DICTION Civil Appeal Nos
4522 4529 of 1985 etc
etc From the Judgment and order dated 1681985 of the Karnataka High Court in W P
Nos t5536 401982 and W P Nos
13981 17071 
17072
19118 and 19285 1983
G Ramaswami
Additional Solicitor General R J Babu RF Nariman Ranjan Karanjawala Mrs M Karanjawala and Ejaz Maqbool for the Appellant in CA Nos 4522 291985 Shanti Bhushan Kapil Sibal Soli J Sorabjee GB Pai VA 353 Bobde KP Kumar R Vasudevan KT Anantharaman Harish N Salve HK Dutt Ms Mridula Ray OC Mathur Ms Meera Mathur and Ms Lekha Mathur for the Petitioners in WP Nos 36 37 39 and 358 of 1986
TS Krishnamurthi Iyer section Padmanabhan Soli J Sorabjee RP Srivastava P Parmeshwaran R Mohan Harish N Salve Ms M Ray and HK Dutt for the Intervener in CA Nos
4522 29 of 1985
Dr YS Chitale MVeerappa Ashok Kumar Sharma and Atul Chitale for the Respondents
The Judgment of the Court was delivered by SABYASACHI MUKHARJI J
These appeals by certificates are from the judgment and order of the High Court of Karnataka dated 16th of August 1985
By the impugned judgment and order the writ petitions filed by the Coffee Board and others were dismissed
In order to appreciate the questions involved in the decision it may be noted that the appellant herein Coffee Board contended that the compulsory delivery of coffee under the extinguishing all marketing rights of the growers was compulsory acquisition  and not sale or purchase to attract levy of purchase tax it was further contended that the appellant was only a trustee  or agent  of growers not exigible to purchase tax and that all export sales were in the course of export  immune to tax under Article 286 of the Constitution
It was held by the Division Bench of the Karnataka High Court that an element of consensuality subsists even in compulsory sales governed by law and once there is an element of consensuality however minimal that may be whether express or implied then that would be sale or purchase for purposes of and the same would be exigible to sales or purchase tax as the case may be under the relevant Sales Tax Law of the country
The power conferred on the Board under section 252 of the  to which we will make reference later to reject coffee offered for delivery or even the right of a buyer analogous to section 3  of the showed that there was an element of consensuality in the compulsory sales regulated by the Act
The amount paid by the Board to the grower under the Act was the value or price of coffee in conformity with the detailed accounting done thereto under 354 the Act
It was further held by the High Court that the amount paid to the grower was neither compensation nor dividend
The payment of price to the grower was an important element to determine the consensuality test to find out whether there was sale under section 41 of the 
The Act also ensures periodical payments of price to the growers
The Rules provide for advancing loans to growers
Therefore according to the Division Bench of the Karnataka High Court without any shadow of doubt these elements indicated that in the compulsory sale of coffee there was an element of consensuality
When once the Board was held to be a dealer  it also followed from the same that there was sale by the grower purchase by the Board and then a sale by the Board
The purchases and the exports if any made by the Board thereafter on any principle would not be local sales  within the State of Karnataka
Explanation 32ii to section 21 of the Karnataka Sales Tax Act had hardly any relevance to hold that the later export sales were local sales  to avoid liability under section 6 of the Karnataka Sales Tax Act
The direct export sales made by the appellant for the period in challenge were not in the course of export  and they did not qualify for exemption from purchase tax under section 6 of the Karnataka Sales Tax Act
The levy of sales tax on coffee it was held by the High Court fell under Entry No 43 of the second schedule of the Act and it was governed by section 53a of the Act and not by section 51 of the Act
It was further held that under section 5 of the purchases and exports made by the Coffee Board are for export  and not in the course of export  and thus did not qualify for exemption under Article 286 of the Constitution of India
It was observed by the High Court that the Board did not purchase or take delivery of any specific coffee or goods of any grower and exported the same under prior contracts of sale
The Board did not purchase any specific coffee of any specific grower for purposes of direct exports at all
The purchases made and exportes made would be for export  only and not in in the course of export  to earn exemption under Article 286 of the Constitution of India
It was further held that sections 11 and 12 of the Act which regulate the levy and payment of Customs and Excise Duties when closely examined really established according to the High Court that what was grown by the growers and delivered to the Board was not at all compulsory acquisition but was sale
If it was compulsory acquisition and there was payment of compensation then these provisions would not have found their places in the at all according to the High Court
Levy of Customs and Excise Duties on compensation was something unheard an incongruity and an anachronism in compulsory acquisitionaccording to the High Court
355 On an analysis of all the provisions of the Act in general and sections 17 and 25 in particular it was held by the High Court that on the true principles of compulsory acquisition or eminent domain it was difficult to hold that on compulsory delivery by growers to the Board there would be compulsory acquisition of coffee by the Board
In order to determine the questions at issue that is to say the nature of the transaction one has to in a case of this nature telescope into the history and project it into the dimensions of the present levy
In November 1935 the Indian Coffee Cess Act 1935 Act 14 of 1935 came into operation for levying cess on coffee produced in and exported out of India for promoting the consumption in India and elsewhere of coffee produced in India and also for promoting agricultural and technological research in the interests of the coffee industry in India
The purpose seems to have been to develop the coffee industry popularise the same and win a market in the international field
On 14th of September 1940 Coffee Market Expansion ordinance No XIII of 1940 was promulgated by the Central Government and the Pool Marketing Scheme for coffee introduced in India for the first time
An internal sale quota  was to be allotted to each coffee estate upto which the owner could sell his coffee in the Indian Market
Coffee in excess of the internal sale quota allotted and grown on the estates which were henceforth to be registered were required to be compulsorily delivered to the surplus pool of the Coffee Market Expansion Board set up under the ordinance
The Pool Marketing Scheme was inspired by the pool marketing schemes for agricultural produce under Australian statutes
On or about 2nd March 1942 the Coffee Market Expansion Act 1942 the title of the Act was later changed to in 1955 hereinafter referred to as the Act was enacted and the ordinance repealed
The Act was to remain in operation for the duration of the second world war and a period of one year thereafter
The Act inter alia added a new sub section 6 to section 25 of the Act specifically providing for extinguishment of all the rights of the owners of the registered coffee estates in the coffee delivered by them to the surplus pool of the Coffee Board hereinafter referred to as the Board  set up under the Act except the right to receive payments referred to in section 34 of the Act
Under section 34 of the Act the Coffee Board was required to pay to the registered owners who had delivered coffee for inclusion in the surplus pool such payments out of the Pool Fund comprising of the monies realised from the sale of coffee pooled with the Board as the Board may think proper the amount so paid being dependent upon the quantity and the kind of the coffee delivered to the Board 356 on or about 26th March 1943 the Act was amended inter alia to enable the Coffee Board with the previous approval of the Central Government not to allow any internal sale quota to the growers
Since 1943 in each year the Board with the previous sanction of the Central Government has decided that no internal sale quota should be allowed
Sections 38A and 38B were added making failure to deliver coffee to the Board an offence to be penalised by fine and confiscation of the quantities not delivered
Power was also conferred on the Coffee Board to seize coffee required to be but not delivered to the Board
Ever since 1943 internal sale quotas have not been al1owed and all the coffee grown on estates in the areas to which Section 251 of the Act was applicable was required to be compulsorily pooled
The surplus pool referred to in the Act was now in fact the pool of practically all coffee produced in India it is not necessary to refer to the actual quantities available in the internal pool in different years though a table to that effect was placed before us by the learned Additional Solicitor General Sree G Ramaswamy
On the 11th of March 1947 the Coffee Market Expansion Amendment Act IV of 1947 was enacted
The life of the Act was extended without any time limit and inter alia changes were made in the constitution of the Board providing for representation of labour
On 1st August 1955 the Coffee Market Expansion Amendment Act 1954 was brought into force
The object of the was modified from the continuation of the provisions made under the Coffee Market Expansion ordinance 1940 for assistance to the coffee industry by regulating the sale of coffee in India and by other means  to Development under the control of the union of the coffee industry
It was highlighted before us in the course of the submission that the pool system of marketing is a unique feature of the coffee industry in India
The principal features according to the learned Additional Solicitor General of this system are a Compulsory registration of all lands planted with coffee section 14 of the 
b Mandatory delivery of all coffee grown in the registered estates except the quantities permitted by the Board to be retained for domestic consumption and for seed purposes see section 251 of the 
Estates situated in remote areas specified in the notification issued by the Central Government under the proviso to section 251 of the are exempt from this provision
c Seizure by the Board of coffee wrongly withheld from the pool
Prosecution for failure to deliver and confiscation of quantity not delivered
d Delivery to be effected at such times and at such places as designated by the Board section 252 the extinguishment on delivery of all rights of the growers in respect of the coffee delivered to the Board excepting the right to receive payment under section 34 of 357 the Act
section 256
e Sale of coffee in the pool by the Board in the domestic market and for export through auctions and other channels in regulated quantities and at convenient intervals
section 261
f Payment to growers in such amounts and at such times as decided by the Board section 34
The payment to be made on the basis of the value as determined by the price differential scale section 244 and in proportion to the value of such coffee to the total realisations in the pool section 342
g Sale or contracts to sell coffee by growers in the years in which internal sale quota was not allotted were prohibited by section 17 of the Act
All contracts for the sale of coffees at variance with the provisions of the Act were declared as void by section 47 of the Act
Learned Additional Solicitor General sought to urge before us that the framers of the Act made a conscious distinction between i mandatory delivery of coffee to the Coffee Board under section 251 and ii purchase of coffee by the Coffee Board from the growers exempted from mandatory delivery and from out of the internal sale quota during the years when such quotas were allotted under section 262 and iii sale of coffee by the growers in the Indian Market whenever internal sale quotas were allotted under sections 17 and 22
It was highlighted that the Board has no capital of its own and it did not have any Reserve Fund
The estates on which coffee is grown are not owned by the Board
The Board is required to maintain two separate funds one General Fund and the other Pool Fund
Our attention was drawn to the fact that the Pool Fund consists of amounts realised from the sale of coffee marketed by the Board
The accounts of the Pool Fund are required to be maintained separately for each coffee season
The coffee season is from July to June of the following year
The sales realisations less the costs of storing curing and marketing the coffee are to be utilised for making payments to growers who had delivered coffee in that season in proportion to the value of the coffee delivered by them
The value is determined with reference to the kind quality and quantity of coffee delivered by the growers There are various other features which have to be borne in mind on the maintenance of the separate funds
It may be highlighted however that the General Fund consisted principally of the amounts paid to the Board by the Central Government from out of appropriations made by the Parliament annually
This fund was to be utilised for meeting the costs of administration research measures for the welfare of plantation labour promotion of coffee consumption and developmental assistance to coffee estates
After the was enacted the production of coffee and the quantities exported and the value of the exports have increased greatly
358 It may be mentioned that the production of coffee was less than 15000 tonnes in 1940
The production in the year 1984 85 was about 193000 tonnes
Over 50 of the coffee grown in the country is grown in the State of Karnataka
There are 112153 coffee estates in the country of which 104958 estates are less than l0 acres in size and 362689 persons were employed on the estates in 1982 83
Over 59000 tonnes of coffee of the value of about Rs209 crores was ex ported in the year 1984 85
The Madras High Court in the case of Indian Coffee Board vs  State of Madras S STC 292 held that the Coffee Board was a dealer  under the Madras General Sales Tax Act 1939 and inter alia held that there was no contract express or implied between the coffee grower and the Board and that the object and scheme of the Act were analogous to the statutes in Australia providing for compulsory acquisition of pool marketing of agricultural produce
So far as the Madras High Court held that the Indian Coffee Board was a dealer we accept the same
The observation that there was no contract was made in the context of agency contract between the Coffee Board and the grower
In or about 1957 Karnataka Sales Tax Act 1957 was enacted and the Mysore Sales Tax Act 1948 repealed Sale  is defined in section 2t and dealer  in section 2k of the said Act
Growers of agricultural produce are not dealers  by reason of the Exception to section 2k of the said Act
This position was not disputed before us
Section S of the Act provides for levy of sales tax
Coffee is mentioned at item 43 in Schedule II to the Karnataka Sales Tax Act
Sales tax on coffee is a single point tax payable on the first sale in the State
The basic rate of tax is l0 in Karnataka
The rate in Tamil Nadu Andhra Pradesh and Kerala is 6
The question involved in these appeals and the writ petitions is the exigibility of tax on sale if there be any by the growers of the coffee to the Board
Basically it must depend upon what is sale in the general context as also in the context of the relevant provisions of the Act namely the Karnataka Sales Tax Act 1957 as amended from time to time hereinafter called the Karnataka Act and the Central  hereinafter called the Central Act
We must however examine these in the context of general law namely the and the concept of sale in general
The essential object of the contract of sale is the exchange of property for a money price
There must be a transfer of property or an agreement to transfer it from one party the seller to the other the buyer in 359 consideration of a money payment or a promise thereof by the buyer
Lord Denning MR in CEB Draper  Sons Ltd vs Edward Turner  Son Ltd  at page 432 observed as follows I know that often times a contract for sale is spoken of as a sale
But the word sale  properly connotes the transfer of the absolute or general property in a thing for a price in money see Benjamin on sale 2nd ed
1873 p 1 quoted in Kirkness vs John Hudson  Co  708 719
In this Act of 1926 I think that sale  is used in its proper sense to denote the transfer of property in the goods
The sale takes place at the time when the property passes from the seller to the buyer and it takes place at the place where the goods are at that time
Lord Denning was speaking for the English Act of 1926 for the sale of Goods Act
D In the  hereinafter called the   Contract of sale of goods is defined under section 41 as a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price
It also stipulates by sub section 4 of section 4 that an agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred
Benjamin s Sale of Goods 2nd Edition states that leaving aside the battle of forms sale is a transfer of property in the goods by one the seller to the other the buyer
F Under the Karnataka Sales Tax Act sale is defined under section 2t as Sale with all its grammatical variations and cognate expressions means every transfer of the property in goods by one person to another in the course of trade or business for case or for deferred payment or other valuable consideration but does not include a mortgage hypothecation charge or pledge
 The Central Act defines sale as under in section 2g 360 Sale with its grammatical variations and cognate expressions means any transfer of property in goods by one person to another for case or for deferred payment or for any other valuable consideration and includes a transfer of goods on the hire purchase or other system of payment by instalments but does not include a mortgage or hypothecation of or a charge or pledge on goods Coffee Board is a dealer  duly registered as such under the Sales Tax Acts of all the States in which it holds auctionsmaintains depots runs coffee houses
The Board is also registered as a dealer  under the 
The Board collects and remits sales tax on all the coffee sold by it for domestic consumption to the State in which the sale takes place
Coffee is sold through auctions held in the States of Karnataka Tamil Nadu and Andhra Pradesh and also through the Board s own depots located in nine States
Sale is also effected by way of allotments to cooperative societies
The Board directly exports coffee and also sells coffee to registered exporters through separate export auctions
It may be mentioned that over fifty per cent of the coffee is produced in Karnataka and most of the Robusta variety of coffee is produced in Kerala
All the coffee produced in these States cannot be sold within the State where the coffee is produced
Coffee meant for export has also to be stored at convenient places
The Board therefore transfers coffee from one State to another
Sales tax is not payable or paid on the transfer of such coffee
In order to appreciate the actual controversy and the point at issue in the instant case it is vital to appreciate the real nature of the transaction
In 1966 this Court in the case of State of Kerala vs Bhavani Tea Produce Co   an unanimous decision of a Bench of five learned judges which arose under the Madras Plantations Agricultural Income Tax Act 1955 held that when growers delivered coffee under section 25 of the Act to the Board all their rights therein were extinguished and the coffee vested exclusively in the Board
This Court observed that when growers delivered coffee to the Board though the grower does not actually sell the coffee to the Board there was a sale  by operation of law
This was in connection with section 25 of the Act
The Court however did not hold that there was a taxable sale  by the grower to the Board in the year in question
The sale according to this Court in that case took place in earlier years in which the Agricultural Income Tax Act did not operate
All the States in which coffee is grown and all the persons concerned with the coffee industry it is asserted on behalf of the Additional Solicitor General NIRANJAN 361 understood this decision as laying down that the sale by operation of law  mentioned therein only meant the compulsory acquisition  of the coffee by the Coffee Board
We are however bound by the clear ratio of this decision
The Court considered this question was there a sale to the Coffee Board at page 99 of the Paper Book and after discussing clearly said the answer must be in the affirmative
It was rightly argued in our opinion by Dr Chitale on behalf of the respondents that the question whether there was sale or not or whether the Coffee Board was a trustee or an agent could not have been determined by this Court as it was done in this case unless the question was specifically raised and determined
We cannot also by pass this decision by the argument of the learned Additional Solicitor General that section 10 of the Act had not been considered or how it was understood by some
This decision in our opinion concludes all the issues in the instant appeal
In 1970 purchase tax was introduced
The Karnataka Sales Tax Act was amended by Karnataka Act 9 of 1970 and section 6 was substituted
The new section 6 provided for the levy of purchase tax on every dealer who in the course of his business purchased any taxable goods in circumstances in which no tax under section 5 was leviable and inter alia despatched these to a place outside the State at the same rate at which tax would have been leviable on the sale price of such goods under section 5 of the Karnataka Act
The delivery of coffee by the coffee growers to the Coffee Board not being treated a purchase by the Board the State did not demand any tax from the Board in respect of such deliveries
Demands were raised for the first time in 1983
Assessments for the years upto 1975 were completed without any demand for purchase tax being raised
This Court on or about 15th of April 1980 in the case of Consolidated Coffee Ltd and Anr
vs Coffee Board Bangalore etc
  held that sale of coffee at export auctions were sales which preceded the actual export and thus exempt from sales tax under section 53 of the 
The Court also directed the State Governments to refund the amounts collected as sales tax on such sales and set a time limit for effecting such refunds
The Karnataka Government as a consequence became liable to refund to the Coffee Board about Rs7 crores which amount in turn was to be refunded by the Board of Directors to the exporters
In 1981 the Commissioner of Sales Tax Karnataka informed the Board by a letter that the mandatory delivery of coffee to the Board by the grower would be 362 regarded as sale  and that the Board should pay purchase tax as the coffee growers being agriculturists are not dealers 
It is the case of the Coffee Board that no such claim had been made at any time in the past in any of the States in India
The Commissioner issued a show cause notice proposing to re open the assessment for the year 1974 75
In June 1982 pre assessment notice was sent by the authorities proposing to assess the Board to purchase tax for the assessment year 1975 76 and a sum of Rs35 crores was demanded as purchase tax on the coffee transferred from Karnataka to outside the State either as stock transfers or as exports directly to buyers abroad
In August 1982 Coffee Board along with two coffee growers filed writ petitions being writ petition Nos 15536 to 15540 of 1982 in the High Court of Karnataka praying for a declaration that the mandatory delivery of coffee under section 25i of the Act was not sale and that section 2t of the Karnataka Sales Tax Act required to be struck down if the same encompassed compulsory acquisition also
The show cause notice and the preassessment notice were also challenged and prayers were made for quashing the same
The High Court granted interim stay
In the meantime on or about 3rd of February 1983 Constitution 46th Amendment Act 1983 came into force and the definition of Tax on sale or purchase of goods was added by insertion of clause 29A in Article 366
This definition is prospective in operation
Subsequent to 3rd of February 1983 the Karnataka Sales Tax Act was amended by Act 10 of and Act 81984
The definition of sale  in section 2t however was not amended
That definition was amended with effect from 1st of August 1985 by the Karnataka Act 27 of 1985
After hearing the State Government the High Court made absolute the stay of further proceedings pursuant to the show cause notice of the Commissioner proposing to re open the assessment for the year 1974 75
The Court modified the stay order regarding the pre assessment notice and permitted the completion of assessment reserving liberty to the Coffee Board to move the High Court after the assessment was completed
On 31st of May 1983 assessment order was made for the year 1975 76
On or about 17th of June 1983 demand for Rs35 crores as arrears of tax for the assessment year 1975 76 was issued to the Coffee Board
On 2nd July 1983 the High Court stayed the assessment demand for purchase tax for the assessment year 1975 76
On or about 18th of June 1983 the assessment order was issued for the year 1976 77
The Board was assessed on a taxable turnover of Rs9299 crores and Rs 1018 crores was assessed as tax
Of this sum Rs806 crores is the demand on account of purchase tax
Thereafter notice demanding payment of Rs806 crores a 363 arrears of tax for the assessment year 1976 77 was issued
The Coffee Board filed a writ petition in August 1983 being Writ Petition No 13981 of 1983 challenging the assessment and the demand for the purchase tax for the assessment year 1976 77
Rule was issued and the assessment as also demand for purchase tax was stayed 
In the meantime notice of demand for Rs808 crores as arrears of tax for the assessment year 1977 78 was issued
In September 1983 Writ Petition No 17071 of 1983 was filed by the Coffee Board for the assessment year 1977 78
Rule was issued
Assessment and demand for purchase tax was stayed
Similarly Writ Petition No 17072 of 1983 was filed by the Coffee Board regarding assessment year 1978 79
Rule was issued
Assessment and demand for purchase tax was stayed
In the meantime in October 1983 there was another Writ Petition No 19285 of 1983 filed challenging the demand for the purchase tax for the year 1979 80
Rule was issued
Assessment and demand was stayed
Writ Petition No  19118 of 1983 was filed challenging the demand of purchase tax for the year 1980 81
Rule was issued
Assessment and demand for purchase tax was stayed
All these writ petitions in January 1984 were referred to the Division Bench for hearing and disposal
It may be mentioned here that in or about May 1984 the Coffee Board started for the first time to collect contingency deposits to cover purchase tax liability if any for the period 3283 onwards subsequent to the 46th Amendment to a limited extent
This was by a circular
It is stated that the Board withheld about Rs68 crores from the pool payment to growers for the season 1982 83 for meeting in part the liability if any for the purchase tax for the period subsequent to 321983
The Court however in 1985 directed the appellant Coffee Board to remit to the State Government Rs68 crores
The High Court also directed the Board to remit to the State Government Rs15 crores collected by the Board as contingency deposits between May and December 1984
The State Government undertook to return these monies with interest in the event of the writ petitions being allowed
By the judgment delivered on 16th August 1985 the High Court dismissed the writ petitions by a common judgment and various sums of money for the various years became payable as purchase tax
The said judgment is reported in Indian Law Reports Karnataka Vol
36 at page 1365
These appeals challenge the said decision
In view of the decision of the High Court several questions were canvassed in these appeals
The questions were 1 Was there transfer of coffee to the Board from the coffee growers or acquisition ii Was 364 there any element of sale involved iii Was the Coffee Board trustee or agent for the coffee growers for sale to the export market and iv if it is sale is it in the course of export of the goods to the territory outside India The first and the basic question that requires to be considered in these appeals is whether the acquisition of coffee by the Board is compulsory acquisition or is it purchase or sale As mentioned all the questions were answered by this Court in Bhavani Tea Produce Co s case supra against the appellant
We were however invited to compare the transaction in question with transactions in Peanuts Board vs The Rockhampton Harbour Board 48 Commonwealth Law Reports 266
Was there any mutuality In this connection it is necessary to analyse and compare the decision of this Court in Vishnu Agencies Pvt Ltd etc
vs Commercial Tax officer and others etc
 1978 2 SCR 433 and to what extent the principles enunciated in the said decision affect the position
In order to address ourselves to the problem posed before this Court we must bear in mind the history and the provisions of the Coffee Market Expansion Act 1942 under which the Board was constituted which we have already noted
The control of marketing of farm produce for the economic benefit of the producers and to bring about collective marketing of the produce is a recognised feature of Governments of several countries particularly United States of America Britain and Australia
The object was to prevent unhealthy competition between the producers to secure the best price for the produce in the local market to conserve for local consumption as much produce as was needed and to make available the surplus for export outside the States and also to foreign markets
The method usually adopted to achieve the object is to establish a marketing board with power to control the price to obtain possession of the produce and to pool it with a view to collective marketing
The legislation in this behalf is compendiously described as pooling legislation and is based on the fundamental idea that the collectivist economy is superior to individualistic economy
There are therefore different marketing boards for different kinds of produce such as sugar dairy produce wheat lime fruit apples pears and so on
The Indian Coffee Market Expansion Act was modelled somewhat on the lines which obtained in other countries and was intended to control the development of the coffee industry and to regulate the export and sale of coffee
If however the transaction amounts to sale or purchase under the relevant Act then that is the end of the matter
All parties drew our attention to the decision in the case of Vishnu Agencies Pvt
Ltd supra
There the Court was concerned 365 with the Cement Control order and the transactions taking place under the provisions of that control order
The Cement Control order was promulgated under the West Bengal Cement Control Act 1948 which prohibited storage for sale and sale by a seller and purchase by a consumer of cement except in accordance with the conditions specified in the licence issued by a designated officer
It also provided that no person should sell cement at a higher price than the notified price and no person to whom a written order had been issued shall refuse to sell cement at a price not exceeding the notified price
Any contravention of the order became punishable with imprisonment or fine or both
Under the AP Procurement Levy and Restriction on Sale order 1967 Civil Appeals Nos 2488 to 2497 of 1972 every miller carrying on rice milling operation was required to sell to the agent or an officer duly authorised by the Government minimum quantities of rice fixed by the Government at the notified price and no miller or other person who gets his paddy milled in any rice mill can move or otherwise dispose of the rice recovered by milling at such rice mill except in accordance with the directions of the Collector
Breach of these provisions became punishable
It was held dismissing the appeals that sale of cement in the former case by the allottees to the permitholders and the transactions between the growers and procuring agents as well as those between the rice millers on the one hand and the wholesalers or retailers on the other in the latter case were sales exigible to sales tax in the respective States
It was observed by Beg CJ that the transaction in those cases were sales and were exigible to tax on the ratio of Indian Steel and Wire Products Ltd Andhra Sugar Ltd and Karam Chand Thapar  In cases like New India Sugar Mills the substance of the concept of a sale itself disappeared because the transaction was nothing more than the execution of an order
The Chief Justice emphasised that deprivation of property for a compensation called price did not amount to a sale when all that was done was to carry out an order so that the transaction was substantially a compulsory acquisition
On the other hand a merely regulatory law even if it circumscribed the area of free choice did not take away the basic character or core of sale from the transaction
Such a law which governs a class obliges a seller to deal only with parties holding licences who may buy particular or allotted quantities of goods at specified prices but an essential element of choice was still left to the parties between whom agreements took place
The agreement despite considerable compulsive elements regulating or restricting the area of his choice might still retain the basic character of a transaction of sale
In the former type of cases the binding character of the transaction arose from the order directed to particular parties asking them 366 to deliver specified goods and not from a general order or law applicable to a class
In the latter type of cases the legal tie which binds the parties to perform their obligations remains contractual
The regulatory law merely adds other obligations such as the one to enter into such a tie between the parties
Although the regulatory law might specify the terms such as price the regulation is subsidiary to the essential character of the transaction which is consensual and contractual
The parties to the contract must agree upon the same thing in the same sense
Agreement on mutuality of consideration ordinarily arising from an offer and acceptance imports to it enforceability in courts of law
Mere regulation or restriction of the field of choice does not take away the contractual or essentially consensual binding core or character of the transaction
Analysing the Act it was observed that according to the definition of sale in the two Acts the transactions between the appellants in that case and the allottees or nominees as the case may be were patently sales because in one case the property in the cement and in the other property in the paddy and rice was transferred for cash consideration by the appellants
When the essential goods are in short supply various types of orders are issued under the with a view to making the goods available to the consumer at a fair price
Such orders sometimes provide that a person in need of an essential commodity like cement cotton coal or iron and steel must apply to the prescribed authority for a permit for obtaining the commodity
Those wanting to engage in the business of supplying the commodity are also required to possess a dealer s licence
The permit holder can obtain the supply of goods to the extent of the quantity specified in the permit and from the named dealer only and at a controlled price
The dealer who is asked to supply the stated quantity to the particular permit holder has no option but to supply the stated quantity of goods at the controlled price
Then the decisions in State of Madras vs Gannon Dunkerley  Co Ltd  and New India Sugar Mills vs Commissioner of Sales Tax Bihar 1963 Suppl
2 SCR459 were discussed and the correctness of the view taken in the former case was doubted and the majority opinion in the latter case was overruled
It was submitted by the learned Additional Solicitor General that these cases namely Bhavani Tea Estate supra and Vishnu Agencies supra would have no application within the set up of the because the provisions of the statute expressly provided that there could be no sale or contract of sale yet the High Court had for purposes of Sales Tax assumed notwithstanding the statutory prohibi 367 tion that the transaction contemplated by the statute in the present case the mandatory delivery would be a sale
It was submitted that where a statute prohibited a registered owner from selling or contracting to sell coffee from any registered estate there could be no implication of any purchase on the part of the Coffee Board of the coffee delivered pursuant to the mandatory provisions of section 251 of the Act
It was urged that section 17 of the read with sections 25 and 47 enacts what since 1944 is a total prohibition against the sale of coffee by growers and corresponding purchase of coffee from growers
In view of section 17 read with section 25 purchase by the Coffee Board of coffee delivered under section 251 was also impliedly prohibited
It is in view of this express prohibition of sale and corresponding implied prohibition of purchase that the Act provided the only method of disposal of coffee viz by the delivery of all coffee to the Coffee Board with no rights attached on such delivery save and except the statutory right under section 34
It was also argued that the Legislature has made a conscious difference between acquisition of coffee by compulsory delivery by the growers under Section 251 of the Act and purchase of coffee by the Board under Section 262 and as such compulsory delivery of coffee under Section 251 cannot constitute a sale transaction as known to law between the growers and the Coffee Board
We are however unable to accept the submissions of the learned Additional Solicitor General
All the four essential elements of sale 1 parties competent to contract 2 mutual consent though minimal by growing coffee under the conditions imposed by the Act 3 transfer of property in the goods and 4 payment of price though deferred are present in the transaction in question
As regards the provisions under Section 262 empowering the Coffee Board to purchase additional coffee not delivered for inclusion in the surplus pool it is only a supplementary provision enabling the Coffee Board to have a second avenue of purchase the first avenue being the right to purchase coffee under the compulsory delivery system formulated under Section 251 of the Act
The scheme of the Act is to provide for a single channel for sale of coffee grown in the registered estates
Hence the Act directs the entire coffee produced except the quantity allotted for internal sale quota if any to be sold to the Coffee Board through the modality of compulsory delivery and imposes a corresponding obligation on the Coffee Board to compulsorily purchase the coffee delivered to the pool except 1 where the coffee delivered is found to be unfit for human 368 consumption and 2 where the coffee estate is situated in a far off and remote place or the coffee grown in an estate is so negligible as to make the sale of coffee through compulsory delivery an arduous task and an uneconomical provision
Since all persons including the Coffee Board are prohibited from purchasingselling coffee in law there could be no sale or purchase to attract the imposition of salespurchase tax it was urged
Even if there was compulsion there would be a sale as was the position in Vishnu Agencies supra
This Court therein approved the minority opinion of Hidayatullah J in New India Sugar Mills vs Commissioner of Sales Tax supra
In the nature of the transactions contemplated under the Act mutual assent either express or implied is not totally absent in this case in the transactions under the Act
Coffee growers have a volition or option though minimal or nominal to enter into the coffee growing trade
Coffee growing was not compulsory
If any one decides to grow coffee or continue to grow coffee he must transact in terms of the regulation imposed for the benefit of the coffee growing industry
Section 25 of the Act provides the Board with the right to reject coffee if it is not upto the standard
Value to be paid as contemplated by the Act is the price of the Coffee
Fixation of price is regulation but is a matter of dealing between the parties
There is no time fixed for delivery of coffee either to the Board or the curer
These indicate consensuality which is not totally absent in the transaction
It was urged that regard having been to the sovereign nature of the power exercised by the Coffee Board and the scheme of the  the ratio of Vishnu Agencies supra will not apply to the acquisition of coffee under section 251 by the 
It is in this connection appropriate to refer to the question of compulsory acquisition and this naturally leads to the problem of exercising eminent domain by the State
It is trite knowledge that eminent domain is an essential attribute of sovereignty of every state and authorities are universal in support of the definition of eminent domain as the power of the sovereign to take property for public use without the owner s consent upon making just compensation
Nichols on Eminent Domain 1950 Edition a classic authority on the subject defines eminent domain  as the power of the sovereign to take property for public use without the owner s consent  see para 111 page 2 of Vol 1 which elaborates the same in these words 369 
This definition expresses the meaning of the power in its irreducible terms a Power to take b Without the owner s consent c For the public use
All else that may be found in the numerous definitions which have received judicial recognition is merely by way of limitation or qualification of the power
As a matter of pure logic it might be argued that inclusion of the term for the public use  is also by way of limitation
In this connection however it should be pointed out that from the very beginning of the exercise of the power the concept of the Public use  has been so inextricably related to a proper exercise of the power that such element must be considered as essential in any statement of its meaning
The public use  element is set forth in some definitions as the general welfare  the welfare of the public  the public good  the public benefit  or public utility or necessity 
It must be admitted despite the logical accuracy of the foregoing definition and despite the fact that the payment of compensation is not an essential element of the meaning of eminent domain that it is an essential element of the valid exercise of such power
Courts have defined eminent domain so as to include this universal limitation as an essential constituent of its meaning
It is much too late in the historical development of this principle to find fault with such judicial utterances
The relationship between the individual s right to compensation and the sovereign s power to condemn is discussed in Thayer s cases on Constitutional Law
But while this obligation to make compensation is thus well established and clear let it be particularly noticed upon what ground it stands viz upon the natural rights of the individual
On the other hand the right of the State to take springs from a different source viz a necessity of government
These two therefore have not the same origin they do not come for instance from any implied contract between the state and the individual that the former shall have the property if it will make compensation the right is no mere right of pre emption and it has no condition of compensation annexed to it either precedent or subsequent
But there is a right to take and 370 attach to it as an incident an obligation to make compensation this latter morally speaking follows the other indeed like a shadow but it is yet distinct from it and flows from another source
 It is concluded thus Accordingly it is now generally considered that the power of eminent domain is not a property right or an exercise by the state of an ultimate ownership in the soil but that it is based upon the sovereignty of the state
As the sovereign power of the state is broad enough to cover the enactment of any law affecting persons or property within its jurisdiction which is not prohibited by some clause of the Constitution of the United States and as the taking of property within the jurisdiction of a state for the public use upon payment of compensation is not prohibited by the constitution of the United States it necessarily follows that it is within the sovereign power of a state and it needs no additional justification
 Cooley in his treatise on the Constitutional Limitations Chapter XV expressed the same view at page 524 of the book in these words 
More accurately it is the rightful authority which must rest in every sovereignty to control and regulate those rights of a public nature which pertain to its citizens in common and to appropriate and control individual property for the public benefit as the public safety convenience or necessity may demand In Charanjit Lal Chowdhury vs The Union of India and others   Mukherjea J as the learned Chief Justice then was while examining the scope and ambit of Article 31 of the Constitution observed as follows It is a right inherent in every sovereign to take and appropriate private property belonging to individual citizens for public use
This right which is described as eminent domain in American law is like the power of taxation and offspring of political necessity and it is supposed to be based upon an implied reservation by Government that private property acquired by its citizens under its pro 371 tection may be taken or its use controlled for public benefit irrespective of the wishes of the owner
 This Court in the State of Karnataka and another etc
vs Ranganatha Reddy and another etc
  held that the power of acquisition could be exercised both in respect of immovable and movable properties
While conceding the power of acquisition of coffee in exercise of eminent domain the scheme contemplated under the Act was not an exercise of eminent domain power
The Act was to regulate the development of coffee industry in the country
The object was not to acquire coffee grown and vest the same in the Board
The Board is only an instrument to implement the Act
The High Court in its judgment has rightly observed that the Board has been chosen as the instrumentality for the administration of the Act
The role of the Board of this type has been noted in three Australian decisions which must be taken note of
It is appropriate at this stage to refer to the decision of the Australian High Court in Peanuts Board vs The Rockhampton Harbour Board supra
The question posed before the High Court was in relation to Section 92 of the Constitution Act of Commonwealth of Australia and the decision is instructive though not in point
Rich J Observed at pages 275 to 277 of the report as follows It therefore remains only to consider whether the operative instruments affecting to deal with peanuts do or do not interfere with the freedom of inter State trade
This should be done weighing compulsory acquisition as a matter perhaps characterizing the enactments but not of necessity determining their effect
The feature which at once challenges attention is that these instruments provide a means of marketing
They are concerned with establishing a compulsory pool through which growers producing peanuts for sale must dispose of their product for distribution and receive their reward
The pith and substance of the enactments is the establishment of collective sale and distribution of the proceeds of the total crop and the concomitant abolition of the grower s freedom to dispose of his product voluntarily in the course of trade and commerce whether foreign inter State of intra State
Section 15 of the Act of 1926 provides that all the commodity shall be 372 delivered by the growers to the marketing board and that all the commodity so delivered shall be deemed to have been delivered to the board for sale by the board who shall account to the growers thereof for the proceeds thereof after making all lawful deductions therefrom for expenses and outgoings and deductions of all kinds in consequence of such delivery and sale or otherwise under these Acts sec
151 2 as modified by the order in Council
Sub section 3 of section 15 penalizes the sale or delivery of any of the commodity to or the purchase or the receipt of any of the commodity from any person except the board
These provisions operate even although the Governor in Council does not resort to compulsory acquisition
It was said by Mr Mitchell that the provisions authorizing the borrowing of money constituted the chief purpose of the compulsory acquisition
If this means that the control of the marketing of peanuts is a subordinate or consequential purpose of the instruments I cannot agree
The ability to borrow upon the whole crop may afford an advantage if not an incentive in the concentration of the commodity in the hands of one marketing authority
But the weight attached to supposed advantages arising from the policy adopted in these enactments is not material
What is material is whether the scope and object of the enactments as gathered from their contents are to deal with trade and commerce including inter State trade and commerce
In examining this question one cannot fail to observe that compulsory acquisition is resorted to as a measure towards ensuring that the whole crop grown in Queensland is available for collective marketing by the central authority
The case is not one in which a State seeks to acquire the total production of something it requires for itself and its citizens
It is interposing in the course of trade in the commodity an organization established for the purpose of carrying out one of the functions of trade
In my opinion the enactment controls directly the commercial dealing in Peanuts by the grower and aims at and would apart from section 92 accomplish the complete destruction of his freedom of commercial disposition of his product
Part of this freedom is guaranteed by section 92
Accordingly the Primary Producers  organization and Marketing Act 1926 30 and the order in Council thereunder are ineffectual to prevent the grower of peanuts from disposing 373 of them in inter State trade and commerce and the appellant Board had no title to the peanuts the subject matter of this action
 In Milk Board New South Wales vs Metropolitan Cream Pty Ltd   Chief Justice Latham at page 131 of the report observed as follows R It is true that the decision in the Peanut Board Case  was approved in James vs The Commonwealth   but it is important to consider carefully the precise words in which this approval was expressed
They were as follows The producers of the peanuts it was held were prevented by the Act from engaging in inter State and other trade in the commodity
The Act embodied so the majority of the court held a compulsory marketing scheme entirely restrictive of any freedom of action on the part of the producers it involved a compulsory regulation and control of all trade domestic inter State and foreign on the basis of that view the principles laid down by this board were applied by the Court Justice McTiernan observed at page 158 of the report as follows It is clear that the Milk Act does not profess to expropriate in order to hinder or burden the passing of milk and the other products which the word milk  is expressed to include from other States and there is no ground for the contention that any such burden or hindrance is imposed under the disguise of expropriation
The Act replaces an individualist economy by a collectivist one for the distribution of milk within the area containing the most densely populated part of the State and all that can be presumed is that the substitution was deemed by the legislature to be an expedient one for reasons only of health hygiene efficiency and the economic benefit of farmers in the milk producing districts
I agree therefore that the operation of section 26 is not inconsistent with section 92 of the Constitution
 The aforesaid observations are most apposite
In the light aforesaid along with the provisions of section 17 and section 25 of the 374 Act it cannot be said in the Act there is any compulsory acquisition
We accept the submission of the learned Additional Solicitor General that it is not necessary that every member of the public should benefit from property that is compulsorily acquired
But in essence the scheme envisaged in sale and not compulsory acquisition
It has also to be borne in mind that the term sale  and purchase  have been used in some of the provisions and that is indicative that no compulsory acquisition was intended
Section 34 of the Act reads as follows  341 The Board shall at such times as it thinks fit make to registered owners who have delivered coffee for inclusion in the surplus pool such payments out of the Pool funds as it may think proper
2 The sum of all payments made under sub section  1 to any one registered owner shall bear to the sum of the payments made to all registered owners the same proportion as the value of coffee delivered by him out of the year s crop to the surplus pool bears to the value of all coffee delivered to the surplus pool out of that year s crop
 The High Court has referred to the provisions of section 342 of the Act and observed that the said provisions ensure periodical payments of price to the growers
The Rules provide for advancing loans to the growers
Without a shadow of doubt these elements indicate according to the High Court that in the compulsory sale of coffee there was an element of consensuality
We are in agreement that there is consensuality in the scheme of the section
The High Court has referred to section 252 of the and observed that the power conferred by section 252 of the must be read subject to the very requirement of that and all other provisions of the Act
When a grower sells coffee that has become totally unfit for human consumption for one or the other valid reason such a grower cannot compel the Board to purchase such coffee on the ground that it was coffee and thus endanger public safety and also pay its value or price
In the very nature of things these things cannot be foreseen or enumerated exhaustively
The High Court was of the view that if a grower delivered coffee to the Board the extinguished his title and absolutely vested the same in the Board however preserving 375 his right for payment of its value or its price in accordance with the provisions of that Act
According to the High Court the amount paid by the Board to the grower under the Act is the value or price of coffee in conformity with the detailed accounting done thereto under the 
The High Court was right
The High Court went on to observe that the amount paid to the grower was neither compensation nor dividend
The payment of price to the grower is an important element to determine the consensuality in the sale and the sale itself is under section 41 of the 
Therefore the High Court was of the view that neither section 252 read with section 17 nor the provisions for payment of compensation indicate that coffee becomes the property of the Coffee Board not by consent but by the operation of law
The levy of duties of excise and customs under sections 11 and 12 of the are inconsistent with the concept of compulsory acquisition
Section 134 of the clearly fixes the liability for payment of duty of excise on the registered owner of the estate producing coffee
The Board is required to deduct the amount of duty payable by such owner from the payment to the grower under section 34 of the Act
The duty payable by the grower is a first charge on such Pool payment becoming due to the grower from the Board
Section 11 of the Act provides for levy of duty of customs on coffee exported out of India
This duty is payable to the Customs authorities at the time of actual export
The levy and collection of this duty is not unrelated to the delivery of the coffee by the growers to the Board or the pool payments made by the Board to the growers
The duty of excise as also the duty of customs are duties levied by Parliament in exercise of its powers of taxation
It is not a levy imposed by the Board
It is a fact that the revenue realised from the levy of these duties form part of the Consolidated Fund of India and can be utilised for any purpose
It may be utilised for the purpose of the only if Parliament by appropriation made by law in this regard so provides
The true principle or basis in Vishnu Agencies case applies to this case
Offer and acceptance need not always be in an elementary form nor does the law of contract or of sale of goods require that consent to a contract must be express
Offer and acceptance can be spelt out from the conduct of the parties which cover not only their acts but omissions as well
The limitations imposed by the Control order on the normal right of the dealers and consumers to supply and obtain goods the obligations imposed on the parties and the penalties prescribed by the order do not militate against the position that eventually the parties must be deemed to have completed the transaction under an agreement by 376 which one party binds itself to supply the stated quantity of goods to the other at a price not higher than the notified price and the other party consents to accept the goods on the terms and conditions mentioned in the permit or the order of allotment issued in its favour by the concerned authority
A contract whether express or implied between the parties for the transfer of the property in the goods for a price paid or promised is an essential requirement for a sale 
In the absence of a contract whether express or implied it is true there cannot be any sale in the eyes of law
However as we see the position and the scheme of the Act in the instant case there was contract as contemplated between the growers and the Coffee Board
This Court applied in Vishnu Agencies s case supra the consensual test laid down in the earlier decision of this Court in the State of Madras vs Gannon Dunkerley  in this regard
In law there cannot be a sale whether or not compulsory in the absence of a contract express or implied
The position of the Coffee Board so far as sale is concerned is explained by the Madras High Court very lucidly in The Indian Coffee Board Batlagundu vs The State of Madras supra where the High Court expressed the view that the Indian Coffee Board which derived its existence from the Coffee Market Expansion Act is a dealer within the meaning of section 2b of the Madras General Sales Tax Act 1939 and is therefore liable to sales tax on its turnover
The High Court held that the Board was not a constituted representative of the producer and it did not hold the goods on behalf of the producer
After the goods enter the pool after delivery they become the absolute property of the Board and the producer a registered owner has no right or claim to the goods except to a share in the sale proceeds after the goods are sold in accordance with the provisions of the Act
It was said by the learned Additional Solicitor General that the cultivation of coffee in India was over a century old and numerous plantations existed long prior to the enactment of the 
There was no act of volition on the part of the growers in taking to coffee cultivation and subjecting themselves to the provisions of the Act by taking up such cultivation
The cultivation of coffee can be carried on only in certain types of soil and in high elevations
The land suited for coffee cultivation cannot be used for growing other crops on a similar scale
Coffee is a perennial crop
The growers have no choice in growing coffee one year and then changing to a different crop in the following year
Coffee plants have a life ranging from 30 to 70 years the average life of the plant being 40 years
Coffee estates require 377 constant attention and expenses have to be incurred for manuring cultural operations application of pesticides etc
at regular intervals
Removal of old and diseased plants and replanting them with superior disease resistant varieties is also necessary and is done each year
The coffee grower has thus no choice at all continuing to be a coffee cultivator it was argued
The cultivation of coffee is not in any way comparable to the cultivation of sugarcane the cultivation of which can be discontinued at will
Such practical difficulties however do not in essence make any difference
Because coffee is grown on the estate the owner of the land can be presumed to have consented to surrender his produce to the Board it was submitted
But the surrender is thus clearly an act of volition
The planting of the seeds of a coffee plant by a grower can be regarded as his act of volition in respect of the surrender to the Board of the coffee yielded by the plant
The coffee growers being agriculturists are not dealers and therefore are not liable to pay any sales tax or purchase tax it was submitted
The demand for purchase tax is in effect a demand on the growers who were exempt from such levy as the monies required for paying the tax if the same is lawful has necessarily to come out of the monies otherwise payable to the growers
The object of the pool marketing system is not to deprive the growers of a fair compensation for their produce by making them suffer a tax which they would not otherwise be required to suffer
An analysis of the different provisions of the makes it clear that there was no sale to attract exigibility to duty it was submitted
We are unable to accept these submissions
Section 6 of the Karnataka Sales Tax Act 1957 meets the situation created by such circumstances
This was examined by this Court in State of Tamil Nadu vs NK Kamaleshwara  which examined section 7A of Tamil Nadu General Sales Tax Act 1959 which was in pari materia with section 6 of the Karnataka Sales Tax Act
In that view of the matter section 6 of the Karnataka Act would he attracted The alternative submission of the appellant was that the Coffee Board was a trustee or agent of the growers
We are unable to accept this submission either
There is no trust created in the scheme of the Act in the Coffee Board it is a statutory obligation imposed on the Coffee Board and does not make it a trustee in any event
It is also not possible to accept the submission that the will not be applicable to any sale by the Coffee Board because it was an 378 export sale by the Coffee Board
In Consolidated Coffee Ltd  Another vs Bangalore etc
 supra it has been held that there must be a prior agreement at the time when the transaction of sale takes place
No such prior agreement existed in this case
In New India Sugar Mills Ltd vs Commissioner of Sales tax Bihar supra Hidayatullah J as the Chief Justice then was observed that so long as the parties trade under controls at fixed price and accept these as any other law of the realm because they must be deemed to have contracted at a fixed price both sides having or deemed to have agreed to such price
Consent under the law of contract need not be expressed it can be implied
This is the position under the scheme of the 
It has to be emphasised like the Vishnu Agencies s case a person for all practical purposes is free to become or not to become a grower of coffee
So it is also covered by the ratio of Vishnu Agencies Pvt Ltd In the aforesaid view of the matter we are of the opinion that the imposition of tax in a manner done by the Sales tax Authorities which had been upheld by the High Court is correct and the High Court was right
The appeals fail and are dismissed
There will however be no order as to costs Civil Writ Petition No 358 of 1986 under Article 32 of the Constitution of India is dismissed
Writ Petition No 36 of 1986 we are of the opinion that we cannot go into in the contentions in this petition
The rights and obligations of the parties inter se between the petitioners and the Coffee Board may be agitated in appropriate proceedings
Writ Petition No 37 of 1986
This writ petition is dismissed without prejudice to the rights of the petitioner to agitate the question of liability of the petitioner vis a vis Coffee Board in respect of the sales tax due and payable on the transactions between the parties in appropriate proceedings
Civil Writ Petition No 39 of 1986
There will be no order in this petition
But it is made clear that this is without prejudice to the right of the parties taking appropriate proceedings if necessary for determination of the liabilities inter se between the petitioners and the Coffee Board for the amount of sales tax payable
Parties in these writ petitions will pay and bear their own costs
Interim orders if any are all vacated


Summary:
The Rajasthan Public Service Commission conducted an examination in 1985 for appointments to State Services
The recruitment rules contained a provision that candidates should secure a minimum of 33 marks in the viva voce test
Some of the candidates who failed to secure the minimum marks in viva voce challenged before the High Court the constitutionality of the provision in the Rules stipulating such minimum cut off marks
The High Court declared the provision unconstitutional
Before this Court it was urged on behalf of the selected candidates and the State of Rajasthan that I the High Court fell into a serious error in importing into the present case principles  which pertained to the proposition whether the setting apart of an excessive and disproportionately high percentage of marks for viva voce in comparison with the marks of the written examination would be arbitrary and 2 the prescription of minimum qualifying marks for the viva voce test would not violate any constitutional principle or limitation but was on the contrary a salutary and desirable provision
On the other hand it was urged that 1 the principles laid down by this Court which the High Court had accepted were sound and had acquired an added dimension in the context of the increasingly denuded standards of probity and rectitude in the discharge of public offices and 2 the real thrust of the principles was that any marking procedure that made the oral test determinative of the fate of a candidate was in itself arbitrary and if this test was applied to this case the decision reached by the High Court would be unexceptionable
380 Allowing the appeals it was  HELD1 A sensitive devoted and professionally competent administrative set up could alone undertake the ever expanding social and economic roles of a welfare state
387A B 2 The interview  was now an accepted aid to selection and was designed to give the selectors some evidence of the personality and character of the candidates which qualities were necessary and useful to public servants
388G H 3 Academic excellence was one thing
Ability to deal with the public with tact and imagination was another
Both were necessary for an officer
The dose that was demanded may vary according to the nature of the service
Administrative and Police Services constituted the cutting edge of the administrative machinery and the requirement of higher traits of personality was not an unreasonable expectation
391D Lila Dhar vs State of Rajasthan 1982 1 SCR 320 referred to
4 The observations made by this Court in Ashok Kumar Yadav were in the context where the spread of marks for the viva voce was so enormous compared with the spread of marks for the written examination that the viva voce test tended to become the determining factor 
The reference was to the possibility of a candidate undeservedly being allotted high marks at the interview
That was a very different thing from the question whether a candidate should acquire at least a certain minimum percentage of marks at the viva voce
394B C Ashok Kumar Yadav vs State of Haryana 1985 Supp
1 SCR 657 explained
State of UP vs Rafiquddin  Ors Judgment Today referred to
5 The prescription of minimum qualifying marks of 60 33 out of the maximum of 180 set apart for the viva voce examination did not by itself incur any constitutional infirmity
The principles laid down by this Court in the case of Ajay Hasia Lila Dhar and Ashok Kumar Yadav did not militate against or render impermissible such a prescription
391B Ajay Hasia vs Khalid Mujib Sehravardi  Ors   Lila Dhar vs State of Rajasthan  Ors and Ashok Kumar Yadav vs State of Haryana distinguished
6 A mere possibility of abuse of a provision did not by itself justify its invalidation
The validity of a provision must be tested with reference to its operation and efficiency in the generality of cases and not 381 by the freaks or exceptions that its application might in some rare cases possibly produce
394F G