the doer liable for such continuance.
A completed inJury would not be a continuing wrong even though it might give rise to continuing damage.
Thus tested, the injury to the appellants resulting from the decree obtained by the trustees in the section 9 suit, which amounted to a ouster, was complete at the date of the ouster and section 23 Of the Limitation Act could not apply so as to save limitation.
Choudhury Bibhuti Narayan Singh vs Maharaja Sir Guru Mahadeu Asram Prasad Saki Bahadur, Pat. 208 and Khair Mohammad Khan vs Mst.
jannat, Lah. 22, referred to.
Maharani Rajroop Koer vs Syaed Abdul Hossein, [1880] L.R. 7 I.A. 240 and Hukum Chand vs Maharaj Bahadur Singh, [1933] L.R. 60 I.A. 313, distinguished and held inapplicable.
|
Summarize this legal judgement text concisely | ON: Civil Appeal No. 340 of 1957.
Appeal from the judgment and order dated November 29, 1954, of the Hyderabad High Court in Reference No. 234/5 of 1953 54.
K. N. Rajagopala Sastri, B. H. Dhebar and D. Gupta, for the appellant.
48 378 A. V. Viswanatha Sastri, P. Rama Reddy and R. Mahalinga Iyer, for the respondents.
March 20.
The Judgment of Bhagwati and Sinha, JJ., was delivered by Bbagwati, J. Kapur, J., delivered a separate Judgment.
BHAGWATI, J.
This appeal with a certificate from the High Court of Judicature at Hyderabad raises the question whether the sum of Rs. 2,19,343 received by the assessee in the year of account relevant for the assessment year 1951 52 was a revenue receipt or a capital receipt.
The facts leading up to this appeal may be shortly stated : The assessee is a registered firm consisting of five brothers and the wife of a deceased brother having equal shares in the profit and loss of the partnership.
The firm was appointed the sole selling agents and sole distributors for the Hyderabad State for the cigarettes manufactured by M/s. Vazir Sultan Tobacco Co., Ltd., under the terms of a resolution of the Board of Directors dated January 6, 1931.
" Mr. Baker reported that an arrangement had been, come to for the time being whereby the firm of Vazir Sultan & Sons, were given the distributorship of " Charminar " Cigarettes within the H. E. H. the Nizam 's Dominions and that they were allowed a discount of 2% on the gross selling price." No written agreement was entered into between the Company and the assessee in respect of the above mentioned arrangement nor was there any correspondence exchanged between them in this behalf.
In 1939 another arrangement was arrived at between the assessee and the company whereby the assessee was given a discount of 2% not only on the goods sold in the Hyderabad State but on all the goods sold in the Hyderabad State and outside Hyderabad State.
It does not appear that the Board of Directors passed any resolution in support of this new arrangement nor was any agreement drawn up between the parties incorporating the said new ar rangement.
379 On June 16, 1950, the Board of Directors passed the following resolution reverting to the old arrangement embodied in the resolution dated January 6,1931: " The Chairman, having referred to resolution No. 24 passed at the board meeting held on 6 1 31 and having reported that Vazir Sultan & Sons had agreed to revert to the arrangement outlined in that resolution with effect from 1 6 50, it was on the proposition of Mr. section N. Bilgrami, seconded by Mr. N. B. Chenoy resolved that payment of the sum of O. section Rs. 2,26,263 be made to Vazir Sultan & Sons by way of compensa tion, Vazir Sultan & Sons, to pay D. B. Akki & Co., out of that amount the sum of O. section Rs. 6,920 also by way of compensation.
Mr. Mohd. Sultan & Mr. Hameed Sultan stated that, as partners in the firm of Vazir Sultan & Sons, they did not take part in this resolution, although they had accepted on behalf of Vazir Sultan & Sons, the terms thereof.
" The sum of Rs. 2,19,343 was accordingly received by the assessee in the year of account 1359 F.
The Income tax Officer included this sum in the assessee 's total income and taxed it as a revenue receipt.
On appeal the Appellate Assistant Commissioner held that the sum of Rs. 2,19,343 was not a revenue receipt but a capital receipt being compensation for the loss of the agency and as such not liable to tax.
The Income tax Officer (C Ward) Hyderabad thereupon preferred an appeal to the Income tax Appellate Tribunal, Bombay, which held that the said sum received by the assessee was a revenue receipt and liable to tax.
The assessee then applied to the Appellate Tribunal for a reference to the High Court under sec.
66(1) of the Income tax Act and the Tribunal accordingly referred the following question of law to the High Court: " Whether the sum of O. section Rs. 2,19,343 received by the assessee Firm from Vazir Sultan Tobacco Co., Ltd., is a revenue receipt or a capital receipt ?" The High Court answered the question in favour of the assessee stating the question in a different form, viz., 380 " Whether the sum of O. section Rs. 2,19,343 received by the assessee firm from Vazir Sultan Tobacco Co., Ltd., is liable to be taxed under the Indian Incometax Act?" The appellant thereafter applied to the High Court for a certificate of fitness which was granted by the High Court on February 21, 1955, and hence this appeal.
The question that falls to be determined is whether the sum which was in express terms of the resolution mentioned by way of " compensation " for the loss of the agency was a revenue receipt (trading receipt or an income receipt) as contended by the Revenue or a capital receipt as contended by the assessee.
It was urged on behalf of the appellant that the sole selling agency which was granted by the Company to the assessee in the year 1931 was merely expanded as regards territory in 1939 and what was done in 1951 was to revert to the old arrangement, and the structure or the profit making, apparatus of the assessee 's business was not affected thereby.
The expansion as well as the restriction of the assessee 's territory were in the ordinary course of the assessee 's business and were mere accidents of the business which the assessee carried on and the sum of Rs. 2,19,343 received by the assessee as and by way of compensation for the restriction of the territory was a trading or an income receipt and was therefore liable to tax.
It was, on the other hand, contended on behalf of the assessee that it did not carry on business of acquiring and working agencies, that the agency acquired in 1931 was a capital asset of the assessee 's business of distributing Charminar cigarettes in the Hyderabad State, that the expansion of territory outside the Hyderabad State in 1939 was an accretion to the capital asset already acquired by the assessee, that the resolution of 1950 was in substance a termination or cancellation of the agency qua territory outside the Hyderabad State and resulted in the sterilisation of the capital asset qua that territory, that the sum of 381 Rs. 2,19,343 received by the assessee in the year of account was by way of compensation for the termination or cancellation of the agency outside Hyderabad State and being therefore compensation for the sterilisation pro tanto of a capital asset of the assessee 's business was a capital receipt and was therefore not liable to tax.
The question whether a particular receipt is a revenue receipt or a capital receipt or a particular expenditure is a capital expenditure or a revenue expenditure is beset with considerable difficulty and one finds the Revenue and the assessee ranged on different sides taking up alternate contentions as it suits their purposes.
As was observed by Lord Macmillan in Van Den Berghs, Limited vs Clark(1) : " The reported cases fall into two categories, those in which the subject is found claiming that an item of receipt ought not to be included in computing his profits and those in which the subject is found claiming that an item of disbursement ought to be included among the admissible deductions in computing his profits.
In the former case the Crown is found maintaining that the item is an item of income; in the latter, that it is a capital item.
Consequently the argumentative position alternates according as it is an item of receipt or an item of disbursement that is in question, and the taxpayer and the Crown are found alternately arguing for the restriction or the expansion of the conception of income.
" The question has therefore to be dealt with irrespective of the one stand or the other which is taken by the Revenue or the assessee and the Court has got to determine what is the true character of the receipt or the expenditure.
In the case of the Commissioner of Income tax and Excess Profits Tax, Madras vs The South India Pictures Ltd., Karaikudi (2) this Court endorsed the following statement of Lord Macmillan in Ven Den Berghs, Ltd. vs Clark (1): " That though in general the distinction between an income and a capital receipt was well recognised (1) ; , 429.
(2) ; , 228.
382 and easily applied, cases did arise where the item lay on the border line and the problem had to be solved on the particular facts of each case.
No infallible criterion or test can be or has been laid down and the decided cases are only helpful in that they indicate the kind of consideration which may relevantly be borne in mind in approaching the problem.
The character of the payment received may vary according to the circumstances.
Thus the amount received as consideration for the sale of a plot of land may ordinarily be a capital receipt but if the business of the recipient is to buy and sell lands, it may well be his income.
" While considering the case law it is necessary to bear in mind that the Indian Income tax Act is not in pari materia with the British Income Tax statutes, it is less elaborate in many ways, subject to fewer refinements and in arrangement and language it differs greatly from the provisions with which the courts in England have had to deal.
Little help can therefore be gained by attempting to construe the Indian Income tax Act in the light of decisions bearing upon the meaning of the Income tax legislation in England.
But on analogous provisions, fundamental concepts and general principles unaffected by the specialities of the English Income tax statutes, English authorities may be useful guides.
(Vide the observations of the Privy Council in the Commissioner of Income tax vs Shaw Wallace & Co. (1); Gopal Saran Narain Singh vs Commissioner of Income tax (2); Commissioner of Income tax, Bombay Presideney and Aden vs Chunnilal B. Mehta (3 ) and Raja Bahadur Kamakshya Narain Singh of Ramgarh vs C. I. T., Bihar & Orissa (4).
Before embarking upon a discussion of the principles emerging from the various decisions bearing upon this question, it is necessary to advert to an argument which was addressed to us by the learned counsel for the appellant in connection with the Privy Council decision in the Commissioner of Income tax vs Shaw Wallace & Co. (1).
That case was relied upon by the (1) (1932) L.R. 59 I.A. 206, 212.
(2) (1935) L.R. 62 I.A. 207, 214.
(3) (1938) L.R. 65 I A. 332, 349.
(4) (1943) L.R. 70 I.A. 180, 188.
383 Appellate Assistant Commissioner and the High Court as determinative of the question in favour of the assessee and it was strenuously urged before us on behalf of the Revenue that the authority of that decision was considerably shaken not only by the later privy Council decision in Raja Bahadur Kamakshya Narain Singh vs C. I. T., Bihar and Orissa (1) but also by a decision of this Court in Raghuvansi Mills Ltd. vs Commissioner of Income tax, Bombay City (2).
It may be remembered that the term " income was understood by their Lordships of the Privy Council in Shaw Wallace 's Case(3) to connote a periodical monetary return coming in with some sort of regularity or expected regularity from definite sources.
The source may not necessarily be one which is expected to be continuously productive, but it must be one whose object is the production of a definite return excluding anything in the nature of a mere windfall.
Income was thus likened pictorially to the fruit of a tree or the crop of a field (lbid p. 212).
This concept of " income " was adopted and in substance repeated by the Privy Council in Gopal Saran Narain Singh 's Case (4) at p. 213, though Lord Russell of Killowen pronouncing the opinion of the Privy Council pithily remarked that anything which can properly be described as income is taxable under the Act unless properly exempted.
The case of Raja Bahadur Kama kshya Narain Singh (1)struck a discordant note and Lord Wright delivering the opinion of the Board observed at p. 192 that it was not in their Lordships ' opinion correct to regard as an essential element in any of these or like definitions a reference to the analogy of fruit or increase or sowing or reaping or periodical harvests and that such picturesque similes cannot be used to limit the true character of income in general.
Lord Wright further observed at p. 194: " Its applicability may in particular cases differ because the circumstances, though similar in some respects, may be different in others.
Thus the profit realised on a sale of shares may be capital if the seller (1) (1943) L.R. 70 I.A. 180, 188.
(2) [1953] S.C.R. 177.
(3) (1932) L.R. 59 I. A. 206, 212.
(4) (1935) L.R. 62 I.A. 207, 2I4.
384 is an ordinary investor changing his securities, but in some instances, at any rate, it may be income if the seller of the shares is an investment or an insurance company.
Income is not necessarily the recurrent return from a definite source, though it is generally of that character.
Income, again may consist of a series of separate receipts, as it generally does in the case of professional earnings.
The multiplicity of forms which " income " may assume is beyond enumeration.
Generally, however, the mere fact that the income flows from some capital assets, of which the simplest illustration is the purchase of an annuity for a lump sum, does not prevent it from being income, though in some analogous cases the true view may be that the payments, though spread over a period, are not income, but instalments payable at specified future dates of a purchase price.
(Vide Secretary of State for India vs Scoble) (1).
This Court in Raghuvansi Mill 's Case (2) also observed that the definition of " income " in Shaw Wallaces Case (3) as a periodical monetary return coming in with some sort of regularity or expected regularity from definite sources must be read with reference to the particular facts of that case.
It was therefore urged on behalf of the Revenue that periodicity or recurring nature of the receipt was not a necessary ingredient of " income " nor was the existence of a material external source capable of producing a recurrent return necessary before a receipt could be treated as income chargeable to tax.
We are not unmindful of this criticism of the definition of " income " adopted by the Privy Council in Shaw Wallace & Co. 's Case (3) and the concept of " income " may have to be thus revised.
But even granting the proposition that is contended for by the Revenue the result is no different in the present case because the head of income under which the assessee before us has been assessed to Income tax is " business " a definite source from which the income in question sought to be assessed is alleged to have been (1) ; (2) ; (3) (1932) L.R. 59 I.A. 206, 212.
385 derived and whether it is of a recurring or non recurring nature therefore does not enter into the picture.
The exemption from liability in regard to that income is claimed by the assessee, not on the ground of the applicability of section 4(3)(vii) of the Income tax Act but on the ground that it is not a revenue receipt but a capital receipt, being compensation paid by the Company to the assessee for the termination or cancellation of the agency qua territory outside Hyderabad State, a capital asset of the assessee 's business.
What then are the considerations which have to be borne in mind in determining these vexed questions ? The distinction between a capital expenditure and a revenue expenditure came up for consideration before this Court in Assam Bengal Cement Co., Ltd. vs The Commissioner of Income tax, West Bengal (1) and this Court laid down certain criteria for the determination as to whether a particular expenditure incurred by the assessee was a capital expenditure or a revenue expenditure.
We need not therefore discuss that problem any further.
As to whether a particular receipt in the hands of an assessee is a capital receipt, or a revenue receipt, we had occasion to consider the same in the Commissioner of Income tax and Excess Profits Tax, Madras vs The South India Pictures Ltd., Karaikudi (2).
The assessee there carried on the business of distribution of films.
In some instances the assessee used to produce or purchase films and then distribute the same for exhibition in different cinema halls and in other cases used to advance monies to producers of films produced with the help of monies so advanced.
In the course of such business it advanced monies to the Jupiter Pictures for the production of these films and acquired the rights of distribution of the three films under three agreements in writing dated September, 1941, July 1942 and May 1943.
In the accounting year ending March 31, 1946, and in the previous years the assessee had exploited its rights of distribution of the three pictures.
On October 31, 1945, the (1) (2) ; , 228. 49 386 assessee and the Jupiter Pictures entered into an agreement cancelling the three agreements relating to the distribution rights in respect of the three films and in consideration of such cancellation the assessee was paid Rs. 26,000 in all by the Jupiter Pictures as compensation.
It was held by the Majority of this Court that the sum received by the assessee was a revenue receipt (and not a capital receipt) assessable under the Indian Income tax Act inasmuch as: (1) the sum paid to the assessee was not truly compensation for not carrying on its business but was a sum paid in the ordinary course of business.
to adjust the relation between the assessee and the producers of the films; (2)the agreements which were cancelled were by no means agreements on which the whole trade of the assessee had for all practical purposes been built and the payment received by the assessee was not for the loss of such a fundamental asset as was the ship managership of the assessee in Barr Crombie & Co., Ltd. vs Commissioners of Inland Revenue (1) and (3)one could not say that the cancelled agreements constituted the framework or whole structure of the assessee 's profit making apparatus in the same sense as the agreement between the two margarine dealers in Van Den Berghs Ltd. vs Clark (2) was.
The criteria laid down by the majority judgment for determining whether the particular payment received by the assessee was income or was to be regarded as a capital receipt were: (i)whether the agreements in question were entered into by the assessee in the course of carrying on its business of distribution of films, and (ii) whether the termination of the agreements in question could be said to have been brought about in the ordinary course of business; so that money received by the assessee as a result of or in connection with such termination of agreements could be regarded as having been received in the ordinary course of its business and therefore a trading receipt.
(1) (2) ; , 429.
387 A similar question arose in Commissioner of Incometax, Nagpur vs Rai Bahadur Jairam Valji(1) where this Court followed the same line of reasoning.
The question there related to a sum of Rs. 2,50,000 received by the assessee as damages or compensation for the premature termination of a contract dated May 9, 1940.
The High Court on a reference under section 66(1) of the Income tax Act had held that the sum was a capital receipt in the hands of the assessee, and as such not liable to be taxed.
It was contended on behalf of the Revenue that the contract dated May 9, 1940, was one entered into by the assessee in the ordinary course of his business, that the sum of Rs. 2,50,000 was paid admittedly as solatium for the cancellation of that contract, and that it was therefore a revenue receipt.
The assessee on the other hand contended that the contract dated May 9, 1940, was for a period of 25 years of which more than 23 years had still to run at the time of the settlement, and it was therefore capital in character.
Moreover, the true character of the agreement was that it brought into existence an arrangement which would enable him to carry on a business and was not itself any business and any payment made for the termination of such an agreement was a capital receipt.
This Court on the facts and circumstances of the case came to the conclusion that the contract in question was entered into by the assessee in the ordinary course of business and was one entered into in the carrying on of that business.
The arrangement ultimately entered into between the parties in regard to the payment of the said sum of Rs. 2,50,000 was accordingly treated as an adjustment made in the ordinary course of business and the receipt was therefore held to be an amount paid as solatium for the cancellation of a contract entered into by a person in the ordinary course of business.
In the course of the discussion reference was made to agency agreements and this Court observed:" In an agency contract, the actual business consists in the dealings between the principal and his (1) [1959] Supp. 1 S.C.R. 110; , 163.
388 customers, and the work of the agent is only to bring about that business.
In other words, what he does is not the business itself but something which is intimately and directly linked up with it.
It is therefore possible to view the agency as the apparatus which leads to business rather than as the business itself on the analogy of the agreements in Van Den Berghs Ltd. vs Clark (1).
Considered in this light, the agency right can be held to be of the nature of a capital asset invested in business.
But this cannot be said of a contract entered into in the ordinary course of business.
Such a contract is part of the business itself, not anything outside it as is the agency, and any receipt on account of such a contract can only be a trading receipt.
" This Court further emphasised the distinction between an agency agreement and a contract made in the usual course of business and pointed out that the agreement could in any event be regarded as a capital asset of the agent which would be saleable.
Such a concept would certainly be out of place with reference to a contract entered into in the course of business and any payment made for the non performance or cancellation of such a contract could only be damages or Compensation and could not, in law or fact, be regarded as an assignment of the rights under the contract.
Once it was found that the contract was entered into in the ordinary course of business, any compensation received for its termination would be a revenue receipt, irrespective of whether its performance was to consist of a single act or a series of acts spread over a period.
While thus indicating that an agency could be treated as a capital asset of the business this Court guarded itself against its being understood as deciding that the compensation paid for cancellation of an agency contract must always and as a matter of law be held to be a capital receipt and it made the following pertinent observations : " Such a conclusion will be directly opposed to the decision in Kelsall 's case (2) and the Commissioner (1) ; ,429.
(2) ; 389 of Income tax and Excess Profits Tax, Madras vs The South India Pictures Ltd., Karaikudi (1).
The fact is that an agency contract which has the character of a capital asset in the hands of one person may assume the character of a trading receipt in the hands of another, as for example, when the agent is found to make a trade of acquiring agencies and dealing with them.
The principle was thus stated by Romer, L. J., in Golden Horse Shoe (New) Ltd. vs Thurgood (2) : The determining factor must be the nature of the trade in which the asset is employed.
The land upon which a manufacturer carries on his business is part of his fixed capital.
The land with which a dealer in real estate carries on his business is part of his circulating capital.
The machinery with which a manufacturer makes the articles that he sells is part of his fixed capital.
The machinery that a dealer in machinery buys and sells is part of his circulating capital, as is the coal that a coal merchant buys and sells in the course of his trade.
So, too, is the coal that a manufacturer of gas buys and from which he extracts his gas.
Therefore when a question arises whether a payment of compensation for termination of an agency is a capital or a revenue receipt, it would have to be considered whether the agency was in the nature of capital asset in the hands of the assessee, or whether it was only part of his stock in trade.
Thus in Barr Crombie & Sons Ltd. vs Commissioners of Inland Revenue (3), the agency was found to be practically the sole business of the assessee, and the receipt of compensation on account of it was accordingly held to be a capital receipt, while in Kelsall 's case the agency which was terminated was one of several agencies held by the assessee and the compensation amount received therefor was held to be a revenue receipt, and that was also the case in the Commissioner of Income tax and Excess Profits Tax, Madras vs The South India Pictures Ltd., Karaikudi (1).
" We may in this context also note the further observations made by this Court: (1) ; 228, (2) , 300.
(3) 390 But apart from these and similar instances, it might, in general, be stated that payments made in settlement of rights under a trading contract are trading receipts and are assessable to revenue.
But where a person who is carrying on business is prevented from doing so by an external authority in the exercise of a paramount power and is awarded compensation therefor, whether that receipt is a capital receipt or a revenue receipt will depend upon whether it is compensation for injury inflicted on a capital asset or on a stock in trade.
The decision in the Glenboig Union Fireclay Co., Ltd. vs The Commissioners of Inland Revenue (1) applies to this category of cases.
There, the assessee was carrying on business in the manufacture of fire clay goods and had, for the performance of that business, acquired a fire clay field on lease.
The Caledonian Railway which passed over the field prohibited the assessee from excavating the field within a certain distance of the rails, and paid compensation therefor in accordance with the provisions of a statute.
It was held by the House of Lords that this was a capital receipt and was not taxable on the ground that the compensation was really the price paid " for sterilising the asset from which otherwise profit might have been obtained.
" That is to say, the fire clay field was a capital asset which was to be utilised for the carrying on of the business of manufacturing fire clay goods and when the assessee was prohibited from exploiting the field, it was an injury inflicted on his capital asset.
Where, however, the compensation is referable to injury inflicted on the stock in trade, it would be a revenue receipt.
(Vide the Commissioners of Inland Revenue vs Newcastle Breweries Ltd. (2).
" It is no doubt true that this Court was not concerned with any agency agreement in the last mentioned case and the observations made by this Court there were by way of obiter dicta.
The obiter dicta of this Court, however, are entitled to considerable weight and we on our part fully endorse the same.
The earlier case of Commissioner of Income tax and Excess Profits Tax, (1) (2) 391 Madras vs The South India Pictures Ltd. (1) was indeed a case where the assessee had entered into agency agreements for the exploitation of the three films in question, but in that case the conclusion was reached that entering into such agency agreements for acquiring the films was a part of the assessee 's business and the agreements in question having been entered into by the assessee in the ordinary course of business the cancellation of those agreements was also a part of the assessee 's business and was resorted to in order to adjust the relation between the assessee and the producer of those films.
It would not be profitable to review the various English decisions bearing on this question as they have been exhaustively reviewed in the above decisions of this Court.
The position as it emerges on a consideration of these authorities may now be summarised.
The first question to consider would be whether the agency agreement in question for cancellation of which the payment was received by the assessee was a capital asset of the assessee 's business, constituted its profit making apparatus and was in the nature of its fixed capital or was a trading asset or circulating capital or stock in trade of his business.
If it was the former the payment received would be undoubtedly a capital receipt; if, however, the same was entered into by the assessee in the ordinary course of business and for the purpose of carrying on that business, it would fall into the latter category and the compensation or payment received for its cancellation would merely be an adjustment made in the ordinary course of business of the relation between the parties and would constitute a trading or a revenue receipt and not a capital receipt.
We may perhaps appropriately refer at this stage to an aspect of this question which was canvassed before us with some force and it was that there was no enforceable agreement as between the assessee and the Company which could be made the subject matter of a legal claim for damages or compensation at his instance in the event of its termination or cancellation by the Company.
The agency agreement was (1) ; , 228.
392 terminable at the will of the Company and if the Company chose to do so the assessee had no remedy at law in regard to the same.
It is, however, to be remembered that in all these cases one has really got to look to the nature of the receipt in the hands of the assessee irrespective of any consideration as to what was actuating the mind of the other party.
As Rowlatt, J., observed in the case of Chibbett vs Joseph Robinson & Sons (1): "As Sir Richard Henn Collins said, you must not look at the point of view of the person who pays and see whether he is compellable to pay or not; you have to look at the point of view of the person who receives, to see whether he receives it in respect of his services, if it is a question of an office and in respect of his trade, if it is a question of trade and so on.
You have to look at his point of view to see whether he receives it in respect of those considerations.
This is perfectly true.
But when you look at that question from what is described as the point of view of the recipient, that sends you back again, looking, for that purpose, to the point of view of the payer; not from the point of view of compellability or liability, but from the point of view of a person inquiring what is this payment for; and you have to see whether the maker of the payment makes it for the services and the receiver receives it for the services.
" The learned Judge further observed at p. 61 " But at any rate it does seem to me that compensation for loss of an employment which need not continue, but which was likely to continue, is not an annual profit within the scope of the Income tax at all." (See also W. A. Guff vs Commissioner of Incometax, Bombay City) (2) where the question whether the amount paid was compensation for which the employer was liable or was a payment made ex gratia was considered immaterial for the purpose of the decision in that case).
It was also urged that the agency in question before us was not an enduring asset of the assessee 's business as in its very nature it was terminable at will, (1) , 60.
(2) 393 there being no agreement or arrangement for a fixed term between the assessee and the Company.
On the analogy of the test laid down by this Court in Assam Bengal Cement Co., Ltd. vs The Commissioner of Income tax, West Bengal (1) while considering the distinction between a capital expenditure and a revenue expenditure, it was argued that the agency agreement in question could not be a capital asset of the assessee 's business in so far as it was not of an enduring character and the compensation paid for its termination could not therefore be a capital receipt in the hands of the assessee.
Whatever be the position, however, in the case of the acquisition of an asset by the assessee by making a disbursement for the purchase of the same, similar considerations would not necessarily operate when the amount is received by the assessee for the termination or cancellation of an asset of his business.
The character of such a receipt would indeed have to be determined having regard to the fact whether the asset in question was a capital asset of the business or a trading asset thereof.
For this purpose it will be immaterial whether that asset was of an enduring character or was one which was terminable at will.
We have therefore got to determine whether the agency in question before us was a capital asset of the assessee 's business.
One of the relevant considerations in the matter of such determination has been whether the asset was in the nature of fixed capital or constituted the circulating capital or stock in trade of the assessee 's business.
This question was thus dealt with by Viscount Haldane in John Smith & Sons vs Moore (2) : " But what was the nature of what the Appellant here had to deal with ? He had bought as part of the capital of the business his father 's contracts.
These enabled him to purchase coal from the colliery owners at what we were told was a very advantageous price, about fourteen shillings per ton.
He was able to buy at this price because the right to do so was part of the (1) (2) , 282.
50 394 assets of the business.
Was it circulating capital ? My Lords, it is not necessary to draw an exact line of demarcation between fixed and circulating capital.
Since Adam Smith drew the distinction in the Second Book of his " Wealth of Nations ", which appears in the chapter on the Division of Stock, a distinction which has since become classical, economists have never been able to define much more precisely what the line of demarcation is.
Adam Smith described fixed capital as what the owner turns to profit by keeping it in his own possession, circulating capital as what he makes profit of by parting with it and letting it change masters.
The latter capital circulates in this sense.
My Lords, in the case before us the Appellant, of course, made profit with circulating capital, by buying coal under the contracts he had acquired from his father 's estate at the stipulated price of fourteen shillings and reselling it for more, but he was able to do this simply because he had acquired, among other assets of his business, including the goodwill, the contracts in question.
It was not by selling these contracts, of limited duration though they were, it was not by parting with them to other masters, but by retaining them, that he was able to employ his cir culating capital in buying under them.
I am accordingly of opinion that though they may have been of short duration, they were none the less part of his fixed capital ".
In the case before us the agency agreement in respect of territory outside the Hyderabad State was as much an asset of the assessee 's business as the agency agreement within the Hyderabad State and though expansion of the territory of the agency in 1939 and the restriction thereof in 1950 could very well be treated as grant of additional territory in 1939 and the withdrawal thereof in 1950, both these agency agreements constituted but one employment of the assessee as the sole selling agents of the Company.
There is nothing on the record to show that the acquisition of such agencies constituted the assessee 's business or that these agency agreements were entered into by the assessee in the carrying on of any such business.
395 The agency agreements in fact formed a capital asset of the assessee 's business worked or exploited by the assessee by entering into contracts for the sale of the " charminar " cigarettes manufactured by the Company to the various customers and dealers in the respective territories.
This asset really formed part of the fixed capital of the assessee 's business It did not constitute the business of the assessee but was the means by which the assessee entered into the business transactions by way of distributing those cigarettes within the respective territories.
It really formed the profit making apparatus of the assessee 's business of distribution of the cigarettes manufactured by the Company.
If it was thus neither circulating capital nor stock in trade of the business carried on by the assessee it could certainly not be anything but a capital asset of its business and any payment made by the Company as and by way of compensation for terminating or cancelling the same would only be a capital receipt in the hands of the assessee.
It would not make the slightest difference for this purpose whether either one or both of the agency agreements were terminated or cancelled by the Company.
The position would be the same in (either event.
As was observed by Lord Wrenbury in the Glenboig Union Fire Clay Co., Ltd. vs The Commissioners of Inland Revenne (1) at p. 465: " The matter may be regarded from another point Of view ; the right to work the area in which the working was to be abandoned was part of the capital asset consisting of the right to work the whole area demised.
Had the abandonment extended to the whole area all subsequent profit by working would, of course have been impossible but it would be impossible to contend that the compensation would be other than capital.
It was the price paid for sterilising the asset from which otherwise profit might have been obtained.
What is true of the whole must be equally true of part.
" If both the agency agreements, viz., one for the territory within the Hyderabad State and the other for the territory outside Hyderabad State had been (1) 396 terminated or cancelled on payment of compensation, the whole profit making structure of the assessee 's business would have been destroyed.
Even if one of these agency agreements was thus terminated, it would result in the destruction of the profit making apparatus or sterilisation of the capital asset pro tanto and if in the former case the receipt in the hands of the assessee would only be a capital receipt, equally would it be a capital receipt if compensation was obtained by the assessee for the termination or cancellation of one of these agency agreements which formed a capital asset of the assessee 's business.
The facts of the present case are closely similar to those which obtained in the Commissioner of Incometax vs Shaw Wallace & Co. (1).
In that case also the assessees had for a number of years prior to 1928 acted as distributing agents in India of the Burma Oil Company, and the Anglo Persian Oil Company, but had no formal agreement with either Company.
In or about the year 1927 the two companies combined and decided to make other arrangements for the distribution of their products.
The assessee 's agency of the Burma Company was accordingly terminated on December 31, 1927, and that of the AngloPersian Company on June 30, following.
Some time in the early part of 1928 the Burma Company paid to the assessee a sum of Rs. 12,00,000 " as full compensation for cessation of the agency " and in August of the same year the Anglo Persian Company paid them another sum of Rs. 3,25,000 as " compensation for the loss of your office as agents to the company " On the facts and circumstances of the case the Privy Council came to the conclusion that the sums could only be taxable if they were the produce, or the result of, carrying on the agencies of the oil companies in the year in which they were received by the assessees.
But when once it was admitted that they were sums received; not for carrying on that business, but as some 'Sort of solatium for its compulsory cessation, the answer seemed fairly plain.
Whatever be the criticism in regard to the concept of income adopted in this case noted (1) (1932) L.R. 59 I. A. 206,212.
397 earlier in this judgment, the decision could just as well be supported on the grounds which we have hereinbefore discussed and was quite correct, the payments having been received by the assessees as and by way of compensation for the termination Or cancellation of the agency agreements in question which were in fact the capital assets of the assessee 's business.
The Appellate Assistant Commissioner as well as the High Court were thus justified in the conclusion to which they came, viz., that the sum of Rs. 2,19,343 received by the assessee from the Company was a capital receipt.
The result, therefore, is that the appeal fails and will stand dismissed with costs throughout.
KAPUR, J. I have had the advantage of perusing the judgment prepared by my learned brother Bhagwati, J., but with great respect I am unable to agree and my reasons are these.
The sole question for determination in this case is as to whether a sum of Rs. 2,26,263 received by the assessees from.
Vazir Sultan Tobacoo Co. Ltd. as compensation for the termination of their agency for the distribution of 'charminar ' cigarettes in areas of India other than Hyderabad State is or is not taxable in the hands of the assessees.
The answer to this question depends on whether the amount has been received by the assessees as a capital or a revenue receipts.
In 1931 the assessees were appointed distributing agents for Hyderabad State only and for the rest of India in 1939, the agency commission in each case being a discount of 2% on the gross selling price.
The agency of 1939 was terminated by a resolution dated June 16, 1950, on payment of the compensation amount already mentioned but the assessees continued to be distributors for Hyderabad State.
It must here be mentioned that the agency in question was terminable at will, and that any compensation paid for it would prima facie be revenue.
During the accounting year the amount of income, profits and gains of the assessees from the cigarette distribution business and from another source, i. e., 398 Acid Factory within the State of Hyderabad was Rs. 4,53,159.
The order of the Income tax Officer or the Appellate Tribunal does not show bow much of this sum was attributable to the Cigarette distribution business and how much to the other source.
There is no finding as to how and to what extent, if any, the business of the assessees was affected by the cesser of distribution business outside that State.
The question now arises did the assessees receive the compensation in lieu of the commission they otherwise might or would have earned if the agreement had continued or did they receive it as compensation for the destruction of a profit making asset.
The answer to this question would again be dependent upon whether the receipt in question is attributable to a fixed capital asset or to circulating capital.
These two terms have been used in a number of cases but as applied to agencies compensation will be a capital receipt if it is received as the value of the agency, i.e., it is a price of the business as if it is brought to sale.
On the other band it is revenue receipt if it is paid in lieu of profits or commission.
In Van Den Berghs Ltd. vs Clark (1) Lord Macmillan described circulating capital as " capital which is turned over and in the process of being turned over yields profit or loss.
Fixed capital is not involved directly in that process and remains unaffected by it ".
As was said by Lord Macmillan in the same case, it is not possible to lay down any single test as infallible or any single criterion as decisive in the determination of the question.
Ultimately it, must depend upon the facts of a particular case.
The assessees rested then case on the decision of the Privy Council in Commissioner of Income tax vs Shaw Wallace & Co. (2) on which the High Court has mainly relied.
In that case the assessees carried on business in India as merchants and agents for various companies.
They were distributing agents for two on companies.
These two agencies were terminated and a sum of Rs. 12,00,000 was paid as compensation for the loss of these agency rights and the question was (1) ; (2) (1932) L.R. 59 I.A. 206. 399 whether this was a capital payment.
It was held to be a capital and not a revenue receipt because the, sum received was not the result of carrying on the ' agencies of the oil companies, in other words, it could 1 not be regarded as profits or gains from carrying on the business but was received in the nature of a solatium for cessation.
The case was decided on the interpretation of the word 'business ' as defined in section 2(4) of the Income tax Act, under which it " includes any trade, commerce or manufacture, or any adventure or concern in the nature of trade, commerce or manufacture ".
These words, it was held, were wide " but underlying each of them is the fundamental idea of the continuous exercise of an activity which was also the idea underlying the relevant words of section 10(1) of the Act, " in respect of the profits or gains of any business carried on by him ", i. e., it is to be the profit earned by a process of production.
The test of income was its periodicity because it connotes a periodical monetary return.
This test of periodicity was not accepted by the Privy Council itself in Raja Bahadur Kamakshya Narain Singh 's case (1).
Lord Wright there said " income is not necessarily the recurrent return from a definite source, though it is generally so ".
The test of periodicity was rejected by this Court in Raghuvanshi Mills Ltd. vs Commissioner of Income tax (2) where Bose, J., said that the remarks of periodical monetary return must be confined to the facts of that case and it was held that money received from an insurance company for insurance against losses was income representing loss of profits as opposed to loss of capital.
In a later case The Commissioner of Income tax vs The South India Pictures Ltd. (3) it was said that if Shaw Wallace & Co. had other agencies similar to those of the two oil companies it would be difficult to reconcile the decision in that case with the later decisions in Kelsall Parsons & Co. vs Commissioners of Inland Revenue (4) and other cases (Per Das, C. J.).
In view of the decision in the South India Pictures ' case and the observations of Bose, J., in the (1) (1943) L.R. 70 I.A. 180.
(2) ; , 183.
(3) ; , 232.
(4) ; 400 case of Raghuvanshi Mills Ltd. (1) the authority of Shaw Wallace & Co. 's case (2) must be taken to be considerably shaken.
We have then to see how the question has to be determined.
Various tests have been laid down in decided cases.
According to Lord Cave, L. C., an expenditure made not only once and for all but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade has been treated as properly attributable to capital and not to revenue.
(British Insulated Cables (3) ).
According to Lord Atkinson the word " asset " need not be confined to " something material" and Romer, L. J., has added that the advantage paid for need not be ,of a positive character " and may consist in the getting rid of an item of fixed capital that is of an onerous character (Anglo Persian Oil Co. vs Dale (4) ).
If the receipt represents the aggregate of profits which an assesee would otherwise have received over a series of years the lump sum might be regarded as of the same nature as the ingredients of which it was composed ; at p. 431) (5) but it is not necessarily in itself an item of income (per Lord Buckmaster in Glenboig Union Fireclay Co. (6) ).
In Van Den Berghs ' case (7) there were three agreements between a British and a Dutch company operative till 1940 making it possible for them to carry on their business 'in friendly alliance ' and providing for the sharing of profits in certain proportions.
The agreements were terminated in 1927 and the Dutch company paid the English company a sum of pound 450,000 as compensation.
The question was the charac ter of the receipt whether capital or revenue.
It was held by the House of Lords that it was the former because the agreements were not " ordinary commercial contracts in the course of carrying on their trade ; they were not contracts for the disposal of their employees or for the engagement of agents or other employees (1) ; , 183 (2) (1932) L.R. 59 I.A. 206 (3) , 213, 222.
(4) , 146 (5) Van Den Berghs Ltd. v Clark (6) (1922) 12 Tax Cas.
427, 464.
(7) ; 401 for the conduct of their business nor were they merely agreements as to how their trading profits when earned should be distributed as between the contracting parties.
On the contrary the agreements related to the whole structure of the recipient 's profit making apparatus.
They regulated its activities, defined what it might or it might not do and affected the whole conduct of its business ".
According to Lord Macmillan if the agreements formed the fixed framework within which the circulating capital operated, then they are not incidental to the working of its profit making machine but were essential parts of the mechanism itself and therefore they would result in a capital receipt and not revenue receipt.
Thus the agreements were designed to ensure that the business was carried on to the best advantage but they did not themselves form part of the business.
They were not agreements which must be regarded as pertinent to trading activities which yielded profits.
As such the totality of payments on account of those agreements were held to be a capital receipt.
The various decided cases demarcate the areas on the two sides of the line in which a receipt may lie and in every case it has to be determined as to whether it falls on one side or the other.
The simplest case is of income from property or business as distinct from something received in lieu of property or business itself.
One illustration of this is insurance against fire, destruction or damage and insurance against loss of profit, the former would bring in compensation in the nature of a capital.
Another instance is where the whole business is bought over and the receipt is the price of the business itself as opposed to a lump sum payment for the loss of profit calculated on a proper basis.
The test of income, i. e., periodicity or recurrence at fixed intervals has been doubted in this Court.
Raghuvanshi Mills (1).
Another test is afforded by cases of tangible immoveable property.
If an owner of such property is paid compensation for not working a part of his property, (1) ; , 183.
51 402 e. g. a part of the demised premises the compensation is not profit because it is payment for sterilising that part of the asset from which otherwise profit might have been obtained.
(Glenboig Union Fireclay case (1) at p. 464).
There is no difference in cases of this kind whether the abandonment extends to the whole area or is circumscribed to a part because in either case it is sterilising an asset from which otherwise profit might have been obtained.
" It makes no difference whether it may be regarded as a sale of the asset out and out or it be treated merely as a means of preventing the acquisition of profit that would otherwise be gained.
In either case the asset of the company to that extent has been sterilised or destroyed ".
Another test is whether the agreement related to the whole structure of recipient 's profit making apparatus and affected the whole conduct of his business or was the loss of a part of the fixed framework of the business.
If it is, it is capital (Van Den Bergh 's case (2) ).
But compensation for temporary and variable elements of the recipient 's profit making apparatus would be revenue (MacDonald 's case (3) ).
If the agreement affects the whole structure and character of the recipient 's business then it is capital but not if the structure of the business is so designed as to absorb the shocks as by the cancellation of one agency (Kelsall Parson 's case(4)).
In Bush Beach and Gent Ltd. vs Road(5) again the test of how the cancellation of the agreement affected the recipient 's business was applied.
Barr Crombie 's case (6) is a case of capital asset as there the recipient lost his entire business which resulted in reduction of staff, salaries and even in office accom modation.
The result was the cesser of its trading existence.
The transaction took the form of a transfer for a price from one party to another of something that formed part of the enduring asset of one of them.
Compensation for the loss of an agency would be for the loss of a capital asset if the termination of the (1) , 464.
(2) ; (3) (4) (1938) 21 Tax Cas.
(5) (6) (1945) 26 Tax Cas.
406. 403 agency was a damage to the recipient 's business structure such as to destroy or materially cripple the whole structure involving serious dislocation of the normal commercial organisation but if it was merely compensation for the loss of trading profit, i. e., in respect of commissions or it took the place of commission that would have been earned if the engagement had continued then it is revenue (Wiseburg vs Domville) (1).
So that the decision as to whether compensation was capital or revenue would depend upon whether the cessation of the agency destroys or materially cripples the whole structure of the recipient 's profit making apparatus or whether the loss is of the whole or part of the framework of business.
If we apply these tests to the agreement which has been terminated in the present case, it does not fall in any of the class of cases of destruction of a capital asset.
For the appellant reliance was placed on the observations of Venkatarama Aiyar, J., in Commissioner of Income tax vs Rai Bahadur Jairam Valji (2) where it was pointed out that in an agency contract the actual business consists in the dealings between the principal and his customers and the work of the agent is only to bring about that business.
In other words what the agent does is not business itself but something which is intimately and directly linked with it.
But an examination of the context shows that that is not what these observations mean.
The point that was to be decided in that case was whether a payment of compensation for the cancellation of a trading contract was a capital or revenue receipt, and dealing with decisions relating to the cancellation of agency contracts which were quoted in support of the contention that they were capital, the learned Judge_ observed that considerations applicable to agency contracts were inapplicable to trading contracts, because the two classes of contracts, were essentially different, and these differences were there pointed out.
The purpose of these observations was to show that receipts from (1) (2) [1959] SUPP.
1 S.C.R. 110 , 161, 163.
404 trading contracts were revenue and not that receipts from agency contracts are capital.
That that is the true scope of these observations is clear from the following passage: "In holding that compensation paid on the cancellation of a trading contract differs in character from compensation paid for cancellation of an agency contract, we should not be understood as deciding that the latter must always, and as a matter of law be held to be a capital receipt.
Such a conclusion will be directly opposed to the decisions in Kelsall 's case (1) and Commissioner of Income tax vs South India Pictures Ltd (2).
The fact is that an agency contract which has the character of a capital asset in the hands of one person may assume the character of a trading receipt in the hands of another, as, for example, when the agent is found to make a trade of acquiring agencies and dealing with them ".
The Court there observed that when the assessee holds a number of agencies, the compensation paid for cancellation of any of them could be regarded as revenue receipt.
This is inconsistent with the conclusion that an agency contract must always be regarded as a capital asset.
The learned Judges further observed that they were not elaborating this part as they were there concerned with a trading contract and therefore the statement as to when receipts from agency contracts could be regarded as revenue receipts cannot be read as exhausting the circumstances under which they could be held to be revenue.
As a matter of fact there are three kinds of cases of agencies shown by the decided cases: (1) Kelsall Parsons case (1) where the recipient was carrying on several agencies and the test laid down was whether the business structure could absorb a shock of the terminate on of one.
(2) The other is where the compensation is for a temporary and variable element of assessee 's profit making apparatus; MacDonald 's case (3).
(3) The third class of cases is represented by (1) ; (2) ; , 232.
(3) 405 Fleming & Co. 's case(1) where the rights and advantages surrendered were such as to destroy or materially cripple the whole structure of the profit making apparatus.
The agencies themselves are of different kinds:(1) where the agent himself carries on the business and sells the product of the principal and gets commission for it; (2) where the agent 's function is confined to bringing the principal and the customer together and be gets agency commission for the performance of only that service; (3) where the agent is a distributor and distributes the products of the principal through his sub agents and charges commission for the distribution work.
Cases (1) and (3) would not strictly fall within the scope of the ' observations in Commissioner of Income tax vs R. B. Jairam Valji (2) and case (2) would fall within the second class of agreements mentioned in Van Den Bergh 's case (3).
The agreement which is now before us and which was surrendered was terminable at will.
The amount of profit which the assessee made from working the agency contract in Hyderabad State alone was much more than the amount which the assees received for the termination of the whole of their agency outside the State.
Thus it is clear that the termination did not affect the trading activities of the assessees and therefore the termination of the contract viewed against the background of the assessee 's business Organisation and profit making structure appears to be no more than compensation for the loss of future profit and commission.
The true effect of the facts of this case appears to be this that in 1939 the assessee 's area of distribution was increased from the State of Hyderabad to the whole of India and in 1950 it was again reduced to the original area of 1931.
The assessees never lost their agency.
As a result of this contraction of area they at the most have lost some agency commission.
The compensation therefore was in the nature of surrogatum and in this view of the matter it is revenue and not capital.
(1) (2) [1959] Supp. 1 S.C.R. 110 , 161, 163.
(3) ; 406 I would therefore allow this appeal with costs throughout.
By COURT: In accordance with the majority judgment of the Court, the appeal is dismissed with costs throughout.
Appeal dismissed.
| In 1931 the respondent, a registered firm, was appointed the sole selling agents and distributors for the Hyderabad State of 376 cigarettes manufactured by V (a limited company)/ under the terms of a resolution of the Board of Directors, the agency commission being a discount of 2% on the gross selling price.
In 1939 another arrangement was made whereby the respondent 's agency was extended to the rest of India.
By a resolution dated June 16, 1950, the agency of 1939 was terminated on payment of Rs. 2,26,263 to the respondent by way of compensation, but the respondent continued to be distributors for the Hyderabad State.
For the assessment year 1951 52 the Income tax Officer included the aforesaid sum in the respondent 's total income and taxed it as a revenue receipt under the head of " business ".
The respondent claimed that it did not carry on business of acquiring and working agencies, that the agency acquired in 1931 was a capital asset of its business of distributing cigarettes in the Hyderabad State, that the expansion of territory outside the Hyderabad State in 1939 was an accretion to the capital asset already acquired by it, that the resolution Of 1950 was in substance a termination of the agency qua territory outside the Hyderabad State which resulted in the sterilisation of the capital asset qua that territory, that the sum of Rs. 2,19,343 received by it in the year of account was by way of compensation for the termination of the agency outside Hyderabad State and being therefore compensation for the sterilisation Pro tanto of a capital asset of its business was a capital receipt and therefore was not liable to tax.
It was contended on behalf of the Incometax Authorities that the sole selling agency which was granted by the company to the assessee in the year 1931 was merely expanded as regards territory in 1939 and what was done in 1950 was to revert to the old arrangement, that the structure or the profit making apparatus of assessee 's business was not affected thereby, that the expansion as well as the restriction of the assessee 's territory were in the ordinary course of the assessee 's business and were mere accidents of the business which the assessee carried on and that the sum of Rs. 2,19,343 received by the assessee as and by way of compensation for the restriction of the territory was a trading or an income receipt and was therefore liable to tax.
It was also urged that the agency agreement between the respondent and the company was terminable at the will of the latter and so it could not be considered as an enduring asset.
Held (per Bhagwati and Sinha, JJ., Kapur, J., dissenting) that the agency agreements in question did not constitute the business of the respondent, but formed a capital asset, being the profit making apparatus of its business of distribution of the cigarettes manufactured by the company within the respective territories, and, consequently, any payment made by the company as compensation for terminating the agency would only be a capital receipt in the hands of the respondent.
Commissioner of Income tax vs Shaw Wallace & Co., (1932) L.R. 59 I. A. 206, relied on.
377 Commissioner of Income Tax and Excess Profits Tax, Madras vs The South India Pictures Ltd., Karaikudi; , and Commissioner of Income tax, Nagpur vs Rai Bahadur jairam Valji, [1959] Supp. 1 S.C.R. 110, distinguished.
Case law reviewed.
Held, further, that the fact that the agency agreements were terminable at will, or that only one of them was terminated, would not make any difference because in either case, when the agency was terminated and the amount was paid as compensation for such termination it resulted in the sterilisation of the capital asset Pro tanto and it was received as a capital receipt in the hands of the respondent.
Glenboig Union Fire Clay Co., Ltd. vs The Commissioners of Inland Revenne, , relied on.
Per Kapur, J. The true effect of the facts of the present case was that in 1939 the respondent 's area of distribution was increased from the State of Hyderabad to the whole of India and in 1950 it was again reduced to the original area of 1931, so that the respondent did not lose its agency.
Consequently, the termination of the agency in 1950 did not affect the trading activities of the respondent and, therefore, viewed against the background of the respondent 's business Organisation and profitmaking structure the compensation for the termination of the agency was no more than that for the loss of future profit and commission.
The compensation therefore was in the nature of surrogatum and in this view of the matter it was revenue and not capital.
The answer to the question, as applied to agencies, whether the compensation is capital or revenue, is that it will be a capital receipt if it is received as the value of the agency, i. e., it is a price of the business as if it is brought to sale.
On the other hand it is revenue receipt if it is paid in lieu of profits or commission.
In view of the decision The Commissioner of Income tax vs The South India Pictures Ltd., Karaikudi; , , and the observations of Bose, J., in the case of Raghuvanshi Mills Ltd. vs Commissioner of Income tax, ; , the authority of Commissioner of Income tax vs Shaw Wallace considerably shaken.
|
Summarize this legal judgement text concisely | ivil Appeal No. 215 of 1955.
Appeal from the judgment and decree dated April 1, 1953, of the Calcutta High Court in Appeal from Original Decree No. 89 of 1946, arising, out of the judgment and decree dated December 4, 1945, of the Subordinate Judge, Darjeeling, in Money Suit No. 5 of 1940.
409 L. K. Jha and D. N. Mukherjee, for the appellant.
C. B. Aggarwala, K. B. Bagchi and Sukumar Ghosh, for Respondents Nos. 1 to 5. 1959.
March 26.
The Judgment of the Court was delivered by SUBBA RAO, J.
This appeal filed against the judgment of the High Court of Judicature at Calcutta raises the question of the legality of a partnership to carry on business in wagering contracts.
The facts lie in a small compass.
They, omitting those not germane to the controversy before us, are as follows: The appellant, Gherulal Parakh, and the first respondent, Mahadeodas Maiya, managers of two joint families entered into a partnership to carry on wagering contracts with two firms of Hapur, namely, Messrs. Mulchand Gulzarimull and Baldeosahay Surajmull.
It was agreed between the partners that the said contracts would be made in the name of the respondents on behalf of the firm and that the profit and loss resulting from the transactions would be borne by them in equal shares.
In implementation of the said agreement, the first respondent entered into 32 contracts with Mulchand and 49 contracts with Baldeosahay and the nett result of all these transactions was a loss, with the result that the first respondent had to pay to the Hapur merchants the entire amount due to them.
As the appellant denied his liability to bear his share of the loss, 'the first respondent along 'With his sons filed O. section No. 18 of 1937 in the Court of the Subordinate Judge, Darjeeling, for the recovery of half of the loss incurred in the transactions with Mulchand.
In the plaint he reserved his right to claim any further amount in respect of transactions with Mulchand that might be found due to him after the accounts were finally settled with him.
That suit was referred to arbitration and on the basis of the award, the Subordinate Judge made a decree in favour of the first respondent and his sons for a sum of Rs. 3,375.
After the final accounts were settled between the first respondent and the two merchants of Hapur and after 52 410 the amounts due to them were paid, the first respondent instituted a suit, out of which the present appeal arises, in the Court of the Subordinate Judge, Darjeeling, for the recovery of a sum of Rs. 5,300 with interest thereon.
Subsequently the plaint was amended and by the amended plaint the respondents asked for the same relief on the basis that the firm had been dissolved.
The appellant and his sons, inter alia, pleaded in defence that the agreement between the parties to enter into wagering contracts was unlawful under section 23 of the Contract Act, that as the partnership was not registered, the suit was barred under section 69(1) of the Partnership Act and that in any event the suit was barred under section 2, Rule 2 of the Code of Civil Procedure.
The learned Subordinate Judge found that the agreement between the parties was to enter into wagering contracts depending upon the rise and fall of the market and that the said agreement was void as the said object was forbidden by law and opposed to public policy.
He also found that the claim in respect of the transactions with Mulchand so far as it was not included in the earlier suit was not barred under section 2, Rule 2, Code of Civil Procedure, as the cause of action in respect of that part of the claim did not arise at the time the said suit was filed.
He further found that the partnership was between the two joint families of the appellant and the first respondent respectively, that there could not be in law such a partnership and that therefore section 69 of the Partnership Act was not applicable.
In the result, he dismissed the suit with costs.
On appeal, the learned Judges of the High Court held that the partnership was not between the two joint families but was only between the two managers of the said families and therefore it was valid.
They found that the ' partnership to do business was only for a single venture with each one of the two merchants of Hapur and for a single season and that the said partnership was dissolved after the season was over and therefore the suit for accounts of the dissolved firm was not hit by the provisions of subsections (1) and (2) of section 69 of the Partnership Act.
411 They further found that the object of the partnere was to deal in differences and that though the said transactions, being in the nature of wager, were void under section 30 of the , the object was not unlawful within the meaning of section 23 of the said Act.
In regard to the claim, the learned Judges found that there was no satisfactory evidence as regards the payment by the first respondent on account of loss incurred in the contracts with Mulchand but it was established that he paid a sum of Rs. 7,615 on account of loss in the contracts entered into with Baldeosahay.
In the result, the High Court gave a decree to the first respondent for a sum of Rs. 3,807 8 0 and disallowed interest thereon for the reason that as the suit in substance was one for accounts of a dissolved firm, there was no liability in the circumstances of the case to pay interest.
In the result, the 'High Court gave a decree in favour of the first respondent for the said amount together with another small item and dismissed the suit as regards " the plaintiffs other than the first respondent and the defendants other than the appellant ".
Before we consider the questions of law raised in the case, it would be convenient at the outset to dispose of questions of fact raised by either party.
The learned Counsel for the appellant contends that the finding of the learned Judges of the High Court that the partnership stood dissolved after the season was over was not supported by the pleadings or the evidence adduced in the case.
In the plaint as originally drafted and presented to the Court, there was no express reference to the fact that the business was dissolved and no relief was asked for accounts ' of the dissolved firm.
But the plaint discloses that the parties jointly entered into contracts with two merchants between March 23, 1937, and June 17, 1937, that the plaintiffs obtained complete accounts of profit and loss on the aforesaid transactions from the said merchants after June 17, 1937, that they issued a notice to the defendants to pay them a sum of Rs. 4,146 4 3, being half of the total payments made by them on account of 412 the said contracts and that the defendants denied their liability.
The suit was filed for recovery of the said amount.
The defendant filed a written statement on June 12, 1940, but did not raise the plea based on section 69 of the Partnership Act.
He filed an additional written statement on November 9, 1941, expressly setting up the plea.
Thereafter the plaintiffs prayed for the amendment of the, plaint by adding the following to the plaint as paragraph 10: " That even Section 69 of the Indian Partnership Act is not a bar to the present suit as the joint business referred to above was dissolved and in this suit the Court is required only to go into the accounts of 'the said joint business ".
On August 14, 1942, the defendant filed a further additional written statement alleging that the allegations in paragraph 2 were not true and that as no date of the alleged dissolution had been mentioned in the plaint, the plaintiffs ' case based on the said alleged dissolution was not maintainable.
It would be seen from the aforesaid pleadings that though an express allegation of the fact of dissolution of the partnership was only made by an amendment on November 17, 1941, the plaint as originally presented contained all the facts sustaining the said plea.
The defendants in their written statement, inter alia, denied that there was any partnership to enter into forward contracts with the said two merchants and that therefore consistent with their case they did not specifically deny the said facts.
The said facts, except in regard to the question whether the partnership was between the two families or only between the two managers of the families on which there was difference of view between the Court of the Subordinate Judge and the High Court, were concurrently found by both the Courts.
It follows from the said findings that the partnership was only in respect of forward contracts with two specified individuals and for a particular season.
But it is said that the said findings were not based on any evidence in the case.
It is true that the documents did not clearly indicate any period limiting the operation of the partnership, but from the attitude adopted by the 413 defendants in the earlier suit ending in an award and that adopted in the present pleadings, the nature of the transactions and the conduct of the parties, no other conclusion was possible than that arrived at by the High Court.
If so, section 42 of the Partnership Act directly applies to this case.
Under that section in the absence of a contract to the contrary, a firm is dissolved, if it is constituted to carry out one or more adventures or undertakings, by completion thereof.
In this case, the partnership was constituted to carry out contracts with specified persons during a particular season and as the said contracts were closed, the partnership was dissolved.
At this stage a point raised by the learned Counsel for the respondents may conveniently be disposed of.
The learned Counsel contends that neither the learned Subordinate Judge nor the learned Judges of the High Court found that the first respondent entered into any wagering transactions with either of the two merchants of Hapur and therefore no question of illegality arises in this case.
The law on the subject is wellsettled and does not call for any citation of cases.
To constitute a wagering contract there must be proof that the contract was entered into upon terms that the performance of the contract should not be demanded, but only the difference in prices should be paid.
There should be common intention between the parties to the wager that they should not demand delivery of the goods but should take only the difference in prices on the happening of an event.
Relying upon the said legal position, it is contended that there is no evidence in the case to establish that there was a common intention between the first respondent and the Hapur merchants not to take delivery of possession but only to gamble in difference in prices.
This argument, if we may say so, is not really germane to the question raised in this case.
The suit was filed on the basis of a dissolved partnership for accounts.
The defendants contended that the object of the partnership was to carry on wagering transactions, i. e., only to gamble in differences without any intention to give or take delivery of goods.
The Courts, on the evidence, both 414 direct and circumstantial, came to the conclusion that the partnership agreement was entered into with the object of carrying on wagering transactions wherein there was no intention to ask for or to take delivery of goods but only to deal with differences.
That is a concurrent finding of fact, and, following the usual practice of this Court, we must accept it.
We, therefore, proceed on the basis that the appellant and the first respondent entered into a partnership for carrying on wagering transactions and the claim related only to the loss incurred in respect of those transactions.
Now we come to the main and substantial point in the case.
The problem presented, with its different facets, is whether the said agreement of partnership is unlawful within the meaning of section 23 of the .
Section 23 of the said Act, omitting portions unnecessary for the present purpose, reads as follows : " The consideration or object of an agreement is lawful, unless it is forbidden by law, or the Court regards it as immoral, or opposed to public policy.
In each of these cases, the consideration or object of an agreement is said to be unlawful.
Every agreement of which the object or consideration is unlawful is void.
" Under this section, the object of an agreement, whether it is of partnership or otherwise, is unlawful if it is forbidden by law or the Court regards it as immoral or opposed to public policy and in such cases the agreement itself is void.
The learned Counsel for the appellant advances his argument under three sub heads: (i) the object is forbidden by law, (ii) it is opposed to public policy, and (iii) it is immoral.
We shall consider each one of them separately.
(i) forbidden by law: Under section 30 of the , agreements by way of wager are void; and no suit shall be brought for recovering anything 415 alleged to be won on any wager, or entrusted to any person to abide the result of any game or other uncertain event on which any wager is made.
Sir William Anson 's definition of " wager " as a promise to give money or money 's worth upon the determination or ascertainment of an uncertain event accurately brings out the concept of wager declared void by section 30 of the Contract Act.
As a contract which provides for payment of differences only without any intention on the part of either of the parties to give or take delivery of the goods is admittedly a wager within the meaning of section 30 of the Contract Act, the argument proceeds, such a transaction, being void under the said section, is also forbidden by law within the meaning of section 23 of the Contract Act.
The question, shortly stated, is whether what is void can be equated with what is forbidden by law.
This argument is not a new one, but has been raised in England as well as in India and has uniformly been rejected.
In England the law relating to gaming and wagering contracts is contained in the Gaming Acts of 1845 and 1892.
As the decisions turned upon the relevant provisions of the said Acts, it would help to appreciate them better if the relevant sections of the two Acts were read at this stage: Section 18 of the Gaming Act, 1845: " Contracts by way of gaming to be void, and wagers or sums deposited with stakeholders not to be recoverable at law Saving for subscriptions for prizes. . . .
All contracts or agreements, whether by parole or in writing, by way of gaming or wagering, shall be null and void; and. . no suit shall be brought or maintained in any court of law and equity for recovering any sum of money or valuable thing alleged to be won upon any wager, or which shall have been deposited in the hands of any person to abide the event on which any wager shall have been made: Provided always, that this enactment shall not be deemed to apply to any subscription or contribution, or agreement to subscribe or contribute, for or towards any plate, prize or sum of money to be awarded to the winner or winners of any lawful game, sport, pastime or exercise." 416 Section 1 of the Gaming Act, 1892: " Promises to repay sums paid under contracts void by 8 & 9 Viet.
c 109 to be null and void.
Any promise, express or implied, to pay any person any sum of money paid by him under or in respect of any contract or agreement rendered null and void by the Gaming Act, 1845, or to pay any sum of money by way of commission, fee, reward, or otherwise in respect of any such contract, or of any services in relation thereto or in connexion therewith, shall be null and void, and no action shall be brought or maintained to recover any such sum of money.
" While the Act of 1845 declared all kinds of wagers or games null and void, it only prohibited the recovery of money or valuable thing won upon any wager or desposited with stakeholders.
On the other hand, the Act of 1892 further declared that moneys paid under or in respect of wagering contracts dealt with by the Act of 1845 are not recoverable and no commission or reward in respect of any wager can be claimed in a court of law by agents employed to bet on behalf of their principals.
The law of England till the passing of the Act of 1892 was analogous to that in India and the English law on the subject governing a similar situation would be of considerable help in deciding the present case.
Sir William Anson in his book " On Law of Contracts " succinctly states the legal position thus, at page 205: ". . . the law may either actually forbid an agreement to be made, or it may merely say that if it is made the Courts will not enforce it.
In the former case it is illegal, in the latter only void; but inasmuch as illegal contracts are also void, though void contracts are not necessarily illegal, the distinction is for most purposes not important, and even judges seem sometimes to treat the two terms as inter changeable.
" The learned author proceeds to apply the said general principles to wagers and observes, at page 212, thus: "Wagers 'beidg only void, no taint of illegality attached to a transaction, whereby one man employed another to make bets for him; the ordinary rules which 417 govern the relation of employer and employed applied in such a case.
" Pollock and Mulla in their book on Indian Contract define the phrase ',forbidden by law " in section 23 thus, at page 158: "An act or undertaking is equally forbidden by law whether it violates a prohibitory enactment of the Legislature or a principle of unwritten law.
But in India, where the criminal law is codified, acts forbidden by law seem practically to consist of acts punishable under the Penal Code and of acts prohibited by special legislation, or by regulations or orders made under authority derived from the Legislature.
" Some of the decisions, both English and Indian, cited at the Bar which bring out the distinction between a contract which is forbidden by law and that which is void may now be noticed.
In Thacker vs Hardy (1), the plaintiff, a broker, who was employed by the defendant to speculate for him upon the stock Exchange, entered into contracts on behalf of the defendant with a third party upon which he (the plaintiff) became personally liable.
He sued the defendant for indemnity against the liability incurred by him and for commission as broker.
The Court held that the plaintiff was entitled to recover notwithstanding the provisions of 8 & 9 Viet.
c. 109, section 18 (English Gaming Act, 1845).
Lindley, J., observed at page 687: " Now, if gaming and wagering were illegal, I should be of opinion that the illegality of the transactions in which the plaintiff and the defendant were engaged would have tainted, as between themselves, whatever the plaintiff had done in futherance of their illegal designs, and would have precluded him from claiming, in a court of law, any indemnity from the defendant in respect of the liabilities he had incurred: Cannan vs Bryce ; McKinnell vs Robinson ; ; Lyne vs Siesfeld (1 H. & N. 278).
But it has been held that although gaming and wagering contracts cannot be enforced, they are (1) 53 418 not illegal.
Fitch vs Jones ; is plain to that effect.
Money paid in discharge of a bet is a good consideration for a bill of exchange: Oulds vs Harrison ; ; and if money be so paid by a plaintiff at the request of a defendant, it can be recovered by action against him : Knight vs Camber ; ; Jessopp vs Lutwyoho ; ; Rosewarne vs Billing (15 C. B. (N. section) 316); and it has been held that a request to pay may be inferred from an authority to bet: Oldham vs Ramsden Having regard to these decisions, I cannot hold that the statute above referred to precludes the plaintiff from maintaining this action.
" In Read vs Anderson.(1) where an agent was employed to make a bet in his own name on behalf of his principal, a similar question arose for consideration.
Hawkins, J., states the legal position at page 104 : " At common law wagers were not illegal, and before the passing of 8 & 9 Vict.
c. 109 actions were constantly brought and maintained to recover money won upon them.
The object of 8 & 9 Viet.
c. 109 (passed in 1845) was not to render illegal wagers which up to that time had been lawful, but simply to make the law no longer available for their enforcement, leaving the parties to them to pay them or not as their sense of honour might dictate." After citing the provisions of section 18 of that Act, the learned Judge proceeds to observe thus, at page 105 : " There is nothing in this language to affect the legality of wagering contracts, they are simply rendered null and void; and not enforceable by any process of law.
A host of authorities have settled this to be the true effect of the Statute." This judgment of Hawkins, J., was confirmed on appeal (reported in 13 Q. B. 779) on the ground that the agency became irrevocable on the making of the bet.
The judgment of the Court of Appeal cannot be considered to be a direct decision on the point.
The said principle was affirmed by the Court of Appeal again in Bridger vs Savage (2).
There the plaintiff sued his (1) (2) 419 agent for the amount received by him in respect of the winnings from the persons with whom the agent had betted.
Brett, M. R., observed at page 366 : ". . the defendant has received money which he contracted with the plaintiff to hand over to him when he had received it.
That is a perfectly legal contract ; but for the defendant it has been contended that the statute 8 & 9 Vict.
c. 109, section 18, makes that contract illegal.
The answer is that it has been held by the Courts on several occasions that the statute applies only to the original contract made between the persons betting, and not to such a contract as was made here between the plaintiff and defendant.
" Bowen, L. J., says much to the same effect at page 367: "Now with respect to the principle involved in this case, it is to be observed that the original contract of betting is not an illegal one, but only one which is void.
If the person who has betted pays his bet, he does nothing wrong; he only waives a benefit which the statute has given to him, and Confers a good title to the money on the person to whom he pays it.
Therefore when the bet is paid the transaction is completed, and when it is paid to an agent it cannot be contended that it is not a good payment for his prin cipal. .
So much, therefore, for the principle governing this case.
As to the authorities, the cases of Sharp vs Taylor , Johnson vs Lansley (12 C. B. 468), and Beeston vs Beeston (I exhibit D. 13), all go to shew that this action is maintainable, and the only authority the other way is that of Beyer vs Adams , and that case cannot be supported, and is not law.
" This case lays down the correct principle and is supported by earlier authorities.
The decision in Partridge vs Mallandaine (1) is to the effect that persons receiving profits from betting systematically carried on by them are chargeable with income tax on such profits in respect of a " vocation " under 5 & 6 Vict.
c. 35 (the Income Tax Act) Schedule D. Hawkins, J., rejecting the argument that the (1) 420 profession of bookmakers is not a calling within the meaning of the Income Tax Act, makes the following observations, at page 278: "Mere betting is not illegal.
It is perfectly lawful for a man to bet if he likes.
He may, however, have a difficulty in getting the amount of the bets from dishonest persons who make bets and will not pay.
" The decision in Hyams vs Stuart King (1) deals with the problem of the legality of a fresh agreement between parties to a wager for consideration.
There, two bookmakers had betting transactions together, which resulted in the defendant giving the plaintiff a cheque for the amount of bets lost to him.
At the request of the defendant, the cheque was held over by the plaintiff for a time, and part of the amount of the cheque was paid by the defendant.
Subsequently a fresh verbal agreement was come to between the parties, by which, in consideration of the plaintiff holding over the cheque for a further time and refraining from declaring the defendant a defaulter and thereby injuring him with his customers, the defendant promised to pay the balance owing in a few days.
The balance was never paid and the plaintiff filed a suit to recover the money on the basis of the fresh verbal agreement.
The Court of Appeal, by a majority, Fletcher Moulton, L. J., dissenting, held that the fresh verbal agreement was supported by good consideration and therefore the plaintiff was entitled to recover the amount due to him.
At page 705, Sir Gorell Barnes posed the following three questions to be decided in the case: (1) Whether the new contract was itself one which falls within the provisions of 8 & 9 Vict.
c. 109, section 18; (2) whether there was any illegality affecting that contract; and (3) whether that contract was a lawful contract founded on good consideration.
Adverting to the second question, which is relevant to the present case, the President made the following observations at page 707: ". . . it is to be observed that there was nothing illegal in the strict sense in making the bets.
(1) 421 They were merely void under 8 & 9 Vict.
c. 109, and there would have been no illegality in paying them.
There is no doubt whatever about this.
There was also nothing illegal in giving the cheque nor would there have been any illegality in paying it, though the defendants could not have been compelled by the plaintiff to pay it, because by statute it was to be deemed and taken to have been made and given for an illegal consideration, and therefore void in the hands of the plaintiff. .
The statutes do not make the giving or paying of the cheque illegal, and impose no penalty for so doing.
Their effect and intention appear only, so far as material, to be that gaming or wagering contracts cannot be enforced in a Court of Law or Equity. . . " The view expressed by the President is therefore consistent with the view all along accepted by the Courts in England.
This case raised a now problem, namely, whether a substituted agreement for consideration between the same parties to the wager could be enforced, and the majority held that it could be enforced, while Fletcher Moulton, L. J., recorded his dissent.
We shall have occasion to notice the dissenting view of Fletcher Moulton, L. J., at a later stage.
The aforesaid decisions establish the proposition that in England a clear distinction is maintained between a contract which is void and that which is illegal and it has been held that though a wagering contract is void and unenforceable between parties, it is not illegal and therefore it does not affect the validity of a collateral contract. 'The same principle has been applied to collateral contracts of partnership also.
In Thwaites vs Coulthwaite (1) the question of legality of a partnership of bookmaking and betting was raised.
There the plaintiff and defendant were partners in a bookmakers and betting business, which was carried on by the defendant; the plaintiff claimed an account of the profits of the partnership, and the defendant contended that, having regard to the nature of the business, no such relief could be obtained.
Chitty, J., rejected the (1) 422 plea holding that the partnership was valid, for the following reasons, among others, and stated at page 498: " The Gaming Act, 1845 (8 & 9 Vict. c. 109), did not make betting illegal; this statute, as is well known, merely avoided the wagering contract.
A man may make a single bet or many bets; he may habitually bet; he may carry on a betting or bookmakers business within the statute, provided the business as carried on by him does not fall within the prohibition of the Betting Act, 1853.
" In Thomas vs Day (1), a similar question arose.
There the plaintiff claimed an account and money due under a partnership which he alleged had existed between himself and the defendant to take an office and carry on a betting business as bookmakers.
Darling, J., held that a partnership to carry on the business of a bookmaker was not recognized by law, that even if there was such a legal partnership, an action for account would not lie as between the two bookmakers founded on betting and gambling transactions.
This judgment certainly supports the appellant; but the learned Judge did not take notice of the previous decision on the subject and the subsequent decisions have not followed it.
When a similar objection was raised in Brookman vs Mather (2), Avery, J., rejected the plea and gave a decree to the plaintiff.
There the plaintiff and the defendant entered into a partnership to carry on a betting business.
Two years thereafter, in 1910, the partnership was dissolved and a certain amount was found due to the plaintiff from the defend ant and the latter gave the former a promissory note for that amount.
A suit was filed for the recovery of the amount payable under the promissory note.
Avery, J., reiterated the principle that betting was not illegal per se.
When the decision in Thomas vs Day(1) was cited in support of the broad principle that the betting business could not be recognized as legal in a Court of Justice, the learned Judge pointed out that that case was decided without reference to Thwaites (1) (2) 423 vs Coulthwaite (1).
This judgment, therefore, corrected the deviation made by Darling, J., in Thomas vs Day(2 ) and put the case law in line with earlier precedents.
The earlier view was again accepted and followed in Keen vs Price (3) where an action by one of the partners in a bookmakers and betting business against the other for an account of the partnership dealings was entertained.
But the Court gave liberty to the defendant to object to repaying anything which represented profits in such business.
The reason for this apparent conflict between the two parts of the decision is found in the express terms of the provisions of the Gaming Act of 1892.
Commenting upon Thwaites vs Coulthwaite (1) in which Chitty, J., held that such an action would lie for an account of the profits of the partnership, Sargant, J., pointed out that in that case the Gaming Act, 1892, was not referred to.
At page 101, the learned Judge says: " Curiously enough, in that case the Gaming Act, 1892, was not referred to, and although the decision is a good one on the general law, it cannot be regarded as a decision on the Act of 1892.
" This judgment confirms the principle that a wager is not illegal, but states that after the Gaming Act, 1892, a claim in respect of that amount even under a collateral agreement is not maintainable.
In O 'Connor and Ould vs Ralston (4), the plaintiff, a firm of bookmakers, filed a suit claiming from the defendant the amount of five cheques drawn by him upon his bank in payment of bets which he had lost to them and which had been dishonoured on presentation.
Darling, J., held that as the plaintiffs formed an association for the purpose of carrying on a betting business, the action would not lie.
In coming to that conclusion the learned Judge relied upon the dissenting view of Fletcher Moulton, L. J., in Hyams vs Stuart King We shall consider that decision at a later stage.
(1) (2) (3) (4) (5) 424 The opinion of Darling, J., was not accepted in Jeffrey Co. vs Bamford (1) wherein McCardie, J., held that a partnership for the purpose of carrying on a betting and bookmakers business is not per se illegal or impossible in law.
The learned Judge says at page 356: ". . betting or wagering is not illegal at common law. .
It has been repeatedly pointed out that mere betting on horse races is not illegal ".
The learned Judge, after noticing the earlier decisions already considered by us and also some of the observations of Fletcher Moulton, L. J., came to the conclusion that the partnership was not illegal.
We shall now scrutinize the decision in Hill vs William Hill (I) to see whether there is any substance in the argument of the learned Counsel for the appellant that this decision accepted the dissenting view of Fletcher Moulton, L. J., in Hyams vs Stuart King (3) or the view of Darling, J., in Thomas vs Day (4) and O 'Connor and Ould vs Ralston (5).
The facts in that case were: The appellant had betting transactions with the respondents, a firm of bookmakers.
As a result of those transactions, the appellant lost pound 3,635 12 6.
As the appellant was unable to pay the amount, the matter was referred to the committee of Tattersalls, who decided that the appellant should pay the respondents a sum of pound 635 12 6 within fourteen days and the balance by monthly instalments of pound 100.
It was laid down that if the appellant failed to make those payments, he was liable to be reported to the said committee which would result in his being warned off Newmarket Heath and posted as defaulters The appellant informed the respondents that he was unable to pay the pound 635 12 6 within the prescribed time and offered to send them a cheque for that sum post dated October 10, 1946, and to pay the monthly instalments of pound 100 thereafter.
On the respondents agreeing to that course, the appellant sent a post dated cheque to (1) (2) (3) (4) (5) 425 them and also enclosed a letter agreeing to pay the monthly instalments.
As the post dated cheque was dishonoured and the appellant failed to pay the entire amount, the respondents filed a suit claiming the amount due to them under the subsequent agreement.
The respondents contended that the sum the appellant had promised to pay was not money won upon a wager within the meaning of the second branch of section 18, but was money due under a new lawful and enforceable agreement and that even if the sum was to be regarded as won on a wager, the agreement was outside the scope of the second branch of section 18 of the Gaming Act, 1845.
The House of Lords by a majority of 4 to 3 held that the agreement contained a new promise to pay money won upon a wager and that the second branch of section 18 applied to all suits brought to recover money alleged to have been won on a wager and therefore the contract was unenforceable.
In coming to that conclusion, Viscount Simon, one of the Judges who expressed the majority view, agreed with Fletcher Moulton, L. J., in holding that the bond constituted an agreement to pay money won upon a wager, notwithstanding the new consideration, and was thus unenforceable under the second limb of section 18.
In Hyams vs Stuart King(1), the facts of which we have already given, the suit was filed on the basis of a subsequent agreement between the same parties to the wager.
The majority of the Judges held that the subsequent agreement was supported by good consideration, while Fletcher Moulton, L. J., dissented from that view.
The basis for the dissenting view is found at page 712.
After reading section 18 of the Gaming Act, 1845, the learned Judge proceeded to state: " In my opinion too little attention has been paid to the distinction between the two parts of this enactment, and the second part has been treated as being in effect merely a repetition of the first part.
I cannot accept such an interpretation.
So far as the actual wagering contract is concerned, the earlier provision is ample.
It makes that contract absolutely void, (1) 54 426 and it would be idle to enact in addition that no suit should be brought upon a contract that had thus been rendered void by statute.
The language of the later provision is in my opinion much wider.
It provides with complete generality that no action shall be brought to recover anything alleged to be won upon any wager, without in any way limiting the application of the provision to the wagering contract itself.
In other words, it provides that wherever the obligation under a contract is or includes the payment of money won upon a wager, the Courts shall not be used to enforce the performance of that part of the obligation ".
These observations must be understood in the context of the peculiar facts of that case.
The suit was between the parties to the wager.
The question was whether the second part of the concerned section was comprehensive enough to take in an agreement to recover the money won upon a wager within the meaning of that part.
Fletcher Moulton, L. J., held that the second part was wide and comprehensive enough to take in such a claim, for the suit was, though on the basis of a substituted agreement, for the recovery of the money won upon a wager within the meaning of the words of that part of the section.
The second question considered by the learned Judge was whether the defendants ' firm which was an association formed for the purpose of a betting business was a legal partnership under the English Law.
The learned Judge relied upon the Gaming Act.
1892 in holding that it was not possible under the English law to have any such partnership.
At page 718, the learned Judge observed : In my opinion no such partnership is possible under English law.
Without considering any other grounds of objection to its existence, the language of the Gaming Act, 1892, appears to me to be sufficient to establish this proposition.
It is essential to the idea of a partnership that each partner is an agent.
of the partnership and (subject to the provisions of the partnership deed) has authority to make payments on its behalf for partnership purposes, for which he is entitled 427 to claim credit in the partnership accounts and thus receive, directly or indirectly, repayment.
But by the Gaming Act, 1892, all promises to pay any person any sum of money paid by him in respect of a wagering contract are null and void.
These words are wide enough to nullify the fundamental contract which must be the basis of a partnership, and therefore in my opinion no such partnership is possible, and the action for this reason alone was wrongly framed and should have been dismissed with costs ".
It would be seen from the said observations that Fletcher Moulton, L. J., laid down two propositions: (i) The second part of section 18 of the Gaming Act, 1845, was comprehensive enough to take in a claim for the recovery of money alleged to be won upon a wager though the said claim was based upon a substituted contract between the same parties; and (ii) by reason of the wide terms of the Gaming Act, 1892, even the fundamental contract, which was the basis of a partnership, was itself a nullity.
The learned Lord Justice did not purport to express any opinion on the effect of a void contract of wager on a collateral contract.
In Hill 's case (1) the only question that arose was whether the second part of section 18 was a bar to the maintainability of a suit under a substituted agreement for the recovery of money won upon a wager.
The majority accepted the view of Fletcher Moulton, L. J., on the first question.
The second question did not arise for consideration in that case.
The House of Lords neither expressly nor by necessary implication purported to hold that collateral contract of either partnership or agency was illegal; and that the long catena of decisions already referred to by us were wrongly decided.
This judgment does not therefore support the contention of the learned Counsel for the appellant.
The legal position in India is not different.
Before the Act for Avoiding Wagers, 1848, the law relating to wagers that was in force in British India was the common law of England.
The Judicial Committee in Ramloll Thackoorseydass vs Soojumnull Dhondmull (2) (1) (2) (1848) 4 M.I.A. 339.
428 expressly ruled that the common law of England was in force in India and under that law an action might be maintained on a wager.
The wager dealt with in that case was upon the average price which opium would fetch at the next Government sale at Calcutta.
Lord Campbell in rejecting the plea that the wager was illegal observed at page 349: " The Statute, 8 & 9 Viet.
c. 109, does not extend to India ' and although both parties on the record are Hindoos, no peculiar Hindoo law is alleged to exist upon the subject; therefore this case, must be decided by the common law of England ".
It is a direct decision on the point now mooted before us and it is in favour of the respondents.
Again the Privy Council considered a similar question in Doolubdass Pettamberdass vs Ramloll Thackoorseydass and others There again the wager was upon the price that the Patna opium would fetch at the next Government sale at Calcutta.
There the plaintiff instituted a suit in the Supreme Court of Bombay in January, 1847, to recover the money won on a wager.
After the suit was filed, Act 21 of 1848 was passed by the Indian Legislature where under all agreements whether made in speaking, writing, or otherwise, by way of gaming or wagering, would be null and void and no suit would be allowed in any Court of Law or Equity for recovering any sum of money or valuable thing alleged to be won on any wager.
This section was similar in terms to that of section 18 of the Gaming Act, 1845.
Their Lordships held that the contract was not void and the Act 21 of 1848 would not invalidate the contracts entered into before the Act came into force.
Adverting to the next argument that under Hindu Law such contracts were void, they restated their view expressed in Ramloll Thackoorserdas vs Soojumnull Dhondmull (2) thus at page 127: " Their Lordships have already said that they are not satisfied from the authorities referred to, that such is the law among the Hindoos. " The Judicial Committee again restated the law in similar terms in Raghoonauth Sahoi Chotayloll vs (1) (1850) 5 M.I.A. 109.
(2) (1848) 4 M.I.A. 339.
429 Manickchund and Kaisreechund (1).
There the Judicial Committee held that a wagering contract in India upon the average price opium would fetch at a future Government sale, was legal and enforceable before the passing of the Legislative Act, No. 21 of 1848.
The aforesaid three decisions of the Privy Council clearly establish the legal position in India before the enactment of the Act 21 of 1848, namely, that wagering contracts were governed by the common law of England and were not void and therefore enforceable in Courts.
They also held that the Hindu Law did not prohibit any such wagers.
The same view was expressed by the Indian Courts in cases decided after the enactment of the Contract Act.
An agent who paid the amount of betting lost by him was allowed to recover the same from his principal in Pringle vs Jafar Khan (2).
The reason for that decision is given at page 445: " There was nothing illegal in the contract; betting at horse races could not be said to be illegal in the sense of tainting any transaction connected with it.
This distinction between an agreement which is only void and one in which the consideration is also unlawful is made in the Contract Act.
Section 23 points out in what cases the consideration of an agreement is unlawful, and in such cases the agreement is also void, that is, not enforceable at law.
Section 30 refers to cases in which the agreement is only void, though the consideration is not necessarily unlawful.
There is no reason why the plaintiff should not recover the sum paid by him. .
" In Shibho Mal vs Lachman Das (3) an agent who paid the losses on the wagering transactions was allowed to recover the amounts he paid from his principal.
In Beni Madho Das vs Kaunsal Kishor Dhusar (4) the plaintiff who lent money to the defendant to enable him to pay off a gambling debt was given a decree to recover the same from the defendant.
Where two partners entered into a contract of wager with a third (1) (1856) 6 M.I.A. 251.
(3) All.
(2) All.
(4) All.
430 party and one partner had satisfied his own and his co partner 's liability under the contract, the Nagpur High Court, in Md. Gulam Mustafakhan vs Padamsi (1) held that the partner who paid the amount could legally claim the other partner 's share of the loss.
The learned Judge reiterated the same principle accepted in the decisions cited supra, when he said at page 49: " Section 30 of the does not affect agreements or transactions collateral to wagers. .
" The said decisions were based upon the well settled principle that a wagering contract was only void, but not illegal, and therefore a collateral contract could be enforced.
Before closing this branch of the discussion, it may be convenient to consider a subsidiary point raised by the learned Counsel for the appellant that though a contract of partnership was not illegal, in the matter of accounting, the loss paid by one of the partners on wagering transactions, could not be taken into consideration.
Reliance is placed in support of this contention on Chitty 's Contract, p. 495, para. 908, which reads: " Inasmuch as betting is not in itself illegal, the law does not refuse to recognise a partnership formed for the purpose of betting.
Upon the dissolution of such a partnership an account may be ordered.
Each partner has a right to recover his share of the capital subscribed, so far as it has not been spent; but he cannot claim an account of profits or repayments of amounts advanced by him which have actually been applied in paying the bets of the partnership.
" In support of this view, two decisions are cited.
They are: Thwaites vs Coulthwaite (2 ) and Saffery vs Mayer(3).
The first case has already been considered by us.
There, Chitty, J., in giving a decree for account left open the question of the legality of certain transactions till it arose on the taking of the (1) A.I.R. (1923) Nag. 48.
(2) (3) 431 account.
Far from helping the appellant, the observations and the actual decision in that case support the respondents ' contention.
The reservation of the question of particular transactions presumably related only to the transactions prohibited by the Betting Act, 1853.
Such of the transactions which were so prohibited by the Betting Act would be illegal and therefore the contract of partnership could not operate on such transactions.
The case of Saffery vs Mayer(1) related to a suit for recovery of money advanced by one person to another for the purpose of betting on horses on their joint account.
The appellate Court held that by reason of the provisions of the Gaming Act, 1892, the action was not maintainable.
This decision clearly turned upon the provisions of the Gaming, Act, 1892.
Smith, M. R., observed that the plaintiff paid the money to the defendant in respect of a contract rendered null and void and therefore it was not recoverable under the second limb of that section.
The other Lord Justices also based their judgments on the express words of the Gaining Act, 1892.
It will be also interesting to note that the Court of Appeal further pointed out that Chitty, J., in Thwaites ' Case(2) in deciding in the way he did omitted to consider the effect of the provisions of the Gaming Act, 1892, on the question of maintainability of the action before him.
The aforesaid passage in Chitty 's Contract must be understood only in the context of the provisions of the Gaming Act, 1892.
The aforesaid discussion yields the following results: (1) Under the common law of England a contract of wager is valid and therefore both the primary contract as well as the collateral agreement in respect thereof are enforceable; (2) after the enactment of the Gaming Act, 1845, a wager is made void but not illegal in the sense of being forbidden by law, and thereafter a primary agreement of wager is void but a collateral agreement is enforceable; (3) there was a conflict on the question whether the second part of section 18 of the Gaming Act, 1845, would cover a case for the recovery of money or valuable thing alleged to be won upon (1) (2) 432 any wager under a substituted contract between the same parties: the House of Lords in Hill 's Case,(1) had finally resolved the conflict by holding that such a claim was not sustainable whether it was made under the original contract of wager between the parties or under a substituted agreement between them; (4) under the Gaming Act, 1892, in view of its wide and comprehensive phraseology, even collateral contracts, including partnership agreements, are not enforceable; (5) section 30 of the is based upon the provisions of section 18 of the Gaming Act, 1845, and though a wager is void and unenforceable, it is not forbidden by law and therefore the object of a collateral agreement is not unlawful under section 23 of the Contract Act; and (6) partnership being an agreement within the meaning of section 23 of the , it is not unlawful, though its object is to carry on wagering transactions.
We, therefore, hold that in the present case the partnership is not unlawful within the meaning of section 23(A) of the Contract Act.
(ii) Public Policy: The learned Counsel for the appellant contends that the concept of public policy is very comprehensive and that in India, particularly after independence, its content should be measured having regard to political, social and economic policies of a welfare State, and the traditions of this ancient country reflected in Srutis, Smritis and Nibandas.
Before adverting to the argument of the learned Counsel, it would be convenient at the outset to ascertain the meaning of this concept and to note how the Courts in England and India have applied it to different situations.
Cheshire and Fifoot in their book on " Law of Contract ", 3rd Edn., observe at page " 280 thus: ' The public interests which is designed to protect are so comprehensive and heterogeneous, and opinions as to what is injurious must of necessity vary so greatly with the social and moral convictions, and at times even with the political views, of different judges, that it forms a treacherous and unstable (1) 433 ground for legal decision These questions have agitated the Courts in the past, but the present state of the law would appear to be reasonably clear.
Two observations may be made with some degree of assurance.
First, although the rules already established by precedent must be moulded to fit the new conditions of a changing world, it is no longer legitimate for the Courts to invent a new head of public policy.
A judge is not free to speculate upon what, in his opinion, is for the good of the community.
He must be content to apply, either directly or by way of analogy, the ' principles laid down in previous decisions.
He must expound, not expand, this particular branch of the law.
Secondly, even though the contract is one which prima facie falls under one of the recognized heads of public policy, it will not be held illegal unless its harmful qualities are indisputable.
The doctrine, as Lord Atkin remarked in a leading case, " should only be invoked in clear cases in which the harm to the public is substantially incontestable, and does not depend upon the idiosyncratic inferences of a few judicial minds . .
In popular language . the contract should be given the benefit of the doubt ".
" Anson in his Law of Contract states the same rule thus, at p. 216: "Jessel, M. R., in 1875, stated a principle which is still valid for the Courts, when he said: ' You have this paramount public policy to consider, that you are not lightly to interfere with the freedom of contract '; and it is in reconciling freedom of contract with other public interests which are regarded as of not less importance that the difficulty in these cases arises. .
We may say, however, that the policy of the law has, on certain subjects, been worked into a set of tolerably definite rules.
The application of these to particular instances necessarily varies with the conditions of the times and the progressive development of public opinion and morality, but, as Lord Wright has said public policy, like any other branch of the Common Law, ought to be, and I think is, governed by 55 434 the judicial use of precedents.
If it is said that rules of public policy have to be moulded to suit new conditions of a changing world, that is true; but the same is true of the principles of the Common Law generally.
" In Halsbury 's Laws of England, 3rd Edn., Vol. 8, the doctrine is stated at p. 130 thus: " Any agreement which tends to be injurious to the public or against the public good is void as being contrary to public policy. . . .
It seems, however, that this branch of the law will not be extended.
The determination of what is contrary to the so called policy of the law necessarily varies from time to time.
Many transactions are upheld now which in a former generation would have been avoided as contrary to the supposed policy of the law.
The rule remains, but its application varies with the principles which for the time being guide public opinion.
" A few of the leading cases on the subject reflected in the authoritative statements 'of law by the various authors may also be useful to demarcate the limits of this illusive concept.
Parke, B., in Egerton vs Brownlow(1), which is a leading judgment on the subject, describes the doctrine of public policy thus at p. 123: " 'I Public policy ' is a vague and unsatisfactory term, and calculated to lead to uncertainty and error, when applied to the decision of legal rights; it is capable of being understood in different senses; it may, and does, in its ordinary sense, mean I political expedience ', or that which is best for the common good of the community; and in that sense there may be every variety of opinion, according to education, habits, talents, and dispositions of each person, who is to decide whether an act is against public policy or not.
To allow this to be a ground of judicial decision, would lead to the greatest uncertainty and confusion.
It is the province of the statesman, and not the lawyer, to discuss, and of the Legislature to determine, what is best for the public good, and to provide for it by proper enactments.
It 1s the province of the judge (1) ; , 123; ; ,408. 435 to expound the law only; the written from the statutes; the unwritten or common law from the decisions of our predecessors and of our existing Courts, from text writers of acknowledged authority, and upon the principles to be clearly deduced from them by sound reason and just inference; not to speculate upon what is the best, in his opinion, for the advantage of the community.
Some of these decisions may have no doubt been founded upon the prevailing and just opinions of the public good ; for instance, the illegality of covenants in restraint of marriage or trade.
They have become a part of the recognised law, and we are therefore bound by them, but we are not thereby authorised to establish as law everything which we may think for the public good, and prohibit everything which we think otherwise.
" In Janson vs Driefontein Consolidated Mines, Ltd.(1) an action raised against British underwriters in respect of insurance of treasures against capture during its transit from a foreign state to Great Britain was resisted by the underwriters on the ground that the insurance was against public policy.
The House of Lords rejected the plea.
Earl of Halsbury, L.C., in his speech made weighty observations, which may usefully be extracted.
The learned Lord says at page 491: In treating of various branches of the law learned persons have analysed the sources of the law, and have sometimes expressed their opinion that such and such a provision is bad because it is contrary to public policy; but I deny that any Court can invent a new head of public policy ; so a contract for marriage brokerage, the creation of a perpetuity, a contract in restraint of trade, a gaming or wagering contract, or, what is relevant here, the assisting of the King 's enemies, are all undoubtedly unlawful things; and you may say that it is because they are contrary to public policy they are unlawful; but it is because these things have been either enacted or assumed to be by the common law unlawful, and not because a judge or Court have a right to declare that such and such (1) 436 things are in his or their view contrary to public policy.
Of course, in the application of the principles here insisted on, it is inevitable that the particular case must be decided by a judge; he must find the facts, and he must decide whether the facts so found do or do not come within the principles which I have endeavoured to describe that is, a principle of public policy, recognised by the law, which the suggested contract is infringing, or is supposed to infringe.
" These observations indicate that the doctrine of public policy is only a branch of common law and unless the principle of public policy is recognised by that law, Court cannot apply it to invalidate a contract.
Lord Lindley in his speech at p. 507 pointed out that public policy is a very unstable and dangerous foundation on which to build until made safe by decision.
A promise made by one spouse, after a decree nisi for the dissolution of the marriage has been pronounced, to marry a third person after the decree has been made absolute is not void as being against public policy: see Fender vs St. John Mildmay (1).
In that case Lord Atkin states the scope of the doctrine thus at p. 12: " In popular language, following the wise aphorism of Sir George Jessel cited above, the contract should be given the benefit of the doubt.
But there is no doubt that the rule exists.
In cases where the promise to do something contrary to public policy which for short I will call a harmful thing, or where the consideration for the promise is the doing or the promise to do a harmful thing a judge, though he is on slippery ground, at any rate has a chance of finding a footing. .
But the doctrine does not extend only to harmful acts, it has to be applied to harmful tendencies.
Here the ground is still less safe and more treacherous ".
Adverting to the observation of Lord Halsbury in Janson vs Driefontein Consolidated Mines Ltd. Lord Atkin commented thus, at page 11: ". . .
Lord Halsbury indeed appeared to decide that the categories of public policy are closed, (1) (2) 437 and that the principle could not be invoked anew unless the case could be brought within some principle of public policy already recognised by the law.
I do not find, however, that this view received the express assent of the other members of the House; and it seems to me, with respect, too rigid.
On the other hand, it fortifies the serious warning illustrated by the passages cited above that the doctrine should only be invoked in clear cases in which the harm to the public is substantially incontestable, and does not depend upon the idiosyncratic inferences of a few judicial minds ".
Lord Thankerton summarised his view in the following terms, at p. 23: " In the first place, there can be little question as to the proper function of the Courts, in questions of public policy.
Their duty is to expound, and not to expand, such policy.
Thai does not mean that they are precluded from applying ail existing principle of public policy to a new set of circumstances, where such circumstances are clearly within the scope of the policy.
Such a case might well arise in the case of safety of the State, for instance.
But no such case is suggested here.
Further, the Courts must be watchful not to be influenced by their view of what the principle of public policy, or its limits, should be ".
Lord Wright, at p. 38, explains the two senses in which the words " public policy" are used : " In one sense every rule of law, either common law or equity, which has been laid down by the Courts, in that course of judicial legislation which has evolved the law of this country, has been based on considerations of public interest or policy.
In that, sense Sir George Jessel, M. R., referred to the paramount public policy that people should fulfil their contracts.
But public policy in the narrower sense means that there are considerations of public interest which require the Courts to depart from their primary function of enforcing contracts, and exceptionally to refuse to enforce them.
Public policy in this sense is disabling 438 Then the noble Lord proceeds to lay down the following principles on which a judge should exercise this peculiar and exceptional jurisdiction: (1) It is clear that public policy is not a branch of law to be extended ; (2) it is the province of the judge to expound the law only; (3) public policy, like any other branch of the common law, is governed by the judicial use of precedents ; and (4) Courts apply some recognised principles to the new conditions, proceeding by way of analogy and according to logic and convenience, just as Courts deal with any other rule of the common law.
The learned Lord on the basis of the discussion of case law on the subject observes at p. 40: " It is true that it has been observed that certain rules of public policy have to be moulded to suit now conditions of a changing world : but that is true of the principles of common law generally.
I find it difficult to conceive that in these days any new head of public policy could be discovered ".
The observations of the aforesaid Law Lords define the concept of public policy and lay down the limits of its application in the modern times.
In short, they state that the rules of public policy are ' well settled and the function of the Courts is only to expound them and apply them to varying situations.
While Lord Atkin does not accept Lord Halsbury 's dictum that the categories of public policy are closed, he gives a warning that the doctrine should be invoked only in clear cases in which the harm to the public is substantially incontestable, Lord Thankerton and Lord Wright seem to suggest that the categories of public policy are well settled and what the Courts at best can do is only to apply the same to new set of circumstances.
Neither of them excludes the possibility of evolving a new bead of public policy in a changing world, but they could not conceive that under the existing circumstances any such head could be discovered.
Asquith, L. J., in Monkland vs Jack Barclay Ltd. (1) restated the law crisply at p. 723: "The Courts have again and again said, that where a contract does not fit into one or other of these (1) 439 pigeon holes but lies outside this charmed circle, the courts should use extreme reserve in holding a contract to be void as against public policy, and should only do so when the contract is incontestably and on any view inimical to the public interest ".
The Indian cases also adopt the same view.
A division bench of the Bombay High Court in Shrinivas Das Lakshminarayan vs Ram Chandra Ramrattandas observed at p. 20: " It is no doubt open to the Court to hold that the consideration or object of an agreement is unlawful on the ground that it is opposed to what the Court regards as public policy.
This is laid down in section 23 of the and in India therefore it cannot be affirmed as a matter of law as was affirmed by Lord Halsbury in Janson vs Driefontein Consolidated Mines, Limited at p. 491) that no Court can invent a new head of public policy, but the dictum of Lord Davey in the same case that " public policy is always an unsafe and treacherous ground for legal decision " may be accepted as a sound cautionary maxim in considering the reasons assigned by the learned Judge for his decision ".
The same view is confirmed in Bhagwant Genuji Girme vs
Gangabisan Ramgopal (2) and Gopi Tihadi vs Gokhei Panda (3).
The doctrine of public policy may be summarized thus: Public policy or the policy of the law is an illusive concept; it has been described as " untrustworthy guide ", " variable quality ", " uncertain one ", " unruly horse ", etc. ; the primary duty of a Court of Law is to enforce a promise which the parties have made and to uphold the sanctity of contracts which form the basis of society, but in certain cases, the Court may relieve them of their duty on a rule founded on what is called the public policy; for want of better words Lord Atkin describes that something done contrary to public policy is a harmful thing, but the doctrine is extended not only to harmful cases but also to harmful tendencies; this doctrine of public policy is only a branch of common law, and, (1) I.L.R. (2) I.L.R. 1941 Bom 71.
(3) I.L.R. 1953 Cuttack 558.
440 just like any other branch of common law, it is governed by precedents; the principles have been crystallized under different heads and though it is permissible for Courts to expound and apply them to different situations, it should only be invoked in clear and incontestable cases of harm to the public; though the heads are not closed and though theoretically it may be permissible to evolve a new head under exceptional circumstances of a changing world, it is advisable in the interest of stability of society not to make any attempt to discover new heads in these days.
This leads us to the question whether in England or in India a definite principle of public policy has been evolved or recognized invalidating wagers.
So far as England is concerned, the passages from text books extracted and the decisions discussed in connection with the first point clearly establish that there has never been such a rule of public policy in that country.
Courts under the common law ' of England till the year 1845 enforced such contracts even between parties to the transaction.
They held that wagers were not illegal.
After the passing of the English Gaming Act, 1845 (8 & 9 Vict. c. 109), such contracts were declared void.
Even so; the Courts held that though a wagering contract was void, it was not illegal and therefore an agreement collateral to the wagering contract could be enforced.
Only after the enactment of the Gaming Act, 1892 (55 Vict. c. 9), the collateral contracts also became unenforceable by reason of the express words of that Act.
Indeed, in some of the decisions cited supra the question of public policy was specifically raised and negatived by Courts: See Thacker vs Hardy (1); Hyams vs Stuart King (2) ; and Michael Jeffrey & Company vs Bamford (3).
It is therefore abundantly clear that the common law of England did not recognize any principle of public policy declaring wagering contracts illegal.
The legal position is the same in India.
The Indian Courts, both before and after the passing of the Act (1) (2) (3) 441 21 of 1848 and also after the enactment of the Contract Act, have held that the wagering contracts are not illegal and the collateral contracts in respect of GI.
them are enforceable.
We have already referred to these in dealing with the first point and we need not A,, cover the ground once again, except to cite a passage from the decision of the Judicial Committee in Ramloll Thackoorseydass vs Soojumnull Dhondmull (1), which is directly in point.
Their Lordships in considering the applicability of the doctrine of public policy to a wagering contract observed at p. 350: " We are of opinion, that, although, to a certain degree, it might create a temptation to do what was wrong, we are not to presume that the parties would commit a crime; and as it did not interfere with the performance of any duty, and as if the parties were not induced by it to commit a crime, neither the interests of individuals or of the Government could be affected by it, we cannot say that it is contrary to public policy.
" There is not a single decision after the above cited case, which was decided in 1848, up to the present day wherein the Courts either declared wagering contracts as illegal or refused to enforce any collateral contract in respect of such wagers, on the ground of public policy.
It may, therefore, be stated without any contradiction that the common law of England in respect of wagers was followed in India and it has always been held that such contracts, though void after the Act of 1848, were not illegal.
Nor the legislatures of the States excepting Bombay made any attempt to bring the law in India in line with that obtaining in England after the Gaming Act, 1892.
The Contract Act was passed in the year 1872.
At the time of the passing of the Contract Act, there was a Central Act, Act 21 of 1848, principally based on the English Gaming Act, 1845.
There was also the Bombay Wagers (Amendment) Act, 1865, amending the former Act in terms analogous to those later enacted by the Gaming Act, 1892.
Though the Contract (1) (1848) 4 M.I.A. 339.
56 442 Act repealed the Act 21 of 1848, it did not incorporate in it the provisions similar to those of the Bombay Act; nor was any amendment made subsequent to the passing of the English Gaming Act, 1892.
The legislature must be deemed to have had the knowledge of the state of law in England, and, therefore, we may assume that it did not think fit to make wagers illegal or to hit at collateral contracts.
The policy of law in India has therefore been to sustain the legality of wagers.
The history of the law of gambling in India would also show that though gaming in certain respects was controlled, it has never been absolutely prohibited.
The following are some of the gambling Acts in India: The Public Gambling Act (111 of 1867); The Bengal Public Gambling Act (11 of 1867); The Bombay Prevention of Gambling Act (IV of 1887); Madhya Bharat Gambling Act(LI of 1949); Madhya Pradesh Public Gambling Act; Madras Gaming Act (111 of 1930); The Orissa Prevention of Gambling Act (XVII of 1955); the Punjab Public Gambling Act (111 of 1867); the Rajasthan Public Gambling Ordinance (Ordinance XLVIII of 1949) and the U.P. Public Gambling Act.
These Acts do not prohibit gaming in its entirety, but aim at suppressing gaming in private houses when carried on for profit or gain of the owner or occupier thereof and also gaming in public.
Gaming without contravening the provisions of the said Acts is legal.
Wherever the State intended to declare a particular form of gaming illegal, it made "an express statute to that effect: See section 29 A of the Indian Penal Code.
In other respects, gaming and wagering are allowed in India.
It is also common knowledge that horse races are allowed throughout India and the State also derives revenue therefrom.
The next question posed by the learned Counsel for the appellant is whether under the Hindu Law it can be said that gambling contracts are held to be illegal.
The learned Counsel relies upon the observations of this Court in The State of Bombay vs R. M. D. Chamarbaugwala (1).
The question raised in that case was (1) ; 443 whether the Bombay Lotteries and Prize ' Competition Control and Tax (Amendment) Act of 1952 extending the definition of " prize competition " contained in section 2(1)(d) of the Bombay Lotteries and Prize Competition Control and Tax Act of 1948, so as to include prize competition carried on through newspapers printed and published outside the State, was constitutionally valid, It was contended, inter alia, that the Act offended the fundamental right of the respondents, who were conducting prize competitions, under article 19(1) (g) of the Constitution and also violated the freedom of inter State trade under article 301 thereof This Court held that the gambling activities in their very nature and essence were extra commercium and could not either be trade or commerce within the meaning of the aforesaid provisions and therefore neither the fundamental right of the respondents under article 19(1)(g) or their right to freedom of interState trade under article 301 is violated.
In that context Das, C. J., has collected all the Hindu Law texts from Rig Veda, Mahabharata, Manu, Brihaspati, Yagnavalkya, etc., at pp.
922 923.
It is unnecessary to restate them here, but it is clear from those texts that Hindu sacred books condemned gambling in unambiguous terms.
But the question is whether those ancient text books remain only as pious wishes of our ancestors or whether they were enforced in the recent centu ries.
All the branches of the Hindu Law have not been administered by Courts in India; only questions regarding succession, inheritance, marriage, and religious usages and institutions are decided according to the Hindu Law, except in so far as such law has been altered by legislative enactment.
Besides the matters above referred to, there are certain additional matters to which the Hindu Law is applied to the Hindus, in some cases by virtue of express legislation and in others on the principle of justice, equity and good conscience.
These matters are adoption, guardianship, family relations, wills, gifts and partition.
As to these matters also the Hindu Law is to be applied subject to such alterations as have been made by legislative enactments: See Mulla 's Hindu Law, para.
444 3, p. 2.
In other respects the ancient Hindu Law was not enforced in Indian Courts and it may be said that they became obsolete.
Admittedly there, has not been a single instance in recorded cases holding gambling or wagering contracts illegal on the ground that they are contrary to public policy as they offended the principles of ancient Hindu Law.
In the circumstances, we find it difficult to import the tenets of Hindu Law to give a novel content to the doctrine of public policy in respect of contracts of gaming and wagering.
To summarize: The common law of England and that of India have never struck down contracts of wager on the ground of public policy ; indeed they have always been held to be not illegal notwithstanding the fact that the statute declared them void.
Even after the contracts of wager were declared to be void in England, collateral contracts were enforced till the passing of the Gamina Act of 1892, and in India, except in the State of Bombay, they have been enforced even after the passing of the Act 21 of 1848, which was substituted by section 30 of the Contract Act.
The moral prohibitions in Hindu Law texts against gambling were not only not legally enforced but were allowed to fall into desuetude.
In practice, though gambling is controlled in specific matters, it has not been declared illegal and there is no law declaring wagering illegal.
Indeed, some of the gambling practices are a perennial source of income to the State.
In the circumstances it is not possible to hold that there is any definite head or principle of public policy evolved by Courts or laid down by precedents which would directly apply to wagering contracts.
Even if it is permissible for Courts to evolve a new head of public policy under extraordinary circumstances giving rise to incontestable harm to the society, we cannot say that wager is one of such instances of exceptional gravity, for it has been recognized for centuries and has been tolerated by the public and the State alike.
If it has any such tendency, it is for the legislature to make a law prohibiting such contracts and declaring them illegal and not for this Court to resort to judicial legislation.
445 Re. Point 3 Immorality: The argument under this head is rather broadly stated by the learned Counsel for the appellant.
The learned counsel attempts to draw an analogy from the Hindu Law relating to the doctrine of pious obligation of sons to discharge their father 's debts and contends that what the Hindu Law considers to be immoral in that context may appropriately be applied to a case under section 23 of the Contract Act.
Neither any authority is cited nor any legal basis is suggested for importing the doctrine of Hindu Law into the domain of contracts.
Section 23 of the Contract Act is inspired by the common law of England and it would be more useful to refer to the English Law than to the Hindu Law texts dealing with a different matter.
Anson in his Law Of Contracts states at p. 222 thus : " The only aspect of immorality with which Court of Law have dealt is sexual immorality. . .
" Halsbury in his Laws of England, 3rd Edn., Vol.
makes a similar statement, at p. 138: " A contract which is made upon an immoral consideration or for an immoral purpose is unenforceable and there is no distinction in this respect between immoral and illegal contracts.
The immorality here alluded to is sexual immorality.
" In the Law of Contract by Cheshire and Fifoot, 3rd Edn., it is stated at p. 279: " Although Lord Mansfield laid it down that a contract contra bonos mores is illegal, the law in this connection gives no extended meaning to morality but concerns itself only with what is sexually reprehensible." In the book on the by Pollock and Mulla it is stated at p. 157: " The epithet " immoral " points, in legal usage, to conduct or purposes which the State, though disapproving them, is unable, or not advised, to visit with direct punishment." The learned authors confined its operation to acts which are considered to be immoral according to the standards of immorality approved by Courts.
The case law both in England and India confines the operation of the doctrine to sexual immorality.
To cite 446 Only some instances: settlements in consideration of encubinage, contracts of sale or hire of things to be used in a brothel or by a prostitute for purposes incidental to her profession, agreements to pay money for future illicit cohabitation, promises in regard to marriage for consideration, or contracts facilitating divorce are all held to be void on the ground that the object is immoral.
The word " immoral " is a very comprehensive word.
ordinarily it takes in every aspect of personal conduct deviating from the standard norms of life.
It may also be said that what is repugnant to good conscience is immoral.
Its varying content depends upon time, place and the stage of civilization of a particular society.
In short, no universal standard can be laid down and any law based on such fluid concept defeats its own purpose.
The provisions of section 23 of the Contract Act indicate the legislative intention to give it a restricted meaning.
Its juxtaposition with an equally illusive concept, public policy, indicates that it is used in a restricted sense; otherwise there would be overlapping of the two concepts.
In its wide sense what is immoral may be against public policy, 'for public policy covers political, social and economic ground of objection.
Decided cases and authoritative text book ' writers, therefore, confined it, with every justification, only to sexual immorality.
The other limitation imposed on the word by the statute, namely, " the court regards it as immoral ", brings out the idea that it is also a branch of the common law like the doctrine of public policy, and, therefore, should be confined to the Principles recognized and settled by Courts.
Precedents confine the said concept only to sexual immora lity and no case has been brought to our notice where it has been applied to any head other than sexual immorality.
In the circumstances, we cannot evolve a new head so as to bring in wagers within its fold.
Lastly it is contended by the learned Counsel for the appellant that wager is extra commercium and therefore there cannot be in law partnership for wager within the meaning of section 4 of the Partnership Act; for partnership under that section is relationship between 447 persons who have agreed to share the profits of a business.
Reliance is placed in respect of this contention on the decision of this Court in The State of Bombay vs R. M. D. Chamarbaugwala (1).
This question was not raised in the pleadings.
No issue was framed in respect of it.
No such case was argued before the learned Subordinate Judge or in the High Court; nor was this point raised in the application for certificate for leave to appeal to the Supreme Court filed in the High Court.
Indeed, the learned Advocate appearing for the appellant in the High Court stated that his client intended to raise one question only, namely, whether the partnership formed for the purpose of carrying on a business in differences was illegal within the meaning of section 23 of the Contract Act.
Further this plea was not specifically disclosed in the statement of case filed by the appellant in this Court.
If this contention had been raised at the earliest point of time, it would have been open to the respondents to ask for a suitable amendment of the plaint to sustain their claim.
In the circumstances, we do not think that we could with justification allow the appellant to raise this new plea for the first time before us, as it would cause irreparable prejudice to the respondents.
We express no opinion on this point.
For the foregoing reasons we must hold that the suit partnership was not unlawful within the meaning of section 23 of the .
In the result, the appeal fails and is dismissed with costs.
Appeal dismissed.
| The question for determination in this appeal was whether an agreement of partnership with the object of entering into wagering transactions was illegal within the meaning of section 23 Of the Indian Contract Act.
The appellant and the respondent No. 1 entered into a partnership with the object of entering into forward contracts for the purchase and sale of wheat with two other firms and the agreement between them was that the respondent would enter into the contracts on behalf of the partnership and the profit or loss would be shared by the parties equally.
The transactions resulted in loss and the respondent paid the entire amount due to the third parties.
On the appellant denying his liability for the half of the loss, the respondent sued him for the recovery of the same and his defence, inter alia, was that the agreement to enter into the wagering contracts was unlawful under section 23 Of the Contract Act.
The trial Court dismissed the suit.
The High Court on appeal held that though the wagering contracts were void under section 30 Of the Indian Contract Act, the object of the partnership was not unlawful within the meaning of the Act and decreed the suit.
It was contended on behalf of the appellant (1) that a wagering contract being void under section 30 Of the Contract Act, was also forbidden by law within the 407 meaning of S.23 Of the Act, that (2) the concept of public policy was very comprehensive in India since the independence, and such a contract would be against public Policy, (3) that wagering contracts were illegal under the Hindu Law and (4) that they were immoral, tested by the Hindu Law doctrine of pious obligation of sons to discharge the father 's debts.
Held, that the contentions raised were unsustainable in law and must be negatived.
Although a wagering contract was void and unenforceable under section 30 Of the Contract Act, it was not forbidden by law and an agreement collateral to such a contract was not unlawful within the meaning of section 23 Of the Contract Act.
A partnership with the object of carrying on wagering transactions was not, therefore, hit by that section.
Pringle vs Jafer Khan, All. 443, Shibho Mal vs Lachman Das, All. 165, Beni Madho Das vs Kaunsal Kishor Dhusar, All.
452, Md. Gulam Mustafakhan vs Padamsi, A.I.R. (1923) Nag.
48, approved.
ThacKer vs Hardy, , Read vs Anderson, , Bridger vs Savage, , Hyams vs Stuart King, , Thwaites vs Coulthwaite, , Brookman vs Mather, and Jaffrey & Co. vs Bamford, (1921) 2 K.B. 351, Ramloll Thackoorseydass vs Soojumnull Dhondmull, (1848) 4 M.l.A. 339, Doolubdas Pettamberdass vs Ramloll Thackoorseydass and Ors.
(1850) 5 M.I.A. 109, Raghoonauth Shoi Chotayloll vs Manickchund and Kaisreechund, (1856) 6 M.I.A. 251, referred to.
Hill vs William Hill, , considered.
The doctrine of public policy was only a branch of the com mon law and just like its any other branch, it was governed by precedents ; its principles had been crystallised under different heads and though it was permissible to expound and apply them to different situations, it could be applied only to clear and undeniable cases of harm to the public.
Although theoretically it was permissible to evolve a new head of public policy in exceptional cirumstances, such a course would be inadvisable in the interest of stability of society.
Shrinivas Das Lakshminarayan vs Ram Chandra Ramrattandas, I.L.R. , Bhagwanti Genuji Girme vs Gangabisan Ramgopal, I.L.R. , and Gopi Tihadi vs Gokhei Panda, I.L.R. 1953 Cuttack 558, approved.
Egerton vs Brownlow, ; ; , Janson vs Driefontein Consolidated Mines, Ltd., , Fender vs St. John Mildmay, (1938) A.C. :1 and Monkland vs Jack Barclay Ltd., , referred to.
Like the common law of England, which did not recognise any principle of public policy declaring wagering contracts illegal, the Indian Courts, both before and after the passing of Of 1848 and also after the enactment of the , held that wagering contracts were not illegal as being contrary to public policy and collateral contracts in respect of them were enforceable in law.
Ramloll Thackoorseydass vs Soojumnull Dhondmull, (1848) 4 M.I.A. 339, referred to.
Gambling or wagering contracts were never declared to be illegal by courts in India as being contrary to public policy as offending the principles of ancient Hindu Law and it was not possible to give a novel content to that doctrine in respect of gaming and wagering contracts.
The State of Bombay vs R. M. D. Chamaybaugwala, ; , considered.
The common law of England and that of India never struck down contracts of wager on the ground of public policy and such contracts had always been held not to be illegal although the statute declared them to be void.
The moral prohibitions in Hindu Law texts against gambling were not legally enforced but were allowed to fall into desuetude and it was not possible to hold that there was any definite head or principle of public policy evolved by courts or laid down by precedents directly applicable to wagering contracts.
There was neither any authority nor any legal basis for importing the doctrine of Hindu Law relating to the pious obligation of sons to pay the father 's debt into the dominion of ' contracts.
Section 23 Of the Contract Act was inspired by the common law of England and should be construed in that light. ' The word " immoral " was very comprehensive and varying in its contents and no universal standard could be laid down.
Any law, therefore, based on such fluid concept would defeat its purpose.
The provisions of section 23 of the indicated that the Legislature intended to give that word a restricted meaning.
The limitation imposed on it by the expression " the Court regards it as immoral " clearly indicated that it was also a branch of the common law and should, therefore, be confined to principles recognised and settled by courts.
judicial decisions confined it to sexual immorality, and wager could not be brought in as new head within its fold.
|
Summarize this legal judgement text concisely | Appeals Nos. 231 and 232 of 1958.
Appeal by special leave from the judgment and order dated October 21, 1957, of the Madras High Court in Writ Petitions Nos. 675 and 676 of 1957.
R. Ganapathy Iyer, section B. Adityan and G. Gopalakrishnan, for the appellant.
A. N. Sinha and P. K. Mukherjee, for respondent No. 1. 1958.
November 24.
, J. These appeals raise a question of considerable importance as to the scope of an enquiry in an election petition wherein election is called in question under section 100(1)(c) of the Representation of the People Act, 1951 (43 of 1951), on the ground that a nomination paper had been improperly ' rejected.
625 The facts are that during the general elections which were held in 1957 six persons including the,, appellant, Veluswami Thevar, the second respondent ' Chellapandian, and the fourth respondent, Arunachalam, were nominated for election to the Legislative Assembly of the State of Madras from Alangulam Constituency in the District of Tirunelveli At the time of the scrutiny which was on February 1, 1957, Chellapandian raised an objection to the nomination of Arunachalam on the ground that he was the Head Master of the National Training School, Tiruchendur, which was a Government aided school, and that he was therefore disqualified under section 7, cls.
(d) and (e) of the Representation of the People Act, 1951 (hereinafter referred to as the Act), as holding an office of profit under the Government.
In upholding this objection, the returning officer observed: " Sri section Arunachalam is not present at the time of scrutiny of nominations nor any authorised agent of his could take notice of the objection and file a reply. ' In view of the objection which has not been cleared by Sri section Arunachalam by satisfying me that he is not holding an office of profit in a concern in which the State Government has financial interest, the objection is upheld and Sri section Arunachalam is disqualified under Sections 7(d) and (e) of Act 43 of 1951.
Accordingly his nomination is rejected.
" The five nomination papers were accepted; two of the candidates subsequently withdrew from the election; the other three went to the polls, and on March 10, 1957, the appellant who secured the largest number of votes was declared elected.
On April 18, 1957, Raja Nainar, the first respondent, who was not a candidate but a voter filed E. P. No. 109 of 1957 praying that the election of the appellant be declared void on the ground that the rejection of the nomination paper of Arunachalam was improper, because he had ceased to be a Head Master at the time of his nomination, and that further the institution was a private one.
The appellant filed a written statement in which he pleaded that Arunachalam was 79 626 not qualified to be chosen not merely on the ground put forward by Chellapandian before the returning officer but also on the grounds that he was interested as a partner in contracts for the execution of works for the Government, and that further he had entered into an agreement with the District Board, Chittoor, to serve as a teacher in that Board, and that his nomination paper was therefore rightly rejected.
Raja Nainar then came out with the application, 1.
A. No. 5 of 1957, out of which the present proceedings arise, to strike out the additional grounds of disquali fication raised in the statement of the appellant on the ground that the Tribunal had no jurisdiction to enquire into any ground of disqualification which was not taken before the returning officer, and that accordingly the new grounds put forward by the appellant should be struck out.
By its order dated August 17, 1957, the Tribunal held that the question to be decided by it was whether there was a valid nomination paper, and that to decide that, it could go into grounds other than those which were put forward before the returning officer, and, in that view, dismissed the application.
The correctness of this order was challenged by Raja Nainar in two Writ Petitions Nos. 675 and 676 of 1957, preferred under article 226.
Therein, he repeated his contention that it was not competent to the Tribunal to enquire into any but the grounds which had been put forward before the returning officer, and prayed that a writ of certiorari be issued to quash the order in 1.
A. No. 5 of 1957 and a writ of prohibition, to restrain the Tribunal from enquiring into the new grounds raised by the appellant.
These applications were heard by a Bench of the Madras High Court consisting of Rajagopalan and Rajagopals Ayyangar, JJ., who upheld the contention of the petitioner, and stated their conclusion in these terms: " We are clearly of opinion that the enquiry before the Tribunal must be restricted to the objections which the returning officer had to consider and decide, but not necessarily to the material placed 627 before the returning officer at the stage of the summary enquiry.
The Tribunal has jurisdiction to adjudicate upon the truth and validity of those objections on relevant material, even if that material be other than that placed before the returning officer.
The Tribunal has no jurisdiction to investigate the truth or validity of the objections which were not put forward before the returning officer, and which he had therefore no occasion to consider.
Once again we have to point out that we are discussing only the position of a candidate whose nomination was rejected, and not, for instance, that of a returned candidate." " A further objection was also taken before the learned judges that as the decision of the Election Tribunal was open to appeal under section 116A of the Act, the court should, in exercise of its discretion under article 226, decline to entertain writ petitions against interlocutory orders.
But the learned judge held that as the Tribunal had no jurisdiction to entertain grounds other than those which were put forward before the returning officer, writs could issue under article 226.
In the result, they quashed the order of the Election Tribunal in 1.
A. No. 5 of 1957, and issued a writ of Mandamus directing it to dispose of the application afresh in accordance with law as laid down in the judgment.
It is against this judgment that the present appeals have been preferred on leave granted by this Court under article 136, and the point that arises for decision is whether in an election petition questioning the propriety of the rejection of a nomination paper under section 100(1)(c) of the Act, it is open to the parties to raise grounds of disqualification other than those put forward before the returning officer.
It will be convenient at this stage to refer to the provisions of the Act hearing on this question.
Section 32 of the Act provides that, "Any person maybe nominated as a candidate for election to fill a seat if he is qualified to be chosen to fill that seat under the provisions of the Constitution and this Act.
" Under section 33(1), the candidate is to deliver to the returning officer a nomination paper completed in the 628 prescribed form and signed by the candidate and by an elector of the constituency as proposer.
Section 33 (4) enacts that, " On the presentation of a nomination paper, the returning officer shall satisfy himself that the names and electoral roll numbers of the candidate and his proposer as entered in the nomination paper are the same as those entered in the electoral rolls: Provided that the returning officer shall permit any clerical or technical error in the nomination paper in regard to the said names or numbers to be corrected in order to bring them into conformity with the corresponding entries in the electoral rolls; and where necessary, direct that any clerical or printing error in the said entries shall be overlooked.
" Section 35 provides inter alia that the returning officer shall cause to be affixed in some conspicuous place in his office a notice of the nomination containing descriptions similar to those contained in the nomination paper both of the candidate and of the proposer.
Section 36, omitting what is not material, is as follows: 36.
(1) " On the date fixed for the scrutiny of nominations under section 30, the candidates, their election agents, one proposer of each candidate, and one other person duly authorized in writing by each candidate, but no other person, may attend at such time and place as the returning officer may appoint; and the returning officer shall give them all reasonable facilities for examining the nomination papers of all candidates which have been delivered within the time and in the manner laid down in section 33.
(2) The returning officer shall then examine the nomination papers and shall decide all objections which may be made to any nomination, and may, either on such objection or on his own motion, after such summary inquiry, if any, as he thinks necessary, reject any nomination on any of the following grounds: (a) that the candidate either is not qualified or is disqualified for being chosen to fill the seat under any of the following provisions that may, be applicable, namely 629 Articles 84, 102, 173 and 191, Part 11 of this Act, or (b) that there has been a failure to comply With any of the provisions of section 33 or section 34; or (c) that the signature of the candidate or the pro.
poser on the nomination paper is not genuine. . . . . . . . . . (5) The returning officer shall hold the scrutiny on the date appointed in this behalf under clause (b) of section 30 and shall not allow any adjournment of the proceedings except when such proceedings are interrupted or obstructed by riot or open violence or by causes beyond his control: Provided that in case an objection is made the candidate concerned may be allowed time to rebut it not later than the next day but one following the date fixed for scrutiny, and the returning officer shall record his decision on the date to which the proceedings have been adjourned.
(6) The returning officer shall endorse on each nomination paper his decision accepting or rejecting the same ania, if the nomination paper is rejected, shall record in writing a brief statement of his reasons for such rejection.
" Then, we have section 100(1)(c), the construction of which is the main point for determination.
It is as follows: 100.
(1) " Subject to the provisions of subsection (2), if the Tribunal is of opinion (c) that any nomination has been improperly rejected ;. the Tribunal shall declare the election of the returned candidate to be void." Now, the whole controversy between the parties is as to what the expression " improperly rejected " in section 100(1)(c) means.
According to the appellant, when the nomination paper of a candidate who is under no such disqualification as is mentioned in section 36(2) has been rejected, that is improper rejection within section 100(1)(c).
Acoording to the respondent, when the 630 nomination paper of a candidate is rejected by the returning officer on the ground that he is subject to a specified disqualification, the rejection is improper, if it is found that that disqualification does not exist.
If the former view is correct, then the scope of an enquiry before the Tribunal must extend to all matters which are mentioned in section 36(2), and if the latter, then it must be limited to determining whether the ground on which the returning officer has rejected the nomination is well founded.
Now, to decide what the expression " improperly rejected " in section 100(1)(c) precisely imports, it is necessary to examine the relevant provisions of the Act bearing on the question and the setting of the above section therein.
Under section 32 of the Act, any person may be nominated as a candidate for election if he is duly qualified under the provisions of the Constitution and the Act.
Section 36(2) authorises the returning officer to reject any nomination paper on the ground that he is either not qualified, that is, under sections 3 to 7 of the Act, or is disqualified under the provisions referred to therein.
If there are no grounds for rejecting a nomination paper under section 36(2), then it has to be accepted, and the name of the candidate is to be included in a list.
Vide section 36(8).
Then, we come to section 100(1)(c) and section 100(1)(d)(1), which provide a remedy to persons who are aggrieved by an order improperly rejecting or improperly accepting any nomination.
In the context, it appears to us that the improper rejection or acceptance must have refer ence to section 36(2), and that the rejection of a nomination paper of a candidate who is qualified to be chosen for election and who does not suffer from any of the dis qualifications mentioned in section 36(2) would be improper within section 100(1)(c), and that, likewise, acceptance of a nomination paper of a candidate who is not qualified or who is disqualified will equally be improper under s.100(1)(d)(1).Section 32 confers a substantive right on a candidate to be chosen to the legislature subject only to the limitations enacted in articles 84, 102, 173 and 191 of the Constitution and sections 3 to 7 of the Act, and sections 36 and 100 provide the machinery for the exercise and enforcement of that right.
It is a sound 631 rule of construction that procedural enactments should be construed liberally and in such manner as to render the enforcement of substantive rights effective.
Readings section 100(1)(c) in the context of the whole enactment, we think that an enquiry before the Tribunal must embrace all the matters as to qualification and disqualification mentioned in section 36(2), and that it cannot be limited to the particular ground of disqualification which was taken before the returning officer.
It was contended for the respondent that the proceedings before the Tribunal are really by way of appeal against the decision of the returning officer, and that, therefore, the scope of the enquiry in the election petition must be co extensive with that before the returning officer, and must be limited to the ground taken before him.
It was argued that a decision could be said to be improper only with reference to a ground which was put forward and decided in a particular manner by the returning officer, and that therefore the expression " improperly rejected " would, in its true connotation, restrict the scope of the enquiry before the Tribunal to the ground taken before the returning officer.
We are unable to agree with this contention.
The jurisdiction which a Tribunal exercises in hearing an election petition even when it raises a question under section 100(1)(c) is not in the nature of an appeal against the decision of the returning officer.
An election petition is an original proceeding instituted by the presentation of a petition under section 81 of the Act.
The respondents have a right to file written statements by way of reply to it; issues have to be framed, and subject to the provisions of the Act, the provisions of the Code of Civil Procedure regulate the trial of the petition.
All the parties have the right to adduce evidence, and that is of the essence of an original proceeding as contrasted with a proceeding by way of appeal.
That being the character of the proceedings, the rule applicable is that which governs the trial of all original proceedings; that is, it is open to a party to put forward all grounds in support of or negation of the claim, subject only to such limitations as may be found in the Act.
632 It should be noted in this connection that if a petition to set aside an election on the ground of improper rejection of a nomination paper is in the nature of an appeal against the decision, of the returning officer, then logically speaking, the decision of the Tribunal must be based only on the materials placed before the returning officer given with respect to the ground which was urged before him, and no fresh evidence could be admitted before the Tribunal except in accordance with 0. 41, R. 27.
The learned judges in the court below, however, observe that though the enquiry before the Tribunal is restricted to the particular ground put forward before the returning officer, it is not restricted to the material placed before him, and that all evidence bearing on that ground could be adduced before the Tribunal.
This, in our view, is quite correct.
The enquiry which a returning officer has to make under section 36 is summary in character.
He may make " such summary enquiry, if any, as he thinks necessary "; he can act suo motu.
Such being the nature of the enquiry, the right which is given to a party under section 100(1)(c) and section 100(1)(d)(1) to challenge the propriety of an order of rejection or acceptance of a nomination paper would become illusory, if the Tribunal is to base its decision only on the materials placed before the returning officer.
It was contended for the respondent that even with reference to the ground taken before the returning officer, no evidence other than what was placed before him could be brought before the Tribunal, and he relied on the following observations of the learned judges in Charanjit Lal vs Lehri Singh (1) : " Whether a nomination has been improperly rejected or not, has to be considered in relation to the state of evidence before the returning officer at the time of the scrutiny.
The testimony of the returning officer shows that he rejected the nomination, because it did not appear to him that on the question of age the candidate Shri Pirthi was qualfied to stand for election ' " (1) A. I. R. 1958 punj.
633 There,, a nomination paper had been rejected by the returning officer on the ground that the candidate did,, not appear to possess the age qualification required by article 173.
The correctness of this order was challenged in an election petition.
Evidence was taken as to the age of the candidate in this petition, and eventually it was held that the order of the returning officer was right.
In the order of rejection, the returning officer also stated: " The nomination is rejected as the age is not mentioned in the nomination paper.
Neither the candidate nor the proposer or any person duly authorised on his behalf is present to testify to his age.
" Now, the argument before the High Court was that the failure to mention the age in the nomination paper was a formal defect which should have been condoned under section 36(4) of the Act.
The learned judges held that the defect was not merely one of failure to mention the age but of want of the requisite qualification in age, and that that could not be cured under section 36(4).
In this context, the observations relied on could not be read as meaning that no evidence could be adduced even in respect of a ground which was urged before the returning officer, as, in fact, evidence was taken before the Tribunal and a finding given, and if they meant what the respondent suggests they do, we do not agree with them.
It is to be noted that in many of the cases which came before this Court, as for example, Durga Shankar Mehta vs Thakur Raghuraj Singh and others (1), the finding of the Tribunal was based on fresh evidence admitted before it, and the propriety of such admission was never questioned.
And if the true position is, as we have held it is, that it is open to the parties to adduce fresh evidence on the matter in issue, it is difficult to imagine how the proceedings before the Tribunal can be regarded as in the nature of appeal against the decision of the returning officer.
In support of his contention that it is only the ground that is urged before the returning officer that (1) [1955] 1 S.C.R. 267.
80 634 can be raised before the Tribunal, Mr. Sinha, learned counsel for the respondent, relies on the provision in section 36(6) that when a nomination paper is rejected, the returning officer should record his reasons therefor.
The object of this provision, it is argued, is to enable the Tribunal to decide whether the order of the returning officer is right or not, and by implication it confines the scope of the enquiry before the Tribunal to the ground put forward before the returning officer.
This contention is, in our opinion, unsound.
Now, when a nomination paper is accepted, section 36(6) does not require that any reason should be recorded therefor.
If the contention of the respondent is right, it would follow that acceptance of a nomination paper can never be questioned.
But that would be against section 100(1)(d)(1), and it must therefore be held that an acceptance can be questioned on all the grounds available under section 36(2).
Section 100(1)(d)(1) deals with improper acceptance of a nomination paper, and if the word " improper " in that provision has reference to the matters mentioned in section 36(2), it must have the same connotation in section 100(1)(c) as well.
The word " improper " which occurs in both section 100(1)(c) and section 100(1)(d)(1) must bear the same meaning in both the provisions, unless there is something in the context to the contrary, and none such has been shown.
There is another difficulty in the way of accepting this argument of the respondent.
A candidate may be subject to more than one disqualification, and his nomination paper may be questioned on all those grounds.
Supposing that the returning officer upholds one objection and rejects the nomination paper on the basis of that objection without going into other objections, notwithstanding that under section 36(2) he has to decide all the objections, is it open to the respondents in the election petition to adduce evidence on those objections ? According to the respondent, it is not, so that if the decision of the returning officer on the objection on which he rejected the nomination paper is held to be bad, the Tribunal has no option but to set aside the election under section 100(1)(c), even though the candidate was, in fact, disqualified and his nomination paper was rightly rejected.
Mr. Sinha for the respondent concedes that the result would be anomalous, but he says that the Law of Election is full of anomalies, and this is one of them, and that is no reason for not interpreting the law on its own terms.
It is no doubt true that if on its true construction, a statute leads to anomalous results, the Courts have no option but to give effect to it and leave it to the legislature to amend and alter the law.
But when on a construction of a statute, two views are possible, one which results in an anomaly and the other not, it is our duty to adopt the latter and not the former, seeking consolation in the thought that the law bristles with anomalies.
Anomalies will disappear, and the law will be found to be simple and logical, if it is understood that when a question is raised in an election petition as to the propriety of the rejection of a nomination paper, the point to be decided is about the propriety of the nomination and not the decision of the returning officer on the materials placed before him, and that decision must depend on whether the candidate is duly qualified and is not subject to any disqualifications as provided in section 36(2) It remains to deal with one more contention advanced on behalf of the respondent, and that is based on the following observations in Hari Vishnu Kamath vs Syed Ahmad Ishaque and others (1): " Under this provision R. 47(4), the Tribunal is constituted a court of appeal against the decision of the returning officer, and as such its jurisdiction must be co extensive with that of the returning officer and cannot extend further.
" The argument is that if the jurisdiction of the Tribunal is co extensive with that of the returning officer, then the enquiry before it must be confined to the grounds which were urged before the returning officer.
Now, the observations quoted above were made statedly with reference to R. 47, and assuming that they apply to an enquiry under section 100(1)(c), the question still remains, what is the jurisdiction of the returning officer in hearing objections to nomination papers? (31) ; , 1132.
636 His jurisdiction is defined in section 36(2), and the Tribunal must therefore have jurisdiction to decide all the questions which can be raised under that section.
The fact that a particular ground which could have been raised was not, in fact, raised before the returning officer does not put an end to his jurisdiction to decide it, and what he could have decided if it had been raised, could be decided by the Tribunal, when raised.
Mr. Ganapathy Iyer, learned counsel for the appellant, invited our attention to the decisions of the Election Tribunals on the question whether grounds other than those raised before the returning officer could be put forward in an enquiry in an election petition.
They held, with one solitary exception, that it is permissible, and indeed, it is stated in Mengh Raj vs Bhimandas (1) as settled law that the rejection of a nomination paper can be sustained on grounds not raised before the returning officer.
If the legislature which must be taken to have knowledge of the law as interpreted in those decisions wanted to make a departure from it, it would have said so in clear terms, and in the absence of such an expression, it would be right to interpret section 100(1)(c) as not intended to alter the law as laid down in those decisions.
It is now necessary to refer to the decisions which have been cited before us.
In Durga Shankar Mehta 's case (2), the election was to a double member constituency.
The appellant who obtained the largest number of votes was declared elected to the general seat and one Vasantarao, to the reserved seat.
The validity of the election was challenged on the ground that Vasantarao was below the age of 25 years, and was, therefore, disqualified to stand.
The Election Tribunal upheld that objection, and set aside the entire election.
The decision was taken in appeal to this Court, and the point for determination was whether the election of the appellant was liable to be set aside on account of the disqualification of Vasantarao.
It was held that the matter fell within section 100(2)(c) as it then stood and not under section 100(1)(c), and that the election of the appellant could not be declared void.
(1) , 31O. (2) [19551 1 S.C.R. 267.
637 This is not a direct pronouncement on the point now in controversy, and that is conceded.
In Vashist Narain Sharma vs Dev Chandra and others (1), a question was raised as to what would be " improper acceptance " within the meaning of section 100; but in the view taken by this Court, no opinion was expressed thereon.
The question now under consideration came up directly for decision before the High Court of Rajasthan in Tej Singh vs Election Tribunal, Jaipur (2), and it was held that the respondent to an election petition was entitled to raise a plea that the nomination of the petitioner rejected on one ground by the returning officer was defective on one or more of the other grounds mentioned in section 36(2) of the Act, and that such a plea, if taken, must be enquired into by the Election Tribunal.
In Dhanraj Deshlehara vs Vishwanath Y. Tamaskar (3), it was observed by a Bench of the Madhya Pradesh High Court that in determining whether a nomination was improperly rejected, the Election Tribunal was not bound to confine its enquiry to the ground on which the returning officer rejected it, and that even if the ground on which the returning officer rejected the nomination could not be sustained, the rejection could not, be held to be improper if the Tribunal found other fatal defects in the nomination.
An unreported judgment of the Andhra Pradesh High Court in Badrivishal Pitti vs J. V. Narsing Rao (4) has been cited before us, and that also takes the view that in an enquiry before the Election Tribunal, it is open to the parties to support an order of rejection of a nomination paper on grounds other than those which were put forward before the returning officer.
We are in agreement with these decisions.
As the question has also been raised as to the propriety of interfering in writ petitions under article 226 with interlocutory orders passed in the course of an enquiry before the Election Tribunal, we shall express our opinion thereon.
The jurisdiction of the High Court to issue writs against orders of the Tribunal is (1) ; (2) [1954] 9 E.L.R.193 (3) (4) Special Appeal No. 1 Of 1957.
638 undoubted; but then, it is well settled that where there is another remedy provided, the court may properly exercise its discretion in declining to interfere under article 226.
It should be remembered that under the election law as it stood prior to the amendment in1956, election petitions were dismissed on preliminary grounds and the correctness of the decision was challenged in applications under article 226 and in further appeals to this Court, with the result that by the time the matter was finally decided, the life of the legislatures for which the election was held would have itself very nearly come to an end thus rendering the proceedings infructuous.
A signal example of a case of this kind is to be found in the decision reported in Bhikaji Keshao Joshi and another vs Brijlal Nandlal Biyani and others (1).
It is to remedy this defect that the legislature has now amended the law by providing a right of appeal against a decision of the Tribunal to the High Court under section 116 A, and its intention is ' obviously that proceedings before the Tribunal should go on with expedition and without interruption, and that any error in its decision should be set right in an appeal under that section.
In this view, it would be a proper exercise of discretion under article 226 to decline to interfere with interlocutory orders.
In the result, we allow the appeals, set aside the orders of the court below, and dismiss the writ petitions.
filed by the respondent, with costs here and in the court below.
Appeal allowed (1) [1055] 2 S.C.R. 428.
| The nomination paper of the fourth respondent who was one of the candidates for election to the Legislative Assembly of the State, was rejected by the returning officer on the ground that as he was the Headmaster of a Government aided school he was disqualified under section 7(d) and (e) of the Representation of the People Act, 1951, to be chosen for election.
One of the voters of the constituency filed a petition praying that the election of the appellant be declared void under section 100(1)(c) of the Act on the ground that the rejection of the nomination paper of the fourth respondent was improper because the latter had ceased to be a Headmaster at the time of his nomination and that, further, the institution was a private one.
The appellant, who was the second respondent in the petition, contended that the nomination paper of the fourth respondent was rightly rejected not only on the ground put forward before the returning officer but also for the reasons that he was interested in Government contracts and that he had agreed to serve as a, teacher under the District Board.
The question was whether in an election petition challenging the validity of the rejection of a nomination paper under s: 100(1)(c) of the Act, it was open to the parties to raise grounds 624 of disqualification other 'than those put forward before the returning officer.
It was contended for the respondent that the proceedings before the Election Tribunal were really by way of appeal against the decision of the returning officer and that, therefore, the scope of the enquiry in the election petition must be co extensive with that before the returning officer and must be limited to the grounds taken before him.
Held, that an election petition is an original proceeding instituted by the presentation of a petition under section 81 of the Representation of the People Act, 1951, and that the jurisdiction which a Tribunal exercises in hearing an election petition even when it raises a question under section 100(1)(c) of the Act is not in the nature of an appeal against the decision of the returning officer.
Held, further, that in considering whether a nomination paper was improperly rejected under section 100(1)(c), the real question for decision would be whether the candidate was duly qualified and was not subject to any disqualifications as provided in section 36(2) of the Act.
The Tribunal would, consequently, be competent to entertain grounds of disqualification other than those put forward before the returning officer.
The expression " improperly rejected " in section 100(1)(c) of the Act, explained.
Mengh Raj vs Bhimandas, , Tej Singh vs Election Tribunal, JaiPur, and Dhanraj Deshlehara vs Vishwanath Y. Tamaskar, (1958) 15 E. L. R. 260, approved.
|
Summarize this legal judgement text concisely | Appeal No. 236 of 1954.
Appeal from the judgment and order dated October 9,1953, of the Patna High Court in Misc.
Judicial Case No. 181 of 1953.
Mahabir Prasad, Advocate General for the State of Bihar, Bhagwat Prasad and section P. Varma, for the appellants.
P. R. Das, A. C. Roy and R. R. Biswas, for the respondent.
April 15.
The Judgment of the Court was delivered by 79 615 section K. DAS, J.
This is an appeal from the judgment and order of the High Court of Patna dated October 9, 1953, in Miscellaneous Judicial Case No. 181 of 1953 of that Court.
It relates to a temple commonly known as the Baidyanath temple situate in the town of Deoghar within the limits of Santal Parganas in the State of Bihar.
For the purposes of this appeal it will be necessary to refer to some earlier litigation about this temple.
The history 'of this temple, it is not disputed, goes back to remote antiquity.
According to Hindu tradition referred to in the Siva Purana and Padma Purana, extracts from which, with translations, are given by Dr. Rajendra Lal Mitra in his paper on the Temples of Deoghar (see Journal of the Asiatic Society of Bengal, Part 1, 1883, quoted in the Bihar District Gazetteer relating to Santal Parganas, 1938 edition ' pp. 373 376), the origin of the temple is traced to the Treta Yuga, which was the second age of the world by Hindu mythology.
Side by side with Hindu tradition, there is a Santal tradition of the origin of the temple given by Sir William Hunter (see the Annals of Rural Bengal, p. 191 ; Satistical Account of Bengal, Vol.
XIV,, p. 323).
But these materials afford no evidence as to when and by whom the idol was established or the temple was built.
The temple sheltering the " lingam " and dedicated to Mahadeva stands in a stone paved quadrangular courtyard.
The courtyard contains eleven other temples, smaller in size and of less importance than that of Baidyanath.
Pilgrims visit the temples in large numbers and make offerings of flowers and money in silver or gold; rich people offer horses, cattle, palanquins, gold ornaments and other valuables and sometimes, rent free land in support of the daily worship.
There is a high or chief priest (Sardar Panda) who it appears used to pay a fixed rent to the Rajas of Birbhum during the Muhammadan regime, and the administration of the temple was then left entirely in the hands of the high priest.
It may be here stated that about 300 families of " pandas ", who belong to a branch of Maithil Brahmins, were attached to the 627 temple and earned their livelihood by assisting pilgrims in performing the various ceremonies connected with the worship of the God.
When the British rule began, it was decided to take over the management of the temple, and with this object an establishment of priests, collectors and watchmen was organised in 1787 at Government expense.
The revenue soon fell off, as the chief priest beset the avenues to the tem ples with emissaries, who induced the pilgrims to make their offerings before approaching the shrine.
(See the District Gazetteer, ibid, p. 383).
In 1791 Government relinquished its claim to a share of the offerings and entrusted the management of the temple to the head priest on his executing an agreement to keep the temples in repair and to perform all the usual ceremonies.
This agreement was entered into by Ram Dutt (the ancestor of the present respondent), then high priest of the temple and Mr, Keating who was then Collector of the district.
According to Mr. Keating the income of the temple in 1791 consisted of the offerings of the proceeds of 32 villages and 108 bighas of land which he estimated at Rs. 2,000 a year; some years later the total income was estimated at Rs. 25,000 a year.
Under the system introduced by the agreement of 1791, the mismanagement of the temple was a source of constant complaint; the temple and " ghats " were frequently out of repair and the high priest was charged with alienating villages from the temple and treating his situation as a means of enriching himself and his family.
On the death of the high priest in 1820 a dispute over the succession arose between an uncle and a nephew.
The nephew Nityanand was eventually appointed, but neglected to carry out the terms of his appointment.
Finally, Nityanand was charged with malversation of the funds and the uncle Sarbanand was appointed in his stead in 1823.
There was a faction which was opposed to Sarbanand 's retention in office and asked for Government interference in the internal management of the temple.
In 1835 Government declined all interference in the matter and the parties were left to have recourse to the established courts of law.
Sarbanand 628 died in 1837 and Iswaranund Ojha, son of Sarbanand Ojha, was subsequently elected Sardar Panda.
Iswaranund was succeeded by his grand son, Sailajanund Ojha.
There were, however, frequent disputes between the high priest and the " pandas " regarding the control of the temple and in 1897 a suit was filed under section 539 (now section 92) of the Code of Civil Procedure in the Court of the District Judge of Burdwan.
This was Suit No. 18 of 1897 which was decided by the learned Additional District Judge of Burdwan by his judgment dated July 4, 1901.
Sailajanund Ojha was dismissed by the order of the court, as he by his conduct and behavior and by causing loss to the Debutter properties rendered himself unfit and disqualified to hold the post of Sardar Panda and trustee of the temple of Baidyanath.
It was further ordered by the learned Additional District Judge in the decree granted by him that some fit person be elected as Sardar Panda by the " pandas " of the temple and that the affairs of the temple be managed under a scheme which was framed by the learned Additional District Judge and formed a part of the decree.
Under this scheme three persons were to be appointed to look after the temple and its properties and for a proper administration of the same.
One of these three persons was to be elected from amongst the descendants of Ram Dutt Jha.
After this Umesbanund Dutt Jha, second son of Iswaranund Ojha, was elected Sardar Panda.
On the death of Umeshanund Dutt Jha, Bhabapritananda Ojha, who was the petitioner in the High Court and is now respondent before us, was appointed Sardar Panda.
Bhabapritananda is the grand son of Sailajanund Ojha, and we.
shall hereinafter refer to him as the respondent.
The scheme which was framed as a result of the decision in Civil Suit No. 18 of 1897 was confirmed by the Calcutta High Court and the decision of the High Court is reported in Shailajananda Dut Jha vs Umeshanunda Dut Jha (1).
This scheme was modified in a subsequent litigation in 1909, when one of the members of the committee applied to the District Judge (1) (19O5) 2 C.L.J. 460.
629 for a modification of the scheme.
The application was first dismissed, but the matter was taken to the Calcutta High Court, and on September 8, 1910, that Court on the authority of the decision of the Judicial Committee in Prayag Doss vs Tirumala (1) and with the consent of counsel on both sides, directed the insertion of two clauses in the decree ; by one of these clauses, liberty was reserved to any person interested to apply to the District Court of Burdwan with reference to the carrying out of the directions of the scheme and by the other clause, liberty was reserved to any person interested to apply from time to time to the Calcutta High Court for any modification of the scheme that might appear necessary or convenient.
Under these two clauses the members of the committee subsequently applied to the District Judge of Burdwan that certain directions might be given to the high priest ; the high priest opposed the application on the ground that it was in essence an application for modification of the scheme and could be entertained only by the High Court.
The learned District Judge overruled this objection.
The matter was again taken to the Calcutta High Court and that Court directed (1) that the committee must prepare ail annual budget of the income and expenditure; (2) that provision must be made for quarterly audit and annual inspection of the accounts; (3) that provision should be made for joint control of the temple funds after they have been realised ; (4) that there must be no undue interference on the part of the committee with the high priest in the internal management of the temple; and (5) that no one who has any pecuniary interest in the temple properties or is a creditor of the endowment should serve on the committee.
The High Court further directed that clauses embodying the aforesaid five directions should be inserted in the scheme.
This decision of the High Court is reported in Umeshananda Dutta Jha vs Sir Ravaneswar Prasad Singh (2).
We now come to more recent events which gave rise to Miscellaneous Judicial Case No. 181 of 1953 in the (1) (196) I.L.R. (2) 630 Patna High Court.
The Bihar Hindu Religious Trusts Act, 1950 (Bihar I of 1951), hereinafter referred to as the Act, received the President 's assent on February 21, 1951, and came into force on August 15. 1951.
This Act established the Bihar State Board of Religious Trusts to discharge the functions assigned to the Board by the Act.
Sometime in August 1952 the President of the Bihar State Board of Religious Trusts acting under section 59 of the Act asked the respondent to furnish a statement in respect of the Baidyanath temple and the.
properties appertaining thereto.
The respondent wrote back to say that the administration of the temple and its properties was in the hands of a committee constituted under a scheme made by the District Judge of Burdwan and approved by the Calcutta High Court, and these Courts being outside the jurisdiction of the Bihar Legislature, the Act did not apply to the temple and the respondent was not in a position to carry out the directions of the President of the Bihar State Board of Religious Trusts which might be in conflict with those of the Calcutta High Court.
The Board, however, proceeded to assess and demand payment of Rs. 1,684 6 6 as fee payable by the respondent in respect of the Baidyanath temple to it under section 70 of the Act.
The respondent then made an application under article 226 of the Constitution to the High Court of Patna, which application gave rise to Miscellaneous Judicial Case No. 181 of 1953.
On various grounds stated therein, the respondent con.
tended that the Act was ultra vires the Bihar Legislature ; he further contended that even if intra vires, the Act properly construed did not apply to the Baidyanath temple and the properties appertaining thereto by reason of the circumstance that the said temple and its properties were administered under a scheme made by the court of the District Judge of Burdwan and approved by the Calcutta High Court both of which are situate outside the territorial 'limits of Bihar.
The State of Bihar, the Bihar State Board of Reli.
gious Trusts and the President thereof, now appellants before us, contested the application.
Relying on the 631 principles (1) that there should be as far as possible no conflict or clash of jurisdiction between two equally competent authorities and (2) that no intention to exceed its own jurisdiction can be imputed to the Bihar Legislature and of two possible constructions of the Act, the one that would make it intra vires should be preferred, the High Court came to the conclusion that the expression " religious trust " as defined in section 2 (1) of the Act must be construed not in the plain and grammatical sense but must be cut down so as to exclude such religious trusts as are administered under a scheme made by a court situate outside the territorial limits of Bihar and, therefore, the Act did not apply to the Baidyanath temple and the President of the Bihar State Board of Religious Trusts constituted under the Act had no jurisdiction to take any proceedings against the respondent under the provisions of the Act.
Accordingly, the High Court allowed the application of the respondent, quashed the proceedings taken against him by the Bihar State Board of Religious Trusts, and issued a writ prohibiting the said Board from taking any further proceedings against the respondent under any of the provisions of the Act.
The State of Bihar, the Bihar State Board of Religious Trusts and its President obtained a certificate under article 132 of the Constitution from the High Court and the present appeal has been filed by them in pursuance of that certificate.
We shall hereinafter refer to them compendiously as the appellants.
We have had before us a number of appeals in which the validity of the Act has been challenged on several grounds and in some of these appeals, further questions were raised as to the application of the Act to private religious trusts and even to public trusts some properties of which are situate outside the State of Bihar.
These appeals we put in four categories.
They have been heard one after another and though we are delivering judgment in each category separate ly, it has been made clear that the reasons for the decision on points which are common to all or some of the appeals need not be repeated in each judgment.
In Civil Appeals Nos. 225, 226, 228, 229 and 248 of 632 1955 (1), which fall in the first category, we have con sidered the questions if the Act is bad on the ground that its several provisions infringe the appellants ' fundamental rights guaranteed under article 14, article 19 (1) (f), and/or articles 25, 26 and 27 of the Constitution, or on the ground that it imposes an unauthorised tax.
We have given reasons for our conclusion that the Act is not bad on any of the aforesaid grounds.
These reasons we do not wish to repeat here; they govern the present appeal also in so far as the Act is challenged on the self same grounds.
In Civil Appeal No. 343 of 1955 (2), which is in the second category, we have dealt at length with the definition clause of the expression " religious trust " in the context of other provisions of the Act, and have come to the conclusion that the Act does not apply to private trusts.
In the appeal under consideration in this judgment the admitted position is that the Baidyanath temple is a public trust; so it was held in the earlier litigation to which we have already referred and the scheme was formulated on that footing in Suit No. 18 of 1897.
In Civil Appeal No. 230 of 1955 (3), which is the third category, we have considered the question if the Act suffers from the vice of extra territoriality by reason of the provisions in section 3, which says that the Act shall apply to all religious trusts, whether created before or after the commencement of the Act, any part of the property of which is situate in the State of Bihar.
We have held therein that two conditions must be fulfilled for the application of the Act (a) the religious trust or institution itself must be in Bihar and (b) part of its property must be situated in the State of Bihar.
Those two conditions are fulfilled in this case; the Baidyanath temple is in Bihar and it is admitted that the properties belonging to the temple lie mainly in Bihar though there are some properties in the districts of Burdwan, Murshidabad and Birbhum in the present State of West Bengal.
Now, we come to the points which have been (1) Mahant Moti Das vs section P. Sahi, see p. 563, ante.
(2) Mahant Ram Saroop Dasji vs section P. Sahi, see P. 583, ante.
(3) State of Bihar vs Charusila Dasi, see p. 601, ante.
633 specially raised in this appeal, which is in the fourth or last category.
On behalf of the appellants it has been very strongly contended that the High Court was in error in relying on the doctrine of comity of jurisdictions and cutting down the scope of the Act on such a doctrine.
It has been submitted that the doctrine of comity of jurisdictions has no application to the facts of the present case and there is no possibility of any conflict or clash of jurisdiction between two equally competent authorities.
It is pointed out that item 28 of the Concurrent List in the Seventh Schedule to the Constitution of India is " Charities and charitable institutions, charitable and religious endowments and religious institutions ".
It is argued that the Bihar Legislature has, therefore, full legislative competence to enact the statute in question, and it has been submitted that if the Act does not suffer from the vice of extra territoriality, then it is good and all courts must obey it.
Under section 4 (5) of the Act, section 92 of the Code of Civil Procedure, 1908, has ceased to apply to any religious trust as defined in the Act ; therefore, no action under section 92, Code of Civil Procedure, can be taken, after the commencement of the Act, in respect of religious trusty in Bihar which are governed by the Act and there can be no question of any conflict of jurisdiction in respect of such trusts as between the Bihar State Board of Religious Trusts and a court in.
Bihar on one side and the courts outside the State of Bihar on the other.
On these submissions, learned counsel for the appellants has argued that the real question for decision is if the Act or any of its provisions suffer from the vice of extra territoriality and if that question is answered in favour of the appellants, then the High Court was in error in cutting down the scope and ambit of the Act by invoking the doctrine of comity of Jurisdictions.
At this stage it is convenient to set out in brief the argument which Mr. P. R. Das, learned counsel for the respondent, has advanced in support of the judgment of the High Court.
In one part of its judgment, the High Court has referred to the principle that every 80 634 statute should be so interpreted and applied, in so far as its language admits, as not to be inconsistent with the comity of nations or with the established rules of international law, and has referred to certain decisions in support of that principle.
Mr. P. R. Das has frankly conceded before us that no question of any inconsistency with, ' the comity of nations or with the established rules of international law arises in the present case and he does not contend that the Act or any of its provisions violate any established rule of international law.
Therefore, it is unnecessary to consider this part of the judgment of the High Court.
Before us Mr. P. R. Das has developed his argument in the following way.
He has first submitted that Suit No. 18 of 1897 which was instituted in the court of the District Judge of Burdwan in respect of the Baidyanath temple and its properties is still pending and the administration of the temple and its properties is being carried on by a committee appointed under a scheme made by the District Judge of Burdwan and later approved and modified by the Calcutta High Court; therefore, the District Judge of Burdwan and the Calcutta High Court are in full seizin of the trust and its properties, and the Bihar Legislature cannot take away or interfere with the jurisdiction of either the District Judge of Burdwan or the Calcutta High Court.
In this connection he has referred to cl. 39 of the Letters Patent of the Patna High Court, particularly to item (a) of the first proviso thereto.
That clause is in these terms: " And We do further ordain that the jurisdiction of the High Court of Judicature at Fort William in Bengal in any matter in which jurisdiction is by these presents given to the High Court of Judicature at Patna ' shall cease from the date of the publication of these presents, and that all proceedings pending in the former Court on that date in reference to any such matter shall be transferred to the latter Court: Provided, first, that the High Court of Judicature at Fort William in Bengal shall continue to exercise jurisdiction (a) in all proceedings pending in that Court on 635 the date of the publication of these presents in which any decree or order, ' other than an order of an interlocutory nature, has been passed or made by that Court, or in which the validity of any such decree or order is directly in question; and (b) in all proceedings (not being proceedings referred to in paragraph (a) of this clause) pending in presents under the 13th, 15th, 22nd, 23rd, 24th, 25th, presents under the 13th, 15th, 22nd, 23rd, 24th, 25th, 26th, 27th, 28th, 29th, 32nd, 33rd, 34th or 35th clause of the Letters Patent bearing date at Westminster the Twenty eighth day of December, in the year of Our Lord One thousand eight hundred and sixty five, relating to that Court; and (c) in, all proceedings instituted in that Court, on or after the date of the publication of these presents, with reference to any decree or order passed or made by that Court: Provided, secondly, that, if any question arises as to whether any case is covered by the first proviso to this clause, the matter shall be referred to the Chief Justice of the High Court of Judicature at Fort William in Bengal and his decision shall be final ".
His argument is that the scheme made by the District Judge of Burdwan and later approved by the Calcutta High Court can be modified only by the Calcutta High Court and that High Court continues to exercise jurisdiction in respect of the scheme under item (a) of the first proviso to clause 39 referred to above, and cl.
41 of the Letters Patent does not empower the Bihar Legislature to amend any of the clauses of the Letters Patent.
He has also submitted that on February 9, 1917, the Calcutta High Court decided that any application for enforcement of the scheme would lie to the District Judge of Burdwan and not to the Deputy Commissioner of Dumka.
It may be stated here that Burdwan is in the State of West Bengal and Dumka in the State of Bihar.
Mr. P. R. Das has contended that in so far as the provisions of the Act interfere with the jurisdiction of courts outside Bihar, they have extra territorial operation and must be held to be bad 636 on that ground; because under article 245 of the Constitution, the Bihar Legislature may make laws for the whole or any part of the State of Bihar, but it cannot make any law which will have extra territorial operation.
He has drawn our attention to the provisions of sections 3, 4 (5) and 28 of the Act, and has laid particular emphasis on the provisions of section 29 of the Act, which provisions, according to him, have extra territorial operation.
Having set out in some detail the arguments which have been advanced before us on behalf of the appellants and the respondent, we proceed now to consider them on merits.
We agree with learned counsel for the parties that no question arises in this case of any conflict or inconsistency with the doctrine of comity of nations or with any established rule of international law.
The question which really arises for decision is if any of the provisions of the Act have extra territorial operation.
This question has two aspects.
First, there is section 3 which says inter alia that the Act shall apply to all religious trusts, any part of the property of which is situated in the State of Bihar.
The argument is that the Bihar Legislature has no power to legislate about trust property which is outside the territorial limits of Bihar and section 3 of the Act in so far as it seeks to operate on trust property outside Bihar makes the Act bad on the ground of extra territorial operation.
This part of the argument has been fully dealt with and rejected in the decision relating to the Charusila Trust, Civil Appeal No. 230 of 1955 (1).
The second facet of the argument is what Mr. P. R. Das has specially emphasised before us in this appeal.
His argument in substance is that the Act by some of its provisions seeks to interfere with the jurisdiction of courts which are outside Bihar, and this in effect is the vice of extra territorial operation from which, according to him, the Act suffers.
We are unable to agree with him in this contention.
Section 3 we have already referred to.
Sub section (5) of section 4 states inter alia that section 92 of the Code of Civil Procedure, 1908, shall not apply to any religious trust (1) State of Bihar vs Charusila Dasi, see p. 601, ante.
637 in the State of Bihar as defined in the Act.
We have considered the effect of this sub section in the decision relating to the Charusila Trust (ibid) and have held that the Act applies when the trust itself, temple or deity or math, is situate in Bihar and also some of its property is in Bihar.
We have pointed out therein that the trust being situatedin Bihar, that State has legislative power over it and over its trustees and their servants or agents who must be in Bihar to administer the trust ; therefore, there is really no question of the Act having extra territorial operation.
In our opinion, this reasoning is equally valid in respect of the argument of Mr. P. R. Das.
If, as we have held, it is open to the Bihar Legislature to legislate in respect of relgious trusts situate in Bihar, then that Legislature can make a law which says, as in sub section
(5) of section 4 of the Act, that section 92 of the Code of Civil Procedure shall not apply to any religious trust in the State of Bihar.
If sub section
(5) of section 4 of the Act is valid as we hold it is, then no question really arises of interfering with the jurisdiction of the District Judge of Burdwan or of the Calcutta High Court in respect of the Baidyanath temple, inasmuch as those courts exercised that jurisdiction under section 92, Code of Civil Procedure, which no longer applies to the Baidyanath temple and the properties appertaining thereto, after the commencement of the Act.
It is true that the Act does put an end to the jurisdiction under section 92, Code of Civil Procedure, of all courts with regard to religious trusts situate in Bihar, but that it does by taking these trusts out of the purview of section 92.
In other words, the Act does not take away the jurisdiction of any court outside Bihar but takes the religious trusts in Bihar out of the operation of section 92 so that a court outside Bihar in exercise of its jurisdiction under section 92 will decline to deal with a religious trust situate in Bihar just as it will decline to entertain a suit under that section regarding a private trust of religious or charitable nature.
Civil Procedure, including all matters included in the Code of Civil Procedure at the commencement of the Constitution, is item 13 of the Concurrent List.
It has not been disputed before us that it is open to the Bihar 638 Legislature to amend the Code of Civil Procedure while legislating in respect of religious endowments and religious institutions in Bihar, and the President 's assent having beep received to the Act, the law made by the Bihar Legislature shall prevail in that State, under.
article 254(2) of the Constitution, in respect of all religious trusts situate in Bihar.
In this view of the matter, it is unnecessary to consider the further questions if Suit No. 18 of 1897 is still pending, the proper scope and effect of cl. 39 of the Letters Patent of the Patna High Court, and which authority can amend the Letters Patent.
Even if Suit No. 18 of 1897 is deemed to be still pending, though we do not so decide, any further action under the scheme in respect of the Baidyanath temple and its properties can be taken either by the District Judge of Burdwan or the Calcutta High Court only if the jurisdiction under section 92, Civil Procedure Code, is still preserved in respect of it.
If that jurisdiction has come to an end in respect of the Baidyanath temple and its properties, then no question of any conflict of jurisdiction between two equally competent authorities arises at all, apart altogether from the more debatable question as to whether the Bihar Legislature on one side and the courts in Bengal on the other can be said at all to be equally competent authorities in respect of a religious trust situate in Bihar.
The question really boils down to this.
Is the Act bad on the ground of extra territorial operation, because it takes certain religious trusts situate in Bihar out of the purview.
of section 92, Code of Civil Procedure ? If the answer to this question is in the negative, then all the hurdles created by the argument of Mr. P. R. Das must disappear; because if the Act is good, it must be bindingonall courts and no question of any conflict of jurisdiction can arise. Learned counsel for the respondent has made a pointed reference to sections 28 and 29 of the Act. Section 28 deals with the general powers and duties of the Board.
We have examined these powers and duties in our decision in connected Civil Appeals Nos.
225, 226, 228, 229 and 248 of 1955 (1) and have held that (1) Mahant Moti Das vs S.P. Sahi, see P. 563, ante.
639 there is nothing in these powers and duties which can be said to have extra territorial operation.
Our attention has been drawn to el.
(j) of section 28 (2) which empowers the Board to sanction on the application of a trustee or any other person interested in the religious B trust the conversion of any property of such trust into another property, if the Board is satisfied that such conversion is beneficial for the said trust.
We have pointed out that these powers and duties are really for the fulfillment of the trust and they do not in any way contravene the rights of the trustees.
Section 29 states : " 29(1).
Where the supervision of a religious trust is vested in any committee or association appointed by the founder or by a competent Court or authority, such committee or association shall continue to function under the general superintendence and control of the Board, unless superseded by the Board under subsection (2).
(2) The Board may supersede any committee or association referred to in sub section (1) which in the opinion of the Board, is not discharging its funetions satisfactorily and, if the Board does so, any decree or order of a Court or authority by which such committee or association was constituted shall be deemed to have been modified accordingly: Provided that before making any order under this sub section, the Board shall communicate to the committee or association concerned the grounds on which they propose to supersede it, fix a reasonable period for the committee or association to show cause against the proposal and consider its explanations and objections, if any.
(3) Such committee or association or any other person interested in the religious trust may, within thirty days of any order of the Board under sub section (2), make an application to the District Judge for varying, modifying or setting aside such order, but, subject to the decision of the District Judge on any such application, the order of the Board shall be final and binding upon the applicant and every person interested in such trust.
640 (4) Where such committee or association has been superseded under sub section (2), the Board may make such arrangements as may be necessary for the administration of the religious trust concerned.
" It has been argued that section 29 in terms gives the Bihar State Board of Religious Trusts power to interfere with a committee appointed by the founder or by a competent court or authority.
The argument is that the Bihar State Board of Religious Trusts can now interfere with the committee appointed under the scheme made by the District Judge of Burdwan and approved by the Calcutta High Court, and can even supersede it.
The answer to this argument is the same as that given before.
Either the Act is bad on the ground of extra territorial operation or it is not.
If the Act is bad on the ground of extra territorial operation, then there is good reason for cutting down the scope and ambit of section 29 of the Act so that it will apply only to committees appointed by a competent court or authority in Bihar.
If, however, ' in respect of a religious trust in Bihar, the Bihar Legislature can amend the Civil Procedure Code and take the trust out of the purview of section 92, Civil Procedure Code, then there is no good reason why the ambit of section 29 should be out down in the manner suggested by the High Court.
It is true that the legislation of a State is primarily territorial and the general rule is that extra territorium jus dicenti impune non paretur.
There is, however, no departure from that general rule when the trust itself is in Bihar and in legislating about that trust, the legislature lays down what should be done to fulfil the objects of the trust and for that purpose puts an end to an old jurisdiction in the sense explained above and creates a new one in its place.
The doctrine of territorial nexus which arises in this connection has been commented on before us at great length by, learned counsel for the respondent.
That doctrine *and the decisions bearing on it we have considered at some length in our decision relating to the Charusila Trust, Civil Appeal No. 230 of 1955.
We do not wish to repeat what we have said therein.
641 The conclusion at which we have arrived is that the Act and its several provisions do not suffer from the vice of extra territoriality in the sense suggested by B learned counsel for the respondent and there is no such conflict of jurisdiction as learned counsel for the respondent has suggested.
Accordingly, the Act is good and applies to the Baidyanath temple and the properties a pertaining thereto.
The result, therefore, is that the appeal succeeds and is allowed with costs.
The judgment and order of the High Court dated October 9, 1953, are set aside and the petition under article 226 of the Constitution made by the respondent must stand dismissed with costs.
Appeal allowed.
| In respect of an ancient temple situate in the State of Bihar, disputes arose in I897 between the high priest and the " pandas " regarding the control of the temple which ultimately led to a suit being filed under section 539 (now section 92) Of the Code of Civil Procedure, in the Court of the District judge of Burdwan and a decree was passed by the Additional District judge, under which a scheme was framed for the proper management of the temple.
The decree was confirmed by the Calcutta High Court and the scheme itself was later modified from time to time by the said High Court.
After the coming into force of the Bihar Hindu Religious Trusts Act, 1950, the President of the Bihar State Board of Religious Trusts, acting under section 59 of the Act, served a notice on the respondent, who had been appointed Sardar Panda for the temple under the scheme, asking him to furnish a statement in respect of the temple and the properties appertaining thereto.
The respondent made an application under article 226 of the Constitution to the High Court of Patna challenging the validity of the action taken against him on the grounds (1) that the Bihar 625 Hindu Religious Trusts Act, 1950, was ultra vires the Bihar Legislature, (2) that the Bihar Legislature did not have legislative competence to deal with the temple in question as some of the properties appertaining to the temple were situate outside Bihar, and (3) that, in any case, the Act did not apply to the temple by reason of the fact that the temple and its properties were administered under a scheme made by the Court of the District Judge of Burdwan and approved by the Calcutta High Court both of which were situate outside the territorial limits of Bihar, as otherwise the Act by some of its provisions would seek to interfere with the jurisdiction of courts which are outside Bihar and thereby get extra territorial operation.
Held: (1) that the Bihar Hindu Religious Trusts Act, 1950, is intra vires the Bihar State Legislature Mahant Moti Das vs section P. Sahi, [1959] SUPP.
2 S.C.R. 563 followed.
(2) that it is competent to the Bihar Legislature to legislate in respect of religious trusts situate in Bihar though some of the properties belonging to the trust may be outside Bihar; State of Bihay vs Charusila Dasi, [1959] SUPP.
2 S.C.R. 601 followed.
(3) that the provision of law in sub section
(5) of section 4 Of the Act by which section 92 Of the Code of Civil Procedure shall not apply to any religious trust in the State of Bihar, is valid; and (4) that as under section 4(5) Of the Act religious trusts in Bihar are taken out of the purview of section 92 Of the Code of Civil Procedure, the jurisdiction of the District judge of Burdwan or the Calcutta High Court to deal with the temple in question under section 92 comes to an end; consequently the Act and its several provisions do not suffer from the vice of extra territoriality and the Act applies to the temple in question and the properties appertaining thereto.
|
Summarize this legal judgement text concisely | Civil Appeals Nos. 85 & 389 of 1957.
Appeal from the judgment and order dated August 26, 1955, of the Calcutta High Court in Income tax References Nos. 44 of 1954 and 17 of 1953.
section Mitra and P. K. Mukherjee, for the appellant (in C. A. No. 85/57.) N. C. Chatterjee and P. K. Ghosh, for the appellant (in C. A. No. 389/57).
R. Ganapathy Iyer, R. H. Dhebar and D. Gupta, for the respondent.
April 15.
The judgment of Sinha and Kapur, JJ., was delivered by Sinha, J. Hidayatullah, J., delivered a separate judgment.
SINHA, J.
The common question of law arising in these two appeals on certificates of fitness granted by the High Court of Calcutta under section 66A(2) of the Indian Income tax Act, 1922, is the effect and scope of the words " constituted under an instrument of partnership" in section 26A of the Income tax Act, which, in the course of this judgment, will be referred to as the Act.
644 The facts of the two cases, leading upto these appeals, though not dissimilar, are not identical.
They are, therefore, set out separately.
In Civil Appeal No. 85 of 1957, Messrs. R. C. Mitter and Sons, 54, Rani Kanto Bose Street, Calcutta, claim to be a firm said to have been constituted in April 1948, with four persons whose names and shares in the nett profits of the partnership business, are stated to be as under (a) Ramesh Chandra Mitter 40 per cent.
of the nett profits.
(b) Sudhir Chandra Mitter 30 per cent.
of the nett profits.
(c) Sukumar Mitter 20 per cent.
of the nett profits.
(d)Sushil Chandra Mitter 10 per cent.
of the nett profits.
The firm intimated its bank, the Bengal Central Bank, Limited, (as it then was), of the constitution of the firm as set out above, by its letter dated April 15, 1948.
The letter also stated that a partnership deed Was going to be drawn up and executed by the partners aforesaid, and that the deed so drawn up, will be forwarded to the bank in due course.
Though the firm is said to have come into existence in April 1948, the deed of partnership which is set out as annexure " A " at P. 5 of the paper book, was drawn up only on September 27, 1949.
This deed of partnership appears to have been registered under the provisions of the Indian Partnership Act, on October 1,2, 1949.
It was also forwarded to the Bengal Central Bank, Ltd., Head Office at Calcutta, as it appears from the seal of the bank and the signature dated December 7, 1949.
An application to register the firm under section 26A, for the assessment year 1949 50, was made to the Income tax Authorities.
The date of the said application does not appear from the record before us.
The application was rejected by the Income tax Authorities.
The firm preferred an appeal to the Income tax Appellate Tribunal, which was also dismissed by the Tribunal by its order dated September 7, 1953.
The ground of the order of the Tribunal was that as the firm admittedly 645 was formed by a verbal agreement in April 1948, and not by or under an instrument in writing dated September 27, 1949, and as the assessment was for the year 1949 50, for which registration of the firm was sought, the registration could not be ordered.
The Tribunal also referred to the letter aforesaid to the Bengal Central Bank, and observed that the letter merely contained information as to the formation of the partnership and of the personnel thereof, but it did not contain the terms on which the partnership had been formed.
It also showed that a partnership had been created but not by deed.
Hence, the Tribunal further observed, the letter might be useful for consideration on the question of the genuineness of the firm, but it could not fulfil the requirements of section 26A, namely, that the firm should be constituted under an instrument of partnership.
Therefore, the Tribunal held that assuming the firm to be genuine, it was not entitled to be registered under section 26A of the Act.
Thereupon, the assessee moved the Tribunal under section 66(1) of the Act.
That application was granted by the order dated February 2, 1954, and the case stated to the High Court for its decision on the following question : " Whether the assessee firm which is alleged to have come into existence by a verbal agreement in April, 1948, is entitled to be registered under section 26A for the purpose of assessment for 1949 50, where the Instrument of Partnership was drawn up only in September, 1949, after the expiry of the relevant previous year ".
The High ' Court Bench, presided over by Chakravarti, C. J., by its judgment dated August 26, 1955, answered the question in the negative.
The learned Chief Justice considered the matter from all possible view points, including grammatical, etymological and textual matters, and came to the conclusion that " constituted " meant created ".
He also considered that the preposition under " is " obviously inappropriate after having convinced himself that " constituted could be equated with "created".
He also found no difficulty in observing that " some of the 646 paragraphs of the Form appear to be ill adjusted to the provisions of the Act and the Rules ".
In the end, therefore, he concluded with the remarks: " It appears to me to be desirable that the language of the section, as also that of the Rules should receive legislative attention ".
In Civil Appeal No. 389 of 1957, Messrs. D. C. Auddy & Brothers, Calcutta, claim to be a partnership consisting of Dulal Chand Auddy, Prem Chand Auddy, Gora Chand Auddy and Kalipada Nandy.
The partnership business is said to have begun in June, 1944.
An application was made on August 24,1949, for the registration of the partnership.
The Income tax Officer and the Appellate Assistant Commissioner were of the opinion that the partnership was not a genuine one, and could not be registered.
Another reason for not ordering registration was that the partnership deed, having been executed on June 2, 1948, could not be operative during the two years under consideration, namely, 1945 46 and 1946 47.
On appeal, the Income.
tax Appellate Tribunal rested its decision on the finding that the alleged partnership had not been constituted under an instrument of partnership within the meaning of those words in section 26A of the Act.
At the instance of the assessee, the Tribunal framed the fol lowing question for determination by the High Court: " Whether the assessee firm constituted orally in June, 1944, can validly be registered in the assessment years 1945 46 and 1946 47 under Section 26A of the Indian Income Tax Act on the basis of a Memorandum of Partnership executed in June 1948.
" The other parts of the statement of the case by the Tribunal, refer to the merits of the assessment, with which we are not concerned in this appeal.
Hence, it is not necessary to set out those facts.
On this part of the statement of the case, the High Court gave the same answer as in the other appeal.
In this case also, the High Court granted the necessary certificate under section 66A(2), read with article 135 of the Constitution.
As both the cases raise the same question of law, they have been heard together, and will be governed by this judgment.
647 It is convenient at this stage to set out the relevant provisions of the Act.
Section 26A is in these terms :" 26A. Procedure in registration of firms. (I) Application may be made to the Income tax Officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners, for registration for the purposes of this Act and of any other enactment for the time being in force relating to income tax or super tax.
(2) The application shall be made by such person or persons and at such times and shall contain such particulars and shall be in such form, and be verified in such manner, as may be prescribed and it shall be dealt with 'by the Income tax Officer in such manner as may be prescribed.
" The section contemplates the framing of rules laying down the details of the Form in which the application has to be made and the particulars which should be stated in the application, and other cognate matters.
Section 59 of the Act, authorizes the Central Board of Revenue, subject to the control of the Central Government, to make rules for carrying out the purposes of the Act, and sub section
(5) of section 59 provides that rules made under the section, shall be published in the Official Gazette, and " shall thereupon have effect as if enacted in this Act".
Income tax Rules 2 to 6B lay down the details of the procedure for making an application for the registration of a firm, as contemplated under section 26A, quoted above.
These rules have been amended extensively in 1952, but we are concerned in this case with the rules before those amendments.
Rule 2 requires such an application to be signed by all the partners personally, and to be made before the income of the firm is assessed for the year, under section 23 of the Act.
Rule 3 requires that the application be made in the Form annexed to the rule, and that the application shall be accompanied by the original Instrument of, Partnership under which the firm is constituted. .
The Form appearing in r. 3, requires the assessment year to be specified.
Thus, the registration is for a particular year of assessment, and not for future years also, and therefore, the application for registration has 648 to be made every year, which in fact means an application for renewal of the registration.
Paragraph 3 of the Form requires a certificate to be signed by the applicants for registration, to the effect that the profits (or loss, if any) of the previous year were divided or credited as shown in Section B of the Schedule.
The Form contains the Schedule in 7 columns which require the names of the partners, their addresses, the date of admittance to partnership, their shares in the profits or loss, etc., to be filled in.
Under the Schedule, there are Section A and Section B. Section A has to contain particulars of the firm as constituted at the date of the application, and Section B has to contain the particulars of the apportionment of the income, profits or gains (or loss) of the business in the previous year between the partners who in that previous year were entitled to share therein.
Rule 4 provides that if the Income tax Officer.
is satisfied that there is or was a firm in existence constituted as shown in the instrument of partnership, and that the application has been properly made, he has to enter a certificate at the foot of the Instrument of Partnership that the firm has been registered under section 26A of the Act, and that the certificate of registration shall have effect for the assessment for the year specified therein.
Rule 5 is as follows:" 5.
The certificate of registration granted under Rule 4 shall have effect only for the assessment to be made for the year mentioned therein.
"And Rule 6 makes provision for the certificate of registration to be renewed for a subsequent year, on an application being made in that behalf in accordance with the preceding Rules.
It is manifest that for a true and proper construction of the relevant provisions of the Act, relating to registration of firms, sections 26, 26A and 28, and the Rules summarized above, have to be read together.
So read, it is reasonably clear that the ' following essential conditions must be fulfilled in order that a firm may be held entitled to registration: (1) That the firm should be constituted under an Instrument of Partnership, specifying the individual shares of the partners.
649 (2) That an application on behalf of, and signed by, all the partners, containing all the particulars as set out in the Rules, has been made; (3) That the application has been made before the assessment of the income of the firm, made under section 23 of the Act (omitting the words not necessary for our present purpose), for that particular year; (4) That the profits (or loss, if any) of the business relating to the previous year, that is to say, the relevant accounting year, should have been divided or credited, as the case may be, in accordance with the terms of the Instrument; and lastly, (5) That the partnership must have been genuine, and must actually have existed in conformity with the terms and conditions of the Instrument.
It is clear from what has been said above with reference to the relevant provisions of the Act, that the certificate of registration has reference to a particular assessment year, and has effect for the assessment to be made for that particular year.
In other words, the terms of the partnership should appear in the Instrument of Partnership in respect of the relevant accounting year.
It is equally clear that the firm to be registered, should have been in existence during the accounting year, " constituted as shown in the Instrument of Partnership ".
The Rules, thus, contemplate a document operative during the accounting year.
We are not here concerned with the further question whether the document should be in existence at the very inception of the accounting year, or before the year is out.
The provisions of the Act, set out above, do not present any serious difficulty except for the words it constituted under an Instrument of Partnership " occurring in section 26A and the relevant Rules.
On the interpretation of these words, there has been a conflict of judicial opinion, as will presently appear.
On behalf of the assessee appellants, it has been contended that so long as the assessment has not been made, the assessees are entitled to have their firms registered in accordance with the terms of the Instrument of 82 650 Partnership, irrespective of the year in which the Instrument may have come into existence.
Strong reliance was placed upon the decision of the Bombay High Court (Chagla, C. J., and Tendolkar, J.) in the case of Dwarkadas Khetan & Co. vs Commissioner of Income tax, Bombay City, Bombay(1), wherein, the following observations have been made: " Any firm can make an application under section 26A for registration and the two conditions that it has got to comply with are that it must be constituted under an instrument of partnership and the second condition is that the instrument of partnership must specify the individual shares of the partners.
If these two conditions are satisfied it would be entitled to registration.
The section does not say that the firm must be constituted by the instrument of partnership.
It does not require that the firm must come into existence by reason of the instrument of partnership, or that the firm should be the creature of the instrument of partnership, or that the firm must not exist prior to the instrument of partnership being executed.
In the case decided by the Bombay High Court, the Instrument of Partnership had been executed on March 27, 1946, with effect from January 1, 1946.
On an application made to the Department to register the firm, the matter was determined by the Income tax Appellate Tribunal against the assessee on the ground that the partnership was in existence before the deed was executed, and that, therefore, it could not be registered.
Before the Bombay High Court, reliance had been placed on behalf of the Department on the decision of the Calcutta High Court, now before us in appeal, as also on a decision of the Punjab High Court.
The decision of the Calcutta High Court now under examination, in the case of R. C. Mitter & Sons vs Commissioner of Income tax (2), takes the view that section 26A of the Act contemplates a firm created or brought into existence by an Instrument of Partnership, which governs the distribution of shares in the relevant accounting period.
Such a deed should have (1) [1956) , 907.
(2) , 704, 705.
651 come into existence on or, before the commencement of the relevant accounting period.
The other decision relied upon in the Bombay High Court, had been given by a Division Bench of the Punjab High Court, reported in Padam Parshad Rattan Chand vs Commissioner of Income tax, Delhi (1).
On the other hand, it has been contended on behalf of the Revenue that in order to entitle a firm to be registered, the firm should have been created by an Instrument of Partnership, or at any rate, such an Instrument should be in existence during the relevant accounting year, that is, the year previous to the year of assessment in respect of which the application for registration has been made.
For the first part of the submission on behalf of the respondent, there is ample authority in the decision under appeal, which bad been relied upon before the Bombay High Court.
In that case, (R. C. Mitter & Sons vs Commissioner of Income tax (supra) (2) ), Chakravarti, C. J., who delivered the opinion of the Court under section 66(1) of the Act, after a very elaborate discussion, came to the conclusion which may best be expressed in his own words, as follows: " If by the expression I constituted under an instrument of partnership ' is meant a firm which originated in a verbal agreement but with respect to which a formal deed was subsequently executed, there would be no room in the section for partnerships actually created by an instrument and such partnerships, although most obviously entitled to registration, would be excluded from the purview of the section.
Even etymologically or textually, I do Dot think that the word constituted ', when used in relation to a firm or such other body, can mean anything but I created when the reference is to some deed or instrument to which the inception of the firm or other body is to be traced. " After having, thus, held that section 26A contemplated firms created or brought into existence by a deed in writing, he had no difficulty in substituting " by " for " under ", thus, making the crucial words " constituted (I) (2) , 704, 705. 652 by " instead of " constituted under ".
In our opinion, the learned Chief Justice fell into the error of re constructing the provisions of the statute, instead of construing them.
The word " by " could be substituted for the word " under " in section 26A only if the words, as they stand in the section, were not capable of making sense, and it would, thus, have been necessary to amend the wording of the section.
Turning his attention from the wording of the section to that of the Rules and the Form appearing under the Rules, he again came to the conclusion that " some of the paragraphs of the Form appear to be ill adjusted to the provisions of the Act ".
Referring to other parts of the Rules, he was constrained to observe that they" would lend strong support to the view that what is meant by 'any firm constituted under an instrument of partnership ' in section 26A is no more than a fir of which the constitution appears from an instrument in writing.
It is obvious that if such be the meaning of the expression 'constituted under an instrument of partnership ', the instrument need not be one by which the partnership was created ".
But then he attempted to get over that difficulty by observing that the language of the Rules and the Form could not supersede a provision contained in the Act itself.
He further opined that the language in para.
4(1) is " un doubtedly unsatisfactory ".
In our opinion, any attempt to reconstruct the provisions of the relevant section and the Rules, on the assumption that the intention of the legislature was to limit the registration of firms to only those which have been created by an Instrument of Partnership, is, with all respect, erroneous.
The proper way to construe the provisions of the statute is to give full effect to all the words of the relevant provisions, to try to read them harmoniously, and then to give them a sensible meaning.
Hence, we have to consider, at the threshold, the question whether the words " constituted under an Instrument of Partnership " have some meaning which can be attributed to them harmoniously with the rest of the relevant provisions.
A partnership may be created or set up by a contract in writing, 653 setting out all the terms and conditions of the partnership, but there may be many cases, and perhaps, such cases are more numerous than the other class, where a partnership has been brought into existence by an oral agreement between the parties on certain terms and conditions which may subsequently be reduced to writing which will answer the description of an Instrument of Partnership.
Such an instrument would, naturally, record all the terms and conditions of the contract between the parties which,.
at the initial stages, had not been reduced to writing.
In such a case, though the partnership had been brought into existence by an oral agreement amongst the partners, if the terms and conditions of the partnership have been reduced to the form of a document, it would be right to say that the partnership has been constituted under that instrument.
The word " constituted " does not necessarily mean " created " or " set up ", though it may mean that also.
It also includes the idea of clothing the agreement in a legal form.
In the Oxford English Dictionary, Vol.
II, at pp.
875 & 876, the word " constitute " is said to mean, inter alia, " to set up, establish, found (an institution, etc.) " and also " to give legal or official form or shape to (an assembly, etc.) ".
Thus, the word in its wider significance, would include both, the idea of creating or establishing, and the idea of giving a legal form to, a partnership.
The Bench of the Calcutta High Court in the case of R. C. Mitter and Sons vs Commissioner of Income tax(1), under examination now, was not, therefore, right in restricting the word " constitute " to mean only " to create ", when clearly it could also mean putting a thing in a legal shape.
The Bombay High Court, therefore, in the case of Dwarkadas Khetan and Co. vs Commissioner of Income tax, Bombay City, Bombay (2), was right in holding that the section could not be restricted in its application only to a firm which had been created by an instrument of partnership, and that it could reasonably and in conformity with commercial practice, be held to apply to a firm which may have come into existence earlier by an (1) , 704, 705.
(2) , 907.
654 oral agreement, but the terms and conditions of the partnership have subsequently been reduced to the form of a document.
If we construe the word " constitute " in the larger sense, as indicated above, the difficulty in which the learned Chief Justice of the Calcutta High Court found himself, would be obviated inasmuch as the section would take in cases both of firms coming into existence by virtue of written documents as also those which may have initially come into existence by oral agreements, but which had sub.
sequently been constituted under written deeds.
The purpose of the provision of the Income tax Acts.
26A is not to compel the firms which had been brought into existence by oral agreements, to dissolve themselves and to go through the formality of constituting themselves by Instruments of Partnership.
If we construe the words " constituted under " in that wider sense, we give effect to the intention of the legislature of compelling a firm which bad existed as a result of an oral agreement, to enter into a document defining the terms and conditions of the partnership, so as to bind the partners to those terms, before they could get the benefit of the provisions of section 23 (5) (a).
Section 23 (5) (a) confers a privilege upon partners who may find it more worth their while to be assessed upon their individual total income than upon the total income of the partnership.
It is, therefore, very important from the point of view of the Revenue that the Department should be apprised in time of the true constitution of the partnership, the names of the true partners and the precise share of each of them in the partnership profits (or loss, if any).
The very object of this provision will be defeated if the alleged partner ship is not genuine, or if the true constitution of the partnership and the respective shares of the partners, are not fully and correctly placed on record as soon as possible, for the purpose of 'assessment.
In this connection, the provisions of section 28(2) of the Act, are also worth noticing.
That sub section provides that if the Income tax Officer or the Appellate Authorities under the Act, are satisfied that the profits of a registered firm have been distributed otherwise than 655 in accordance with the shares of the partners, as shown in the Instrument of Partnership registered under the Act, and governing such distribution, and that any partner has concealed any part of his profits, the penalty prescribed therein may be imposed upon such a partner.
Unless the Instrument of Partnership has been registered in respect of the accounting year and before the assessment has been done, the penal provisions aforesaid cannot be enforced.
It is, therefore, essential, in the interest of proper administration and enforcement of the relevant provisions relating to the registration of firms, that the firms should strictly comply with the requirements of the law, and it is incumbent upon the Income tax Authorities to insist upon full compliance with the requirements of the law.
But, in our opinion, there is no warrant in the words of the relevant provisions of the statute for restricting registration under section 26A of the Act to those firms only which have been created or brought into existence by an Instrument of Partnership.
In our opinion, it is more in consonance with the terms of the relevant provisions of the Act, referred to above, to hold that the words " constituted under an instrument of partnership " include not only firms which have been created by an Instrument of Partnership but also those which may have been created by word of mouth but have been subsequently clothed in legal form by reducing the terms and conditions of the partnership to writing.
We have already indicated that there has been a conflict of judicial opinion in the different High Courts in India on the question now before us.
But on a consideration of the facts in each case, it will be found that the decision arrived at in most of the cases, was correct, though the reasons given appear to have gone beyond the requirements of the case.
The decision of the Bombay High Court in Dwarkadas Khetan & Co. vs Commissioner of Income tax, Bombay City, Bombay (1), discloses that the partnership then in question had come into existence with effect from the beginning of 1946, though the Instrument of Partnership (1) [1956) , 907.
656 was executed on March 27, 1946.
Thus, the Instrument of Partnership came into existence during the accounting year, whatever that year may have been, because the year 1946 was the starting year of the partner Ship.
Hence, even the earliest assessment year, presumably the year 1947 48, would be governed by the terms and conditions of the written Instrument of Partnership aforesaid.
The decision of the Bombay High Court was followed by the same Bench of that Court in the case of Commissioner of Income tax, Bombay North vs Shantilal Vrajlal & Chandulal Dayalal & Co. (1).
In the second case, the learned Judges ruled that the second partnership deed of September 12, 1951, which set out the names and shares of all the partners who constituted the partnership, could be registered in respect of the accounting year November, 1948 to October, 1949.
This conclusion was arrived at without even a mention, far less a discussion, of the relevant provisions of the Act.
Apparently, the matter was not critically placed before the learned Judges, when they decided the second case.
The con clusion in this case is, with all respect, apparently wrong in view of our conclusion that the Instrument of Partnership should have been in existence in the accounting year.
In the High Court of Punjab, the question was fully discussed in a judgment of a Division Bench, given by one of us (Kapur, J., as he then was), in the case of Kalsi Mechanical Works, Nandpur vs Commissioner of Income tax, Simla (2).
In that case, the firm had come into existence by a verbal agreement in June, 1944.
The deed of partnership was drawn up as late as May 9, 1949.
The application for registration of the firm under section 26A for the assessment year 1949 50, was dismissed by the lncome tax Authorities as also by the Tribunal.
The High Court, after an elaborate examination of the relevant provisions of the Act, including the Rules and the Forms, upheld the orders of the Department.
The conclusion of the Bench was in these terms: " The sections of the Income tax Act show that (1) (2) , 361. 657 for the purpose of registration it is necessary that the firm should be constituted by an instrument of partnership and in my opinion the Rules read with Sections 26 and 28 of the Act indicate that such a firm as is constituted under an instrument of partnership should have been in existence during the account period and should not come into existence during the assessment year, and if it was not in existence during the account period it cannot be registered so as to affect the liabilities of the partners for income tax accruing during the account period.
" The conclusion reached is correct, except, with all respect, for the observation that under section 26A, it is necessary that the firm should be constituted " by " an instrument of partnership.
That is the leading judgment in the High Court of Punjab.
It was followed by another Division Bench of that Court in the case of Padam ParshadRattan Chand vs Commissioner of Income tax, Delhito the effect that constituted under an instrument in section 26A, meant created or formed by a formal deed".
In this case, the business of the firm had started from April 1, 1947, but the Instrument of Partnership was executed on April 10, 1950.
The application for registration was made in respect of the assessment year 1948 49.
It is clear with reference to these dates that the Instrument of Partnership was not in existence either during the accounting year or even during the assessment year, and the Court, therefore, rightly held that the partnership could not be registered in respect of the assessment year; but they proceeded further to observe that there was no objection to the firm being treated as having been constituted under the Instrument as from the date of the Instrument itself.
The answer of the Court to the question posed, was that the firm could be registered not in respect of the assessment year for which the application had been made, but with effect from the date of the Instrument.
Apparently, the attention of the Court was not drawn to the Rules aforesaid, particularly, Rules 2 and 3, which require (1) 83 658 that the application has to be made before the assessment is completed and for a particular assessment year.
More or less to the same effect, are two other Division Bench rulings Of that High Court in Bery Engineering Co., Delhi vs Commissioner of Income tax, Delhi (1) and Income tax Commissioner, Delhi vs Messrs. Birdhi Chand Girdhari Lal (2).
In all these cases in the Punjab High Court, the deeds came into existence later than the accounting year or the assessment year, and therefore, could not have been registered.
The actual decisions in these cases were correct, though there are orbiter dicta to the effect that section 26A requires that the firm should have been created or set up by an Instrument of Partnership.
In the Patna High Court, the very same question was discussed at great length by a Division Bench of that Court, presided over by Ramaswami, C. J., in the case of Khimji Walji & Co. vs Commissioner of Income tax, Bihar and Orissa (3).
The learned Chief Justice, after an elaborate examination of the relevant provisions of the Act, came to the conclusion in these terms " It is necessary for the purpose of registration under Section 26A that the partnership should be constituted by an instrument of partnership and that such a partnership as is constituted under an instrument of partnership should have been in existence during the accounting year ".
It is on the same lines as the leading judgment of the Punjab High Court, supra.
With reference to the dates given in the judgment, the decision is right, though, in this case also, the words " constituted under " have been construed as " constituted by ", without discussing the necessity for so amending the words of the statute, even as in the Punjab High Court decisions.
As a result of the above discussion, the conclusion is reasonably clear that unless the partnership business was carried on in accordance with the terms of an Instrument of Partnership which was operative during (1) (2) (3) , 470. 659 the accounting year, it cannot be registered in respect of the following assessment year.
As in these cases, the partnership did not admittedly function under such a deed of partnership, the Department and the High Court were right in refusing registration.
We would, therefore, dismiss these appeals, but for different reasons to those given below.
The respondent is entitled to his costs one set of hearing fees to be paid half and half by the appellants.
HIDAYATULLAH, J. I have had the advantage of reading the judgment just delivered by my brother, Sinha, J.
I agree that section 26A of the Indian Income tax Act must be read as it is.
The words of the section, as they stand, are not meaningless, and in view of the decision in Commissioners for special Purpose of the Income tax vs Pemsel (1) it is not possible to read for the expression " constituted under " the words constituted by ".
I entertain, however, some doubt as to whether the instrument sought to be registered, should be in existence in the accounting year, before registration can be claimed.
There is nothing in the Act which says this specifically.
My brother has reasoned from the contents of the Act and the Rules that such a condition is implied.
While I entertain some doubts, I am not prepared to record a dissent, more so as the Board of Revenue has issued instructions that all firms should be registered, whether the documents under which they were constituted existed in the accounting year or not, provided the Income tax Officer was satisfied about the genuineness of the firms.
In the result, I agree that the appeals should be dis.
missed with costs.
Appeals dismissed.
(1) ; 542.
| The question for determination in these two appeals was whether the appellant firms were entitled to registration under section 26A of the Indian Income tax Act and the common point of law involved was the interpretation of the words " constituted under an instrument of partnership " occurring in that section.
In Appeal No. 85 the assessee firm was said to have been constituted by a verbal agreement in April, 1948, and the deed of partnership was drawn up in September, 1949.
The application for registration under section 26A of the Act for the assessment year 1949 1950 was made thereafter to the Income tax Officer.
In Appeal NO. 389 the assessee firm was verbally constituted in 81 642 June, 1944, and a memorandum of partnership was executed in June 1948.
The application for registration under section 26A for the assessment years 1945 46 and 1946 47 was made on August 24, 1949.
The applications were rejected by the Income tax Officer and the appeals preferred by the assessees were also dismissed by the Income tax Appellate Tribunal.
The High Court took the view that section 26A of the Indian Income tax Act contemplated a firm created or brought into existence by an instrument of partnership and answered the questions against the assessees.
It was contended on their behalf that solong as the assessment was not made, they were entitled to registration irrespective of the year in which the instrument of partnership came into existence.
This was controverted on behalf of the Revenue and their case was that a firm seeking registration under section 26A of the Act should be created by an instrument of partnership, or at any rate, such instrument should be in existence during the relevant accounting year, i. e. the year previous to the year of assessment in respect of which the application for registration was made.
Held, that the words " Constituted under an instrument of partnership occurring in section 26A of the Indian Income tax Act included not only firms that were created by instruments of partnership but also those that were subsequent to their creation, clothed in legal form by reducing the terms and conditions of the partnership in writing.
Dwarkadas Khetan & Co. vs Commissioner of Income tax, Bombay City, Bombay, , approved.
Kalsi Mechanical Woyks, Nandpur vs Commissioner of Income tax, Simla, , Padam Parshad Rattan Chand vs Commissioner of Income tax, Delhi, , Bery Engineering Co., Delhi vs Commissioner of Income tax, Delhi, , Income tax Commissioner, Delhi vs Messrs. Birdhi Chand Girdhari Lal, and Khimji Walji & Co. vs Commissioner of Income tax, Bihar and Orissa, , dissented from.
Section 26A, read with SS. 26, 28 and Rules 2 to 6B, laid down the following essential conditions that a firm must fulfil before it could claim registration under section 26A of the Act (1) that it must be constituted under an Instrument of Partnership, specifying the individual shares of the partners; (2) that an application on behalf of and signed by, all the partners, containing all the particulars as set out in the Rules, must be made; (3) that the application must be made before the assessment of the income of the firm was made under section 23 Of the Act for that particular year; (4) that the profits (or loss, if any) of the business relating 643 to the previous year, i. e., the relevant accounting year, must be divided or credited, as the case may be, in accordance with the terms of the Instrument ; and lastly, (5) that the partnership must be genuine and in actual existence in conformity with the terms and conditions of the Instrument.
Where, therefore, as in the instant cases, the partnership did not admittedly function in terms of an instrument of partnership which was operative during the accounting year, it could not be registered during the following assessment year.
Commissioner of Income tax, Bombay North vs Shantilal Vrajlal & Chandulal Dayalal & CO. , dis approved.
Per M. HIDAYATULLAH, J. While it was clearly not possible to read " constituted by " for the words " constituted under " occurring in section 26A of the Act, it was doubtful whether the instrument of partnership sought to be registered must be in existence in the accounting year in order to entitle it to registration.
Dwarkadas Khetan & Co. vs Commissioner of Income tax, Bombay City, Bombay, , referred to.
|
Summarize this legal judgement text concisely | Appeals Nos. 380 to 389, 391 to 399, 401, 429 and 431 to 434 of 1958.
Appeals from the judgment and decree dated December 19, 1956, of the Allahabad High Court in Civil Misc.
Writs Nos.
1574, 1575, 1576, 1577, 1578, 1579,1444,1584,1586,1589, 1631, 1632, 1634, 1635, 1636,1694, 1695, 1697, 1704, 1707, 3726, 1647, 1948 and 1949 and 1956.
M. K. Nambiyar, Shyam Nath Kacker, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the appellants (in C. As.
380 385, 387 389, 391 399 and 401 of 1958). S.N.Kacker and J. B. Dadachanji, for the appellant (in C. A. No. 386/58).
Naunit Lal, for the appellants (in C. As.
429 & 431 434/58).
K. B. Asthana & G. N. Dikshit, for the respondents.
January 15.
The judgment of Das, C. J., and Sinha, J., was delivered by Das, C. J.
The judgment of Bhagwati, Subba Rao and Wanchoo, JJ., was delivered by Subba Rao, J. DAS, C. J. We have had the advantage of perusing the judgment prepared by our learned Brother Subba Rao and 'we agree with the order proposed by him, namely, that all the above appeals should be dismissed with costs, although we do not subscribe to all the reasons advanced by him.
The relevant facts and the several points raised by learned counsel for the appellants and the petitioners in support of the appeals have been fully set out in the judgment which our learned Brother will presently deliver and it is not necessary for us to set out the 12 same here.
Without committing ourselves to all the reasons adopted by our learned Brother, we agree with his following conclusions, namely, (1) that the Uttar Pradesh Transport Service (Development) Act, 1955 (Act IX of 1955), hereinafter referred to as the U. P. Act, did not, on the passing of the Motor Vehicles (Amendment) Act, 1956 (100 of 1956), hereinafter referred to as the Central Act, become wholly void under article 254(1) of the Constitution but continued to be a valid and subsisting law supporting the scheme already framed under the U. P. Act; (2) that, even if the Central Act be construed as amounting, under article 254(2), to a repeal of the U. P. Act, such repeal did not destroy or efface the scheme already framed under the U. P. Act, for the provisions of section 6 of the General Clauses Act saved the same; (3) that the U. P. Act did not offend the provisions of article 31 of the Constitution, as it stood before the Constitution (4th Amendment) Act, 1955, for.
the U. P. Act and in particular section 11(5) thereof provided for the payment of adequate compensation.
These findings are quite sufficient to dispose of the points urged by Mr. Nambiyar and Mr. Naunit Lal in support of the claims and contentions of their respective clients.
In view of the aforesaid finding that the U. P. Act did not infringe the fundamental rights guaranteed by article 31, it is wholly unnecessary to discuss the following questions, namely, (a) whether the provisions of 'Part III of the Constitution enshrining the fundamental rights are mere checks or limitations on the legislative competency conferred on Parliament and the State Legislatures by articles 245 and 246 read with the relevant entries in the Lists in the Seventh Schedule to the Constitution or are an integral part of the provisions defining, prescribing and conferring the legislative competency itself and (b) whether the doc trine of eclipse is applicable only to pre Constitution laws or can apply also to any post Constitution law which falls under article 13(2) of the Constitution.
As, however, our learned Brother has thought fit to embark upon a discussion of these questions, we desire to guard ourselves against being understood as 13 accepting or acquiescing in the conclusion that the doctrine of eclipse cannot apply to any post Constitution law.
A post Constitution law may infringe either a fundamental right conferred on citizens only or a fundamental right conferred on any person, citizen or non citizen.
In the first case the law will not stand in the way of the exercise by the citizens of that fundamental right and, therefore, will not have any operation on the rights of the citizens, but it will be quite effective as regards non ,citizens.
In such a case the fundamental right will, qua the citizens, throw a shadow on the law which will nevertheless be on the Statute Book as a valid law binding on non citizens and if the shadow is removed by a constitutional ,amendment, the law will immediately be applicable even to the citizens without being re enacted.
The decision in John M. Wilkerson vs Charles A. Rahrer (1) cited by our learned Brother is squarely in point.
In other words the doctrine of eclipse as explained by this Court in Bhikaji Narain Dhakras vs The State of Madhya Pradesh (2) also applies to a post Constitution law of this kind.
Whether a post Constitution law of the other kind, namely, which infringes a fundamental right guaranteed to all persons, irrespective of whether they are citizens or not, and which, therefore, can have no operation at all when it is enacted, is to be regarded as a still born law as if it had not been enacted at all and, therefore, not subject to the doctrine of eclipse is a matter which may be open to discussion.
On the findings arrived at in this case, however, a discussion of these aspects of the matter do not call for a considered opinion and we reserve our right to deal with the same if and when it becomes actually necessary to do so.
SUBBA RAO, J.
These twenty five appeals are by certificate under articles 132 and 133 of the Constitution granted by the High Court of Judicature at Allahabad and raise the question of the validity of the scheme of nationalization of State Transport Service formulated by the State Government and the consequential orders made by it.
(1) ; ; , (2) [1955] 2 S.C.R. 589.
14 The said appeals arise out Writ Petitions filed by he appellants in the Allahabad High Court challenging the validity of the U. P. Transport Services (Development) Act of 1955, being U. P. Act No. IX of 1955 (hereinafter referred to as the U. P. Act), and the notifications issued thereunder.
All the appeals were consolidated by order of the High Court.
The appellants have been carrying on business as stage carriage operators for a considerable number of years on different routes in Uttar Pradesh under valid, permits issued under the , along with buses owned by Government.
The U. P. Legislature, after obtaining the assent of the President on April 23, 1955, passed the U. P. Act and duly published it on April 24, 1955.
Under section 3 of the U. P. Act, the Government issued a notification dated May 17, 1955, whereunder it was directed that the aforesaid routes along with others should be exclucively served by the stage carriages of the Government and the private stage carriages should be excluded from those routes.
On November 12, 1955, the State Government published the notification under section 4 of the U. P. Act formulating the scheme for the aforesaid routes among others.
The appellants received notices under section 5 of the U. P. Act requiring them to file objections, if any, to the said scheme; and after the objections were received, they were informed that they would be heard by a Board on January 2, 1956.
On that date, the objections filed by the operators other than those of the Agra region were heard and the inquiry in regard to the Agra region was adjourned to January 7, 1956.
It appears that the operators of the Agra region did not appear on the 7th.
The notification issued under section 8 of the U. P. Act was pub lished in the U. P. Gazette on June 23, 1956, and on June 25, 1956, the Secretary to the Regional Transport Authority, Agra, sent an order purported to have been issued by the Transport Commissioner to the operators, of the Agra region prohibiting them from plying their stage carriages on the routes and also informing them that their permits would be transferred to other routes.
On July 7, 1956, a notice was sent to 15 filed Writ Petitions in the Allahabad High Court challenging the validity of the U. P. Act and the notifications issued thereunder.
The facts in Civil Appeal No. 429 of 1958 are slightly different from those in other appeals and they may be stated: The appellant 's application for renewal of his permanent permit was rejected in 1953; but, on appeal, the State Transport Authority Tribunal allowed his appeal on September 6,1956, and directed his permit to be renewed for three years beginning from November 1, 1953.
Pursuant to the order of the Tribunal, the appellant 's pert nit was renewed with effect from November 1, 1953, and it was made valid up to October 31, 1956.
The scheme of nationalisation was initiated and finally approved between the date of the rejection of the appellant 's application for renewal and the date when his appeal was allowed.
The appellant applied on October 11, 1956, for the renewal of his permit and he was informed by the Road Transport Authority, Allahabad, that no action on his application, under reference was possible.
The appellant 's contention, among others, was that the entire proceedings were taken behind his back and therefore the scheme was not binding on him.
The appellants in thirteen appeals, namely, Civil Appeals Nos.
387 to 389, 391 to 394, 396 to 399 and 401 and 429 were offered alternative routes.
Though they tentatively accepted the offer, presumably on the ground that it was the lesser of the two evils, in fact they obtained stay as an interim arrangement and continued to operate on the old routes.
The appellants filed applications for permission to urge new grounds in the appeals, which were not taken before the High Court.
The said grounds read : (i) That by reason of the coming into operation of the Motor Vehicles (Amendment) Act, No. 100 of 1956, passed by Parliament and published in the Gazette of India Extraordinary dated 31st December, 1956, the impugned U. P. Act No. IX of 1955 has become void.
(ii) That by reason of Article 254 of the Constitution of India, the said impugned Act No. IX of 1955, 16 being repugnant and inconsistent with the Central Act No. 100 of 1956, has become void since the coming into operation of the aforesaid Act No. 100 of 1956 ".
The judgment of the Allahabad High Court, which is the subject matter of these appeals, was delivered on December 19, 1956.
The Amending Act of 1956 was published on December 31, 1956.
It is therefore manifest that the appellants could not have raised the aforesaid grounds before the High Court.
Further, the grounds raise only a pure question of law not dependent upon the elucidation of any further facts.
In the circumstances, we thought it to be a fit case for allowing the appellants to raise the new grounds and we accordingly gave them the permission.
Mr. M. K. Nambiar, appearing for some of the appellants, raised before us the following points: (i) The Motor Vehicles (Amendment) Act (100 of 1956) passed by, the Parliament is wholly repugnant to the provisions of the U. P Act and therefore the latter became void under the provisions of Article 254(1) of the Constitution ; with the result that, at the present time, there is no valid law whereunder the Government can prohibit the appellants from exercising their fundamental right under the Constitution, namely, to carry on their business of motor transport; (ii) the scheme framed under the Act, being one made to operate in future and from day to day, is an instrument within the meaning of section 68B of the Amending Act, and therefore the provisions of the Amending Act would prevail over those of the scheme, and after the Amending Act came into force, it would have no operative force; and (iii) even if the U. P. Act was valid and continued to be in force in regard to the scheme framed thereunder, it would offend the provisions of article 31 of the Constitution, as it was before the Constitution (Fourth Amendment) Act, 1955, as, though the State had acquired the appellant 's interest in a commercial undertaking, no compensation for the said interest was given, as it should be under the said Article.
The other learned Counsel, who followed Mr. Nambiar, except Mr. Naunit Lal, adopted his argument.
Mr. Naunit Lal, in addition to the argument 17 advanced by Mr. Nambiar in regard to the first point, based his contention on the proviso to article 254(2) of the Constitution rather than on article 254(1).
He contended that by reason of the Amending Act,,, the U. P. Act was repealed in toto and, because of section 68B of the Amending Act, the operation of the provisions of the General Clauses Act was excluded.
In addition, he contended that in Appeal No. 429 of 1958, the scheme, in so far as it affected the appellant 's route was bad inasmuch as no notice was given to him before the scheme was approved.
We shall proceed to consider the argument advanced by Mr. Nambiar in the order adopted by him; but before doing so, it would be convenient to dispose of the point raised by the learned Advocate General, for it goes to the root of the matter, and if it is decided in his favour, other questions do not fall for consideration.
The question raised by the learned Advocate General may be posed thus: whether the amendment of the Constitution removing a constitutional limitation on a legislature to make a particular law has the effect of validating the Act made by it when its power was subject to that limitation.
The present case illustrates the problem presented by the said question.
The U. P. Legislature passed the U. P. Act on April 24, 1955, whereunder the State Government was authorized to frame a scheme of nationalization of motor transport.
After following the procedure prescribed therein, the State Government finally published the scheme on June 23, 1956.
The Constitution (Fourth Amendment) Act, 1955, received the assent of the President on April 27, 1955.
The State Government framed the scheme under the U. P. Act after the passing of the Constitution (Fourth Amendment) Act, 1955.
Under the said Amendment Act, el.
(2) of article 31 has been amended and cl.
(2A) has been inserted.
The effect of the amendment is that unless the law provides for the transfer of 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 compulsory acquisition or 3 18 requisition of property within the meaning of cl.
(2) of that Article and therefore where there is no such transfer, the condition imposed by cl.
(2), viz., that the law Should fix the amount of compensation or specify the principles on which and the manner in which the compensation is to be determined and given is not attracted.
If the amendment applies to the U. P. Act, as there is no transfer of property to the State, no question of compensation arises.
On the other hand, if the unamended Article governs the U. P. Act, the question of compensation will be an important factor in deciding its validity.
The answer to the problem so presented depends upon the legal effect of a consti tutional limitation of the legislative power on the law made in derogation of that limitation.
A distinction is sought to be made by the learned Advocate General between the law made in excess of the power conferred on a legislature under the relevant List in the Seventh Schedule and that made in violation of the provisions of Part III of the Constitution.
The former, it is suggested, goes to the root of the legislative power, whereas the latter, it is said, operates as a check on that power, with the result that the law so made is unenforceable, and as soon as the check is removed, the law is resuscitated and becomes operative from the date the check is removed by the constitutional amendment.
Mr. Nambiar puts before us the following two propositions in support of his contention that the law so made in either contingency is void ab initio: (i) the paramountcy of fundamental rights over all legislative powers in respect of all the Lists in the Seventh Schedule to the Constitution is secured by the double process of the prohibition laid by article 13(2) and the restrictions imposed by article 245, unlike the mere implied prohibition implicit in the division of power under article 246; and (ii) where the provisions of an enactment passed by a legislature after January 26, 1950, in whole or in part subject to the doctrine of severability are in conflict with the provisions of Part III, the statute, in whole or in part, is void ab initio.
This question was subjected to judicial scrutiny by this 19 Court, but before we consider the relevant authorities, it would be convenient to test its validity on first principles.
The relevant Articles of the Constitution read as follows: Article 245: "(1)Subject to the provision of this Constitution, Parliament may make laws for the whole or any part of the territory Of India, and the Legislature of a State may make laws for the whole or any part of the State.
" Article 246: " (1) Notwithstanding anything in clauses (2) and (3) Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the" Union List ").
(2) Notwithstanding anything in clause (3), Parliament and, subject to clause (1), the Legislature of any State also, have power to make.
laws with respect to any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as the " Concurrent List").
(3) Subject to clauses (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the " State List ").
(4) Parliament has power to make laws with respect to any matter for any part of the territory of India not included in a State notwithstanding that such matter is a matter enumerated in the State List.
" Article 13: " (1) All laws in force in the territory of India immediately before the commencement of this Constitution, in so far as they are inconsistent with the provisions of this Part, shall, to the extent of such inconsistency, be void.
(2) The State shall Dot make any law which takes away or abridges the rights conferred by this Part and any law made in contravention of this clause shall, to the extent of the contravention be void." 20 Article 31 (Before the Constitution (Fourth Amendment) Act, 1955): " (1) No person shall be deprived of his property save by authority of law.
(2) No property, movable or immovable, including any interest in, or in any company owning, any commercial or industrial undertaking, shall be taken possession of or acquired for public purposes under any law authorising the taking of such possession or such acquisition, unless the law provides for compensation for the property taken possession of or acquired and either fixes the amount of the compensation, or specifies the principles on which, and the manner in which, the compensation is to be determined and given The combined effect of the said provisions may be stated thus: Parliament and the Legislatures of States have power to make laws in respect of any of the matters enumerated in the relevant lists in the Seventh Schedule and that power to make laws is subject to the provisions of the Constitution including article 13, i.e., the power is made subject to the limitations imposed by Part III of the Constitution.
The general power to that extent is limited.
A Legislature, therefore, has no power to make any law in derogation of the injunction contained in article 13.
Article 13(1) deals with laws.in force in the territory of India before the commencement of the Constitution and such laws in so far as they are inconsistent with the provisions of Part III shall, to the extent of such inconsistency be void.
The clause, therefore, recognizes the validity of, the pre Constitution laws and only declares that the said laws would be void thereafter to the extent of their inconsistency with Part III; whereas cl.
(2) of that article imposes a prohibition on the State making laws taking away or abridging the rights conferred by Part III and declares that laws made in contravention of this clause shall, to the extent of the contravention, be void.
There is a clear distinction between the two clauses.
Under el.
(1), a pre Constitution law subsists except to the extent of its inconsistency with the provisions of Part III; whereas, no post Constitution law 21 can be made contravening the provisions of Part III, and therefore the law, to that extent, though made, is a nullity from its inception.
If this clear distinction is borne in mind, much of the cloud raised is dispelled.
When cl.
(2) of article 13 says in clear and unambiguous terms that no State shall make any law which takes away or abridges the rights conferred by Part III, it will not avail the State to contend either that the clause does not embody a curtailment of the power to legislate or that it imposes only a check but not a prohibition.
A constitutional prohibition against a State making certain laws cannot be whittled down by analogy or by drawing inspiration from decisions on the provisions of other Constitutions; nor can we appreciate the argument that the words " any law " in the second line of article 13(2) posits the survival of the law made in the teeth of such prohibition.
It is said that a law can come into existence only when it is made and therefore any law made in contravention of that clause presupposes that the law made is not a nullity.
This argument may be subtle but is not sound.
The words " any law " in that clause can only mean an Act passed or made factually, notwithstanding the prohibition.
The result of such contravention is stated in that clause.
A plain reading of the clause indicates, without any reasonable doubt, that the prohibition goes to the root of the matter and limits the State 's power to make law; the law made in spite of the prohibition is a still born law.
Cooley in his book " Constitutional Limitations" (Eighth Edition, Volume I), states at page 379: " From what examination has been given to this subject, it appears that whether a statute is constitutional or not is always a question of power; that is, a question whether the legislature in the particular case, in respect to the subject matter of the act, the manner in which its object is to be accomplished, and the mode of enacting it, has kept within the constitutional limits and observed the constitutional conditions." The Judicial Committee in The Queen.
vs Burah (1) observed at page 193 as under (1) (1878) L.R. 5 I. A. 178.
22 The established courts of Justice, when a question arises whether the prescribed limits have been exceeded, must of necessity determine that question ; and ,the only way in which they can properly do so, is by ;looking to the terms of the instrument by which, affirmatively, the legislative powers were created, and by which, negatively, they are restricted.
" The Judicial Committee again in Attorney General for Ontario vs Attorney General for Canada (1) crisply stated the legal position at page 583 as follows: ". . . if the text is explicit the text is con clusive, alike in what it directs and what it forbids." The same idea is lucidly expressed by Mukherjea, J., as he then was, in K. C. Gajapati Narayan Deo vs The State of Orissa (2).
It is stated at page 11 as follows: " If the Constitution of a State distributes the legislative powers amongst different bodies, which have to act within their respective spheres marked out by specific legislative entries, or if there are limitations on the legislative authority in the shape of fundamental rights, questions do arise as to whether the legislature in a particular case has or has not, in respect to the subject_matter of the statute or in the method of enacting it, transgressed the limits of its constitutional powers.
" The learned Judge in the aforesaid passage clearly accepts the doctrine that both the transgression of the ambit of the entry or of the limitation provided by the fundamental rights are equally transgressions of the limits of the State 's constitutional powers.
It is, therefore, manifest that in the construction of the constitutional provisions dealing with the powers of the legislature, a distinction cannot be made between an affirmative provision I and a negative provision; for, both are limitations on the power.
The Constitution affirmatively confers a power on the legislature to make laws within the ambit of the relevant entries in the lists and negatively prohibits it from making laws infringing the fundamental rights.
It (1) (2) ; 23 goes further and makes the legislative power subject to the prohibition under article 13(2).
Apparent wide power is, therefore, reduced to the extent of the prohibition.
If articles 245 and 13(2) define the ambit of the power to legislate, what is the effect of a law made in excess of that power ? The American Law gives a direct and definite answer to this question.
Cooley in his " Constitutional Limitations " (Eighth Edition, Volume I) at page 382 under the heading " Consequences if a statute is void " says : " When a statute is adjudged to be unconstitutional, it is as if it had never been. . . .
And what is true of an act void in toto is true also as to any part of an act which is found to be unconstitutional, and which, consequently, is to be regarded as having never, at any time, been possessed of any legal force.
" In Rottschaefer on Constitutional Law, much to the same effect is stated at page 34: " The legal status of a legislative provision in so far as its application involves violation of constitutional provisions, must however be determined in the light of the theory on which Courts ignore it as law in the decision of cases in which its application produces unconstitutional results.
That theory implies that the legislative provisions never had legal force as applied to cases within that clause.
" In " Willis on Constitutional Law ", at page 89: " A judicial declaration of the unconstitutionality of a statute neither annuls nor repeals the statute but has the effect of ignoring or disregarding it so far as the determination of the rights of private parties is concerned.
The Courts generally say that the effect of an unconstitutional statute is nothing.
It is as though it had never been passed. . . . . " Willoughby on Constitution of the United States Second Edition, Volume I, page 10: " The Court does not annul or repeal the statute if it finds it in conflict with the Constitution.
It simply refuses to recognize it, and determines the rights of 24 the parties just as if such statute had no application. . . .
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.
I An after acquired power cannot, ex proprio vigore, validate a statute void 'When enacted '.
" However, it has been held that where an act is within the general legislative power of the enacting body, but is rendered unconstitutional by reason of some adventitious circumstance, as, for example, when a State legislature is prevented from regulating a matter by reason of the fact that the Federal Congress has already legislated upon that matter, or by reason of its silence is to be construed as indicating that there should be no regulation, the act does not need to be re enacted in order to be enforced, if this cause of its unconstitutionality is removed.
" For the former proposition, the decision in Newberry vs United States (1) and for the latter proposition the decision in John M. Wilkerson vs Charles A. Rahrer (2) are cited.
In Newberry 's Case the validity of the Federal Corrupt Practices Act of 1910, as amended by the Act of 1911, fixing the maximum sum which a candidate might spend to procure his nomination at a primary election or convention was challenged.
At the time of the enactment, the Congress had no power to make that law, but subsequently, by adoption of the 17th Amendment, it acquired the said power.
The question was whether an after acquired power could validate a statute which was void when enacted.
Mr. justice McReynolds delivering the opinion of the court states the principle at page 920 : " Moreover, the criminal statute now relied upon ante dates the 17th Amendment, and must be tested by powers possessed at time of its enactment.
An (1) ; ; (2) ; ; 25 after acquired power cannot, ex proprio vigore, validate a statute void when enacted.
" In Wilkerson 's Case (1) the facts were that in June 1890, the petitioner, a citizen of the United States and an agent of Maynard, Hopkins & Co., received from his principal intoxicating liquor in packages.
The packages were shipped from the State of Missouri to various points in the State of Kansas and other States.
On August 9, 1890, the petitioner offered for sale and sold two packages in the State of Kansas.
The packages sold were a portion of the liquor shipped by Maynard, Hopkins & Co. It was sold in the same packages in which it was received.
The petitioner was prosecuted for violating the Prohibitory Liquor Law of the State of Kansas; for, under the said law, "any person or persons who shall manufacture, sell or barter any in toxicating liquors, shall be guilty of a misdemeanor ".
On August 8, 1890, an Act of Congress was passed to the effect that intoxicating liquors transported into any State should upon arrival in such State be subject to the operation and effect of the laws of such State.
It will be seen from the aforesaid facts that at the time the State Laws were made, they were valid, but they did not operate upon packages of liquors imported into the Kansas State in the course of interstate commerce, for the regulation of inter State commerce was within the powers of the Congress; and that be fore the two sales in the Kansas State, the Congress made an Act making intoxicating liquors transported into a State subject to the laws of that State, with the result that from that date the State Laws operated on the liquors so transported.
Under those circumstances, the Supreme Court of the United States held : " It was not necessary, after the passage of the Act of Congress of August 8, 1890, to re enact the Law of Kansas of 1899, forbidding the sale of intoxicating liquors in that State, in order to make such State Law operative on the sale of imported liquors." The reason for the decision is found at page 578: (1) ; ; 4 26 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.
A reference to these decisions brings out in bold relief the distinction between the two classes of cases referred to therein.
It will be seen from the two decisions that in the former the Act was Void from its inception and in the latter it was valid when made but it could not operate on certain articles imported in the course of inter State trade.
On that distinction is based the principle that an after acquired power cannot, ex proprio vigore, validate a statute in one case, and in the other, a law validly made would take effect when the obstruction is removed.
The same principle is enunciated in Carter vs Egg and Egg Pulp Marketing Board (1).
Under section 109 of the Australian Constitution " when a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid. " Commenting on that section, Latham, C. J., observed at page 573: " This section applies only in cases Where, apart from the operation of the section, both the Commonwealth and the State Laws which are in question would be valid.
If either is invalid ab initio by reason of lack of power, no question can arise under the section.
The word " invalid " in this section cannot be interpreted as meaning that a State law which is affected by the section becomes ultra vires in whole or in part.
If the Commonwealth law were repealed the State law would again become operative.
" We shall now proceed to consider the decisions of this Court to ascertain whether the said principles are (1) ; 27 accepted or departed from.
The earliest case is Keshavan Madhava Menon vs The State of Bombay (1).
There the question was whether a prosecution launched under the Indian Press (Emergency Powers) Act, 1931, before the Constitution could be continued after the Constitution was passed.
The objection taken was that the said law was inconsistent with fundamental rights and therefore was void.
In the context of the question raised, it became necessary for the Court to consider the impact of article 13(1) on the laws made before the Constitution.
The Court, by a majority, held that article 13(1) of the Indian Constitution did not make existing laws which were inconsistent with fundamental rights void ab initio, but only rendered such laws ineffectual and void with respect to the exercise of the fundamental rights on and after the date of the commencement of the Constitution and that it had no retrospective effect.
Das, J., as he then was, observed at page 233: " It will be noticed that all that this clause declares is that all existing laws, in so far as they are inconsistent with the provisions of Part III shall, to the extent of such inconsistency, be void.
Every statute is prima facie prospective unless it is expressly or by necessary implications made to have retrospective operation.
" At page 234, the learned Judge proceeded to state: " They are not void for all purposes but they are void only to the extent they come into conflict with the fundamental rights.
In other words, on and after the commencement of the Constitution no existing law will be permitted to stand in the way of the exercise of any of the fundamental rights.
Therefore, the voidness of the existing law is limited to the future exercise of the fundamental rights. . .
Such laws exist for all past transactions and for enforcing all rights and liabilities accrued before the date of the Constitution.
" At page 235, the same idea is put in different words thus : ". . . . .Article 13(1) only has the effect of (1) ; 28 nullifying or rendering all inconsistent existing laws ineffectual or nugatory and devoid of any legal force or binding effect only with respect to the exercise Of fundamental rights on and after the date of the commencement of the Constitution.
" At page 236, the learned Judge concludes: " So far as the past acts are concerned the law exists, notwithstanding that it does not exist with respect to the future exercise of fundamental rights." Mahajan, J., as he then was, who delivered a separate judgment, put the same view in different phraseology at page 251 : " The effect of Article 13(1) is only prospective and it operates in respect to the freedoms which are infringed by the State subsequent to the coming into force of the Constitution but the past acts of a person which came within the mischief of the law then in force are Dot affected by Part III of the Constitution." The learned Judge, when American law was pressed on him in support of the contention that even the pre Constitution law was void, observed thus, at page 256 : " It is obvious that if a statute has been enacted and is repugnant to the Constitution, the statute is void since its very birth and anything done under it is also void and illegal.
The courts in America have followed the logical result of this rule and even convictions made under such an unconstitutional statute have been set aside by issuing appropriate writs.
If a statute is void from its very birth then anything done under it, whether closed, completed, or inchoate, will be wholly illegal and relief in one shape or another has to be given to the person affected by such an unconstitutional law.
This rule, however, is not applicable in regard to laws which were existing and were constitutional according to the Government of India Act, 1935.
Of course, if any law is made after the 25th January, 1950, which is repugnant to the Constitution, then the same rule will have to be followed by courts in India as is followed in America and even convictions made under such an unconstitutional law 29 will have to be set aside by resort to exercise of powers given to this court by the Constitution.
" Mukherjea J., as he then was, in Behram Khurshed Pesikaka vs The State of Bombay (1) says at page 652 much to the same effect: " We think that it is not a correct proposition that constitutional provisions in Part 11I of our Constitution merely operate as a check on the exercise of legislative power.
It is axiomatic that when the lawmaking power of a State is restricted by a written, fundamental law, then any law enacted and opposed to the fundamental law is in excess of the legislative authority and is thus a nullity.
Both these declarations of unconstitutionality go to the root of the power itself and there is no real distinction between them.
They represent but two aspects of want of legislative power.
The legislative power of Parliament and the State Legislatures as conferred by articles 245 and 246 of the Constitution stands curtailed by the fundamental rights chapter of Constitution.
A mere reference to the provisions of article 13(2) and articles 245 and 246 is sufficient to indicate that there is no competency in Parliament or a State Legislature to make a law which comes into clash with Part 111 of the Constitution after the coming into force of the Constitution.
" The effect of the decision may be stated thus: The learned judges did not finally decide the effect of article 13(2) of the Constitution on post Constitution laws for the simple reason that the impugned law was a pre Constitution one.
article 13(1) was held to be prospective in operation and therefore did not affect the preexisting laws in respect of things done prior to the Constitution.
As regards the post Constitution period, article 13(1) nullified or rendered all inconsistent existing laws ineffectual, nugatory or devoid of any legal force or binding effect with respect to the exercise of the fundamental rights.
So far as the past acts were concerned, the law existed, notwithstanding that it did not exist with respect to the future exercise of the said rights.
As regards the pre Constitution laws, (1) 30 this decision contains the seed of the doctrine of eclipse developed by my Lord the Chief Justice in Bhikaji Narain Dhakras vs The State of Madhya Pradesh (1) where it was held that as the pre Constitution law was validly made, it existed for certain purposes even during the post Constitution period.
This principle has no application to post Constitution laws infringing the fundamental rights as they would be ab initio void in toto or to the extent of their contravention of the fundamental rights.
The observations of the learned judges made in the decision cited above bring out the distinction between pre and post Constitution laws which are repugnant to the Constitution and the impact of article 13 on the said laws.
In Behram Khurshed Pesikaka 's Case(2), this Court considered the legal effect of the declaration made ' in the case of The State of Bombay vs F. N. Balsara (3) that clause (b) of section 13 of the Bombay Prohibition Act (Bom.
XXV of 1949) is void under article 13(1) of the Constitution in so far as it affects the consumption or use of liquid medicinal or toilet preparations containing alcohol and held that it was to render part of section 13(b) of the Bombay Prohibition Act inoperative, ineffective and ineffectual and thus unenforceable.
Bhagwati, J., at page 620, cited all the relevant passages from textbooks on Constitutional Law and, presumably, accepted the view laid down therein to the effect that an unconstitutional Act in legal contemplation is as though it had never been passed.
Jagannadhadas, J., at page 629, noticed the distinction between the scope of cls.
(1) and (2) of article 13 of the Constitution.
After citing a passage from " Willoughby on Constitution of the United States ", the learned Judge observed : " This and other similar passages from other treatises 'relate, however, to cases where the entire legislation is unconstitutional from the very commencement of the Act, a situation which falls within the scope of article 13(2) of our Constitution.
They do not directly cover a situation which falls within (1) ; (2) (3)[1951] S.C. R. 682.
31 article 13(1). . .
The question is what is the effect of article 13(1) on a pre existing valid statute, which in respect of a severable part thereof violates fundamental rights.
Under article 13(1) such part is, " void " from the date of the commencement of the Constitution, while the other part continues to be valid.
Two views of the result brought about by this voidness are possible, viz., (1) the said severable part becomes unenforceable, while it remains part of the Act, or (2) the said part goes out of the Act and the Act stands appropriately amended pro tanto.
The first is the view which appears to have been adopted by my learned brother, Justice Venkatarama Aiyar, on the basis of certain American decisions.
I feel inclined to agree with it.
This aspect, however, was not fully presented by either side and was only suggested from the Bench in the course of arguments.
We have not had the benefit of all the relevant material being placed before us by the learned advocates on either side.
The second view was the basis of the arguments before us.
It is, therefore, necessary and desirable to deal with this case on that assumption." This passage shows that his opinion though a tentative one was that the severable part became unenforceable while it remained part of the Act.
But the learned Judge made an incidental observation that the American view applied to cases that fall within the scope of article 13(2) of the Constitution, i.e., the entire legislation would be unconstitutional from the very commencement of the Act.
Venkatarama Aiyar, J., founded his decision on a broader basis.
At page 639, the learned Judge observed: " Another point of distinction noticed by American jurists between unconstitutionality arising by reason of lack of legislative competence and that arising by reason of a check imposed on a competent Legislature may also be mentioned.
While a statute passed by a Legislature which had no competence cannot acquire validity when the Legislature subsequently acquires competence, a statute which was within the competence of the Legislature at the time of its enactment but which infringes a, constitutional 32 prohibition could 'be enforced 'Proprio vigore when once the prohibition is removed.
" On the basis of this distinction, the learned Judge held that article 13(1) of the Constitution only placed a check on a competent legislature and therefore the word " void " in that article meant " relatively void ", i.e., the law only condemned the Act as wrong to individuals and refused to enforce it against them.
In support of the said conclusion the learned Judge cited a passage from " Willoughby on the Constitution of the United States ".
A comparison of the passage cited with that in the text book discloses that one important sentence which makes all the difference to the legal position is omitted by mistake and that sentence is " An after acquired power cannot ex proprio vigore validate a statute void when enacted ".
The second paragraph in the extract on which the learned Judge placed reliance and also the decision relied upon, by him did not support his conclusion.
As already stated, the decision and the passage dealt not with a case where the State had no power to make the law, but with a case where the law lay dormant till a law of the Federal Congress removed the conflict between the State Law and the Federal Law.
That case may by analogy be applied to article 13(1) in respect of laws validly made before the Constitution but cannot be invoked in the case of a statute which was void when enacted.
By a subsequent order, this Court granted the review and reopened the case to enable the :Bench to obtain the opinion of a larger Bench on the Constitutional points raised in the judgment delivered by the learned Judges.
That matter came up before a Con stitutional Bench, and Mahajan, C. J., who was a party to the decision in Keshavan Madhava Menon 's Case (1) explained the majority view therein on the meaning of the word " void " in article 13(1) thus, at page 651: " The majority however held that the word "void" in article 13(1), so far as existing laws Were concerned, could not be held to obliterate them from the statute book, and could not make such laws void altogether, because in its opinion article 13 had not been given any (1) ; 33 retrospective effect.
The majority however held that after the coming into force of the Constitution the effect of article 13(1) on such repugnant laws was that it nullified them, and made them ineffectual and nugatory and devoid of any legal force or binding effect.
It was further pointed out in one of the judgments representing the majority view, that the American rule that if a statute is repugnant to the Constitution the statute is void from its birth, has no application to cases concerning obligations incurred or rights accrued in accordance with an existing law that was constitutional in its inception, but that if any law was made after the 26th January, 1950, which was repugnant to the Constitution, then the same rule shall have to be followed in India as followed in America.
The result therefore of this pronouncement is that the part of the section of an existing law which is unconstitutional is not law, and is null and void.
For determining the rights and obligations of citizens the part declared void should be notionally taken to be obliterated from the section for all intents and purposes, though it may remain written on the statute book and be a good law when a question arises for determination of rights and obligations incurred prior to 26th January, 1950, and also for the determination of rights of persons who have not been given fundamental rights by the Constitution.
Thus, in this situation, there is no scope for introducing terms like " relatively void " coined by American Judges in construing a Constitution which is not drawn up in similar language and the implications of which are not quite familiar in this country.
" The learned Judge, as we have already pointed out, rejected the distinction made by Venkatarama Aiyar, J., between lack of legislative power and the abridgment of the fundamental rights.
Though that question did not directly arise, the learned Judge expressed his view on the scope of article 13(2) at page 653 thus: " The authority thus conferred by Articles 245 and 246 to make laws subjectwise in the different Legislatures is qualified by the declaration made in 5 34 article 13(2).
That power can only be exercised subject to the prohibition contained in article 13(2).
On the construction of article 13(2) there was no divergence of opinion between the majority and the minority in Keshava Madhava Menon vs The State of Bombay (supra).
It was only on the construction of article 13(1) that the difference arose because it was felt that that article could not retrospectively invalidate laws which when made were constitutional according to the Constitution then in force.
" Das, J., as he then was, in his dissenting judgment differed from the majority on other points but does not appear to have differed from the aforesaid views expressed by Mahajan, C. J., as regards the scope of Keshava Madhava Menon 's Case on the meaning of the word " void " in article 13(1).
This judgment is therefore an authority on two points and contains a weighty observation on the third : (i) when the law making power of a State is restricted by written fundamental law, then any law opposed to the fundamental law is in excess of the legislative authority and is thus a nullity; (ii) even in the case of a statute to which article 13(1) applies, though the law is on the statute book and be a good law, when a question arises for determination of rights and obligations incurred prior to January 26, 1950, the part declared void should be nationally taken to be obliterated from the section for all intents and purposes ; and (iii) on the construction of article 13(2), the law made in contravention of that clause is a nullity from its inception.
The next case is a direct one on the point and that is Sag hir Ahmad vs The State.
of U. P. (1).
There, the U.P.Road Transport Act (11 of 1951) was passed enabling the State to run stage carriage service on a route or routes to the exclusion of others.
Under that Act, the State Government made a declaration extending the Act to a particular area and issued a notification setting out what purported to be a scheme for the operation of the stage carriage service on certain routes.
At the time the said Act was passed, the State had no such power to deprive a citizen of his (1) ; 35 right to carry on his transport service.
But after the Act, article 19(1) was amended by the Constitution (First Amendment)Act, 1951, enabling the State to carry on any trade or business either by itself or through, corporations owned or controlled by the State to the.
exclusion of private citizens wholly or in part.
One of the questions raised was whether the amendment of the Constitution could be invoked to validate the earlier legislation.
The Court held that the Act when passed was unconstitutional and therefore it was still born and could not be vitalised by the subsequent amendment of the Constitution removing the constitutional objections but must be re enacted.
At page 728, Mukherjea, J., as he then was, who delivered the judgment of the Court, has given the reasons for the said view : " As Professor Cooley has stated in his work on Constitutional Limitations (Vol. 1, page 304 note.) " a statute void for unconstitutionality is dead and cannot be vitalised by a subsequent amendment of the Constitution removing the constitutional objection but must be re enacted ".
We think that this is sound law and our conclusion is that the legislation in question which violates the fundamental right of the appellants under article 19(1) (g) of the Constitution and is not shown to be protected by clause (6) of the article, as it stood at the time of the enactment, must be held to be void under article 13(2) of the Constitution.
" This is a direct authority on the point, without a dis senting voice, and we are bound by it.
The decision given in Bhikaji Narain 's Case, (1) is strongly relied upon by the learned Advocate General in support of his contention.
Shortly stated, the facts in that case were: Before the Constitution, the C. P. & Berar Motor Vehicles (Amendment) Act, 1947 (C. P. III of 1948) amended the (Central Act IV of 1939) and conferred extensive powers on the Provincial Government including the power to create a monopoly of the motor transport business in its favour to the exclusion of all motor transport operators.
It was contended by the affected parties that by reason of article 13(1) of the Constitution, (1) ; 36 the Act became void.
On behalf of the State, it was argued that the Constitution (First Amendment) Act, 1951, and the Constitution (Fourth Amendment) Act, 1955, had the effect of removing the inconsistency and the Amendment Act III of 1948 became operative again.
This Court unanimously accepted the contention of the State.
This decision is one given on a construction of article 13(1) of the Constitution and it is no authority on the construction and scope of article 13(2) of the Constitution.
The reason for the decision is found in the following passages in the judgment, at page 598: " . . . . on and after the commencement of the Constitution the existing law, as a result of its becoming inconsistent with the provisions of article 19(1)(g) read with clause (6) as it then stood, could not be permitted to stand in the way of the exercise of that fundamental right.
Article 13(1) by reason of its language cannot be read as having obliterated the entire operation of the inconsistent law or having wiped it out altogether from the statute book . . .
In short, article 13(1) had the effect of nullifying or rendering the existing law which had become inconsistent with article 19(1) (g) read with clause (6) as it then stood ineffectual, nugatory and devoid of any legal force or binding effect only with respect to the exercise of the fundamental right on and after the date of the commencement of the Constitution.
Therefore, between the 26th January, 1950, and 18th June, 1951, the impugned Act could not stand in the way of the exercise of the fundamental right of a citizen under Article 19(1)(g).
The true position is that the impugned law became, as it were, eclipsed, for the time being, by the fundamental right The American authorities refer only to post Constitution laws which were inconsistent with the provisions of the Constitution.
Such laws never came to life but were still born as it were Such laws were not dead for all purposes.
They existed for the purposes of pre Constitution rights and liabilities and they remained operative, even after the Constitution, as against non citizens.
It is only as 37 against the citizens that they remained in a dormant or moribund condition." The aforesaid passages are only the restatement of the law as enunciated in Keshavan Madhava Menon 's a Case(1) reaffirmed in Pesikaka 's Case (2) and an extension of the same to meet a different situation.
A pre Constitution law, stating in the words of Das, J., as he then was, exists notwithstanding that it does not exist with respect to the future exercise of the fundamental rights.
That principle has been extended in this decision, by invoking the doctrine of eclipse.
As the law existed on the statute book to support pre Constitution acts, the Court held that the said law was eclipsed for the time being by one or other of the fundamental rights and when the shadow was removed by the amendment of the Constitution, the impugned Act became free from all blemish or infirmity.
The Legislature was competent to make the law with which Pesikaka 's Case (2) was concerned at the time it was made.
It was not a case of want of legislative power at the time the Act was passed, but one where in the case of a valid law supervening circumstances cast a cloud.
To the other class of cases to which article 13 (2) will apply, the views expressed by the American authorities, by Mahajan, J., as he then was, in Pesikaka 's Case, and by Mukherjea, J., as he then was, in Saghir Ahmad 's Case (3 ) directly apply.
To the facts in Bhikaji Narain 's Case, (4) the principle laid down in Keshavan Madhava Menon 's Case is attracted.
But it is said that the observations of the learned Judges are wide enough to cover the case falling under article 13 (2) of the Constitution and further that a logical extension of the principle laid down would take in also a case falling under article 13(2).
The first contention is based upon the following passage: But apart from this distinction between pre Constitution and post Constitution laws, on which however we need not rest our decision, it must be held that these American authorities could have no application to our Constitution.
All laws existing or future (1) ; (2) , (3) ; (4) ; 38 which are inconsistent with the provisions of Part III of our Constitution, are by express provisions of article 13 rendered void to the extent of such inconsistency.
Such laws were not dead for all purposes.
They existed for the purposes of pre Constitution rights and liabilities and they remained operative, even after the Constitution, as against non citizens.
It is only as against the citizens that they remained in a dormant or moribund condition.
" The first part of the said observation states nothing more than the plain import of the provisions of article 13(1) and (2), namely, that they render laws void only I to the extent ' of such inconsistency.
The second part of the observation directly applies only to a case covered by article 13(1), for the learned Judges say that the laws exist for the purposes of pre Constitution rights and liabilities and they remain operative even after the Constitution as against non citizens.
The said observation could not obviously apply to post Constitution laws.
Even so, it is said that by a parity of reasoning the post Constitution laws are also void to the extent of their repugnancy and therefore the law in respect of non citizens will be oil the statute book and by the application of the doctrine of eclipse, the same result should flow in its case also.
There is some plausibility in this argument, but it ignores one vital principle, viz., the existence or the non existence of legislative power or competency at the time the law is made governs the situation.
There is no scope for applying the doctrine of eclipse to a case where the law is void ab initio in whole or in part.
That apart, in the present case we do not base our decision on that article
31(1) infringed by the Act, applies to all persons irrespective of whether they are citizens or non citizens, and.
therefore the entire law was void ab initio.
That judgment, therefore, does not support the respondent as it has bearing only on the construction of article 13(1) of the Constitution.
In Ram Chandra Palai vs State of Orissa (1), this Court followed the decision in Bhikaji Narain 's Case (2) in the case of a pre Constitution Act.
In Pannalal (1) (2) ; 39 Binjraj vs Union of India (1), Bhagwati, J., quoted, with approval the extract from Keshavan Madhava Menon 's Case (2), wherein it was held that article 13(1) has only the effect of nullifying or rendering all inconsistent existing laws ineffectual or nugatory or devoid of any legal force or binding effect only with respect to the fundamental rights on or after the commencement of the Constitution.
The learned Advocate General relied upon certain decisions in support of his contention that the word " void " in articles 13(1) and 13 (2) means only " unenforceable " against persons claiming fundamental rights, and the law continues to be in the statute book irrespective of the fact that it was made in infringement of the fundamental rights.
The observations of Mukherjea, J., as he then was, in Chiranjit Lal Chowdhuri vs The Union of India (3) are relied on and they are: " Article 32, as its provisions show, is not directly concerned with the determination of constitutional validity of particular legislative enactments.
What it aims at is the enforcing of fundamental rights guaranteed by the Constitution, no matter whether the necessity for such enforcement arises out of an action of the executive or of the legislature. . . . .
The rights that could be enforced under article 32 must ordinarily be the rights of the petitioner himself who complains of infraction of such rights and approaches the court for relief.
" He also relies upon the, decision of Das, J., as he then was, in The, State of Madras vs Srimathi ChamPakam Dorairajan (4), wherein the learned Judge states thus, at page 531 : " The directive principles of the State Policy, which by article 37 are expressly made unenforceable by a Court, cannot override the provisions found in Part III which, notwithstanding other provisions, are expressly made enforceable by appropriate Writs, Orders or directions under article 32." Basing his argument on the aforesaid two observations, (1) ; (2) ; (3) ; , 899.
(4) ; , 40 it is contended that in the case 'of both the directive principles and the fundamental rights, it must be held that the infringement of either does not invalidate the law, but only makes the law unenforceable.
This argument, if we may say so, mixes up the Constitutional invalidity of a statute with the procedure to be followed to enforce the fundamental rights of an individual.
The Constitutional validity of a statute depends upon the existence of legislative power in the State and the right of a person to approach the Supreme Court depends upon his possessing the fundamental right, i.e., he cannot apply for the enforcement of his right unless it is infringed by any law.
The cases already considered supra clearly establish that a law, whether pre Constitution or post Constitution, would be void and nugatory in so far as it infringed the fundamental rights.
We do not see any relevancy in the reference to the directive principles; for, the legislative power of a State is only guided by the directive principles of State Policy.
The directions, even if disobeyed by the State, cannot affect the legislative power of the State, as they are only directory in scope and operation.
The result of the aforesaid discussion may be summarized in the following propositions: (i) whether the Constitution affirmatively confers power on the legislature to make laws subject wise or negatively prohibits it from infringing any fundamental right, they represent only two aspects of want of legislative power; (ii) the Constitution in express terms makes the power of a legislature to make laws in regard to the entries in the Lists of the Seventh Schedule subject to the other provisions of the Constitution and thereby circum cribes or reduces the said power by the limitations laid down in Part III of the Constitution; (iii) it follows from the premises that a law made in derogation or in excess of that power would be ab initio void wholly or to the extent of the contravention as the case may be ; and (iv) the doctrine of eclipse can be invoked only in the case of a law valid when made, but a shadow is cast on it by supervening constitutional inconsistency or,supervening existing statutory 41 inconsistency; when the shadow is removed, the impugned Act is freed from all blemish or infirmity.
Applying the aforesaid principles to the present case, we hold that the validity of the Act could not be tested on the basis of the Constitution (Fourth Amendment) Act, 1955, but only on the terms of the relevant Articles as they existed prior to the Amendment.
We shall now proceed to consider the first contention of Mr. Nambiar.
He contends that the Motor Vehicles (Amendment) Act (100 of 1956) passed by Parliament was wholly repugnant to the provisions of the U. P. Act and therefore the law became void under the provisions of article 254(1) of the Constitution, with the result that at the present time there is no valid law whereunder the State can prohibit the appellants exercising their fundamental right under the Constitution, namely, carrying on the business of motor transport.
Mr. Naunit Lal bases his case on the proviso to article 254(2) of the Constitution rather than on cl.
(1) thereof.
He contends that by reason of the Amending Act, the U. P. Act was repealed in toto; and because of Section 68B, the operation of the provisions of the General Clauses Act saving things done under the repealed Act was excluded.
The learned Advocate General attempted to meet the double attack by pressing on us to hold that there was no repugnancy at all between the provisions of the Central Act and the U. P. Act and therefore the U. P. Act had neither become void nor was repealed by necessary implication by the Central Act.
We shall now examine the provisions of article 254(1) and 254(2).
Article 254: "(1) If any provisions of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament which Parliament is competent to enact, or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then, subject to the provisions of clause (2), the law made by Parliament, whether passed before or after the law made by the Legislature of 6 42 such State, or, as the case may be, the existing law, shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void.
(2) Where a law made by the Legislature of a State with respect to one of the matters enumerated in the Concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his as sent, prevail, in that State.
Provided that nothing in this clause shall prevent Parliament from enacting at any time any law with respect to the same matter including a law adding to, amending, varying or repealing the law so made by the Legislature of the State.
" Article 254(1) lays down a general rule.
Clause (2) is an exception to that Article and the proviso qualifies the exception.
If there is repugnancy between the law made by the State and that made by Parliament with respect to one of the matters enumerated in the Concurrent List, the law made by Parliament shall prevail to the extent of the repugnancy and the law made by the State shall, to the extent of such repugnancy, be void.
Under cl.
(2), if the Legislature of a State makes a provision repugnant to the provisions.
of the law made by Parliament, it would prevail if the legislation of the State received the assent of the President.
Even in such a case, Parliament may subsequently either amend, vary or repeal the law made by the Legislature of a State.
In the present case, the Uttar Pradesh Legislative Assembly, after obtaining the assent of the President on April 23, 1955, passed the U. P. Act.
Parliament subsequently passed the Motor Vehicles (Amendment) Act (100 of 1956).
Therefore, both the clauses of article 254 would apply to the situation.
The first question is whether the provisions of the Union law, i.e., the Motor Vehicles (Amendment) Act (100 of 1956), are repugnant to the provisions of the U. P. Act and if so to 43 what extent.
Before we proceed to examine the provisions of the two Acts, it may be convenient to notice the law pertaining to the rule of repugnancy.
Nicholas in his Australian Constitution, 2nd Edition, page 303, refers to three tests of inconsistency or repugnancy : "(1) There may be inconsistency in the actual terms of the competing statutes; (2) Though there may be no direct conflict, a State law may be inoperative because the Commonwealth law, or the award of the Commonwealth Court is intended to be a complete exhaustive code; and (3) Even in the absence of intention, a conflict may arise when both State and Commonwealth seek to exercise their powers over the same subject matter.
" This Court in Ch.
Tika Ramji vs The State of Uttar Pradesh (1) accepted the said three rules, among others, as useful guides to test the question of repugnancy.
In Zaverbhai Amaidas vs The State of Bombay (2), this Court laid down a similar test.
At page 807, it is stated: " The principle embodied in section 107(2) and Article 254(2) is that when there is legislation covering the same ground both by the centre and by the Province, both of them being competent to enact the same, the law of the Centre should prevail over that of the State.
" Repugnancy between two statutes may thus be ascertained on the basis of the following three principles: (1) Whether there is direct conflict between the two provisions ; (2) Whether Parliament intended to lay down an exhaustive code in respect of the subject matter replacing the Act of the State Legislature; and (3) Whether the law made by Parliament and the law made by the State Legislature occupy the same field.
We shall now examine the provisions of both the Acts in some detail in order to ascertain the extent of the repugnancy between them.
The Scheme of (1) ; (2) [1955] 1 S.C.R. 799.
44 the U. P. Act may be summarized thus: Under the U. P. Act " State Road Transport Service " is defined to mean transport service by a public service vehicle owned by the State Government.
Under section 3: " Where the State Government is of the opinion that it is necessary in the interests of the general public and for subserving the common good, or for maintaining and developing efficient road transport system so to direct, it may, by notification in the official Gazette declare that the road transport services in general, or any particular class of such service on any route or portion thereof as may be specified, shall be run and operated exclusively by the State Government, or by he state Government in conjunction with railways or be run and operated partly by the State Government and partly by others under and in accordance with the provisions of the Act".
After the publication of the notification under section 3, the State Government or, if the State Government so directs, the Transport Commissioner publishes in such manner as may be specified a scheme as to the State Road Transport Service providing for all or any of the matters enumerated in cl (2) of section 4.
Clause (2), of section 4 directs that, among others, the scheme should 'provide the particulars of the routes or portions thereof over which and the date on which the State Transport Service will commence to operate, the roads in regard to which private persons may be allowed to operate upon, the routes that will be 'served by the State Government in conjunction with railways , the curtailment of the routes covered by the existing permits or transfer of the permits to other route or routes.
Section 5 enjoins the Transport Commissioner to give notice to the permit holder requiring him to lodge a statement in writing whether he agrees to the transfer of the permit and in cl.
(2) thereof, it is prescribed that in case he accepts the transfer, he is nit entitled to any compensation, but if he does not agree to the transfer,his permit will be cancelled subject to his right to get compensation under the Act.
Under section 6 any person whose interests are affected may within 30 days from the publication of the scheme, file objections 45 on it before the Transport 'Commissioner who shall forward them to the Board constituted under section 7, consisting of the Commissioner of a Division, Secretary to Government in the Transport Department and the Transport Commissioner.
The Board shall consider the objections, if any, forwarded under section 6 and may either confirm, modify or alter the scheme.
The Scheme so confirmed or modified or altered under section 7 shall be published in the Official Gazette.
Any scheme published under section 8 may at any time be cancelled or modified or altered by the State Government.
Section 10 gives the consequences of the publication under section 8.
Section 11 provides compensation for premature cancellation of permits or curtailment of route or routes, as may be determined in accordance with the principles specified in Schedule 1.
In Schedule 1, compensation is payable as follows: " (1) For every complete month or Rupees one part of a month exceeding fifteen days of hundred.
the unexpired period of the permit.
(2) For part of a month not exceed Rupees ing fifteen days of the unexpired fifty.
period of a permit.
Provided always that the amount of compensation shall in no case be less than rupees two hundred.
" Section 12 authorises the State Government, in a case where the permit has been cancelled, to purchase the motor vehicle covered by it if the holder of the permit offers to sell, upon terms and conditions laid down in Schedule 11 provided the vehicle is of the type of manufacture and model notified by the State Government and provided secondly that the vehicle is mechanically in a sound condition or otherwise declared fit by the Transport Commissioner or his nominee.
Sections 13 to 18 provide for a State Machinery for the development of motor transport industry.
Sections 19 to 22 are provisions which are consequential in nature.
Shortly stated, under the U. P. Act the State Government initiate a scheme providing for the nationalization of the road transport in whole or in part; the objections filed by the persons affected by the scheme are heard by a 46 Board of three officers appointed by the State Government; the Board after hearing the objections may confirm, modify or alter the scheme; the scheme so confirmed may be cancelled, modified or altered by ,the State Government by following the same procedure adopted for framing the original scheme; and the holders of permits cancelled may be given new ' permits if they choose to accept and if not they will be paid such compensation as prescribed under the Act.
Under the Amendment Act 100 of 1956, whereby a new chapter was inserted in the of 1939, the procedure prescribed is different.
Under section 68 A of that Act, 'State Transport Undertaking ' is defined to mean any undertaking providing road transport service, where such undertaking is carried on by, (i) the Central Government or a State Government; (ii) any Road Transport Corporation established under section 3 of the Road Transport Corporation Act, 1950; (iii) the Delhi Transport Authority established under section 3 of the Delhi Road Transport Authority Act, 1950; and (iv) any municipality or any corporation or company owned or controlled by the State Government.
Under section 68C, the State Transport Undertaking initiates a scheme if it is of opinion that for the purpose of providing an efficient, adequate, economical and properly coordinated road transport service, it is necessary in the public interest that road transport service in general, or any particular class of such service in relation to any area or route or portion thereof should be run and operated by the State Transport Undertaking, whether to the exclusion complete or partial, of other persons or otherwise.
Section 68D says that any person affected by the Scheme may file objections to the said Scheme before the State Government; the State Government may, after considering the objections and after giving an opportunity to the objectors or their representatives and the representatives of the State Transport Undertaking to be heard in the matter, approve or modify the Scheme.
Any Scheme published may at any time be cancelled or modified by the State Transport Undertaking following the same procedure; for the purpose of giving effect 47 to the Scheme, the Regional Transport Authority, inter alia, may cancel the existing permits or modify the terms of the existing permits.
Section 68G lays down the principles and method of determination of compensation.
Under that section compensation is, payable for every completed month or part of a month exceeding fifteen days of the unexpired period of the permits at Rs. 200 and for part of a month not exceeding fifteen days of the unexpired period of the permit at Rs. 100.
Under the Amending Act, the gist of the provisions is that the Scheme is initiated by the State Transport Undertaking carried on by any of the four institutions mentioned in section 68A, including the State Government; objections are filed by the affected parties to the Scheme, the affected parties and the Undertaking are heard by the State Government, which, after hearing the objections, approves or modifies the Scheme.
There is no provision for transfer of permits to some other routes, or for the purchase of the buses by the State Government.
Compensation payable is twice that fixed under the U. P. Act.
One important thing to be noticed is that the U. P. Act is prospective, i. e., comes into force only from the date of the passing of the Amending Act and the procedure prescribed applies only to schemes that are initiated under the provisions of the U. P. Act.
A comparison of the aforesaid provisions of the U. P. Act and the Amending Act indicates that both the Acts are intended to operate, in respect of the same subject matter in the same field.
The unamended of 1939 did not make any provision for the nationalization of transport services, but the States introduced amendments to implement the scheme of nationalization of road transport.
Presumably, Parliament with a view to introduce a uniform law throughout the country avoiding defects found in practice passed the Amending Act inserting Chapter IV A in the .
This object would be frustrated if the argument that both the U. P. Act and the Amending Act should co exist in respect of schemes to be framed after the Amending Act, is accepted.
Further the authority to initiate 48 the scheme, the manner of doing it, the authority to hear the objections, the principles regarding payment of compensation under the two Acts differ in import ant details from one another.
While in the U. P. Act the scheme is initiated by the State Government, in the Amendment Act, it is proposed by the State Transport Undertaking.
The fact that a particular undertaking may be carried on by the State Government also cannot be a reason to equate the undertaking with the State Government; for under section 68A the undertaking may be carried on not only by the State Government but by five other different institutions.
The undertaking is made a statutory authority under the Amending Act with a right to initiate the scheme and to be heard by the State Government in regard to objections filed by the persons affected by the scheme.
While in the U. P. Act a Board hears the objections, under the Amending Act the State Government decides the disputes.
The provisions of the scheme, the principles of compensation and the manner of its payment also differ in the two Acts.
It is therefore manifest that the Amending Act occupies the same field in respect of the schemes initiated after the Amending Act and therefore to that extent the State Act must yield its place to the Central Act.
But the same cannot be said of the schemes framed under the U. P. Act before the Amending Act came into force.
Under article 254(1) " the law made by Parliament, whether passed before or after the law made by the Legislature of such State. . shall prevail and the law made by the legislature of the State shall, to the extent of the repugnancy, be void." Mr. Nambiar contends that, as the U. P. Act and the Amending Act operate in the same field in respect of the same subject matter, i. e., the nationalization of bus transport, the U. P. Act becomes void under article 254(1) of the Constitution.
This argument ignores the crucial words " to the extent of the repugnancy " in the said clause.
What is void is not the entire Act but only to the extent of its repugnancy with the law made by Parliament.
The identity of the field may relate to the pith and substance of the subject matter 49 and also the period of its. operation.
When both coincide, the repugnancy is complete and the whole of the State Act becomes void.
The operation of the Union Law may be entirely prospective leaving the State Law to be effective in regard to thing already, done.
Sections 68C, 68D and 68E, inserted by the Amending Act, clearly show that those sections are concerned only with a scheme initiated after the Amending Act came into force.
None of the sections, either expressly or by necessary implication, indicates that the schemes already finalised should be reopened and fresh schemes be framed pursuant to the procedure prescribed thereunder.
Therefore, under article 254(1), the law under the U. P. Act subsists to support the schemes framed thereunder and it becomes void only in respect of schemes framed under the Central Act.
A similar question arose in the context of the application of article 13(1) to a pre Constitution law which infringed the fundamental rights given under the Constitution.
In Keshavan Madhava Menon 's Case (1), which we have referred to in a different context the question was whether Indian Press (Emergency Powers) Act, 1931, was void as infringing the provisions of article 13(1) of the Constitution;, and the Court held that the said Act was valid and would continue to be in force to sustain a prosecution launched for an act done be fore the Constitution.
In the words of Das, J., as he then was: " Such laws exist for all past transactions and for enforcing all rights and liabilities accrued before the date of the Constitution." (p. 234).
" So far as the past acts are concerned the law exists, notwithstanding that it does not exist with respect to the future exercise of fundamental rights.", (pp. 235 236).
Article 13(1), so far as it is relevant to the present in quiry, is pari materia with the provisions of article 254(1) of the Constitution.
While under article 13(1) all the pre Constitution laws, to the extent of their inconsistency with the provisions of Part III, are void, under (1) ; 7 50 article 254(1) the State Law to the extent of its repugnancy to the law made by,Parliament is void.
If the pre Constitution law exists for the post Constitution period for all the past transactions, by the same parity of reasoning, the State law subsists after the making of the law by Parliament, for past transactions.
In this view, both the laws can co exist to operate during different periods.
The same decision also affords a solution to the question mooted, namely, whether if the law was void all the completed transactions fall with it.
Mahajan, J., as he then was, draws a distinction between a void Act and a repealed Act vis a vis their impact on past transactions.
At page 251, the learned Judge says: The expression is void " has no larger effect on the statute so declared than the word " repeal ".
The expression " repeal " according to common law rule obliterates a statute completely as if it had never been passed and thus operates retrospectively on past transactions in the absence of a saving clause or in the absence of provisions such as are contained in the Interpretation Act , 1889, or in the , while a provision in a statute that with effect from a particular date an existing law would be void to the extent of the repugnancy has no such retrospective operation and cannot affect pending pro secutions or actions taken under such laws.
There is in such a situation no necessity of introducing a saving clause and it does not need the aid of a legislative provision of the nature contained in the Interpretation Act or the .
To hold that a prospective declaration that a statute is void affects pending oases is to give it indirectly retrospective operation and that result is repugnant to the clear phraseology employed, in the various articles in of the Constitution.
" The said observation directly applies to a situation created by Art.254(1).
As the U. P. Act was void from the date of the Amending Act, actions taken before that date cannot be affected.
In whichever way it is looked at, we are satisfied that in the present case, the scheme already framed subsists and the 51 State law exists to sustain it even after the Parliament made the law.
In this view we reject the contention of Mr. Nambiar based on Art 254(1)of the Constitution.
The alternative argument advanced by Mr. Naunit Lal may now be considered.
It is not disputed that under the proviso to article 254(2), the Parliament can repeal the law made by the Legislature of a State and that Parliament can repeal the repugnant State law whether directly or by necessary implication.
Assuming that Parliament in the present case by enacting the Amending Act repugnant to the State law with respect to the same subject matter i. e., nationalization of road transport, impliedly repealed the State law, would it have the effect of effacing the scheme already made ? If there was a repeal, the provisions of section 6 of the of 1897 are directly attracted.
The relevant part of section 6 of the reads: " Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter 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 so repealed or anything duly done or suffered thereunder.
" The express words used in clause (b)certainly take in the scheme framed under the repealed Act.
It was a thing duly done under the repealed Act.
But it is said that a comparison of the provisions of section 6 with those of section 24 would indicate that anything duly done excludes the scheme.
Section 24 deals with the continuation of orders, schemes, rules, forms or bye laws.
made or issued under the repealed Act.
But that section applies only to the repeal of a Central Act but not a State Act.
But the exclusion of the scheme is sought to be supported on the basis of the argument that in the case of a repeal of a Central Act, both the sections apply and, in that context, a reasonable 52 interpretation would be to exclude what is specifically provided for from the general words used in section 6.
Whatever justification there may be in that context, there is none when we are concerned with the repeal of a State Act to which section 24 does not apply.
In that situation, we have to look to the plain words of section 6 and ascertain whether those words are comprehensive enough to take in a scheme already framed.
We have no doubt that a scheme framed is a thing done under the repealed Act.
A further contention is raised on the basis of the provisions of section 68B to achieve the same result, namely, that the said section indicates a different intention within the meaning of section 6 of the .
Section 68B reads: " The provisions of this Chapter and rules and orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in Chapter IV of this Act or in any other law for the time being in force or in any instrument having effect by virtue of any such law.
" This section embodies nothing more than the bare statement that the provisions of this Act should prevail notwithstanding the fact that they are inconsistent with any other law.
We have expressed our view that the provisions of this Act are prospective in.
operation and, therefore, nothing in those sections, which we have already analysed, is inconsistent with the provisions of the State law in regard to its operation with respect to.
transactions completed thereunder.
Assuming without deciding that the word 'instrument ' in section 68B includes a scheme, we do not see any provisions in the Act which are inconsistent with the scheme framed under the State Act.
The provisions starting from section 68C only contemplate a scheme initiated after the Amending Act came into force and therefore they cannot obviously be inconsistent with a scheme already framed under the State Act before the Amending Act came into force.
We, therefore, hold that section 6 of the saves the scheme framed under the U. P. Act.
The next contention of the learned Counsel Mr. 53 Nambiar, namely, that the scheme being a prescription for the future, it has a continuous operation even after the Amending Act became law, with the result that after the Amending Act, there was no valid law to sustain it, need not detain us; for, we have held that the State law subsists even after the Amending Act to sustain the things done under the former Act.
This leads us to the contention of the learned Advocate General that even if the Constitution (Fourth Amendment) Act, 1955, could not be relied on to sustain the validity of the U. P. Act, there was no deprivation of property of the appellants within the meaning of the decisions of this Court in The State of West Bengal vs Subodh Gopal Bose (1); Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning & Weaving Co. Ltd. (2) and Saghir Ahmad 's Case (3).
Those cases have held that cls.
(1) and (2) of article 31 relate to the same subject matter and that, though there is no actual transfer of property to the State, if by the Act of the State, an individual has been substantially dispossessed or where his right to use and enjoy his property has been seriously impaired or the value of the property has been materially reduced, it would be acquisition or taking possession within the meaning of el.
(2) of the said Article.
After a faint attempt to raise this question, the learned Advocate General conceded that in view of the decision in Saghir Ahmad 's Case he could not support his argument to the effect that the State did not deprive the petitioners of their interest in a commercial undertaking.
In the said case, this Court held in express terms that U. P. Transport Act, 1951, which, in effect prohibited the petitioners therein from doing their motor transport business deprived them of their property or interest in a commercial undertaking within the meaning of article 31(2) of the Constitution.
Mukherjea J., as he then was, observed at page 728 : " It is not seriously disputed on behalf of the respondents that the appellants ' right to ply motor vehicles for gain is, in any event, an interest in a (1) ; (2) ; (3) ; 54 commercial undertaking.
There is no doubt also that the appellants have been deprived of this interest." The learned Judge proceeded to state at page 729 : " In view of that majority decision it must be taken to be settled now that clauses (1) and (2) of article 31 are not mutually exclusive in scope but should be, read together as dealing with the same subject, namely, the protection of the right to property by means of limitations on the State 's.powers, the deprivation contemplated in clause (1) being no other than acquisition or taking possession of the property referred to in clause (2).
The learned Advocate General conceded this to be the true legal position after the.
pronouncements of this Court referred to above.
The fact that the buses belonging to the appellants have not been acquired by the Government is also not material.
The property of a business may be both tangible and intangible.
Under the statute the Government may not deprive the appellants of their buses or any other tangible property but they are depriving them of the business of running buses on hire on public roads.
We think therefore that in these circumstances the legislation does conflict with the provisions of article 31(2) of the Constitution and as the requirements of that clause have not been complied with, it should be held to be invalid on that ground.
The above observations are clear and unambiguous and they do not give scope for further argument on the subject.
It follows that if the Act does not provide for compensation, the Act would be invalid being in conflict with the provisions of article 31(2) of the Constitution.
The next question is whether in fact the provisions of article 31(2) of the Constitution, before the Constitution (Fourth Amendment) Act, 1955, were complied with.
Under article 31(2) no property shall be taken possession of or acquired save for a public purpose and save by authority of law which provides for compensation for the property so acquired or requisitioned and either fixes the amount of the compensation or specifies the principles on which, and the manner in which, the compensation is to be determined and 55 given.
In The State of West Bengal vs Mrs. Bela Banerjee (1), Patanjali Sastri, C. J., has defined the meaning of the word I compensation ' at page 563, as under " While it is true that the legislature is given the discretionary power of laying down the principles which should govern the determination of the amount to be given to the owner for the property appropriated, such principles must ensure that what is determined as payable must be compensation, that is, a just equivalent of what the owner has been deprived of.
Within the limits of this basic requirement of full indemnification of the expropriated owner, the Constitution allows free play to the legislative judgment as to what principles should guide the determination of the amount payable.
Whether such principles take into account all the elements which make up the true value of the property appropriated and, exclude matters which are to be neglected, is a justiciable issue to be adjudicated by the Court.
, This, indeed, was not disputed.
" On the basis of the aforesaid principle, Mr. Nambiar contends that the U. P. Act does not provide for com pensation in the sense of giving the operator deprived of his interest a just equivalent of what he has been deprived of, or fix any principles to guide the determination of the amount payable.
The U.P. Act, the argument proceeds, does not provide at all for compensation payable in respect of the interest of the operator in a commercial undertaking, but only gives compensation for the unexpired period of the permit.
On the other hand, the learned Advocate General contends that the appellants would be entitled only to just equivalent of the interest that they are deprived of, namely, the interest in a commercial undertaking and that the cumulative effect of the provisions of the U. P. Act is that just equivalent of the said interest is given.
As it is common case that what the Act should give is just compensation for the interest of the operator in a commercial undertaking, we Shall now examine the provisions of the U. P. Act to ascertain whether it (1) ; 56 provides a quid pro quo for the interest the operator is deprived of The provisions of the U. P. Act relating to compensation pay usefully be read at this stage: Section 5 : " (1) Where the scheme published under section 4 provides for cancellation of any existing permit granted under Chapter IV of the , or for the transfer of such permit to any other route or routes the Transport Commissioner shall cause notice thereof to be served on the permit holder concerned and on any other persons to whom in his opinion special notice should be given.
The notice shall also require the permit holder to lodge a statement in writing within the period to be specified.
therein whether he agrees to the transfer of the permit.
(2) If the permit holder agrees to the transfer of his permit, he shall, provided the permit is actually so transferred ultimately, be not entitled to claim com pensation under section 11 but the transference of the permit shall be deemed to be in lieu of compensation and complete discharge therefor of the State Government.
Where, however, the permit holder does not agree to the transfer, the permit shall, without prejudice to the right of the permit holder to get compensation under the said section be liable to be cancelled.
" Section 11 :" (1) Where in pursuance of the Scheme published under section 8 any existing permit granted under Chapter IV of the , is or is deemed to have been cancelled or the route or routes covered by it are curtailed or are deemed to have been curtailed, the permit holder shall, except in cases where transfer of the permit has been agreed to under sub section (2) of section 5; be entitled to receive and be paid such compensation by the State Government for and in respect of the premature cancellation of the permit or, as the case may be, for curtailment of the route or routes covered by the permit as may be determined in accordance with the principles speci fied in Schedule I. (2) The compensation payable under this section shall be due as from the date of order of cancellation 57 of the permit or curtailment of the route covered by the permit.
(3) There shall be paid by the State Government on the amount of compensation determined under subsection (1) interest at the rate of two and one half per cent.
from the date of order of cancellation or curtailment of route to the date of determination of compensation as aforesaid.
(4)The compensation payable under this section shall be given in cash.
(5) The amount of compensation to be given in accordance with the provisions of sub section (1) shall be determined by the Transport Commissioner and shall be offered to the permit holder in full satisfaction of the compensation payable under this Act and if the amount so offered is not acceptable to the permit holder, the Transport Commissioner may within such time and in such manner as may be prescribed refer the matter to the District Judge whose decision in the matter shall be final and shall not be called in question in any Court.
" Section 12: " Where a permit granted under Chapter IV of the , has been cancelled or the route to which the permit relates has been curtailed in pursuance of the scheme published under section 8, the State Government may if the holder of the permit offers to sell, choose to purchase the motor vehicles covered by the permit upon terms and conditions laid down in Schedule II: Provided, firstly, that the vehicle is of a type, manufacture and model notified by the State Government; and Provided, secondly, that the vehicle is in a mechanically sound condition and is otherwise declared fit by the Transport Commissioner or his nominee.
SCHEDULE I. "Paragraph 1: The compensation payable under section 11 of the Act for cancellation of a contract carriage or stage carriage or public carrier 's permit under clause (e) of sub section (1) of section 10 of the 8 58 Act shall be computed for every ' vehicle covered by the permit as follows, namely: (1) For every complete month or part Rupees One Rupees of a month exceeding fifteen hundred days of one the unexpired period of the permit.
(2) For part of a month not exceeding Rupees fifteen days of the unexpired period fifty of a permit.
Provided always that the amount of compensation shall in no case be less than rupees two hundred.
Paragraph 2: The compensation payable under section 1 1 for curtailment of the route or routes covered by a stage carriage or public carrier permit under clause (d) of sub section (1) of section 10 of the Act shall be an amount computed in accordance with the following formula: Y x A R In this formula Y means the length in mile by which the route is curtailed.
A means the amount computed in accordance with Paragraph 1 above.
R means the total length in miles of the route covered by the permit.
" The aforesaid provisions constitute an integrated scheme for paying compensation to the person whose permit is cancelled.
The gist of the provisions may be stated thus: The scheme made by the State Government may provide for the cancellation of a permit, for curtailment of the route or routes or for transfer of the permit to other routes.
Where a transfer of the permit is accepted by the operator, he will not be entitled to any compensation; if he does not accept, compensation will be paid to him with interest in respect of the premature cancellation of the permit, or as the case may be for the curtailment of the route or routes covered by the permit.
The amount of compensation to be ' given shall be deter mined by the Transport Commissioner in accordance with the provisions of the Act, and if the amount so 59 offered is not acceptable to the permit holder, the Transport Commissioner may, within such time and in such manner as may be prescribed, refer the matter to the District Judge whose decision in the matter shall he final.
There is also a provision enabling the Government to purchase the motor vehicles covered by the permit, if the holder of the permit offers to sell and if the vehicles satisfy the specifications laid down in the Act.
The question is whether these provisions offer a quid pro quo for the interest of the petitioners in the commercial undertaking i.e., business in motor transport.
Let us examine the question from the standpoint of a business deal.
If the transport business is sold, the seller gets his value for the assets minus the liabilities and for his good will.
In the case of a scheme framed under the Act, the assets are left with the holder of the permit and under certain con ditions the State purchases them.
As the scheme is a phased one, it cannot be said, though there will be difficulties, that the assets cannot be sold to other operators.
If a permit is not cancelled but only transferred to another route, it may be assumed that if the transfer is voluntarily accepted by the permit holder, he is satisfied that the route given to him is as good as that on which he was doing his business.
On the other hand, if he chooses to reject the transfer of his permit to another route and takes compensation, the question is whether the compensation provided by section 11 is anything like an equivalent or quid pro quo for the interest in the commercial undertaking acquired by the State.
If cl.
(5) of section 11 had not been there, we would have had no hesitation to hold that a flat rate of Rs. 100 or less irrespective of the real loss to the holder would not be compensation within the meaning of article 31(2).
But, in our view, section 11(5) gives a different complexion to the entire question of compensation.
Under that clause., a permit holder aggrieved by the amount of compensation given by the Transport Commissioner may ask for referring the matter to the District Judge for his decision in regard to the adequacy of the compensation.
This clause is susceptible of both a strict as well as a 60 liberal interpretation.
If it is strictly construed, it may be held that what the District Judge can give as compensation is only that which the Transport Commissioner can, under the provisions of section 11(1) i. e., at the rates mentioned in the Schedule.
But a liberal interpretation, as contended by the learned Advocate General, can be given to that clause without doing violence to the language used therein and that interpretation will carry out the intention of the legislature.
If the jurisdiction of the District Judge relates only to the calculation of figures, the said clause becomes meaningless in the present context.
Section 11 read with the Schedule gives the rate of compensation, the rate of interest, the dates from which and up to which the said compensation is to be paid with interest.
The duty of calculating the said amount is entrusted to the Transport Commissioner who will be a fairly senior officer of the Government.
If he made any mistake in mere calculations, he would certainly correct it if the permit holder pointed out the mistake to him.
In the circumstances, is it reasonable to assume that the legislature gave a remedy for the permit holder to approach the District Judge for the mere correction of the calculated figures ? It is more reasonable to assume that the intention of the legislature was to provide prima facie for, compensation at flat rate and realising the inadequacy of the rule of thumb to meet varying situations, it entrusted the duty of the final determination of compensation to a judicial officer of the rank of a District Judge.
The provisions of section 11(5), in our view, are certainly susceptible of such.
an inter pretation as to carry out the intention of the legislature indicated by the general scheme of the provisions.
The crucial words are " if the amount so offered is not acceptable to the permit holder ".
The amount offered is no doubt the amount calculated in accordance with s.11(1).
But a duty is cast on the Transport Commissioner to refer the matter to the District Judge if the amount offered is not acceptable to the permit holder.
The word" acceptable" is of very wide connotation and it does not limit the objection only to the wrong calculation under section 11(1).
The permit holder may 61 not accept the amount on the ground that compensation offered is inadequate and is not a quid pro quo for the interest of which he is deprived.
It is therefore for the District Judge, on the evidence adduced by both the parties, to decide the proper compensation to be paid to him in respect of the right of which he is deprived by the cancellation of the permit.
The language of section 11(5) not only bears the aforesaid construction but also carries out the intention of the legislature, for it cannot be imputed to the legislature that it intended to deprive a valuable interest by giving a nominal amount to the permit holder.
Section 11(5) speaks of the time limit within which such reference may be made to the District Judge, but no such rule has been brought to our notice.
We hope and trust that, without standing on any such technicality, the Transport Commissioner, if so required, will refer the matter of compensation to the District Judge.
Having regard to the entire scheme of compensation provided by the Act, we hold that the Act provided for adequate compensation for the interest acquired within the meaning of article 31(1) of the Constitution.
It is said that out of the twenty five appeals appellants in thirteen appeals had accepted to take a transfer of the permits to different routes; but on behalf of the appellants it is denied that the acceptance was unequivocal and final.
They say that it was conditional and that, as a matter of fact, they have not been plying the buses on the transferred routes and indeed have been operating them only on the old routes.
In these circumstances, we cannot hold that the said appellants accepted the alternative routes.
If they or some of them choose to accept any alternative routes, they are at liberty to do so, in which event they will not be entitled to any compensation.
Lastly, the learned Counsel for the appellants contends that el.
(2) of section 3 of the U. P. Act infringes their fundamental rights under article 31(2) inasmuch as it prevents them from questioning the validity of the scheme on the ground that it is not for public purpose.
Section 3 reads: 62 (1) Where the State Government is of the opinion that it is necessary in the interest of the general public and for subserving the common good, or for maintaining and developing efficient road transport system so to direct, it may, by notification in the official Gazette declare that the road transport services in general, or any particular class of such service on any route or portion thereof as may be specified, shall be run and operated exclusively by the State Government, or by the State Government in conjunction with railways or be run and operated partly by the State Government and partly by others under and in accordance with the provisions of this Act.
(2) The notification under sub section (1) shall be conclusive evidence of the facts stated therein.
" The argument of the learned Counsel on the interpretation of this section appears to be an after thought; for the records do not disclose that the appellants attempted to question the said fact before the Government and they were precluded from doing so on the basis of cl.
(2) of section (3).
We are not, therefore, prepared to allow the appellants to raise the contention for the first time before us.
The last contention, which is special to Civil Appeal No. 429 of 1958, is that during the crucial period when the scheme of nationalization was put through, the appellant had no permit, it having been cancelled by the order of the appropriate tribunal; but subsequently, after the scheme was finalised, the said order was set aside by the Appellate Tribunal retrospectively and therefore the order of the State Government made behind the back of the appellant does not bind him.
The appellant 's permit was not renewed by the Regional Transport Authority.
Against the said order, he preferred an appeal to the State Transport Tribunal, which by an order dated September 6, 1956, allowed the appeal and directed that the appellant 's permit be renewed for three years beginning from November 1, 1953.
In disposing of the appear the State Transport Tribunal observed: " We are told that in the meantime this route has been notified and the Government buses are plying 63 on it.
The effect of this order will be that the appellant shall be deemed to be in possession of a valid permit and he shall have to be displaced after following the usual procedure prescribed by the U. P. Road Transport Services (Development) Act.
" Pursuant to their order, it appears that the Regional Transport Authority renewed his permit on October 11, 1956 with effect from November 1, 1953 to October 31, 1956.
In the circumstances, as the petitioner was not a permit holder when the Government made the order, no relief can be given to him in this appeal.
This order will not preclude the appellant in Civil Appeal No. 429 of 1958, if he has any right, to take appropriate proceedings against the State Government.
In the result, all the appeals are dismissed with one set of costs to the State of Uttar Pradesh.
Appeals dismissed.
| These appeals impugned the constitutionality of the Uttar Pradesh Transport Service (Development) Act, 1955 (U. P. IX Of 1955), passed by the State Legislature after obtaining the assent of the President, and the validity of the scheme of nationalisation framed and the notifications issued by the State Government under it.
The appellants as permit holders under the , were plying buses on different routes in Uttar Pradesh along with buses owned by the State Government.
The State Government issued a notification under section 3 Of the impugned Act directing that the said routes along with others should be exclusively served by the State buses, and followed up that notification by others under ss 4 and 8 of the Act.
The appellants moved the High Court under article 226 of the Constitution challenging the validity of the said Act and the notifications thereunder.
The High Court rejected their petitions and thereafter came into force the Motor Vehicles (Amendment) Act (100 Of 1956), inserting Ch.
IVA into the Act, which provided for nationalisation of transport services.
The contentions raised on behalf of the appellants were, (1) that the passing of the Amending Act made the impugned Act wholly void under article 254(1) Of the Constitution, (2) that the scheme framed under the impugned Act fell within the purview of section 68B of the Amending Act and ceased to be operative and (3) that even 'assuming that the impugned Act was valid in so far as the scheme was concerned, it violated article 31 as it stood before the Constitution (Fourth Amendment) Act, 1955.
A further contention on the basis of the proviso to article 254(2) was that the impugned Act stood wholly repealed by the Amending Act, section 68B of the latter excluding the operation of the General Clauses Act.
It was contended, inter alia, on behalf of the State that the amendment of article 31 by the Constitution (Fourth Amendment) Act, 1955, having removed, before the scheme under the impugned Act had 9 yet been framed, the constitutional limitation which that Article had imposed on the Legislature when it passed the impugned Act, had the effect of validating that Act passed by it at a time when it was subject to the limitation.
Held, (per curiam), that the Uttar Pradesh Transport Service (Development) Act, 1955, did not, on the passing of the Motor Vehicles (Amendment) Act, 1956 (100 of 1956), become wholly void under article 254(1) Of the Constitution but continued to be a valid and subsisting law supporting the scheme already framed under the U.P. Act.
Even assuming that the Amending Act had the effect, under article 254(2), of repealing the State Act, such repeal could not nullify the scheme already framed under that Act, for the provisions of section 6 of the General Clauses Act would operate to save it.
Nor could it be said, having regard to the provisions of the impugned Act and particularly section II(5) thereof, that it offended article 31 of the Constitution as it stood before the Constitution (Fourth Amendment) Act, 1955, by failing to provide for the payment of adequate compensation.
Per Das, C.J., and Sinha J.
There was no reason why the doctrine of eclipse as explained in Bhikaji Narain Dhakras vs The State of Madhya Pradesh, ; , could not also apply to a post Constitution law that infringed a fundamental right conferred on citizens alone.
Such a law, though shadowed and rendered ineffective by the fundamental right so far as the citizens were concerned, would remain effective so far as noncitizens were concerned.
The moment the shadow was removed by a constitutional amendment, the law would apply to citizens without re enactment.
John M. Wilkerson vs Charles A. Rahrer, ; ; ; and Bhikaji Nayain Dhakras vs The State of Madhya Pradesh, ; , referred to.
The question whether a post Constitution law that infringed a fundamental right guaranteed to all persons, citizens or noncitizens ' would be subject to that doctrine should, however, be left open.
Held, (per Bhagwati, Subba Rao and Wanchoo, jj.), that it was apparent from the provisions of articles 254, 246 and 13 of the Constitution, read together, that the power of Parliament and the State Legislature to make laws with regard to any of the matters enumerated in the relevant list in the Seventh Schedule was subject to the provisions of the Constitution including article 13.
There was a clear distinction between the two clauses of article I3.
Under cl.
(1), pre Constitution law subsisted except to the extent of its inconsistency with the provisions of Part III whereas under Cl.
(2) any post Constitution law contravening those provisions was a nullity from its inception to the extent of such contravention.
The words "any law" in the second line of 2 Cl.
(2) meant an.
Act factually passed in spite of the prohibition contained therein, and did not pre suppose that the law made was not a nullity.
That prohibition went to the root and limited the State 's power of legislation and law made in spite of it was a still born one.
In construing the constitutional provisions relating to the powers of the legislature embodied in articles 245 and 13(2) of the Constitution, no distinction should be made as between an affirmative and a negative provision, for both are limitations on that power.
K. C. Gajapati Narayan Deo vs The State of Orissa, ; , referred to.
A distinction, well recognised in judicial decisions, had, however, to be made in judging the effect of law made in transgression of the limits fixed by articles 245 and I3(2), between an Act that was void from its inception and one that, though valid when made, was rendered unconstitutional later on.
On that distinction was based the principle that an after acquired power could not validate a statute and a law validly made could take effect when the obstruction was removed.
A review of the relevant authorities and judicial decisions clearly established, (1) that affirmative conferment of power to make laws subject wise and the negative prohibition from infringing any fundamental rights were but two,,aspects of want of legislative power, (2) that by expressly making the power to legislate on the entries in the Seventh Schedule subject to other provisions of the Constitution, that power was subjected to the limitations laid down in Part III of the Constitution, (3) that, therefore, a law in derogation or in excess of such power would be void ab initio either wholly or to the extent of the contravention and that (4) the doctrine of eclipse could be invoked only in the case of a law that was valid when made but was rendered invalid by a supervening constitutional inconsistency.
Newberry vs United State, ; 65 L. Ed. 9I3; John M. Wilkerson vs Charyles A. Rahrer, (1891) 140 U. section 545; ; ; Carter vs Egg and Egg Pulp Marketing Board, ; ; Keshavan Madhava Menon vs The State of Bombay, ; ; Behram Khurshed Pesikaka vs The State Of Bombay, [1955) 1 S.C.R. 589; Saghir Ahmed vs The State of U. P. ; ; Ram Chandra Balai vs State of Orissa, and Pannalal Binjraj vs Union of India; , , referred to and discussed.
The tests of repugnancy between two statutes, one passed by the Parliament and the other by the State Legislature, were, (1) whether there was a direct conflict between them, (2) whether Parliament intended to lay down an exhaustive code in respect of the subject matter replacing the Act of the State Legislature, and (3) whether both the laws occupied the same field.
A comparison of the provisions of the two Acts indicated 11 that both were intended to operate in respect of the same subject matter and the same field but only in respect of the schemes initiated after the Amending Act had come into force, the latter Act having no retrospective effect.
The State Act must, therefore, yield place to the Central Act to that extent and become void only in respect of schemes framed under the Central Act.
Keshavan Madhava Menon vs The State of Bombay, [1951] S.C.R. 228, applied.
|
Summarize this legal judgement text concisely | Appeal No. 139 of 1959.
Appeal by special leave from the judgment and order dated January 8, 1959, of the Patna High Court in Election Appeal No. I of 1958, arising out of the judgment and order dated November 30, 1957, of the Election Tribunal, Patna, in Election Petition No. 353 of 1957.
B. K. P. Sinha and D. P. Singh, for the appellant.
G. C. Mathur and Dipak D. Choudhri, for respondent No. 1.
R. H. Dhebar, for respondent No. 3. 1959.
April 14.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J.
This appeal by special leave arises from the ' election petition filed by respondent I (No. 353 of 1957) in which he claimed a declaration that the election of the appellant as a member of the 537 Bihar Legislative Assembly Maner Constituency should be declared to be void.
In the last General Election for the said constituency which was held in February March 1957, there were three candidates, the appellant, respondent I and respondent 2.
The last date for filing nomination papers at the said election was January 29, 1957; the 'said papers were scrutinised on February 1, 1957.
Respondent I had challenged the validity of the appellant 's nomination paper at the said scrutiny but the returning officer had overruled the objection raised by respondent I and had accepted the nomination paper of the appellant along with 'those of the two other candidates.
After the counting of votes was done on March 3, 1957, the appellant was declared duly elected at the election inasmuch as he had got 9,826 votes while res pondents I and 2 had got 7,526 and 49 votes respectively.
Thereupon respondent I filed his election petition under section 81 of the Representation of the People Act, 1951 (hereinafter called the Act).
In his petition respondent 1 challenged the election of the appellant on several grounds all of which were controverted by the appellant.
On the allegations of the parties the tribunal had framed several issues and parties had led evidence on them.
At the stage of arguments, however, only a few issues were pressed by respondent I and all of them were found against him and in favour of the appellant.
In the result the tribunal dismissed the election petition on November 30, 1957.
Against the said decision of the tribunal respondent I preferred an appeal in the High Court of Judicature at Patna; and in his appeal he pressed only issue No. 1.
This issue was whether the nomination of the appellant was hit by the provision of section 7(d) of the Act and as such whether the said nomination had been improperly accepted.
On this issue the tribunal had found in favour of the appellant but the High Court reversed the said finding and accepted the plea of respondent 1.
As a result of this finding the High Court allowed the appeal preferred by respondent I and 68 538 declared on January 8, 1959, that the election of the appellant was void under section 100(1)(a) of the Act.
The validity of the appellant 's nomination has been challenged under section 7(d) of the Act on the ground that at the date of the nomination he had an interest in a contract for the execution of works undertaken by the Bihar Government.
There is no doubt that if a person is interested in a contract for the execution of any work undertaken by the appropriate Government he is disqualified for membership of the State Legislature in question.
The appellant, however, denied that the disqualification imposed by section 7(d) could be invoked against him.
His case was that the contracts in question had not been undertaken by the Bihar Government but they bad been undertaken by the Central Government; and he also urged that he had not taken the said contracts individually in his personal capacity, but as the Mukhiya of the Jeorakhan Tola Gram Panchayat.
On both these issues the Election Tribunal and the High Court have differed; and it is the said two issues that arise for our decision in the present appeal.
It is clear that if the appellant succeeds in showing that he had entered into the impugned contracts not individually but on behalf of the Panchayat of which he was the Mukhiya it would be un necessary to consider whether the works covered by the said contracts had been undertaken by the Government of Bihar.
Let us therefore first consider that point.
The impugned contracts are five in number.
They were for the execution of works under local development works programme envisaged under the Second Five Year Plan formulated by the Government of India.
These contracts are evidenced by five documents, Exs.
16 A, B, C, D & E. The first is for the construction of Beyapore Jeorakhan Tola Road, the second for the construction of the Beyapore M. E. School, the third for the construction of a Dispensary at Jeorakhan Tola, the fourth for the construction of the Gram Panchayat building, and the last for the construction of a well at the said village.
It is admitted by the appellant that these contracts had not been completed at the time of his nomination.
539 In considering the appellant 's plea that he had executed these contracts as a Mukhiya of the Village Panchayat of his village, it would be necessary to bear in mind the background of the scheme in pursuance of which these works were undertaken.
The Second Five Year Plan published by the Planning Commission in 1956 shows that the programme of ' starting these ' works was treated as a part of the co operative movement and the Commission had therefore recommended that the States were to sponsor and assist actively in the Organisation and development of Village Panchayats which was an important constituent of the programme of fostering corporate life in the rural areas as it would promote among the rural community active interest in the development programmes of the villages.
The object of this programme which would operate in areas not yet reached by the National Extension Service was to enable village communities to undertake works of local benefit mainly with their own labour.
The Commission realised that the resources of all the States taken together would fall far short of the requirements of this Plan and so it recommended large transfers of resources from the Centre to the States.
In this connection the conclusion of the Commission was that out of Rs. 200 chores sanctioned for the year 1957 58, 12 cores would be required for the Centre for schemes undertaken or directly sponsored by the Community Project Administration and 180 crores were to form part of the balance for the States.
Thus it is obvious that the basic idea underlying the Plan was to evoke popular response to the community projects undertaken in pursuance of the Plan and to leave the execution of different works adopted under the Plan to be fulfilled by popular local agencies like Village Panchayats.
This policy was emphasised by the Secretary of the Planning Commission in his communication to all State Governments, No. PC/Pub/52/53 dated August 11, 1953 (H. 1).
This communication set out the seven categories of work which were most suitable for assistance and it said that the local contribution in cash or kind or through voluntary labour together 540 with any contribution that the State Government or a local body might make should be a minimum of 50% of the total cost of each work.
The intention was to spread the benefit over as wide an area and to as many people as possible.
The State Governments were accordingly requested to arrange for a detailed scrutiny of the schemes before they were accepted and for making adequate provisions providing for their pro per execution.
They were also required to nominate a liaison officer for each district or other suitable unit for the purpose of checking the execution of the works and for maintenance of such initial accounts as might be necessary.
This communication makes detailed provisions about financing and accounting procedures to be followed and required the State Governments to make progress reports from time to time.
It appears that the Government of India was aware that the District Boards whose primary responsibility it was to sponsor these undertakings would find the project beyond their financial resources and so it accepted the recommendation of the Planning Commission to contribute 50% of the cost of each of the schemes on the condition that the remaining half had to be found by the District Board or by the public to be benefited by it in the form of cash or voluntary labour.
The five impugned contracts related to community projects of the kind envisaged by this programme.
By its letter dated February 27, 1954 (H. 2) the Bihar Government had advised all the District Local Boards to assist the execution of such projects and to afford all facilities to and co operate with the district officers in the execution of the programmes undertaken by these projects without charging any remuneration for the same.
The idea clearly was that if the Village Panchayats sponsored works undertaken under these programmes they should encourage people to contribute labour and even money.
The result would be that the works undertaken would benefit the community at large and if any saving was made in executing the contract it would enure for the benefit of the village Panchayats that were usually expected to be the sponsoring units.
541 It is in the light of this background that we have to consider the question whether the contracts in question had been executed by the appellant in his individual capacity as contended by respondent I or in his capacity as the Mukhiya of the Village Panchayat as urged by the appellant.
The four contracts evidenced by Exs.
16A, C, D and E are all similarly executed whereas contract 16 B which is in respect of the construction of the Beyapore M. E. School is somewhat differently worded.
With regard to this latter contract both the Election Tribunal and the High Court are agreed that it had been executed by the appellant as the Secretary of the Beyapore Madhyamik Vidyalaya and that in this con tract the appellant was not personally interested.
The Election Tribunal took the view that the other contracts are substantially of the same character whereas the High Court has held that they are entirely different and that the appellant has personally executed them.
The question which we have now to decide is whether this view of the High Court is right.
We would take exhibit 16 A as typical of the remaining four contracts.
The material terms of this contract are 8 in number and they are all in the prescribed form.
At the commencement of the contract the appellant has described himself by his name and he has stated that he belongs to the village of Jeorakhan Tola and that his profession is cultivation.
The preamble to the contract shows that the appellant undertook to carry out the construction of the development project under local works programme mentioned in the contract as per estimate attached thereto and he agreed to execute the work according to and subject to the terms and conditions contained therein, and he also undertook to contribute 50% of the cost in cash and labour.
At the end the appellant has signed as Mukhiya and has given his address as Jeorakhan Tola Gram Panchayat.
The High Court took the view that the description of the appellant given by him at the time when he signed the contract was not a term of the contract and could not therefore support his plea that he had executed the contract as Mukhiya of 542 the Panchayat.
It is on this ground that the High Court distinguished this and the other three allied contracts from the school contract, exhibit 16 B.
In this latter contract the appellant has described himself as the Secretary, Madhyamik Vidyalaya, both at the commencement of the document and at the end where the appellant has signed.
In our opinion, the distinction made by the High Court between the two sets of contracts is not valid.
We do not see any reason to take the view that the description given by the appellant about his status while he signed the contract is no part of the contract itself.
Incidentally we may observe that the contract is accepted by the officer who signs as the section D. O., Dinapore.
The designation of the officer given by him while signing the acceptance of the contract indicates the character in which the officer has accepted the contract.
Similarly the description given by the appellant about his status and character when he signed the contract should be taken to denote the character in which he executed the contract.
The High Court also thought that cls.
4 and 7 by which the appellant undertook liability to execute the contract as required and to become liable for payment of any fine imposed by the local government officer in case of his default clearly showed obligations of a personal type which were inconsistent with his plea that he had entered into the contract as the Mukhiya of the Panchayat.
We think that this argument has no force.
If the nature of the liability undertaken by these two clauses necessarily involves the conclusion that the execution of the contract must be by an individual person, then it is significant that the same two clauses occur in the school contract and yet the High Court has held that the said contract has been executed by the appellant not in his individual capacity but as the Secretary of the Madhyamik Vidvalava.
Therefore too much reliance cannot be placed upon these two clauses to support the view that the contract has been executed by the appellant personally.
Besides, the High Court has not properly considered the term of the contract by which the contracting 543 party undertakes to contribute 50% of the cost of the work in cash or labour.
In other words, the contracting party becomes a sponsoring agent of the contract and agrees to undertake 50% of its cost.
It is very difficult to appreciate the suggestion that the appellant personally and in his individual character agreed to contribute 50% of the cost in cash or labour.
In ' ordinary course a person who undertakes to carry out a building contract expects to make profit and would never agree to contribute 50% of the cost of the contemplated work.
This clause clearly indicates that the sponsoring of the contract was really done by the Village Panchayat which agreed through its Mukhiya that it would contribute 50% of the cost either in cash or in labour.
Consistently with the general policy of Plan the Village Panchayat became a sponsoring agent and hoped and expected to obtain popular response from the villagers who would contribute their labour and thus make up the 50% of the cost of the intended work.
Therefore, in our opinion, if the contract in question is considered in the light of the background of the Plan of which it forms one item, and all its conditions are taken into account together, there can be no doubt that the appellant as the Mukhiya of the Village Panchayat acted as its agent when he signed the contract., and not as an individual acting in his personal capacity.
This position is also corroborated by the record kept by the Village Panchayat in respect of these contracts.
This record consists of the several proceedings before the Village Panchayat, the budgets adopted by it and the resolutions passed by it from time to time in respect of these contracts.
It had been alleged by respondent 1 that the whole of this record had been fabricated for the purpose of the present proceedings.
The Election Tribunal has made a definite finding against respondent I on this point.
It has considered the oral evidence given by the appellant and other witnesses in proving the said record.
It has examined the entries themselves on their merits and has taken into account the fact that some of the exhibits showed that they had been signed and 544 approved by the District Panchayat Officer from time to time.
The tribunal, therefore, thought that it was impossible to believe that all persons who purported to sign the record had helped the appellant to manufacture it simply because the appellant was the Mukhiya of the village.
The judgment of the High Court shows that it was not prepared to reverse this finding in terms.
It has, however, made certain observations in respect of this record which would show that it was not prepared to attach any importance to it.
" The papers ", says the judgment, " do not inspire much confidence and cannot be relied upon in proof of, the facts disclosed by them ".
It is unfortunate that when a serious allegation was made against the whole of the record alleged 'to have been kept by the Village Panchayat and it had been categorically rejected by the Election Tribunal, the High Court should not have made its own finding on the point in clear and unambiguous terms.
The oral evidence led by the appellant in support of the record and the other material circumstances considered by the Election Tribunal do not appear to have been properly taken into account by the High Court in dealing with this point.
The High Court was, however, impressed by what it called two defects in respect of this record .
It observed that the accounts had not been audited as required by r. 20 of the Bihar Gram Panchayat Account Rules, 1949, and that the cash balance had not been kept by the Mukhiya in the nearest Post Office Savings Bank or in any recognised Co operative Bank or a Government Treasury in the name of the Panchayat as required by r. 8.
These two defects may undoubtedly suggest that the officers of the Panchayat including the appellant had not acted properly and had not complied with the obligations imposed by the said rules; but it is difficult to understand how the said two defects can have a material and direct bearing on the question as to whether the record had, been fabricated.
If the High Court intended to hold that the record bad in fact been fabricated it should have considered the relevant evidence and the material circumstances 545 more carefully and should have made a definite finding in that behalf.
To say that the record bore only the signatures of the appellant and his clerk and to seek to draw an adverse inference from that fact is, in our opinion, adopting a wrong approach to the question.
If the appellant was the Mukhiya he was bound to sign the record, and so was the clerk bound to write it; that cannot therefore be treated as a suspicious circumstance by itself We have carefully examined this question and we do not see any reason why the well considered finding of the Election Tribunal on this point should not have been accepted.
Therefore, we must assume that the Panchayat record produced by the appellant is not shown to have been fabricated.
Besides, the High Court itself appears to have assumed that this record showed that there was an understanding between the appellant and the Village Panchayat in regard to the financial obligations involved in the execution of the impugned contracts.
" It might well be ", says the judgment, " that the loss or the profit was ultimately to be borne or pocketed by the Gram Panchayat itself " ; but that, according to the High Court, " does not take away the effect of the contract itself which on the face of it was entered into by the appellant himself ".
If the Panchayat agreed to bear the loss or take the profit flowing from the performance of the contract then it clearly supports the appellant 's case that he had executed the contract as the Mukhiya of the Panchayat.
The arrangement to which the High Court refers, if genuine, would be wholly inconsistent with the case set up by respondent I that the contract had been executed by the appellant personally.
The High Court has also held that the appellant had not made out this specific case either before the returning officer when his nomination was challenged or in the present proceedings when he filed his written statement.
The appellant had no doubt stated in reply that he had no interest in any contract undertaken by the State Government.
According to the 69 546 High Court his failure to add the further particular that the contract had been executed,by him on behalf of the Panchayat shows that the said plea is an afterthought.
We are unable to see the force of this criticism.
But apart from it, the question raised by the appellant relates to the construction of the contract and we do not see how the construction of a document can be prejudicially affected by the failure of the party to make a more specific and more precise plea in his written statement.
We have no doubt that, if the contract is considered as a whole, it would show that the appellant had executed it as the Mukhiya of the Village Panchayat and this conclusion cannot be affected by the alleged defect in the plea taken by him in the written statement.
The High Court has also relied on the fact that if the contract was intended to be executed by the appellant on behalf of the Panchayat it should have been executed in the name of the corporate body as required by section 6 of the Bihar Panchayat Raj Act (Bihar Act 7 of 1958).
It may be that the Gram Panchayat is a body corporate by the name specified in the notification under sub section
(1) of section 3 and has a perpetual succession and a common seal, and so has power to contract in the name of the body corporate; but as the judgment of the High Court itself points out the invalidity of the contract would not affect the merits of the issue raised under section 7(d) of the Act.
That is the view taken by this Court in Chatturbhuj Vithaldas Jasani vs Moreshwar Parashram (1), and that in fact is the point made by the High Court in rejecting the appellant 's contention that since the contract was invalid he could not be said to be interested in it under section 7(d) of the Act.
Therefore, the invalidity of the contract cannot help us in deciding the question as to whether, on its true construction, the contract can be said to have been executed by the appellant in his personal capacity or as the Mukhiya of the Village Panchayat.
Our conclusion, therefore, is that the four impugned contracts have been executed by the appellant as the Mukhiya of the Village (1) ; 547 Panchayat just in the same way as he had executed the school contract as the Secretary of the Vidyalaya in question.
That being so, section 7(d) cannot be invoked against him.
In view of this conclusion it is unnecessary to decide whether the works in question had been undertaken by the Government of Bihar or by the Central Government.
The result is that the appeal must be allowed, the order passed by the High Court set aside and that of the tribunal restored ; respondent I shall pay the costs of the appellant throughout; and the Election Commission shall bear their own.
We would like to add that, after this appeal was argued before us on April 2, 1959, we had announced our decision that the appeal would be allowed and that the judgment would be delivered later on in due course.
It is in pursuance of that order that the present judgment has been delivered.
Appeal allowed.
| The election of the appellant as a member of the Bihar State Assembly was challenged under section 7(d) of the Representation of the People Act, 951, by the first respondent who was also a candidate for election for the same constituency, on the ground that at the date of the nomination the appellant had an interest in contracts for execution of works undertaken by the Bihar Government, and that his nomination had been improperly accepted.
The appellant 's plea inter alia was that he had executed the contracts not in his individual capacity but as the Mukhiya of the Village Panchayat and therefore the disqualification imposed by section 7(d) of the Act could not be invoked against him.
The contracts in question related to community projects undertaken in pursuance of the Second Five Year Plan, under which the execution of different works adopted under the plan was to be by popular local agencies like Village Panchayats.
The contracts were all in the prescribed form and the appellant, at the com 536 mencement of the contract, described himself by his name, stating that he belonged to the village.
The preamble to the contract showed that the appellant undertook to carry out the construction of the development project under local works programme mentioned in the contract as per estimate attached thereto, that he agreed to execute the work.
according to and subject to the terms and conditions contained therein and that he undertook to contribute 50% of the cost in cash and labour.
At the end of the contract he signed as Mukhiya, giving his address as the Gram Panchayat.
The Election Tribunal found in favour of the appellant and dismissed the election petition, but, on appeal, the High Court took the view (1) that the description of the appellant given by him at the time when he signed the contracts was not a term of the contract and could not therefore support his plea that he had executed the contract as Mukhiya of the Panchayat, and (2) that the fact that he undertook liability to execute the contracts as required and to become liable for payment of any fine imposed by the local government officer in case of his default showed obligations of a personal character inconsistent with his plea.
Held, that, on a proper construction of the contracts taking into account all the terms and conditions as a whole and considering them in the light of the background of the Second Five Year Plan, when the appellant signed the contracts as the Mukhiya of the Village Panchayat he acted as its agent and not as an individual acting in his personal capacity.
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Subsets and Splits