Civil Appeal No 1178 of 1984 From the Judgment and Order dated the 15th July 1982 of the High Court of Madras in Civil Revision Petition No 3396 of 1981
AND Civil Appeal No 6211 of 1983 From the Judgment and Order dated the 5th November 1982 of the High Court of Andhra Pradesh in Civil Revision Petition No 2477 of 1982
WITH Civil Appeal No 1992 of 1982 From the Judgment and Order dated the 17th December 1981 of the High Court of Madras in Civil Revision Petition No 152 of 1981 
WITH Civil Appeal No 1959 of 19X2 From the Judgment and Order dated the 14th December 1981 of the High Court of Madras in Civil Revision Petition No 1630 of 1980
WITH Civil Appeal No 3668 of 1982 From the Judgment and Order dated the 20th October 1982 of the High Court of Madras in Civil Revision Petition No 4087 of 1982
WITH Civil Appeal No 2246 of 1982 From the Judgment and Order dated the 5th November 1981 of the High Court ot Madras in Civil Revision Petition No 1397 of 198  AND Civil Appeal No 4012 of 1982 From the Judgment and Order dated the 23rd November 1982 of the High Court of Madras in Civil Revision Petition No 3983 of 1981 Y section Chitale and P N Ramalingam for the Appellant in Civil Appeal No 1178 of 1984
652 PG K K Mani V shekher and PR Setharaman for the Respondents in Civil Appeal No 1178 of 1984 AK Sen and ATM Sampath for the Appellant in Civil Appeal No 6211 of 1983
TVS Narasimhachari for the Respondent K Ramkumar for the Appellant in Civil Appeal No 1992 of A T M Sampath for the Respondent
A section Nambiar for the Appellant in Civil Appeal No 1659 of 1982
K section Ramamurthy and ATM Sampath for the Appellant in Civil Appeal No 3668 of 1982
C section Vaidianathan and K K Mani for the Respondents
M G Ramachandran and AV Rangam for the Appellant in Civil Appeal No 2246 of 1982
T section Krishnamurthy Iyer for the Respondent
T section Krishnamurth Iyer
and section Balakrishna for the Appellant in Civil Appeal No 4012 of 1984
Padmanbhan and DN Gupta for the Respondent in Civil Appeal No 4012 of 1982
The following Judgments were delivered FAZAL ALI J
These appeals invlove more or less an identical point of law relating to the interpretation of the term wilful default  appearing in the proviso to section 10 2 of the Tamil Nadu Buil dings Lease and Rent Control Act 1960 hereinafter referred to as the Act  coupled with the Explanation which seeks to explain the intent Or the proviso
We have heard counsel for the parties at great length and a large number of authorities have been cited before us in support of both the parties
Before we take up the points of law involved in these appeals we would briefly narrate the bare facts of each of these cases in order to test the correctness of the points argued before us
653 In Civil Appeal No 1178 of 1984 the respondent landlord let A out the suit premises No 3 B New No 2 B Davidson Street Broadway Madras to the appellant tenant on a monthly rent of Rs 600 for non residential use
The appellant despite repeated reminders did not pay the rent for the period from October 1978 to August 1979
The respondent filed a suit on 2 1279 for evicting the appellant on two grounds wilful default in payment of rent and 2 material acts of waste committed in the building
It may be mentioned here that before filing a suit for eviction of the appellant the respondent on 17979 sent a two months notice to the appellant
through his Advocate to clear up the dues
The appellant on receipt of the notice paid up the amount of the arrears amounting to Rs 6600 on 31079 ie within the stipulated period of two months
But the respondent contended that in view of the past conduct of theappellant he was guilty of wilful default within the meaning of proviso to section 10 2 of the Act
So far as this appeal is concerned as the entire rent had been paid up in pursuance of the notice dated 17979 even prior to the filing of the suit it is manifest that on the date of filing of the suit no cause of action in presenti having arisen the suit should have been dismissed on this short ground alone as being not maintainable
As indicated above it was not open to the landlord after having received the entire amount of arrears before filing of the suit to have filed a suit for past conduct of the tenant
This appeal therefore merits dismissal on this ground alone
In Civil Appeal No 6211 of 1983 the respondent tenants were given the suit premises No 171582 Ward B Old corresponding No 2 New No 5181582 Abid Road Hyderabad on a monthly rent of Rs 225 which was by mutual consent increased to Rs 275 per month in the year 1964
From 1766 the rent was again agreed to be increased to Rs 300 per month
The appellants landlord filed a suit under section 10 of the Andhra Pradesh Buildings Lease Rent and Eviction Control Act 1960 on 121171 against the respondents for eviction on three grounds 1 wilful default by the tenants in payment of rent for the months of September October and November 1971 total amount being Rs 900 2 the tenants sublet the premises to one Hanumantha and 3 that the premises were required bona fide for their own use
However during toe pendency of the matter the original landlords sold away their interest in the property in favour of the present appellants before us and therefore the question of bona fied requirement abated there itself
654 The Rent Controller upheld both the grounds of wilful default and subletting
Aggrieved by the said decision the respondents tenant filed an appeal to the Chief Judge City Small Causes Court Hyderabad and the learned Chief Judge by his judgment held that wilful default in payment of rent for the month of September 1971 as also the question of sub letting was proved
Against this decision of the Chief Judge City Small Causes the respondents filed a revision petition in the High Court
It is not in dispute that the rent from September 1971 on wards has not been paid and that by the time the eviction petition was filed the default was only for the month of September 1971
The High Court agreed with the lower courts with regard to wilful default for the month of September 1971 and reversed the finding with regard to subletting but on the ground of wilful default ordered eviction of the respondents
In civil Appeal No 1992 of 1982 the respondent landlord filed an eviction petition against the appellant tenant on the grounds of wilful default and the premises needing repairs
However the second ground was not pressed and the only point which survived for deter mination was whether there was any wilful default on the part of the appellant
The brief facts are that the appellant became a tenant under the father of the respondent in 1953 at a monthly rent of Rs 15 which was subsequently mutually agreed to be increased to Rs 49 per month
The respondent contended in his petition that the appellant became a defaulter in payment of the rent as he did not pay the rent for the months of June 1977 to January 1978
The respondent also issued a notice on 16178 demanding the dues amounting to Rs 392
The appellant sent a detailed reply on 30178 alongwith a Bank Draft for Rs 392 which was however not encashed by the respondent and returned to the appellant subsequent to the filing of an eviction petition which was filed on 1181978
The Rent Controller found the tenant to be a wilful defaulter and consequently order his eviction
However on appeal the Appellate Authority reversed the finding of the Rent Controller and accepted the plea of the tenant that as he was ill he was not able to pay the rent
In revision the High Court did not agree with the finding of the Appellate Authority and restored the finding of the Rent Con troller and ordered the eviction of the appellant holding that the explanation offered by the tenant could not be accepted as his sons were carrying on the business in the same premises and nothing pre vented them from paying the rent to the landlord of the appellant was ill
655 In Civil Appeal No 1659 of 1982 the respondent landlord filed an eviction petition against the appellant tenant in respect of a nonresidential premises on two grounds 1 wilful default in payment of rent from 1577 to 31877 and 2 bona fide requirement for personal use
The Rent Controller after an equiry ordered eviction of the tenant on both the grounds and the Appellate Authority confirmed the findings of the Rent Controller
The landlord issued a lawyer s notice on 1977 to the tenant to clear up the dues
After receipt of the notice the tenant paid the rent of two months  only and for the remaining two months the tenant could not offer any satisfactory explanation and therefore the High Court in revision agreed with the findings of both the courts below in regard to wilful default of payment of arrears of rent and ordered eviction of the tenant on this ground alone
The High Court however did not agree with the findings of the courts below with regard to bona fide requirement of the landlord and held that the landlord could not ask for a non residential portion for residential purposes having leased it out for a non residential purpose
In Civil Appeal No 3668 of 1982 the appellant took out the premises from the respondent for non residential use on a monthly rent of Rs 350
There was some misunderstanding between the parties over payment of rent and as a result of which it was agreed that the tenant would deposit the rent in the Bank
The respondent landlord filed an eviction petition on 141980 in the court of the Rent Controller after verifying from the Bank that the tenant had not deposited the rent for the months of January and February 1980 thereby committing a wilful default
The authorities below found against the arrangement of depositing the rent in the Bank and ordered the eviction of the appellant on the ground of wilful default
The High Court upheld the decision of the courts below and held that the appellant had wilfully defaulted in the payment of rent and ordered the eviction of the appellant
In Civil Appeal No 2246 of 1982 the respondent landladies let out the premises to the tenant appellant for non residential use on a monthly rent of Rs 105
The respondents filed an eviction petition on 21176 against the tenant on the ground of wilful default for non payment of rent for the period from January 1976 to September 1976 ie for a period of 9 months
But before filing the eviction petition the respondents on 671976 issued a notice to the tenant to pay the dues and on 17776 the appellant paid a sum of Rs 630 which was accepted by the landladies without prejudice
The Rent 656 Controller found that the default in payment of rent was not wilful and therefore dismissed the applcation of the landladies
On appeal the Appellate Authority reversed the finding of the Rent Controller and held that the default was wilful
In revision the High Court did not agree with the contention of the appellant that he was not wilful defaulter as immediately after filing of the eviction petition he had paid the entire arrears even before the serving of summons The High Court held that there was no satisfactory explanation by the tenant for nonpayment of rent for the period from January to June 1976 before the issue of notice Even after the payment of rent the tenant committed further default till the petition for eviction was filed on 21176
The high Court therefore upheld the finding of the Appellate Authority and ordered eviction of the tenant on the ground of wilful default
In civil appeal No 4012 of  1982 the appellant is in occupation of the residential premises bearing No 17 New No 59 Burkit Road T Nagar Madras on a monthly rent of Rs 325 payable according to English calendar month
The respondent filled an eviction petition against the appellant on the ground of wilful default and bona fide requirement for her own occupation
It was stated on behalf of the respondent landlady that the appellant committed wilful default in payment of rent from June 1976 onwards and after repeated demands a sum of Rs 1000 was paid by him on 141977
He had paid rent for five months to the Income Tax Department on behalf of the respondent but he did not produce any receipt evidencing payment to the Income Tax Department
Assuming that the appellant had made the said payment the respondent further contended that from February 1977 to July 1978 the appellant was in arrears thereby committing a wilful default
The Rent Controller did not agree with the contentions of the respondent and held that the default was not wilful and the requirement for own Occupation of the landlay was not bona fide
On appeal the Appellate Court came to the conclusion that the tenant had committed wilful default in payment of rent from May 1976 onwards as on 1477 and from December 1976 as on 10477
However the appellate authority was of the view that the respondent had not been able to prove her case for bona fide requirement
But on the around of wilful default the eviction of the appellant was ordered
In reviston the High Court agreed with the findings of the Appellate Court and confirmed the eviction of the appellant on the ground of wilful default
From a detailed survey of the provisions of the various Rent Acts prevailing in the States and various Union Territories of our 657 country it appears that the provisions regarding eviction for default A in payment of rent are not uniform and differ from State to State
Some Acts do not mention wilful default  at all some mention it in a negative form while some put it in an affirmative form
To cut the matter short from a review of the various Rent Acts the position that emerges is that the provisions relating to eviction are couched in three different types of default 1 Acts which expressly mention wilful default  without defining the same 2 Acts which do not mention the words wilful default  at all but confer a right on the landlord to evict the tenant on pure and simple default after a certain period of time when the rent has become due which is also different in different States 3 Acts which use the expression wilful default  but in a negative form rather than in an affirmative form
D These are the AP Buildings Lea5e Rent and Eviction Control Act of 1960 The Orissa House Rent Control Act 1967 and the Pondicherry Buildings Lease  Rent Control Act 1969 hereinafter referred to as the A P Act Orissa Act  and Pondicherry Act  respectively The last category of the Acts is the Tamil Nadu Act which is the Statute in question and which makes a marked improvement by broadening the ambit of wilful default  in the proviso to section 10 2 which is further clarified by virtue of the Explanation added to the said proviso by Act No 23 of 1973
There are other Rent Acts which not only use the expression wilful default  but which also give a sort OF a facility to a tenant even for an ordinary default to pay the entire rent together with interest on payment of which the suit for eviction is dismissed or at any rate they contain provisions by which even if a suit for eviction is filed the tenant is required to pay the entire arrears of rent costs and interest failing which his defence is struck out and the suit for eviction is decreed automatically
In these circumstances for the purpose of the present cases it is not necessary for us to make a roving enquiry into or carry on a detailed survey of the Acts which do not use the term wilful default 
We might usefully refer only to those Acts which contain the term wilful default  either in a negative or in a positive form
These Acts as already indicated are the AP Orissa Pondicherry and the Tamil Nadu Acts
Though we are concerned mainly with the Tamil Nadu 658 Act yet in order to understand the contextual background of the words wilful default  and its proper setting we might briefly examine the relevant provisions of the aforesaid Acts
Section 10 2 of the AP Act is the only provision which confers protection to the tenant from eviction under certain conditions
Proviso to that sub section runs thus Provided that in any case falling under clause i if the Controller is satisfied that the tenant s default to pay or tender rent was not wilful he may notwithstanding anything in section 11 give the tenant a reasonable time not exceeding fifteen days to pay or tender the rent due by him to the landlord up to the date of such payment or tender and on such payment or tender the application shall be rejected
 It may be noticed that although the default contemplated by the Act is wilful yet it has been put in a negative form which undoubtedly gives sufficient leeway to the tenant to get out of the rigours of the statutory provision
The proviso to s7 2J of the Orissa Act is similarly worded and the relevant portion of which runs thus Provided that in any case falling under clause i if the Controller is satisfied that the tenant s default to pay or tender rent was not wilful Pondicherry Act is another statute which also contains the word wilful  in a negative form the relevant portion of which runs thus Provided that in any case falling under clause i if the Controller is satisfied that the tenant s default to pay of tender rent was not wilful  The aforesaid Acts undoubtedly contemplate that a default simpliciter would not be sufficient to evict the tenant but it must further be shown that the default was not wilful
The Act however is silent on the mode and the manner in which a court may decide as to what is wilful and what is not wilful
Thus the Act has left it to the courts to decide this question
So far as the Tamil Nadu Act is concerned it clearly defines as to what is wilful default 
Proviso to section 10 2 of the Act runs thus Provided that in any case falling under clause i if the Controller is satisfied that the tenant s default to pay or tender rent was not wilful he may notwithstanding anything 659 contained in section 11 give the tenant a reasonable time t not exceeding fifteen days to pay or tender the rent due by him to the landlord up to the date of such payment or tender and on such payment or tender the application shall be rejected
 This proviso was clarified by an Explanation added to it by Act No 23 of 1973 which provides a clear criterion to determine as to what is wilful default and what is not
in this connection it was submitted by counsel for the tenants that despite the Explanation it is open to the Court on an appraisement of the circumstances of each case to determine whether or not the default was wilful and in doing so it cannot be guided wholly and solely by the Explanation which is merely clarificatory in nature
If the Court in the circumstances of each case finds that the default is not wilful then it can come to this finding despite the Explanation
On the other hand the argument ot the counsel for the landlords is that the very purpose of the Explanation is to briny about uniformity in court decisions by laying down a conclusive yardstick in the shape of the Explanation which says that a default would be wilful only if the landlord gives two months  notice to the tenant and the tenant does not pay the rent after the expiry of this period
In other words the argument seems to be that the Explanation is to be read into the proviso so that the word wilful  will have to be defined and interpreted in accordance with the criterion laid down by the said Explanation ie issue of two months  notice  The arguments merits consideration but before coming to any conclusion it may be necessary for us to examine the exact meaning of the words Wilful default  as also the interpretation and the scope of the Proviso and the Explanation
Prima facie there seems to be some force in the argument of the counsel for the tenants that unless the conditions of the Explanation are fulfilled whatever may be the nature of the default it cannot be a wilful default  as contemplated by the Proviso
Before however going into this question further let us find out the real meaning and content of the word wilful  or the words wilful default 
In the book A Dictionary of Law  by LB Curzon at page 361 the words wilful  and wilful default  have been defined thus Wilful  deliberate conduct of l person who is a free agent knows what he is doing and intends to do what he is doing
660 Wilful default  Either a consciousness of negligence or breach of duty or a recklessness in the performance of a duty
In other words wilful default  would mean a deliberate and intentional default knowing full well the legal consequences thereof
In Words and Phrases  Volume 11 A Permanent Edition at page 268 the word default  has been defined as the non performance of a duty a failure to perform a legal duty or an omission to do something required
In volume 45 of Words  Phrases  the word wilful  has been very clearly defined thus Wilful  intentional not incidental or involuntary done intentionally knowingly and purposely without justifiable excuse as distinguished from an act done carelessly thoughtlessly heedlessly or inadvertently in common parlance word wilful  is used in sense of intentional as distinguished from accidental or involuntary
P 296 Wilful refers to act consciously and deliberately done and signifies course of conduct marked by exercise of volition rather than which is accidental negligent or involuntary
In Volume III of Webster s Third New International Dictionary at page 2617 the word wilful  has been defined thus governed by will without yielding to reason or with out regard to reason obstinately or perversely self willed
 The word default  has been defined in Vol
I of Webster s Third New International Dictionary at page 590 thus to fail to fulfil a contract or agreement to accept a responsibility to fail to meet a financial obligation
 In Black s Law Dictionary 4th Edn at page 1773 the word wilful  has been defined thus Wilfulness implies an act done intentionally and designedly a conscious failure to observe care Conscious knowing done with stubborn purpose but not with malice
The word reckless as applied to negligence is the legal equivalent of willful or Wanton
661 Thus a consensus of the meaning of the words wilful default  appears to indicate that default in order to be wilful must be intentional deliberate calculated and conscious with full knowledge of legal consequences flowing therefrom
Taking for instance a case where a tenant commits default after default despite oral demands or reminders and fails to pay the rent without any just or lawful cause it cannot be said that he is not guilty of wilful default because such a course of conduct manifestly amounts to wilful default as contemplated either by the Act or by other Acts referred to above
The next question that arises for consideration is as to what is the scope of a proviso and what is the ambit of an Explanation either to a proviso or to any other statutory provision
We shall first take up the question of the nature scope and extent of a proviso
The well established rule of interpretation of a proviso is that a proviso may have three separate functions
Normally a proviso is meant to be an exception to something within the main enactment or to qualify something enacted therein which but for the proviso would be within the purview of the enactment In other words a proviso cannot be torn apart from the main enactment nor can it be used to nullify or set at naught the real object of the main enactment
Craies in his book Statute Law  7th Edn while explaining the purpose and import of a proviso states at page 218 thus The effect of an excepting or qualifying proviso according to the ordinary rules of construction is to except out of the preceding portion of the enactment or to qualify something enacted therein which but for the proviso would be within it
The natural presumption is that but for the proviso the enacting part of the section would have included the subject matter of the proviso
 Odgers in Construction of Deeds and Statutes  Fifth Edn while referring to the scope of a proviso mentioned the following ingredients P 317 Provisos These are clauses of exception or qualification in an Act excepting something out of or qualifying something in the enactment which but for the proviso would be within it
 P 318 Though framed as a proviso such a clause may exceptionally have the effect of a substantive enactment
 662 Sarathi in Interpretation of Statutes  at pages 294 295 has collected the following principles in regard to a proviso a When one finds a proviso to a section the natural presumption is that but for the proviso the enacting part of the section would have included the subject matter of the proviso
b A proviso must be construed with reference to the preceding parts of the clause to which it is appended
c Where the proviso is directly repugnant to a section the proviso shall stand and be held a repeal of the section as the proviso speaks the later intention of the makers
d Where the section is doubtful a proviso may be used as a guide to its interpretation but when it is clear a proviso cannot imply the existence of words of which there is no trace in the section
e The proviso is subordinate to the main section
f A proviso does not enlarge an enactment except for compelling reasons
g Sometimes an unnecessary proviso is inserted by way of abundant caution
h A construction placed upon a proviso which brings it into general harmony with the terms of section should prevail
i When a proviso is repugnant to the enacting part the proviso will not prevail over the absolute terms of a later Act directed to be read as supplemental to the earlier one
j A proviso may sometimes contain a substantive provision
 In the case of Local Government Board vs South Stoneham Union  Lord Macnaghten made the following observation I think the proviso is a qualification of the preceding enactment which is expressed in terms too general to be quite accurate In Ishverlal Thakorelal Almaula vs Motibhai Nagjibhai2 it was held that the main object of a proviso is merely to qualify the main enactment
In Madras  Southern Maharatta Railway Co Ltd vs Bezwada Municipality3 Lord Macmillan observed thus 1 2 1966 1 SCR 367
3 ATR 663 The proper function of a proviso is to except and to deal with a case which would otherwise fall within the general language of the main enactment and its effect is confined to that case
 The above case was approved by this Court in Commissioner Of Income Tax Mysore etc
vs Indo Mercantile Bank Ltd
l where Kapur J held that the proper function of a proviso was merely to qualify the generality of the main enactment by providing an exception and taking out as it were from the main enactment a portion which but for the proviso would fall within the main enactment
In Shah Bhojraj Kuverji Oil Mills  Ginning Factory vs Subhash Chandra Yograj Sinha2 Hidayatullah J as he then was very aptly and succinctly indicated the parametres of a proviso thus As a general rule a proviso is added to an enactment to qualify or create an exception to what is in the enactment and ordinarily a proviso is not interpreted as stating a general rule
 In West Derby vs Metropolitan Life Assurance Co3 while guarding against the danger of interpretation of a proviso Lord Watson observed thus a very dangerous and certainly unusual course to import legislation from a proviso wholesale into the body of the statute
 A very apt description and extent of a provio was given by Lord Oreburn in Rhodda Urban District Council vs Taff Vale Railway Coq where it was pointed out that insertion of a proviso by the draftsman is not always strictly adhered to its legitimate use and at times a section worded as a proviso may wholly or partly be in substance a fresh enactment adding to and not merely excepting something out of or qualifying what goes before
To the same effect is a later decision of the same Court in Jennings add Another vs Kelly5 where it was observed We must now come to the proviso for there is I think no doubt that in the construction of the section the 1 1959 2 supp
SCR 256
2  3 4 l909 AC 253
5 664 whole of it must be read and a consistent meaning if possible given to every part of it The words are provided that such licence shall be granted only for premises situate in the ward or district electoral division in which such increase in population has taken place
There seems to be no doubt that the words such increase in population refer to the increase of not less than 25 per cent of the population mentioned in the opening words of the section  While interpreting a proviso care must be taken that it is used to remove special cases from the general enactment and provide for them separately
In short generally speaking a proviso is intended to limit the enacted provision so as to except something which would have other wise been within it or in some measure to modify the enacting clause
Sometimes a proviso may be embedded in the main provision and becomes an integral part of it so as to amount to a substantive provision itself
Apart from the authorities referred to above this Court has in a long course of decisions explained and adumbrated the various shades aspects and elements of a proviso
In State of Rajasthan vs Leela Jain  the following observations were made So far as a general principle of construction of a proviso is concerned it has been broadly stated that the function of a proviso is to limit the main part of the section and carve out something which but for the proviso would have been within the operative part In the case of Sales Tax Officer Circle 1 Jabalpur vs Hanuman Prasad2 Bhargava J Observed thus It is well recognised that a proviso is added to a principle clause primarily with the object of taking out of the scope of that principal clause what is included in it and what the legislature desires should be excluded In Commissioner of Commercial Taxes and Ors
vs RS Jhaver and Ors3 this Court made the following observations 1 19651 S CR 276
2 1967 I SCR 831
3 19681 SCR 148
665 Generally speaking it is true that the proviso is an exception to the main part of the section but it is recognised that in exceptional cases a proviso may be a substantive provision itself  In Dwarka Prasad vs Dwarka Das Sarafl Krishan Iyer J speaking for the Court observed thus B There is some validity in submission but if on a fair construction the principal provision is clear a proviso can not expand or limit it
Sometimes a proviso is engrafted by an apprehensive draftsman to remove possible doubts to make matters plain to light up ambiguous edges
Here such is the case If the rule of construction is that prima facie a proviso should be limited in its operation to the subject matter of the enacting clause the stand we have taken is sound
To expand the enacting clause inflated by the proviso sins against the fundamental rule of construction that a proviso must be considered in relation to the principal matter to which it stands as a proviso
A proviso ordinarily is but a proviso although the golden rule is to read the whole section inclusive of the proviso in such manner that they mutually throw light on each other and result in a harmonious construction
In Hiralal Rattanlal etc
vs Staie of UP and Anr2 etc
this Court made the following observations Ordinarily a proviso to a section is intended to take out a part of the main section for special treatment
It is not expected to enlarge the scope of the main section
But cases have arisen in which this Court has held that despite the fact that a provision is called proviso it is really a separate provision and the so called proviso has substantially altered the main section
 We need not multiply authorities after authorities on this point because the legal position seems to be clearly and manifestly well established
To sum up a proviso may serve four different purposes 1 19761 SCR 128
2 1973 1 SCC216
666 1 qualifying or excepting certain provisions from the main enactment 2 it may entirely change the very concept of the intendment of the enactment by insisting on certain mandatory conditions to be fulfilled in order to make the enactment workable 3 it may be so embedded in the Act itself as to become an integral part of the enactment and thus acquire the tenor and colour of the substantive enactment itself and 4 it may be used merely to act as an optional addenda to the enactment with the sole object of explaining the real intendment of the statutory provision
These seem to be by and large the main purport and parameters of a proviso
So far as the Act in question is concerned the matter does not rest only on the question of wilful default but by an amendment Act No 23 of 1973 an Explanation in the following terms was added to the proviso to section 10 2 of the Act Explanation For the purpose of this sub section default to pay or tender rent shall be construed as wilful if the default by the tenant in the payment or tender of rent continues after the issue of two months  notice by the landlord claiming the rent
 We have now to consider as to what is the impact of the Explanation on the proviso which deals with the question of wilful default
Before however we embark on an enquiry into this difficult and delicate question we must appreciate the intent purpose and legal effect of an Explanation
It is now well settled that an Explanation added to a statutory provision is not a substantive provision in any sense of the term but as the plain meaning of the word itself shows it is merely meant to explain or clarify certain ambiguities which may have crept in the statutory provision
Sarathi in Interpretation of Statutes  while dwelling on the various aspects of an Explanation observes as follows a The object of an explanation is to understand the Act in the light of the explanation
667 b It does not ordinarily enlarge the scope of the original A section which it explains but only makes the meaning clear beyond dispute P 329 Swarup in Legislation and Interpretation  very aptly sums up the scope and effect of an Explanation thus Sometimes an explanation is appended to stress upon a particular thing which ordinarily would not appear clearly from the provisions of the section
The proper function of an explanation is to make plain or elucidate what is enacted in the substantive provision and not to add or substract from it
Thus an explanation does not either restrict or extend the enacting part it does not enlarge or narrow down the scope of the original section that it is supposed to explain 
The Explanation must be interpreted according to its own tenor that it is meant to explain and not vice versa PP 297 298 Bindra in Interpretation of Statutes  5th Edn at page 67 states thus An explanation does not enlarge the scope of the original section that it is supposed to explain
It is axiomatic that an explanation only explains and does not expand or add to the scope of the original section
The purpose of an explanation is however not to limit the scope o the main provision
The construction of the explanation must depend upon its terms and no theory of its purpose can be entertained unless it is to be inferred from the language used
An explanation  must be interpreted according to its own tenor 
 The principles laid down by the aforesaid authors are fully supported by various authorities of this Court
To quote only a few in Burmah Shell Oil Storage and Distributing Co
Of India Ltd and Anr
vs Commercial Tax Officer and Orsl a Constitution Bench decision Hidayatullah J speaking for the Court
Observed thus Now the Explanation must be interpreted according to its own tenor and it is meant to explain cl1aof the 1 1961 I SCR 902
668 Article and not vice versa
It is an error to explain the Explanation with the aid of the Article because this reverses their roles
 In Bihta Cooperative Development Cane Marketing Union Ltd and Anr
v The Bank of Bihar and Orsi
 this Court observed thus The Explanation must be read so as to harmonise with and clear up any ambiguity in the main section It should not be so construed as to widen the ambit of the section
 In Hiralal Rattanlal s case supra this Court observed thus On the basis of the language of the Explanation this Court held that it did not widen the scope of clause c But from what has been said in the case it is clear that if on a true reading ofan Explanation it appears that it has widened the scope of the main section effect be given to legislative intent notwithstanding the fact that the Legislature named that provision as an Explanation In Dattatraya Govind Mahajan and Ors
vs State of Maharashtra and Anr2
 Bhagwati J Observed thus It is true that the orthodox function of an explanation is to explain the meaning and effect of the main provision to which it is an explanation and to clear up any doubt or ambiguity in it
Therefore even though the provision in question has been called an Explanation we must construe it according to its plain language and not on any a priori considerations
 Thus from a conspectus of the authorities referred to above it is manifest that the object of an Explanation to a statutory provision is a to explain the meaning and intendment of the Act itself b where there is any obscurity or vagueness in the main enactment to clarify the same so a to make it consistent with the dominant object which it seems to subserve 1 19671 SCR 848
2 l9772 S CR 790
669 c to provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful d an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment and e it cannot however take away a statutory right with which any person under a statute has been clothed or set at naught the working of an Act by becoming an hindrance in the interpretation of the same
Having therefore fully discussed the main scope and ambit of a proviso and an Explanation we shall now proceed to elucidate the various provisions of the Act and other Acts
We have already discussed that although almost every State has its own Rent Act neither the Explanation nor the statutory clause concerning the term wilful default  is mentained therein These Acts seem to proceed only on the simple word default  and perhaps to buttress their intention they have laid down certain guidelines to indicate the grounds of ejectment wherever a default takes place
Looking generally at such Acts they seem to have first provided statutorily a particular date or time when the tenant on being inducted under the contract of tenancy is to pay the rent
Such a provision may or may not be against the contract of the tenancy and if it is to that extent it overrides the contract
This therefore gives sufficient notice to any tenant inducted in any premises that he must pay the rent according to the yard stick set out by the Act failing which he runs the risk of being evicted for default
Some Acts however have provided a particular number of defaults to enable the Rent Controller or Court to find out whether such a default would entitle the landlord to get an order of eviction
There are some other Acts which have made rather ingenious and if we may say so apt provisions for expediting the process of eviction in case of default by providing that whenever a suit for eviction is filed against a tenant on the ground of default the tenant in order to show his bona fides must first deposit the entire rent arrears and cost in the court of the Rent Controller where the action is filed on the very first date of hearing failing which the court or the authority concern 670 ed would be fully justified in striking down the defence and passing an order of eviction then and there
The dominant object of such a procedure is to put the tenants on their guard
It is true that such provisions are rather harsh but if a tenant goes on defaulting then there can be no other remedy but to make him pay the rent punctually unless some drastic step is taken
These Acts therefore strike a just balance between the rights of a landlord and those of a tenant
For deciding these cases it is not necessary for us to go either into the ethics or philosophy of such a provision because we are concerned with statutes having different kinds of provisions
With this little preface we would now examine the working and relevant provisions of the Act alongwith similar provisions contained in the other three Acts viz AP Orissa and Pondicherry Acts which are almost in pari materia the proviso to section 10 2 of the Act
The only difference between the Act and the other Acts is that where as an Explanation is added to the proviso to section 10 2 of the Act no such Explanation has been added to the provisions of the other three Acts hence we have now to consider the combined effect of the proviso taken in conjunction with the Explanation
We may therefore extract the Explanation again to find out what it really means and to what extent does it affect the provisions of the Proviso Explanation For the purpose of this sub section default to pay or tender rent shall be construed as wilful if the default by the tenant in the payment or tender of rent continues after the issue of two months  notice by the landlord claiming the rent If we analyse the various concomitants of the Explanation the position seems to be that a there should be a default to pay or tender rent b the default should continue even after the landlord has issued two months  notice claiming the arrears or rent c if despite notice the arrears are not paid the tenant is said to have committed a wilful default and consequently liable to be evicted forthwith
The question is do these three conditions whittle down the effect of the proviso or merely seeks to explain the intendment of a wilful default  One view which may be possible and which form the basis of the argument of the connsel for the tenants is that mere non 671 payment of arrears of rent after issue of two months  notice cannot in A all circumstances automatically amount to a wilful default if the nonpayment does not fulfil the various ingredients pointed out by us while defining the term Wilful default 
The other view which has been canvassed before us by the counsel for landlords is that in view of the Explanation once it is proved that after issue of two months  notice if the tenant does not pay the arrears within the stipulated period of two months he is liable to be ejected straightaway
Another view is that such an interpretation would be extremely harsh and penal in nature because if after receipt of the notice the tenant is not able to pay the arrears due to circumstances beyond his control of which the court is satisfied it will be putting a serious premium or handicap on the right of the tenant
In the same token it was argued that if such an interpretation is put on the Explanation then the entire provisions of the Proviso become otiose thus rendering the said Proviso nugatory
Another aspect that must be stressed at this stage is that where a tenant has committed default after default without any lawful or reasonable cause and the said defaults contain all the qualities of a wilful default viz deliberate intentional calculated and conscious should he be given a further chance of locus paenitentiae  After hearing counsel for the parties at great length we feel that although the question is difficult one yet it is not beyond solution
If we keep the objects of the proviso and the Explanation separate there would be no difficulty in deciding these cases
To begin with section 13 2 i of the Act lays down that where the Controller is satisfied that the tenant has not paid or tendered the rent within 15 days after the expiry of the time fixed in the Agreement of tenancy or in the absence of any such Agreement by the last date of the month next following that for which the rent is payable he tenant undoubtedly commits a default
Two factors mentioned in section 10 2 i seem to give a clear notice to a tenant as to the mode of payment as also the last date by which he is legally supposed to pay the rent
This however does not put the matter beyond controversy because before passing an order of eviction under the proviso it must also be proved that the default was wilful and if the Controller is of the opinion that the default in the circumstances and facts of the case was not wilful in the sense that it did not contain any of the qualities or attributes of a wilful default as indicated by us above he may give the tenant a reasonable time not exceeding 15 days to pay the entire rent and if this is complied with 672 the application for ejectment would stand rejected
The difficulty however is created by the Explanation which says that once a land lord gives a two months  notice to his tenant for paying the arrears of rent but the tenant continues in default even thereafter then he is liable to be evicted
There is a good deal of force in this argument which has its own advantages
In the first place it protects the court from going into the intricate question as to what is a wilful default and whether or not the conditions of a wilful default have been satisfied which if permitted would differ from case to case and court to court
But the difficulty is that if such a blanket ban is put on the court for not examining the question of wilful default once the conditions laid down in the Explanation are satisfied then it would undoubtedly lead to serious injustice t l the tenant
A subsidiary consequence of such an interpretation would be that even though the tenant after receipt of the notice may be wanting to pay the arrears of rent but is unable to do so because of unforseen circumstances like death accident robbery etc which prevent him from paying the arrears yet under the Explanation he has to be evicted
Another view which in our opinion is a more acceptable one and flows from the actual words used by the proviso is that where the Explanation does not apply in the sense that the landlord has not issued two months  notice it will be for the Court to determine in each case whether the default is wilful having regard to the tests laid down by us and if the Court finds that default is wilful then a decree for eviction can be passed without any difficulty
Another difficulty in accepting the first view viz if two months notice is not given the tenant must not be presumed to be a wilful defaulter is that in such a case each landlord would have to maintain a separate office so that after every default a two months  notice should be given and if no notice is given no action can be taken against a tenant
We are unable to place such an unreasonable restriction on the landlord to give two months  notice after every default which may or may not be possible in every case
A correct interpretation in our opinion would be that where 1 no notice as required by the Explanation is given to the tenant the Controller or the court can certainly examine the question whether the default has been wilful and to such a case the Explanation would have no application 673 2 where the landlord chooses to issue two months  notice and the rent is not paid then that would be a conclusive proof of the default being wilful unless the tenant proves his incapability of paying the rent due to unavoidable circumstances
B The argument of the counsel for landlords was that even if a notice under the Explanation is given that does not take away the jurisdiction of the proviso to determine whether or not the default has been wilful if it contains the qualities and attributes referred to above because what the Explanation does is merely to incorporate an instance of a wilful default and is not conclusive on the point and would have to be construed by the court in conjunction with the conditions mentioned in the proviso
We are however unable to go to this extreme extent because that will actually thwart the object of the Explanation
As we read the Explanation it does not at all take away the mandatory duty cast on the Controller in the proviso to decide if a default is wilful or not
Indeed if the landlord chooses to give two months  notice to his tenant and he does not pay the rent then in the absence of substantial and compelling reasons the controller or the court can certainly presume that the default is wilful and order his eviction straightaway
We are unable to accept the view that whether two months  notice for payment of rent is given or not it will always be open to the Controller under the proviso to determine the question of wilful default because that would render the very object of Explanation otiose and nugatory
We express our view in the matter in the following terms 1 Where no notice is given by the landlord in terms of the Explanation the Controller having regard to the four conditions spelt out by us has the undoubted discretion to examine the question as to whether or not the default committed by the tenant is wilful
If he feels that any of the conditions mentioned by us is lacking or that the default was due to some unforeseen circumstances he may give the tenant a chance of locus paenitentiae by giving a reasonable time which the statute puts at 15 days and if within that time the tenant pays the rent the application for ejectment would have to be rejected
2 If the landlord chooses to give two months  notice to the tenant to clear up the dues and the tenant does not 674 pay the dues within the stipulated time of the notice then the Controller would have no discretion to decide the question of wilful default because such a conduct of the tenant would itself be presumed to be wilful default unless he shows that he was prevented by sufficient cause or circumstances beyond his control in honouring the notice sent by the landlord
We would however refer to some case law on the question of wilful default as interpreted by the Madras High Court because there appear to be three decisions of the Madras High Court taking some what contrary views
In Rajeswari vs Vasumal Lalchand1 it was held that non payment of rent amounted to such supine and callous in difference on the part of the tenant as to amount to a wilful default
However the learned Judge does not appear to have noticed the effect of the Explanation to section 10 2 introduced in 1973
This decision undoubtedly supports the view that a wilful default is not merely a pure and simple default but a default which is per se deliberate and intentional
In N Ramaswami Reddiar vs SN Periamuthu Nadar2 Explanation to the proviso to section 10 2 of the Act was expressly considered and Ratnam J Observed as follows A reading of the Explanation indicates that it is not exhaustive of all cases of wilful default but it specifies only one instance where the default should be construed as wilful
If a tenant does not pay the rents at all for a considerable time and the landlord files a petition for an order of eviction on the basis that the tenant had committed wilful default without issuing any notice then in the absence of any other explanation by the tenant the default should be construed as wilful in spite of the fact that the landlord had not chosen to issue a notice to the tenant claiming the rents
In this view I hold that counsel for the petitioner cannot be of any assistance to him
 We feel ourselves in complete agreement with the view taken by the learned Judge On the interpretation of the proviso read with the Explanation
In the case of Khivraj Chordia vs G Maniklal Bhattad3 Ramamurti J has drawn a very apt and clearcut distiction 1 AIR 1983 Madras 97
2 1980 Law Weekly vol 93 577 3 AIR 1966 Madras 67 675 between a simple default and a wilful default and has pointed out A that in order to be a wilful default  it must be proved that the con duct of the tenant was such as would lead to the inference that his omission was a conscious violation of his obligation to pay the rent
In this connection the learned Judge observed thus The decisions of this court have reportedly pointed B out that there is a clear difference in law between default and wilful default and that non payment of rent within the time specified by the Act though would amount to default cannot by itself be treated as wilful default and that if the rent was paid after the expiry of the time in the following month within a short time thereafter the default cannot be said to be wilful to warrant the punishment of eviction Keeping in mind the main object of the enactment namely prevention of unreasonable eviction of tenants the principle that emerges from the several decisions is that for default to be regarded as wilful default the conduct of the tenant should be such as to lead to the inference that his omission was a conscious violation of his obligation to pay r the rent or reckless indifference
If the default was due to accident or inadvertence or erroneous or false sense of security based upon the conduct of the landlord himself the default cannot be said to be wilful default
 Having therefore enunciated the various principles and tests to be applied by courts in deciding the question of wilful default we now proceed to decide the various appeals filed before us
The brief facts of each appeal have already been narrated in the opening part of our judgment and we would like to sum up our conclusions flowing from the facts found by the High Court in each case
In civil appeal No 1178 of 1984 it would appear that though the tenant had committed a default but he had paid the entire rent well before the filing of the suit by the landlord
In fact the suit for eviction was filed by the landlord not on the ground of pending arrears but to penalise the tenant for having defaulted in the past
Such a suit cannot be entertained because once the entire dues are paid to the landlord the cause of action for filing of a suit completely vanishes
Hence the suit arising out of civil appeal No 1978 of 1984 must be dismissed as being not maintainable and the order of ejectment passed by the High Court is hereby set aside
H 676 In civil appeal No 6211 of 1983 having regard to the tests and the criteria laid down by us there can be no doubt that wilful default in the payment of arrears to the tune of Rs 900 has been proved and as there is nothing to show that the arrears were not paid or withheld due to circumstances beyond the control of the tenant the order of eviction passed by the High Court is confirmed and the appeal is allowed
In civil appeal No 1992 of 1982 a somewhat peculiar position seems to have arisen
It is true that to begin with the tenant did not pay the rent for the months of June 1977 to January 1978 which led the landlord to issue a notice on 16178 demanding payment of arrears amounting to Rs 392
The tenant within 15 days of receipt of the notice on 301783 sent a detailed reply to the landlord and enclosed a Bank Draft of Rs 392 which was however not encashed by the landlord and returned to the tenant after filing of the eviction petition for reasons best known to him
Therefore since the tenant had already complied with the notice within the stipulated time envisaged by the Explanation to Proviso to section 10 2 of the Act by no stretch of imagination could be called guilty of wilful default
On the other hand the conduct of the landlord in filing a suit and not encashing the Bank Draft was motivated with a view to get a decree for eviction on false excuse
Such a state of affairs could not be countenanced by the court
In these circumstances we are of the opinion that the arrears having been paid through the Bank Draft the question of eviction of the tenant did not arise nor did the question of default come into the picture merely because the landlord wanted to harass him by filing an eviction petition
The High Court was therefore clearly in error in passing the decree of ejectment against the tenant
We therefore allow the appeal and set aside the order of the High Court evicting the tenant
In civil appeal No 1659 of 1982 as it was clearly a case of wilful default on the part of the tenant we affirm the order of the High Court evicting the tenant and dismiss the appeal
In civil appeal No 3668 of 1982 some dispute arose between the parties as to whether the rent was to be deposited in Bank resulting in the filing of the present suit for eviction on 1480 in the court of the Rent Controller by the landlord after verifying from the Bank that the tenant had not deposited the rent for the months of January and February 1980
This default in our opinion was undoubtedly deliberate conscious and without any reasonable or rational basis 677 and the High Court was perfectly right in holding that the tenant A was guilty of wilful default and passing a decree for ejectments
As no notice was given by the landlord Explanation to proviso to section 10 2 of the Act does not apply at all
The appeal is accordingly dismissed
In civil appeal No 2246 of 1982 the respondent landladies had let out the premises to the tenant at a monthly rent of Rs 105
A petition for eviction was filed by them on 21176 for non payment of rent by the tenant from January 1976 to September 1976 a period of 9 months
But we might state here that before filing the eviction petition the respondents had issued a notice on 6776 asking the tenant to pay the dues which the tenant paid on 17 776 ie within 10 days of the receipt of the notice which was accepted by the landladies without any prejudice
The Rent Controller held that the default was not wilful as in pursuance of the notice the payment had already been made
The Appellate Authority reversed the finding of the Rent Controller and held that the default was wilful
The High Court in revision upheld the order of eviction O n the ground that there was no satisfactory explanation for non payment of rent for the period January to June 1976
In coming to this finding the High Court was clearly in error because the tenant had already deposited the entire dues including the rent from January to June on 17776
Thus the question of wilful default could not arise nor could it be said that the default was either conscious or deliberate or international
Moreover in view of the Explanation since the tenant had paid the amount within the time of the notice there could be no question of wilful default
This fact seems to have been completely overlooked by the High Court
We therefore allow the appeal and set aside the order of the High Court directing eviction of the tenant
In civil appeal No 4012 of 1982 the tenant occupied the premises at a monthly rent of Rs 325
It appears that the tenant defaulted in payment of tent from June 1976 onwards and after repeated demands only a sum Or Rs 1000 was paid by him on 14 77
leaving a substantial balance of arrears unpaid
The plea of the tenant that he had made payments to the Income Tax Department has not been proved nor did the tenant have any right under the contract to pay any amount to the Income Tax Department and if he did so on his own he must he held responsible for his conduct
Even so the landlord contended that right from February 1977 to July 1978 the appellant was in arrears without any lawful cause
This was therefore a clear case of wilful default where the tenant did not pay the 678 rent deliberately consciously and intentionally
In these circumstances the High Court was fully justified in holding that the default was wilful and affirming the decree passed by the Appellate court
The appeal is accordingly dismissed
The result is that all the appeals are disposed of as indicated above but in the circumstances there will be no order as to costs in any of the appeals
Civil Appeal No 5769 of 1983 already stands disposed of in terms of our Order of September 121984
SABYASACHI MUKHARJI J
With great respect to my learned brothers I regret I am unable to agree on the construction put on the expression wilful default  in the Explanation to the Proviso of sub section 2 of section 10 of the Tamil Nadu Buildings Lease and Rent Control Act 1960
It may be borne in mind that The Tamil Nadu Buildings Lease and Rent Control Act 1960 hereinafter called the Act  was an Act to amend and consolidate the law relating to the regulation of letting of residential and non residential buildings and the control of rents of such buildings and the prevention of unreasonable eviction of tenants therefrom in the State of Tamil Nadu
The Act was from time to time amended and was last amended by Act 1 of 1980
By Act 23 of 1973 an Explanation was added to the Proviso to sub section 2 of section 10 of the Act
Section 10 of the Act deals with the eviction of tenants
In order to appreciate the scheme of the section and the meaning of the expression wilful  introduced by the Explanation to the Proviso of sub section 21 of section 10 we have to examine the provisions of section 10 and the various sub sections of the section
As mentioned hereinbefore section 10 deals with the eviction of tenants and postulates that a tenant shall not be evicted whether in execution of a decree or otherwise except in accordance with the provisions of section 10 or sections 14 to 16
For these appeals we are not concerned with the provisions of sections 14 to 16
The first Proviso to sub section l of section 10 stipulates that the said sections 14 to 16 would not apply to a tenant whose land lord is the Government The second Proviso also provides that if the tenant denies the title of the landlord or claims right of permanent tenancy the Controller shall decide whether the denial or claim is bona fide and if he records a finding to that effect the landlord shall be entitled to sue for eviction of the tenant in a Civil Court and the Court may pass a decree for eviction on any of the grounds 679 mentioned in the said sections notwithstanding that the Court finds that such denial does not involve forfeiture of the lease or that the claim is unfounded
Sub section 2 of section 10 of the Act deals with the procedure which a landlord must follow in order to evict his tenant
It provides that a landlord should apply to the Controller for a direction for eviction if he wants it and if the Controller after giving the tenant a reasonable opportunity of showing cause against the application is satisfied with any of the various conditions which are stipulated in clause i ii iii iv v vi and vii then he shall make an order directing the tenant to put the landlord in possession of the building and if the Controller is not satisfied he shall make an order rejecting the application
The Proviso to sub section 2 of section 10 is as follows Provided that in any case falling under clause i if the Controller is satisfied that the tenant s default to pay or tender rent was not wilful he may notwithstanding any thing contained in section 11 give the tenant a reasonable time not exceeding fifteen days to pay or tender the rent due by him to the landlord up to the date of such payment or tender and on such payment or tender the application shall be rejected
 The Explanation which was added by Act 23 of 1973 to the said Proviso stipulates that for the purpose of this sub section default to pay or tender rent shall be construed as wilful if the default by the tenant in the payment or tender of rent continues after the issue of two months  notice by the landlord claiming the rent
It is this Explanation that falls for consideration in these appeals
Clause i of sub section 2 of section 10 of the Act requires the Controller to be satisfied that the tenant has not paid or tendered rent due by him in respect of the building within fifteen days after the expiry of the time fixed in the agreement of the tenancy with his landlord or in the absence of any such agreement by the last day of the month next following that for which the rent is payable
For the purpose of these appeals it is not necessary to consider the grounds of eviction mentioned in other clauses of sub section 2 of section 10 of the Act
If the Controller is satisfied of any of the grounds mentioned in clause i to clause vii of sub section 2 of section 10 then the shall so the section stipulates make an order directing the tenant to put the landlord in possession of the building and if he is not so satisfied he shall make an order rejecting the application the Proviso provides that in any case falling under clause i which we have noted 680 hereinbefore if the Controller is satisfied that the tenant s default to pay or tender rent was not wilful he may notwithstanding anything contained in section l l give the tenant a reasonable time not exceeding fifteen days to pay or tender the rent due by him to the landlord upto the date such payment or tender and on such payment or tender the application shall be rejected
The Explanation which is the subject matter of interpretation before us and which was added as noted before by Act 23 of 1973 by section 10 stipulates that for the purpose of the said sub section namely sub section 2 of section 10 default to pay or tender rent shall be construed as wilful if the default by the tenant in the payment or tender of rent continues after the issue of two months  notice by the landlord claiming the rent
The question therefore is can the default be construed as wilful under any other circumstances apart from default continuing after the issue of two months  notice by the landlord claiming the rent  In other words for the purpose of this section will the wilful default be only when notice has been given by the landlord and two months have expired and the tenant has not paid the rent  My learned brethren say that there may be other circumstances constituting wilful default
With respect I differ
I will briefly note the reasons
As I read the provision it appears to me that there must be satisfaction of the Controller whether default was wilful and a default will be construed as wilful in my opinion only where the landlord has given notice and two months have expired without payment of such rent
Default has been construed in various ways depending upon the context Default  would seem to embrace every failure to perform part of one s contract or bargain
It is a purely relative term like negligence
See in this connection Stroud s Judicial
Dictionary Vol 1 Third Edition page 757
It means nothing more nothing less than not doing what is reasonable under the circumstances not doing something which you ought to do having regard to the transaction
Similarly default in payment imports some thing wrongful the omission to do some act which as between the parties ought to have been done by one of them
It simply means non payment failure or omission to pay
See Prem s Judicial Dictionary Vol
I 1964 page 483
Earl Jowitt defines default  as omission of that which a man ought to do
See The Dictionary of English Law
page 597
The Privy Council in the case of Fakir Chander Dutt and Others 681 vs Ram Kumar Chatterji1 observed that Default  did not necessarily A mean breach of contractual obligation but simply non payment of rent by a person capable of protecting his tenure by doing so
Default happens in payment of rents under various contingencies and situations
Default is a fact which can be proved by evidence
Whether the default is willful or not is also a question of fact to be proved from evidence direct and circumstantial drawing inferences from certain conduct
If the Courts are free to decide from varying circumstances whether default was wilful or not then divergence of conclusions are likely to arise one judicial authority coming to the conclusion from certain circumstances that the default was wilful another judicial authority coming to a contrary conclusion from more or less same circumstances
That creates anomalies
In order to obviate such anomalies and bring about a uniform standard the explanation as I read explains the expression wilful  and according to the Explanation added a default to pay or tender rent shall be construed as wilful if the default by the tenant in the payment of rent continues after issue of two months  notice by the landlord claiming the rent If that is the position in a case where the landlord has given notice to the tenant claiming the rent and the tenant has not paid the same for two months then the same must be construed as wilful default whatever may be the cause for non payment bereavement on the date of payment in the family of near or dear ones or serious heart attack or other ailment of the tenant or of any person sent by the tenant to pay the rent cannot be excused and cannot be considered to be not wilful because the legislature has chosen to use the expression shall be construed as wilful if after a notice by the landlord for two months failure to pay or tender rent on the part of the tenant continues and if it is wilful then under sub section 2 clause i read p with the proviso as explained by the Explanation the Controller must be satisfied and give an order for eviction
The question is whether in other cases that is to say in cases where admittedly or by other facts or aliunde the Court comes to the conclusion that the default is wilful for instance in a case where there is chronic default regular defaults or habitual defaults the two months  notice is necessary or not
It was the argument on behalf of the respondents that in those circus stances such notice was not necessary and this is the view which has found acceptance by my learned Brethren I am unable to agree 1 Indian Appeals Vol
XXXI p 195
682 with respect
If in cases where there are genuine and bona fide reasons for failure or non payment of rent which cannot be excused after two months  notice to pay rent then other causes which lead to inference of wilful default cannot also be construed as wilful default  in the context of the Explanation
The legislature has provided an absolute and clear definition of wilful default 
Other circumstances cannot be considered as wilful default
In my opinion the expression shall be construed would have the effect of providing a definition of wilful default in the proviso to sub section 2 of section 10
If a definition is provided of an expression then the Courts are not free to construe the expression otherwise unless it is so warranted by the use of the expression such as except otherwise provided or except if the context otherwise indicates
There is no such expression in the instant case
There may be in certain circumstances intrinsic evidence indicating otherwise
Here there is none
The whole scheme of section 10 is that in order to be entitled to eviction on the ground of arrears of rent the ingredients of which the Controller must be satisfied are a default b default was wilful
Whether in a particular case default is wilful or not must be considered in accordance with the definition provided in the Explanation to Proviso to sub section 2 of section 10 of the Act
If it was intended that the Courts would be free to judge whether in a particular set up of facts the default was wilful or not where no notice has been given then in such a case there was no necessity of adding this Explanation to the Proviso which is a step to the making of the findings under clause 1 of sub section 2 of section 10 of the Act
It is well settled that the Legislature does not act without purpose or in futility
lt was contended on behalf of the landlords that the Legislature has not used the expression default to pay or tender rent shall be construed as wilful only if the default by the tenant in the payment or tender of rent continues after the issue of two months  notice by the landlord claiming the rent It is true that legislature has not chosen to use language to indicate that in no other cases the default could be considered to be wilful except one case which has been indicated in the Explanation
683 As I read the Explanation it is not so necessary because Legislature has defined wilful d fault  by the expression that default to pay or tender rent shall be construed  meaning thereby that it will mean only this and no other
My learned brethren have given instances of difficulties and hardships if the other defaults that is to say default apart from tenant not paying after the expiry of notice by the landlord are not considered as wilful default
It is true that there may be hardships and many problems might arise
I share the apprehension of these problems and hardships but I find no justification to read that these hardships of which Legislature must have been aware were also intended to be covered by the Explanation
It appears to me that the meaning is clear about the purpose of introduction of the Explanation ie to obviate the difficulties and divergence of judicial opinions depending upon varying circumstances the legislature has provided a uniform definition to the concept of wilful default 
It is true that where two constructions are possible one which avoids anomalies and creates reasonable results should be preferred but where the language is clear and where there is a purpose that can be understood and appreciated for construing in one particular manner that is to say avoidance of divergence of judicial opinions in construing wilful default and thereby avoiding anomalies for different tenants one judge taking a particular view on the same set of facts another judge taking a different view on the same set of facts in my opinion it would not be proper in such a situation to say that this definition of wilful default was only illustrative and not exhaustive
I cannot construe the expression used in the Explanation to the Proviso to sub section 2 of section 10 as illustrative when the Legislature has chosen to use the expression shall be construed
It has been observed that statutory provisions must be so construed if it is possible that absurdity and mischief may be avoided
Where the plain and literal interpretation of statutory provision proviso produces a manifestly absurd and unjust result the Court might modify the language used by the legislature or even do some violence to it so as to achieve the obvious intention of the legislature and produce rational construction and just results
See vs in this connection the observations in the No 1451 NCE of 1984
Lord Denning in the case of Seaford Court Estates Ltd vs Asherl has observed If the makers of the Act had themselves come across this 1 164CA 684 ruck in the texture of it how would they have straightened i out  He must then do as they would have done A judge must not alter the material of which it is woven but he can and should iron out the creases
 Ironing out the creases is possible but not re writing the language q to serve a notion of public policy held by the judges
Legislature must have legislated for a purpose by Act 23 of 1973 and used the expression shall be construed in Explanation in the manner it did
The fact that in interpreting the statutory language judges should avoid policy as an approach was emphasised by Lord Scarman in the decision of the House of Lords in the case of Regina vs Barnet London Borough Council Exparte Nilish Shahl User of policy in interpretation of statutory language Lord Scarman observed was an impermissible approach to the interpretation of statutory language
Judges should not interpret statutes in the light of their own views as to policy
They may of course adopt a purposive interpretation if they can find in the statute read as a whole or in material to which they are permitted by law to refer as aids to interpretation an expression of Parliament s purpose or policy
In the case of Carrington and Others vs Therm a Stor Ltd2 the Master of the Rolls observed that If regard is had solely to the apparent mischief and the need for a remedy it is only too easy for a judge to persuade himself that Parliament must have intended to provide the remedy which he would himself have decreed if he had legislative power
In fact Parliament may not have taken the same view of what is a mischief may have decided as a matter of policy not to legislate for a legal remedy or may simply have failed to realise that the situation could ever arise
This is not to say that statutes are to be construed in blinkers or with narrow and legalistic literalness but only that effect should given to the intentions of Parliament as expressed in the statute applying the normal canons of construction for resolving ambiguities or any lack or clarity
 1 19832 Weekly Law Reports 16 at 30
2 1983 1 Weekly Law Reports 138 at 142
685 In the aforesaid view of the matter I would construe the expression wilful default  in the Explanation to Proviso to subsection 2 of section 10 of the Act in the manner l have indicated
In that view of the matter I would decide the appeals accordingly that is to say l would agree with my learned brethren in the order passed in those cases where eviction orders have been passed after two months  notice had been given and there was continuance of default by the tenant thereof
Appeals which have been disposed of on the basis of wilful default as understood in the manner indicated in the aforesaid observations of mine I respectfully agree
Appeals which have been disposed of on wilful default other than in the manner I have indicated hereinbefore I respectfully differ
The individual appeals are disposed of accordingly
There will be no order as to costs
MLA Appeals dismissed
741 fair return on the capital employed  which is to be exempted from A tax under sub section 1 of Section 80J the owner s capital alone should be taken into account and borrowed monies should be excluded
Even in regard to the provisions of the above mentioned four statutes an argument could well be advanced that borrowed monies are as much part of capital employed in the undertaking as the owner s capital and when monies are borrowed on payment of interest by way of hire charges they become part of the owner s capital originally brought in by the owner and there is no reason why capital partaking of the samd characteristics as the fair return should not be allowed on it
This has precisely been the argument advanced on behalf of the assesses in support of their contention that capital employed  must include borrowed monies in sub section 1 of Section 80J
But this argument has not prevailed with the Legislature in the enactment of any of the above mentioned four statutes and despite this argument the Legislature has chosen to exclude borrowed monies in computing the capital employed  or the capital of the company for determining what should be regarded as fair return so that profits in excess of such fair return may be subjected to additional tax
The Central Board of Revenue cannot therefore be accused of any irrationality or whimsicality in providing that fair return on the capital employed  eligible for exemption under subsection 1 of Section 80J should be calculated by applying the statutory percentage to the owner s capital that is the paid up share capital and reserves without taking into account long term borrowings or for the matter of that any borrowed monies and debts
We cannot appreciate the contention of Mr Palkhivala that when the Legislature was offering a tax incentive it could not have intended that the tax incentive should be measureable by reference only to the owner s capital and that borrowed capital should b e left out of account because that would in the submission of Mr Palkhivala result in favouring the affluent assessees who are able to employ their own capital and discriminate against the indigent who have to borrow funds to finance their undertakings
Having regard to the legislative practice and usage referred to by us it is obvious that if the Legislature intended that the capital employed  must include long term borrowings the Legislature would not have used the flexible expression capital employed  but would have expressed itself unambiguously by providing that the capital employed  shall include long term borrowings
It is clear from the language used by the section that the Legislature proceeded on the basis that the expression capital employed  has no fixed definite meaning including or excluding long term borrowings and deliberately chose to leave it to the Central Board of Revenue to prescribe 742 how the capital employed  shall be computed or in other words what items shall be included and what items excluded in computing the capital employed  and by incorporating Rule 19A with retrospective effect in Section 80J by the Finance No  the Legislature clearly expressed its aproval of the manner of computation of the capital employed  prescribed by the Central Board of Revenue by making sub rule 3 of Rule 19A
The consequence of this interpretation would undoubtedly be that the assessees would get relief only with reference to their own capital and not with reference to any monies which might have been borrowed by them for employment in the undertaking but that is a matter of policy which clearly falls within the province of the Executive and the Courts are not concerned with it
It is obvious that the Central Board of Revenue intended and having regard to the retrospective amendment of Section 80J by Finance Act No 2 of l980 that must also be taken to be the intention of the legislature that the assessees should be given relief only with reference to their own capital and not with reference to any borrowed monies presumably because the object of giving relief was to encourage assessees to bring out their own monies for starting new industrial undertakings and the intention was not that the assessees should be given relief with reference to monies which did not belong to them but which were borrowed from financial institutions and other parties and which would have to be repaid
Mr Palkhivala then contended that if sub section 1 of Section 80J were construed as leaving it to the Central Board of Revenue to prescribe what items shall be included and what items excluded in computation of the capital employed  it would be vulnerable to attack on the ground of excessive delegation of legislative power and would consequently be void
We do not think there is any substance in this contention for there is in the present case no question of excessive delegation of legislative power
The essential legislative policy of allowing relief to an assessee who starts a new industrial undertaking or business of a hotel and declaring the period for which such relief shall be granted is laid down by the Legislature itself in the various sub sections of Section 80J and all that is left to the Central Board of Revenue to prescribe is the manner of computation of the capital employed  with reference to which the quantum of the relief is to be calculated
It is only the details relating to the working of the exempting provision contained in Section 80J which are left by the Legislature to be determined by the Central Board of Revenue
This 743 is clearly permissible without offending the inhibition against excessive delegation of legislative power
It must be remembered that Section 80J enacts an exemption in a taxing statute and a certain margin of latitude is always allowed to the Executive in working out the details of exemption in a such taxing statute
It was laid down by this Court as far as back as 1959 in Pt
Banaarsi Dass Bhanol vs State of Madhy a Pradeshl
Now the authorities are clear that it is not unconstitutional for the legislature to leave it to the executive to determine details relating to the working of taxation laws such as the selection of persons on whom the tax is to be laid the rates at which it is to be charged in respect of different classes of goods and the like So also in Sitaram Bishambardas and Ors
vs State of UP and OrsZ this Court upheld the validity of Section 3D 1 of the UP Sales Tax Act 1948 which authorised the levy of a tax on the turnover of first purchases made by dealer or through a deal r acting as a purchasing agent in respect of such goods or class of goods and at such rates subject to a maximum as may from time to time be notified by the State Government and Hegde J speaking on behalf of the Court observed E It is true that the power to fix the rate of a tax is a legislative power but if the legislature lays down the legislative policy and provides the necessary guidelines that power can be delegated to the executive
Though a tax is levied primarily for the purpose of gathering revenue in selecting the objects to be taxed and in determining the rate of tax various economic and social aspects such as the availability of the goods administrative convenience the extent of evasion the impact of tax levied on the various sections of the society etc have to be considered
In a modern society taxation is an instrument of planning
It can be used to achieve the economic and social goals of the State For that reason the power to tax must be a flexible power
It must be capable of being modulated to meet the exigencies of the situation
In a Cabinet form of Government the executive 1  2  H 744 is expected to reflect the views of the legislatures
In fact in most matters it gives the lead to the legislature
However much one might deplore the New Depotism of the executive the very complexity of the modern society and the demand it makes on its Government have set in motion forces which ha e made it absolutely necessary for the legislatures to entrust more and more powers to the Executive
Text book doctrines evolved in the 1 9th century have become out of date
Present position as regards delegation of legislative power may not be ideal but in the absence of any better alternative there is no escape from it
The legislatures have neither the time nor the required detailed information nor even the mobility to deal in detail with the innumerable problems arising time and again
In certain matters they can only lay down the policy and guidelines in as clear a manner as possible
 The validity of Section 3D of the UP Sales Tax Act 1948 was again challenged before this Court in Hiralal Ratan Lal vs State of UP and Anr 1 the same ground that it suffered from the vice of legislative power and again the challenge was negatived by this Court with the following observations The only remaining contention is that the delegation made to the executive under section 3D is an excessive delegation
It is true that the legislature cannot delegate its legislative function to any other body
But subject to that qualification it is permissible for the legislature to delegate the power to select the persons on whom the tax is to be levied or the goods or the transactions on which the tax is to be levied
In the Act under section 3 the legislature has sought to impose multi point tax on all sales and purchases
After having done that it has given power to the executive a high authority and which is presumed to command the majority support in the legislature to select for special treatment dealings in certain class of goods
In the very nature of things it is impossible for the legislature to ennumerate goods
dealings in which Sales
Tax or Purchase tax should be imposed
It is also impossible for the legislature to select the goods which should be subjected to 1  745 a single point sales or purchase tax
Before making such selections several aspects such as the impact of the levy on the society economic consequences and the administrative convenience will have to be considered
These factors may change from time to time
Hence in the very nature of things these details have got to be left to the executive
 The principles laid down in these observations from the decided cases clearly govern the present case and conclusively repel the contention or Mr Palkhivala that if sub section 1 of Section 80J were construed in the manner suggested by the learned Attorney General on behalf of the Revenue it would be rendered void on the ground of excessive delegation of legislative power
the Legislature having laid down the legislative policy of giving relief to an assessee who is starting a new industrial undertaking or the business of a hotel
had necessarily to leave it to the Central Board of Revenue to determine what should be the amount of capital employed that should be required to be taken into that account for the purpose of determining the quantum of the relief allowable under the Section
What should be the quantum of the relief allowable to the assessee would necessarily depend upon diverse tactors such as the impact of relief on the industry as a whole the response of the industry to the grant of the relief the adequacy or inadequacy of the relief granted in promoting the growth of new industrial undertakings the state of the economy prevailing at the time whether it is buoyant or depressed and administrative convenience
These are factors which may change from time to time and hence in the very nature of thin as the working out of the mode of computation of the capital employed  for the purpose of determining the quantum of the relief must necessarily be left to the Central Board of Revenue which would be best in a position to consider what should be the quantum of the relief necessary to be given by way of tax incentive in order to promote setting up of new industrial undertakings and hotels and for that purpose what amount of the capital employed  should form the basis for computation of such relief
Moreover it may be noticed that under Section 29 of the Income Tax 1961 every Rule made under the Act is required to be laid before each House of Parliament so that both Houses of Parliament have an opportunity of knowing what the rule is and considering whether any modification should be made in the rule or the rule should not be made or issued and if both Houses agree in making any modification in the rule or both Houses agree that the H 746 Rule should not be made or issued then the Rule would thereafter have effect only in such modified form or have no effect at all
as the case may be
Parliament has thus not parted with its control over the rule making authority and it exercises strict vigilance and control over the rule making power exercised by the Central Board of Revenue
This is a strong circumstance which militates against the argument based on excessive delegation of legislative power
This view receives considerable support from the decision of the Privy Council in Powell vs
Appollo Company Limited1 where the Judicial Committee while negativing the challenge to the constitutionality of Section 133 of the Customs Regulation Act of 1879 which conferred power on the Governor to impose tax on certain articles of import observed as follows It is argued that the tax in question has been imposed by the Governor and not by the Legislature who alone had power to impose it
But the duties levied under the Order in V Council are really levied by the authority of the Act under which the Order is issued
The Legislature has not parted with its perfect control over the Governor and has the power of course at any moment of withdrawing or altering the power which they have entrusted to him
In these circumstances their Lordships are of opinion that the judgment Of the Supreme Court was wrong in declaring Section 133 of the Customs Regulation Act of 1879 to be beyond the power of the Legislature
The same approach was adopted by this Court in D section Grewal vs State of Punjab2 where upholding the validity of Section 3 of the All India Services Act 1951 which was challenged on the ground of excessive delegation of legislative power Wanchoo J speaking on behalf of the Court said Further by section 3 the Central Government was given the power to frame rules in future which may have the effect of adding to altering varying or amending the rules accepted under s4 as binding
Seeing that the rules would govern the all lndia services common to the Central Government and the State Government provision was made by s3 that rules should be framed only after consulting the State 11188510 AC 282
211959 Supp 1 SCR 792
747 Governments
At the same time Parliament took care to A see that these rules were laid on the table of Parliament for fourteen days before they were to come into force and they were subject to modification whether by way of repeal or amendment on a motion made by Parliament during the session in which they are so laid
This makes it perfectly clear that Parliament has in no way abdicated its authority but is keeping strict vigilance and control over its delegate
It will thus be seen that there is no question of excessive delegation of legislative power in the present case and even on the view as to interpretation taken by us sub section 1 of Section 80J cannot be assailed as unconstitutional on the ground of excessive delegation of legislative power
We must therefore hold that subrule 3 of Rule 19A in so far as it provided for exclusion of borrowed monies and debts and particularly long term borrowings in computation of the capital employed  could not be said to be outside the rule making authority conferred on the Central Board of Revenue under sub section 1 of Section 80J and was a perfectly valid piece of subordinate legislation
That takes us to the second point urged by Mr Palkhivala relating to the dimension of time in regard to the expression capital employed 
The argument of Mr Palkhivala was that the concept of capital employed  in respect of the previous year is a concept which compels attention to the reality of the capital used during the whole year and not merely on the first day of the computation period and therefore Rule 19A in so far as it provided for computation of the capital employed  as on the first day of the computation period was ultra vires the rule making authority of the Central Board of Revenue under sub section 1 of Section
80J This argument of Mr Palkhivala is also unsustainable and must be rejected
It may be noted that when sub section 1 of Section 80J speaks of capital employed  in an industrial undertaking or business of a hotel it does not refer to capital employed  during the previous year but it uses the expression capital employed  in respect of the previous year There is a vital difference between the expression during the previous year and the expression In connection with the previous year
The argument of Mr Palkhivala would have had great force if the reference in sub section 1 of Section 80J would have been to capital employed  during the previous year Then it could have been contended with considerable plausibility that the capital employed  11 748 cannot be computed as on the first day of the previous year but it should be taken to be the average amount of capital employed  during the previous year
But the expression used by the Legislature in sub section 1 of Section 80J being capital employed computed in the prescribed manner in respect of the previous year the computation has to be in respect of the previous year and it need not take into account the average amount of capital employed  during the previous year but it can legitimately take the first day of the previous year as the point of time at which the capital employed  must be computed
The capital employed  so computed would clearly fall within the expression capital employed computed in the prescribed manner in respect of the previous year
Mr Palkhivala relied on the description given in the parenthetical portion at the end of sub section 1 of Section 80J which describes the amount calculated by applying the statutory rate of six per cent to the capital employed  computed in the prescribed manner in respect of the previous year as the relevant amount of capital employed during the previous year but that is merely a description given to the amount calculated as provided in the main part of sub section 1 of Section 80J and in the main part we find the words in respect of the previous year and not during the previous year
It may be pointed out that the words in respect of the previous year were introduced for the first time when Section 80J came to be enacted as a result of the Report of Shri section Boothalingam where he recommended that the prevailing base for the calculation of profits nemely average capital employed  in the business during each year was complicated and difficult to establish and it was therefore desirable to adopt the basis of computation of the capital employed  as at the beginning of the year but ignoring the fresh introduction of capital in the course of the year
It was following upon the introduction of the words in respect of the previous year in subsection 1 of Section 80J that Rule l9A was made providing for computation of the capital employed  as on the first day of the computation period
Moreover if we refer to the definition of statutory deduction  in sub section 8 of Section  and Rule I of the Second Schedule of the  it would be apparent that
according to the Legislature the process of computation of the capital of the company includes also the specification of the point of time as on which the capital of the company shall be computed
Therefore even if the words in respect of the previous year were absent it would have been competent to the Central Board of Revenue as the rule making authority to provide for the computation of the capital employed as on the 749 first day of the computation period as was done by the Legislature in the case of the 
The words in respect of the previous year are facilitative of the computation of the capital employed  being prescribed as on the first day of the computation period
We cannot therefore accept the contention of Mr Palkhivala that Rule l9A in so far as it provided for computation of the capital employed  as on the first day of the computation period was outside the rule making authority of the Central Board of Revenue under sub section 1 of Section 80J
We are therefore of the view that Rule 19A in so far as it excluded borrowed monies and debts in computation of the capital employed  and provided for computation of the capital employed  as on the first day of the computation period was not ultra vires Section 80J and was a perfectly valid rule within the rule making authority conferred upon the Central Board of Revenue
So also for the same reasons Rule 9A in so far as it provided that the capital employed  in a ship shall be taken to be the written down value of the ship as reduced by the aggregate of the amounts owed by the assessee as on the computation date on account of monies borrowed or debts incurred in acquiring that ship must be held to be valid as being within the rule making authority of the Central Board of Revenue
Since on the view taken by us Rule 19A did not suffer from any infirmity and was valid in its entirety Finance Act No2 of 1980 in so far as it amended Section 80J by incorporating Rule l9A in the Section with retrospective effect from 1st April 1972 was merely clarificatory in nature and must accordingly be held to be valid
F The writ petitions will therefore stand dismissed but having regard to the importance of the questions involved in the writ petitions we think it would be fair and just to direct each party to bear its own costs of the writ petitions
AN SEN J I have had the benefit of reading the judgment prepared by my learned brother Bhagwati J
I regret I cannot pursuade myself to agree
The material facts have been fully stated in the judgment of my learned brother
My learned brother in his judgment has set out all the relevant provisions of the Income Tax Act and the Income Tax Rules
He has also traced the legislative history of S80J of the 750 Income Tax Act 1961 and has noted the various amendments effected to that section from time to time
It does not therefore become necessary to reproduce the same at any length in my judgment
The two questions which fall for determination are  1 Whether rule 19A of the Income Tax Act Rules insofar as the said rule excludes borrowed capital and fixes the first day of the year in the matter of computation of capital employed for the purpose of relief under section 80J is valid
2 Whether the amendment introduced in section 80J by the Finance No2 Act of 1980 incorporating in the section the provisions of the rule in relation to the exclusion of borrowed capital and the fixing of the first day of the year for the purpose of computation of the capital employed for granting relief under section 80J with retrospective affect from 1st April 1972 is valid  The material provisions Of Rule 19A read as follows 1 For the purposes of section 80J the capital employed in an industrial undertaking or the business of a hotel shall be computed in accordance with sub rules 2 to 4 and the capital employed in a ship shall be computed in accordance with sub rule 5
2 The aggregate of the amounts representing the values of the assets as on the first day of the computation period of the undertaking or of the business of the hotel to which the said section 80J applies shall first be ascertained in the following manner i in the case of assets entitled to depreciation their written down value ii in the case of assets acquired by purchase and not entitled to depreciation their actual cost to the assessee iii in the Case of assets acquired other wise then by purchase and not entitled to depreciation the value of the assets when they became assets of the business 751 iv in the case of assets being debts due to the person carrying on the business the nominal amount of those debts v in the case of assets being cash in hand or bank the amount thereof
Explanation 1 In this rule Computation period means the period for which profits and gains of the industrial undertaking or business of the hotel are computed under sections 28 to 43A Explanation 2 The value of any building machinery or plant or any part there of as is referred to in cl
a or clause b of the explanation at the end of sub section 6 of section 80J shall not be taken into n account in computing the capital employed in the industrial undertaking or as the case may be the business of the hotel
Explanation 3 Where the cost of asset has been satisfied other wise than in cash the then value of the consideration actually given for the asset shall be treated as the actual cost of the asset
3 From the aggregate of the amount as ascertained under sub rule 2 shall be deducted the aggregate of the amounts as on the first day of the computation period of borrowed moneys and debts due by the assessee including amount due towards any liability in respect of tax  Rule l9A forms a part of the Income Tax Rules 1962 which have been framed by virtue of the authority conferred under section 295 of the Income tax Act 1961
Section 295 lays down 1 The Board may subject to the control of the Central Government by notification in the Gazette of India make rules for the whole or any part of India for carrying out the purposes of this Act 752 2 In particular and without prejudice to the generality of the foregoing power such rules may provide for all or any of the following matters xxx x It may be noted that the matters mentioned in sub section 2 do not refer to section 80J of the Act The relevant provisions of section 80J as it stood prior to the impugned amendment by the Finance Act 2 of 1980 material for the purpose of the present proceedings may be set out 1
Where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking or a ship or the business of a hotel to which this section applies there shall in accordance with and subject to the provisions of this section be allowed in computing the total income of the assessee a deduction from such profits and gains reduced by the aggregate of the deductions if any
admissible to the assessee under section 80H and section 80HH of so much of the amount thereof as does not exceed the amount calculated at the rate of six per cent per annum on the capital employed in the industrial undertaking or ship or business of the hotel as the case may be computed in the prescribed manner in respect of the previous year relevant to the assessment year the amount calculated as aforesaid being hereafter in this section referred to as the relevant amount of capital employed during the previous year 2 The deduction specified in sub section 1 shall be allowed in computing the total income in respect of the assessment year relevant to the previous year in which the industrial undertaking begins to manufacture or produce articles or to operate its cold storage plant or plants or the ship is first brought into use or the business of the hotel starts functioning such assessment year being hereafter in this section referred to as the initial assessment year and each of the four assessment years immediately succeeding the initial assessment year
x x x 4 This section applies to any industrial undertaking which fulfills all the following conditions namely 753 i it is not formed by the splitting up or the reconstruction of a business already in existence ii it is not formed by the transfer to a new business of machinery or plant previously used for any purpose B iii it manufactures or produced articles or operates one or more cold storage plant or plants
in any part of India and has begun or begins to manufacture or produce articles or to operate such plant or plants at any time within the period of thirty three years next following the 1st day of April 1948 or such further period as the Central Government may by notification in the official Gazette specify with reference to any particular industrial undertaking D iv in a case where the industrial undertaking manufactures or produces articles the undertaking employs ten or more workers in a manufacturing process carried on with the aid of power or employs twenty or more workers in a manufacturing process carried on without the aid of power E Provided that the condition in clause i shall not apply in respect of any industrial undertaking which is formed as a result of the re establishment reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in section 33B in the circumstances and within the period specified in that section Provided further that where any building or any part thereof previously used for any purpose is transferred to the business of the industrial undertaking the value of the building or part so transferred shall not be taken in to account in computing the capital employed in the industrial undertaking Provided also that in the case of an industrial undertaking which manufactures or produces any articles specified in the list in the Eleventh Schedule the provisions of clause iii shall have effect as if for the words thirty three years  the word thirty one years  had been substituted
 11 754 I propose to take up first the question of the validity of the Rule
I consider this will be the proper course to adopt lf the Rule is held to be valid the question of the amendment with retrospective effect may not require any consideration at all
If on the other hand the Rule is held to be invalid the question of the validity of the amendment assumes vital importance
The invalidity of the Rule on the basis of the arguments advanced may also have a bearing in deciding the validity or otherwise of the amendment
The rule must be held to be valid if the rule is found to be in conformity with and consistent with the section If however the rule is found to be inconsistent with and contrary to the provisions of the section the rule has to be pronounced invalid
Whether the rule is in conformity with and is consistent with the section or whether the rule is inconsistent with and contrary to the provisions of the section must necessarily be determined on a proper interpretation of the section
Principles of construction of any statute or any statutory provision are well settled
The purpose of interpretation of any statute is to gather the true intention of the Legislature
It is well settled that if the words of a statue are clear and unambiguous they themselves indicate what must be taken to have been the intention of Parliament and there is no need to look elsewhere to discover their intention or their meaning
See Halsbury s Laws of England 4th Edn
44 at P 522
When the words of a statue are clear plain or unambiguous it becomes the duty of the Court to expound those words in their natural and ordinary sense as the words used themselves best declare the intent of the Legislature If on a fair reading of a section the words used appear to be plain and unambiguous and are reasonably susceptible to one meaning only Courts must give effect to that meaning unless such a meaning makes a non sense of the section or leads to absurdity
The Court is not concerned with the policy involved or with the results injurious or otherwise which may follow from giving effect to the language 0 used
In Emperor vs Banoari Lal Sarmal Viscount Simon LC Observed at P55 Again and again this Board has insisted that in enacted words we are not concerned with the policy involved 1 AIR 1945 PC48
755 construing or with the results injurious or otherwise which A may follow from giving effect to the language used
In Kanti Lal Sur vs Paramnidhi Sadhukhanl this Court at P 910 held lf the words used are capable of one construction only then it would not be open to the Courts to adopt any other hypothetical construction on the ground that such hypothetical construction is more consistent with the alleged object and policy of the Act
If however the words of a statute are not clear and are ambiguous different considerations may apply in interpreting the provisions for gathering the true intention of the law giver
It is stated in Halsbury s Laws of England 4th Edn
44 in para 858 at P 523 as follows If the words of a statute are ambiguous the intention of Parliament must be sought first in the statute itself then in other legislation and contemperaneous circumstances and finally in the general rules laid down long ago and often approved namely by ascertaining 1what was the common law before the making of the Act 2 what was the mischief and defect for which the common law did not provide 3 what remedy Parliament resolved and appointed to cure the disease of the commonwealth and 4 the true reason of the remedy
As on a fair reading of section 80J I am satisfied that the section is sufficiently clear and the language used therein suffers from no ambiguity it does not become necessary for me in the instant case to consider at length the principles of interpretation which are required to be observed in construing an ambiguous statute
The material provisions of section 80J of the Income tax Act prior to the impugned amendment by the Finance Act 1980 have been earlier set out
The relevant provisions of the said section provide that where the gross total income of an assessee includes profits and gains derived from an industrial undertaking or ship or the business of a hotel to which the section applies there shall in accordance with and subject to the provisions of the section be allowed in 1 Al
R H 756 computing total income of the assessee a deduction from such profits and gains reduced by the deduction if any admissible to the assessee under section 80HH or section 80HHA of so much of the amount thereof as does not exceed an amount calculated  6  per annum on the capital employed in the industrial undertaking or ship or business of the hotel as the case may be computed in the manner prescribed in respect of the previous year relevant to the assessment year the amount calculated aforesaid being hereinafter in this connection referred to as the relevant amount of capital employed during the previous year For qualifying for relief under this section an assessee must derive profits and gains from an industrial undertaking or ship or the business of a hotel to which the section must be applicable
It is not in dispute that the assessees who have approached the Court have derived profits and gains from industrial undertaking set up by them and they qualify for relief under this section
A plain reading of the section with reference to the language used therein clearly postulates that relief as contemplated in the section is to be allowed on the capital employed in the undertaking in the previous year producing the profits and gains of the under taking in the previous year
An undertaking might have had capital which might not have been employed in the undertaking in previous year for earning profits and gains which were earned in the previous year
Such capital though forming part of the capital of the undertaking will not be entitled to the benefit of the relief under this section
Relief is contemplated only on the capital which was employed in the undertaking in the previous year and which produced the previous year the profits and gains of the undertaking which were included in the total income of the assessee in the previous year
Relief under this section for the undertaking is clearly intended on the capital employed in the undertaking which produced the profits and gains of the undertaking in the previous year
This intention is made manifestly clear as relief has to be granted on the basis of the profits and gains earned by the undertaking in the previous year by virtue of employment of capital in the undertaking in the previous year
The capital employed in the undertaking which qualifies for relief under this Section clearly refers to and must necessarily be the capital employed in the undertaking in the previous year for the purpose of earning the profits
If the capital employed in the undertaking is own capital such capital qualifies for relief
If capital employed is borrowed capita such capital will equally 757 qualify for relief
If capital employed consists of assessee s own capital and also his borrowed capital the capital so employed assessee s own and borrowed will both qualify for the relief
The capital employed in the undertaking in the previous year which qualifies for relief under this section has to be computed in the manner prescribed
There is nothing in the section to suggest or indicate that in prescribing the manner of computation of the capital employed in the undertaking for the purpose of relief any part of the capital which was employed in the undertaking for producing the profits and gains can be excluded
If the Legislature had any such intention for excluding any part of the capital employed in the undertaking producing profits and gains of the undertaking the Legislature would have and could have easily made suitable provisions
The Legislature must be presumed to have known that the capital employed in an undertaking may consist of and in fact does consist of assessee s own capital and also capital borrowed by the assessee
It is common knowledge that most of the undertakings carry on their activities with borrowed capital in addition to own capital employed in the undertakings
Inspite of the knowledge of the Legislature that undertakings are carried on with borrowed capital the Legislature in its wisdom has in this section mentioned capital employed in the undertaking for earning profits and gains of the undertaking without making any distinction between own capital and borrowed capital and has provided for relief in respect of the capital employed in the undertaking on the basis of profits and gains of the undertaking earned by virtue of employment of such capital
It is not disputed and cannot be disputed that profits and gains of the undertaking to be ultimately included in the total income of the assessee are produced by the capital whether assessee s own or borrowed employed in the undertaking in the relevant year and while computing profits and gains of the undertaking the borrowed capital is as important as the assessee s own capital and both play the same role in earning the profits and gains of the undertaking
It is the capital employed in the undertaking which qualifies for relief under this section
irrespective of the nature and source of the capital employed in the undertaking
It is however to be emphasised hat the capital to qualify for relief under this section whether borrowed or own must be employed in the undertaking in the previous year for earning profits and gains and any capital of the undertaking borrowed or assessee s own which remains idle and is not employed in the undertaking for earning profits and gains dose not qualify for any relief under this section  H 758 Sub section 4 of section 80J lays down the conditions which have to be fulfilled by an undertaking to qualify for the relief granted under this section
Even in this sub section there is no indication that any undertaking set up with borrowed capital or with capital part of which may be borrowed will not be entitled to the benefits n of this section
An industrial undertaking which satisfies all the conditions laid down in sub section 4 will undoubtedly be entitled to the benefits of section 80J
An undertaking with borrowed capital can also very well satisfy the conditions of sub section 4 and qualify for the relief as there is nothing in this sub section which prevents an undertaking set up with wholly or partly borrowed capital from fulfilling the conditions laid down in the sub section 4
An undertaking satisfying all the conditions in sub section 4 and there by qualifying for relief if however set up with borrowed capital will be denied the relief to which the undertaking in terms of the clear provisions of the section is justly entitled merely on the ground that the rule prescribed for computing the relief excludes the borrowed  capital in the computation of the capital employed for the purpose of granting the relief under this section
In other words an industrial undertaking qualifying for the relief under section 80J by virtue of the clear and unambiguous provisions made in the section will be denied the relief because of the rule as on computation on the basis of the rule excluding borrowed capital no relief will be available
As the sub section in clear and unequivocal terms provides that section 80J will apply to such an undertaking the benefit intended to be given to the undertaking under this section cannot be denied to such an undertaking by any rule which will clearly have the effect of negativing the clear and unambiguous statutory provisions
The argument of Mr Palkhivala that the expression capital employed  is a term of art and is usually understood in business parlance and commercial circles and also in commercial accountancy in the sense that it includes not only owner s capital but also borrowed capital particularly if the borrowing is on a long term basis to my mind has considerable force
It may be true that in different context and particularly in the context of return of capital capital employed may not include borrowed capital
Unless the content otherwise requires and except in the case of return of capital the expression capital employed  in its ordinary sense is understood to include borrowed capital
It refers to the capital whatever may be the source which is employed in any undertaking or venture for carrying on the business for the purpose of earning the profits and gains
759 In the instant case the words capital employed have to be A understood and interpreted in the context the said words have been used in section 80J
It is quite clear from the text of the section that the words capital employed have been used in the context of the capital which has been employed in the under taking for producing profits and gains of the undertaking in the relevant year
If borrowed capital is also employed in the undertaking capital employed necessarily and clearly includes such borrowed capital which has teen employed in the undertaking and which has contributed to the profits and gains of the undertaking
To my mind therefore on a proper interpretation section 80J is clear language postulates that capital employed in the undertaking includes own capital and also borrowed capital employed in the undertaking in the relevant year and the section plainly and unequivocally makes this intention of the Parliament manifestly clear
As the Section is clear and unambiguous it is indeed not proper and necessary to refer to any other consideration for its construction
It may however be pointed out that this interpretation not only makes perfect sense but also clearly promotes the object for which this section was incorporated
To my mind the object of section 80J which indeed replaces the earlier section 84 which came in place of section 15C of the earlier Income Tax Act is to give impetus and encouragement to the setting up of new industrial undertaking by offering tax incentives or tax reliefs
The object clearly is to encourage persons to set up new industrial undertakings for rapid industrialisation of the country by offering incentives in respect of undertakings covered by this section by way of grant of tax relief on the capital employed in such undertakings
In the case of Textile Machinery Corporation vs Commissioner of Income tax West Bengal1 this Court while considering the object of a similar provision in section 1 5C observed at page 202 The principal object of section 15C is to encourage setting up of new industrial undertaking by offering tax incentives within a period of 13 years from April 1 1948
Section 1 5C provides for a fractional exemption from tax of profits of a newly established undertaking for five assessment years as specified there in
This section was inserted in the Act in 1949 by section 13 of the Taxation Laws Extension to 1 760 Merged States and Amendment Act 1949 Act 67 of 919 extending the benefit to the actual manufacture or production of articles commencing from a prior date namely April 1 1948
After the country had gained independence in 1947 it was most essential to give fillip to trade and industry from all quarters
That seems to be the background for insertion of section 15C
It is also significant that the limit of the number of years for the purpose of claiming exemption has been progressively raised from the initial 3 years in 1949 to 6 years in 1953
7 years in 1951 13 years in 1956 and 18 years in 1968
The incentive introduced in 1949 has been thus stopped up ever since and the only object is that which we have already mentioned
 In the case of Rajapopalayan Mills Ltd vs Commissioner of Income Tax Madras1 this Court had also held at page 783 The law of income tax in a modern society is intended to achieve various social and economic objectives
It is often used as an instrument for accelerating economic growth and development
section 15C is a provision introduced in the 
Indian IT Act 192 with a view to carrying out this objective and it is calculated to encourage setting up of new industrial undertakings in the country
 The rapid industrialisation of the country for economic growth in the larger interests of the country is the main object of this section which seeks to afford an incentive or tax relief to new industrial undertakings which satisfy the requirements of the section
To my mind the argument of the learned Attorney General that the provision contained in the Section requiring the capital employed to be computed in the manner prescribed  authorises the rule making authority to include or to exclude borrowed capital at its discretion by making appropriate provision in the rules as to exclusion of a part of the capital employed for computation of capital employed for the purpose of granting relief under the section is clearly untenable
The section only enjoins that capital employed is to be computed in the manner to be prescribed and the 1 761 manner of computation of the capital employed only authorises A the rule making authority to deal with the details regarding computation of capital employed for carrying out the provisions of the section and the provision regarding the manner of computation does not empower or authorise the rule making authority to lay down which part of the capital employed or how much of it will have to be included or excluded and to what extent if any The question whether there should be any such exclusion or inclusion in the matter of consideration of the grant of relief is essentially a matter of policy for the Legislature to decide and is not a matter for the rule making authority to prescribe
The power of the rule making authority in terms of the provision contained in section 295 of the Income tax Act which confers such power is limited to the framing of rules for carrying out the purposes of the Act
The rule making authority is not competent to prescribe any rule which will be in the nature of a substantive provision of the Act itself and more particularly which will be in conflict with the substantive provision of the section itself and which will in any way defeat or frustrate the purpose for which any provision in the Act has been enacted
In the instant case I am clearly of the opinion on a construction of section 80J that the said section unequivocally and in clear terms provides that capital employed for earning the profits of the undertaking is the capital which is entitled to the benefit of the relief
The exclusion of borrowed capital by the rule making authority in the rules prescribed for computation of the relief under section 80J is inconsistent with and derogatory to the provisions of the statute
The said rule not only fails to carry out the purpose of the said section but in fact tends to defeat the same and the rule runs clearly contrary to the provisions of the statute
The rule excluding borrowed capital must therefore be held to be bad and invalid
The argument of Mr Palkhivala that any such rule framed by the rule making authority including or excluding any part of the capital employed in the undertaking in the absence of any guideline will also be clearly beyond the power of the rule making authority to my mind
is sound
In the section itself or in any other provision of the Act it does not appear that there is any provision laying down any guideline which may entitle the rule making authority to exclude any part of the capital employed whether it is borrowed capital or own capital
No such provision or guideline is there in the Act
To my mind there could not possibly be any such provision or guideline in the Act as the section itself clearly provides that the entire amount of capital employed for earning the profits will qualify for 762 the relief
If it be held that the rule making authority enjoys and such power of excluding any part of the capital employed in the undertaking because of the provision in the section regarding computation of capital employed in the manner prescribed it must necessarily be held that the rule making authority enjoys the power of framing a rule contrary to the provision of the section
It must further be held that the rule making authority at its discretion enjoys the power to exclude the whole or part of owner s capital and also the whole or part of the borrowed capital
this interpretation will mean that interpretation the power will be available with the rule making authority which at its discretion and in the absence of any guideline will be entitled to exclude any or every part of the capital employed even to an extent of rendering the section itself nugatory
This interpretation will have the effect of justifying a delegation of power to the rule making authority to an extent which cannot be permitted
l have no hesitation in coming to the conclusion that the rule making authority does not enjoy any such power or jurisdiction
No such power or jurisdiction in the absence of specific provision and clear guideline in the Act could be delegated to the rule making authority
In the case of Sales Tax Officer vs KS
Abrahaml this Court had the occasion to construe the meaning of the phrase in the prescribed manner occurring in section 84 of the Central Sales Tax Act 1956
In dealing with the vires of rule 6 of the Central Sales Tax Kerela Rules 1967 in so far as the said rule purported to prescribe a time limit within which  the declaration was to be filed by the registered dealer this Court held In our opinion the phrase in the prescribed manner  occurring in section 8 4 of the Act only confers power on the rule making authority to prescribe a rule stating what particulars are to be mentioned in the prescribed form the nature and value of the goods sold the parties to whom they are sold and to which authority the form is to be furnished
But the phrase in the prescribed manner  in section 8 4 does not take in the time element
In other words the section does not authorise the rule making authority to prescribe a time limit within which the declaration is to be filed by the registered dealer
The view that we have taken is supported by the language of section 13 4 g of the Act 1  763 which states that the State Government may make rules for the time within which the manner in which and the authorities to whom any change in the ownership of any business or in the name place or nature of any business carried on by any dealer shall be furnished  This makes it clear that the Legislature was conscious of the fact that the expression in the manner  would denote only the mode in which an act was to be done and if any time limit was to be prescribed for the doing of the act specific words such as the time within which  were also necessary to be put in the statue
The Privy Council in the case of Utah Construction  Engineering Pvt Ltd and Anr
vs Patakyl observed at pages 653 654 Their lordships now pass to section 22 2 g iv and v
Sub paragraph iv empowers the Governor to make regulations relating to the manner of carrying out excavation work 
The relevant portion of reg
9X provides Every drive and tunnel shall be securely protected and made safe for persons employed therein 
The expression manner of carrying out  the work plainly envisages a system of working and does not in their lordships view justify a regulation imposing an absolute duty of protecting the drive and tunnel or an absolute duty of ensuring the safety of persons employed in the drive or tunnal
The relevant portion of reg 98 does not prescribe the manner of doing the work
Sub paragraph iv therefore cannot in their lordships opinion empower the making of the relevant portion of reg 98  F The proposition that the rule making authority does not have any power to encroach upon any substantive provision in the statute appears to be beyond dispute
By virtue of S 295 1 of the Income tax Act the rule making authority is empowered to make rules for carrying out the purposes of the Act and sub section 2 which specifically refers that such rules may provide for all or any of the matters mentioned in the said subsection does not make any reference to section 80J
In prescribing the manner of computation of capital employed the rule making authority in the absence of specific provision in the section itself or in the absence of any statutory provision cannot exclude any 1 196513 All
ER 650 764 part of capital employed in the undertaking at its discretion under the guise of the process of prescribing the manner of computation
The argument of the learned Attornney General that as an undertaking which employs borrowed capital gets relief because in calculating the profits and gains the interest paid on the borrowed capital is taken into account the rule making authority in prescribing the manner of computation of capital employed is entitled to exclude borrowed capital to avoid grant of double relief to the undertaking is without any merit
Interest paid on borrowed capital by any undertaking whether it is an undertaking within the meaning of S80J J or not is taken into account as business expenditure in calculating the profits and gains of any undertaking
It is the prescribed mode of calculating the profits and gains of every undertaking and is no special benefit for any undertaking and undoubtedly it affords no incentive of special relief to a new undertaking which has necessarily to satisfy the required conditions laid down in S 80J for being entitled to the relief intended to be granted to an undertaking which comes within the purview of S80J
In any event such inclusion or exclusion on any consideration will be a matter of policy to be determined by the Legislature and not a matter for the rule making authority to lay down in prescribing the mode of computation
The decision of the Calcutta High Court in the case of Century Enka Ltd vs IT01 the decision of the Madras High Court in the case of Madras Industrial Linings Ltd vs IT02 the decision of the Allahabad High Court in Kota Box Manufacturing Co vs IT03 the decision of the Punjab and Haryana High Court in the case of Ganesh Steel Industries vs IT04 the decision of the Andhra Pradesh High Court in the case of Warner Hindustan Ltd vs IT05 holding the rule to the extent it excludes borrowed capital in the computation of capital employed for the purpose of granting relief under section 80J to be invalid are correct and l have no hesitation in upholding these decisions The contrary view expressed 
by the Madhya Pradesh High Court in the case of Commissioner of Income Tax MP Il vs Anand Bahri Steel and Wire Productsn must necessarily be held to be erroneous
1 2 3 4 5 1982 134 lTR 158
6 l982 765 It may be noticed that the Madhya Pradesh High Court proceeded to hold the rule to be valid mainly on the ground that this rule has been in existence for a long time under S15C of the earlier Act which subsequently came to be replaced by S80J and the Parliament must have been aware at the time of enacting S80J of the existence of the rule framed by the rule making authority which held the field for a long period without any challenge
The decision proceeds on the basis that the Parliament must have therefore accepted the interpretation put by the rule making authority at the time the Parliament enacted S 80J
This decision does not take into consideration the fact that the interpretation put by the rule making authority has not been the same all throughout and has undergone changes from time to time and the rule making authority has in certain years also permitted certain classes of borrowed capital to be taken into account in computation of capital employed for the purpose of relief
The decision of the Madhya Pradesh High Court does not also take into consideration the question whether the rule seeking to include or exclude borrowed capital at the discretion of the rule making authority in the absence of any statutory provision or guideline becomes bad on account of unjustified excessive delegation of authority
The decision of the Madhya Pradesh High Court has not proceeded to construe S80J correctly to gather the true intention of the Parliament before deciding the question as to whether the rule excluding borrowed capital is consistent with the intention of Parliament clearly expressed in S80J
In my opinion the mere existence of an invalid rule without any challenge for any length of time does not affect the question of validity of the rule and cannot render a rule otherwise invalid to be valid only on the ground that the rule had remained in existence without any challenge for a number of years
In the case of Proprietary Articles Trade Association vs Attorney General for Canadal the Judicial Committee while considering the vires of a statute namely Combines Investigation Act RS Can
1927 c 26 passed by the Parliament of Canada observed at p 317 Both the Act and the section have a legislative history which is relevant to the discussion
Their Lordships entertain no doubt that time alone will not validate an Act which when challenged is found to be ultra vires nor will a history of a gradual series of advances till this boundary is finally crossed avail to protect the ultimate encroachment
 In the case of Campbell College Belfast Governors vs Commis 1 766 sioner of Valuation for Northern Irelandl the House of Lords while considering the validity of payment of rates by fee paying public school in Northern Ireland which has continued for over 132 year despite the terms of section 2 of the Valuation Ireland Act Amendment Act 1954 held at p 941 to 942   my Lords for my part I am quite unable to apply that principle to a statute although it was passed over 100 years ago but its language is plain and unambiguous and it was not misconstrued until the decision in the Alexandra College case 60 years later
True it is that fee paying schools did always pay rates in accordance with section 2 but until 1914 that was not because it was assumed that section 2 was con trolled by the proviso and that charitable purposes bore a limited meaning
It may have been that it was thought that if some of the pupils were free paying section 16 of the Act of 1852 was not satisfied
That argument is now untenable n and as Black LJ point out at an early part of his judgment Campbell College is clearly for this purpose a charitable institute
My Lords in these circumstances I can attach no weight whatever to this long unquestioned payment when construing section 2
To my mind this doctrine can have no application to the circumstances of this case
It is also well settled that even if the rules have been laid before the Parliament and there is a resolution of the Parliament approving the rules the validity of the rules has to be declared by the Court and the Court can declare any rule placed before the Parliament and approved by the Parliament to be ultra vires the Act and invalid
In the case of Kerala State Electricity Board
vs Indian Aluminium2
 this Court held at p576 In India many statutes both of Parliament and of State Legislatures provide for subordinate legislation made under the provisions of those statutes to be placed on the table of either the Parliament or the State Legislature and to be subject to such modification amendment or annulment as the case may be as may be made by the Parliament or the State Legislature
Even so we do not think that where an executive authority is given power to frame subordinate legislation within stated limits rules made by such authority 1 1964 I WLR 912
2 1976 I SCR552
767 if outside the scope of the rule making power should be deemed to be valid merely because such rules have been placed before the legislature and are subject to such modification amendment or annulment as the case may be as the legislature may think fit
The process of such amendment modification or annulment is not the same as the process of legislation and in particular it lacks the assent either of the President or the Governor of the State as the case may be
We are therefore of opinion that the correct view is that notwithstanding the subordinate legislation being laid on the table of the House of Parliament or the State Legislature and being subject to such modification annulment or amendment as they may make the subordinate legislation cannot be said to be valid unless it is within the scope of the rule making power provided in the statute The other impugned provision of the rule prescribing that capital employed should be computed on the basis of the capital employed on the first day of the year must on a proper construction of the section be also held to be invalid
The section clearly provides that the deduction to be allowed is to be computed in the prescribed manner in respect of the previous year relevant to the assessment year
The deduction to be allowed is on the profits and gains of the undertaking earned in the relevant year in respect of the previous year relevant to the assessment year
Profits and gains which are to be taken into account are the profits and gains earned in the relevant year and the year must necessarily mean and include the whole of the year and not some days or months of the year
The capital employed for earning the posts and gains dring the whole year must necessarily be the capital which is entitled to the benefit of the section
Capital employed on the 1st day of the year does not produce the profits of the entire relevant year unless the very same amount of capital remains employed throughout the year
It does not usually happen and in any event it may not happen
Therefore by prescribing the 1st day of the year to be the date of 
computation of the capital employed the capital employed during the whole year is sought to be denied by the rule the benefit to which it is entitled under the section
This provision therefore is clearly contrary to and inconsistent with the specific provision of the statute as by fixing the 1st day of the year to be the date of computation of the capital employed for the year the rule making authority is seeking to deny the benefit conferred by the statute
Andhra Pradesh High Court in the case of Warner Hindustan H 768 Ltd and Anr
vs Income tax Officer and Ors
supra in dealing with this question has referred to the decision of the Calcutta High Court in Century Enka Ltd vs Income tax Officer supra on this very point and in agreement with the decisions of the Calcutta High Court the Andhra Pradesh High Court held at p 195 As observed by a learned Judge of the Calcutta High Court in Century Enka Ltd vs Income tax Officerlthe main consideration upon which this question has to be resolved is p 132 whether having regard to the purpose for which provisions of section 80J of the Act was introduced it was the legislative intent to restrict the capital employed in any manner so as to limit it to the first day of the computation period 
So far as section 80 J is concerned it does not give any such indication
That apart such computation of capital employed in an industrial undertaking would defeat the very purpose of the undertaking and would lead to incongruous and anomalous results
While an assessee who has employed the capital in an industrial undertaking on the very first day but has withdrawn it for the major part of the year would be entitled to the full benefit an assesses who has not employed the capital on the first day but has employed it during the major part of the previous year would be deprived of the benefit
If the intendment of the Act is to give tax holiday for the new industrial undertaking with a view to help them find their roots and encourage entrepreneur to establish new industrial undertakings and pave the way for rapid industrial growth in the country then the purpose would be not served
In fact it would be defeated if the capital employed is computed with reference to the first day of the computation period and not in respect of the previous year relevant to the assessment year
The Calcutta High Court and Andhra Pradesh High Court have both held this part of the rule fixing the first day of the year for computing the capital employed for the purpose of granting relief under section 80J to be invalid
I find no difficulty in upholding the decision of the Calcutta High Court and of the Andhra Pradesh High Court on this question
I know proceed to consider the other question about the validity of the amendment of section 80J introduced by the Finance 1 of 1980
By the amendment the provisions contained in the A rule excluding borrowed capital and fixing the first day of the year for computation of capital employed for the purpose of relief under section 80J have been incorporated in the section itself with retrospective effect from 1472
On behalf of some of the assessees the amendment both with regard to its prospective and retrospective operation has been challenged
Dr D Pal supported by other learned counsel addressed us mainly on the aspect of prospective operation while supplementing and supporting the submissions of Mr Palkhivala on the aspect of retrospective operation
Mr Palkhivala who has been the principal spokesman for the assessees confined his challenge to the validity of the amendment mainly to the retrospective part although he made it clear that he was not conceding the validity of the prospective operation
I propose to consider the submission of Dr Pal in the first instance
If the submission of Dr Pal that the entire amendment is invalid is accepted the submission of Mr Palkhivala that the amendment in so far as it is made retrospective is also bad must necessarily succeed
Dr Pal has argued that the amendment seeks to make an invidious distinction between own capital and borrowed capital in the matter of granting relief under this section
It is the argument of Dr Pal that having regard to the object of the section which is to promote new industries and to give relief on the basis of the capital employed in such new industries by way of incentive distinction between own capital and borrowed capital is wholly irrelevant  and does not have any nexus with the object sought to be achieved and this distinction between own capital and borrowed capital in the matter of computation of capital employed in the undertaking for the purpose of granting relief results in justified discrimination and is therefore violative of article 14 of the constitution
To my mind there is no merit in the submission of Dr Pal
It is entirely a matter for the Parliament to decide whether any relief by way of incentive should be allowed and if so to what extent and in what manner
There is no obligation on the part of the Parliament to make any provision for granting relief to promote new industries
The Legislature in its wisdom may decide to grant relief and may equally decide not to grant any relief
It is essentially for the Legislature to decide as to whether any incentive for promoting industrial growth of the country is called for and if the Legislature feels that in the 770 situation prevailing in the country such incentive should be provided it will be again for the Legislature to decide what kind of incentive and in what form and to what extent the same should be provided and to pass appropriate legislation in this regard
The Parliament would have been legally competent to withdraw the entire relief under section 80J and to abrogate the said section in its entirety if the Parliament had considered such withdrawal to be necessary
The Parliament is equally competent to increase or reduce the quantum of relief intended to be given under this section
In providing that relief intended under section 80J would be allowed only to owner s own capital and not to any borrowed capital there can be no infringement of article 14
No entrepreneur or businessman can claim as a matter of right that relief by way of incentive should be provided to new undertakings to be set up by him
The Parliament provides for such relief in pursuance of a policy and policy may change from time to time in view of the situation prevailing from time to time
The Parliament may legitimately feel that borrowing by businessman may not be encouraged and persons should be encouraged to bring their own money for setting up new undertakings and Parliament may provide for appropriate relief by way of incentive to the owner s capital employed to the exclusion of borrowed capital in the setting up of any new industrial undertaking
Whether it is prudent to do so is essentially a matter for the Parliament in its wisdom to decide
It is not for this Court to sit in judgment over the wisdom of the Parliament in the framing of its policy
The discrimination in the matter of granting relief to own capital to the exclusion of borrowed capital in pursuance of a policy cannot be said to be violative of Art 14 as the two classes of capital though forming a part of the total capital of the undertaking are distinct p and they stand on a different footing
A classification between these two classes of capital for encouraging investment of own capital in setting up new industrial undertakings cannot be held to be unreasonable and unjustified
The contention of Dr Pal that the amendment in discriminating between borrowed capital and owner s own capital in the enjoyment of relief under section 80J infringes article 14 must therefore be rejected
Very properly in challenging the validity of the amendment in so far as it operates prospectively no grievance in regard to violation of article 19 of the Constitution has been made
I now pass on to the question of the validity of the amendment with retrospective effect from 14 1972
It has been contended by the learned counsel for the assessees that the retrospective operation of the provision is unreasonable arbitrary and violative of articles 14 and 19 of the Constitution
The 771 main argument is that the withdrawal of relief granted by the statute A before the present amendment and lawfully enjoyed by the assessee during all these years and thereby imposing on the assessee an unjust unmerited and accumulated huge financial liability cannot be considered to be reasonable and such imposition of accumulated liability will seriously affect the financial stability of the undertakings and will further create various other difficulties which may be almost impossible for the assessees to overcome
It has been argued that the present amendment has not been necessitated as a result of any provision of the statute being declared ultra vires for any lacuna in the statutory provision and there is no question of any liability being foisted on the Government of refunding any large sun of money collected as tax from the assessees on account of any statutory provision imposing any levy being declared invalid or unconstitutional
It is submitted that in view of the unequivocal provision of the statute granting relief to borrowed capital which was sought to be negated and denied by an invalid rule which has been struck down the assessees are legitimately entitled to the relief and they have rightly and justifiably arranged their affairs on the basis of the law as it stood
The existence of an invalid rule and the tendency of appeals in this Court against the judgment of the various High Courts declaring the rule to be invalid cannot be considered to be relevant factors particularly when the statutory provision is clear for guiding the assessee who has to carry on its normal trading activities in arranging its affairs
The submission is that the withdrawal or relief lawfully granted and properly enjoyed by the assessees after this long lapse of time when no serious prejudice is caused or is likely to be caused to the public exchequer and on the other hand a heavy unwarranted financial burden along with other difficulties and problems are created for the assessee cannot be said to be in public interest and must be held to be unreasonable arbitrary and violative of article 14 and 19 of the Constitution
The learned Attorney General has submitted that retrospective operation of the provision does not suffer from any infirmity and is not arbitrary or unreasonable nor is it violative of article 14 and 19 of the Constitution
He argues that prior to rule 19 A being considered by some of the tribunals and by various High Courts the said rule excluding borrowed capital in the matter of computation of relief and fixing the 1st day of the year as the relevant date for the computation of relief has remained in force for a number of years
It is his argument that after the said rule had been struck down the validity of the decisions has been challenged and was pending appeal in this Court and the appeal was pending at the time when the present 772 amendment came to b enacted in 1980
The Learned Attorney General contends that as rule 19 A excluding borrowed capital and fixing the first day of the year as the date for computation of relief had remained in force for a number of years and as the decision striking down the rule is now pending appeal the assessees were not justified in arranging their affairs on the basis of the said rule being invalid and as prudent men of business they should have so arranged their affairs as to cover every contingency and particularly the contingency of the validity of the rule being upheld by this Court
The Learned Attorney General has submitted that the amendment has been introduced before the decision of this Court in the pending appeals as the Parliament wanted to clarify the position in the interest of all concerned and more so in the interest of the assessees to enable the undertakings which qualified for relief under section 80J to enjoy the benefit intended to be conferred by the Section
It is the submission of the Learned Attorney General that in the absence of any valid rule prescribing the manner of computation of relief to which the assessee may be entitled under section 80J the benefit cannot be computed and therefore no benefit contemplated under section 80J may be at all available to the assessees
He submits that if the rule is held to be valid by this Court in these appeals the arguments of the assessee that the assessee has arranged its affairs on the basis of invalidity of the rule will be of no avail and he further submits that if the invalidity is upheld by this Court in these appeals the assessee in the absence of any valid rule prescribing the manner of computation of the relief will not be entitled to the benefit of any relief under the section
It is his submission that in these circumstances the Parliament with the object of seeing that the assessee who is entitled to any relief under section 80J is not denied such relief over these years for lack of provision of a suitable rule prescribing the manner p of computation of such relief has amended the section itself with retrospective effect from 1972 in the interest of the assessees them selves
It is the submission of the Attorney General that as the amendment with retrospective effect has been made essentially in the interest of the assessees to enable them to enjoy the relief intended to be given under section 80J the retrospective effect of the amendment cannot be said to be unreasonable or arbitrary and the retrospective amendment dose not violate either article 14 or 19 of the Constitution even if the retrospective effect may operate harshly on some assessees
Before considering the arguments advanced on behalf of the parties I propose at this stage to refer to some of the decisions cited from the Bar on this aspect 773 In the case of Epari Chinna Krishna Moorthy Proprietor Epari A Chinna Moorty and Sons Berhampur Orissa vs State of Orissal it was observed at p 191 Mr Sastri also argued that the retrospective operation of the impugned section should be struck down as unconstitutional because it imposes an unreasonable restriction on the petitioners  fundamental right under article 19 1 g
It is true that in considering the question as to whether legislative power to pass an Act retrospectively has been reasonably exercised or not it is relevant to enquire how the retrospective operation operates
But it would be difficult to accept the argument that because the retrospective operation may operate harshly in some cases
 therefore the legislation itself is invalid
Besides in the present case the retrospective operation dose not spread over a very long period either
Incidentally it is not clear from the record that the petitioners did not recover sales tax from their customers when they sold the gold ornaments to them
D In the case of Rai Ram Krishna  Ors
vs State of Bihar2
this Court observed at pp
914 917 Mr Setalvad contends that since it is not disputed that the retrospective operation of a taxing statute is a relevant fact to consider in determining its reasonableness it may not be unfair to suggest that if the retrospective operation covers a long period like ten years it should be held to impose a restriction which is unreasonable and as such must be struck down as being unconstitutional
In support of this plea Mr Setalvad has referred us to the observations made by Sutherland Tax Statute  says Sutherland nay be retrospective if the legislature clearly so intends
If the retrospective feature of a law is arbitrary and burdensome the statute will not be sustained
The reasonableness of each retrospective tax statute will depend on the circumstances of each case
A statute retroactively imposing a tax on income earned between the adoption of an amendment making income taxestes legal and the passage of the income tax Act is not unreasonable Likewise an Income tax not retroactive beyond the year of its passage is clearly valid
The longest 1  2 1964 I SCR897 774 period of retroactivity yet sustained has been three years
In general income taxes are valid although retroactive if they affect prior but recent transaction  Basing himself on these observations Mr Setalvad contends that since the period covered by the retroactive operation of the Act is between April 1 1950 and September 25 1961 it should be held that the restrictions imposed by such retroactive operation are unreasonable and so the Act should be struck down in regard to its retrospective operation
We do not think that such a mechanical test can be applied in deter mining the validity of the retrospective operation of the Act
It is conceivable that cases may arise in which the retrospective operation of a taxing or other statute may introduce such an element of unreasonableness that the restrictions imposed by it may be open to serious challenge as unconstitutional but the test of the length of time covered by the retrospective operation cannot by itself necessarily be a decisive test
We may have a statute whose retrospective operation covers a comparatively short period and yet it is possible that the nature of the restriction imposed by it may be of such a character as to introduce a serious infirmity in the retrospective operation
On the other hand we may get cases where the period covered by the retrospective operation of the statute though long will not introduce any such infirmity
Take the case of a Validating Act
If a statute passed by the legislature is challenged in proceedings before a Court and the challenge is ultimately sustained and the statute is struck down it is not unlikely that the judicial proceedings may occupy a fairly long period and the legislature may well decide to await the final decision in the said proceedings before it p uses its legislative power to cure the alleged infirmity in the earlier Act
In such a case if after the final judicial verdict is pronounced in the matter the legislature passes a validating Act it may well cover a long period taken by the judicial proceedings in Court and yet it would be in appropriate to hold that because the retrospective operation covers a long period therefore the restriction imposed by it is unreasonable
That is why we think the test of the length of time covered by the retrospective operation cannot by itself be treated as a decisive test
It the case of Jawaharlal vs State of Rajasthan  Orsl this Court held at p 905 1 l966 1 SCR890
775 We have already stated that the power to make laws A involves the power to make them effective prospectively as well as retrospectively and tax laws are no exception to this rule
So it would be idle to contend that merely because a taxing statute purports to operate retrospectively the retrospective operation per se involves contravention of the fundamental right of the citizen taxed under article 191f or g
It is true that cases may conceivably occur where the Court may have to consider the question as to whether excessive retrospective operation prescribed by a taxing statute amounts to the contravention of the citizens  fundamental right and in dealing with such a question the Court may have to take into account all the relevant and surrounding facts and circumstances in relation to the taxation
In the case of Assistant Commissioner of Urban Land Tax vs The Buckingham  Carnatic Co Ltdl etc
it was observed at P287 It is contended on behalf of the petitioners that the retrospective operation of the law from 1st July 1963 would make it unreasonable
We are unable to accept the argument of the petitioners as correct
It is not right to say as a general proposition that the imposition of tax with retrospective effect per se renders the law unconstitutional
In E applying the test of reasonableness to a taxing statute it is of course a relevant consideration that the tax is being enforced with retrospective effect but that is not conclusive in itself
In the case of Ms Krishnamurthi  Co Etc
vs State of p Madras  Anr2j this Court observed at P 61 The object of such an enactment is to remove and rectify the defeat in phraseology or lacuna of other nature and also to validate the proceedings including realisation of tax which have taken place in pursuance of the earlier enactment which has been found by the Court to be vitiated by an infirmity
Such an amending and validating Act in the very nature of things has a retrospective operation
Its aim is to effectuate and carry out the object for which the earlier principal Act had been enacted
Such an amending 1 1970 I SCR 268
2 1197312 SCR 54 i 11 776 and validating Act to make small repairs  is a permissible mode of legislation and is frequently resorted to in fiscal enactments
 Similar observations have been made by this Court in the case of Hira Lal Rattan Lal etc
vs State of UP  Anr
etcl at P 511 A feable attempt was made to show that the retrospective levy made under the Act is violative of article 19t f and g
But we see no substance in that contention
As seen earlier the amendment of the Act was necessitated because of the legislature s failure to bring out clearly in the principal Act its intention to separate the processed or split pulses from the unsplit or unprocessed pulses
Further the retrospective amendment became necessary as otherwise the State would have to refund large sum of money
In the case of State of Gujarat vs Ramanalal Keshave Lal Soni2 this Court observed at p 62 The Legislature is undoubtedly competent to legislate y with retrospective effect to take away or impair any vested right acquired under existing laws but since the laws are made under a written Constitution and have to conform to do s and don ts of the Constitution neither prospective nor retrospective laws can be made so as to contravene fundamental rights
The law must satisfy the requirements of the Constitution today taking into account the accrued or acquired rights of the parties today
The law cannot say 20 years ago the parties had no rights therefore the requirements of the Constitution will be satisfied if the law is dated back by 20 years
We are concerned with today s rights an i not yesterday section A legislature cannot legislate today with reference to a situation that obtained 20 years ago and ignore the march of events and the constitutional rights accrued in the course of the 20 years
That would be most arbitrary unreasonable and a negation of history
The power and competence of the Parliament to amend any 1  2 1983 2 SCC 33 777 statutory provision with retrospective effect cannot be doubted
Any A retrospective amendment to be valid must however be reasonable and not arbitrary and must not be violative of any of the fundamental rights guaranteed under the Constitution
The mere fact that any statutory provision has been amended with retrospective effect does not by itself make the amendment unreasonable
Unreasonableness or arbitrariness of any such amendment with retrospective effect has necessarily to be judged on the merits of the amendment in the light of the facts and circumstances under which such amendment is made
In considering the question as to whether the legislative power to amend a provision with retrospective operation has been reasonably exercised or not it becomes relevant to enquire as to how the retrospective effect of the amendment operates
C In the large interest of administration and for promotion of public interest and welfare of the country power has been conferred by the Constitution on the Parliament to mobilize resources and to levy tax
In view of the complexity of fiscal adjustment of diverse elements the Parliament necessarily enjoys a very wide discretion in the matter of fiscal legislation
To meet various expenses for proper administration maintenance of defense and security for promoting peace and prosperity and for development of social economic and all round growth of the country the Government must have resource and sufficient funds at its disposal
Suitable provisions have necessarily to be made for raising the revenue and for proper realisation of funds to be collected to meet such expenses
Appropriate legislations including various fiscal laws are enacted for this purpose
Imposition of any tax by the Parliament is therefore considered to be made in public interest
It may so happen that any provision of any enactment imposing a particular levy may be challenged in Court and may be challenged successfully and the particular levy may for some reason or other be held to be constitutionally invalid
If any particular provision of any statute imposing any tax which has been or is being collected is struck down as unconstitutional the financial arrangement of the State may become upset and the Government which might have already collected and even utilised the tax may be called upon to refund taxes so collected
If such a situation arises the economy of the State may get unbalanced and difficulties may arise for meeting the various commitments and obligations
Under such circumstances a Validating Act may be passed and is often enacted to remove the infirmities which might have led to the invalidation of the provision imposing the levy
Validating Acts for meeting such situations have necessarily to be passed with retrospective operation so that the fiscal arrangement of the State and its financial commitments 778 may not in any way be in jeopardy and the State may be relieved of the liability of refunding any tax already collected
A validating Act validating any fiscal provision with retrospective operation is usually held not to be unreasonable or arbitrary
In the case of any Validating Act the intention of the legislature is generally made sufficiently clear in the section or in the Act which is declared invalid on account of some flaw or defect which is within the competence of the Parliament to rectify
Such Validating Acts it may be observed do not in fact have the effect of imposing a fresh tax with retrospective effect and they only legalese the levy already imposed
There is in effect and substance no imposition of any new tax for the earlier years by virtue of the retrospective operation and the retrospective operation merely validates the levy already imposed and possibly collected
The present amendment has been necessitated not as a result of any part of section 80J being declared invalid
There was no lacuna or defect in section 80J prior to the impugned amendment and the section which was perfectly valid granted relief in clear and unambiguous language to the assessee in respect of capital employed whether assesses  own or borrowed in an undertaking which qualified for relief under the section
The rule making authority by framing an invalid rule sought to deny the asks the benefit of the relief lawfully and validly granted by the section
The rule was contrary to the clear provisions of the statute and the invalid rule has been rightly struck down
By the present amendment the Parliament is seeking to validate not any provision of the State declared invalid because of any flaw or defect as there was none but is seeking to validate an invalid rule which had sought to deprive the assessee of the benefit which the Parliament had clearly bestowed on the assessee by the section
The effect of the present amendment by seeking to incorporate the provisions of the rule declared invalid in the section itself is to withdraw with retrospective effect the relief which had been earlier granted by the Parliament in so far as the relief extends to borrowed capital employed in the undertaking and thereby to impose on the assessee a burden of tax which was not there for all these years
As a matter of policy it may be open to the Parliament to withdraw the relief granted to borrowed capital by an amendment with prospective effect consequent on any such amendment
To withdraw with retrospective effect the benefit of relief unequivocally granted by the section to an assessee who qualified for such relief and was lawfully entitled to enjoy the benefit of such relief and has in fact in many cases enjoyed the benefit for all these years prior to the present amendment with retrospective effect cannot in my opinion be said to on any just and valid grounds and cannot be considered to be reasonable
If any fiscal statute grants relief to any assessee and the assessee enjoys the benefit of that relief 779 as the assessee is legally entitled under the statute the withdrawal of the relief validly and unequivocally granted and enjoyed by any A assessee must necessarily in the absence of proper grounds be held to be unreasonable and arbitrary
The relief granted under section 80J before the present amendment was not merely a promise on the part of the Government relying on which the assessee might have set up new undertakings but it was in the nature of a statutory right confer red on any assessee might have set up new undertakings but it was in the nature of a statutory right conferred on any assessee who qualified for such relief under the section
The withdrawal with retrospective effect of any relief granted by a valid statutory provision to an assessee depriving the assessee of the benefit of the relief vested in the assessee stands on a footing entirely different from the footing which may necessitate the passing of a Validating Act seeking to validate any statutory provision declared unconstitutional
When Parliament passes an amendment validating any provision which might have been declared invalid for some defect or lacuna the Parliament seeks to enforce its intention which was already there by removing the defect or lacuna
The Parliament indeed seems to remedy the situation created as a result of the statutory provision being declared invalid
As I have earlier observed this is done in public interest for properly regulating the fiscal structure and to relieve the Government of any financial burden by way of refund of taxes collected for enabling the State to implement its budget by proper collection of revenue expected to be realised
When the Parliament in any fiscal statute proposes to grant any relief to any assessee the Parliament must be presumed to do so in public interest
In the instant case section 80J granted relief for the purpose of promoting the industrial growth of the country by affording incentive for the setting up of new undertakings
As a matter of policy again the Parliament may withdraw such relief or any part thereof or modify the nature extent and kind of relief if Parliament may withdraw such relief or any part thereof or modify the nature extent and kind of relief if Parliament in its wisdom may consider any such action necessary and proper and any such act done by the Parliament must also be regarded to have been done in public interest
However the withdrawal or modification with retrospective effect of the relief properly granted by the statute to an assessee which the assessee has lawfully enjoyed or is entitled to enjoy as his vested statutory right depriving the assessee of the vested statutory right has the effect of imposing a levy with retrospective effect for the years for which there was no such levy and cannot unless there be strong and exceptional circumstances justifying such withdrawal or modification be held to be reasonable or in public interest
This kind of retrospective amendment seeking to defeat an accrued statutory right 780 is likely to affect the sanctity of any statuory provision and may A create a state of confusion
The only circumstance which appears to have led to the present retrospective amendment is the existence of the invalid rule
The existence of any invalid rule seeking to deny an assessee a benefit clearly and unequivocally granted to an assessee by the Legislature lawfully and properly enjoyed or to be impugned amendment in 1980 the relief granted by section 80J had been in force and had been legitimately available to the assessee
In view of the clear provision made in the statute by Parliament itself the Parliament must be presumed to have been aware that the relief as contemplated under section 80J was available to the assessee and the assessee had been enjoying and were entitled to enjoy the benefit of the said relief
The Parliament must have and in any event must be presumed to have arranged the financial affairs of the State on the footing that the relief allowed to an assessee under section 80J was being enjoyed and would be enjoyed by the assessee In view of the clear provision of the statute which must be held to manifest the true intention of the Parliament it will be idle to contend that Parliament could have intended that the relief so granted would not be available to the assessees who would be liable to pay a larger amount of tax
The years for which relief had remained in force had already passed out
It does not appear that as a result of the relief enjoyed by the assessee the financial position of the state for all these years had been or could be in any way affected
The facts and circumstances also do not indicate that there will be any heavy burden on the State to sound taxes collected which may upset the economy of the State
It appears that in the majority of the cases the assessees have succeeded and they have been assessed after being allowed the relief and under section 80J in respect of the borrowed capital also
On the other hand it is quite clear that if the relief granted is to be withdrawn with retrospective operation from 1972 the assessees who have enjoyed the relief for all those years will have to face a very grave situation
The effect of the withdrawal of the relief with retrospective operation will be to impose on the assessee a huge accumulated financial burden for no fault of the assessee and this is bound to create a serious financial problem for the assessee
Apart from the heavy financial burden which is likely to upset the economy of the undertaking the assessee will have to face other serious problems
On the basis that the relief was legitimately and legally available to the assessee the assessee had proceeded to act and to arrange its affairs
If the relief granted is now permitted to be withdrawn with retrospective operation the assessee may be found guilty of violation provision of other state and may be visited with panel consequen 781 ces
This position cannot be and is not disputed by the learned A Attorney General who has however argued that taking into consideration the peculiar facts and circumstances penal provisions may not be enforced
This argument does not impress me
The assessee has in any event to run the risk and for no fault on his part has to place itself at the mercy of the authorities for facing consequences of violation of statutory provisions which but for the introduction of retrospective amendment would not have been violated by the assessee
To establish arbitrariness or unreasonableness it does not become necessary to prove that the undertaking of the assessee will be completely crippled and will have to be closed down in consequence of the withdrawal of the relief with retrospective effect
There cannot be any doubt about the real possibility of very serious prejudice being caused to the assessee for no fault of the assessee
In my opinion the possibility of very grave prejudice to the assessee by the withdrawal of the relief with retrospective effect in the absence of any justifiable ground and any serious prejudice to the interest of revenue establishes unreasonableness and arbitrariness of the retrospective amendment is bound to have very serious effect on the assessee and there is reasonable possibility of the business of the assessee being adversely affected and seriously prejudiced
The retrospective amendment therefore is also violative of Art 19 1 g of the Constitution
The argument of the Attorney General that the amendment had to be made with retrospective effect in the interest of the assessee as otherwise the assessee would not be entitled to the benefit of there lief intended to be given under the section because there will be no valid rule for computing the relief to my mind is clearly untenable
I see no reason as to why there should be any difficulty in the computation of relief if the invalid part of the rule is struck down
It may be noted that the rule in so far it excludes borrowed capital and fixes the first day of the year for computation of the relief had been struck down by various High Courts years ago and the assessing authorities have found no difficulty in computing the relief and in proceeding to complete the assessment by granting the relief legally available to assessee under section 80J even after the invalid part of the rule had been struck down
It may also be noted that the Parliament had also not considered it necessary to effect this amendment earlier inspite of the decisions of the High Courts although the Parliament had introduced other amendments into this section
Before concluding I wish to emphasise that the withdrawal with retrospective effect by amendment of any financial benefit or 782 relief granted by a fiscal statute must ordinarily be held to be unreasonable and arbitrary
Such withdrawal makes a mockery of beneficial statutory provision and leads to chaos and confusion Such withdrawal in effect results in the imposition of a levy at a future date for past years for which there was no such levy in the relevant years
The imposition of any fresh tax with retrospective effect for years for which there was no such levy is entitled to arrange and normally arranges his financial affairs on the basis of the law as it exists
Such retrospective taxation imposes an unjust and unwarranted accumulated burden on the assessee for no fault on his part and the assessee has to face unnecessarily without any just reason very serious financial and other problems
Imposition of any tax with retrospective effect for years for which no such tax was there cannot also be considered to be just and reasonable from the point of view of revenue
The years for which levy is sought to be imposed with retrospective effect had already passed and there cannot be any proper justification for imposition of any fresh tax for those years
Such retrospective taxation is likely to disturb and unsettle the settled position and because of such imposition of retrospective levy for the years for which there was no such levy assessments for those years which might already have been completed and concluded will get upset
If the State is in need of more funds the State instead of seeking to levy any tax with retrospective effect can always take appropriate steps to collect any larger amount so required by imposition of higher taxes or by other appropriate methods
I have already observed that Validating Acts which seek to validate the levy of any tax with retrospective effect do not in effect impose any fresh tax with retrospective effect and Validating Acts stand on an entirely different footing
T therefore hold that the impugned amendment in so far as it is sought to be made retrospective with effect from the 1st day of April 1972 is invalid and unconstitutional though the amendment in so far as it operates prospectively is valid
In the result I dismiss the appeals filed by the Union of India against the decisions of the High Courts declaring Rule 19 A to be invalid in so far as the said rule excludes borrowed capital and fixes the first day of the year for computation of the relief to be granted to an assessee under S80J
I set aside the judgment of the Madhya Pradesh High Court which upholds the validity of the Rule and I allow the appeal of the assessee against the judgment of the Madhya Pradesh High Court
I hold and declare that Rule 19 A is so far as it seeks to exclude the borrowed capital and fixes the first day of the year for the computation of relief under section 80J is invalid and unconstitutional and the same has to be struck down and has been struck down 783 by the various High Courts
I hold and declare that the impugned amendment of 1980 incorporating the provision of the invalid rule l9 A in the section itself excluding the borrowed capital and fixing the first day of the year for computation of the relief under section 80J is valid in its prospective operation from the date of the amendment and is unconstitutional and invalid insofar as the said amendment is sought to brought into operation retrospectively with effect from 1st B April 1972
Accordingly I allow the writ petitions challenging the validity of the amendment only to the extent of its retrospective operation and I dismiss the writ petitions in so far as the amendment in its entirety is sought to be challenged
I propose to make no order as to costs


Summary:
Section 10 of the Tamil Nadu Buildings Lease and Rent Control Act 1960for short the Tamil Nadu Act deals with the eviction of tenants and postulates that a tenant shall not be evicted whether in acquisition of a decree or otherwise except in accordance with the provisions of s10 or sections 14 16 Section 102i of the Tamil Nadu Act provides for the eviction of a tenant on the ground of non payment of rent
It lays down that where the Controller is satisfied that the tenant has not paid or tendered the rent within 15 days after the expiry of the time fixed in the Agreement y f tenancy or in the absence of any such Agreement by the last date of the month next following that for which the rent is payable he tenant undoubtedly commits a default The proviso to sub s2 provides that in any case falling in clause i if the Controller is satisfied that the tenant s default to pay or tender rent was not wilful he may notwithstanding anything contained in s11 give the tenant a reasonable time not exceeding 15 days to pay or tender the rent due by him to the landlord upto the date of such payment or tender and on such payment or tender the application shall be rejected
The Explanation which was added by Act 23 of 1973 to the said proviso stipulates that for the purpose of sub s 2 of s 10 default to pay or tender rent shall be construed as wilful if the default by the tenant in the payment or tender of rent continues after the issue of two months notice by the landlord claiming the rent
In Civil Appeals Nos
1178 of 1984 1992 of 1982 2246 of 1982 and 1659 of 1982 the respondents landlords issued notices to the appellants tenants demanding the amount of rent in arrears and thereafter filed eviction petitions against the appellants tenants inter alia on the ground of wilful default
All the appellants tenants complied with the notices issued by their respective landlords except the appellant tenant in Civil Appeal No 1659 of 982 where he made part payment only
However in Civil Appeal 3668 of 1982 and 4012 of 1982 the respondents landlords had filed eviction petitions against the appellantstenants without issuing such notices before filing of eviction petitions
In all the 644 appeals the Madras High Court passed andor confirmed as the case may be the orders of eviction holding that the ground ofwillful  default mentioned in section 102i had been proved against the tenants
Hence these appeals by special leave
The common question of law involved in these appeals was as to what is the interpretation of the term wilful default in the Explanation to the Proviso of sub s2 of section 10 of the Tamil Nadu Act
Counsel for the appellants tenants contended i that despite the explanation it is open to the court on an appraisement of the circumstances of each case to determine whether or not the defaultt was wilful and in doing so it cannot be guided wholly and solely by the Explanation which is merely clarificatory in nature and ii that mere non payment of arrears of rent after issue of two months  notice cannot in all circumstances automatically amount to a wilful default if the non payment does not fulfil the various ingredients of the term wilful default
On the other hand it was argued by counsel for the respondents landlords i that the very purpose of the Explanation is to bring about uniformity in court decisions by laying down a conclusive yardstick in the shape of the Explanation and once it is proved that after issue of two months  notice if the tenant does not pay the arrears within the stipulated period of two months he is liable to be ejected straightaway
On the question of interpretation of the termswilful default  appearing in the proviso to sl02 of the Tamil Nadu Act coupled with the Explanation the Court  HELD Per Fazal Ali and A Varadarajan JJ
majority 1
Though the Court is concerned mainly with the Tamil Nadu Act yet in order to understand the contextual background of the words wilful default  and its proper setting it Will be useful to refer to those Acts which contain the term wilful default  either in a negative or in positive form
These Acts are l A P Buildings Lease Rent and Eviction Control Act of 1960 the Orissa House Rent Control Act 1967 and the Pondichery Buildings Lease and Rent Control Act 1969 hereinafter referred to as the AP Act Orissa Act and Pondicherry Act respectively
Although the default contemplated by these Acts is wilful yet it has been put in a negative
Form which undoubtenly gives sufficient leeway to the tenant to get out of the rigors of the statutory provision the relevant provisions of these Acts relating to eviction of tenants on the ground of wilful default  in payment of rent contemplate that a default simpliciter would not be sufficient to evict the tenant but it must further be shown that the default was not wilful
These Acts are however silent on the mode and the manner in which a court may decide as to what is wilful and what is wilful
Thus these Acts have left it to the courts to decide this question
So far as the Tamil Nadu Act is concerned it makes a marked improvement by broadening the ambit of wilful default  in the proviso to section 102 which is further clarified by an Explanation added to it subsequently
Before coming to any conclusion it may be necessary to examine the exact meaning of the words wilful default  as also the interpretation and the scope of the Proviso and the Explanation
657H 658A 2
The words wilful default  would mean a deliberate and intentional default knowing fully well the legal consequences thereof
A consensus of the 645 meaning of the words wilful default  appears to indicate that default in order to A be wilful must be intenional deliberated and calculated and conscious with full knowledge of legal consequences flowing therefrom
660B 661A B A Dictionary of Low  by LB Co zon page 361 Words and Phrases volume 11 A Permanent Edition page 268 Words and Phrases Vol
45 pages 296
Webster s Third New International Dictionary Vol
III page 2617 and Volume I page 590 and Black s Law Dictionary4th Edn page 1773 referred to
The well established rule of interpretation of a proviso is that a proviso may have three e  rate functions
Normally a proviso is meant to be an exception to something within the main enactment or to qualify something enacted the in which but for the proviso would b within the purview of the enactment
In other words a proviso cannot be ton apart from the main enactment nor can it be use to nullify or set at naught the real object of the main enactment
Whil interpreting a proviso sure be taken that it is used to remove special cases from the general enactment and provide for them separately In short generally speaking a proviso is intended to limit the enacted provision so as to except something which would have otherwise been within it or in some measure to modify the enacting clause
Sometimes a proviso may be embedded in the main provision and becomes an integral part of it so as to amount to a substantive provision itself
To Sum up a proviso may serve four different purposes 1
qualifying or excepting certain provisions from the main enactment 2
it may entirely change the very concept of the intendment of the enactment by insisting on certain mandatory conditions to be fulfilled in order to make the enactment workable 3
it may be embedded in the Act itself as to become an integral part of the enactment and thus acquire the tenor and colour of the substantive enactment itself and 4
it may be used merely to act as an optional addenda to the enactment with the sale object of explaining the real intendment of the statutory provision
661D E 664C D 665H 666A C  Craies in Statute Law  7th Edn Page 218 Odgers in Construction of Deeds and Statutes  Fifth Edn 317 318
Sarathi in Interpretation of Statutes  page 294 2951
referred to
Local Government Board vs South Stoneham Union Ishverlal Thakorelal Almala vs Motiobhai Nagjibhai 1966 I SCR 367
Madras and Southern Maharatta Railway Co Ltd vs Bezwada Municipality
AIR 1944 C71
West Derby vs Metropolitan Life Assurance Co Rhodda Urban district Council v Taff Vale Railway Co and Jennings and Another v KellY referred to
Commissioner of Income Tax Mysore etc vs Indo Mercantile Bank Ltd 1959 Z Supp
SCR 256 Shah Bhojraj Kuverji Oil Mills and Ginning Factory vs Subhash Chandra Yograj Sinha  State of Rajasthan 646 vs Leela Jain 1965 I SCR 276 Sales Tax officer Circle 1 Jabalpur vs Hanuman Prasad 1967 I SCR 831 commisioner of Commercial Taxes and Ors
vs RS Jhaver and Ors
1968 I SCR 148 Dwarka Prasad v Dwarka Das Saraf 19761 1 SCC 128 and Hiralal Rattanlal etc
vs State of UP and Anr etc
19731 I SCC 216 relied upon
The next question is as to what is the impact of the Explanation on the Proviso which deals with the question of wilful default It is now well settled that an explanation added to a statutory provision is not a substantive provisoo in any sense of the term but as the plain meaning of the word itself shows it is merely meant to explain or qualify certain ambiguities which may have crept in the statutory provision
From a conspectus of the authorities it is manifest that the object of an Explanation to a statutory provision is a to explain the meaning and intendment of the Act itself b where there is any obscurity or vagueness in the main enactment to clarify the same so as to make it consistent with the dominant object which it seems to subserve c to provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful d an Explanation cannot in any way interfere with or change the enactment or any part thereof but where gap is left which is relevant for the purpose of the Explanation in order to suppress the mischief and advance the object of the Act it can help or assist the court in interpreting the true purport and intendment of the enactment and e it cannot however take away a statutory right with which any person  under a statute has been clothed or set at naught the working of an Act by becoming an hindrance in the interpretation of the same
666F G  668G H 669A C Sarathi in Interpretation of Statutes p 329 Swarup in Legislation and Interpretation  pages 297 298 and Bindra in Interpretation of Statutes  5th Edn page 67 referred to
Burmah Shell Oil Storage and Distributing Co
Of India Ltd and Anr
vs Commercial Tax Officer and Ors
1961 I SCR 902 Bihta Cooperative Development Cane Marketing Uaion Ltd and Anr
vs The Bank of Bihar and Ors  and Dattatraya Govind Mahajan and Ors vs State of Mahararashtra and Anr  relied upon
Although almost every State has its own Rent Act neither the Explanation nor the statutory clause concerning the term wilful default  is mentioned therein
These Acts seem to proceed only on the simple word default  and perhaps to buttress their intention they have laid down certain guidelines to indicate the grounds of ejectment wherever a default takes place
Looking generally at such Acts they seem to have first provided statutorily a particular date or time when the tenant on being inducted under the contract of tenancy is to pay the rent
Such a provision may or may not be against the contract of the tenancy 647 and if it is to that extent it overrides the contract This therefore gives sufficient notice to any tenant inducted in any premises that he must pay the lent according to the yardstick set out by the Act failing which he runs the risk of being evicted for default
Some Acts however have provided a particular number of defaults to enable the Rent Controller or Court to find out whether such a default would entitle the landlord to get an order of eviction There are some other Acts which have made rather ingenious and apt provisions for expediting the process of eviction in case of default by providing that whenever a suit for eviction is filed against a tenant on the ground of default the tenant in order to show his bona fides must first deposit the entire rent arrears and cost in the court of the Rent Controller where the action is field on the very first date of hearing failing which the court or the authority concerned would be fully justified in striking down the defence and passing an order of eviction then and there
The dominant object of such a procedure is to put the tenants on their guard
It is true that such provisions are rather harsh but if a tenant goes on defaulting then there can be no other remedy but to make him pay the rent punctually unless some drastic step is taken
These Acts therefore strike a just balance between the rights of a landlord and those of a tenant
For deciding the present cases it is not necessary to go either into the ethics or philosophy of such a provision because the Court is concerned with statutes having different kinds of provisions
The relevant provisions of the AP Orissa and Pondichery Acts are almost in pari materia the proviso to Section 102 of the Tamil Nadu Act
The only difference between the Tamil Nadu Act and the other Acts is that whereas an Explanation is added to the proviso to sl02 of the Tamil Nadu Act no such Explanation has been added to the provisions of the other three Acts
Hence the Court has to consider the combined effect of the proviso taken in conjunction with the Explanation
From an analysis of the various concomitants of the Explanation the position seems to be that a there should be a default to pay or tender lent E b the default should continue even after the landlord has issued two months  notice claiming the arrears of rent and c if despite notice the arrears are not paid the tenant is said to have committed a wilful default and consequently liable to be evicted forthwith
669E H 670A D F G F 5 ii The Explanation does not at all take away the mandatory duty cast on the Controller in the Proviso to decide if a default is wilful or not
Indeed if the landlord chooses to give two months notice to his tenant and he does not pay the rent then in the absence of substantial and compelling reasons the Controller or the court can certainly presume that the default is wilful and order his eviction straightaway
There is no force in the view that whether two months notice for payment of rent is given or not it will always be open to the Controller under the Proviso to determine the question of wilful default  because that would render the very object of explanation otiose and nugatory
673D E 6
Two factors mentioned in s102i seem to give a clear notice to a tenant as to the mode of payment as also the last date by which he is legally supposed to pay the rent
This however does not put the matter beyond controversy because before passing an order of eviction under the proviso it must also be 648 proved that the default was wilful and if the Controller is of the opinion that the default in the circumstances and facts of the case was not wilful in the sense that it did not contain any of the qualities or attributes of a wilful default as indicated he may give the tenant a reasonable time not exceeding 15 days to pay the entire rent and if this is complied with the application for ejectment would stand rejected
The difficulty however 
is created by the Explanation which says that once a landlord gives a Iwo months  notice to his tenant for paying the arrears of rent but the tenant continues in default even thereafter then he is liable to be evicted
There is a good deal of force in this argument which has its own advantages
In the first place it protects the court from going into the intricate question as to what is a wilful default and whether or not the conditions of a wilful default have been satisfied which if permitted would differ from case to case and court to court
But the difficulty is that if such a blanket ban is put on the court for not examining the question of wilful default once the conditions laid down in the Explanation are satisfied then it would undoubtedly lead to serious injustice to the tenant
A subsidiary consequence of such an interpretation would be that even though the tenant after receipt of the notice may be wanting to pay the arrears of rent but is unable to do so because of unforeseen circumstances like death accident robbery etc
which prevent him from paying the arrears yet under the Explanation he has lo be evicted
Another difficulty in accepting the first view viz if two month s notice is not given the tenant must not be presumed to be a wilful defaulter is that in such a case each landlord would has to maintain a separate office so that after every default a two months  notice should be given and if no notice is given no action can be taken against a tenant
The correct view in the matter is in the following terms
i Where no notice is given by the landlord in terms of the Explanation the Controller
having regard to the four conditions spelt out in this judgment has the undoubted discretion to examine the question as to whether or not the default committed by the tenant is wilful If he feels that any of the conditions mentioned is lacking or that the default was due to some unforeseen circumstances he may give the tenant a chance of locus paenitentiae by giving a reasonable time which the statute puts at 15 days and if within that time the tenant pays the rent the application for ejectment would have to be rejected
ii If the landlord chooses to give two months  notice to the tenant to clear up the dues and the tenant does not pay the dues within the stipulated time of the notice then the Controller would have no discretion to decide the question of wilful default because such a conduct of the tenant would itself be presumed to be wilful default unless he shows that he was prevented by sufficient cause or circumstances beyond his control in honouring the notice sent by the landlord
671G H 672A D F 673F H 674A B N
Ramaswami Reddiar vs SN Periamuthu Nadar 1980 Law Weekly vol
93 p 577 and Khivaraj Chordia vs C Maniklal Bhattad AIR 1966 Madras 67 approved
Rajeswari vs Vasumal Lalchand AIR 1983 Madras 97 referred to
In the light of the above principles and tests to be applied by courts in deciding the question of wilful default the Court allowed Civil Appeals Nos
1178 of 1984 1992 of 1982 and 2246 of 1982 and dismissed rest of the appeals
678B 649 Per Mukharjij
dissenting A li Default has been construed in various ways depending upon the context  Default  would seem to embrace every failure to perform part of one s contract or bargain
It is a purely relative term like negligence
It means nothing more nothing less
than not doing what is reasonable under the circumstances not doing something which you ought to do
having regard to the transaction
Similarly default in payment imports something wrongful the omission to do some act which as between the parties ought to have been done by one of them
It simply means non payment failure or omission to pay
Default happens in payment of rents under various contingencies and situations
Whether the default is wilful or not is also a question of fact to be proved from evidence direct and circumstantial drawing inferences from certain conduct
If the Courts are free to decide from varying circumstances whether default was wilful or not then divergence of conclusions are likely to arise one judicial authority coming to the conclusion from certain circumstances that the default was wilful another judicial authority coming to a contrary conclusion from more or less same circumstances
That creates anomalies
In order to obviate such anomalies and bring about a uniform standard that Explanation explains the expression wilful and according to the Explanation added a default to pay or tender rent small be construed as wilful if the default by the tenant n th payment of rent continues after issue of two months  notice by the landlord claiming the rent
If that is the position in a case where the landlord his given notice to the tenant claiming the rent and the tenant has not paid the same for two months then the same must be construed as wilful default whatever may be the cause for non payment
Whether in a particular case default is wilful or not must be considered in accordance with the definition provided in the Explanation to Proviso to sub section 2 of section 10 of the Act
If it was intended that the courts would be free to judge whether in a particular set up of facts the default was wilful or not where no notice has been given then in such a case there was no necessity of adding this Explanation to the Proviso which is a step to the making of the findings under clause l of sub section 2 of section 10 of the Tamil Nadu Act
It is well settled that Legislature does not act without purpose or in futility
680E G 681B E 682E F _ 
_ Stroud s Judicial Dictionary Vol 1
Third Edition
page 757 Prem s Judicial Dictionary
1 196 t page 483
The Dictionary of English Law page 597 Fakir Chander Datt and Other vs Ram Kumar Chatterji Indian Appeals
Vol XXXI
p l9 n referred to Iii If a definition is provided of an expression then the courts are not free to construe the expression otherwise unless it is so warranted by the use of the expression such as except otherwise provided or except if the context otherwise indicates
 There is no such expression in the instant case
There may be in certain circumstances intrinsic evidence indicating otherwise
Here there is none
682C D 2i The expression shall be construed would have the effect of providing a definition of wilful default in the proviso to sub section 2 of section 10
According to the explanation a default to pay or tender rent shall be construed 650 as wilful if the default by the tenant in the payment of rent continues after issue of two months  notice by the landlord claiming the rent
If that is the position in a case where the landlord has given notice to the tenant claiming the rent and the tenant has not paid the same for two month s then the same must be construed as wilful default whatever may be the cause for non payment
The Legislature has chosen to use the expression shall be construed as wilful if after a notice by the landlord for two months  failure to pay or tender rent on the part of the tenant continues and if it is wilful then under sub section2 clause 1 read with the proviso as explained by the Explanation the Controller must be satisfied and give an order for eviction
The Legislature has provided an absolute and clear definition of wilful default  Other circumstances cannot be considered as wilful default
It is true that Legislature has not chosen to use language to indicate that in no other cases the default could be considered to be wilful except one default case which has been indicated in the Explanation
But it is not so necessary be cause Legislature has defined wilful default by the expression that default to pay or tender rent shall be construed  meaning thereby that it will mean only this and no other
Therefore a default will be construed as wilful only where the landlord has given notice and two months have expired without payment of such rent
682 B R C H 681 D F 683A 2iiStatutory provisions must be construed if it is possible that absuridity and mischief may be avoided
Where the plain and literal interpretation of a statutory provision produces a manifestly absurd and unjust result the court might modify the language used by the Legislature or even  o some violence to it so as to achieve the obvious intention Or the Legislature and produce rational construction and just results
Ironing out the creases is possible but not rewriting the language to serve a notion of public Policy held by the judges 683C 684B 2iii Where two constructions are possible one which avoids anomalies and creates reasonable results should be preferred but where the language is clear and where there is a purpose that can be understood and appreciated for construing in one particular manner that is to say avoidance of divergence of judicial opinions in construing wilful default and thereby avoiding anomalies for different tenants it would not be proper in such a situation to say that this definition of wilful default was only illustrative and not exhaustive
The Proviso to sub section 2 of section 10 cannot be cons trued as illustrative when the Legislature has chosen to use the expression shall be construed
683D F In the aforesaid view ot the matter the individual appeals are disposed of accordinglY that is to saY OnlY those appeals of tenants are dismissed where eviction orders were passed after two months  notice had been given and there was continuance of default and the rest of the appeals are allowed
1685B C Seaford Court Estates Ltd vs Asher 1949 2 All ER 155 at pages 164 CA Regina vs Barnet London Borough Council Ex parte Nilish Saah 1983 2 Weakly Law Reports p 16 at p 30 Carrington and others vs Therm a Stor Ltd 1983 1 Weakly Law Reports p 138 at p 142
referred to 651