ivil Appeal No 2110 of 1987
From the Order dated 861987 of the Customs Excise and Gold Control Appellate Tribunal New Delhi in Appeal No EDSB14584 C in Order No 44087 C MK Banerjee Solicitor General P Parmeshwaran Mrs Radha Rangaswamy and Mrs Sushma Suri for the Appellant
JS Kapil Krishan Kumar and Vimal Dave for the Respondent
The Judgment of the Court was delivered by SABYASACHI MUKHARJI J
The Collector of Central Excise Kanpur is the appellant in this appeal under section 35Lb of the hereinafter called the Act 
The period involved in this appeal is the assessment period from 25th March 1979 to 24th September 1979 a period of about six months
The respondent Ms Krishna Carbon Paper Company was engaged in the manufacture of carbon papers
During the period from 25th March 1979 to 24th September 1979 the respondent manufactured and cleared from its factory a quantity of 5601 boxes 20288 reams and 45 packets of carbon papers for a total value of Rs76749840 without payment of any duty under the Act
The Superintendent of Central Excise Lakhimpur Kheri issued notice to the respondent demanding central excise duty on carbon paper cleared during the aforesaid period under section II A of the Act
The respondent submitted a written reply stating that the notice was without jurisdiction because the respondent had taken out the central excise PG NO 15 licence immediately on the direction of the department and it was only after February 28 1982 that the product was subjected to duty under sub item 3 of item 17 by the Central Excise Budget of 1982
In support of this contention the respondent relied on Notifications Nos 18782 and 6982 both dated 28th February 1982
It was contended that the carbon paper was a new item which was specified under sub item 3 of item 17 of CET
According to the revenue however that the recasting of Tariff Item 17 in 1976 was irrelevant and that the carbon being akin to coated paper one side or both side was covered under sub item 2 of item 17 of the CET since 1976
The submission of the respondent was that sub item 3 of item 17 of the CET covering the carbon paper including copy paper was inserted by the Central Excise Budget 1982 but it does not make any retrospective change
It was according to the appellant an introduction of specific name or variety of paper for being subjected to a different rate of duty
The carbon paper remained a coated paper already covered under sub item 2 of item 17 of CET
The Assistant Collector of Central Excise Sitapur by his order dated 2730th April 1983 confirmed the demand for basic excise duty amounting to Rs11512476 and special excise duty of Rs575623 on carbon paper cleared during the period from 25th March 1979 to 24th September 1979
The Appellate Collector however set aside the order of the Assistant Collector and was of the view that the carbon paper could not be classified under Tariff Item 172 of the Act as it was before 1982
The Collector Appeals accepted the respondent s contention that the carbon paper was brought under the purview of Tariff Item 17 for the first time in 1982 when it was introduced as sub item 3 of Item 17 of the First Schedule to the Act with effect from 1st March 1982
Being aggrieved thereby the appellant preferred an appeal before the Appellate Tribunal
The Appellate Tribunal dismissed the appeal
Hence this appeal
The question for decision in this appeal is whether carbon paper before the introduction of Central Excise Budget in 1982 and consequential amendment in tariff fell under item 68 of the First Schedule to the Act as held by the Tribunal or under item 172 of the Tariff Item which was claimed by the Collector of Central Excise
Following its previous decision in the case of Sai Giridhara Supply Co vs Collector of Central Excise Bombay 1987 23 ELT 438 Tribunal the Tribunal upheld the contention of the respondent and held that for the period before the amendment of Central Excise Budget in 1982 carbon paper fell under Tariff Item 68 and not under Tariff Item 172 as it then was
The Tribunal did not go into the question of the PG NO 16 limitation namely whether the claim was barred in any event by the lapse of time in view of section 11 A of the Act
The Tribunal came to the finding that the carbon paper in question fell under Tariff Item 68 of the Central Excise Tariff
Shri Kapil on behalf of the respondent submitted before us that the claim in any event was barred by lapse of time in view of section 11 A of the Act
In view of the fact that the Tribunal did not decide this question if we are persuaded to reject the revenue s contention in this appeal the matter has to be remanded back to the Tribunal to decide this question as to limitation as there is no decision of the Tribunal on this aspect of the matter
Before the contentions are appreciated it will be appropriate to refer to the position of Tariff Item 17 at three different phases namely in 1975 after the amendment in 1976 and after the further amendment to item No 17 by the Finance Act of 1982
Item No 17 was amended with effect from 27th February 1982 and two specific entries were added
These were 3 and 4
It is necessary to set out in the position at different points of time
It was as follows Tariff Item 17 Position in I975 Item No Description of goods Rate of Duty 17
Paper all sorts including paste board mill board strawboard and cardboard in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power 1 Cigarette tissue Rs 3 per Kg
2 Blotting toilet target tissue Rs 1 and 20 other than cigarette tissue paise per kg
teleprinter typewritting manifold bank bond art paper chrome paper tubsized paper cheque paper stamp paper cartridge paper waxed paper polythelene coated paper parchment and coated board including art board chrome board and for playing cards PG NO 17 3 Printing and writing paper 90 paise per kg
packing and wrapping paper strawboard and pulp board including grey board corrugated board duplex and triplex boards other sorts 4 All other kinds of paper and Re 1 and 20 paper board not otherwise paise per kg
specified
Position in 1976 17
Paper and Paper BoardAll sorts Thirty percent including paste board mill board ad valorem
straw board cardboard and corrugated board in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power 1 Uncoated and coated print and writing paper other than poster paper Twenty five per cent ad valorem 2 Paper board and all kinds of paper including paper or paper hoards which have been subjected to various treatments such as coating impregnating corrugation creping and design printing not elsewhere specified
There was further amendment to Item No 17 by the Finance Act of l982
Item 16 was amended with effect from 272 1982 and two specific entries were added
They are 3 and 4 which are reproduced below Item No Description of goods Rate of Duty 17
xx xx xx 3 Carbon and other copying papers 32 12 ad including duplicator stencils and valorem papers whether or not cut to size and whether or not put to in boxes PG NO 18 4 Boxes cartons bags and other 32 12 ad packing containers including flattened valorem or folded boxes and flattened or folded cartons whether or not printed and whether in assembled or unassembled conditions
 The short question with which we are concerned is whether during the relevant period namely 25th March 1979 to 24th September 1979 when the position mentioned above was prevailing whether carbon papers could be included in all kinds of paper including the paper which have been subjected to coating would come within sub item 2 of item 17 as mentioned hereinbefore or under residuary item 68 of the Central Excise Tariff
The Tribunal followed a previous decision in Sai Giridhara Supply Co vs Collector of Central Excise Bombay supra
There the Tribunal had discussed the various aspects of the matter and felt itself bound by the decision of the Karnataka High Court to which reference will be made later
The Tribunal has referred to the observations of Buckley LJ where the Lord Justice observed that once a precedent was held to be a binding one then no deviation therefrom was permissible within the judicial polity except in the well accepted categories of cases enumerated in the judgment
Those contingencies the Tribunal found were not applicable to the facts of this case
It is well settled that in order to ascertain the correct meaning of a fiscal entry reference to a dictionary is apt to be a somewhat delusive guide as it gives all the different shades of meaning
In the instant case our attention was drawn to the extract from the Oxford English Dictionary Volume III page 436 where the meaning of the word paper has been given
It reads as follows Paper pei per sb
Also 4 papure 4 6 papir
5 papire papyre paupire 5 6 pauper 5 7 papyr 6 papre
a AF
papir  OF Papier Pr
Papier Cat
Paper Sp
papel paper  It
papira papyrus ad
L papyrus the papyrus or paper reed of the Nile also writing material made of it a Gr
nanvpos the papyrus reed
From the writing sheets made of the thin strips of papyrus the name was transferred to paper made of cotton and thence to paper of linen and other fibres
These extensions took place before the word became English so that here its application to papyrus is only a later retrospective use PG NO 19 I
The simple word
Without a or pl
as denoting a particular kind
I A substance composed of fibres interlaced into a compact web made usually in the form of a thin flexible sheet most commonly white from various fibrous materials as linen and cotton rags straw wood certain grasses etc which are macerated into a pulp dried and pressed and subjected to various other processes as bleaching colouring sizing etc according to the intended use it is used in various forms and qualities for writing printing or drawing on for wrapping things in for covering the interior of walls and for other purposes
 Our attention was also drawn to the meaning of the carbon paper in Pulp and Paper Manufacture  second edition
volume II which has been described as follows Carbon paper is made by coating paper with a mixture consisting principally of a wax and a pigment
The color is obtained from the pigment usually a carbon black of low oil absorption plus toners usually lake pigments or oil soluble dyes which are added to increase the blackness
The wax which acts as a binder for the pigment must have a viscosity low enough to permit slight penetration into the paper but not so low that the wax strikes through or sweats oil
Waxes with a melting point between 105 to 120 F and a viscosity of about 60 or 70 Saybolt at 210 F are generally used
The principal wax used is carnauba although some ceresin beeswax candelilla ozokerite ouricury and synthetic waxes are also used
Special grades of micro crystalline waxes may be added to soften the coating and improve the printing qualities
In addition to the above ingredients non drying oils mineral oils are used to soften the coating and control the amount of coating transferred to the copy
Oleic acid is sometimes used as a solvent for oil soluble dyes
All carbon papers must be free of offset flaking wrinkles curl or other defects and must give a good impression on the copy paper
The coating must be hard enough not to smear in hot weather but the exact degree of hardness depends upon the intended use that is whether PG NO 20 the paper is designed as a pencil carbon a typewriter carbon or a one time carbon
The amount of coating varies from a very thin coating used in making one time carbons to a very heavy coating used in making high grade typewriter carbons for multiple use
The latter in which the paper may be reused up to 40 to 50 times must have a coating of very high color value and the coating must be compounded so that only a small amount is transferred to the copy sheet
A simplified formula for a typewriter carbon would be as follows Carnauba was     34 Ozokerite      6 Deeswax      7 Petrolatum      6 Mineral Oil     25 Carbon black     13 Toners      6 Oleic acid      3 In the coating of carbon paper the molten was mixture is applied to the paper at a temperature of about 200 F Coating is done on a carbon paper coater which consists of an inking roll which is supplied with coating directly from a bath or from a heated fountain
The inking roll revolves in a direction opposite to that of the paper web
Excess coating is scraped off the paper by an equalizer rod and the sheet then passed over a water cooled cylinder to chill and harden the coating
Crystallization of the wax occurs Upon chilling and this process continues over a period of several days
For this reason it is customary for cart on manufacturers to age their coated paper for two to seven days before shipping
It is absolutely essential that the coating be absorbed evenly by the paper
Therefore the paper must have a smooth surface uniformly high density good formation and above all be free of pinholes
Further requirements are high strength low basis weight and freedom from flaws such as slime spots and dirt specks
Because of these rigid requirements the base stock for carbon tissue is difficult to make
The best grades made from new cotton or linen rags or from manila hemp whereas the cheaper grades are made PG NO 21 from sulfate and sulfite pulps
The stock is beaten for a considerable period of time often up to thirty hours in order to develop maximum strength
The stock is only lightly sized
Calcium carbonate is often used as a filler but the ash should not be over 5
The basis weight is usually 4 5 12 7 or 10 lb
per ream 20 x 30 500
The 4 1b
paper is used when a large number of copies is to be made the 5 and 7 lb
papers are suitable for ordinary work
Carbon paper under the specifications of the Indian Standard Institute is described as follows Carbon Paper paper coated generally on one side with a pressure transferable pigmented layer used for making copies at the same time as an original manuscript or typescript is made
 It is well settled as mentioned before that where no definition is provided in the statute itself as in this case for ascertaining the correct meaning of a fiscal entry reference to a dictionary is not always safe
The correct guide it appears in such a case is the content and the trade meaning
In this connection reference may be made to the observations of this Court in Commissioner of Sales Tax UPv
SN Bothers Kanpur AIR 1973 SC68 at page 80 para 5
The trade meaning is one which is prevalent in that particular trade where that good is known or traded
If special type of good is subject matte of a fiscal entry then that entry must be understood in the context of that particular trade bearing in mind that particular word
Where however there is no evidence either way then the definition given and the meaning following from particular statute at particular time would be the decisive test
In the famous Canadian case in King V Planters Nut and Chocolate Company Limited 1951 CLR exhibit 122 Cameron J observed that it is not botanist s conception as to what constitutes a fruit or vegetable but rather what would ordinarily in matters of commerce in Canada be included there should be the guide
Similarly this Court has held in Union of India and Anr
V Delhi Cloth and General Mills Co Ltd  at page 79 para 12 that the view of the Indian Standard Institute as regards what is refined oil as known to the market in India must be preferred in the absence of any other reliable evidence
It must be PG NO 22 emphasised in view of he regards what is refined oil as known arguments advanced in this case that the meaning should be as understood in the particular trade
In this case we are construing not paper as such but a particular brand of paper with a meaning attributed to it
Sub item 2of item 17 as was the position in 1976 paper referred to all kinds of paper including paper or paper boards which have been subjected to various treatments such as coating impregnating
So therefore if all kinds of paper including coated paper is the goods we have to find out the meaning attributed to those goods in the trade of those kinds of paper where transactions of those goods take place
It is a well settled principle of construction as mentioned before that where the word has a scientific or technical meaning and also an ordinary meaning according to common parlance it is in the latter sense that in a taxing statute the word must be held to have been used unless contrary intention is clearly expressed by the legislature
This principle is well settled by a long line of decisions of Canadian American Australian and Indian cases
Pollock J pointed out in Grenfell vs IRC 1876 I exhibit D 242 at 248 that if a statute contains language which is capable of being construed in a popular sense such a statute is not to be construed according to the strict or technical meaning of the language contained in it but is to be construed in its popular sense meaning of course by the words popular sense   that which people conversant with the subject matter with which the statute is dealing would attribute to it
The ordinary words in every day use are therefore to be construed according to their popular sense
The same view was reiterated by Story J in 200 Chests of Tea  1824 9 Wheaton US 435 at 438 where he observed that the legislature does not suppose our merchants to be naturalists or geologists or botanists
See the observations of Bhagwati J as the learned Chief Justice then was in Porritts  Spencer Asia Ltd vs State of Haryanal9791 I SCC 82
But there is a word of caution that has to be borne in mind in this connection the words must be understood in popular sense that is to say these must be confined to the words used in a particular Statute and then if in respect of that particular items an artificial definition is given in the sense that a special meaning is attached to particular words in the Statute then the ordinary sense or dictionary meaning would not be applicable but the meaning of that type of goods dealt with by that type of goods in that type of market should be searched
In the instant case we have all kinds of papers including papers subjected to coating impregnating etc
 If there is a market meaning or trade meaning of that kind of a paper that should be adhered to
In this case there is no direct evidence how these peculiar goods are dealt with in the particular market dealing with PG NO 23 those goods
But there is evidence how these are to be understood in the light of the specifications of the Indian Standard Institute which we have mentioned before
It is instructive to refer in this connection a passage of the Tribunal s decision in Kores India Ltd Thane vs Collector of Central Excise Thane  where the Tribunal observed that on the point whether carbon paper is understood as a coated paper in trade there is authority of the Indian Standards Institute s publication Glossary of Terms used in Paper Trade and Industry IS 4661
Therefore understood in the accepted notion of construing entries of fiscal Statute not from a technical or scientific point of view but from the point of view of the people in the trade dealing with that particular type of goods and having regard to the evidence of the Indian Standard Institute and in the absence of any other evidence to the contrary the Tribunal was justified in holding that on the basis of the definition of paper as it was in the year 1976 carbon paper would come within item 172of the Tariff Items
Learned counsel for the respondent placed reliance on the observations of this Court in State of Uttar Pradesh vs Ms Kores India Ltd 977 1 SCR 837 where this Court was concerned with a notification under section 3 A of the UP Sales Tax Act 1948 The question fell for consideration before this Court in that case was whether carbon paper was taxable as paper and further whether ribbon was accessory or part of typewriter
This Court reiterated that a word which is not defined in an enactment has to be understood in its popular and commercial sense with reference to the context in which it occurs
The word has to be understood according to the well established canon of construction in the sense in which persons dealing with and using the article understand it
For this principle this Court relied on the observations of Lord Tenterden in Attorney General vs Winstanley  and the observations of Pollock J in Grenfell vs Commissioners of Inland Revenue  at 248
Pollock J was construing the Stamp Act where he correctly emphasised that the words should be construed in popular sense meaning thereby the sense in which people conversant with the subject matter with which the Statute is dealing would attribute to it
That is the correct test
This Court observed further at page 839 of the report that in popular parlance the word paper  is understood as meaning a substance which is used for bearing writing or printing or for packing or for drawing on or for decorating or covering the walls
Carbon paper is not commonly understood as paper
This Court thus held that paper simpliciter cannot include carbon paper because that would not be in consonance with the popular PG NO 24 understanding of the expression paper
But where paper of a special type defined in the particular statute as one including paper which have been subjected to various treatments such as coating impregnating how that paper be understood there must be evidence of that understanding
In the absence of that evidence the natural meaning following from the expression used in the statute should be adhered to
In that light it appears to us that in view of the facts of this c se and in the principles of law as prevailing in 1976 papers of all kinds including paper with coating and impregnating and the views of the Indian Standard Institute would include carbon papers 
Learned counsel drew our attention to the decision of the Karnataka High Court in Khoday Industries Ltd vs Union of India and Ors where the learned single Judge held that carbon paper is an article of statutory classifiable under item 68 of the Central Excise Tariff al1d not under item 172 as coated paper prior to its amendment with effect from 27th February 1982
He took into account the Trade Notice No 5676 and Tariff Advice No 576
The Trade Notice No 576
The issued by the Collector was based on the instructions issued by the Boarsl as per Tariff Advice No 576
Carbon paper was commercially recognised only as an article of stationery falling under item 68 of the Central Excise Tariff and not under Item 172
This was in respect of the position as it stood prior to 1976 when paper did not include coated paper or impregnated paper
It appears from the said judgment of the High Court that the Trade Notice 5676 was issued by the Collector on 2nd March 1976 and Item 17 was amended on 27th May 11976 and sub clause 2 as amended among other things included coated paper
the trade notices and the tariff advices are not relevant as such in construing items in Tariff Schedule
In this connection reference may be made to the observations of this Court in Orient Paper Mills Ltd V Union of India  where this Court observed that a quasi judicial body exercising quasi judicial power is not bound by the directions of the Board
There is no provision in the Act empowering the Board to issue directions to the assessing authorities or the appellate authorities in the matter of deciding disputes between the persons who are called upon to pay duty and the department
Therefore trade notices as such issued by the Board are not relevant considerations
The point which Shri Kapil further urged is that Item No 17 was amended by the Finance Act of 1982 and two specific entries were added namely Items nos
173 and 174 we have noted before
His contention was that if the PG NO 25 carbon paper was already there then there was no purpose of introducing these subsequent amendments
Shri Kapil relied on a Full Bench decision of the Government of India in the case of Ms Colgate Palmolive India P Ltd 1979 ELT J 567 where the Government of India observed that it was well settled law that the proper rule of construction applicable to items and entries occurring in Excise Schedule should be to construe not in scientific or technical sense but in the sense as understood by the parties dealing with or commercially conversant with them
The Government of India relied on the observations of this Court in Dunlop India Ltd vs Union of India AIR 1977 SC 597
So far as that principle is concerned this is applicable
It must be understood by the persons dealing with this particular type of goods
We are concerned here not with paper simpliciter or how it is understood in common parlance but paper with a particular definition at the relevant time namely all kinds of paper including paper or paper boards which have been subjected to various treatments such as coating impregnating stated in that context
In that context it cannot be said that carbon paper cannot be coated paper as such
Shri Kapil submitted that if carbon paper was there then there was no purpose for introducing two sub items by the Finance Act of 1982
The Finance Minister however observed in his speech extract of para 123 at page 38 39 of Part B  dated 27th February l982 as follows 123
I also propose to rationalise and restructure the tariff relating to paper and paper boards the primary objective being to exempt small scale paper converters from payment of excise duty and to release them from excise control
In order to recoup the consequent loss in revenue I propose to raise the basic excise duty on industrial varieties of paper and paper boards by a small margin of 2 12 per cent ad valorem
However certain converted papers of high value added categories are proposed to be subject to basic excise duty at 32 12 per cent ad valorem
Similarly specified articles made of paper and paper board are proposed to be brought within the purview of the tariff item but effectively restricting the levy to printed cartons and printed boxes
It appears that the Finance Minister was adding two items one was 173 carbon and other copying papers and the second was 174 boxes cartons bags and other packing containers
He mentioned in his speech that in order to recoup the consequent loss in revenue he proposed to raise PG NO 26 the basic excise duty on industrial varieties of paper and paper boards by a small margin of 2 1i2 per cent ad valorem
Tariff Advice No 576 contained the following statement TARIFF ADVICE No 576 BOARD S LETTER F No 61273 CX
2 dated 12276 Sub Paper Carbon paper and Stencil Paper Whether excisable under Item No 17 of
A doubt has been raised whether carbonstencil paper produced by conversion of duty paid base paper should be treated as paper falling under tariff item 174 of Central Excise Tariff or as on item of stationery outside the scope of item No 17 of CE Tariff
The matter was considered in the Central Excise Tariff Conference held at Cochin on the 13th to 15th November 1975
It was reported that carbon paperstencil paper is sold in the market mostly cut to size by retail stationers
The Indian Customs Tariff Guide has also treated Carbon paper as an item of stationery and not as paper
The Conference was therefore of the view that carbon paperstencil paper were commercially recognised only as articles of stationery
The Board is accordingly advised that carbon paper and stencil paper should he treated as articles of stationery
and therefore outside the purview of item No 17 CEx 
Tariff
4 Receipl of this letter may kindly be acknowledged
These are relevant or proper materials to apply to construe the meaning of the Tariff Item
Moreover
in proper light these do not militate against the view that carbon paper in 1976 was included in the special type of paper
as defined at that time
In the aforesaid view of the matter we are of the opinion that as at the relevant time the definition of paper PG NO 27 being paper board and all kinds of paper including paper or paper boards which have been subjected to various treatments such as coating and impregnating and in the light of the IS specifications as noted hereinbefore and there being no other reliable evidence as to how coated paper is understood in the market except the opinion of the Indian Standard Institute in its specifications in our opinion the Tribunal was not right in the view it took 
The Tribunal in Kores India Ltd Thane vs Collector of Central Excise thane supra expressed the view that carbon would fall under item 172 of the Tariff Items relying on ISI specifications
There was authority of the Indian Standards Institute s publication Glossary of Terms used in paper Trade and Industry Is 4661
In view of the facts as appeared in paragraph 14 of the Tribunal s judgment in Kores India Lid
Thane vs Collector of Central ExciseThane supra where the basis of the classifications of ISI in its specifications is explained we are of the opinion that the carbon paper fell under item 172 as it stood at the relevant period germane for this appeal before 1982 and not in residuary item No68 of CET Learned Solicitor General submitted that this amendment so tar as item 173 was concerned was mere clarificatory and was introduced ex abundanti cautela
Our attention was drawn to the decision of this Court in Md Qasim Larry Factory ManagerSasamusa Sugar Works vs Muhammad Samsuddin and Anr 1964 7 SCR419 where the Court was concerned with the question whether the term wages as defined by section 2vi of the including wages fixed in an industrial dispute between the employer and the employee
The question had to be answered in the light of the definition prescribed by section 2vi before it was amendement in 1958
The subsequent amendment expressly provided by section 2via that any remuneration payable under any award or settlement between the parties or order of a Court would be included in the main definition under section 2vi
In the view we have taken on the construction of the expression as it stood in the relevant time it is not necessary to rest our decision on the question whether the amendment was clarificatory or not
In the light of the evidence referred to by the Tribunal in Kores India Ltd Thane vs Collector of Central Excise Thane supra and in the light of the definition of paper in CET Item 17 l  as it stood at the relevant time it is sufficient to hold that it was covered by item 172 of PG NO 28 CET and would not fall into the residuary entry
In that view of the matter the decision of the Tribunal cannot be sustained on this point and the appeal must be allowed
However as the point of limitation has not been decided by the Tribunal we remand the case back to the Tribunal to decide that question having regard to the facts found in this case
The appeal is therefore disposed of in the light of what is stated aforesaid
In the facts of this case the parties will pay and bear their own costs
R S 
section Appeal disposed of


Summary:
Respondents are running Private Schools
In pursuance of the State of Kerala publishing in the Gazette a final list of areas where new unaided recognised high schoolsupper primary schoolslower primary schools were to be opened or existing unaided lower primary schools upper primary schools were to be upgraded in the year 1986 87 the Respondents educational agencies submitted applications for grant of sanction to open the unaided recognised schools or for upgrading the schools already run by them
These applications were duly inquired and considered by the District Educational Officer as also by the Director of Education as per the Rules  procedure laid down therefor particularly Rules 243 and 4 and thereafter the Government considered the applications in accordance with Rule 2A5 and took a final decision for grant of necessary sanction for openingupgrading of 36 lower primary schools 36 upper primary schools and 19 high schools totalling in all 91 schools in the list of areas selected
On 4287 the State Government issued an Order under exhibit P 4 granting sanction to the Respondents to open new unaided schools or to upgrade their existing schools subject to the conditions set out therein
However by an Order exhibit P 5 dated 20287 the Government directed that the earlier order under Ex P 4 be kept in abeyance
The Respondents challenged the Order of the Government by means of a Writ Petition
During the pendency of the Writ Petition general elections were held to the Kerala Legislative Assembly as a result whereof a new Ministry assumed office
The Government under the new Ministry passed an order dated 19587 under Ex P 7 cancelling in toto the order under Ex P 4 granting sanction to the Respondents to open the school or to upgrade the existing schools
PG NO 94 PG NO 95 The Respondents thereupon amended their Petition suitably and challenged the validity of the order of cancellation passed under Ex
The Singie Judge of the High Court before whom the Writ Petition first came up for hearing took the view that while it was obligatory for the Government to follow the procedure prescribed in Rules 2  2A Chapter V if it was to permit the opening of new unaided recognised schools or upgradation of existing schools the converse result would not follow ie wherever the Government had gone through the procedure under the Rules the Government could not retrace its steps and was bound to proceed further in the matter and that the Government had no option to reverse its decision
On the question of revocation of the order of sanction however the learned Judge held that the power to sanction new schools carried with it the inherent power of cancellation of an order passed under Rule 2A5
Accordingly the learned Singie Judge dismissed the petitions
The respondents thereafter preferred appeals before the Division Bench
The Division Bench allowed the appeals reversed the order passed by the Single Judge but granted only limited reliefs to the Respondents in that it quashed the order under exhibit P 7 dated 19587 and issued a mandamus to the State Government to consider the applications of the Respondents on their merits on the basis of the earlier order passed in their favour under exhibit P 4 dated 4287
The Division Bench further held that the Respondents have locus standi to challenge the order of cancellation and that the Government did not have the power or jurisdiction to revoke the cancellation order
It also held that the cancellation order violated the principle of natural justice
Being aggrieved by the decision of the Division Bench of the High Court the State filed these appeals after obtaining special leave
Dismissing the appeals this Court HELD The importance of securing recognition lies in the fact that without recognition the students studying in the unaided schools will neither be permitted to appear as candidates in the examinations conducted by the State nor be eligible to avail of the opportunities for higher education or to enter public service examination
The obtainment of recognition from the Government is therefore a vital factor for the educational agencies starting new schools or newly upgrading their existing schools
 107B C Rule 2A1 makes it imperative for the Director to call for applications from interested parties for opening new schools or upgrading existing schools in the selected areas
The mandate contained therein goes to show that the PG NO 95 idenffication and selection of inadequately served areas under Rule 24 is not an idle or meaningless exercise
111A C When even an unsuccessful applicant is conferred a right to represent to Government against the non approval of the application can it be said that an approved applicant has no right whatever to complain when the sanction granted to him is revoked all of a sudden without he being given any opportunity to show cause against such cancellation
111D E The further scrutiny of the application of the approved applicant under Rule 9 and the confirmation of approval under Rule 11 would not however mean that the earlier sanction granted under Rule 2AS does not create legitimate expectation right in the approved applicant
111G H 12A The Rules do not provide for the Government reviewing suo moto any order of sanction passed under Rule 2A5 in favour of any applicant for opening of a new school or upgrading an existing school and its power of revision under Rule  2 is confined to the reconsideration of the case of any applicant whose name did not find a place in the final list of approved applications published by the Government
116D E  Though the sanction granted to the respondents under exhibit P 4 would not by itself entitle them to open new schools or upgrade the existing schools it did confer on them a right to seek the continuance of the statutory procedural stream in order to have their applications considered under Rule 9 and dealt with them under Rule 11 122C It was not open to the Government either under the Act or Rules or under Section 20 of the Kerala General Clauses Act to cancel the approval granted to the respondents under Rule 2A5 for opening new schools or upgrading existing schools in the selected areas on the basis of a revised policy
122D The impugned order under exhibit P 7 irrespective of the question whether the government had the requisite power of cancellation or not is vitiated by reason of non observance of the principles of natural justice and the vice of extraneous factors
 122E