ivil Appeal No 768 NT of 1975
From the Judgment and Order dated 311973 of the Allahabad High Court in Writ Petition No 4225 of 1971
SC Manchanda and AK Srivastava for the Appellants
NEMO for the Respondents
The Judgment of the Court was delivered by 263 VENKATACHALIAH J
This appeal by certificate preferred by the State of UP against the Judgment dated 311973 of the Allahabad High Court in WP No 42251971 raises a short question whether the Rule 25 A5 of the UP Sales Tax Rules 1948 Rules in so far as it stipulates that a recognition certificate  issued for purposes of Section 4 B of the UP Sales Tax Act 1948 Act shall take effect from the date of its issue is inconsistent with does not carry out the purposes of and therefore is ultra vires Section 4 B of the UP Sales Tax Act 1948 Act
The full bench of the Allahabad High Court by a majority has by the judgment under appeal preferred this view
So far as the declaration on the law on the point is concerned the matter loses much of its edge in view of the relevant amendment brought about by the UP Taxation Laws Amendment  Validation Act 1978 which now provides that such a recognition certificate shall take effect from the anterior date of the presentation of the application by the dealer
By the same amendment the certificate is rendered valid for three successive assessment years at a time and the renewals shall also be for like periods
The necessary and material facts are in a short compass and may briefly be stated Respondent Haji Ismail Noor Mohammad  Co a registered firm of partners was a Dealer registered under the Act
It inter alia carried on the business of manufacture of oils from groundnuts and other oil seeds
The oil so manufactured was sold by the Dealer both intra state inter state and by way of export
Under Section 3 D of the Act a dealer is liable to purchase tax on oil seeds at 3 ad valorem on the turnover of the purchases made by the dealer from the cultivators or other unregistered dealers
Section 4 B of the Act however contemplates special reliefs to certain manufactures of notified goods the relief being in the form of concessional rate of purchase tax or exemption there from as the case may be as notified by the State Government if the dealer holds a recognition certificate issued under sub section 2 in respect thereof
 On 1021969 the State Government notified that oils of all kinds to be notified goods for purposes of Section 4 B and that the purchases by the dealer liable to tax on the turnover of the firstpurchases shall be entitled to a concessional rate of tax at 2 on the 264 raw material required for the manufacture of notified goods
The present controversy relates to the Dealer s entitlement to the concessional rate of purchase tax respecting the purchase turn over of its first purchases under the said notification
On 2131969 Respondent applied under Section 4 B2 to the prescribed authority in the prescribed form for the grant of a recognition certificate
The recognition certificate for certain reasons was granted only on 521969
There appears no dispute that the turn over of the first purchases of the Respondent respecting which the claim for reduced rate of tax was made constituted raw material required for the manufacture of notified goods and therefore satisfied the requirement of the notification
However the relief was confined to the turnover of such first purchases made only after 5121969 ie the date of issue of the certificate and the relief in respect of the turnover prior to that date was refused on the basis of the condition in sub rule 5 of Rule 25 A which provided that such certificate shall take effect from the date of its issue
Respondent in its writ petition before the High Court contended that this clause in Sub Rule 5 of Rule 25 A is at cross purposes with and did not carry out the objects of Section 4 B and is ultra vires Section 4 B The High Court by majority opinion has accepted this contention
The provisions of Section 4 B and Rule 25A5 may now be noticed 4 B Special relief to certain manufacturers
1 Notwithstanding anything contained in sections 3 3 A 3 AA and 3 D a where any goods liable to tax under section 3 D are purchased by a dealer who is liable to tax on the turnover of his first purchases under that section and the dealer holds a recognition certificate issued under subsection 2 in respect thereof he shall be liable in respect of those goods to tax at such concessional rate or be exempt from tax as may be notified in the Gazette by the State Government in that behalf 265 b where any goods liable to tax under any other section are sold by a dealer to another dealer and such other dealer furnishes to the selling dealer in the prescribed form and manner a certificate to the effect that he holds a recognition certificate issued under sub section 2 in respect thereof the selling dealer shall be liable in respect of these goods to tax at such concessional rates or be exempt from tax as may be notified in the Gazette by the State Government in that behalf
2 A dealer who requires any goods referred to in sub section 1 for use as raw material for the purposes of manufacture in the State of Uttar Pradesh of any notified goods and such notified goods are intended to be sold by him in the State or in the course of inter state trade or commerce or in the course of export out of India may apply within such period and in such form and manner as may be prescribed to the assessing authority for the grant of recognition certificate in respect thereof and if the applicant satisfied such requirements and conditions as may be prescribed the assessing authority shall grant to the dealer in respect of such goods a recognition certificate in such form and subject to such conditions as may be prescribed Sub Rule 5 of Rule 25 A provides 25 A5
The recognition certificate shall ordinarily be issued within 30 days of the presentation of the application to the Sales Tax Officer
If however it may not be possible to issue the certificate within the time specified above the Sales Tax Officer shall obtain the approval of the Assistant Commissioner Executive of his range for an extension of time after stating the reasons for which it is not possible to issue the certificate in time
Such certificate shall take effect from the date of its issue underlining supplied In reaching such conclusion on the point as it did the reasoning that commended itself to the High Court was this 
The efficacy of the recognition certificate under clause a aforesaid becomes material and relevant at the time of the quantification of the purchase tax ie when 266 the assessment order is being drawn up
It is in the assessment proceedings that the liability to pay tax at a concessional rate is fructified
A dealer would be entitled to the concessional rate if he holds a recognition certificate    
The language of clause b does not make it a condition precedent or a necessary obligation that the purchasing dealer must at the time of the purchase produce the recognition certificate
If the purchasing dealer subsequent to the transaction of purchase furnishes to the selling dealer the certificate that he holds a recognition certificate the requirements of clause b are fully satisfied
 The High Court also took into account that sub Rule 5 of Rule 25 A while rightly recognising the need for the issue of the certificate with due despatch and within a time bound schedule could not consistently with the scheme and purpose of Section 4 B provide that the certificate shall take effect only from the date of its issue
Shri Manchanda learned Senior Advocate appearing in support of the appeal contended that the interpretation placed by the High Court runs in the teeth of the express statutory language which stipulates that the dealers holds a recognition certificate and the interpretation placed on it by the High Court if accepted would have the effect of adding something to the language of the section which is not in the Section
Learned Counsel said that the High Court had by the judgment virtually introduced a fiction that under certain circumstances where there had been a delay in issuing the certificate the dealer must be deemed to have held the certificate
Shri Manchanda submitted that the clear intendment of the provision was that the dealer should hold the recognition certificate  at the time of the purchases and that it would not be sufficient compliance with the statute if the dealer comes to hold it subsequently
He accordingly commended the view that found favour with the learned judge in the minority in the High Court
We did not have the benefit of the arguments from the side of the respondent which has remained unrepresented
It is really a matter of construction of the language of Section 267 4 B whether the dealer should hold a recognition certificate at the time the purchases were made or whether the requirements of the Section should be held to be satisfied if the dealer holds such a recognition certificate at the time of the assessment of the turnover in question
The High Court has held that the requirements of the Section are substantially complied with if the certificate is available to the dealer at the time the liability to tax of the turnover in question is sought to be determined subject to the requirement that the turnover is after the date of the application filed by the dealer for issue of a certificate
According to the High Court the date of actual issue of the certificate should not be held to be material and that the benefit for the concessional rate of tax should be available to the dealer if the dealer at the time of the assessment holds a recognition certificate in respect thereof 
According to the High Court the language of Section 4 B does support the extreme construction that the recognition certificate should be held at the time of the purchases themselves
On a consideration of the matter we are persuaded to the view that the construction placed on the provision by the High Court is an eminently plausible one
There is nothing basically wrong in the approach of the High Court that the statutory language does not insist upon the contemporaneity of the holding of the certificate with the purchases and that it is sufficient if the dealer subsequently comes to hold certificate in respect thereof
It seems possible to say that to insist upon a contemporaneity of the purchases and the certificate would also amount to qualifying the word holds  in the section by adding the words at the time of the purchases
It is true the words in respect thereof as Lord Greene MR said are colourless words See Trustees vs IRC but in Section 4 B they are in their reference to the certificate sufficiently though non specifically wide enough to include a certificate obtained later but pertaining to the turnover in question
If this is the scheme of Section 4 B in that it does not exclude from its contemplation the efficacy and sufficiency for its purpose of a certificate issued subsequently then the rule which compels only its prospective operation might not unreasonably be held to be inconsistent with and ultra vires of Section 4 B We find therefore nothing unreasonable in this construction of Section 4 B Indeed by the 1978 Amendment this position has been made clear in the rule itself which after the amendment expressly provides that the certificate will take effect from the 268 date of the application made by the dealer and not merely from the date of the issue
In this view of the matter the judgment of the High Court does not call for interference
The appeal is dismissed
However there will be no order as to the cost
RSS Appeal dismissed


Summary:
A car owned by a firm was entrusted to Guru proprietor of Ms Auto Electrical Works for electrical repairs
The car was insured with Ms Oriental Insurance Co Ltd as required under the  The Act 
When Momad Donttach an employee of the repairer was repairing the car the respondent No 1 was knocked down when the car dashed against the said respondent as a result whereof she had to be hospitalised and treated for injuries
The respondent No 1 instituted a claim petition under section 110 A of the Act before the Motor Accidents Claims Tribunal impleading the firm the owner of the car Guru the repairer Momad Donttach the mechanic and the insurer Ms
Oriental Insurance Co Ltd as respondents
The respondents contested the petition
The Tribunal passed its award allowing a compensation of Rs90000 to the respondent No 1 for the injuries suffered by her payable jointly and severally by the insurer and all the other respondents
Aggrieved by the decision of the Tribunal the insurer and Guru filed appeals before the High Court which allowed the appeal of the insurer however holding that under section 92 A of the Act the insurer was liable to pay to the extent of Rs7500
Guru s appeal was dismissed holding that he and his mechanic Momad Donttach alone were jointly and severally liable to pay the compensation ie the entire sum awarded minus Rs7500 above said
Aggrieved by the decision of the High Court
Guru moved this Court for relief by special leave
Allowing the appeal and modifying the order of the High Court the Court 171  HELD The only question of law arising for consideration was whether the insurer was liable to pay the compensation to the claimant which has to be resolved in the light of the provisions of the Act
175 B C If a policy is taken in respect of a motor vehicle from an insurer in compliance with the requirements of Chapter VIII of the Act the insurer is under an obligation to pay the compensation payable to a third party on account of any injury to hisher person property or to a legal representative of the third party in case of death of the third party caused by use of the vehicle at a public place
The liability to pay the said compensation arises when the insured is using the vehicle in a public place
It also arises when the insured has caused or allowed any other person including an independent contractor to use his vehicle in a public place and the death of or injury to the person or property of a third party is caused on account of the use of the said vehicle during such period unless such other person has himself taken out a policy of insurance to cover the liability arising out of such an accident
176E  In this case neither Guru Govekar the repairer nor his mechanic Momad Donttach had taken a policy of insurance covering the liability to pay compensation payable to a third party when a motor vehicle taken for repairs from its owner has caused the death of or injury to a third party
When the owner of a Motor vehicle entrusts his vehicle to a repairer to carry out repairs he is allowing the repairer to use his vehicle in that connection
It is also implicit in the said transaction that unless there is any contract to the contrary the owner of the vehicle also causes or allows any servant of the repairer engaged in the work of repairs to use the vehicle in connection with the work of repairs and when such work of repair is being carried out in a public place if on account of the negligence of either the repairer or his employee engaged in the repair work a third party dies or suffers injury to his person or property the insurer becomes liable to pay the compensation under the provisions of the Act
While it may be true that under the Law of Torts the owner may not be liable on the principle of vicarious liability the insurer would be liable to pay the compensation by virtue of the provisions of sections 94 and 95 of the Act
On the facts of the case the insurer was liable to pay the compensation found due to the claimant as a consequence of the injuries suffered by her due to the negligence of the mechanic engaged by the repairer who had undertaken to repair the vehicle by virtue of the provisions contained in section 94 of the Act
Any other view will expose the innocent third 172 parties to go without compensation when they suffer injuries on account of such motor accidents and will defeat the very object of introducing the necessity for taking out insurance policy under the Act
176H 177A C 180F 181F The Court allowed the appeal modified the order of the High Court and directed the insurer to pay to the claimant the sum of Rs90000 etc
181G Monk vs Warbey and others  McLeod or Houston vs Buchanan  Vijaynagaram Narasimha Rao and others vs Chanashyam Das Tapadia and others  Shantibai and others vs The Principal Govindram C Sakseria Technological Institute Indore and others  D Rajapathi vs University of Madurai and others  New Asiatic Insurance Co Ltd vs Pessumal Dhanamal Aswani and Ors  referred to