iminal Appeal No 16 of 1959
Appeal from the judgment and order dated November 18 1958 of the Allahabad High Court in Criminal Reference No 452 of 1956
B V section Mani for the appellants
G C Mathur and C P Lal for the respondent
January 20
The Judgment of the Court was delivered by AYYANGAR J
Having heard the learned Counsel for the appellants in full we did not consider it necessary to call on the respondent since we were clearly 565 of the opinion that the contentions raised in the appeal possessed no merit
The legality of a prosecution for contravention of the notification fixing the maximum prices at which certain categories of iron  steel could be sold is the subject matter of this appeal
The appellants are two in number related to each other as husband and wife
The second appellant Sushila Devi is  a Registered Stockholder  and is stated to be the proprietor of the firm  Balwanta Devi Sushila Devi  situated in Sultanpur in Uttar Pradesh and the first appellant Bhagwati Saran her husband the manager of the said firm
There has been some previous history before the present prosecution was initiated but it is sufficient for the purposes of this appeal to start with the report to the Judicial Magistrate Amathi by the officer incharge of the Police station Sultanpur dated August 201955
It was headed  Offence Section II B Iron Steel Control Order 1941 and set out the following facts  Bhagwati Saran used to work as a Karinda in the firm of Balwanta Devi Sushila Devi and had all along been doing sales and purchases at the shop and also issued receipts under his signatures
Shrimati Sushila Devi is the wife of accused Bhagwati Saran and she was the proprietor
Balwanta Devi has died
Hence she alone is the proprietor
In the course of investigation it was also revealed that Bhagwati Saran had from time to time sold some iron bark on behalf of this firm after receiving price more than the control rate which he had all along been getting printed and  had been getting some other receipts checked fictitiously under the Control Act from the office of the Supply Officer
An information relating to it was given to Shri P N Kapoor the then D M Sultanpur by his munim Kalapnath and on it a case was registered at this police station and the investigation was made   
On the report of the PP the SP ordered another charge sheet to be submitted under section 8 of Essential Commodities Ordinance of 1955
Hence this charge sheet under section 11 B 566 III Iron and Steel Control of Production and Distribution Order 1941 read with s  8 of Essential Commodities Ordinance of 1955 is sent against both the accused
The accused persons after being arrested were released on bail
It is therefore prayed
that the accused persons after being summoned may be punished
 The report further stated that 4 volumes of cash memos and 5 volumes of register of Permits were deposited in the Malkhana and would be produced in evidence and followed it with a list of 13 prosecution witnesses
The Judicial Magistrate registered the case and issued summons to the accused on September 16 1955 the case being directed to be called on September 30 1955
The accused were thereafter examined before the Magistrate under section 364 of the Criminal Procedure Code on March 23 1956 and on the next day the Magistrate framed a charge against them which read as follows  That you between 10th January 1952 and 27th February 1952 in Sultanpur sold 11 Cwt
12 lb
iron bars on 11th January 1952 ad 3 Cwt
iron bars on 18 2 52 and Cwt
iron bars on 26th February 1952 at the rate of Rs 21 13 9 per Cwt
though the controlled rate as notified in Government of India Gazette dated 1st July 1952 for the commodity was Rs 21 2 4 per Cwt
and thus you charged Rs 1 15 0 Rs 2 2 3 and Rs 4 4 6 respectively excess and more than the controlled price and thereby committed an offence punishable under section 7 E section Temp
P Act 1946 read with section 1 1 B iii of Iron and Steel Control of Production and Distribution Order of 1941 and I hereby direct that you be tried by the said Court on the said charge
 The two appellants thereupon moved the
Court of the Sessions Judge Sultanpur to revise the order of the Magistrate dated March 24 1956 framing charges against them under section 7 of the Essential Supplies Temporary Powers Act 1946 Act XXIV of 1946 referred to hereafter as the Act
The points urged at that stage were mainly two 1 That the notification by the Controller under 567 cl
11 B1 fixing the maximum prices which were stated to have been contravened not having been filed before the Court the Magistrate erred in framing a charge and 2 that the report of the police was not in conformity with the provisions of section 11 of the Act
The learned Sessions Judge upheld the second of the above contentions which was that the report made by the police officer did not set out  the facts constituting the offence as required by section II of the Act
He rejected the other point put forward by the appel lants but in view of his conclusion that there was a defect in the report which went to the root of the jurisdiction of the Magistrate to take cognizance of the case he made a reference to the High Court with a recommendation that the charge framed against the appellants be quashed
This reference was heard by a Single Judge of the High Court who disagreed with the learned Sessions Judge in his view that the report did not satisfy the requirements of section 11 of the Act
Before the learned Judge however a further point was urged that section 11 B of the Iron  Steel Control of Production and Distribution Order 1941 which will be referred to hereafter as the Control Order was itself ultra vires
This further objection was referred to a Division Bench for decision
The point urged before the learned Judges of the Division Bench was that the power to fix prices vested in the Steel Controller by cl 11 B of the Control Order was unconstitutional as violative of the right to carry on business guaranteed by article 191 g of the Constitution
The learned Judges answered this point against the appellants and the case thereafter came back before the learned Single Judge for final disposal of the reference by the Sessions Judge
The learned Counsel for the appellants once again made a submission to the learned Judge regarding the report of the police officer dated August 20 1955 not satisfying the requirements of section 11 of the Act and pressed before him the view which found favour with the learned Sessions Judge
In a more detailed judgment the learned Judge again rejected this contention and dismissed the reference and directed the prosecution to continue
It is this 73 568 order of the High Court
of Allahabad that is the subject matter of appeal now before us
on a certificate granted by that Court
It would be seen that the only two points in controversy before the High Court were 1 whether the report of the police officer dated August 20 1955 contained  the facts constituting the offence  with which the appellants were charged as to satisfy the requirements of section 11 of the Act and 2 whether el 11 B of the Control Order violated the fundamental right to carry on business guaranteed by article 191g
In the grounds of appeal to this Court and in the statement of case however the appellants have raised various other grounds and have also filed a petition for leave to urge these additional grounds We desire to make it clear that grounds additional to those urged before the High Court would not be permitted to be raised before this Court as a matter of course and that petitions for such purpose would not be granted save in exceptional cases
It has to be noticed that in hearing and dealing with such additional grounds the Court is handicapped in not having the advantage of the opinions of the High Court on the points urged
It is the correctness of the decisions of High Courts that are sought to be challenged in appeals and it is but proper that the correctness of these judgments should save in exceptional cases like for instance subsequent legislation or questions of fundamental and general importance etc be assailed only on grounds urged before such Courts
Besides when among the grounds thus urged as in this case is includ ed a violation of article 14 the handicap is accentuated since the material facts on which the classification might rest could not be properly investigated or evaluated on the basis of the affidavits filed in this Court without a careful sifting of the facts which a consideration by the High Court would afford
If in the appeal now before us we have departed from this rule and permitted the appellants to urge the additional grounds it was because of the circumstance that the prosecution was pending and learned Counsel submitted that he would seek to sustain his contention 569 regarding the violation of fundamental rights on the materials already on record
The ground regarding the constitutionality of el
11 B of the Control Order has been the subject of elaborate consideration by this Court in Union of India vs Messrs Bhana Mal Oulzari Mal 1 and is therefore no longer open to argument
Learned Counsel for the appellant therefore did not challenge the correctness of the judgment of the High Court upon this point
Besides the ground based on a non compliance with section 11 of the Act which we shall consider later learned Counsel urged before us two points with reference to the notification issued by the Steel Controller fixing the maximum prices at which the several categories of iron and steel could be sold by producers and stockholders
These were 1 that the notification of the Controller dated July 1 1952 for the contravention of which the appellants were being prosecuted was ultra vires the rule making power conferred upon him by el 11 B1 of the Control Order 2 if however the notification was held to be within his power the same was unconstitutional in that it was discriminatory and violated article 14 of the Constitution
As we have indicated earlier these grounds of challenge to the validity of the notification were not made in any of the Courts below including the High Court but for the reasons indicated we permitted learned Counsel to argue them before us
In order to appreciate the contention presented in the two forms it is necessary to set out the terms of el 11 B1 which conferred power upon the Controller to fix the maximum base prices at which the several varieties of iron and steel could be sold
Clause 11 B1 runs  11 B Power to fix prices 1 The Controller may from time to time by notification in the Gazette of India fix the maximum prices at which any iron or steel may be sold a by a Producer b by stockholder including a Controlled Stockholder and c by any other person or class of persons
Such price or prices may differ for iron and steel obtainable from 1  570 different sources and may include allowances for contribution to and payment from any equalization fund established by the Controller for equalising freight the concession rates payable to each producer or class of producers under agreements entered into by the Controller with the producers from time to time and any other disadvantages
 Clause 2 of the Control Order defines  producer as  a person carrying on the business of manufacturing iron or steel  and  registered producer  as  a producer who is registered as such by the Controller 
The same clause defines  stockholder  as  a person holding stocks of iron or steel for sale who is registered as a stockholder by Controller  and  Controlled stockholder  as  a stockholder appointed by the Con
troller to hold stocks of iron or steel under such terms and conditions as he may prescribe from time to time 
The notification of the Controller dated July 1 1952 impugned in these proceedings runs in these terms quoting only the material words  Under Ministry of Commerce and Industry Notification  the prices of all items of steel under columns 1 11 and III in the schedule of Base Prices of the attached price circular No 1 of 1951 have been increased by Rs 50 per ton with effect from 1st July 1952 except item 19b ie Billets which has been increased by Rs 45 per ton 
The other General and Special Conditions of sale mentioned in the attached Price circular remain the 571 The price circular dated July 1 1951 referred to here consisted of eight columns which ran thus Price in rupees per ton Maximum Base Prices at Calcutta Bombay and Madras Base Materials Column I Column II Column III Price Item For sales by For sales by For sales by Registered controlled all persons No Producers
stockholders
other than Registered Producers and controlled stockholders
Untested Untested Untested Untested Untested Te sted Rs Rs Rs Rs Rs Rs A Bars Structural and plates etc
Bars and Rods 303 333 328 363 348 383 Rounds and squares below 3 and flats up to and including 5 wide 2 to 42      
This was followed by General Conditions and Special Conditions which inter alia made provision for the purpose of rounding off inequalities in freight caused by places being situated at varying distances from the place of production etc
It was the operation of some of these conditions that was urged as giving rise to the discrimination complained of but it will however be convenient to deal with them later after disposing of the argument regarding the notification not being within the powers of the Controller under cl 11 B 1
The ground urged in support of the contention that the notification by the Controller was not in conformity 572 with cl 1 1 B 1 was this Whereas under cl 1 1 B 1 the Controller was directed to fix the maximum prices which could be charged by three different classes viz a Producers b Stockholders including Controlled stockholders and c Other persons the impugned notification departed from this scheme in two respects 1 The clause contemplated that the notification should apply to all  producers  whereas  producers  other than  Registered producers  were wholly left out by the Controller with the result that no limitation was placed upon the price they could charge 2 Whereas the clause directed the Controller to include both the types of stockholders Registered  as well as  Controlled  within the same class and make the same limit of prices applicable to both the notification had included only  Controlled stockholders  as the second category of dealers and  registered stockholders  had not been specified eo nomine by him
This meant either that Registered stockholders  were wholly outside the class of dealers governed by the notification or that they were intended to be included in the residuary class in column III
On these premises learned Counsel urged that if  registered stockholders  like the second appellant were not within the notification the prosecution must fail because the maximum prices chargeable by her had not been fixed
If on the other hand such dealers had been separated from  Controlled stockholders  and included in the residual category such a classification was not countenanced by cl
11 B1 and was therefore ultra vires
We consider that these submissions are wholly without any substance
Before the argument that  producers  other than  registered producers  had not been included in the notification can be accepted it has to be established that there is any such producer
There is a list of  registered producers  appended to the notification and learned Counsel admitted that he could not say that there were any besides these who were Producers of iron and steel within the meaning of the Control Order
If therefore every  producer  was registered there is no scope for the argument that 573 any persons had been left out and permitted to sell at prices of their choice
The other part of learned Counsel s argument that registered stockholders  were not governed by the notification because they were not included in column II thereof and that dealings by them were not subjected to the maxima of prices fixed by it has only to be stated to be rejected
The heading of the last column shows that all categories of dealers other than registered producers and  controlled stockholders  were included in the residuary category
The related contention that the Controller acted outside his powers in differentiating between  controlled stockholders  and  registered stockholders  and in fixing different maxima of prices that could be charged by the two categories of dealers does not deserve serious consideration either
If we understand the classification aright it is like one between wholesale dealers and retailers and it is on this basis that the maximum price that could be charged by the  Registered Stockholders  who fall under column III is fixed at Rs 20 per ton above that permissible to  Controlled Stockholders  in respect of the category of steel which we have extracted earlier
The classification which gives persons in the category of the appellants this advantage is certainly not one regarding which a complaint could be made
Even when this advantage conferred on registered stock holders by the classification by the Controller was pointed out to learned Counsel for the appellant he persisted in his argument that registered stock
holders
should have been put in column II along with  controlled stockholders  and should have been permitted to sell only at the same maximum prices
This is sufficient to show that the argument regarding the classification was frivolous and could not have been urged with any seriousness
This apart we consider that even on the terms of cl 11 B 1 the Controller is not prevented from drawing a distinction within the three classes which are specified in it
The purpose and policy of the enactment is to ensure that an essential commodity like iron and steel is made available to 574 the consumer at reasonable prices and in the achievement of this objective classification of producers or of other stockholders based upon rational grounds would obviously be within the power of the Controller
Taking for instance the last class c  any other person or class of persons it cannot be that this group could not be sub classified if there was any reason or necessity to do so
If head c is susceptible of this interpretation as it obviously must we see no reason why head b should not be similarly construed
We have therefore no hesitation in rejecting the contention of learned Counsel that the notification of the Controller fixing maximum prices is beyond his power as not warranted by the terms of el
11 B 1 of the Control Order
The argument next advanced in challenge of the validity of the notification was that some of the General Conditions appended to the notification were discriminatory of the class of registered stockholders as compared with the  controlled stockholders  invoking for this purpose article 14 of the Constitution
Learned Counsel did not challenge the legality of the creation of the equalisation fund by the allowances for what is termed as  place extra 
Learned Counsel however urged two matters wherein facilities had been afforded or price increases permitted to  controlled stockholders which were denied to  registered stockholders  and that these had been done without any rational basis
These were 1 The 3rd of the special conditions for sale by  controlled stockholders  read The question of credit facilities will be a matter for negotiation between the customers and the controlled stockholders  2 Similarly Condition 5 also relating to  controlled stockholders read The base prices are
for sizes and length available in Size
Customers requiring material cut to length or size not available in stock will be required to pay cutting and wastage charges agreed between the customers and the stockholders  Coming now to the special conditions for sale  by persons other than producers and controlled stock holders  ie the conditions which governed sales like those by the second appellant special condition 1 575 read  The base rates given in column III above are ex site and apply to sales by all persons other than Producers and Controlled Stockholders  and are not subject to additional charges for cutting or for credit facilities
 Neither of these points cutting charges or credit facilities could be held to be discriminatory without a full investigation of the facts and circumstances which led to the imposition of these special conditions
Differentiation could never per se be discrimination nor is there any presumption that the adoption of different rules for groups differently situated is unequal treatment violative of article 14
On the other hand the presumption is the other way and the party that alleges unjustifiable discrimination should establish it to the satisfaction of the Court
We consider that there is no material on the basis of which an argument could be sustained that the special conditions to which learned Counsel adverted contained any element of unfair or irrational discrimination to attract article 14
There was a slight and subsidiary point raised in regard to the allowance of credit facilities and cutting charges
It was said that these charges were indeterminate and that the Controller having been directed by cl 11 B 1 to fix definite maximum prices had departed therefrom by permitting increases of undefined amounts
This argument again has no substance
The base price for the commodity having been fixed there are incidentals which by their very nature were incapable of definite quantification since they were dependent on each individual case
This contention also we therefore reject
In passing we might observe that the matter before this Court in Union of India vs Messrs Bhana Mal Gulzari Mal 1 related to a prosecution for a contravention of a notification of an earlier date but in terms identical with the present except as to the prices wherein the dealers in the commodity were classified in the same manner as has been done in the notification now before us and with the same general and special conditions
The respondent then before this Court was  a registered 1  74 576 stockholder  who was being prosecuted for effecting sales in excess of the maximum prices fixed
The fact that on that occasion no contention was urged challenging the validity of the notification as beyond the powers of the Controller on the grounds now put forward clearly indicates that the matters now urged never appeared then as a possible source of grievance to a party situated similarly as the second appellant
We hold that the notification fixing the prices together with the conditions appended thereto are valid and enforceable
The last point that remains to be dealt with is the contention that the initiation of the prosecution against the appellants was invalid for non compliance with the requirements of section 11 of the Act
This Section runs   11
Cognizance of offences
No Court shall take cognizance of any offence punishable under this Act except on report in writing of the facts constituting such offence made by a person who is a public servant as defined in section 21 of the Indian Penal Code XLV of 1860
 Learned Counsel for the appellants urged that though two of the conditions specified by the statute viz 1 a report in writing 2 by a public servant were satisfied the third requisite viz that the report should set out the  facts constituting such offence  was lacking and that by reason of this defect the Magistrate could not lawfully take cognizance of the case against the appellants
In elaboration of this point learned Counsel pointed out that the report did not specify a the date when the alleged sales took place b the quantity sold c the person in question who was the buyer and who paid the excess over the controlled price d the class or category of iron and steel which was the subject of the sale by the appellants e the precise maximum price which had been fixed for such variety f the amount which the appellants were alleged to have received in excess
The learned Judge of the High Court rejected this contention and in our opinion correctly
In the report which we have already extracted the provision 577 of the law which the appellants were stated to have contravened was set out and it was there stated that being  registered stockholders  they had sold the goods above the price notified and that they had further in order to conceal their crime fabricated evidence
It is to be noticed that the report is required to contain only  a statement of facts constituting the offence  and its function is not to serve as a chargesheet against the accused
The function or purpose of the second of the above three requirements of section 11 is to eliminate private individuals such as rival traders or the general public from initiating a prosecution and for this purpose before cognizance is taken the complaint is required to emanate from  a public servant 
The two further requirements viz that the report should be in writing and regarding the contents of the report are to ensure that there shall be a record that the public servant is satisfied that a contravention of the law has taken place
If the contravention in question is sufficiently designated in the report and in the present case that cannot be disputed since besides a reference to the notification stated to have been contravened the report states that the accused had effected sales above the maximum prices specified in the notification the requirements of the section are satisfied
The details which would be necessary to be proved to bring home the guilt to the accused and which comprised the several matters enumerated by learned Counsel which we have set out will be details which would emerge at a later stage when after notice to the accused a charge is framed against them and of course at the stage of the trial
They would all be matters of evidence and section 11 does not require the report to be or to contain either the charge sheet or the evidence in support of the charge its function being merely to afford a basis for enabling the magistrate to take cognizance of the case
In support of his submission regarding the construction of section 11 reliance was placed on two decisions Dr N G Chatterji vs Emperor 1 and Rachpal Singh vs 1 578 Rex 1
Both these were cited before the learned Judge and we agree with the manner in which he has dealt with and distinguished them
No doubt in both these cases it was held that the requirement of r 130 1 of the Defence of India Rules whose language was similar to is
11 of the Act as to the Statement of  facts constituting the contravention  was not complied with but the  reports  dealt with in them bear no resemblance to the report in the case before us
In the first of these decisions the recital in the report was that the accused was guilty of a  prejudicial act to the interest of the public  and  had prejudiced the success of financial measures with a view to the efficient prosecution of the war 
These words were held to be absolutely vague even the particular rule or provision of law which was said to have been contravened not even being mentioned in the report
The other decision in 50 Criminal Law Journal does not bear any analogy to the present case either
The report there in question ran On the statement of the informant an offence under section 812 Defence of India Rules has been committed for which the charge sheet is being submitted On this it was held that the facts alleged to constitute the contravention were not set out in the report and that the Magistrate had therefore no jurisdiction to take cognizance of the case
Obviously this case could not assist the learned Counsel to sustain a contention that the report in the present case was defective
We consider that the report on which the prosecution was launched satisfied the requirements of section 11 of the Act
In the result the appeal fails and is dismissed
Appeal dismissed


Summary:
The business of manufacture and sale of a particular brand of beedies was carried on by 0 a Mohamedan who died in 1942 leaving a minor son the appellant by his pre deceased wife his widow L and four children by her
Proceedings were taken first by the appellant and later on by L in connection with the partition of the properties left by 0 including the business and during the pendency of the proceedings the business was carried on by receivers who had been appointed by the court by consent of parties on May 17 1943
The receivers continued the business till November 25 1946 when during the course of the proceedings the business was put up for sale by auction between the co heirs and was purchased by the appellant
For the years of assessment 1944 45 to 1947 48 for which the accounting years were 1943 to 1946 the profits of the business were assessed to income tax in the hands of the receivers as the income of an association of persons and the claim of the appellant that the shares of the profits of each of the co heirs should have been separately taxed was rejected by the income tax authorities
The facts showed that the business was inherited by the heirs of 0 and was carried on without break during the accounting years first by L and another and then by the receivers that the nature of the business was such that it could not be divided up and that all the parties desired that the business should be carried on as one whole with a unity of control
Held that on the finding that the business was carried on by the consent of all parties as one unit with unity of control the co heirs did form an association of persons within the meaning of section 3 of the Indian Income tax Act 1922 and that the income of the business was assessable as the income of an association of persons  and the mere fact that a suit was pending at the time for the administration of the estate of the deceased or for the separation of the shares of the co heirs did not affect the incidence of taxation in the case
Commissioner of Income tax Bombay vs Indira Balkrishna   followed
516 section C Mazumdar Receiver Trigunait Brothers  Estate vs Commissioner of Income tax  disapproved in so far as it was contrary to the above decision of the Supreme Court