Appeal No 139 of 1959
Appeal by special leave from the judgment and order dated January 8 1959 of the Patna High Court in Election Appeal No I of 1958 arising out of the judgment and order dated November 30 1957 of the Election Tribunal Patna in Election Petition No 353 of 1957
B K P Sinha and D P Singh for the appellant
G C Mathur and Dipak D Choudhri for respondent No 1
R H Dhebar for respondent No 3 1959
April 14
The Judgment of the Court was delivered by GAJENDRAGADKAR J
This appeal by special leave arises from the  election petition filed by respondent I No 353 of 1957 in which he claimed a declaration that the election of the appellant as a member of the 537 Bihar Legislative Assembly Maner Constituency should be declared to be void
In the last General Election for the said constituency which was held in February March 1957 there were three candidates the appellant respondent I and respondent 2
The last date for filing nomination papers at the said election was January 29 1957 the said papers were scrutinised on February 1 1957
Respondent I had challenged the validity of the appellant s nomination paper at the said scrutiny but the returning officer had overruled the objection raised by respondent I and had accepted the nomination paper of the appellant along with those of the two other candidates
After the counting of votes was done on March 3 1957 the appellant was declared duly elected at the election inasmuch as he had got 9826 votes while res pondents I and 2 had got 7526 and 49 votes respectively
Thereupon respondent I filed his election petition under section 81 of the Representation of the People Act 1951 hereinafter called the Act
In his petition respondent 1 challenged the election of the appellant on several grounds all of which were controverted by the appellant
On the allegations of the parties the tribunal had framed several issues and parties had led evidence on them
At the stage of arguments however only a few issues were pressed by respondent I and all of them were found against him and in favour of the appellant
In the result the tribunal dismissed the election petition on November 30 1957
Against the said decision of the tribunal respondent I preferred an appeal in the High Court of Judicature at Patna and in his appeal he pressed only issue No 1
This issue was whether the nomination of the appellant was hit by the provision of section 7d of the Act and as such whether the said nomination had been improperly accepted
On this issue the tribunal had found in favour of the appellant but the High Court reversed the said finding and accepted the plea of respondent 1
As a result of this finding the High Court allowed the appeal preferred by respondent I and 68 538 declared on January 8 1959 that the election of the appellant was void under section 1001a of the Act
The validity of the appellant s nomination has been challenged under section 7d of the Act on the ground that at the date of the nomination he had an interest in a contract for the execution of works undertaken by the Bihar Government
There is no doubt that if a person is interested in a contract for the execution of any work undertaken by the appropriate Government he is disqualified for membership of the State Legislature in question
The appellant however denied that the disqualification imposed by section 7d could be invoked against him
His case was that the contracts in question had not been undertaken by the Bihar Government but they bad been undertaken by the Central Government and he also urged that he had not taken the said contracts individually in his personal capacity but as the Mukhiya of the Jeorakhan Tola Gram Panchayat
On both these issues the Election Tribunal and the High Court have differed and it is the said two issues that arise for our decision in the present appeal
It is clear that if the appellant succeeds in showing that he had entered into the impugned contracts not individually but on behalf of the Panchayat of which he was the Mukhiya it would be un necessary to consider whether the works covered by the said contracts had been undertaken by the Government of Bihar
Let us therefore first consider that point
The impugned contracts are five in number
They were for the execution of works under local development works programme envisaged under the Second Five Year Plan formulated by the Government of India
These contracts are evidenced by five documents Exs
16 A B C D  E The first is for the construction of Beyapore Jeorakhan Tola Road the second for the construction of the Beyapore M E School the third for the construction of a Dispensary at Jeorakhan Tola the fourth for the construction of the Gram Panchayat building and the last for the construction of a well at the said village
It is admitted by the appellant that these contracts had not been completed at the time of his nomination
539 In considering the appellant s plea that he had executed these contracts as a Mukhiya of the Village Panchayat of his village it would be necessary to bear in mind the background of the scheme in pursuance of which these works were undertaken
The Second Five Year Plan published by the Planning Commission in 1956 shows that the programme of  starting these  works was treated as a part of the co operative movement and the Commission had therefore recommended that the States were to sponsor and assist actively in the Organisation and development of Village Panchayats which was an important constituent of the programme of fostering corporate life in the rural areas as it would promote among the rural community active interest in the development programmes of the villages
The object of this programme which would operate in areas not yet reached by the National Extension Service was to enable village communities to undertake works of local benefit mainly with their own labour
The Commission realised that the resources of all the States taken together would fall far short of the requirements of this Plan and so it recommended large transfers of resources from the Centre to the States
In this connection the conclusion of the Commission was that out of Rs 200 chores sanctioned for the year 1957 58 12 cores would be required for the Centre for schemes undertaken or directly sponsored by the Community Project Administration and 180 crores were to form part of the balance for the States
Thus it is obvious that the basic idea underlying the Plan was to evoke popular response to the community projects undertaken in pursuance of the Plan and to leave the execution of different works adopted under the Plan to be fulfilled by popular local agencies like Village Panchayats
This policy was emphasised by the Secretary of the Planning Commission in his communication to all State Governments No PCPub5253 dated August 11 1953 H 1
This communication set out the seven categories of work which were most suitable for assistance and it said that the local contribution in cash or kind or through voluntary labour together 540 with any contribution that the State Government or a local body might make should be a minimum of 50 of the total cost of each work
The intention was to spread the benefit over as wide an area and to as many people as possible
The State Governments were accordingly requested to arrange for a detailed scrutiny of the schemes before they were accepted and for making adequate provisions providing for their pro per execution
They were also required to nominate a liaison officer for each district or other suitable unit for the purpose of checking the execution of the works and for maintenance of such initial accounts as might be necessary
This communication makes detailed provisions about financing and accounting procedures to be followed and required the State Governments to make progress reports from time to time
It appears that the Government of India was aware that the District Boards whose primary responsibility it was to sponsor these undertakings would find the project beyond their financial resources and so it accepted the recommendation of the Planning Commission to contribute 50 of the cost of each of the schemes on the condition that the remaining half had to be found by the District Board or by the public to be benefited by it in the form of cash or voluntary labour
The five impugned contracts related to community projects of the kind envisaged by this programme
By its letter dated February 27 1954 H 2 the Bihar Government had advised all the District Local Boards to assist the execution of such projects and to afford all facilities to and co operate with the district officers in the execution of the programmes undertaken by these projects without charging any remuneration for the same
The idea clearly was that if the Village Panchayats sponsored works undertaken under these programmes they should encourage people to contribute labour and even money
The result would be that the works undertaken would benefit the community at large and if any saving was made in executing the contract it would enure for the benefit of the village Panchayats that were usually expected to be the sponsoring units
541 It is in the light of this background that we have to consider the question whether the contracts in question had been executed by the appellant in his individual capacity as contended by respondent I or in his capacity as the Mukhiya of the Village Panchayat as urged by the appellant
The four contracts evidenced by Exs
16A C D and E are all similarly executed whereas contract 16 B which is in respect of the construction of the Beyapore M E School is somewhat differently worded
With regard to this latter contract both the Election Tribunal and the High Court are agreed that it had been executed by the appellant as the Secretary of the Beyapore Madhyamik Vidyalaya and that in this con tract the appellant was not personally interested
The Election Tribunal took the view that the other contracts are substantially of the same character whereas the High Court has held that they are entirely different and that the appellant has personally executed them
The question which we have now to decide is whether this view of the High Court is right
We would take exhibit 16 A as typical of the remaining four contracts
The material terms of this contract are 8 in number and they are all in the prescribed form
At the commencement of the contract the appellant has described himself by his name and he has stated that he belongs to the village of Jeorakhan Tola and that his profession is cultivation
The preamble to the contract shows that the appellant undertook to carry out the construction of the development project under local works programme mentioned in the contract as per estimate attached thereto and he agreed to execute the work according to and subject to the terms and conditions contained therein and he also undertook to contribute 50 of the cost in cash and labour
At the end the appellant has signed as Mukhiya and has given his address as Jeorakhan Tola Gram Panchayat
The High Court took the view that the description of the appellant given by him at the time when he signed the contract was not a term of the contract and could not therefore support his plea that he had executed the contract as Mukhiya of 542 the Panchayat
It is on this ground that the High Court distinguished this and the other three allied contracts from the school contract exhibit 16 B
In this latter contract the appellant has described himself as the Secretary Madhyamik Vidyalaya both at the commencement of the document and at the end where the appellant has signed
In our opinion the distinction made by the High Court between the two sets of contracts is not valid
We do not see any reason to take the view that the description given by the appellant about his status while he signed the contract is no part of the contract itself
Incidentally we may observe that the contract is accepted by the officer who signs as the section D O Dinapore
The designation of the officer given by him while signing the acceptance of the contract indicates the character in which the officer has accepted the contract
Similarly the description given by the appellant about his status and character when he signed the contract should be taken to denote the character in which he executed the contract
The High Court also thought that cls
4 and 7 by which the appellant undertook liability to execute the contract as required and to become liable for payment of any fine imposed by the local government officer in case of his default clearly showed obligations of a personal type which were inconsistent with his plea that he had entered into the contract as the Mukhiya of the Panchayat
We think that this argument has no force
If the nature of the liability undertaken by these two clauses necessarily involves the conclusion that the execution of the contract must be by an individual person then it is significant that the same two clauses occur in the school contract and yet the High Court has held that the said contract has been executed by the appellant not in his individual capacity but as the Secretary of the Madhyamik Vidvalava
Therefore too much reliance cannot be placed upon these two clauses to support the view that the contract has been executed by the appellant personally
Besides the High Court has not properly considered the term of the contract by which the contracting 543 party undertakes to contribute 50 of the cost of the work in cash or labour
In other words the contracting party becomes a sponsoring agent of the contract and agrees to undertake 50 of its cost
It is very difficult to appreciate the suggestion that the appellant personally and in his individual character agreed to contribute 50 of the cost in cash or labour
In  ordinary course a person who undertakes to carry out a building contract expects to make profit and would never agree to contribute 50 of the cost of the contemplated work
This clause clearly indicates that the sponsoring of the contract was really done by the Village Panchayat which agreed through its Mukhiya that it would contribute 50 of the cost either in cash or in labour
Consistently with the general policy of Plan the Village Panchayat became a sponsoring agent and hoped and expected to obtain popular response from the villagers who would contribute their labour and thus make up the 50 of the cost of the intended work
Therefore in our opinion if the contract in question is considered in the light of the background of the Plan of which it forms one item and all its conditions are taken into account together there can be no doubt that the appellant as the Mukhiya of the Village Panchayat acted as its agent when he signed the contract and not as an individual acting in his personal capacity
This position is also corroborated by the record kept by the Village Panchayat in respect of these contracts
This record consists of the several proceedings before the Village Panchayat the budgets adopted by it and the resolutions passed by it from time to time in respect of these contracts
It had been alleged by respondent 1 that the whole of this record had been fabricated for the purpose of the present proceedings
The Election Tribunal has made a definite finding against respondent I on this point
It has considered the oral evidence given by the appellant and other witnesses in proving the said record
It has examined the entries themselves on their merits and has taken into account the fact that some of the exhibits showed that they had been signed and 544 approved by the District Panchayat Officer from time to time
The tribunal therefore thought that it was impossible to believe that all persons who purported to sign the record had helped the appellant to manufacture it simply because the appellant was the Mukhiya of the village
The judgment of the High Court shows that it was not prepared to reverse this finding in terms
It has however made certain observations in respect of this record which would show that it was not prepared to attach any importance to it
 The papers  says the judgment  do not inspire much confidence and cannot be relied upon in proof of the facts disclosed by them 
It is unfortunate that when a serious allegation was made against the whole of the record alleged to have been kept by the Village Panchayat and it had been categorically rejected by the Election Tribunal the High Court should not have made its own finding on the point in clear and unambiguous terms
The oral evidence led by the appellant in support of the record and the other material circumstances considered by the Election Tribunal do not appear to have been properly taken into account by the High Court in dealing with this point
The High Court was however impressed by what it called two defects in respect of this record 
It observed that the accounts had not been audited as required by r 20 of the Bihar Gram Panchayat Account Rules 1949 and that the cash balance had not been kept by the Mukhiya in the nearest Post Office Savings Bank or in any recognised Co operative Bank or a Government Treasury in the name of the Panchayat as required by r 8
These two defects may undoubtedly suggest that the officers of the Panchayat including the appellant had not acted properly and had not complied with the obligations imposed by the said rules but it is difficult to understand how the said two defects can have a material and direct bearing on the question as to whether the record had been fabricated
If the High Court intended to hold that the record bad in fact been fabricated it should have considered the relevant evidence and the material circumstances 545 more carefully and should have made a definite finding in that behalf
To say that the record bore only the signatures of the appellant and his clerk and to seek to draw an adverse inference from that fact is in our opinion adopting a wrong approach to the question
If the appellant was the Mukhiya he was bound to sign the record and so was the clerk bound to write it that cannot therefore be treated as a suspicious circumstance by itself We have carefully examined this question and we do not see any reason why the well considered finding of the Election Tribunal on this point should not have been accepted
Therefore we must assume that the Panchayat record produced by the appellant is not shown to have been fabricated
Besides the High Court itself appears to have assumed that this record showed that there was an understanding between the appellant and the Village Panchayat in regard to the financial obligations involved in the execution of the impugned contracts
 It might well be  says the judgment  that the loss or the profit was ultimately to be borne or pocketed by the Gram Panchayat itself   but that according to the High Court  does not take away the effect of the contract itself which on the face of it was entered into by the appellant himself 
If the Panchayat agreed to bear the loss or take the profit flowing from the performance of the contract then it clearly supports the appellant s case that he had executed the contract as the Mukhiya of the Panchayat
The arrangement to which the High Court refers if genuine would be wholly inconsistent with the case set up by respondent I that the contract had been executed by the appellant personally
The High Court has also held that the appellant had not made out this specific case either before the returning officer when his nomination was challenged or in the present proceedings when he filed his written statement
The appellant had no doubt stated in reply that he had no interest in any contract undertaken by the State Government
According to the 69 546 High Court his failure to add the further particular that the contract had been executedby him on behalf of the Panchayat shows that the said plea is an afterthought
We are unable to see the force of this criticism
But apart from it the question raised by the appellant relates to the construction of the contract and we do not see how the construction of a document can be prejudicially affected by the failure of the party to make a more specific and more precise plea in his written statement
We have no doubt that if the contract is considered as a whole it would show that the appellant had executed it as the Mukhiya of the Village Panchayat and this conclusion cannot be affected by the alleged defect in the plea taken by him in the written statement
The High Court has also relied on the fact that if the contract was intended to be executed by the appellant on behalf of the Panchayat it should have been executed in the name of the corporate body as required by section 6 of the Bihar Panchayat Raj Act Bihar Act 7 of 1958
It may be that the Gram Panchayat is a body corporate by the name specified in the notification under sub section
1 of section 3 and has a perpetual succession and a common seal and so has power to contract in the name of the body corporate but as the judgment of the High Court itself points out the invalidity of the contract would not affect the merits of the issue raised under section 7d of the Act
That is the view taken by this Court in Chatturbhuj Vithaldas Jasani vs Moreshwar Parashram 1 and that in fact is the point made by the High Court in rejecting the appellant s contention that since the contract was invalid he could not be said to be interested in it under section 7d of the Act
Therefore the invalidity of the contract cannot help us in deciding the question as to whether on its true construction the contract can be said to have been executed by the appellant in his personal capacity or as the Mukhiya of the Village Panchayat
Our conclusion therefore is that the four impugned contracts have been executed by the appellant as the Mukhiya of the Village 1  547 Panchayat just in the same way as he had executed the school contract as the Secretary of the Vidyalaya in question
That being so section 7d cannot be invoked against him
In view of this conclusion it is unnecessary to decide whether the works in question had been undertaken by the Government of Bihar or by the Central Government
The result is that the appeal must be allowed the order passed by the High Court set aside and that of the tribunal restored  respondent I shall pay the costs of the appellant throughout and the Election Commission shall bear their own
We would like to add that after this appeal was argued before us on April 2 1959 we had announced our decision that the appeal would be allowed and that the judgment would be delivered later on in due course
It is in pursuance of that order that the present judgment has been delivered
Appeal allowed


Summary:
The by its First and Second Schedules provided the rates of and custom duties to be levied under the 
Chapter 98 introduced in Second Schedule prescribed a concessional rate of duty in respect of articles and items specified therein
As per Chapter 655 Note 1 if a particular article mentioned in Chapter 98 also fell under some other Chapterheading still such item would be governed by Chapter 98 and not by that other chapterheading
Photographic machinery was covered under Chapter 90 wherein the rate of duty was far higher but for purposes of duty it was claimed as industrial plant under Chapter 9801
The expression industrial plant was defined neither in nor in 
Chapter Note 2 of Chapter 98 of the laid down that Heading 9801 would apply to all goods imported in accordance with the regulations made under
section 157 of the Act and the expressions used in heading 9801 should have the meaning assigned to them in the said regulations
Accordingly the Project Import Regulations 1986 were framed
Regulation 3 of said Regulations defined industrial plant exduding from its purview industrial systems meant for establishments designed to offer services of any description such as
photographic studios photographic film processing laboratories etc
On coming into force of the Project Import Regulations the Customs authorities refused to treat the photographic equipment imported by the appellants as industrial plant falling under heading 9801 and sought to levy duty thereon under Chapter 90 of the 
The appellant filed writ petitions before the High Court challenging the validity of the Project Import Regulations 1986
The writ petitions were dismissed
Hence the appeals by special leave
The appellant contended that regulations made by the Central Board of customs and Excise under section 157 of the  not being subject to Parliament s scrutiny in the sense that they were not required to be laid on the floor of the Houses of Parliament under section 159 stand on an inferior footing to rules made by the Central Government under section 156 and therefore the regulation making power was confined only to peripheral and procedural matters and not for making substantive provisions the Act specified the articles and things subjected to duty as also the rates of duty and such A power was not left to be exercised by a delegate the Parliament did not contemplate delegating to the Board the power to cut down the field and ambit occupied by the provisions of the or the and such a power if delegated to the Board would amount to excessive delegation of legislative power Regulation 3 of the Project Imports Regu 656 lation defining Industrial plant was outside the purview of the regulation making power conferred by section 157 as the same took away under the garb of defining the said expression the beneficial rate of duty provided by the Parliament in the interest of industrial progress of the country
Dismissing the appeals this Court HELD  1
The regulation making power conferred on the Central Board of Customs and Excise by section 157 of the customs Act 1962 is not confined only to peripheral andor procedural matters
The Parliament has appointed the Central Government and the Board to make rulesregulations to carry out purposes of the Act
The character of Rules and of the Regulations made under sections 156 and 157 of the Act respectively Is the same both constitute delegated legislation
The Regulations are subject to an additional limitation viz they should not be contrary to the Rules made under section 156
The purpose of sub section 2 in both the sections is to allocate certain matters to each of them exclusively subject to these sub sections both the delegates can exercise the power vested in them for carrying out the purposes of the Act
662G H 663 G H 664 A 21
It is not for the Court to question the wisdom of the Government sor for that matter of Board s policy
Enactments like and are not merely taxing statutes but are also potent instruments in the hands of the Government for regulating the economy and the industrial development of the country
Power of taxation is one of the weapons in the Government s armoury to regulate the economy
A certain industry may require encouragement while another may not
Such legislations can be properly administered only by constantly adjusting them to the needs of the situation
This calls for a good amount of discretion to be allowed to the delegate
Flexibility is essential in law making and it is one of the advantages of rules and regulations that they can be altered much more quickly and easily than can Acts of Parliament
Probably it is for this reason that the Parliament has through Chapter Note 2 vested the power to define the expressions occurring in Chapter 98 in the Board which is a part of the Government and is in immediate direct charge of the administration of the Act alongwith and subject to the guidance of the Central Government
Looked at from this angle it cannot be said that Chapter Note 2 amounts to excessive delegation of the Parliament s essentialle legislative function
665 D  G
Chapter 98 of the provides a concessional tariff to industrial plant
The expression industrial plant is a term of wide 657 connotation
All kinds of Industrial plants may not require to be encouraged
Some may others may not
Decisions of this nature have to be made from time to time
Parliament cannot obviously do this
It has therefore rightly left the function to the Board
In 1986 the Government which expression includes the Board thought that import of industrial systems  meant for establishments designed to offer services of any description such as hotels hospitals photographicstudios photographic film processing laboratories etc need no encouragement in the shape of concessional custom tariff and they said so through the Project Imports Regulations 1986 which cannot he said to have travelled beyond the purview of the statute
Nor can it be said that the Board has travelled beyond its brief by excluding the Establishments designed to offer services of any description from the preview of industrial plant as defined under Regulation 3 of the Project Imports Regulations
Accordingly photographic equipment does not fall within the ambit of industrial plant
665 G H 666 A 668 E 23
It cannot be said that the Parliament has by empowering the Board to define the expression industrial plant occurring in Chapter 98 delegated its essential legislative function
There is indeed no self abnegation on the part of the Parlimaent
The express power conferred by Chapter Note 2 of Chapter 98 of is undoubtedly different from the power of exemption conferred by Section 25
It makes little difference in principle that while an exception notification is required to be laid on the floor of the parliament Regulations made under Section 157 are not so required
Absence of such requirement does not mean absence of control by the Parliament over the acts of the delegate
661 G H Supreme Court Employee Welfare Association vs Union of lndia  Avinder Singh vs Punjab   State of Tamil Nadu vs Hind Stone   relied on
Vasantial Maganbhai Sanjanwala vs State of Bombay   Devidas vs State of Punjab   referred to