Civil Appeal No 34 of 1956
Appeal from the judgment and order dated February 19 1954 of the former Nagpur High Court in Misc
Appeal No 164 of 1949 arising out of the judgment and decree dated November 22 1949 of the First Additional District Judge Akola in Civil Suit No 12 A of 1948
C B Agarwala and Ganpat Rai for the appellant
section K Kapur and B P Maheshwari for the respondent
January 21
The Judgment of the Court was delivered by KAPUR J
KAPUR J
This is an appeal against the judgment and order of the Nagpur High Court and arises out of proceedings under the Indian 
The appellant in this case is Champalal and the respondent is Samarath Bai the widow of Lal Chand
The parties who are Jains belong to Balapur in the district of Akola in the previous State of Madhya Pradesh
The relationship of the parties is shown by the following pedigree table 813 Phool Chand       Nanak Chand Khushal Chand Sundarlal    Bulakhidas Lalchand Deolal jivanbai Samarathbai         Babibai Ratanbai  Rasiklal Vijay Kumar         Ishwardas Baglal Digamber Das   Champalal         Sakarchand Vinaychand Vimalchand On September 14 1944 Lal Chand made a will by which he authorized his wife Samarath Bai to adopt Champalal and made certain disposition of his property
Lal Chand died on September 26 1944
On October 20 1944 the appellant made an application under section 192 of the Succession Act to the First Additional District Judge of Akola for the appointment of a Curator
This was Misc
No 3 of 1944
Notices were issued to the respondent Samarath Bai and her daughters The will was registered on December 29 1944
On January 10 1945 an arbitration agreement was entered into between the appellant and the respondent and on January 16 1945 both parties applied for stay of proceedings in the case Misc
No 3 of 1944 and the case was adjourned to March 28 1945 and then was adjourned to June 18 1945
On that date the arbitrators made an application to the First Additional District Judge for extension of time for four months for making the award
This application was opposed by the appellant but the court gave three months  time on July 26 1946
The award was made on October 18 1946
On October 21 it was filed by the arbitrators in the court of the First Additional District Judge who on October 30 gave to the parties ten days  time for objections
On November 15 814 1946 the appellant filed objections to the award and on January 31 1947 the respondent applied for a judgment in terms of the award and for a decree
The award was unregistered and therefore at the request of the respondent it was handed over for getting it registered to Mithulal who was an attorney of two of the arbitrators Magandas and Sakarchand
On February 7 1947 he presented it for registration to the Sub Registrar but the Sub Registrar returned it as it was not accompanied by a list and particulars of the property covered by the award
On February 15 1947 the list and particulars signed by Mithulal were supplied and the award was represented for registration by Mithulal
As he was an attorney of only two of the three arbitrators the Sub Registrar registered the document on March 26 1947 in regard to said arbitrators and refused it qua the third arbitrator Bhogilal
But under the orders of the Registrar the document was registered in regard to Bhogilal also and it was refiled on July 21 1948 in the Court of the First Additional District Judge
He ordered the two proceedings one under section 192 of the Succession Act and the other under the to be separated and the proceedings under the were ordered to be registered as a suit on August 14 1948 and on August 30 the court ordered a proper application as required under the High Court Rules to be filed
On September 15 1948 an application under section 142 of the was filed
On October 141948 the appellant filed an application for setting aside the award and therein raised various objections which were rejected and on November 22 1949 a judgment was passed in accordance with the terms of the award followed by a decree
Against this order the appellant took an appeal to the High Court which was dismissed on February 19 1954
The High Court held that the application filed
by the respondent dated September 15 1948 under section 142 of the was not within time but the original application filed by the arbitrators on October 21
 1946 was within time that no objection could be taken to the award on the ground that 815 there were two awards one by the arbitrators and the other by Mithulal who had added to the award by giving the list and particulars that the First Additional District Judge was authorised to extend time for making an award an the application of the arbitrators and he was properly seized of the case that no misconduct had been proved and that no illegality had been established and that the appellant did not get anything under the will except on adoption nor was he until then constituted an executor
Against this judgment this appeal has been filed on a certificate by the High Court
In appeal before us counsel for the appellant raised six points 1 the filing of the award was not within time as no application was made under section 14 within the time allowed by the Limitation Act 2 that the award required registration and was not registered in accordance with law and the mere fact that it was registered does not clothe it with legality  3 the First Additional District
Judge had no jurisdiction to grant three months  extension of time to the arbitrators for making the award which was granted on July 26 1946  4 that the arbitrators were guilty of mis conduct 5 that the award is in excess of the power given to the arbitrators under the agreement of arbitration and 6 even if the award was proper and legal the respondent had refused to adopt the appelant and therefore the decree should have been as provided by the award on the happening of that contingency and in the alternative the First Addi tional District Judge who passed the decree had no jurisdiction to take subsequent events into consideration
In our opinion points nos 1 2 and 3 are wholly without substance
The award was made on October 18 1946 and the arbitrators filed it in the court of the First Additional District Judge and they also gave notice to the parties by registered post informing them of the making of the award
It has not been shown as to how the filing of the award is barred by Iimitation
Article 178 of the Limitation Act which was 104 816 relied upon by the appellant applies to applicationmade by the parties and not to the filing of the award by the arbitrators
The second question that the award required registration and could not be filed by the arbitrators before it was registered is equally without substance
The filing of an unregistered award under section 49 of the Registration Act is not prohibited what is prohibited is that it cannot be taken into evidence so as to affect immoveable property falling under section 17 of that Act
That the award required registration was rightly admitted by both parties
It was contended by counsel for the appellant that under section 21 of the Registration Act and the rules made tinder section 22 a description of the property was necessary and as that was supplied through Mithulal who according to counsel did not have the necessary authority to do so the award must be taken to be an incomplete document which could not be registered
The High Court has found that in the circumstances of this case lists were not necessary and therefore anything done by Mithulal whether authorised or not will not affect the legality of the registration
The third point that the First Additional District Judge before whom the application was made for extending the time for making the award had no jurisdiction is also not sustainable
It so happened that the court which had jurisdiction to entertain applications for the filing of awards was the same before whom the application under section 192 of the Succession Act had been filed
If that court was the proper court in which such applications were to be made then no defect can be found in the application being made to that court or that court giving such extension
The ground on which the charge of misconduct of the arbitrators was founded was that the arbitrators had before hearing the parties decided amongst themselves that they would give a particular award
The High Court has found that this charge has not been proved
It was based on a statement of the appellant that one of the arbitrators Magandas had suggested to him that he the appellant should agree to give to 817 the respondent an absolute estate in a portion of the property and if that was done the dispute would be settled but he was agreeable only to giving a life estate and the arbitrators then told him that in that case they would give an absolute estate to the respondent
As the High Court has pointed out this fact was not pleaded in the first application of objections filed by the appellant and it was in its opinion an after thought
Reliance was also placed on the following statement of Magandas in cross examination as PW 3  We had decided as to how the award was to be made by us but as these two persons did not come we made the application to the Court for extension of time 
But the explanation of the other arbitrators was that they wanted to bring about an amicable settlement and had gone to Balapur and then to Akola
The appellant and his brother had promised to follow them there but as they did not turn up an application was made for extension of time
There is nothing wrong in what the arbitrators did and it cannot be said that any inference of misconduct can be drawn from this evidence
It was then submitted that the award was in excess of the powers given to the arbitrators and was therefore invalid
This point was divided into three points i that the reference itself was invalid and therefore the award was a nullity ii that the award was in excess of the powers given to the arbitrators and iii the award was contrary to law on the face of it
In support of point No 1 it was submitted that the appellant having accepted the office of an executor could not enter into an arbitration concerning the execution authority to adopt or the property covered by the will
It is unnecessary to decide the vitality of this point because according to the true construction of the will the appellant was not to become the executor till he had been adopted
Paragraph 10 of the will was as follows  I have this day made as above the wilt of my estate
Under this will I am authorising the said 818 Champalal Ishwardas to execute the same
I have appointed him the executor of this will
Under the said will the said Champalal alone shall be the full owner of my entire movable and immoveable property and the executor of the will after my death if I adopt him during my lifetime or even if my wife adopts him after my death
 The words  under the said will the said Champalal shall be the executor of the will after my death if I adopt him during my lifetime or even if my wife adopts him after my death  show that the appellant was to become executor after his adoption and as he was not adopted he cannot be the executor and therefore the argument that an executor cannot enter into arbitration does not arise and we do not think it necessary to decide this matter beyond saying that the appellant was not constituted an executor eo nominiee but was to be an executor if he was adopted
Similarly the question whether the appellant after accepting the office of an executor had renounced it or a discharge was necessary under section 301 of the Succession Act does not arise
Points ii and iii may be taken up together
lt was argued that the award is in excess of the power given to the arbitrators because it determined the rights of the appellant as an executor and because it was in excess of para
No 1 of the arbitration agreement which provided that the arbitrators should maintain the gifts to charities and the gift in favour of the testator s daughters and others
lt is difficult to see how the award has lost sight of this paragraph
As a matter of fact the arbitrators have maintained the gifts to charities and other gifts made by the testator in the will and they have clearly stated that the person becoming the owner of the deceased s property will have to provide for the maintenance of the persons named in the will and pay the charities therein enumerated
Another objection raised was that according to the arbitration agreement the arbitrators had to enforce the will and not to act outside it and also they could not impose a limit of time for adoption
How they 819 have acted dehors the will has not been shown
The contention raised was that according to the arbitration agreement the arbitrators had to decide in what proportion the parties to the dispute were to  enjoy  the estate of the testator and not that one of them will get nothing at all
As we read paragraph 10 of the will and the High Court also so construed it the appellant could get the property of the testator only if he was adopted by the testator or his widow the respondent
It is not correct therefore to read the term of the arbitration agreement as meaning that the appellant was to get at least some portion of the property irrespective of his being adopted
Paragraph 2 of the arbitration agreement shows that they had also to decide that in case the respondent adopted the appellant what should be the respective rights of the parties in the estate
The arbitrators decided that the respondent should adopt the appellant according to Hindu Law within four months before February 1947 and if the respondent failed so to do within the time above specified the appellant would be the heir and executor of the deceased s entire property and the respondent would he entitled to Rs 200 per mensem as maintenance
But if in spite of the respondent s readiness to adopt the appellant refused to be adopted within four months he would not get any rights in the property of the deceased nor would he be the executor
As it was specifically stated in the arbitration agreement that the consequences of the adoption or non adoption were to be decided by the arbitrators they rightly laid down what was to happen if the adoption did not take place and also provided that if it was due to the default of the appellant one consequence will follow and if it was the default of the respondent another consequence would follow
The words of the agreement In the same way the arbitrators may also decide that in case it is decided that the party No 2 should adopt the party No 1 and if that thing is accepted by the party No 1 and in case the adoption takes place what shall be the rights of both the parties and how they will stand in respect of the property    820 mean that the power to limit the time was implicit because the happening of these events could not be left for a limitless period
The courts below have found on the evidence that the appellant was not prepared to be adopted
We have been taken through the evidence and we find no reason to differ from the opinion of the High Court that the appellant was not prepared to be adopted
His attitude in regard to that matter is clear from ground No 37 of the Grounds of Appeal taken by him in the High Court which was  The lower Court erred in holding that Champalal was not within his rights in consenting to get adopted by Mt Samarathbai within the time fixed by the arbitrators without prejudice to his objections against the award  and the courts have rightly come to that conclusion
In this view of the matter the alternative argument of taking subsequent events into consideration does not arise
It was also argued that by making the award the arbitrators had perverted the line of succession
All that the award has stated is that in case the adoption takes place the respondent would receive I share of the property of the testator and it would form her stridhana
How that has perverted the line of succession is difficult to understand
There is no force in this appeal and it must there
fore be dismissed with costs
Appeal dismissed


Summary:
The appellant a resident and ordinarily resident in India carried on trade in Colombo in grains and foodstuffs for cattle
For the relevant assessment years the Income tax Officer rejected the accounts produced by the appellant on the grounds inter alia that there was absence of vouchers and that the stock account and the manufacturing account had not been kept or produced and he then made an estimate of the profits
The Appellate Tribunal also agreed with the Income tax Officer and held that the correct profits could not be deduced from the books produced by the assessee and that therefore the proviso to section 13 of the 11959 II LLJ 38 886 Indian income tax Act 1922 applied
Having taken into consideration all the relevant factors it computted the profits at 15 on grains imported from India and 12 12  on grains purchased in Ceylon and in support of its computation it pointed out that in certain cases which had come to its notice the rates of profits went Up to 20
The appellant challenged the validity of the assessment on the ground that the principle of natural justice had been violated in that the Tribunal had taken into consideration the rate of profit in other cases without giving an opportunity to the appellant to explain those cases and relied upon Dhakeshwari Cotton Mills Ltdv
The Commissioner of lncome tax WestBengal
1I955 i SCR 941 He also urged that the non production of stock account was not such a defect as to entitle the Taxing Authorities to reject the books and apply the proviso to section 13 of the Act
Held1 that the percentage of profits made by traders in other cases was not the basis made by the Tribunal for arriving at any conclusion as to the percentage at which income should be computed in the present case but was merely an ancillary support to that conclusion and that Dhakeshwari Cotton Mills Ltd vs The Commissioner of Income tax West Bengal was not applicable to the case
2that the keeping of a stock register is of great importance because that is a means of verifying the assessee s accounts by having aquantitative tally that if after taking into account all the materials including the want of a stock register it is found that from the method of accounting correct profits of the business are not deducible the operation of the proviso to section 13 of the Act would be attracted
Ghansyam Das Permanand vs Commissioner of Income tax CP  Beray  Bombay Cycle Stores Company Ltd vs Commissioner of Income tax
and Commissioner of Income tax vs McMillan and Co 1958 SCR 689 relied on