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minal Appeal No 738 of 1992 From the Judgment and Order dated 16111992 of the Bombay High Court in Crl A No 148 of 1989 AN Mulla Ms Shefali Khanna and JM Khanna for the Appellant SB Bhasme SM Jadhav and AS Bhasme for the Respondents The Judgment of the Court was delivered by YOGESHWAR DAYAL J This is an appeal by the four accused persons against the judgment of the Bombay High Court dated 16th November Appellant No 1 who was accused No 1 was tried for the offence of having 880 committed the murder of his daughter in law Sangita wife of appellant No 2 who was accused No2 during the night between 14th September 1984 and 15th September 1984 at the residential house of the appellants at Murtizapur with common intention and also for having treated her with cruelty on account of dowry amount In the alternative the appellants were also charged for the offence of having abetted the deceased Sangita in commission of suicide by subjecting her to cruelty Appellant no3 who was accused No3 is the wife of accused No1 and appellant No4 who was accused No 4 is their daughter Appellants 1 to 4 are hereinafter called accused Nos 1 to 4 The story of the prosecution was as follows The accused run a printing press at their residence Marriage of accused No 2 was settled with the 5th daughter of Madan lal PW 8 Few days prior to the settlement of the marriage marriage of her elder sister was also settled As such marriages of both the daughters ie Sangita and Hemlata were celebrated at Paratwada on 28th April 1994 Talk over the marriage had taken place about a month prior to the marriage and the same was finalised after about 2 or 3 days of such talks At the time of finalisation accused No 1 demanded Rs 20000 by way of hard cash as dowry besides other articles add he himself had given such demands in writing vide Ext Though agreed Madan Lal father of the deceased could not give Rs 20000 at the time of marriage He also could not give the gold agreed though he assured to comply with the demands later on getting the crops After the marriage on account of the month of Shrawan and as per custom Sangita resided with her parents It was during her stay after the marriage that she was found disturbed and sullen Though she herself did not give out the reason therefore but on insistence by the father to know the reason she told him that accused No 1 had an evil eve on her and that other members of the family used to beat and ill treat her because of the failure on the part of Madan Lai to pay the dowry amount Though Madan lal assured that he would come down to Murtizapur and pursued the accused but he could not visit Murtizapur After the month of Shrawan Sangita returned to Murtizapur but not communication was made about her safe return by the accused persons to her father The accused persons had a telephone connection and Madan Lal PW8 two three days prior to the date of the incident contacted accused No 1 on telephone Accused No 1 talked angrily with Madan Lal Madan Lal then requested accused No 1 to call Sangita on telephone Sangita came on phone and in answer to his query she broke down and Stated weeping and told Madan lal as to why he did not send Ganesh Chaturthi Neg Neg means a customary offer that the father of the bride has to pay on an auspicious day It varies according to financial capacity of the father He told 881 Sangita that he had committed it mistake and assured that he would be sending it immediately On the next day lie had got drawn a draft of Rs 101 on State Bank of India 74 A is the said draft It was thereafter when Madan Lai was on a visit to Amravati that Madan Lal received a message about Sangita having got burnt on 15th September 1984 During the night between 14th and 15th September 1984 at about midnight the accused found Sangita not in her bed and smell of burning They found that in the rear side open space Sangita was burning and lying down According to the defence the doors were closed from inside and there was no access to the said open space Accused No 1 informed the police about the occurrence that he had seen through the window opening on the pen space Accused No 1 at about 345 am on 15th September 1994 submitted it report Ext82 to the police wherein he had stated that about 2 10 am in the night Sangita was found to be burnt and died in the bath room Mundheh the investigating Officer gave instructions to the accused persons not to disturb the situation Initially on the report of the accused accidental death was registered PW9 when reached the spot on 15th September 1984 at about 1000 am he made spot Panchnama vide ext63 He also found a postcard half burnt Ext 62 by the side of the dead body He thereafter drew inquest panchnama Ext64 PW 1 Bhanudas acted as a panch PW9 having convinced that it was a case of murder lodged it report on behalf of the State registering the offence punishable under Section 302 read with Section 34 of the Indian Penal Code Dr Lande PW3 on 15th September 1994 at about 500 pm conducted the post mortem The Additional Sessions Judge on the basis of the material filed with the challan on 30th September 1994 trained a charge under Sections 302499 A and 201 read with Section 34 of the Indian Penal code and thereafter recorded the evidence of PWs 1 to 9 Thereafter by an order dated 22nd August 1988 the trial court framed an additional charge for the offence punishable under Section 306 read with Section 34 of the Indian Penal Code The accused persons challenged the framing of the additional charge before the High Court but the challenge was defeated The accused persons were accordantly tried Their defence through out was a total denial It appears that during arguments the Prosecutor did not think it proper to press for the diffence punishable under Section 302 read with Section 34 of the Indian penal Code According to the Prosecutor the only case made out was for the offences punishable under Sections 306 498 A read with Section 34 of the Indian Penal Code The trial court endorsed the view of the Public Prosecutor and did not 882 discuss the relevant evidence it all on the charge of Section 302 and recorded a finding of acquittal in that behalf He also held that the charge of Section 201 also did not survive The learned trial Judge also held that the prosecution hits not been able it prove that the accused persons with their common intention treated Sangita with cruelty or thereby abetted her to commit suicide He accordingly acquired all the accused persons for the offence punishable under Section 306 read with Section 34 of the Indian Penal Code The State filed all appeal against their order of acquittal and the High Court on appeal castigated the trial judge for having gone merely oil the statement of the public Prosecutor without applying his own mind on the evidence The High Court examined the evidence afresh The High Court posed a question is to whether the nature of death of Sangita was suicidal or homicidal and ultimately gave a finding that it was a case of homicidal death and found all the accused guilty under Section 302 read With Section 34 and Section 201 read with Section 34 The accused were also find guilty under Sections 498 A read with Section 34 For the offence under Section 302 read with Section 34 all of them were sentenced to rigorous imprisonment for life and different fines For the offence under Section 201 read with Section 34 all the accused persons were sentenced to rigorous imprisonment for three years and each of them was fined Rs1000 For the offence under Section 498 A read with Section 34 all of them were sentenced to one year rigorous imprisonment and a fine of Rs2000 Learned counsel for the defence however submitted before the High Court that the charge under Section 302 read with Section 34 did not survive tit view of the concession made by the Prosecutor and also in view of the framing of the additional charge under Section 306 read with Section 34 It was also submitted that the framing of the additional charge negated the theory of murder in pith and substance The High Court however negatived this submission and on consideration of the evidence convicted all the accused persons as stated above Body of Sangita suffered 100 burn injuries and smell of kerosene was even noticed in the spot panchanama The description 1005 burn does not really fully 883 convey the condition of the body Asper the inquest report the dead body was lying on its back in the open court yard at the back side of the house of the accused Both the legs were partly stiffen Both the hands were partly bent and lying at side Hairs on the head burnt and even fleshy portion is also burnt at some places There was slight hair at some portion of head Complete body was burnt and skin on it also peeled up Face had became red and black Eyes were closed and burnt Nose was burnt and blood was cozing from the nose and mouth Tongue was slightly protruding out Brassier of the left side was totally burnt and right side was partly burnt Ash of burnt cloth was visible on stomach A partly burnt small piece of the border of saree was lying there Some pieces of saree burnt and sticking each other were lying on the stomach Skin on palm of both hands was peeled up and was appearing reddish Skin on the complete body was burnt and peeled up On observing the body by turning its upside down the complete body was burnt from back side On observing the private parts of the deceased through Pancha No3 it was stated that private parts were burnt and there was no injury and to ascertain the actual cause of death the dead body was sent to the Civil Surgeon Murtizapur for post mortem According to Dr Lande who conducted the postmortem on opening of trachea black particles were found He recorded that probable cause of death was 100 burn with bum shock with asphysix On the basis of medical evidence the High Court again felt the necessity to ascertain whether the act of pouring kerosene oil was voluntarily by the victim or the act of a third person The High Court felt that the trial court has not even discussed the medical evidence or the inquest report and hastily reached the conclusion that it was a case of suicidal death According to the High Court the entire approach of the trial court was thoroughly unsatisfactory and grossly erroneous After going through the evidence the High Court gave the following findings That the deceased could not control her emotional out burst even during the presence of her father in law while talking on telephone The deceased was a young girl of 20 years A determination to suffer extreme pain in silence could not be a matter of speculation In third degree injuries as per Dr Lande the victim suffers extreme pain Such injuries will make the person to give out cries and shouts for help The shouting and crying of the deceased was not only obvious but inevitable Undisputedly none had heard the cries or shouts of the deceased while she was in flames This circumstance alone does not support the probability of suicidal death 884 The trial court has wrongly read the contents of letter Ext 62 and its interpretation is highly illegal Undisputedly Sangita returned from Paratwada after Shrawani Mass just a week before the incident probably by 7th September 1984 She was subjected to insinuation and accused used to refer her as awara loafer badmash She wanted to convey this to her father through post card Ext62 which seemingly not delivered By this letter she requested her father not to visit Murtizapur This letter never reached post off ice and the message could not be passed to Madan Lai PW 8 Before accomplishing her design to convey this message she could not bring an end to her life Sangita could not simply think of committing suicide while in possession of Ext62 Sangita at the time of incident as per the post mortem report was having a pregnancy of 3 4 months and this is also not in tune with the act of commission of suicide The Sessions Judge omitted to discuss the complete evidence of Dr Lande and the post mortem report Ext50 As per post mortem report the eye ball and tongue of the deceased were protruding Dozing of the blood was found from the nose and mouth In case of death due to burning such injuries cannot be sustained Sangita was assaulted before she was set on fire There might be a definite attempt to cause death by strangulation before pouring kerosene oil on her person Relying of the evidence of PW1 Shivraj a neighbour who heard a shriek of woman as a result of strangulation coming from the house of the accused Taking into account tile medical evidence read with the testimony of PW1 Shivraj Sangita met with tile homicidal death A ball of cloth half burnt was also found by the side of the body The ball was used for gagging her mouth as a precautionary measure to handicap her from raising cries or shouts PW5 Bhanudas had also noticed dragging marks in the court yard and the deceased after assault was dragged and kept at the spot While in flames Sangita did not make any movement She was completely motionless The latching of doors of the compound was not accepted as an act of the deceased Latching of doors and pouring of kerosene after assault was a farcical venture skilfully and conveniently made to bring colour of suicide to the incident 885 The High Court then posed the question as to who is responsible for homicidal death of Sangita It was held that it could not be an act of an individual It was joint venture There is no direct evidence Undisputedly the payment of Rs20000 was not made nor the tither items mentioned in Ext 73 were given till the date of incident On her second visit the deceased had disclosed to her father Madan Lal that the members of in laws family had beaten and ill treated her for the reason of non fulfillment of dowry and other articles A reading of the letter indicates that the accused persons had very serious grievance against Sangita and her parents for non fulfillment of dowry demands Recovery of handkerchief at the instance of accused No 1 in pursuance of a disclosure statement and the seizure thereof vide Ext69 from a drawer of the table of the office The handkerchief was smelling kerosene oil It was concealed at a place which was not normally or ordinarily used for keeping the handkerchief This handkerchief was used at the time of the incident None of the accused persons made any attempt to reach the spot even though they noticed the death of Sangita They merely allowed the body to be burnt Accused persons had quoted exact time of death in Ext82 which means that they were mentally alert and conscious of the happening in the house The refusal to disclose the death of Sangita to the chowkidar of the locality PW2 Rahadursingh The meeting with chowkidar Bahadursingh was falsely denied in the statement under Section 313 of the Code of Criminal Procedure Homicidal death occurred by Sangita while she was in their custody The incident with its gravity and extent cannot in any manner go unnoticed As such the accused persons were duty bound to offer plausible explanation Their action was concerted well thought out well planned With the aforesaid findings all the accused persons were found guilty by the High Court and the appellants have come up in appeal before this Court This court on application of appellant Nos 3 and 4 ie another in law and sister in law of the deceased admitted them to be on hail Apart from the inferences noticed by the High Court there are certain other features in the post mortem report Ext 15 which may also be noticed at this state It is stated in paragraph 13 of the post mortem report that the whole if skin of face 886 was burnt and Covered at places with black soot Eye ball slightly protruding Tongue was protruding from mouth Blood stained discharge from nose and mouth In paragraph 17 it is noticed heirs of the scalp eye lashes both ears eyes whole neck whole chest whole abdomen suffer from burns Buttock and pubic hairs also burnt Black soot was present over burnt area of face chest abdomen In paragraph 19 it is stated Brain Meninges congested In paragraph 20 it is stated Larynx Trachea and Bronchi congested on opening troches black particles seen inside human Right lung left lung congested Right ventricle of the heart was full whereas left was empty In paragraph 21 it is stated liver and gall bladder congested pancreas and suprarenals congested spleen congested kidneys congested and bladder empty ie parenchymatous organs show intense venous congestion Dr KS Narayan Reddy MD DCP MIAFM FIMSAFAFSc Professor of Forensic Medicine Osmania Medical College Hyderabad in his well known treatise THE ESSENTIALS OL FFORENSIC MEDICINE AND TOXICOLOGY Sixth Education at page 255 gives descriptions of internal as well as external symptoms of manual strangulation At page 255 while dealing with signs of asphyxia the learned author observes The face may be livid blotchy and swollen the eyes wide open bulging and suffused the pupils dialated the tongue swollen dark cloured and protruded Petechial hemorrhages are common into the skin of the eyelids face forehead behind the cars and scalp Bloody froth may escape front the mouth and nostrils and there may he bleeding from the nose and cars The hands are usually clenched The genital organs may be congested and there may be discharge of urine faeces and seminal fluid While internal injuries described little later included as under The larynx trachea and bronchi are congested and contain frothy often blood stained mucus The lungs are markedly congested and show ecchymoses and larger subaerial hemorrhages Dark fluid blood exudes on section Silvery looking spots under the pleural surface due to rupture of the air cells which disappear on pricking are seen in more than 505 cases The parenchymatous organs show intense venous congestion and in young persons ecchymoses are usually seen on the heart and kidneys The brain is contested and shows petechial hemorrhages The right side of the heart is full of dark fluid blood and the left empty Both the cavities are full if the heart stopped during diastole Whereas in burn injuries the learned author at pages 237 238 observes the 887 brain is usually shrunken firm and yellow to light brown due to cooking The dura matter is leathery dura matter is meninges of the brain If the death has occoured from suffocation aspirated blackish coal particles are seen in the nose mouth and whole of the respiratory track Their presence is proof that the victim was alive hen tile fire occurred The pleurae are contested or inflamed The lungs are usually congested may be strunken and rarely anemic Visceral congestion is marked in many cases The heart is usually filled with clotted blood The adarmes glands above kidneys may he enlarged and congested Some of these symptoms or internal and external injuries are common in case of strangulation and burn like face is swollen and distorted the tongue protruded the lungs are usually congested visceral congestions is marked in many cases What is to he noticed in the present case is that there are hardly any cries as per the defence also by the deceased This is not possible even in case of suicide Even if the burns ire inflicted with suicidal intent tile victim is bound to cry out of pain Admittedly there was no cries and therefore it was not a Case of suicidal burn but the deceased was put in a condition where she could not cry and yet get burnt by third party As is clear from the aforesaid commentary of Dr KS Narayan Reddy that if it was a case of merely burns the blood of the heart would have got clotted Even the postmortem report does not say that asphvsix was due to burn Coupled with all the internal injuries which occur in the case of strangulation are present in this case As pointed out by the High Court there is no direct evidence to connect the appellants with the offence of murder and the prosecution entirely rests its case only on circumstantial evidence There is a series of decisions of this Court propounding the cardinal principles to be followed in cases in which the evidence is of circumstantial nature It is not necessary to repapitulate all those decisions except stating the essential ingredients as noticed by Pandian J in the case reported as The State of Uttar Pradesh vs Dr Ravindra Prakesh J in the case 2 SC 114 at 121 to prove quilt of an accused person by circumstantial evidence They are 1 The circumstance from which tile conclusion is drawn should be fully proved 2 the circumstances should he conclusive in nature 888 3all the facts so established should he consistent only with the hypothesis of guilt and inconsistent with innocence 4the circumstances should to a moral certainty exclude the possibility of guilt of any person other than the accused Now let us examine the impelling circunistances attending the case and examine whether tile cumulative effect of those circumstances negatives tile innocence of tile appellants and serves a definite pointer towards their guilt and unerringly leads to the conclusion that with all human probability the offence was committed by the appellants and none else There is no doubt that when the incident occurred there was no outsider its the house The circumstances which ire establislied its having closely linked up with one another may be noticed 1 The motive for the occurrence 2 The place where the tragic incident occurred was in possession and occupation of the appellants 3 The occurrence had happened in the wee hours when body else would have had ingress at the place where the incident allegedly occurred 4 The appellants admit their presence The positive features which occurred had it been it pure case of burning there would he evidence of vomiting 6 The positive opinion of the doctor that the death was due to asphysix as well apart from 100 burns 7 The deceased was carrying fetus of 3 4 months 8 The extensive use of kerosene as seen from the burn shows that the deceased was practically 889 drenched as sort of a bath with kerosene 9 Total absence of any shout or cries except one which was heard by way o f strangulation by PW 1 10 Blood in heart was not found clotted Right ventricle heart was full of blood but left ventricle wits empty 11 Besides total burning of neck was to destroy evidence of attempted strangulation 12 In burn brain is usually shrunken and firm whereas in strangulation it is congested As noticed by Pandian J in the aforesaid decision opinion of Taylor in Medical Jurisprudence is quoted below It reads thus Not uncommonly the victim who inhales smoke also vomits and inhales some vomit presumably due to bouts of coughing and plugs of regur gitated stomach contents mixed with soot may be found in the smaller bronchi in the depths of the lungs By the time a person could take a bath of kerosene she is likely to get fainted and would not be in a position thereafter to burn herself A total burning of the face and the neck shows that even at portions where she was not wearing any clothes were not burnt It could only be possible if she had poured kerosene on her head and face also It is not understood as to how the unposted post card found near the dead body was not burnt when the whole body had got burnt It in fact indicates that the planting of the post card was to show that it was a case of suicidal death In passes all human probabilities that the appellants have satisfied themselves by watching through the window the burning of daughter in law without any due and cry or without and serious attempt to save her We are thus satisfied that it was a case of murder and not suicidal death So far as the accomplicity of appellants 1 and 2 are concerned there is no doubt But 890 it is not necessary if appellant Nos 3 4 ie mother in law and sister in law of the deceased have also participated in the murder of the deceased For the aforesaid reasons we dismiss the appeal on behalf of appellant Nos 1 and 2 but give benefit of doubt to appellant Nos 3 and 4 and accept the appeal on their behalf They are accordingly acquitted The convictions and sentences of appellant Nos 1 and 2 are upheld U R Appeal dismissed

Respondent No 2 was married to the appellant She went to reside with her parents in order to prepare for Higher Secondary Examination In the meantime she conceived The appellant and his family members asked her to undergo abortion but she refused and a child was born to her In a petition under section 125 Cr PC riled by respondent No 2 against her husband the wife and the child were granted maintenance The appellant disputing the paternity of the child riled a criminal miscellaneous application for blood group test if respondent No 2 and the child It was claimed that if it was established that he was not father of the child he would not be liable to pay the maintenance The application was dismissed Appellant s revision application was also rejected by the High Court The appellant filed the appeal by special leave Dismissing the appeal this Court 918 HELD 11 Courts is India cannot order blood group test as a matter of course Unlike the English law in India there is no special statute governing this Neither the Criminal Procedure Code nor the Evidence Act empowers the court to direct such a test Affiliation Proceedings Act 1957 Family Reforms Act 1969 Family Reforms Act 1987 12 Wherever applications are made for blood group test in order to have roving inquiry the prayer cannot be entertained Bhartiraj vs Sumesh Sachdeo Ors approved 21 Section 112 read with s4 of the Evidence Act debars evidence except in cases of non access for disproving the presumption of legitimacy and paternity It is a rebuttable presumption of lam that a child born during the lawful wedlock is legitimate and that access occurred between the parties This presumption can only be displaced by a strong preponderance of evidence and not by a mere balance of probabilities 22 There must be a strong prima facie case in that the husband must establish non access in order to dispel the presumption arising under section 112 of the Evidence Act Vasu vs Santha 1975 Kerala Law Times 533 and Raghunath vs Shardabai referred to Morris vs Davies cited 3 The Court must carefully examine as to what would be the consequence of ordering the blood test whether it will have the effect of branding a child as a bastard and the mother as an unchaste woman Dikhtar Jahan vs Mohammed Faroog referred to 41 Blood group test is a useful test to determine the question of disputed paternity It can be relied upon by courts as a circumstantial evidence which ultimately excludes a certain individual as a father of the child 42 No person can be compelled to give sample of blood for analysis and no adverse inference can he drawn against a person on account of such refusal 919 Hargovind Soni vs Ramdulari AIR 1986 MP 57 approved Vasu vs Santha 1975 Kerala Law Times 533 Polavarapu Venkeeswarlu vs Polavarapu Subbayya referred to Subayya Gounder vs Bhoopala AIR 1959 Madras 396 Venkateswarlu vs Subbayya AIR 1951 Madras 910 Hukum Chand Boid vs Kamalan and Singh Cal 927 cited Wilson vs Wilson Lancet 1942 1570 Re L 1968 1 All England Reports 20 B R B vs J B 1968 2 All Eng Reports 1023 referred to Tauylor s Principles and Practice of Medical Jurisprudence Vol 2 Medical Jurisprudence and Toxicology 8th Edition by Rai Bahadur Jaising P Mod cited Forensic Sciences edited by Cyril H Wecht referred to In the instant case the purpose of the application for blood group test was nothing more than to avoid payment of maintenance without making any ground whatever to have recourse to the test The High Court was right in confirming the order of the court below rejecting the application

il Appeal No 2860 of 1993 From the Judgment and Order dt 31101990 of the Punjab and Haryana High Court in LPA No 1427 of 1982 K Lahiri and JD Jain for the Appellant DV Sehgal and KK Mohan for the Respondents The Judgment of the Court was delivered by GN RAY J Special leave granted Heard learned counsels for the parties 867 On the application for special leave to appeal notice was issued by this Court on the respondents indicating therein that the said application for special leave to appeal will be disposed of finally at the notice stage itself on the short question as to why the disciplinary proceedings and the order passed therein should not be set aside and a fresh enquiry should be ordered on the ground that one of the participants of the enquiry committee was biased Such notice was served on the respondents and the respondent Nos 1 and 4 have entered appearance through a learned counsel and also filed counter affidavit to the special leave petition The appellant was appointed as Principal of Dr Hari Ram Co education Higher Secondary School Datarpur in Tehsil of Dasuya in the District of Hoshiarpur He was placed under suspension by the Managing Committee of the said School and charge sheet containing 12 charges was issued to the appellant Charge No 12 was to the following effect the following amounts are reported to have been used by you and are unaccounted for A sum of Rs 12937 on account of amalgamated fund for the month of December 1969 given to you by Shri Maru Ram teacher incharge amalgamated fund The school authorities appointed an enquiry committee consisting of three members of which the said Shri Maru Ram was one of the members It is an admitted position that the said Shri Maru Ram appeared as a witness in support of charge No 12 on behalf of administration in the said enquiry proceedings The appellant raised an objection for inclusion of the said Shri Maru Ram in the enquiry committee but the said objection of the appellant was overruled by the Enquiry Committee inter alia on the ground that similarly your objection to the appointment of Shri Maru Ram in the enquiry committee is ill conceived unfounded unjustified and invalid because Shri Maru Ram is as good a member of the Managing Committee as any one else and as such as member is entitled to act on any sub committee formed by the Managing Committee and even perhaps more in this case because to give you a fair trial it was necessary to have a teachers union s representative on the Enquiry Committee Shri Maru Ram represented the Union of the staff of the school and is thus your own representative as such 868 There is no dispute to the fact that the said Shri Maru Ram himself deposed in the enquiry proceeding in support of Charge No 12 against the appellant and he also participated as one of the members of the Enquiry Committee Tile Enquiry Committee found the appellant guilty on some of the charges including the said charge No 12 The Managing Committee proposed to dismiss the appellant from service It is not disputed that the disciplinary proceeding against the petitioner is to be carried out in accordance with the provisions of the Punjab Aided Schools Security of Service Act 1969 Sub Section 2 of Section 3 of the said Act is set out hereunder No order of dismissal or removal or reduction in rank of an employee shall take effect unless it has been confirmed by the Deputy Commissioner who may refuse to do so if in his opinion the provisions of Sub section 1 have not been complied with In view of such provision in the aforesaid Act the report of the Managing Committee and the proposal for dismissal of the appellant from service were sent for confirmation by the Deputy Commissioner The appellant being informed of the decision of the Managing Committee to dismiss him from service subject to the confirmation by the Deputy Commissioner Hoshiarpur made an application to the President of the Managing Committee for the inspection of the stipend register and the office file of the case of December 29 1970 so that he could make a proper representation to the Deputy Commissioner of Hoshiarpur The Managing Committee however did not give inspection to the appellant of the said records but the original application made by the appellant to the President of the Managing Committee was not entertained but then and there returned with the remarks under what rules do you wish to see the file please Sd RD Sharma 2912 1970 The appellant there after submitted his representation to the Deputy Commissioner against the proposed order of dismissal of the appellant and it was urged by the appellant that the Managing Committee acted in a prejudicial manner and had been trying to urge his dismissal on unfounded grounds By order dated March 181971 the Deputy Commissioner rejected the representation of the appellant The appellant thereafter preferred an appeal against the order of con on by the Deputy Commissioner under Sub section 5 of Section 3 of the said Act to the Commissioner Jullundur Division but such appeal was also dismissed by the Commissioner on December 3 1973 The appellant thereafter moved a Writ 869 Petition in the High Court of Punjab and Haryana being Civil Writ Petition No II 21 of 1974 inter alia praying for qushing the enquiry report and the orders passed by the Managing Committee Deputy Commissioner Hoshiarpur and the Commissioner Jullundur Division The Managing Committee contested the said Writ Petition by entering appearance though Paras Ram Local Manager cumVice President of the Managing Committee and the counter affidavit was also filed to the Writ Petition The Managing Committee disputed the contention of the appellant that the enquiry committee was biased partial and inimical towards the appellant and Shri Maru Ram a member of the staff with whom the appellant was not on good terms and who was the root cause of the trouble became the member of the enquiry committee and after his inclusion the enquiry was summed up in a slip shed manner In the counter affidavit it was contended on behalf of the Managing Committee that in the Managing Committee members of the staff are required to be taken Two members from teaching staff were taken on the Managing Committee and the appellant Principal was one of the members and the other member was the said Shri Maru Ram As the appellant himself was the accused the only member who could be taken in the enquiry committee was the other representative of the teachers union Shri Maru Ram It was further stated that the appellant had raised objection before the Committee against his inclusion in the enquiry committee but such objection was not entertained and it was stated that the enquiry committee was neither partial nor inimical towards the appellant and the enquiry committee was comprised of three members including the President Shri BB Kashyap and the said Shri Maru Ram teachers representative in the Managing Commiittee In the counter affidavit it was further stated that the appellant had applied for inspection of the stipend register but such demand of inspection was made after the appellant was dismissed Even then the inspection was not denied and the appellant had been asked to indicate under what rules he could see the file At this stage it may be indicated that when the appellant had asked for inspection there was no question of the appellant being dismissed because under the said Act the proposed order of dismissal cannot take effect until such proposal is confirmed by the Deputy Commissioner The appellant asked for inspection of the register to make effective representation before the Deputy Commissioner But such inspection was not given and the application itself was returned then and there apparently on the ground of absence of any specific rule for such inspection A Single Bench of the Punjab and Haryana High Court allowed the Writ Petition on the ground that the departmental proceeding was vitiated for the flagrant violation of the principle of natural justice The learned Judge indicated that Charge No 12 was sought to be proved by Shri Maru Ram himself who appeared as a witness before the enquiry committee although he was one of the 870 members of the enquiry committee Since one of the members of the Managing Committee acted both as a Judge and as a witness to prove one of the charges against the appellant despite the objections made by the appellant against the inclusion of such member in the Committee the entire enquiry proceeding was vitiated The learned Judge further held that the contention of the respondents that the bias of Shri Maru Ram even if any should be restricted only to charge No 12 and as such the order of dismissal also on the basis of other charges should not be set aside could not be accepted The learned Judge was of the view that since Shri Maru Ram conducted the enquiry with bias the said bias continued and percolated to the entire proceeding and such bias therefore should not be restricted to charge No 12 only The learned Judge also rejected the contention of the respondents that as the appellant did not raise the plea of bias on the part of Shri Maru Ram before the Deputy Commissioner or the Commissioner specifically the appellant should not be allowed to raise the question of bias The learned Judge held inter alia that it was evident from the enquiry proceeding and the report of the enquiry committee that the said Shri Maru Ram was member of the enquiry committee and had also deposed as a witness in the enquiry proceeding Since such report was required to be considered by the Deputy Commissioner for the purpose of affirming the proposed order of dismissal the said fact of bias and prejudice was required to be considered and the appellant was not debarred from raising such vital plea of bias in the Writ proceeding The learned Judge was of the view that in the facts and circumstances of the case the decision of the Managing Committee and the orders passed by the Deputy Commissioner and the Commissioner on the basis of an illegal and biased enquiry against the petitioner could not he sustained The learned Judge therefore allowed the said petition set aside the proposed order of dismissal and the order of confirmation passed by the Deputy Commissioner and the appellate order passed by the Commissioner and directed the Deputy Commissioner to decide the reference made by the Managing Committee for confirmation of the proposed order of dismissal passed by the Deputy Commissioner in the light of the observations made in the judgment The Managing Committee being aggrieved by the said decision of the learned Single Judge of the Punjab and Haryana High Court preferred an appeal before a Division Bench of punjab and Haryana High Court being LPA No 1427 of 1992 The Division Bench however held that it had not been brought on record as to what objection was taken and in what form against Shri Maru Ram who was a member of the enquiry committee The Division Bench however noted the order passed by the Managing Committee rejecting the objection of inclusion of Shri Maru Ram in the Managing Committee by quoting the order passed by the enquiry committee The Division Bench was of the view that the plea of bias could be waived and if the appellant felt that the enquiry proceeding was vitiated by the 871 reason of bias because of inclusion of Shri Maru Ram he could have raised specific plea of bias before the Deputy Commissioner and Commissioner Since such specific plea was not raised before the Deputy Commissioner and Commissioner the appellant should not be allowed to raise such contention in the Writ Petition The Division Bench also held that the plea of bias of Shri Maru Ram as indicated in the Writ Petition was also very vague The Division Bench further held that the Deputy Commissioner gave opportunity to the appellant to meet certain charges and he was not influenced by Charge No 12 only in respect of which the said Shri Maru Ram appeared as witness As it appeared from the order that the Deputy Commissioner was impressed with some other char ges for which the order of dismissal could be confirmed no interference was called for against the impugned order The Division Bench therefore allowed the appeal and dismissed the Writ Petition As aforesaid the appeal is directed against the said impugned judgment of he Division Bench in LPA No 1427 of 1982 dismissing the Writ Petition In terms of the notice issued on the special leave application the short question as to why the enquiry and the order passed therein should not be set aside and a fresh enquiry should not be ordered on the ground that one of the participants of the Committee was biased is required to be considered in this appeal In Administrative Law Rules of natural justice are foundational and fundamental concepts and law is now well settled that the principles of natural justice are part of the legal and judicial procedures On the question whether the principles ofnatural justice are also applicable to the administrative bodies formerly the law courts in En land and India had taken a different view It was held in Franklin vs Minister of Town and Country Planning that the duty imposed on the minister was merely adn Anistrative and not being judical or quasijudicial the principle of natural justice as applicable to the judicial or quasi judicial authorities was not applicable and the only question which was required to be considered was whether the Minister had complied with the direction or not Such view was also taken by the Indian courts and reference may be made to the decision of this Court in Kishan Chand Arora vs Commissioner of police Calcutta It was held that the compulsion of hearing before passing the order implied in the maxim audi alteram pertem applied only to judicial or quasi judicial proceedings Later on the law courts in England and also in India including this Court have specifically held that the principle of natural justice is applicable also in administrative proceedings In Breen vs Amal ganaled Engineering Union Lord Denning emphasised that Statutory body is required to act fairly in function whether administrative or judicial or quasi judical Lord 872 morris observed as noted by this Court in Maneka Gandhi s decision that We can think take pride in what has been done in recent periods and particularly in the field of administrative law by invoking and by applying these principles which we broadly classify under the designation of natural justice Many testing problems as to their application yet remain to be solved But I affirm that the area of administrative action is but one area in which the principles are to be deployed It may be indicated herein that the aforesaid observation was quoted with approval by this Court in the decision in Maneka Gandhi vs Union of India 1 In State of Orissa vs BinapaniDei this Court also accepted the application of the principle of natural justice in the order which is administrative in character It was observed by ShahJ It is true that the order is administrative in character but even an administrative order which involves civil consequences must be made consistently with the rules of natural justice Similar view was also taken in AK Kraipak vs Union of India Ors and the observation of Justice Hedge may be referred to Till very recently it was the opinion of the courts that unless the authority concerned was required by the law under which it functioned to act judicially there was no room for the application ofthe rules of natural justice The validity of that limitation is now questioned If the purpose ofthe rules of natural justice is to prevent miscarriage of justice one fails to see why those rules should be made inapplicable to administrative enquiries There are number of decisions where application of principle of natural justice in the decision making process of the administrative body having civil consequence has been upheld by this Court but it is not necessary to refer to all such decisions Prof Wade in his Administrative Law 1988 at page 503 has very aptly observed that the principles of natural justice are applicable to almost the whole range of administrative powers Since the rules of natural justice were not emodied rules it is not possible and 873 practicable to precisely define the parameter of natural justice In Russel vs Duke of Norfold 19491 1 All ER 109 Tucker LJ observed There are in my view no words which are of universal application to every kind of inquiry and the every kind of domestic tribunal The requirements of natural justice must depend on the circumstances of the case the nature of the inquiry the rules under which the tribunal is acting the subject matter that is being dealt with and so forth It has been observed by this Court in Union of India vs PK Roy that The extent and application of the doctrine of natural justice cannot be imprisoned within the strait jacket of a rigid formula The application of the doctrine depends upon the nature of the jurisdiction conferred on the administrative authority upon the character of the rights of the persons affected the scheme and policy of the statute and other relevant circumstances disclosed in the particular case Similar view was also expressed in AK Kraidak s case ibid This Court observed What particular rule of natural justice should apply to a given case must depend to a great extent on the facts and circumstances of that case the framework of the law under which the enquiry is held and the constitution of the Tribunal or body of persons appointed for that purpose Whenever a complaint is made before a court that some principle of natural justice had been contravened the court has to decide whether the observance of that rule was necessary for a just decision on the facts of that case Prof Wade in his Administrative Law has succinctly summarised the principle of natural justice to the following effect It is not possible to lay down rigid rules as to when the principles of natural justice are to apply not as to their scope and extent Everything depends on the subject matter the application for principles of natural justice resting as it does upon statutory 874 implication must always be in conformity with the scheme of the Act and with the subject matter of the case In the application of the concept of fair play there must be real flexibility There must also have been some real prejudice to the complainant there is no such thing as a merely technical infringement of natural justice The requirements of natural justice depend on the facts and the circumstances of the case the nature of the enquiry the rules under which the tribunal is acting the subject matter to be dealt with and so forth One of the cardinal principles of natural justice is Nemo debetesse judex in propria causa No man shall be a judge in his own cause The deciding authority must be impartial and without bias It has been held by this Court in Secretary to Government Transport Department vs Munuswamy that a predisposition to decide for or against one party without proper regard to the true merits of the dispute is bias Personal bias is one of the three major limbs of bias namely pecuniary bias personal bias and official bias A classic case of personal bias was revealed in the decision of this Court in state of UP vs Mohd Nooh In the said case a departmental enquiry was held against an employee One of the witnesses against the employee turned hostile The officer holding the enquiry then left the enquiry gave evidence against the employee and there after resumed to complete the enquiry and passed the order of dismissal This Court quashed the order of dismissal by holding inter alia that the rules of natural justice were grievously violated In the instant case Charge No 12 states that a particular sum on account of amalgamated fund for the month of December was given to the appellant by Shri Maru Ram who was teacher incharge of the amalgamated fund In the enquiry committee comprising of the three members the said Shri Maru Ram was taken as one of the members and he himself deposed to establish the said Charge No 12 and thereafter again joined the enquiry committee and submitted a report holding the appellant guilty of some of the charges including the said Charge No 12 Shri Maru Ram was interested in establishing the said charge From the charge itself it is apparent that he had a predisposition to decide against the appellant It is really unfortunate that although the appellant raised an objection before the enquiry committee by clearly indicating that the said Shri Maru Ram was inimical towards him and he should not be a member in the enquiry committee such objection was rejected on a very flimsy ground namely that since the said Shri Maru Ram was one of the members of the Managing Committee and was the representative of the teachers in the Managing Committee it was necessary to include him in the enquiry 875 committee It is quite apparent that the enquiry committee could have been constituted with other members of the Managing Committee and the rules of the enquiry are not such that Shri Maru Ram being teacher s representative was required to be included in the said enquiry committee so that the doctrine of necessity maybe attracted If a person has a pecuniary interest such interest ever it very small disqualifies such person For appreciating a case of personal bias or bias to the subject matter the test is whether there was a real likelihood of a bias even though such bias has not in fact taken place De Smith in his Judicial Review of Administrative Action 1980 at pace 262 has observed that real likelihood of bias means at least substantial possibility of bias In Rv Sunderland Justices 373 it has been held that the Court will have to judge the matter as a reasonable man would judge of any matter in the conduct of his own business In R versus Sussex Justices 259 it has been indicated that answer to the question whether there was a real likelihood of bias depends not upon what actually was done but upon what might appear to be done In Halsbury Laws of England 4th Edn Vol2 para 551 it has been indicated that the test of bias is whether a reasonable intelligent man fully apprised of all the circumstances would feel a serious apprehension of bias The same principle has also been accepted by this Court in Manak Lal vs Dr Prem Chand This Court has laid down that the test is not whether in fact a bias has affected the judgment the test always is and must be whether a litigant could reasonably apprehend that a bias attributable to a member of the tribunal might have operated against him in the final decision of the tribunal It is in this sense that it is often said that justice must not only be done but must also appear to be done In the facts of the case there was not only a reasonable apprehension in the mind of the appellant about the bias of one of the members of the enquiry committee namely the said Shri Maru Ram but such apprehension became real when the said Shri Maru Ram appeared as a witness against the appellant to prove the said charge and thereafter proceeded with the enquiry proceeding as a member of the enquiry committee to uphold the correctness of his deposition as a Judge The learned Single Judge considering the aforesaid facts came to the finding that the participation of Shri Maru Ram as a member of the enquiry committee has vitiated the enquiry proceeding because of flagrant violation of the principles of natural justice Unfortunately the Division Bench set aside such judgment of the learned Single Judge and dismissed the Writ Petition improperly to say the least on a technical ground that plea of bias of Shri Maru Ram and his acting as a Judge of his own case by being a member of the enquiry committee was not specifically taken before the Deputy commissioner and also before the appellate authority namely the Commissioner by the appellant and as such the said plea should not be allowed to be raised in writ proceeding more so when the case of prejudice on 876 account of bias could be waived by the person suffering such prejudice General v a point not raised before be tribunal or administrative authorities may not be allowed to be raised for the first time in the writ proceeding more so when the interference in the writ jurisdiction which is equitable and discretionary is not of course or must as indicated by this Court in AM Allison versus State of Assam particularly when the plea sought to be raised for the first time in a Writ proceeding requires investigation of facts But if the plea though not specifically raised before the subordinate tribunals or the administrative and quasi judicial bodies is raised before the High Court in the writ proceeding for the first time and the plea goes to the root of the question and is based on admitted and uncontroverted facts and does not require any further investigation into a question of fact the High Court is not only justified in entertaining the plea but in the anxiety to do justice which is the paramount consideration of the Court it is only desirable that litigant should not be shut out fromraising such plea which goes to the root of the lis involved The aforesaid view has been taken by this Court in a number of decisions and a reference may be made to the decisions in AS Arunachalam Pillai vs Ms Southern Roadways Ltd and another The Cantonment Board Ambala vs Pyarelal In our view the learned Single Judge has very rightly held that the Deputy Commissioner was under an obligation to consider the correctness and propriety ofthe decision of the Managing Committee based on the report of the enquiry committee which since made available to him showed on the face of it that Shri Ramu Ram was included and retained in the enquiry committee despite objection of the appellant and the said Shri Maru Ram became a witness against the appellant to prove one of the charges It is really unfortunate that the Division Bench set aside the decision of the learned Single Bench by taking recourse to technicalities that the plea of bias on account of inclusion of Shri Maru Ram in the enquiry committee and his giving evidence on behalf of the department had not been specifically taken by the appellant before the Deputy Commissioner and the Commissioner The Division Bench has also proceeded on the footing that as even apart from Charge No 12 the Deputy Commissioner has also considered the other charges on consideration of which along with Charge No 12 the proposed order ofdismissal was made no prejudice has been caused to the appellant Such view to say the least cannot be accepted in the facts and circumstances of the case The learned Single Judge in our view has rightly held that the bias of Shri Maru Ram one of the members of the enquiry commttee had percolated throughout the enquiry proceeding thereby vitiating the principles of natural justice and the findings made by the enquiry committee was the product of a biased and prejudiced mind The illegality committed in conducting the departmental proceedings has left an indelible stamp of infirmity on the decision of the Managing Committee since affirmed by the Deputy Commissioner and the Commissioner The observatiory of SR Das CJ 877 in Mohd nooh s case ibid may be referred to in this connection Where the error irregularity or illegality touching jurisdiction or procedure committed by an inferior court or tribunal of first instance is so patent and loudly obstrusive that it leaves on its decision an indelible stamp of infirmity or vice which cannot be obliterated or cured on appeal or revision If an inferior court or tribunal of first instance acts wholly without jurisdiction or patently in excess of jurisdiction or manifestly conducts the proceedings before it in a manner which is contrary to the rules of natural justice and all accepted rules of procedure and which offends the superior court s sense of fair play the superior court may we think quite properly exercise its power to issue the prerogative writ of certiorari to correct the error of the court or tribunal of first instance even if an appeal to another inferior court or tribunal was available and recourse was not had to it or if recourse was had to it it confirmed what ex facie was a nullity for reasons aforementioned We have therefore no hesitation in allowing the appeal by setting aside the impugned judgment of the Division Bench of Punjab and Haryana High Court and the order of dismissal of the appellant passed by the Managing Committee of the School confirmed by the Deputy Commissioner and affirmed in appeal by the Commissioner This decision however will not preclude the Managing Committee however from proceeding a fresh with the departmental proceedings from the stage of issuance of charge sheet It is however made clear that if a fresh enquiry proceeding is initiated it should be ensured that the enquiry committee is not composed with any of the members of the previous enquiry committee and such proceeding should be completed within a period of four months from today In the special facts of the case and in view of the financial difficulties pleaded by the respondent we do not think that it will be proper to compel the management to pay full back wages The school authorities and other concerned authorities are directed to pay one fourth of the salary to the appellant from the date of dismissal till today and thereafter go on paying the salary with such increments which the appellant would have been entitled to in the absence of initiation of the departmental proceeding Considering the facts of the case we allow this appeal with costs against the appearing respondents

A subsidiary company of the appellant holding company CA No 2866 of 1993 diverted to the appellant rupees ten crores received by it by way of chit subscriptions It failed to pay the subscribers the prize money When some of the subscribers initiated winding up proceedings against the subsidiary company the appellant appeared before the High Court and undertook the liability of the subsidiary company to an extent of a sum of Rs 1040 Crores to the subscribers The High Court approved the scheme of compromise and arrangement under section 391 of the and directed the winding up order to be held in abeyance on the condition that the appellant holding company would pay off the amount or Rs 1040 Crores to the subscribers within five years It also restricted alienation of any property by the holding company Without obtaining prior permission of the Court Even ten Cars after the order of the High Court more than one third of the subscribers remained unpaid Meanwhile the appellant company took steps to sell 2079 acres of land to pay the Creditors The appellant in CANo 2863 65 if 1973 made an offer where as the respondent creditors association made a counter offer The High Court accepted the offer of Creditors association Hence the appeals by special leave Disposing of the appeals this Court gave the following 904 Directions 1 The holding company shall deposit with the official Receiver fir Assignee concerned a sum equivalent to the deposited sum on which the High Court had directed sale deed to be executed in favour of the creditors association together with 25 interest minus the interest if any earned by the deposit made calculated in the deposited amount from the date of deposit till 31st July 1993 within a period of three months Out of the amount mentioned in condition 1 above a sum equivalent to the amount deposited by creditors Association together with interest at 25 thereon from the date of deposit upto 31st July 1993 shall be refunded to the creditors association in lieu of their claim for the disputed land being given up The balance amount shall remain for the benefit of general body of creditors of the subsidiary company Tile holding company shall pay through the receiver the entire outstanding debts payable to the subscribers who were members of the creditors association on the date when their claim applications were decided by the High Court together with interest thereon at 12 per cent from the date of decision till 31st July 1993 In case the above terms and conditions are complied with within the period allowed then the disputed land offered for sale by the holding company and purchased by creditors associations shall stand released in holding company s favour If such deposits are not made the sale in favour of creditors company shall stand confirmed 5 In view of the offer made by the appellant in Appeals No 2863 65 of 1993 the land on its release shall be sold for a price not less titan five lakhs per acre The amount so realised shall also be deposited of the holding company with the receiver for distribution among general body of creditors of the subsidiary company The receiver shall further take steps to see that the holding company fulfils its obligations and pays the entire balance within a period of one year from 31st August 1993 In case of failure to clear the dues of all tile subscribers it shall he open to an unpaid subscriber to approach the High Court for recalling the order passed by the High Court for in 1983 direction the winding up to be plot in abeyance as well as to the steps to get the amount realised front assets of 905 the holding company If such an application is made it shall be disposed of by the High Court expeditiously in accordance with law after hearing parties concerned

Appeal No 2221 of 1993 From the Judgment and Order dated55 1993 of the Madhya Pradesh High Court in MP No 4420 of 1991 Harish N Salve and LR Singh for the Appellant Anoop Choudhary AK Sanghi SV Deshpande and section K Agnihotri for the Respondents The Judgment of the Court was delivered by Mohan J Leave granted in SLP filed by Indian Medical Council Jabalpur All these appeals are dealt with under a common judgment since they arise out of the same judgment passed in Misc Petition No4420 of 1991 by the Madhya Pradesh High Court Jabalpur Bench One Dr Nelson father of respondent1 was serving in Madhya Pradesh State Public Health in the Department of Surgery in the Medical College at Jabalpur His wife Dr Mrs Shobha Nelson was also working as a Lecturer in the Department of Obstetrics and Gynecology in Medical College in a purely temporary capacity Nelson applied for foreign assignment He was selected for the same Therefore a request was made by the Government of India Department of Personnel and Administrative Reforms vide its letter dated 2nd of January 1975 790 requesting the State Government to spare the services of Dr SK Nelson for foreign assignment with Zanzibar Government The Under Secretary to the Government of Madhya Pradesh Department of Public Health and Family Planning replied on 1541975 that it was not possible for the State Government to spare his services However Dr Nelson proceeded on two months vacation with effect from 1575He wrote a letter to the Dean of Medical College Jabalpur that he was proceeding on long leave owing to unavoidable family circumstances Even after the expiry of the period of leave he did not rejoin the post His request for further extension of leave was rejected Notwithstanding the same Dr Nelson and his wife proceeded to Tanzania and the first respondent Silas Nelson also accompanied them It also requires to be mentioned in passing that a request was made to the Government of madhya Pradesh to spare the services of Dr Shobha Nelson It was pointed out by tile State Government that she being A temporary servant she had no lien and she will have to resign the State service before joining her duties in Zanzibar She also absented unauthorisedly and proceeded to Tanzania along with her husband The first respondent claimed to have passed GCE O level as well as A level examinations from the University of London conducted by the Education Council of the Government at Dar es Salam in Tanzania He also claimed that he had obtained credits in A level in three subjects ie Biology Physics and Chemistry and O level in six subjects ie Biology Chemistry English language English Literature Mathematics and Physics On this basis he claimed that he was entitled to admission in any Medical College in India According to him these examinations are considered to be equivalent qualifying examinations and pre requisite for admission to any Medical College It was also stated that Rani Durgawati University of Jabalpur had given an equivalence certificate He obtained admission in Muhmbili Medical College in the Faculty of Medicine which is affiliated to the University of Dar es Salam in the year 1989 lie had completed one year at the same college and University Thereafter he was pursuing his study in the second year Having regard to the fact that he had studied the subjects in Anatomy Physiology Biochemistry Preventive and Social Medicine including Behavioural Science and Biostatistics Medical Psychology and Developmental Studies and Medical Surgery he had undergone a wider course Therefore according to him he possesses the eligibility criteria for admission to the MBBS Degree Course at Jabalpur A request was made by the father of the first respondent to nominate the first respondent to MBBS Course directly under Central Government quota This request related not only to the first respondent but also his sister However the Central Government advised Dr Nelson to approach the Medical Council oflndia 791 and the concerned University in jabalpur seeking their concurrence to the migration of his two children from the University of Dar es Salam Tanzania to Medical College in jabalpur On 20th December 1989 Dr nelson approached the appellant Medical Council of India hereinafter referred to as the Council for grant of no objection to the transfer This request was turned down on 12190 as migration was not permissible under the Rules The position was further made clear by the letter of the appellant dated 281290 Aggrieved by this the first respondent and his sister Kumari Divya Nelson filed Writ Petition Misc Petition No 2535 of 1990 before the Madhya pradesh high Court at Jabalpur The prayer was for a writ of mandamus to direct the respondents to grant admission to them to the 2nd year of MBBS Degree Course at Medical College jabalpur It was contended that the Council had not authority to object or refuse the issue of no objection certificate since its primary function is to prescribe minimum standards of medical education It is the University alone which should be concerned about the admission The High Court by its judgment dated 12791 allowed the writ petition It directed the appellant and other authorities to consider the case of respondent 1 and his sister within a period of two months for their admission in the Medical College jabalpur in the light of clause E of the mandatory recommendations approved under Section 33 of the It was also held that though the Council had considered the case of the candidates yet it had not looked into the individual merits regarding their eligibility for transfer to Medical Collegejabalpur which affiliated to Rani Durgawati Vishwa vidyalaya jabalpur Besides teh impugned letter of the council does not show any application of mind as it is not speaking order In complete with the above directions the Executive Committee of the appellant Council reconsidered the case on 20891 The question was whether the migration of the respondent on individual merit to Medical College jabalpur under clause v e of the Migration Rules was permissible It was concluded that the migration could not be allowed since the ground were not sufficient for such migration It was also of the view that the facts stated for considering the individual case on merits were not relevant What is important to be considered is the course of study the student had already undergone vis a vis the course being taught in the Medical College in Which the migration is sought The candidate had not also finished enough materials to make comparison with 792 the course of study conducted in medical College at jabalpur For these reasons the request for migration was rejected The same was reiterated by a letter dated 4192 After this a review petition was filed to recall the order dated 12791 of the High Court However the review petition was dismissed by the High Court An application for contempt was also dismissed There upon Misc Petition No 4420 of 1991 came to be filed seeking admission in the 2nd year or the 1st professional MBBS Course at Medical College Jabalpur on the same grounds as were alleged previously direction was issued on 23121991 to give provisional admission After admission of the writ petition the same order was continued Though an application was preferred by the respondents 2 to 4 to have the order vacated on the ground that migration from an unrecognized Medical College to a recognised Medical College was not permissible the same was dismissed Some interesting development took place during this stage The candidates did not produce the required document Hence provisional admission was not granted to them by the respondents 2 to 4 That led to the filing of Interlocutory Application No 2805 of 1992 for further direction Respondents 2 to 4 also filed an application for direction on 26392 inter alia pointing out that before grant of provisional admission the writ petitioners were required to submit proof of their having passed 1st year course at Tanzania In the absence of such proof the admission was impossible Further in which year of the MBBS course the first respondent was to be admitted was not free from difficulty it was averred that even without passing the first year from the university of Dar es Salam the claim is made for admission to the second year This is nothing but fraud the High Court strangely permitted the writ petitioner Kumari Divya Nelson to withdraw herself from the petition and it directed respondent 1 alone could prosecute his studies The authorities were directed to grant provisional admission his filing necessary forms and depositing admission fees without insisting on the production of any other certificate or testimonials or syllabus of Dar es Salam University For non compliance with this direction a contempt application was taken but by the first respondent On peril of contempt the Dean Respondent 4 had not other option but to comply with the order of provisional admission Against this order directing provisional admission without insisting on the production of any other documents SLP C No 10498 of 1992 was preferred Leave was granted on 7992 by this court staying the operation of the order dated 18592 of the High Court This Court directed that the interim order well subsist 793 till the disposal of the writ petition before the High Court and requested the High Court to dispose of the writ petition of the respondent I expeditiously By the impugned judgment dated 5th March 1993 the writ petition was allowed The resolution dated 20th August 1991 refusing to accede to the request of the writ petitioner respondent 1 for migration was quashed holding that there was no application of mind by the Council lt is under these circumstances these appeals by special leave to appeal have come to be preferred Mr harish N Salve learned counsel for the appellant would submit the following grounds attacking the impugned judgment The High court erred in directing admission to respondent I in recognised medical college in India from an unrecognized college by way of migration transfer WI the more so when such impermissibility has been recognised by this Court in Medical Council of India New Delhi vs Rajendra section Sankpal and Ors C A Nos 3 4 of 1991 dated 211092 and order dated 6121990 of this Court passed in Medical Council of India vs Ms Sunita Anant Chavan Ors IA Nos 2 7 in Transfer Petition Civil Nos 230 235 of 1989 The High Court misread Regulation V Under that Regulation migration is allowed from a recognised medical college to another recognised college and that too within three moths after passing of the first professional examination In so far as the first respondent has neither undergone study in a medical college recognised by the Council nor has he passed the first professional examination he could not he admitted to the second year The first respondent failed in the subject of Anatomy which is one of the papers taught in the first year at Dar es Salam University Under the Examination Regulation of the said University he was required to sit in the supplementary examination in the failed subject before the beginning of the next academic year Thus he was required to clear the said paper within six weeks Should he fails in the supplementary examination he ceases to be a student of the CollegeUniversity In so far as the first respondent did not take the supplementary examination he ceased to be a student of Dar es Salam University Therefore the question of migration could not arise at all The first yen course of Dar es SalamlJniversitv is not equivalent to the first phase of MBBS Examination in India 794 Equivalence has to be decided by only an expert body that too on technical and academic matters It is not in the domain of assessment or evaluation by the Court The High Court should not have embarked on the determination of equivalence on the basis of sketchy materials placed before it The High Court erred in relying on Minakshi Malik vs University of Delhi There the candidate was not in any matter ineligible while here the first respondent is ineligible The High Court erred overlooking that an administrative authority like the appellant is not required to pass reasoned orders The decree awarded by Dar es Salam University is not recognised and Is not included under any of the Schedules of the Medical Council of India Act 1956 Therefore there was no occasion for the appellant to decide the equivalence Should the first respondent be anxious he should have placed all the materials In opposition to this learned counsel for the respondents argues that the Council has taken a self contradictory stand In one breath it will contend that there are no materials to decide the equivalence and in the other breath it would say it is not equivalence Under these circumstances in view of the cryptic order passed the High Court itself decided finding that the Council had not applied its mind The High Court was satisfied on the basis of documents there is equivalence The High Court is well entitled to do so More so having regard to the ruling of Minakshi Malik s case supra Equity also must weigh in favour of the first respondent In any event the first respondent had passed his pre Medical test successfully in the year 199 1 He also belong s to scheduled tribe Therefore on the basis of these two documents his candidature could be considered for admission to first year MBBS Course for the ensuing academic year of 1993 94 as otherwise the career of a young man would be completely ruined The factual position with regard to study of the first respondent in Dar es Salam University requires to be carefully analysed The claim of the first respondent is that he has passed GCE O level as well as A level examinations from the University of London conducted by the Education Council of the Government at Dar es Salam in Tanzania He claims to have obtained credits in A level in the following three subjects i Biology ii Physics and 795 iii Chemistry In O level he claim to have obtained credits in the following six subjects i Biology ii Chemistry iii English Language iv English Literature v Mathematics and vi Physics On this basis he claims admission to any Medical College in India as these are considered to be equivalent qualifying examinations and prerequisite for admission to any Medical College It is claimed on behalf first respondent at Rani Durgawati University of Jabalpur has given an equivalence certificate That is extracted below With reference to your above cited letter it is to inform you that students have passed in five subjects at least at the GCE Ordinary Level and two subjects at the Advanced Level from University of London are treated as having successfully completed the 12 year Pre UniversityHigher Secondary in India Hence if your son Shri Silas Supragya Nelson has passed above examination then he may appear in Pre Medical test examination as desired by you According to first respondent he was admitted in Muhmbili Medical College in the Faculty of Medicine which is affiliated to the University of Dar es Salam in the year 1989 and has completed one year at the same College and University In the First year he had studied subjects in Anatomy Physiology Biochemistry Preventive and Social Medicine which includes Behavioural Science and Bio statistics Medical Psychology and Development Studies Medical Surgery whereas at Rani Durgawati University the subjects taught in the first year are Anatomy Physiology and Biochemistry Thus the courses followed at Dar es Salam University are much wider It was further claimed that his course in the said Medical College is equivalent to first year course of MBBS Degree awarded by Rani Durgawati University Jabalpur and therefore he possesses the eligibility criteria for admission to the MBBS Degree Course at Jabalpur 796 On the said basis migration is sought Dar es Salam University is not recognised by the Medical Council of India Therefore front all unrecognised institution admission is sought to a recognised institution With the object of maintaining and regulating standards of medical education in the country the Parliament enacted the Under Section 6 of the Act the Medical Council of India has been incorporated which is a body corporate having a perpetual succession and a common seal Section 12 of the Act makes provisions for recognition of medical qualifications granted by medical institutions in countries with which there is a scheme of reciprocity Under this section the schedules are given providing list of recognised medical institutions qualifications The first schedule gives list of recognised medical qualifications granted by universitiesmedical institutions in India whereas schedule second gives the list of recognised medical qualifications granted by medical institutions outside India University of Dar es Salam its medical institution is not included in the second schedule and therefore the qualifications imparted by that institution are not recognised That apart section 14 of the Act makes provisions for recognition of medical qualifications granted by countries in which there is not scheme of reciprocity The Central Government has not considered Dar es Salam University for such recognition It was in this context the following order came to be passed by the appellant The Director Medical Education Madhya Pradesh Bhopal Subject Migration of Silas Nelson and Divya Nelson from Dar es Salam Medical College Tanzania to Medical Collage Jabalpur Sir With reference to your letter No 6151DMEIV dated 1251990 I am to state that the matter regarding Migration of Silas Nelson and Divya Nelson from Dar es Salam Medical College Tanzania to Medical CollegeJabalpur was duly placed before the Executive Committee of this Council at its meeting held on 20th August 1991 for consideration The Committed decided as under 797 The Executive Committee considered the matter with regard to the migration of the above candidates on individual merit to Medical College Jabalpur under Clause Ve of the migration rules and did not allow these migration since the grounds are not sufficient for migration and the facts stated in the individual cases are not very relevant for grant of permission for migration For considering any such cause of migration it is important to consider the cause of study the student has already undergone vis a vis the course being taught in the Medical Colleges in which the migration is sought Further it is observed that the candidates seeking their migration have also brought no records to show the course of study being conducted at their medical college for making comparison with the study being conducted in Medical College Jabalpur Hence the applications for migration of the above candidates are rejected Your faithfully Mrs M Sachdeva Off Secretary Concerning migration the rule also is to the effect that the same can be allowed by the University concerned within three months after the passing of the first professional examination Then the question of equivalence arises The equivalence came to be decided in the following manner Reference Letter dated 28121991 of Dy Registrar General RD University Jabalpur Regarding letter of ku Divya Nelson and 2 Silas Nelson to the University I have gone through prospectus of University of Dar es Salam 1990 90 For MD degree which is equivalent to MBBS of Universities abroad as per letter No HQGN17862 dated 2nd May 1990 of Director of Training and Occupational Health Service attached in the file For examination at the end of first year in Dar es Salam University the subjects are 798 AnatomyHistology Behavioural Sciences Only one Biochemistry Year study Physiology Development studies Where in Indian Universities the First MBBS Course which is of 18 months the subjects examined are As premedical Council of India Anatomy Physiology one and half Biochemistry Year study As the detailed syllabus of the 5 subjects taught in one year at Dar es Salam University is not given in the Prospectus it is difficult to know whether the course is equal as only three subjects are taught in Indian University for one and half years indicating that these subjects are taught in more detail here in our University However in general the subjects taught there in first year included Anatomy Physiology and Biochemistry along with other two subjects which are also the subjects of first MBBS one and half years course here also For mote clarification the Medical Council of India may be consulted because they are the main authority in India in this respect Dean Faculty of Medicine of our University was also consulted in this matter sd Protessor Head Dept of Biochemistry Medical College Chairman Board of Studies for Anatomy Physiology Biochemistry This may be put up before the standing for confirmation We cannot understand when this was the position with reference to equivalence how the High Court had donned the role of an expert body and would say as follows The petitioner has filed documents showing that Dr RK Gupta Reader in Pharmacology of the Medical College Jabalpur was sent on deputation for teaching in the medical college affiliated to Dar es Salam University The petitioner by filing the documents wants to show that persons having requisite qualifications for teaching in the Medical College Jabalpur were posted or appointed at the medical college affiliated to Dar es Salam University The documents filed by the petitioner show that the subjects taught in the first year MBBS at Muhibili Medical 799 College Dar es Salam University and the subjects taught at the Medical College Jabalpur are the same to us the material consideration is the qualifications necessary for admission to the first year MBBS course The documents on record show that the educational qualifications for admission to the Medical College Jabalpur and the Muhbili Medical College of Dar es Salam University are the same and there is equivalence of courses As there is equivalence of courses required for admission to the first year MBBS courses in Muhibili Medical College and the Medical College Jabalpur the petitioner is entitled to be transferred to the first year MBBS course of the Medical College Jabalpur and should be permitted to appear in the examination conducted by the Rani Durgawati University Jabalpur This is totally unwarranted because the High Court does not have the necessary expertise in this regard As to the equivalence we have already extracted the opinion of the Chairman of Board of Studies for Anatomy Physiology and Biochemistry From the above extract it is clearly seen that the Council is the main authority in this respect Then again the High Court had gone wrong in concluding that the individual cases are relevant for the grant of permission for migration In our considered view as rightly concluded by the Council what is material is the course of study which a student has undergone vis a vis the courses being taught in the Medical College in which the migration is sought What the Council was endeavouring to point out was the materials placed before it by the present first respondent were not sufficient to decide the equivalence The criticism of the Council by the High Court is also not warranted First of all no certificate was produced by the first respondent that he had completed the first year course in Dar es Salam Unless and until that is done the question of admission to the second year MBBS could not arise The first respondent had not appeared in the supplementary examination If that is so according to the Regulations of Dar es Salam University he is deemed to have discontinued from that Course In such a case the question of giving admission to Medical College at Jabalpur could never arise Therefore looked at from any point of view the Medical Council of India which is the authority to decide the equivalence has come to the correct conclusion in that there cannot be a migration from unrecognised institution to a recognised Medical College The judgment of the High Court is wholly unsupportable Once we have arrived at this conclusion the question arises whether the case of the first respondent could be considered for the academic year 1993 94 based on his performance in the pre Medical test for the year 1991 The statement of 800 marks obtained in pre Medical Test 1991 is as under Subjects Max Marks Marks Obtained Physics 300 127 Chemistry 300 220 Botany 300 160 Zoology 300 214 English 300 217 1200 721 He also claims that he belongs to Scheduled Tribe We do not have material to show as to whether he was granted admission to any Medical College on the basis of his performance in the pre Medical test for the year 199 1 However in the petition for special leave to appeal the appellant has made the following averments In the said Count er affidavit on oath the respondent no1 deliberately knowingly an d willfully made a false statement that he had never appeared in the Pre Medical Test held in the year 1991 and failed It was further stated that in fact it was his younger brother Sushrut who had appeared in the TMT Examination of 1992 The petitioner herein has made an inquiry and has come to know that the respondent no1 appeared in the Pre Medical Test 1991 vide application No 27811 and was allotted Roll No 624227 but failed to qualify and complete in the said test Since the writ petitioner respondent no1 appeared in the Pre Medical Test 1991 vide application No 27811 and was allotted Roll No 624227 but failed to qualify and complete he was not at all eligible for admission to the undergraduate medical course in India If this be the correct position he would not be entitled to be considered for admission for the academic year 1993 94 on the basis of his performance in the Pre Medical test held in the year 199 1 It is for the concerned authority to verify the factual situation and decide the matter 801 We make it clear that if his case has already been considered for admission on the basis of performance in the Pre Medical test 1991 and rejected there is no need to consider his case once again for the year 1993 94 Otherwise it may be considered on the basis of performance in the pre Medical test for the year 1991 as against the quota intended for Scheduled Tribe if his status as belonging to Scheduled Tribe is established provided there is no legal impediment in doing so Subject to the above directions civil appeals will stand allowed However there shall be no order as to costs IA No 1 of 1993 in SLP C 6161 of 1993 is also allowed UP Appeal allowed

Sangita was married to accused 2 on 28th April 1984 In the intervening night of 14115 September 1984 the accused found Sangita burning Sangita s body suffered 100 burns and the smell of kerosene was noticed even in the spot panchnama There had been problems relating to dowry and she had complained of ill treatment and of being beaten because of failure to pay the dowry amount The trial judge acquitted accused 1 4 her father in law husband mother in law and sister in law respectively The High Court examined the evidence a fresh while castigating the trial judge for having gone merely on the statement of the Public Prosecutor that only a case under Ss 306 498 A and 34 was made out The High Court Convicted the accused under S302 rw 34 S201 rw 34 and 498 A rw 34 Partly dismissing the appeal this Court HELD 1 It was a case of murder and not suicidal death It is not possible that there were no cries from the deceased while she was burning This is not possible even in a case of suicide Some of the symptoms of internal and external injuries are common in 879 case if strangulation and burns But some symptoms that occur in the case of strangulation and not in case of burns are present in this case Dr KS Narayan Reddy The Essentials of Forensic Medicine and Toxicology 6th edn p 55 relied on The prosecution rests its case only on circumstantial evidence Therefore it is necessary to examine the impelling circumstances attending the case and examine whether the cumulative effect of those circumstances negatives the innocence of the appellant and serves a definite pointer towards their guilt and unerringly leads to the conclusion that with all human probability the offence was committed by the appellants and none else State of UP vs Dr Ravindra prakash Mittal JT1992 2 SC 114 at 121 applied Taylor Medical jurisprudence relied on On an appreciation of the circumstances which arc established as being closely linked to one another the complicity of appellants 1 and 2 is not in doubt But it is not necessary that appellants 3 and 4 also participated in the murder of the deceased They are given the benefit of doubt and accordingly acquitted

pt Petition Nos 130 195 of 1991 IN Civil Appeal No 2054 of 1990 From the Judgment and Order dated 23187 of the Central Administrative Tribunal Calcutta in TA No 126386 GS Chatterjee and Avijit Bhattacharjee for the Appellants Dr Anand Prakash P Narasimhan for BK Prasad for the Respondents The Judgment of the Court was delivered by RM SAHAI J Why the appellants should have been forced to file these contempt applications for enforcement of the order passed by this Court as far back as on 30th April 1990 in Civil Appeal No2054 of 1990 is not without reason Grievance of the applicants is that despite clear findings recorded by this Court opposite parties are going back on it and persisting in the implementation of the order in a manner which frustrates the entire purpose for which the applicants approached this Court and is a clear violation of directions of this Court issued on 30th April 1990 Entire dispute centered round the practice of exercising option by Assistant Station Masters who were recruited directly Were they left any choice in the matter or was it compulsory It was held by this Court that various letters issued made it clear that the option had to be exercised at the time of appointment and where no option was exercised it was deemed to have been exercised This Court found that the applicants were those persons who had to exercise option at the time of appointment and their options were irrevocable Effect of this was that they had 758 to wait till 1983 when restructuring was done The Court further found that the cadre of Assistant Station MasterStation Master in South Eastern Railway was separate and not combined But the Chief Personnel Officer applied alternative1 which under restructuring was to be applied to a zone where combined cadre was in vogue as it was acceptable to leaders of the Union and was beneficial to large number of employees The Court therefore did not interfere with implementation of the alternatives but protected the interest of the applicants by holding thus But both the employees unions have accepted the implementation of the letter of Chief Personal Officer as it is beneficial to a majority of the employees Therefore it may not be disturbed At the same time all those 204 employees who had opted before 1983 must be entitled to the benefit which would have been available to them on their options What remained thereafter which could not be clear to opposite parties cannot be appreciated The order left no ambiguity that these employees shall be treated separately and would be granted benefit which would have been available to them That was possible and obvious if alternative 11 was applied to them It was for this reason that the Court directed to create even additional posts Attempt was made by the learned senior counsel to urge that it shall disturb seniority and may result in extending it to many others We are afraid that this Court in these applications is concerned with the implementation of the order passed by it and not whether the order passed by it was correct or not Neither of these submissions were raised earlier and if had been raised they should be deemed to have been rejected Even earlier it had been made clear that no one promoted shall be disturbed We therefore direct opposite parties to implement the order of this Court in respect of 204206 employees by applying altemative II to them for purposes of determining their placement and promotion After their placements and promotions are so determined under alternative II then they may be governed by the present alternative for future promotions Six months time was granted in 1990 The opposite parties have delayed it by nearly two and half years We direct the opposite parties to finalise it within two months from today The promotions and all benefits shall be given retrospectively No application for further extension by opposite parties shall be entertained Failure to comply with the directions shall not be treated lightly in future 759 We are not taking any action in the circumstances for the present The contempt applications are disposed of accordingly But the respondents shall pay a sum of Rs 5000 as costs to the applicants UR Contempt Petition disposed of

The appellant appointed Principal of Dr Hari Ram Co education Higher Secondary School was placed under suspension and a charge sheet containing 12 charges issued to him Charge No 12 accused him of use of an unaccounted sum of Rs 12937 given to him by Maru Ram teacher in charge of amalgamated fund The enquiry committee constituted comprised 3 members of which the said Maru Ram was a member Maru Ram deposed as a witness for the administration in support of charge No 12 The appellant s objection to the inclusion of Maru Ram on the enquiry committee was overruled and he was found guilty of some of the charges including the said charge and the Managing Committee proposed to dismiss him from service The appellant s application for inspection of documents to enable him to make his representation before the Deputy Commissioner the confirming authority under S32 of the Punjab Aided Schools Security of Service Act 1969 was rejected by the Managing Committee the Deputy Commissioner and the Commissioner The appellant then filed a writ petition in the High Court for quashing the enquiry report and the orders passed by the Managing Committee the Deputy Commissioner and the Commissioner The Managing Committee opposing the petition contended that the enquiry committee was not partial or inimical towards the appellant It was 864 contended that maru Ram was the only teacher member of the Managing Committee other than the appellant himself therefore only Maru Ram could be taken in the enquiry committee as a representative of the teachers union It was further contended that though the application for inspection had been made after his dismissal he had not been refused permission for inspection he had been asked to indicate the rules under which he could see the file A Single Judge of the Punjab and Haryana High Court allowed the petition on the ground that the departmental proceeding was vitiated by the flagrant violation of natural justice Since one of the members of the Managing Committee acted both as a Judge and as a witness to prove one of the charges against the appellant despite the objections made by the appellant against the inclusion of such member in the committee the entire enquiry proceeding was vitiated He held that the bias continued and percolated to the entire proceeding and should not be restricted to charge no 12 Since the enquiry report was required to be considered by the Deputy Commissioner for the purpose of affirming the proposed order of dismissal the fact of bias and prejudice was required to be considered and the appellant was not debarred from raising such vital plea of bias in the writ proceeding The decision arrived at on the basis of an illegal and biased enquiry could not be sustained On appeal the Division Bench reserved the order of the Single Judge It held that the plea of bias was vague that the appellant had waived it by not raising it specifically before the Deputy Commissioner and Commissioner and that as the Deputy Commissioner was not influenced by charge no12 only but was impressed with some other charge no interference with the impugned order was called for Allowing the appeal this Court HELD 1 In Administrative Law Rules of natural justice are foundational and fundamental concepts and the law is now well settled that the principles of natural justice are part of the legal and judicial procedures 871 E Franklin vs Minister of Town and Country Planning Kishan Chand Arora vs Commissioner of Police Calcutta Breen vs Amalgamated Engineering Union Maneka Gandhi vs Union of India 1978 2 SCR 621 State of Orissa vs Bina pani Dei and AKKraipak vs Union of India Ors1970 1 SCR 457 865 referred to 2Since the rules of natural justice are not embodied rules it is not possible and practicable to precisely define the parameters of natural justice 872 H Russel vs Duke of Norfolk 1949 ALL ER109 Union of India vs PK Roy AKKraipak vs Union of India and Prof Wade Administrative Law edn 1988 p 503 referred to 3One of the cardinal principles of natural justice is Nemo debet esse judex in propria causa No man shall be a judge in his own cause The deciding authority must be impartial and without bias 874 C Secretary tit Government Transport Department vs Munuswamy and State of UP vs Mohd Nooh referred to 874 C For appreciating a case of personal bias the test is whether there was a real likelihood of a bias even though such bias has not in fact taken place De Smith Judicial Review of Administrative Action 1980 p 269 R Sunderlal Justices at 373 R vs Sussex Justices at 259 Halsbury s Laws of England 4th Edn Vol2 para 551 and Manak Lal vs Dr Prem Chand referred to It is in this sense that it is often said that justice must not only be done but must also appear to be done 875 E 4In the facts of this case there was not only a reasonable apprehension of bias if one of the members of the enquiry committee but such apprehension became real when Maru Ram appeared as a witness against the appellant and thereafter proceeded with the enquiry proceeding as a member of the enquiry committee to uphold the correctness of his deposition as a Judge 875 F 5The Division Bench dismissed the writ petition improperly on a technical ground that the plea of bias could not be raised in a writ proceeding especially when it was not specifically taken before the Deputy Commissioner and the Commissioner more so when this defence could be waived by the person suffering the prejudice 876 E 866 Generally a point not raised before the tribunal or administrative authorities may not be allowed to be raised for the first time in writ proceedings Which is equitable and discretionary and interference is not a matter of course particularly when the plea sought to be raised for the first time in a writ proceedings requires investigation of facts 876 A AM Allison vs State of Assam referred to But if the plea goes to the root of the question and is based on admitted and uncontroverted facts and does not require any further investigation into a question of fact it is only desirable that a litigant should not he shut out from raising such plea pp 19 20 876 C AS Arunachalam Pillai vs Ms Southern Roadways Ltd and The Cantonment Board vs Pyarelal referred to 6The bias of Shri Maru Ram one of the members of the enquiry committee had percolated throughout the enquiry proceeding thereby vitiating the principles of natural justice and the findings made by the enquiry committee was the product of a biased and prejudiced mind The illegality committed in conducting the departmental proceedings has left an indelible stamp of infirmity on the decision of the Managing Committee since affirmed by the Deputy Commissioner and the Commissioner 876 G State of UP vs Mohd Nooh relied on

Appeals Nos 225 226 228 229 and 248 of 1955 Appeals from the judgments and orders dated October 5 1953 in Misc Judicial Cases Nos 41852 and 12453 and October 8 1953 in T section No 10653 565 Misc Judicial Cases Nos 18853 and 23553 of the Patna High Court R Patnaik for the appellant in C A No 22555 R CPrasad for the appellants in C As Nos 226 228 229 24855 Mahabir Prasad Advocate General for the State of Bihar Tribeni Prdsad Sinha and section P Varma for the respondents in C As 225 226 228 22955 Mahabir Prasad Advocate General for the State of Bihar and section P Varma for the respondent in C A No 24855 April 15 The Judgment of the Court was delivered by section K DAS J This is a batch of five appeals which have been heard together and the principal question for decision in these appeals is the constitutional validity of the Bihar Hindu Religious Trusts Act 1950 Bihar I of 1951 hereinafter referred to as the Act Four of these appeals arise out of writ proceedings taken in the High Court of Patna on petitions made under articles 226 and 227 of the Constitution One of them namely Civil Appeal No 228 of 1955 arises out of a suit which was originally instituted in the Court of the Subordinate Judge of Patna but was later transferred to the High Court by an order made by it tinder article 228 of the Constitution The Petitioners in the writ petitions and the plaintiffs in the suit challenged the constitutional validity of the Act on certain grounds to which we shall presently refer The petitions and the suit were contested by the State of Bihar andor the President Bihar State Board of Religious trusts who are now respondents before us The High Court in three separate judgments two dated October 5 1953 and the third dated October 8 1953 held that the Act was a valid piece of legislation and on that main finding dismissed the writ petitions and the suit The petitioners and the plaintiff appellants before us applied for and obtained certificates from the High Court under article 132 of the Constitution to the effect that the cases involved substantial ques 566 tions of law as to the interpretation of the Constitution and the appeals have been brought to this Court in pursuance of those certificates The facts lie within a very narrow compass In Civil Appeal No 225 of 1955 the appellant is Mahant Moti Das and he alleged that he was the Mahant of a math or astral situate in village Parbatta district Monghyr in Bihar that he was a follower of the religion founded by Sri Kabir Sahib that the properties of the asthal were treated as private properties of the mahants and that the President of the Bihar State Board of Religious Trusts constituted under the Act had no authority to serve him with a notice under section 59 of the Act inasmuch as the Act was ultra vires and unconstitutional and in any event did not apply to his math or asthal In Civil Appeal No 226 of 1955 the appellant Mahant Ram Das similarly alleged that he was the mahant of a math or asthal situate in village Bhuthari in the same district of Monghyr that he was a bairagi sadhu and follower of Ramanandi Laskari Sri Vaishnava Sampradaya that he was the absolute owner of the properties belonging to the math and that the President Bihar State Board of Religious Trusts had no authority to issue a notice to him asking him to furnish statements and accounts of the properties in his possession In Civil Appeal No 228 of 1955 the appellants made similar allegations in their plaint and challenged the vires of the Act mentioning as their cause of action the date on which the assent of the President of India to the Act was first published in the Bihar Gazette In Civil Appeal No 229 of 1955 the appellant Mahant Mahabir Das stated that he was the Mahant of a asthal known as Bisanpur Asthal situate in the self same district He also received a notice from the President Bihar State Board of Religious Trusts to furnish statements and accounts and he challenged the vires of the Act on similar grounds In Civil Appeal No 248 of 1955 Mahant Ram Krishna Das alleged that the temple in question known as Bhikam as Thakurbari in the town of Patba was constructed by one Benidasji with his own money and he installed certain deities therein 567 The allegation was that the temple and the properties thereof did not constitute a religious trust within the meaning of that expression in the Act and further that the Act was ultra vires the Constitution inasmuch as it infringed some of his fundamental rights The defence in all these cases was that the Act was valid and applied to the asthals or temple in question and the properties thereof The principal argument presented before us on behalf of the appellants is that the Act is bad on the ground that its several provisions infringe the appellants fundamental rights guaranteed under a article 14 b article 19 1f and e articles 25 26 and 27 of the Constitution The Act has also been impugned on the ground that it imposes an Unauthorised tax and also contravenes article 133 of the Constitution At this stage it is necessary to advert to the object or purpose of the Act and set out the relevant provisions thereof The Act was passed by the Bihar Legislature and received the assent of the President which assent was published in the Bihar Gazette on February 21 1951 The long title of the Act and the preamble give the object of the Act The long title says that it is an Act to provide for the better administration of Hindu Religious Trusts and for the protection and preservation of properties appertaining to such trusts The preamble repeats the same object or purpose and makes it further clear that the Act is meant to provide for the better administration of Hindu Religious Trusts in the State of Bihar Section I gives the short title and provides for extent and commencement the Act having come into force on August 15 1951 Section 2 is the definition section and the word Hindu in the Act means a person professing any religion of Hindu origin and includes a Jain and a Buddhist but does not include a Sikh The expressions religious trust and trust property are defined in the following way Section 2 1 I religious trust means any express or constructive trust created or existing for any purpose recognised by Hindu Law to be religious pious or charitable but shall not include a trust created 568 according to the Sikh religion or purely for the benefit of the Sikh community and a private endowment created for the worship of a family idol in which the public are not interested p I trust property means the property appertaining to a religious trust Section 3 states This Act shall apply to all religious trusts whether created before or after the commencement of this Act any part of the property of which is situated in the State of Bihar Section 4 was amended by Bihar Act 16 of 1954 and it provides for necessary amendment or repeal as the case may be of certain earlier Acts dealing with public religious trusts and charitable endowments such as the 20 of 1863 the 6 of 1890 and the Charitable and Religious Trusts Act 1920 14 of 1920 Sub section 5 of section 4 has an important bearing on one of the questions before us and must be quoted in full Section 4 5 The and section 92 of the Code of Civil Procedure 1908 shall not apply to any religious trust in this State as defined in this Act Chapter II of the Act deals with the constitution of the Board Section 5 provides for the constitution of the Bihar State Board of Religious Trusts Section 53 states that the Board shall be a body corporate and shall have perpetual succession and a common seal with power to acquire and hold property both moveable and immovable Section 7 makes provision for the appointment of the President and the members of the first Board and their terms of office Section 8 contains the terms of the constitution of the second and every subsequent Board Chapter IV refers to the appointment and qualification of the Superintendent of the religious trusts The chapter further provides for the appointment of officers and servants for the Board Chapter V relates to the power and duties of the Board Section 28 1 provides that the general superintendence of all religious trusts in the State shall be vested in the 569 Board and the Board shall do all things reasonable and necessary to ensure that such trusts are properly supervised and administered and that the income thereof is duly appropriated and applied to the objects of such trusts and in accordance with the purposes for which such trusts were founded and for which they exist Section 28 2 enumerates in great detail the powers and duties of the Board in regard to certain matters Section 282e for example states that the duty of the Board shall be to cause inspection to be made of the property and the office of any religious trust including accounts and to authorise the Superintendent or any of its members officers or servants for that purpose Section 282g empowers the Board to give directions for the proper administration of a religious trust in accordance with the law governing such trust and the wishes of the founder in so far as such wishes can be ascertained Section 32 empowers the Board to settle a scheme for the proper administration of religious trusts Chapter VI refers to the establishment of regional trusts committees and the powers and duties imposed on such committees Chapter VIII refers to transfer of immovable properties and borrowing of money by trustees Section 44 of this chapter states that no transfer made by a trustee of any immovable property of a religious trust by way of sale mortgage or lease for a term exceeding three years shall be valid unless made with the previous sanction of the Board Section 45 prohibits a trustee from borrowing money for the purpose of any religious trust without the previous sanction of the Board Chapter X relates to trustees and their duties Section 59 of this chapter imposes a duty on the trustee to furnish particulars of the religious trust Section 60 relates to the budget of religious trusts and submission of such budgets to the Board and the Board may alter or modify the budget in such manner and to such extent as it thinks fit Chapter Xi relates to audit of accounts and recovery of irregular expenses from the trustees in default Chapter XIII provides for the creation of a trust fund which is to be vested in the 72 570 Board Section 70 states that for the purpose of defraying the expenses incurred in the administration of the Act the trustee of every religious trust shall pay to the Board such fee not exceeding five per centum of its net income as the Board may from time to time with the previous sanction of the State Government determine Chapter XVI provides for the dissolution or supersession of the Board Section 80 states that if in the opinion of the State Government the Board makes default in the performance of the duties imposed on it or exceeds or abuses its powers the State Government may declare the Board to be in default and direct that the Board shall be superseded Section 81 provides that where an order of supersession has been passed all the members of the Board shall vacate their offices as such members and all the powers and duties to be performed by the Board shall be performed by such person as the State Government may direct Section 81 empowers the State Government to make rules and section 83 empowers the Board to make bye laws not inconsistent with the Act and the rules made thereunder We proceed now to consider the contentions urged on behalf of the appellants The first contention is that the provisions in sections 2 5 6 7 and 8 infringe article 14 of the Constitution It is pointed out that the definition of the word Hindu in section 2 does riot include Sikhs and section 5 constitutes a Board for religious trusts other than Jain religious trusts and also two separate Boards one for Swetambar Jain religious trusts and the other for Digambar Jain religious trusts It is further pointed out that under sections 6 7 and 8 the constitution of the Board for religious trusts other than Jain religious trusts differs in material particulars from the constitution of the two Boards for Jain religious trusts The submission is that there is inequality of treatment as between Hindu religious trusts on one hand and Sikh religious trusts on the other the latter having been excluded from the purview of the Act secondly there is inequality of treatment even as between Hindu religious trusts and Jain religious trusts though both come under the Act We do not 571 think that there is any substance in this contention The provisions of article 14 of the Constitution had come up for discussion before this Court in a number of earlier cases see the cases referred to in Shri Ram Krishna Dalmia vs Shri Justice section R Tendolkar 1 It is therefore unnecessary to enter upon any lengthy discussion as to the meaning scope and effect of the Article It is enough to say that it is now well settled by a series of decisions of this Court that while article 14 forbids class legislation it does not forbid reasonable classification for the purposes of legislation and in order to pass the test of permissible classification two conditions must be fulfilled namely 1 that the classification must be founded on an intelligible differential which distinguishes persons or things that are grouped together from others left out of the group and 2 that differentia must have a rational relation to the object sought to be achieved by the statute in question The classification may be founded on different bases such as geographical or according to objects or occupations and the like The decisions of this Court further establish that there is a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional guarantee that it must be presumed that the legislature understands and correctly appreciates the needs of its own people and that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds and further that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest It is not disputed before us and this has been pointed out by the High Court that there are some differences between Hindus Sikhs and Jains in some of the essential details of the faith which they profess and the religious practices they observe the Sikhs have no caste or priests though they have grantis who officiate at marriages and other ceremonies they do not believe in the Vedas Puranas or Shastras at least not in the same 1 372 way as the Hindus believe in them The Jains also do not recognise the divine authority of the Vedas and do not practise sradhs or ceremonies of the dead nor do they recognise the spiritual authority of the Brahmins Maine s Hindu Law 11th Edition p 82 It has been further pointed out that there are also organizational differences in the matter of religious trusts between Hindus Sikhs and Jains There are not many Sikh religious trusts in Bihar and their organization is essentially different Jains consist of two main branches Swetambar Jains and Digambar Jains and each branch has a separate central organisation Section 8 of the Act recognises these differences for example there is an assembly of Swetambar Jains known as Shree Sangh and under section 82c of the Act the Shree Sangh is entitled to elect five per sons to the Board of Swetambar Jain Religious Trust Similarly Digambar Jains also have an assembly known as the Digambar Samaj and under section 83c of the Act this assembly is entitled to elect five persons to the Board for Digambar Jain Religious Trust In view of these differences it cannot be said that in the matter of religious trusts in the State of Bihar Sikhs Hindus and Jains are situated alike or that the needs of the Jains and Hindus are the same in the matter of the administration of their respective religious trusts therefore according to the well established principles laid down by this court with regard to legislative classification it was open to the Bihar Legislature to exclude Sikhs who might have been in no need of protection and to distinguish between Hindus and Jains Therefore the contention urged on behalf of the appellants that the several provisions of the Act contravene article 14 is devoid of any merit The next contention urged on behalf of the appellants is that the provisions in Chapter V and in particular sections 28 and 32 violate the fundamental right guaranteed to the appellants under article 191f of the Constitution namely their right to acquire hold and dispose of the trust properties This argument before us has proceeded on the footing that the properties which the appellants bold are trust properties within 573 the meaning of the Act but we must state here that the appellants have also alleged that the properties are their private properties to which aspect of the case we shall advert later Chapter V of the Act and in particular section 28 thereof lays down the powers and duties of the Board To some of these powers and duties we have already made a reference earlier Section 32 gives power to the Board of its own motion or on application made to it in that behalf by two or more persons interested in any trust to settle schemes for proper administration of the religious trust There are other sections in the chapter which give the Board power to enter into contracts and to borrow money etc for carrying out any of the purposes of the Act or to give effect to the provisions thereof Under section 58 every trustee must carry out all directions which may from time to time be issued to him by the Board under any of the provisions of the Act The powers given under section 28 include the power to prepare and settle the budget to cause inspection to be made of the property and the office of any religious trust to call for information reports returns etc to give directions for the proper administration of a religious trust in accordance with the law governing such trusts and the wishes of the founder to remove a trustee from his office in certain circumstances and to control and administer the trust fund etc The argument before us is that the position of a maharani or shebait of a Hindu religious trust is a combination of office and proprietary right and under the provisions of the Act the mahant or shebait practically loses his right of management and is reduced to the position of a mere servant of the Board this it is contended is violative of the appellants fundamental right under article 191f In Angurbala Mullick vs Debabrata Mullick 1 Mukherjea J delivering the majority judgment of this Court has said that the exact legal position of a shebait may not be capable of precise definition but its implications are fairly well established It is now settled that the relation of a shebait in regard to 1 1133 574 debutter property is not that of a trustee to trust property under the English law Mukherjea J said In English law the legal estate in the trust property vests in the trustee who holds it for the benefit of cestui que trust In a Hindu religious endowment on the other hand the entire ownership of the dedicated property is transferred to the deity or the institution itself as a juristic person and the shebait or mahant is a mere manager But though a shebait is a manager and not a trustee in the technical sense it would not be correct to describe the shebaitship as a mere office The shebait has not only duties to discharge in connection with the endowment but he has a beneficial interest in the debutter property In almost all such endowments the shebait has a share in the usufruct of the debutter property which depends upon the terms of the grant or upon custom or usage Even where no emoluments are attached to the office of the shebait he enjoys some sort of right or interest in the endowed property which partially at least has the character of a proprietary right Thus in the conception of shebaiti both the elements of office and property of duties and personal interest are mixed up and blended together and one of the elements cannot be detached from the other It is the presence of this personal or beneficial interest in the endowed property which invests shebaitship with the character of proprietary rights and attaches to it the legal incidents of property It is to be remembered that even before the passing of the Act here impugned there was statutory machinery for enforcing the obligations and duties imposed Upon mahant or shebait Section 92 of the Code of Civil Procedure provided that in the case of an alleged breach of any express or constructive trust created for public purposes of a charitable or religious nature or where the direction of the court was deemed necessary for the administration of any such trust the Advocate General or two or more persons having an interest in the trust and having obtained the consent in writing of the Advocate General might institute 575 a suit to obtain a decree a to remove any trustee b appointing a new trustee c vesting any property in a trustee d directing accounts and enquiries e declaring what proportion of the trust property or of the interest therein shall be allocated to any particular object of the trust f authorising the whole or any part of the trust property to be let sold mortgaged or exchanged g settling scheme andor h granting such further or other relief as the nature of the case might require The section therefore provided an important machinery for enforcing the obligations and duties imposed on trustees and the jurisdiction given to the court was of a very wide extent Now the right guaranteed under article 191f is subject to cl 5 thereof which says inter alia that nothing in sub clause f shall prevent the State from making any law imposing reasonable restrictions on the exercise of the right conferred by the said sub clause in the interests of the general public We are of the view in agreement with that of the High Court that the restrictions imposed by the Act on the power of the trustees are really intended as the preamble of the Act states for the better administration of Hindu religious trusts in the State of Bihar and for the protection and preservation of properties appertaining to such trusts It is indeed true that the Act provides a better and more speedy remedy for the enforcement of the obligations and duties imposed on the trustees than the lengthy and cumbrous procedure of a suit under section 92 of the Civil Procedure Code The Board is vested with summary powers in various matters but the control is to be exercised for the better and more efficient administration of the trust and for the protection and preservation of the trust properties It is germane to refer in this connection to sub section 1 of section 28 which states that the Board shall do all things reasonable and necessary to ensure that the religious trusts are properly supervised and administered and that the income thereof is duly appropriated and applied to the objects of such trusts and in accordance with the purposes for which such trusts were founded Section 576 60 2 no doubt empowers the Board to alter or modify the budget of any religious trust in such manner and to such extent as it thinks fit but sub section 6 of section 60 makes it clear that nothing contained in the section shall be deemed to autborise the Board to alter or modify any budget in a manner or to an extent inconsistent with the wishes of the founder so far as such wishes can be ascertained or with the provisions of the Act Section 28 2 h gives the Board power to remove a trustee from his office in certain contingencies but sub section 3 of section 28 says that an order of removal passed by the Board under el h of sub section 2 shall be communicated to the trustee concerned and such trustee may within 90 days of the communication of such order apply to the District Judge for varying modifying or setting aside the order Section 28 2 j empowers the Board to sanction the conversion of any property of a religious trust into another property if the Board is satisfied that such conversion is beneficial for the trust there is however an important proviso that no such conversion shall be sanctioned unless the Board so resolves by a majority which includes at least three fourths of its members and the resolution is approved by the District Judge Even with regard to the settling of a scheme under section 32 there is a safeguard under sub section 3 thereof which says that the trustee or any person interested in the trust may within three months of the publication of the scheme make an application to the District Judge for varying modifying or setting aside the scheme These and similar other safeguards clearly indicate Act and we are of the view that having regard to the position of a trustee as respects the trust property which he holds and the object or purpose of the Actthe restrictions imposed are really for the purpose of carrying out the objects of the trust and for better administration protection and preservation of the trust properties they are therefore reasonable restrictions in the interests of the general public within the meaning of el 5 of article 19 of the Constitution In 577 this respect the impugned provisions of the Act differ from those provisions of the Madras Hindu Religious and Charitable Endowments Act 1951 and the Orissa Hindu Religious Endowments Act 1939 as amended by the Amending Act 11 of 1952 which came under consideration of this Court in The Commissioner Hindu Religious Endowments Madras vs Sri Lakshmindra Thirtha Swamiar of Shri Shirur Mutt 1 and Mahant Shri Jagannath Ramanuj Das vs The State of Orissa 2 and were held to be invalid on the ground that they were not reasonable restrictions within the meaning of el 5 of article 19 of the Constitution The third contention of the appellants rests upon articles 25 and 26 of the Constitution The appellants have invoked in aid article 25 1 which says inter alia that subject to public order morality and health all persons have the right freely to profess practice and propagate religion Article 26 is also relied on for the contention that every religious denomination or any section thereof has a right a to establish and maintain institutions for religious and charitable purposes and b to manage its own affairs in matters of religion It is difficult to see how any of the provisions of the Act can be said to interfere with the right guaranteed by article 25 viz freedom of conscience and the right freely to profess practice and propagate religion Learned counsel for the appellants has not been able to point out to us any particular provision of the Act which interferes with such a right On behalf of the appellants it has been submitted that the power to alter or modify the bud get relating to a religious trust or the power to give directions to a trustee may be exercised by the Board in such a way as to affect the due observance of religious practices in a math or temple so as to constitute an encroachment on the right guaranteed under article 25 and learned counsel for the appellants had placed reliance on The Commissioner Hindu Religious Endowments Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt 1 for his submission that I 73 2 578 freedom of religion in our Constitution is not confined to religious beliefs only but extends to religious practices as well subject to the restrictions which the Constitution itself has laid down The answer to this submission is two fold we have pointed out earlier that the power to alter the budget is subject to cl 6 of section 60 of the Act and the Board is nit authorised to alter or modify the budget in a manner or to an extent inconsistent with the wishes of the founder or with the provisions of the Act The power to give directions to the trustee is also subject to a similar restriction namely the directions must be for the proper administration of the religious trust in accordance with the law governing such trust and the wishes of the founder in so far as such wishes can be ascertained and are not repugnant to such law The keynote of all the relevant provisions of the Act is the due observance of the objects of the religious trust and not its breach or violation Secondly as was observed in The Commissioner Hindu Religious Endowments Madras vs Shri Lakshmindra Thirtha Swamiar of Shri Shirur Mutt1 at p 1030 an apprehension that the powers conferred may be abused in individual cases does not make the provision itself bad or invalid in law With regard to article 26 cls a and b the position is the same There is no provision of the Act which interferes with the right of any religious denomination or any section thereof to establish and maintain institutions for religious and charitable purposes nor do the provisions of the Act interfere with the right of any religious denomination or any section thereof to manage its own affairs in matters of religion Learned counsel for the appellants has drawn our attention to Sri Venkataramana Devaru vs The State of Mysore 2 where following the earlier decision in The Commisssioner Hindu Religious Endowments Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt 1 it was observed that matters of religion included even practices which are regarded by the community as part of its religion Our attention has also been drawn I 2 579 to Ratilal Panachand Gandhi vs The State of Bombay in which it has been held that a religious sect or denomination has the right to manage its own affairs in matters of religion and this includes the right to spend the trust property or its income for religion and for religious purposes and objects indicated by the founder of the trust or established by usage obtaining in a particular institution It was further held therein that to divert the trust property or funds for purposes which the charity commissioner or the court considered expedient or proper although the original objects of the founder could still be carried out was an unwarranted encroachment on the freedom of religious insti tutions in regard to the management of their religious affairs We do not think that the aforesaid decisions afford any assistance to the appellants Granting that matters of religion include practices which a religious denomination regards as part of its religion none of the provisions of the Act interfere with such practices nor do the provisions of the Act seek to divert the trust property or funds for purposes other than those indicated by the founder of the trust or those established by usage obtaining in a particular institution On the contrary the provisions of the Act seek to implement the purposes for which the trust was created and prevent mismanagement and waste by the trustee In other words the Act by its several provisions seeks to fulfill rather than defeat the trust In our opinion there is no substance in the argument that the provisions of the Act contravene articles 25 and 26 of the Constitution Lastly the appellants have challenged the validity of section 70 of the Actthe relevant portion of which states expenses incurred or to be incurred in the administration of this Act the trustee of every religious trust shall in each financial year pay to the Board such fee not exceeding five per centum of its net income in the last preceding financial year as the Board may from time to time with the previous sanction of the State Government determine I 1954 SCR 1055 580 The argument is that section 70 imposes an unauthorised tax The point is we think concluded by our decision in Mahant Sri Jagannath Ramanuj Das vs The State of Orissa 1 where the distinction between a tax and a fee for legislative purposes under our Constitution was pointed out and with regard to an identical imposition under section 49 of the Orissa Hindu Religious Endowments Act 1939 it was held that the contribution levied was a fee and not a tax It was observed there at p 1054 The collections made are not merged in the general public revenue and are not appropriated in the manner laid down for appropriation of expenses for other public purposes They go to constitute the fund which is contemplated by section 50 of the Act We are further of opinion that an imposition like this cannot be said to be hit by article 27 of the Constitution What is forbidden by article 27 is the specific appropriation of the proceeds of any tax in payment of expenses for the promotion or maintenance of any particular religion or religious denomination The object of the contribution under section 49 is not the fostering or preservation of the Hindu religion or of any denomination within it the purpose is to see that religious trusts and institutions wherever they exist are properly administered It is the secular administration of the religious institutions that the legislature seeks to control and the object as enunciated in the Act is to ensure that the endowments attached to the religious institutions are properly administered and their income is duly appropriated for purposes for which they were founded or exist As there is no question of favouring any particular religion or religious denomination article 27 could not possibly apply These observations apply with equal force to the present case It has also been argued that section 55 2 of the Act con travenes article 133 of the Constitution and is accordingly invalid Section 55 is in these terms 55 1 Unless otherwise provided in this Act an appeal shall lie to the High Court against every order passed by the District Judge under this Act I 581 2 No appeal shall lie from any order passed in appeal under this section We do not think that section 55 2 of the Act overrides or is intended to override article 133 or any other Article of the Constitution relating to appeals to the Supreme Court Such appeals must undoubtedly lie to the Supreme Court provided the necessary requirements for such appeals are fulfilled It is we think obvious that the Act cannot affect the jurisdiction of the Supreme Court We now come to that part of the case of the appellants in which they claim the properties to be their private properties or in the alternative the trusts to be private trusts The High Court has pointed out that in M J C 418 of 1952 out of which has arisen Civil Appeal No 225 of 1955 though there was an assertion that the properties were not trust properties there was a counter affidavit on behalf of the State of Bihar that the asthal in question was a public asthal and the properties appertaining thereto trust properties within the meaning of the Act In M J C 124 of 1953 out of which has arisen Civil Appeal No 226 of 1955 there was a similar claim that the mahant of the asthal was the absolute owner of the properties belonging to the math In Suit No 34 of 1952106 of 1953 out of which has arisen Civil Appeal No 228 of 1955 there was a prayer for adjournment in order to enable the plaintiffs now ap pellants before us to file a petition to amend the plaint and the purpose of the amendment sought to be made was to claim that the institutions in question were of a private charater and the Act had no application to them This prayer was disallowed by the High Court on the ground that the amendment sought to be made would alter the whole character of the suit In M J C 188 of 1953 out of which has arisen Civil Appeal No 229 of 1955 the claim was that there was no trust express or implied In M J C 235 of 1953 out of which has arisen Civil Appeal No 248 of 1955 there was a counter affidavit on behalf of the State of Bihar that the temple in question was a public temple and the Act applied to it In all these cases the High Court has 582 taken the view rightly in our opinion that the questions whether the trusts are public or private trusts or the properties are private or trust properties are questions which involve investigation of complicated facts and recording of evidence and such investigation could not be done on writ proceedings In the one suit which was tried in the High Court the question did not arise as no amendment was allowed Therefore in these cases there are no materials on which the question as to the nature of the trust can be determined though in Civil Appeal No 343 of 1955 1 in which also judgment is being delivered today we have held that having regard to the preamble to the Act the provisions in section 3 and the provisions of sub section 5 of section 4 the definition clause of religious trust in the Act must mean public trusts express or constructive recognised by Hindu law to be religious pious or charitable That finding however is of no assistance to the appellants in the present cases The fate of these cases must depend on the sole question whether the Act is constitutionally valid or not We have held that the Act is constitutionally valid In the result we hold that the appeals are without any merit They are accordingly dismissed with costs Appeals dismissed

In 1989 respondent 1 and his sister applied for migration from Mumbili Medical College in the Faculty of Medicine affiliated to the University of Dar es Salam to a recognised medical college in India The Medical Council of India turned down this application A writ petition was filed in the Court at Jabalpur The High Court directed that the appellant and other authorities consider the case of the petitioners Thereafter the Executive Committee of the Medical Council reconsidered the case on 20th August 1991 It found that the grounds for migration were not sufficient that it was the course of stud already undergone vis a vis that being taught in the medical college in which migration was sought and not the facts of individual case which was relevant Also the candidate had not furnished enough materials to make the comparison The Council therefore rejected the application A review petition and contempt petition filed in the High Court were dismissed Thereupon in a miscellaneous petition filed on the same grounds seeking admission in the second year or the 1 year professional MBBS Course at Medical College Jabalpur the High Court directed that the petitioners be given provisional admission The petitioners however did not produce the required documents and the college did not provisionally admit them In an interlocutory application the High Court permitted one of the petitioners to withdraw herself from the petition and directed that the other petitioner 788 respondent I before this Court he granted provisional admission on his filing necessary forms and depositing the fees without insisting ton the Production of any other certificate or testimonials or syllabus of Dar es Sala in University On fear of contempt the Dean had to comply with this order On an application before it this Court stayed the interim order and requested the High Court to dispose of the main petition expeditiously The High Court allowed the Tit petition and quashed the resolution dated 20th August 1991 refusing migration holding that there was no application of mind by the Council On appeal before this Court it was contended that the High Court erred in directing admission of respondent in a recognised medical college from an unrecognised medical college by way of migration that Regulation V had been misread and that not having under gone study in a recognised medical college nor having passed the first professional examination he could not be admitted to the second year that he had failed in anatomy and had not sat for his supplementary examination and had therefore ceased to be a student of Dar es Salam University and that the first year course at Dar es Salam University and in India were not equivalent Equivalence in any case it was urged is to be decided by an expert body and is not in the domain of the Court For respondent 1 it was argued that the self contradictory stand of the Council on equivalence had led to the High Court deciding the issue that equity was in his favour that he had in any event passed his pre medical test in 1991 and that he belongs to a scheduled tribe Allowing the appeal this Court HELD 1 The Medical Council has come to the correct conclusion that there cannot he migration from unrecognised institution to a recognised medical college 799 G Dar es Salam University has not been recognised as provided in the Indian Medical Council Act 19567 A 2 The High Court does not have the necessary expertise to determine equivalent The Medical Council is the main authority in this respect 799 C 789 3 what is material for grant of permission for migration is the course of study which a student has undergone vis a vis the courses being taught in the medical college in which the migration is sought and not the individual case 799 D The material placed before the Council was not sufficient to decide equivalence The concerned authority is to verify the disputed factual position concerning his performance in the 1991 pre Medical test and decide on considering him for admission for the academic year 1993 94 800 E G

appeal Nos 1450 51 of 1993 From the Judgment and Order dated 16792of the Delhi High Court in Civil Writ Petition No 1780 of 1992 and Civil Misc No 3485 of 1992 KTS Tulsi Addl Solicitor General and SN Terdol for the Appellants Kapil Sibal Vikas Singh LR Singh Yunus Malik and Gopal Singh for the Respondents The Judgment of the Court was delivered by RM SAHAI J Was there any valid justification for the appellants the Union of India to withhold the payment of subsidy to the respondents the small scale manufacturers of fertiliser is the main question that arises for consideration in this appeal directed against the judgment and order of the Delhi High Court Two other questions that arise in this connection are if the High Court committed any error in exercise of its extraordinary jurisdiction to interfere at the stage of show cause and if a report prepared by the Project Development India Limited in brief PDIL behind the back of the respondents could be relied for rejecting the specification of standard fertilizer produced by the respondents Before adverting to these issues we consider it necessary to mention that the payment of subsidy to manufacturers of fertilisers was introduced in 1982 under a scheme framed by the Government of India in pursuance of which every manufacturer was required to give a written undertaking to the President of India In 1985 Government of India issued a Fertilizer Control Order under the Essential Commodities Act Sub clause h of Clause 2 of the order defines fertilizer to mean any substance used or intended to be used as a fertiliser of the soil andor crop and specified in Part A of Schedule I and includes a mixture of fertiliser mixtures of micro nutrient fertilisers and special mixture of fertilisers Sub clause q of the same clause explains prescribed standard of fertilizer as under Prescribed standard means i in relation to fertiliser included in Column 1 of Part A of 763 Schedule 1 the standard set out in the corresponding entry in Column 2 subject to the limits of permissible variation as specified in Part B of that Schedule and iiin relation to a mixture of fertilisers the standard set out in respect of that mixture under sub clause 1 of Clause 13 by the Central Government subject to the limits of permissible variation as specified in Part B of Schedule 1 iiiin relation to a mixture of NPK fertilisers mixture of micronutrient fertilisers and combination thereof the standard set out in respect of that mixture under sub clause 2 of Clause 13 by the State Government subject to limits of permissible variation as specified in Part B of Schedule 1 And standard specified of single super phosphate SSP sulphur manufactured by the respondents is described in Schedule I of the Order as under Single Super Phosphate Granulated i Moisture per cent by weight maximum ii free phosphoric acid as P 2 0 5 per cent by weight maximum iii Water soluble phosphates as P 205 per cent by weight maximum iv Particle size Notless than 90 per cent of the material shall pass through 4 nun IS sieve and shall be retained on 1 mm IS sieve Not more than 5 per cent shall pass through 1 mm IS sieve The Control Order further deals in detail with price control distributionrestriction on manufacturers and sale etc of fertiliser Chapter VII deals with enforcement authorities Paragraph 27 empowers the State Government and the Central Government to appoint inspectors of fertilisers Paragraph 28 empowers the inspectors to secure compliance of the Order by requiring the wholesaler or retail dealer to give any information in his possession with respect to manufacture draw samples of any fertiliser enter upon and search any premises etc How the sample has to be analysed has been provided by Schedule 11 of the Order The basic raw material for manufacture of fertiliser is rock phosphate There 764 are various mines spread all over the country from where these rocks are obtained They are canalised through State mineral corporations One of such mines is located in Hirapur in the State of Madhya Pradesh The Government of the State requested the PDIL to undertake laboratory test of these rocks and submit a report for determining disability allowance payable to SSP producers The conclusion o f the report is extracted below The world reserve of good quality rock phosphate is gradually depleting making the use of non standard and low grade phosphate in the manufacture of phosphatic fertiliser as essential In India compared to other countries the availability of usable quality rock phosphate is rather limited though available in abundance This study was made at the request of Madhya pradesh Government with a view to effectively utilise to the extent possible the lower grade indigenous rock phosphate from HIRAPUR MINES for SSP production Experiments in PDIL laboratory has shown that this rock phosphate cannot be processed in the conventional route to produce SSP as such and it is imperative to make blends with any standard rock phosphate The report establishes that the rock phosphate available in our country whether it is in Madhya Pradesh or Jaipur appears to be incapable of producing SSP unless it is blended with imported rock Proportion of the two depends on the strength of rock obtained from different mines The PDIL conducted the test for those rocks whose strength varied from 05 and 0 5 and opined that blending of rock with 24 should be in proportion of 20 and 80 The extract from the report runs as under The chemical analysis has shown 2485 P 2 0 5 and 3003 Silica plus insoluble besides other impurities like high R 2 0 3 compared to 324 P 2 0 5 456 Silica plus insoluble and 075 R2 03 in standard Jordon variety Many proportions of blends were tried in laboratory to find out the optimum blend which would produce SSP of specification laid down by FCO and finally it was concluded that a blend of 20 Hirapur rock matrix and 80 Senegal will be a suitable proportion This was confirmed even in pilot plant trials where for a comparison purpose two blends were tested eg 3070 and 2080 for Hirapur Senegal rock phosphates There 765 was found from analytical results that 2080 proportion was most suited Accordingly study was concentrated towards this 2080 HirapurSenegal blend We now turn to the various issues that arise in this case Relying on these reports the subsidy Payable to the manufacturers was withheld and they were required by a letter dated 20th April 1990 to explain as to how they were able to achieve the standard specification The letter reads as under It is generally observed from the quarterly cost date being submitted by your company that you are either using only low grade rock phosphate for manufacture the P2 05 content of which is less than 30 or in large proportion thereof Please therefore intimate how you are manufacturing SSP of standard specification ie of 16 P2 05 content SSP as required under the specification laid down on the F C 0 Both the assumptions in the letter were without any foundation We shall examine it in detail later It was at this stage that the manufacturers approached the High Court They claimed that the fertiliser manufactured by them having been checked and verified by the inspectors appointed under the Control Order the opposite parties were not justified either in withholding the subsidy or issuing any notice In the counter affidavit filed in the High Court the reason for issuing notice was explained as under That in reply to Paras 15 and 16 of the Petition it is submitted that upto 141992 imported Rock Phosphate was being procured by the SSP units including the petitioners through the Minerals Metals reading Corporation MMTC which was a canalising agency Rock Phosphate is also available through the State owned indigenous sources such as Rajasthan State Mineral Development Corporation RSMDC Rajasthan State Mines Minerals Limited RSMML Uttar Pradesh State Minerals Development Corporation UPSMDC Madhya Pradesh State Mining Corporation MPSMC and Hindustan Zinc Limited HZL and SSP is manufactured by using rocks of standard grade The quality of indigenous rock phosphate from the above mentioned State owned sources varies considerably from low grade rock of 14 to 16 P2 05 content to high degree rock of 3 1 P2 05 content For producing 766 SSP of 16 WS P2 05 the rock phosphate used should contain a minimum of 3 1 P2 05 and the conversion efficiency of the rock should be more than 9 1 SSP of 16 WS P2 05 can be produced by using low grade rocks only after suitably blending it with standardhigh grade rock phosphate to have a feed conforming to the above mentioned minimum specifications of 31 P2 05 That in reply to Para 17 of the Petition it is submitted that indigenous rock phosphate is being procured by the SSP Units from Madhya Pradesh State Mining Corporation Uttar Pradesh Sate Minerals Development Corporation Rajasthan State Mining Development Corporation and Rajasthan Mines and Minerals limited Since detailed technical examination of th e various grades of indigenous rock phosphate available from sources other than RSMML was not available the SSP Units were informed that pending detailed technical examination the prices of such indigenous rock phosphate would be reimbursed at par with RSMML price for rock phosphate having 3 1 P2 05 on a provisional basis only A copy of the circular letter issued by the Office of the FICC dated 29th September 1986 to all manufacturers of SSP is at Annexure 1 Subsequently Projects and Development India Ltd PDIL Sindri which is a Consultancy and R D organisation for fertilisers in the public sector which had conducted an evaluation of MPSMC Rock Phosphate of Hirapur and Jhabua Mines submitted its report which indicated that taking into account the P2 05 content and the impurities present in both Jhabua and Hirapur Rock it is unsuitable to make SSP of 16 WS P2 05 content unless it is blended with minimum of 7O which grade imported Senegal rock with 30 low grade Jhabua rock and minimum of 80 high grade Senegal rock with 20 low grade Hirapur rock After considering this a Division Bench of the High Court allowed the writ petition and issued a direction to the appellant to pay the subsidy which was payable to respondents after determining it in accordance with the terms of the scheme under which it was payable within the period specified in the order The direction was issued as the Bench found that the basis for denying the subsidy was the report submitted by PDIL prepared behind the back of the manufacturers without issuing any notice to them or inviting their participation After excluding the report the bench held that since the payment of subsidy was dependent on basis of laboratory reports furnished by the manufacturers and these reports had been furnished by 767 them and they had not been questioned at any time by the appropriate authorities it was not open to opposite parties either to withhold the subsidy or to initiate the proceedings by issuing show cause notices To assail the finding on merits the learned Additional Solicitor General launched a two pronged attack He urged that subsidy under the scheme of 1982 was payable only if the fertiliser conformed to specification of 16 water soluble phosphoric penta oxide The learned counsel submitted that under the scheme the Department of Fertilisers was entitled to conduct survey and check the quality and the manufacturers were required to give an undertaking that they were to supply prescribed information along with the monthly claim for subsidy According to learned counsel claim for subsidy According to learned counsel under the said scheme a circular was issued on September 29 1986 to all the manufacturers of SSP wherein it was clarified that the indigenous rock phosphate being obtained by the manufacturers from sources other than Udaipur was pending a detailed technical examination He urged that the circular further stated that the prices were to be worked out on the basis of rock phosphate having plus 3 1 P2 05 Therefore pending completion of detailed technical examination the subsidy worked out was provisional Anti when the technical examination conducted by the PDIL indicated that on the admitted figures famished by the manufacturers in their quarterly invoices the standard specification could not have been achieved the notice were issued therefore the High Court was in error in quashing it According to him it was open to the department to get it ascertained from an authentic source if the manufacturers of fertiliser were using proper material and achieving the specified standard He urged that the PDIL being independent and reputed body it was not required to issued any show cause notice We do not consider it necessary to express any opinion if the PDIL report could have been discarded for want of show cause notice or for being ex party as there are certain features about the report which obviate the necessity of considering its validity on this ground From the counter affidavit filed by Managing Director of Ms Brij Fertilizers Pvt Ltd it appears that the manufacturers of SSP have been using rock phosphate which is of hard quality but in order to encourage use of indigenous rock phosphate and to avoid loss of foreign exchange the Government of Madhya Pradesh directed the PDIL laboratory to undertake laboratory test to find out the grade of phosphate from Hirapur mines to enable the manufacturers to claim disability allowance The report therefore was not concerned with finding out whether any of the manufacturers who were engaged in producing fertilizer were doing so in accordance with standard provided in the Control Order In the circumstances it may be that it was not necessary to issue any notice to the manufacturers 768 Yet the question is could it furnish material for rejecting the claim of respondents and withholding their subsidy The learned Additional Solicitor General urged that the non release of subsidy was not based solely on report of PDIL but on basis of input cost data supplied by the manufacturers which indicated that on basis of analysis of raw material input provided by the respondents the manufacturers could not have produced SSP of 16 water soluble P2 05 This assumption appears to be unfounded for more than one reason Under the Control Order there is a detailed procedure provided for carrying out test to find out if the fertiliser produced was of specified standard It is not disputed that no such test as provided was ever carried by any authority Rather the report submitted by the inspectors appointed under the Control Order indicates that the fertiliser manufactured by the respondents was standard We are not willing to accept the submission of the Additional Solicitor General that these reports were incorrect and have been obtained through the connivance of the official machinery There is no material on record to indicate that the Government at any point of time doubted the correctness of there ports or initiated an proceedings against any inspector or any officer for it is not possible to draw an inference against the authenticity of the reports which have been given by the authority empowered under the order It is not the claim of department that at any point of time prior to submission of the PDIL report any step was taken or the government ever required the inspectors to find out if the manufacture carried on by respondents was in accordance with law and rules To discard the certificate issued by the inspector in the circumstances would be arbitrary without any valid reason With this we may now examine the PDIL report itself As has been seen earlier the purpose of getting the rock tested was to pay disability allowance The purpose being entirely different it could not be utilised for a different purpose How risky it is to embark on such exercise shall be clear when the result of report obtained by the PDIL is applied to the dates of respondents relied by appellant to justify their action of issuing show cause notice From paragraph two of the conclusions of the PDIL extracted earlier it is clear that the study was made at the request of Madhya Pradesh Government with a view to effectively utilise to the extent possible the lower grade indigenous phosphate from Hirapur mines for SSP production The report concludes that experiments in PDIL laboratory has shown that this rock phosphate cannot be processed in the conventional route to produce SSP as such it is imperative to make blends with any standard rock phosphate The objection of the department is not that the rock phosphate should not be blended with imported one but that on the proportion shown along with the strength of indigenous rock used the standard as provided could not have been 769 achieved From the analysis of rock phosphate purchased by the manufacturers as per their invoices and attempt was made to demonstrate that if the figures mentioned therein were taken as correct and they are compared with the calculation given by the PDIL it would be clear that the standard specification could not have been achieved It is necessary to mention at this stage that the rock phosphate found in Hirapur mines was of three grades That is clear from the letter of Assistant General Manager Mines to the Joint Director Fertiliser Coordination Committee Relevant part of the letter reads We were selling Hirapur Phosphorite for so many Fertiliser SSP manufactures since starting of the mining and were never found any complaint regarding its suitability to manufacture SSP Fertiliser We have learnt form Fertiliser Manufacturing Units that our Phosphorite is suitable for SSP Fertiliser manufacturing but in case of F0203 contents increases in Phosphorite the Wear and Tear of the plant increases We had also been directed by Joint Director FA FICC vide their letter dated 31889 to sale our Phosphorite in category A to SSP Units This further certifies the suitability of our Phosphorite for SSP manufacturing of requisite grade The material supplied to these units are of 32 category A and not 25 as given in PDIL report hence the question of blending with other Rock Phosphate does not require to Manufacture the requisite grade SSP The MPSMC was selling Hirapur Phosphorite in different percentages P2 05 grades and not in mix condition Out grades and other specifications indicated as below Before 53 1991 From 63 1991 11st A 1st A P2 05 30 Sio2 P2 05 29 3 1 1518 Sio2 15 1 8 F0203 below 45 Fo203 below 24 A 12 212 Size A 122 12 size B ROM B ROM 2 1st B 1st B P205 28 30 PrO5 27 29 Sio2 18 770 Sio222 Fo203 F 203 above 45 above 45 A 12 size A 12 size B R0 M BROM C By Product Dust 3 II Grade P205 22 25 Sio2 and Fo2O3 No grantee ROM Further no rock phosphate has been or could be purchased by any manufacturer except through corporation of the State This fact is admitted in the counter affidavit of the appellant extracted earlier It is also clear from the letter of Assistant General Manager that Brij Fertilisers did not use any rock except Grade A It is claimed by the respondents that on a technical assessment conducted by Bhabha Research Institute for Lalitpur rocks that the water soluble in rock phosphate with P2 05 with 29 to 32 is more than 16 Even if this report is ignored the letter of Assistant Mines Inspector establishes that water soluble phosphate in Hirapur mines of grade A was 16 Each respondent has filed details of rock phosphate consumed by its unit from various corporations The average grade mentioned is 3 1 Not one has used grade II Even Avadh Fertiliser has not used rock phosphate below 27 From the chart appended in respect of Hirapur mines the blending in proportion of 50 indigenous and 50 indicates that even with rock of 3066 the water soluble actually was 1757 These figures could not be disputed in the reply filed on behalf of Union of India From the PDIL report it is clear that it had undertaken test of rock with 2485 P2 05 and 3003 Silica and suggested that most suited blend with such rock was 20 indigenous and 80 imported It could not furnish any guideline or material to reject the rock phosphate used by the respondents which varies between 27 P2 05 to 3 1 P2 05 In absence of any reliable data or any material the inference drawn by the appellants in the notice was baseless The counter affidavit filed in the High Court by the appellant did not explain the basis for concluding that for producing SSP of 16 or P2 05 the rock phosphate should contain a minimum of 3 1 P2 05 It is contrary to the letter of Assistant General Manager Mines In any case PDIL could not furnish any basis for it In absence of any valid justification the entire exercise undertaken by the appellant was vitiated being tainted with arbitrariness Failing in his effort to assail the order on merits the learned Additional Solicitor General vehemently urged that the department was not precluded form issuing show cause notice and requiring the manufacturers to appear and explain their claim It was urged that the High Court was not justified in quashing the show 771 cause notice and issuing the directions for paying the subsidy without giving an opportunity to the department to verify if the respondents had in fact complied with Control Order True the High Court should normally not interfere at the stage of show cause notice But where from the facts it is apparent that there was no material available with the department to doubt the statement on behalf of the respondents and their own officers at every point of time had issued the certificate the correctness of which could not be disputed or doubted except by raising unfounded suspicion or drawing on imagination it would be failing to exercise jurisdiction if the Court does not discharge its constitutional obligation of protecting the manufacturers who as is apparent from the counter affidavit filed in this Court and the various letters issued from different authorities are in perilous condition as they are not able to meet their liabilities to pay to financial institutions and various other authorities and are facing proceedings on various accounts and have virtually closed their unit We are pained to say that the authorities did not realise either the purpose of granting subsidy or the harassment to which the manufacturers have been exposed Entire litigation appears to he a sad plight for those who have set up small scale units in the hope that they will stand on their own on the subsidy given by the government as admittedly the price of manufacturing fertilizers is much more than the price fixed by the government for which it assured to pay subsidy show cause notice issued by the appellants and issuing the directions to pay the subsidy The appeals fail and are dismissed with costs which is assessed at Rs 10000 one set U R Appeal dismissed

The dispute was about whether the exercise of option by Assistant Station Masters directly recruited was a matter of choice or was compulsory The order of this court of 30 April 1990 inter alia protected the interests of the applicants by holding that the 204206 employees who had opted before 1983 must be entitled to the benefit which would have been available to them on their options The order was not implemented It was argued for the condemner that the order of this court would disturb seniority and may result in extending it to many others Disposing of the contempt petition this court HELD 1 The order dt 30490 left no ambiguity that these employees shall be treated separately and would he granted the benefit that would have been available to them 758 D 2 The Court in contempt applications is concerned with the implementation of an order passed by it and not whether such order is correct or not 3Neither the submission regarding seniority nor that it may extend to others was raised earlier and if raised they should be deemed to have been rejected Even earlier it had been made dear that no one promoted shall be disturbed 758 F 757 4Within 2 months alternative 11 to be applied to 204206 employees for their placement and promotion Future promotions may be governed by the present alternative Promotions and all benefits shall be given retrospectively 758 H Cost to the applicants of Rs 5000

etition Nos 90 312 of 1992 Under Article 32 of the Constitution of India DD Thakur Tapash Ray ML Verma Gauray Jain and Ms Abha Jain for the Petitioner in WP No 90 of 1992 RP Gupta for the Petitioner in WP No 31292 G Ramaswamy Attorney General DP Gupta Solicitor General B Parthasarthy CVS Rao AS Bhasme and Chava Badri Nath Babu for the Respondent R K Jain and Rajan Mukherjee for the customs Excise Gold Control Appellate Tribunal KK Venugopal Ms Pallav Shisodia and CSS Rao for the Respondent The Judgments of the Court were delivered by AHMADI J We have had the benefit of the industry erudition and exposition of the constitutional and jurisprudential aspects of law on the various questions urged before us in the judgment of our esteemed Brother K Ramaswamy J But while concurring with the hereinafter mentioned conclusions recorded by him we would like to say a few words to explain our points of view Since the facts have been set out in detail by our learned Brother we would rest content by giving an abridged preface which we consider necessary It all began with the receipt of a letter dated December 26 1991 from Shri RK Jain Editor Excise Law Times addressed to then Chief Justice of India Shri MH Kania J complaining that as the Customs Excise and Gold Control Appellate Tribunal for short the CEGAT was without a President for the last over six months the functioning of the Tribunal was adversely affected in that the Benches sit for hardly two hours or so the sittings commence late at about 1050 818 am there is a tendency to adjourn cases on one pretext or the other so much so that even passing of interim orders like stay orders etc is postponed and inordinately delayed and the general tendency is to work for only four days in a week The work culture is just not there and the environmental degradation that has taken place is reflected in the letter of Shri G Sankaran dated June 3 1991 who prematurely resigned as the President of the CEGAT Lastly he says that there were nearly 42000 appeals and approximately 2000 stay petitions pending in the CEGAT involving revenue worth crores of rupees which will remain blocked for long Three directions were sought namely i the immediate appointment of the President to the CEGAT preferably a senior High Court Judge ii order an enquiry into the mal functioning of the CEGAT and iii issue all other directions as your Lordship may deem fit and necessary This letter was directed to be treated as Public Interest Litigation and notice was issued to the Union of India restricted to relief No i ie in regard to the appointment of the President of the CEGAT On April 29 1992 the learned Additional Solicitor General informed the Court that the appointment of the President was made On the next date of hearing the relevant file on which the decision regarding appointment was made was produced in a sealed envelope in Court which we directed to be kept in safe custody as apprehension was expressed that the file may be tempered with The focus which was initially on the working of the CEGAT and in particular against the conduct and behaviour one of its Members now shifted to the legality and validity of the appointment of respondent No 3 as its President Serious allegations were made against respondent No 3 and his competence to hold the post was questioned It was contended that his appointment was made in violation of the Rules and convention found mentioned in the message of Shri YV Chandrachud the then Chief Justice of India dated October 5 1992 forwarded on the occasion of the inauguration of the CEGAT The further allegation made is that even though High Court Judges were available no serious attempt was made to requisition the services of one of them for appointment as President of the CEGAT To put a quietus to the entire matter at an early date we called the file from the Registry on May 41992 but when we were about to peruse the same the learned Additional Solicitor General contended that the Court cannot inspect it because he desired to claim privilege We therefore directed that a formal application may be made in that behalf before the next date of hearing and returned the file to enable the making of such an application 819 Accordingly the then Finance Secretary filed an affidavit claiming privilege under sections 123 and 124 Evidence Act and Article 742 of the Constitution The Minister of State in the Finance Department was also directed to file an affidavit in support of the claim for privilege which he did It is in this context that the question of privilege arose in the present proceedings Our learned Brother Ramaswamy J dealt with this question elaborately After referring to the provisions of the relevant Statutes and the Constitution as well as the case law of both foreign and Indian courts the authoritative text books he has concluded as under Having perused the file and given our anxious consideration we are of the opinion that on the facts of the case it is not necessary to disclose the contents of the records of the petitioner or his counsel We are in respectful agreement with this conclusion recorded by our learned Brother though not entirely for in the reasons which have weighed with him On the question of appointment of respondent No 3 as the President of the CEGAT we must notice a few provisions contained in the CEGAT Members Recruitment anti Conditions of Service Rules 1997 hereinafter called the Rules Rule 2c defines a member to include the President of the CEGAT also Rule 3 prescribes the qualifications for appointment and Rule 6sets out the method of recruitment of a member through a Selection Committee consisting of a Judge of the Supreme Court of India nominated by the Chief Justice of India Rule 10 provides for the appointment of the President It says that the Central Government shall appoint one of the members to be the President Sub rule 2 then provides as under 2 Notwithstanding anything contained in rule 6 a sitting or retired judge of a High Court may also he appointed by the Central Government as a member and President simultaneously Sub rule 4 and the proviso thereto bear reproduction 4 Where a serving judge of a High Court is appointed as a member and President he shall hold office as President for a period of three years from the date of his appointment or till he attains the age of 62 years whichever is earlier 820 Provided that where a retired judge of a High Court above the age of 62 years is appointed its President he shall hold office for such period not exceeding three years as may be determined by the Central Government at the time of appointment or re appointment It will thus he seen that the rules empower the Central Government to appoint any member as the President of the CEGAT It is true that under sub rule 4 a serving judge and under the proviso thereto a retired judge can also be appointed a Member and President simultaneously In the case of a serving judge his age of superannuation is fixed at 02 years but in the case of a retired judge he may be appointed for it period of three years at the most Insofar as a serving High Court Judge is concerned he holds office until he attains the age of 62 years vide Article 217 of the Constitution It therefore heats common sense why a sitting Judge of he High Court would opt to serve as the President of tile CEGAT if lie is to retire At the same age without any benefit On tile contrary he would lose certain perks which are attached to tile office of a High Court Judge Even status wise lie would suffer as his decisions would he subject to the writ jurisdiction of the High Court under Articles 226227 of tile Constitution He may agree to accept the offer only if he had an extended tenure of at least three years We are therefore in agreement with our learned Brother that sub rule 4 of Rule 10 of the Rules needs a suitable change to make it sufficiently attractive for sitting High Court Judges to accept appointment as the President of the CEGAT We also agree with our learned brother that to instill the confidence of the litigating public in the CEGAT the Government must make a sincere effort to appoint a sitting Judge of the High Court is a President of the CEGAT in consultation of the Chief Justice of India and it a sitting Judge is not available the choice must fall on a retired Judge as far as possible This would he consistent with the assurance given by the Finance Department as is reflected in the letter of Shri Chandrachud extract wherefrom is reproduced by our learned Brother in his judgment Shri Harish Chandra was a Senior Vice President when the question of filling up the vacancy of the President came up for consideration He was fully qualified for the post under the Rules No challenge is made on that count Under Rule 101 the Central Government is conferred the power to appoint one of the Members to be the President Since the validity of the Rule is not questioned there can be no doubt that the Central Government was entitled to appoint respondent No 3 as the President But it was said that the track record of respondent No 3 was poor and he was hardly fit to hold the post of the President of the CEGAT It has been averred that respondent No 3 had been in the past proposed for appointment 821 as a Judge of the Delhi High Court but his appointment did not materialise due to certain adverse reports Assuming for the sake of argument that these allegations are factually accurate this Court cannot sit in judgment over the choice of the person made by the Central Government for appointment as a President if the person chosen is qualified and eligible for appointment under the Rules We therefore agree with our learned Brother that this Court cannot sit in judgment over the wisdom of the Central Government in the choice of the person to be appointed as a President so long as the person chosen possesses the prescribed qualification and is otherwise eligible for appointment therefore cannot interfere with the appointment of respondent No 3 on the ground that his track record was poor or because of adverse reports on which account his appointment as a High Court Judge had not materialised The allegations made by Shri RK Jain in regard to the working of the CEGAT are rave and the authorities can ill afford to turn a Nelson s eve to those allegations made by a person who is fairly well conversant with the internal working of the Tribunal Refusal to inquire into such grave allegations some of which are capable of verification can only betray indifference and lack of a sense of urgency to tone up the working of the tribunal Fresh articles have appeared in the Excise Law Times which point to the sharp decline in the functioning of the CEGAT pointing to a serious management crises It is high time that the administrative machinery which is charged with the duty to supervise the working of the CEGAT wakes up from its slumber and initiates prompt action to examine the allegations by appointing a high level team which would immediately inspect the CEGAT identify the causes for the crises and suggest remedial measures This cannot brook delay Lastly the time is ripe for taking stock of the working of the various Tribunals set up in the country after the insertion of Articles 323A 323B in the Constitution A sound justice delivery system is a sine qua non for the efficient governance of a country wedded to the rule of law An independent and impartial justice delivery system in which the litigating public has faith and confidence alone can deliver the goods After the incorporation of these two articlesActs have been enacted whereunder tribunals have been constituted for dispensation of justice Sufficient time has passed and experience gained in these last few years for taking stock of the situation with a view to finding out if they have serve the purpose and objectives for which they were constituted Complaints have been heard in regard to the functioning of other tribunals as well and it is time that a body like the Law Commission of India has comprehensive look in with a view to 822 suggesting measures for their improved functioning That body can also suggest changes in the different statutes and evolve a model on the basis whereof tribunals may be constituted or reconstituted with a view to ensuring greater independence An intensive and extensive study needs to be undertaken by the Law Commission in regard to the constitution of tribunals under various statutes with a view to ensuring their independence so that the public confidence in such tribunals may increase and the quality of their performance may improve We strongly recommend to the Law Commission of India to undertake such an exercise on priority basis A copy of this judgment may be forwarded by the Registrar of this Court to the Member Secretary of the Commission for immediate action We have thought it wise to clarify the extent of our concurrence with the views expressed by our learned Brother in his judgment to avoid possibility of doubts being raised in future We accordingly agree with our learned Brother that the writ petitions should stand disposed of accordingly with no order as to costs KRAMASWAMY J The same facts gave birth to the twin petitions for disposal by a common judgment On October 11 1982 the Customs Central Excise and Gold Control Appellate Tribunal for short CEGAT came into existence with Justice FS Gill as its President After he retired in 1985 no Judge was appointed as President In letter dated December 26 1991 addressed to the Chief Justice of India the petitioner highlighted the mal functioning of the CEGAT and the imperative to appoint a sitting or retired judge of the High Court as President to revitalise its functioning and to regenerate warning and withering faith of the litigant public of the efficacy of its adjudication Treating it as writ petition on February 25 1992 this court issued rule nisi to the first respondent initially to make immediate appointment of the President of the CEGAT prefer ably a senior High Court Judge On March 30 1992 when the Union s counsel stated that the matter was under active consideration of the government having regard to the urgency this court hoped that the decision would he taken within two weeks from that date On April 20 1992 the learned Addl Solicitor General reported that the appointment of the President had been made however the order was not placed on record In the meanwhile die petitioner filed writ petition No 312 of 1992 impugning the appointment of Sri Harish Chander as President and sought to quash the same being in violation of the direction issued by this our on February 25 1992 and to strike down Rules 101 3 and 4 of the CEGAT Members Recruitment and Conditions of Service Rules 1987 for short the Rule as violative of article 43 of the Constitution Rule nisi was also issued to the respondents in that writ petition on May 4 1992 The tile in a sealed cover was produced The first and the third respondents were directed to file their counters 823 within four weeks This court also directed the first respondent to reflect in the counter what was the actual understanding in regard to the convention referred to in the letter of the then Chief Justice of India dated October 5 1982 What procedure was followed at the time of the appointment by first respondents and whether Chief Justice of India was consulted or whether the first respondent was free to choose a retired or a sitting Judge of the High Court as President of the Tribunal with or without consultation of the Chief Justice of India It should also point out what procedure it had followed since then in the appointment of the President of the Tribunal It should also clarify whether before the third respondent was appointed as the President any effort or attempt was made to ascertain if any retired or a sitting Judge of the High Court could be appointed as the President of the Tribunal and directed to post the cases for final disposal on July 21 1992 At request to enable to government to file a counter the rile was returned The Solicitor General though brought the file on July 21 1992 objected to our inspecting the file and desired to claim privilege The file was directed to be kept in the custody of the Registrar General till further orders The union was directed to file written application setting out the grounds on which the claim for privilege is founded and directed the Registry to return the sealed envelop as the Solicitor General expressed handicap to make precise claim of the privilege for want of file Thereafter an application was filed supported by the affidavit of the Secretary Finance and the State Minister also filed his affidavit Counter affidavits and rejoinders were exchanged in the writ petitions The Attorney General also appeared on behalf of the Union The government s claim for privilege is founded upon section 123 of the and article 74 2 of the Constitution of India Later on the Solicitor General modified the stand that the government have no objection for the court to peruse the file but claimed privilege to disclose the contents of the file to the petitioner Section 123 of the postulates that no one shall be permitted to give any evidence derived from unpublished official records relating to any affairs of State except with the permission of the officer at the head of the department concerned who shall give or withhold such permission as he thinks fit Section 124 provides that no public officer shall be compelled to disclose communications made to him in official confidence when he considers that the public interests would suffer by the disclosure section 162 envisages procedure on production of the documents that a witness summoned to produce a document shall if it is in his possession or power bring it to the court notwith standing any objection which there may be to its production or to its admissibility 824 The validity of any such objection shall be decided by the court The court if it deems fit may inspect the documents unless it refers to matters of State or take other evidence to enable it to determine on its admissibility The remedy under article 32 of the Constitution itself is a fundamental right to enforce the guaranteed rights in Part 111 This court shall have power to issue writ of habeas corpus mandamus certiorari quowarranto or any other appropriate writ or direction or order appropriate to the situation to enforce any of the fundamental right power of High court under article 226 is wider Article 144 enjoins that all authorities civil and judicial in the territory of India shall act in aid of this Court Article 142 1 empowers this Court to make such orders as is necessary for doing complete justice in any cause or matter pending before it Subject to the provisions of any law made in this behalf by the Parliament by Clause 2 of article 142 this Court shall have all and every power to make any order for the purpose of securing the attendance of any person the discovery or production of any documentsor the investigation or punishment of any contempt of itself When this Court was moved for an appropriate writ under article 32 rule nisi would be issued and for doing complete justice in that cause or matter it has been invested with power to issue directions or orders which includes ad interim orders appropriate to the cause All authorities constitutional civil judicial statutory or persons in the territory of India are enjoined to act in aid of this court This court while exercising its jurisdiction subject to any law if any made by Parliament consistent with the exercise of the said power has been empowered by Cl 2 of article 142 with all and every power to make any order to secure attendance of any person to issue discovery order nisi for production of any documents or to order investigation Exercise of this constituent power is paramount to enforce not only the fundamental rights guaranteed in Part III but also to do complete justice in any matter or cause presented or pending adjudication The power to issue discovery order nisi is thus express as well as inherent as an integral power of Judicial review and process in the court to secure the attendance of any person or discovery or production of any document or to order investigation in that behalf However in an appropriate case depending on facts on hand court may adopt such other procedure as would be warranted The petitioner must make strong prima facie case to order discovery order nisi etc and it must not be a hunting expedition to fish out some facts or an attempt to cause embarrassment to the respondents nor for publicity But on issuance of rule nisi by this Court under article 32 or a discovery order nisi the government or any authority constitutional civil judicial statutory or otherwise or any person must produce the record in their 825 custody and disobedience thereof would be at the pain of contempt Section 123 of the Evidence Act gives right to the government in other words to the minister or in his absence head of the department to claim privilege in other words immunity from disclosure of the unpublished official state documents in public interest In a democracy governed by rule of law State is treated at par with a person by article 196 in commercialindustrial activities It possessed of no special privileges This Court in State of UP vs Raj Narain Ors at 349 held that an objection claiming immunity should be raised by an affidavit affirmed by the head of the department The court may also require a Minister to affirm an affidavit They must state with precision the grounds or reasons in support of the public interest immunity It is now settled law that the initial claim for public interest immunity to produce unpublished official records for short state documents should be made through an affidavit generally by the Minister concerned in his absence by the Secretary of the department or head of the Department In the latter case the court may require an affidavit of the Minister himself to be filed The affidavit should indicate that the documents in question have been carefully read and considered and the deponent has been satisfied supported by reasons or grounds valid and germane as to why it is apprehended that public interest would be injured by disclosure of the document summoned or called for If the court finds the affidavit unsatisfactory a further opportunity may be given to file additional affidavit or be may be summoned for cross examination If the court is satisfied from the affidavit and the reasons assigned for withholding production or disclosure the court may pass an appropriate order in that behalf The Court though would give utmost consideration and deference to the view of the Minister yet it is not conclusive The claim for immunity should never be on administrative routine nor be a garb to avoid inconvenience embarrassment or adverse to its defence in the action the latter themselves a ground for disclosure If the court still desires to peruse the record for satisfying itself whether the reasons assigned in the affidavit would justify withholding disclosure the court would in camera examine the record and satisfy itself whether the public interest subserves withholding production or disclosure or making the document as part of the record On the one side there is the public interest to be protected on the other side of the scale is the interest of the litigant who legitimately wants production of some documents which he believes will support his own or defeat his adversary s case Both are matters of public interest for it is also in the public interest that justice should be done between litigating parties by production of all relevant documents for which public interest immunity has been claimed They must be weighed one 826 competing public interest in the balance as against another equally competing public administration of justice The reasons are there is public interest that harm shall not be done to the nation or the public service by disclosure of the document in question and there is public interest that the administration of justice shall not be frustrated by withholding the document which must be produced if justice is to be done The court also should be satisfied whether the evidence relates to the affairs of the State under sec 123 or not evidence is relevant to the issue and admissible As distinct from private interest the principle on which protection is given is that where a conflict arise between public and private interest private interest must yield to the public interest In SP Gupta Ors etc vs Union of India Ors 1982 2 SCR 365 this court by seven Judges bench held that the court would allow the objection to disclosure if it finds that the document relates to affairs of State and its disclosure would be injurious to public interest but on the other hand if it reaches the conclusion that the document does not relate to affairs of State or that the public interest does not compel its non disclosure or that the public interest in the administration of justice in the particular case before it overrides all other aspects of public interest it will overrule the objection and order disclosure of the document When an objection was raised against disclosure of a particular document that it belongs to a class which in the public interest ought not to be disclosed whether or not it would be harmful to disclose that class document or the contents of that particular document forming part of the class would be injurious to the interest of the state or the public service it would be difficult to decide in vacuum the claim because it would almost invariably be supported by an affidavit made either by the Minister or head of the department and if he asserts that to disclose the contents of the document would or might do to the nation or the public service a grave injury the court out of deference will be slow to question his opinion or to allow any interest even that of justice to prevail over it unless there can be shown to exist some factors suggesting either lack of good faith or an error of judgment on the part of the minister or the head of the department or the claim was made in administrative routine without due consideration or to avoid inconvenience or injury to their defence However it is well settled law that the court is not bound by the statement made by the minister or the head of the department in the affidavit and it retains the power to balance the injury to the State or the public service against the risk of injustice The real question which the court is required to consider is whether public interest is so strong to override the ordinary right and interest of the litigant that he shall be able to lay before a court of justice of the relevant evidence In balancing the competing interest it is the duty of the court to see that there is the public interest that harm shall not be done to the nation or the 827 public service by disclosure of the document and there is a public interest that the administration of justice shall not be frustrated by withholding documents which must be produced if justice is to he done It is therefore the paramount right and duty of the court not of the executive to decide whether a document will be produced or may he withheld The court must decide which aspect of public interest predominates or in other words whether the public interest which requires that the document should not be produced out weighs the public interest that a court of justice in performing its functions should not be denied access to relevant evidence In some cases therefore the court must weight one competing aspect of the public interest against the other and decide where the balance lies If the nature of the injury to the public interest is so grave a character then even private interest or any other interest cannot be allowed to prevail over it The basic question to which the court would therefore have to address itself for the purpose of deciding the validity of the objection would be whether the document relates to affairs of State or in other words is it of such a character that its disclosure would be against the interest of the State or the public service and if so whether the public interest in it non disclosure is so strong that it must prevail over the private interesting the administration of justice and on that account it should not be allowed to be disclosed By operation of Sec 162 of Evidence Act the final decision in regard to the validity of an objection against disclosure raised under section 123 would always be with the court The contention therefore that the claim of public interest immunity claimed in the affidavit of the State Minister for Finance and the Secretary need privacy and claim for immunity of state documents from disclosure is unsustainable The same is the law laid down by the Commonwealth countries see Conway vs Rimmer D vs National Society for the Prevention of Cruelty to Children Burmah Oil Co Ltd vs Governor and Company of the Bank of England Butters Gas and Oil Co vs Hammer Air Canada vs Secretary of State for Trade and Council of Civil Service Unions vs Minister for the Civil service Pursuant to the law laid down in Conway s case the Administration of Justice Act 1970 was made enabling the court to order disclosure of the documents except where the court in exercise of the power under sections 31 to 34 considered that compliance of the order would be injurious to the public interest consistent with the above approach is the principle laid by this court in SP Gupta s case In United States of America the Primacy to the executive privilege is given only where the court is satisfied that disclosure of the evidence will expose military 828 secrecy or of the document relating to foreign relations In other respects the Court would reject the assertion of executive privilege hi United States vs Reynolds 1935 1 Environment Protection Agency vs Patsy T Mink 410 US 11 Newyork Times vs U section Pentagan Papers case and U section vs Richard M Nixon 1035 What is known as Watergate Tapes case the Supreme Court of USA rejected the claim of the President not to disclose the conversation he had with the officials The Administrative Procedure Act 5 Art 552 was made Thereunder it was broadly conceded to permit access to official information Only is stated hereinbefore the President is to withhold top secret documents pursuant to executive order to be classified and stamped as highly sensitive matters vital to our national defence and foreign policies In other respects under the Freedom of Information Act documents are accessible to production In the latest Commentary by McCormick on Evidence 4th Ed by John W Strong in Chapter 12 surveyed the development of law on the executive privilege and stated that at p 155 that once we leave the restricted area of military and diplomatic secrets a greater role for the judiciary in the determination of governmental claims of privilege becomes not only desirable but necessary Where these privileges are claimed it is for the judge to determine whether the interest in governmental secrecy is out weighed in the particular case by the litigant s interest in obtaining the evidence sought A satisfactory striking of this balance will on the one hand require consideration of the interests giving rise to the privilege and an assessment of the extent to which disclosure will realistically impair those interests On the other hand factors which will affect the litigant s need will include the significance of the evidence sought for the case the availability of the desired information from other sources and in some instances the nature of the right being asserted in the litigation In Robinson vs State of South Australia PC Shankey vs Whitlan 1979 53 ALR p1 FAI Insurances Ltd vs The Hon Sir Henry Arthus Winneke and ors whitlan vs Australian Consolidated Press Ltd1985 60 ALR p7 Minister for Arts Heritage and Environment and Ors vs Pekoi Wallsend Ltd and Ors and Commonwealth of Australia vs Northern Land Council and Anr Australian Courts consistently rejected the executive privilege and exercise the power to determine whether the documents need immunity from disclosure in the public interest The same view was endorsed by the Supreme Court of Canada in R vs Shinder and Gagnon vs Quebec Securities Commission The Supreme Court of Victoria in Bruce vs Waldron 1963 VLR p3 The Court of Appeal of New south Wales in Re Tunstall exhibit P Brown 1966 84 WN Pt 2 829 NSW 13 The Court of Appeal of the New Zealand in Corbett vs Social Security Commission Creednz Inc vs Governor General 1981 1 NLR p 172 The Supreme Court of Ceylon in Apponhamy vs Illangaretute 1964 66 CLW 17 The Court of Appeal of Jamaica in Allen vs By field No2 at page 71 and The Court of Session in Scotland in Glasqow Corporation vs Central Land Board 1956 Scotland Law Time p4 The learned Solicitor General contended that a Cabinet sub committee constituted under Rules of Business approved the appointment of Harish Chander as President of CEGAT The President accordingly appointed him By operation of article 77 3 and 741 the appointment was made by the President The file constitutes Cabinet documents forming part of the Preparation of the documents leading to the formation of the advice tendered to the President Noting of the officials which lead to the Cabinet note and Cabinet decision and all papers brought into existence to prepare Cabinet note are also its part Section 123 of the Evidence Act and Article 742 precludes this court from inquiring into the nature of the advice tendered to the President and the documents are therefore immuned from disclosure The disclosure would cause public injury preventing candid and frank discussion and expression of views by the bureaucrats at higher level and by the MinisterCabinet Sub committee causing serious injury to public service Therefore Cabinet papers Minutes of discussion by heads of departments high level documents relating to the inner working of the government machine and all papers concerned with the government policies belong to a class documents which in the public interest they or contents thereof must be protected against disclosure The executive power of the Union vested in the President by Operation of article 531 shall be exercised by him either directly or through officers subordinate to him in accordance with the Constitution By operation of article 731 subject to the provisions of the constitution the executive power of the Union shall extend to the matters with respect to which Parliament has power to make laws Article 751 provides that the Prime Minister shall be appointed by the President and the other Ministers shall be appointed by the President on the advice of the Prime Minister article 753 posits that the Council of Ministers shall be collectively responsible to the House of the People article 754 enjoins that before a Minister enters upon his office the President shall administer to him the oaths of office and of secrecy according to the forms set out for the purpose in the Third Schedule to the Constitution Article 741 as amended by section 11 of the Constitution 42nd Amendment Act 1976 with effect from January 3 1977 postulates that there shall be a Council of Ministers with the Prime Minister as the head to aid and advise the President who shall in the exercise of his functions act in accordance with such 830 advice The proviso thereto added by section 11 of the Constitution 44th Amendment Act 1978 which came into effect from June 20 1979 envisages that provided that the President may require the Council of Ministers to reconsider such advice either generally or otherwise and the President shall act in accordance with the advice tendered after such reconsideration Clause 2 declares that the question whether any and if so what advice was tendered by Minister to the President shall not be inquired into in any court In Satwant Singh Sawhney vs D Ramarathnam Asstt Passport Officer and in Maganbhai Ishwarbhai Patel vs Union of India and anr this Court held that the Ministers are officers subordinate to the President under article 53 1 or the Governor under article 154 1 as the case may be The President exercises his executive power under Art 74 1 through the Council of Ministers with the Prime Minister as its head who shall be collectively responsible to the House of People The exercise of the power would be as per the rules of business for convenient transaction of the Govt administration made under article 773 viz the Govt of India Transaction of Business Rules 1961 for short the Business Rules The Prime Minister shall be duty bound under article 78 to communicate to the President all decisions of the Council of Ministers relating to the administration of the affairs of the Union and proposals for legislation etc The details whereof are not material Article 771 prescribes that all executive actions of the Govt of India shall be expressed to be taken in the name of the President and shall be authenticated in the manner specified in the Rules made by the President The President issued business rules and has allocated diverse functions to the Council of Ministers its committees and the officers subordinate to them In Shamsher Singh vs State of Punjab a Bench of seven Judges speaking through Ray CJ held that the executive power is generally described as the residue which does not fall within legislative or judical power but executive power also partakes of legislative or judicial actions All powers and functions of the President except his legislative powers are executive powers of the Union vested in the President under article 531 The President exercises his functions except conferred on him to be exercised in his discretion with the aid and advice of the Council of Ministers as per the business rules allocated among his Ministers or Committees Wherever the constitution requires the satisfaction of the President the satisfaction required of him by the Constitution is not the personal satisfaction of the President but is of the Cabinet System of Govt The Minister lays down the policies The Council of Ministers settle the major policies The civil servant does it on behalf of the Govt as limb of the Govt The decision of any Minister or officer under the rules is the decision of the President 831 Cabinet is a constitutional mechanism to ensure that before important decisions are reached many sides of the question are weighed and considered which would mean that much work must be done beforehand in interdepartmental discussions and in the preparation of papers for Cabinet Committees Political decisions of importance are in their nature complies and need sufficient time and considerate thought Equally the decisions relating to public service need probity and diverse consideration The Cabinet system is extremely well adapted to making considered decisions with all due speed and expedition The principle of ministerial responsibility has a verity of meanings precise and imprecise authentic and vague Parliament rarely exercises direct control over Ministers Though the floor of the House is the forum for correcting excesses of the government but rarely a place where a Minister can be expected to keep the information secret Therefore the Minister is answerable for his decision to the Parliament is fanciful Sir Ivor Jenningsin his Cabinet Government stated that the Cabinet is the supreme directing authority It integrates what would otherwise be a heterogeneous collection of authorities exercising a vast variety of functions Neither the Cabinet nor the Prime Minister as such claims to exercise any powers conferred by law They take the decision but the acts which have legal effect are taken by others the Privy Council a Minister a statutory commission and the like At page 81 it is stated that the existence and activities of these coordinating ministers does not impair or diminish the responsibility to Parliament of the departmental ministers whose policies they co ordinate The ministers are fully accountable to Parliament for any act of policy or administration within their departmental jurisdiction It does not follow that the coordinating ministers are non responsible Having no statutory powers as coordinating ministers they perform in that capacity no formal acts But they share in the collective responsibility of the Govt as a whole and as Minister they are accountable to Parliament At page 233 he stated that the Cabinet has to decide policy matters Cabinet is policy formulating body When it has determined on a policy the appropriate department carries it out either by administrative action within the law or by drafting a bill to be submitted to Parliament so as to change the law The Cabinet is a general controlling body It neither desires nor is able to deal with all the numerous details of the Govt It expects a minister to take all decisions which are not of real political importance Every Minister must therefore exercise his own discretion as to what matters arising in his department ought to receive cabinet sanction At page 35 1 he stated that civil servants prepare memorandum for their Ministers Ministers discuss in Cabinet Proposals are debated in the House of Commons At the persons involved are peculiar people and nobody knows what the man in the back street thinks of it all though the politician often thinks he does On the Cabinet 832 Minister s responsibility at page 449 he stated that when it is said that a Minister is responsible to Parliament it is meant that the House of Commons in our constitution Lok Sabha may demand an explanation If that explanation is not considered satisfactory and the responsibility is collective the House will vote against the Govt and so compel a resignation or a dissolution If the responsibility is not collective but the act or advice was due to the negligence of or to an error of judgment by a Minister and the House disapproves the Minister will resign In Halsbury s Laws of England Fourth Ed Vol 8 para 820 it is stated that the Cabinet control of legislative and executive functions the modern English system of government is the concentration of the control of both legislative and executive functions in a small body of men presided over by the Prime Minister who are agreed on fundamentals and decide the most important questions of policy secretly in the Cabinet The most important check on their power is the existence of a powerful and organised parliamentary opposition and the possibility that measures proposed or carried by the government may subject them to popular disapproval and enable the Opposition to defeat them at the next general election and supplant them in their control of the executive In Great Britain Cabinet system is based on conventions Patrick Gordon Walker in his The Cabinet 1973 Revised Ed at p 178 stated that basically Cabinet is a constitutional mechanism to ensure that before important decisions are reached many sides of the question are weighed and considered This means that much work must be done beforehand in interdepartmental discussions and in the preparation of papers for Cabinet Committees and the Cabinet Cabinet that acts without briefs or over hastily think for themselves usually in my experience make mistaken decisions Political decisions of importance are in their nature complex and need some time and thought The cabinet system is extremely well adapted to making considered decisions with all due speed Cabinet discussions as distinct from Cabinet decisions must from their nature be kept secret At page 184 he maintained that the main effective change towards less secrecy would be for the Cabinet to share with Parliament and public more of the factual information on which the government makes some of their decisions Moves in this direction have begun to be taken In his the British Cabinet John P Mackintosh 2nd Edn at p 11 stated that if there is dissension between Ministers matters may be thrashed out in private and the contestants plead in turn with the Prime Minister but it is in the Cabinet that the conflict must be formally solved the minority either accepting the decision and assuming joint responsibility or if they cannot tolerate it tender their resignations At p529 he stated that some decisions are taken by the Prime Minister alone some in consultation between him and the senior Ministers while others are left to heads of departments to the full Cabinet to the concerned Cabinet Committee or to the 833 permanent officials Of these bodies the Cabinet holds the central position because thou oh it does not often govern in that sense it is the place where disputes are settled where major policies are endorsed and where the balance of the forces emerge if there is disagreement In the end most decisions have to be reported to the Cabinet and Cabinet Minister are the only ones who have the right to complain if they have not been informed or consulted Hood Phillips and Paul Jackson in their Constitutional and Administrative Law 7th Ed at p301 stated that the duties of Cabinets are a the final determination of the policy to be submitted to Parliament b the supreme control of the national executive in accordance with the policy prescribed by the Parliament and c the continuous coordination and delimitation in the interests of the several departments of State The Cabinet giving collective advice to the Sovereign through the Prime Minister was said to exercise under Parliament supreme control over all departments of State and to be the body which coordinate the work on the one hand of the executive and the legislature and on the other hand of the organs of the executive among themselves At p307 they stated that committee system has increased the efficiency of the Cabinet and enables a great deal more work to be done by Ministers The Cabinet itself is left free to discuss controversial matters and to make more important decisions and its business is better prepared The system also enables non Cabinet Ministers to be brought into discussions At p309 it is stated that the responsibility of Ministers is both individual and collective The individual responsibility of a Minister for the performance of his official duties is both legal and conventional it is owed legally to the sovereign and also by convention to Parliament Responsibility is accountability or answerability The responsible Minister is the one under whose authority an act was done or who must take the constitutional consequences of what has been done either by himself or in his department In the Cabinet Walker at page 183 stated that the feeling is widespread that the Cabinet shrouds its affairs in too much secrecy and that Parliament Press and public should be able to participate to a greater degree in formulation of policy With few exceptions Cabinet decisions have to be made public in order to he made effective although a small number that do not need to be executed do not become known for instance talks with a foreign country or a decision not to take some action All other cabinet decisions are necessarily disclosed and are subject to public scrutiny Cabinet discussions as distinct from Cabinet decisions must from their nature be kept secret Cabinet discussions often depend upon confidential advice from civil servants or reports from Ambassadors If those are disclosed and thus become subject to public attack it would be extremely difficult for the cabinet 834 to secure free and frank advice In Rai Sahib Ram Jawaya Kapur Ors vs The State of Punjab at 236 this Court held that the existence of the law is not a condition precedent for the exercise of the executive power The executive power connotes the residual government function that remain after legislative and judicial functions are taken away subject to the provisions of the Constitution or the law It would thus be held that the Cabinet known as Council of Ministers headed by Prime Minister under article 753 is the driving and steering body responsible for the Governance of the country They enjoy the confidence of the Parliament and remain in office so long as they maintain the confidence of the majority They are answerable to the Parliament and accountable to people They bear collective responsibility and shall be bound to maintain secrecy Their executive function comprises of both the determination of the policy as well as carrying it into execution the initiation of legislation the maintenance of order the promotion of social and economic welfare direction of foreign policy In short the carrying on or supervision of the general administration of the affairs of Union of India which includes political activity and carrying on all trading activities the acquisition holding and disposal of property and the making of contracts for any purpose In short the primary function of the Cabinet is to formulate the policies of the Govt in confirmity with the directive principles of the Constitution for the Governance of the nation place before the Parliament for acceptance and would carry on the executive function of the State as per the provisions of the Constitution and the laws Collective responsibility under article 753 of the Constitution inheres maintenance of confidentiality as enjoined in oaths of office and of secrecy set forth in Schedule III of the Constitution that the Minister will not directly or indirectly communicate or reveal to any person or persons any matter which shall be brought under hisher consideration or shall become known to himher as Minister except as may be required for the due discharge of hisher duty as Minister The base and basic postulate of its significance is unexceptionable But the need for and effect of confidentiality has to be nurtured not merely from political imperatives of collective responsibility envisaged by article 753 but also from its pragmatism Bagehot in his The English Constitution 1964 Edition at p 68 stated that the most curious point about the Cabinet is that so very little is known about it The meetings are not only secret in theory but secret in reality By the present practice no official minute in all ordinary cases is kept of them Even a private note is discouraged and disliked But a Cabinet though it is a committee of the legislative assemblyis a committee with a power which no assembly would unless 835 for historical accidents and after happy experience have been persuaded to entrust to any committee It is a committee which can dissolve the assembly which appointed it it is a committee with a suspensive veto a committee with a power of appeal In Commonwealth of Australia vs Northern Land Council Anr 1991 103 Australian Law Reports p 267 the Federal Court of Australia General Division was to consider the scope of confidentiality of the cabinet papers collective responsibility of the Council of Ministers and the need for discovery of the Cabinet note books and dealt with the question thus The conventional wisdom of contemporary constitutional practice present secrecy as a necessary incident of collective responsibility But historically it seems to have derived from the 17th century origins of the cabinet as an inner circle of Privy Councillors sometimes called the Cabinet Council who acted as advisors to the monarch However that basis for confidentiality has to be assessed in the light of the political imperatives of collective responsibility Confidentiality has been described as the natural correlative of collective responsibility It is said to be difficult for Ministers to make an effective defence in public of decisions with which it is known that they have disagreed in the course of Cabinet discussions The Cabinet as a whole is responsible for the advice and conduct of each of its members If any member of the Cabinet seriously dissents from the opinion and policy approved by the majority of his colleagues it is his duty as a man of honour to resign Cabinet secrecy is an essential part of the structure of government which centers of political experience have created To impair it without a very strong reason would be vandalism the wanton rejection of the fruits of civilisation By operation of article 75 3 and oaths of office and of secrecy taken the individual Minister and the Council of Ministers with the Prime Minister as its head as executive head of the State as a unit body or committee are individually and collectively responsible to their decisions or acts or policies and they should work in unison and harmony They individually and collectively maintain secrecy of the deliberations both of administration and of formulating executive or legislative policies Advice tendered by the Cabinet to the President should be unanimous The Cabinet should stand or fall together Therefore the Cabinet as a whole is collectively responsible for the advice tendered to the President and for the conduct of business of each of hisher department They require to maintain secrecy and confidentiality in the performance of that duty of office entrusted by the Constitution and the laws Political promises or aims as per manifesto of the political party are necessarily broad in their particular applications when voted to power may be the subject of disagreement among the members of the Cabinet 836 Each member of the Cabinet has personal responsibility to his conscience and also responsibility to the Government Discussion and persuasion may diminish disagreement reach unanimity or leave it unaltered Despite persistence of disagreement it is a decision though some members like it less than others Both practical politics and good Government require that those who like it less must still publicly support it If such support is too great a strain on a Minister s conscience or incompatible to hisher perceptions of commitment and find it difficult to support the decision it would be open to himher to resign So the price of the acceptance of Cabinet office is the assumption of the responsibility to support Cabinet decisions The burden of that responsibility is shared by all Equally every member is entitled to insist that whatever his own contribution was to the making of the decision whether favourable or unfavourable every other member will keep it secret Maintenance of secrecy of an individual s contribution to discussion or vote in the Cabinet guarantees most favourable and conducive atmosphere to express views formally To reveal the view or vote of a member of the Cabinet expressed or given in Cabinet is not only to disappoint an expectation on which that member was entitled to rely but also to reduce the security of the continuing guarantee and above all to undermine the principle of Collective responsibility Joint responsibility supersede individual responsibility in accepting responsibility for joint decision each member is entitled to an assurance that he will be held responsible not only for his own but also as member if the whole Cabinet which made it that he will be held responsible for maintaining secrecy of any different view which the others may have expressed The obvious and basic fact is that as part of the machinery of the Government Cabinet secrecy is an essential part of the structure of the government Confidentiality and collective responsibility in that scenario are twins to effectuate the object of frank and open debate to augment efficiency of public service or effectivity of collective decision to elongate public interest To hamper and impair them without any compelling or at least strong reasons would be detrimental to the efficacy of public administration It would tantamount to wanton rejection of the fruits of democratic governance and abdication of an office of responsibility and dependability Maintaining of top secrecy of new taxation policies is a must but leaking budget proposals a day before presentation of the budget may be an exceptional occurrence as an instance Above compulsive constraints would give rise to an immediate question whether the minister is required to disclose in the affidavit the reasons or grounds for public interest immunity of disclosure and the oath of secrecy is thereby whether breached or whether it would be a shield for non production of unpub 837 lished state documents or an escape route to acts impugned as fondly pleaded and fervently argued by Attorney General It is already held that on issuance of rule nisi or discovery order nisi every or an of the State or the authority or a person is enjoined to act in aid of this court and pursuant thereto shall be required to produce the summoned documents But when a claim for public interest immunity has been laid for non disclosure of the state documents it is the Minister s due discharge of duty to state on oath in his affidavit the grounds on which and the reasons for which he has been persuaded to claim public interest immunity from disclosure of the state papers and produce them The oath of secrecy the Minister had taken does not absolve him from filing the affidavit It is his due discharge of constitutional duty to state in the affidavit of the grounds or reasons in support of public interest immunity from producing the state documents before the Court In Attorney General vs Jonathan Cape Ltd 1976 Queen s Bench 752 Lord Widgery CJ repelled the contention that publication of the diaries maintained by the Minister would be in breach of oath of secrecy In support of the plea of secrecy reliance was placed on the debates on cabinet secrecy that took place on December 1 1932 in the House of Lords An extract from the official report of House of Lords at Column 520 Lord Hailsham s speech emphasised the imperative to maintain secrecy and the limitation which rigidly hedged around the position of a Cabinet Minister thus having heard that oath read your Lordships will appreciate what a complete misconception it is to suppose as some people seem inclined to suppose that the only obligation that rests upon a Cabinet Minister is not to disclose what are described as the Cabinet s minutes He is sworn to keep secret all matters committed and revealed unto him or that shall be treated secretrly in council He went on to point out that I have stressed that because as my noble and learned friend Lord Halsbury suggested and the noble Marquis Lord Salisbury confirmed Cabinet conclusions did not exist until 16 years ago The old practice is set out in a book which bears the name of the noble Earl s father Halsbury s Laws of England with which I have had the honour to be associated in the present edition Then in column 532 of the speech Lord Hailsham stated that the oath of secrecy should be maintained Upon matters on which it is their shorn duty to express their opinions with complete frankness and to give all information without any haunting fear that what happens may hereafter by publication create difficulties for themselves or what is far more grave may create complications for the king and country that they are trying to serve For those reasons I hope that the inflexible rule which has hitherto prevailed will be maintained in its integrity and that if there has been any relaxation or misunderstanding of which I say nothing 838 the debate in this House will have done something to clarify the position and restate the old rule in all its rigour and all its inflexibility As a Council of Minister his duty is to maintain the sanctity of oath and to keep discussions and information he had during its course as secret Lord Widgery after considering the evidence of a former Minister examined in that case who did not support the view of Lord Hailsham held thus that degree of protection afforded to cabinet papers and discussions cannot be determined by single rule of thumb Some secrets require a high standard of protection for short time other requires protection till a new political generation has taken over In the Present action against the literary executors the perpetual injunction against them restraining from their publication was not proper It was further held that the draconian remedy when public interest demands it would be relaxed In Sankey vs Whitlan 1979 153 Australian Law Journal Reports 11 while considering the same question Gibbs ACJ at p23 held that the fact that members of the Executive Council are required to take a binding oath of secrecy does not assist the argument that the production of State papers cannot be compelled The plea of privilege was negatived and the Cabinet papers were directed to be produced The contention that the Minister is precluded to disclose in his affidavit the grounds or the reasons as to how he dealt with the matter as a part of the claim for public interest immunity is devoid of substance It is already held that it is the duty of the Minister to file an affidavit stating the grounds or the reasons in support of the claim from public interest immunity He takes grave risk on insistence of oath of secrecy to avoid filing an affidavit or production of State documents and the court may be constrained to draw such inference as are available at law Accordingly we hold that the oath of office of secrecy adumberated in Article 754 and Schedule III of the Constitution does not absolve the Minister either to state the reasons in support of the public interest immunity to produce the state documents or as to how the matter was dealt with or for their production when discovery order nisi or rule nisi was issued On the other hand it is his due discharge of the duty as a Minister to obey rule nisi or discovery order nisi and act in aid of the court The next limb of the argument is that the Cabinet Sub committee s decision is a class document and the contents of state documents required to be kept in confidence for efficient functioning of public service including candid and objective expression of the views on the opinion by the Ministers or bureaucrats etc The prospects of later disclosure at a at a litigation would hamper and dampen 839 candour causing serious incursion into the efficacy of public service and result in deterioration in proper functioning of the public service This blanket shielding of disclosure was disfavoured right from Robinson vs State of South Australia 1931 Appeal Cases PC p 704 Lord Warrington speaking for the Board held that the privilege is a narrow one and must sparingly be exercised This court in Raj Narain s case considering green book ie guidelines for protecting VVIPs on tour though held to be confidential document and be wihheld from production though part of its contents were already revealed yet it was held that confidentiality itself is not a head of privilege In SP Gupta s case Bhagwati J speaking per majority reviewing the case law and the privilege against disclosure of correspondence exchanged between the Chief Justice of the Delhi High Court Chief Justice of India and the Law Minister of the Union concerning extension of term or appointment of Addl Judges of the Delhi High Court which was not dissented but explained by Fazal AliJ held that in a democracy citizens are to know what their Govt is doing No democratic Govt can survive without accountability and the basic postulate of accountability is that the people should have information about the functioning of the Govt It is only if the people know how the Govt is functioning and that they can fulfill their own democratic rights given to them and make the democracy a really effective participatory democracy There can be little doubt that exposure to public scrutiny is one of the surest means of running a clean and healthy administration Disclosure of information in regard to the functioning of the Govt must be the rule and secrecy can be exceptionally justified only where strict requirements of public information was assumed The approach of the court must be to alleviate the area of secrecy as much as possible constantly with the requirement of public interest bearing in mind all the time that the disclosure also serves an important aspect of public interest In that case the correspondence between the constitutional functionaries was inspected by this court and disclosed to the opposite parties to formulate their contentions In Conway s case the speech of Lord Reid is the sole votery to support the plea of confidentiality emphasising that the business of Govt is difficult enough as it is no Govt could contemplate with equanimity the inner workings of the Govt machine being exposed to the gazes of those ready to criticise without adequate knowledge of the background and perhaps with some axe to grind Other Law Lords negated it Lord Morris of Borth y Gest referred it as being doubtful validity Lord Hodson thought it impossible to justify the doctrine in its widest term Lord Pearce considered that a general blanket protection of wide classes 840 led to a 0complete lack of common sense Lord Upjohn found it difficult to justify the doctrine when those in other walks of life which give rise to equally important matters of confidence in relation to security and personal matters as in the public service can claim no such privilege In Burmah Oil Co section case House of Lords dealing with the cabinet discussion laid that the claim for blanket immunity must now be treated as having little weight if any It was further stated that the notion that any competent and conscientious public servant would be inhibited at all in the candour of his writings by consideration of the off chance that they might have to be produced in a litigation as grotesque The plea of impairment of public service was also held not available stating now a days the state in multifarious manifestations impinges closely upon the lives and activities of individual citizens Where this was involved a citizen in litigation with the state or one of its agencies the candour argument is an utterly insubstantial ground for denying his access to relevant document The candour doctrine stands in a different category from that aspect of public interest which in appropriate circumstances may require that the Sources and nature of information confidentially tendered should be with held from disclosure In Reg vs Lewes Justices Ex Parte Secretary of state for the Home Department 1973 AC 388 and DV National Society for the Prevention of Cruelty to Children are cases in point on that matter and needs no reiteration It would therefore be concluded that it would be going too far to lay down that no document in any particular class or one of the categories of cabinet papers or decisions or contents thereof should never in any circumstances be ordered to be produced Lord Keith in Burnnah Oil s case considered that it would be going too far to lay down a total protection to cabinet minutes The learned Law Lord at p 1134 stated that something must turn upon the subject matter the persons who dealt with it and the manner in which they did so In so far as a matter of government policy is concerned it may be relevant to know the extent to which the policy remains unfulfilled so that its success might be prejudiced by disclosure of the considerations which led to it In that context the time element enters into the equation Details of an affair which is stale and no longer of topical significance might be capable of disclosure without risk of damage to the public interest The nature of the litigation and the apparent importance to it of the documents in question may in extreme cases demand production even of the most sensitive communications to the highest level Lord Scarman also objected total immunity to Cabinet documents on the plea of candour In Air Canada s case Lord Fraser lifted Cabinet minutes front the total immunity to disclose although same were entitled to a hi oh degree of protection 841 In Jonathan Cape Ltd s case it was held that it seen is that the degree of protection afforded to Cabinet papers and discussions cannot be determined by a single rule of thumb Some secrets require a high standard of protection for a short time Others require protection until new political generation has taken over Lord Redcliff Committee appointed pursuant to this decision recommended time gap of 15 years to withhold disclosure of the cabinet proceedings and the Govt accepted the same Shanky s case ratio too discounted total immunity to the Cabinet document as a class and the plea of hampering freedom and candid advice or exchange of views and opinions was also rejected It was held that the need for protection depends on the facts in each case The object of the protection is to ensure the proper working of the Govt and not to shield the Ministers and servants of the crown from criticism however intemperate and unfairly based Pincus J in Harbour Corp of Queensland vs Vessey Chemicals Ply Ltd Wilcox J in Manthal Australia Pty Ltd vs Minister for industry Technology and commerce 11987171 ALR 109 Koowarta vs Bjelke Petersen 1988 and took the same view In Australia the recognised rule thus is that the blanket immunity of all Cabinet documents was given a go bye In United States vs Richard M Nixon 41 Lawyers Ed 2nd Ed 1039 a grand jury of the United States District Court for the District of Columbia indicted named individuals charging them with various offences including conspiracy to defraud the United States and to obstruct justice and Mr Nixon the President of United States was also named as an unindicted coconspirator The special prosecutor issued a third party subpoena duces tecum directing the President to produce at the trial certain tape recordings and documents relating to his conversations with aides and advisors known as Watergate rapes The President s executive privilege again st disclosure of confidential communications was negatived holding that the right to the production of all evidence at a criminal trial has constitutional dimensions under sixth amendment The fifth amendment guarantees that no person shall be deprived of liberty without due process of law It was therefore held that it is the manifest duty of the court to vindicate those guarantees and to accomplish that it is essential that all relevant and admissible evidence be produced Though the court must weigh the importance of the general privilege of confidentiality of Presidential communications in performance of his responsibilities it is an inroad on the fair administration of criminal justice In balancing between the President s generalised interest in confidentiality and the need for relevant evidence in the litigation civil or criminal and though the interest in preserving confidentiality is weighty indeed and entitled to great respect Allowing privilege to withhold evidence that is demonstrably relevant in a criminal trial would cut deeply into the guarantee of due process of law and gravely impair the basic function of the courts A President s acknowledged need for 842 confidentiality in the communications of his office is general in nature whereas constitutional need for production of relevant evidence in a criminal proceeding is specific and central to the fair adjudication of a particular criminal case in the administration of justice Without access to specific facts a criminal prosecution may be totally frustrated The President s broad interest in confidentiality of communications will not be vitiated by disclosure of a limited number of conversations preliminarily shown to have some bearing on the pending criminal cases If the privilege is based only on the generalized interest in confidentiality it cannot prevail over the fundamental demands of due process of law in the fair administration of criminal justice The generalized assertion of privilege must yield to the demonstrated specific need for evidence in a pending criminal trial Exemptions were engrafted only to the evidence relating to the security of the State diplomatic relations and defence It was held that the importance of this confidentiality is too plain to require further discussion Human experience teaches that those who expect public dissemination of their remarks may well temper candor with a concern for appearances and for their own interest to the detriment of the decision making process Whatever the nature of the privilege of confidentiality of Presidential communications in the exercise of article 11 powers the privilege can be said to derive from the supremacy of each branch within its own assigned area of constitutional duties Certain powers and privileges flow from the nature of enumerated powers the protection of the confidentiality of Presidential communications has similar constitutional underpinnings However neither the doctrine of separation of powers nor the need for confidentiality of high level communications without more can sustain an absolute unqualified Presidential privilege of immunity from judicial process under all circumstances The President s need for complete candor and objectivity from advisers calls for great deference from the courts However when the privilege depends solely on the broad undifferentiated claim of public interest in the confidentiality of such conversations a confrontation with other values arises Absent a claim of need to protect military diplomatic or sensitive national security secrets we find it difficult to accept the argument that even the very important interest in confidentiality of Presidential communications is significantly diminished by production of such material for in camera inspection with all the protection that a district court will be obliged to provide In a clash of public interest that harm shall be done to the nation or the public service by disclosure of certain documents and the administration of justice shall not be frustrated by withholding the document which must be produced if justice is to be done it is the courts duty to balance the competing interests by weighing in scales the effect of disclosure on the public interest or injury to administration 843 of justice which would do greater harm Some of the important considerations in the balancing act are thus in the interest of national security some information which is so secret that it cannot be disclosed except to a very few for instance the state or its own spies or agents just as other counters have Their very lives may be endangered if there is the slighest hint of what they are doing In Mark Hosenball R vs Home Secretary ex parte Hosenball in the interest of national security Lord Denning MR did not permit disclosure of the information furnished by the security service to the Home Secretary holding it highly confidence The public interest in the security of the realm was held so great that the sources of the information must not be disclosed nor should the nature of the information itself be disclosed There is a natural temptation for people in executive position to regard the interest of the department as paramount forgetting that there is yet another Greater interest to be considered namely the interest of justice itself Inconvenience and justice are often not on speaking terms No one can suppose that the executive will never be guilty of the sins common to all people Sometimes they may do things which they on which they on ought not to do or will not do things they ought to do The court must be alive to that possibility of the executive committing illegality in its process exercising its powers reaching a decision which no reasonable authority would have reached or otherwise abuse its powers etc If and when such wrongs are suffered or encountered injustice by an individual what would be the remedy Just as shawl is not suitable for winning the cold so also mere remedy of writ of mandamus certiorari etc or such action as is warranted are not enough unless necessary foundation with factual material in support thereof are laid Judicial review aims to protect a citizen from such breaches of power non exercise of power or lack of power etc The functionary must be guided by relevant and germane considerations If the proceeding decision or order is influenced by extraneous considerations which ought not to have been taken into account it cannot stand and needs correction no matter of the nature of the statutory body or status or stature of the constitutional functionary though might have acted in good faith Here the court in its judicial review is not concerned with the merits of the decisions but its legality It is therefore the function of the court to see that lawful authority is not abused Every communication that passes between different departments of the Govt or between the members of the same department interse and every order made by a Minister or Head of the Department cannot therefore be deemed to relate to the affairs of the state unless it related to a matter of vital importance the disclosure of which is likely to prejudice the interest of the state Confidentiality candour and efficient public service often bear common 844 mask Lord Keath in Burmah Oil s case observed that the notion that any competent or conscientious public servant would be inhibited in the candour of his writings by consideration of the off chance that they might have to be produced inlitigationisgrotesque The possibility that it impairs the public service was also nailed This court in section P Gupta s case also rejected the plea of hampering candid expression of views or opinion by constitutional functionaries and bureaucrats In Whitlam vs Australian Consolidated Press 1985 60 ALR p 7 the Supreme Court of Australia Capital territory in a suit for damages for defamation the plaintiff the former Prime Minister of Australia was called upon to answer certain interrogatories to disclose discussions and words uttered at the meeting of the Cabinet or of the Executive Council at which the plaintiff had been present The commonwealth intervened and claimed privilege prohibiting the plaintiff to disclose by answering those interrogatories The claim was based on two grounds i the oath taken by the plaintiff as a member of the Executive Council and also immunity from disclosing of the Cabinet meetings and both were public policies It was also contended that it would be in breach of the principle of collective Cabinet responsibility The court held that the oath taken by the plaintiff did not in itself provide a reason for refusing to answer the interrogatories whether immunity from disclosure would be granted depends upon the balancing of two competing aspects both of public policy on the one hand the need to protect a public interest which might be endangered by disclosure and on the other the need to ensure that the private rights of individual litigants are not unduly restricted The disclosure of the meeting of the Cabinet or of the Executive Council would not be a breach of the principle of other two responsibilities Bagehot stated protection from disclosure is not for the purpose of shielding them from criticism but of preventing the attribution to them of personal responsibility It was stated that I am not required to lay down a precise test of when an individual opinion expressed in Cabinet becomes of merely historical interest The Cabinet minutes and minutes of discussion are a class They might in very special circumstances be examined Public interest in maintaining Cabinet secrecy easily outweighs the contrary public interest in ensuring that the defendant has proper facilities for conducting its case principally because of the enormous importance of Cabinet secrecy by comparison with the private rights of an individual and also because of the relative unimportance of these answers to the defendant s case Answers to interrogatories 87 vii viii and ix were restrained to be disclosed which relates to the members of the Council who expressed doubts as to whether the borrowing was wholly for temporary purpose and to identify such purpose In Jonathan Cape Ltd case Lord Widgery CJ held that publication of the Cabinet discussion after certain lapse of time would not inhibit free discussion in the Cabinet of today even though the individuals involved are the same and the national problems have a distressing similarity with those of a decade ago It is difficult to say at what point the material 845 loses its confidential character on the ground that publication will no longer undermine the doctrine of joint Cabinet responsibility The doctrine of joint Cabinet responsibility is not undermined so long as the publication would not inhibit free discussion in the Cabinet and the court decides the issue In Minister for Arts Heritage and Environment and Ors vs Peko Wallsend Ltd and Ors 11987175 ALR 218 Federal Court of Australia General Division the respondent had mining lease under the existing law In 1986 the Cabinet decided that portion of the same land covered by KNP Kakadu National Park in the Northern Territory State 2 was earmarked for inclusion in the World Heritage List the List which had been established under the World Heritage Convention the Convention and to submit to Parliament aplan of management for the national park which differed from a previous plan which enabled exploration and mining to take place outside pre existing leases with the approval of the Governor General Under the Convention on listing could be made without the consent of the State party concerned The respondents laid the proceedings to restrain the appellants from taking further steps to have Stage 2 nominated for inclusion on the list on the basis that Cabinet was bound by tile rules of natural justice to afford the man opportunity to be heard and that it failed to do so The Single Judge declared the action as void Thereafter the National Park and Wildlife conservation Amendment Act 1987 came into force adding sub section IA to section 10 of that Act which provides that No operations for the recovery of minerals shall be carried on in Kakadu National Park While allowing the appeal the full court held that the Executive action was not immune from judicial review merely because it was carried out in pursuance of a power derived from the prerogative rather than a statutory source The decision taken for the prerogative of the Cabinet is subject to judicial review In Commonwealth of Australia vs Northern Land Council and Anr 1991 103 ALR p267 in a suit for injunction for Northern Land Council NLC against the Commonwealth sought production of certain documents including 126 Cabinet notebooks A Judge of the Federal Court ordered the Commonwealth to produce the notebooks for confidential inspection on behalf of NLC On appeal it was held that information which may either directly or indirectly enable the party requiring them either to advance his own case or to damage the case of his advisory are necessary The class of Cabinet papers do not afford absolute protection against disclosure and is not a basis for otherwise unqualified immunity from production The Commonwealth cannot claim any immunity for public interest immunity from production The court should decide at the threshold balancing of the public interest in the administration of justice The court does not have to be satisfied that as a matter of likelihood rather than mere speculation the materials would contain evidence for tender at trial 846 In a democracy it is inherently difficult to function at high governmental level without some degree of secrecy No Minister nor it Senior Officer would effectively discharge his official responsibilities if every document prepared to formulates sensitive policy decisions or to make assessment of character rolls of coordinate officers at that level if they were to be made public Generally assessment of honesty and integrity is a high responsibility At high co ordinate level it would be a delegate one which would furthered compounded when it is not backed up with material Seldom material will be available in sensitive areas Reputation gathered by an officer around him would form the base If the reports are made known or if the disclosure is routine public interest grievously would suffer On the other hand confidentiality would augment honest assessment it improve efficiency and integrity in the officers The business of the Govt when transacted by bureaucrats even in personal level it would be difficult to have equanimity if the inner working of the Govt machinery is needlessly exposed to the public On such sensitive issues it would hamper the expression of frank and forthright views or opinions Therefore it may be that at that level the deliberations and in exceptional cases that class or category of documents get protection in particular on policy matters Therefore the court would he willing to respond to the executive public interest immunity to disclose certain documents where national security or high policy high sensitivity is involved In Asiatic Petroleium vs Anglo Persian Oil the court refused production of the letter concerning the Govt plans relating to Middle Estern campaigns of the First World was as claimed by the Board of Admiralty Similarly in Duncan vs Cammell Laired tile House of lords refused disclosure of the design of sub marine The national defence as a class needs protection in the interest of security of the State Similarly to keep good diplomatic relations the state documents or official or confidential documents between the Govt and its agencies need immunity from production In Council of Civil Service Union vs Minster for Civil Service the Govt Communications headquarters GCHQ functions were to ensure the security of military and official communications and to provide the Govt with signals intelligence They have to handle secret information vital to national security The staff of CCHQ was permitted to be members of the trade union but litter on instructions were issued without prior consultation amending the Staff rules and directed them to dissociate from tile trade union activities The Previous practice of prior consultation before amendment was not followed Judicial review 847 was sought of the amended rules pleading that failure to consult the union before amendment amounts to unfair act and summoned the records relating to it An affidavit of the cabinet Secretary was filed explaining the disruptive activities the national security and the union actions designed to damage Govt agencies Explaining the risk of participation by the members in further disruption the House held that executive action was not immune from judicial review merely because it was carried out in pursuance of a power derived from a common law or prerogative rather than a statutory source and a minister acting under a prerogative power might depending upon its subject matter whether under the same duty to act fairly as in the case of action under a statutory power But however certain information on consideration of national security was withheld and the failure of prior consultation of the trade union or its members before issue the amended instruction or amending the rules was held not infracted In Burmah Oil Co section case at an action by the Oil Company against the Bank for declaration that the sale of units in British Petroleum held by the company at 230 Pounds per unit was unconscionable and inequitable The oil company sought production of the cabinet decision and 62 documents in possession and control of the bank The state claimed privilege on the basis of the certificate issued by the Minister House of Lords per majority directed to disclose certain documents which were necessary to dispose of the case fairly Lord Scarman laid that they were relevant but their significance was not such a to override the public interest objections to their production Lords Wilberforce dissented and held that public interest demands protection of them In The Australian Communist Party Ors vs Commonwealth Ors 1950 51 83 CLR p 1 at p 179 Dixon J while considering the claim of secrecy and non availability of the proclamation or declaration of the Governor General in Council based on the advice tendered by the Minister rejected the privilege and held that the court would go into the question whether the satisfaction reached by the Governor General in Council was justified The court has one into the question of competence to dissolve a voluntary or corporate association ie Communist Party as unlawful within the meaning of Sec 52 of the Constitutional Law of the Commonwealth In The Queen vs Toohey the Northern Territory Self Government Act 1978 provides appointment of an Administrator to exercise and perform the functions conferred under the Act The Town Planning Act 1979 regulates the area of land to be treated as towns The Commissioner exercising powers under the Act held that part of the peninsula specified in the schedule was not available for town Planning Act When it was challenged there was a change in the law and the Minister filed an affidavit 848 claiming the privilege of certain documents stating that with a view to preserve the land to the original the Govt have decided to treat that the land will continue to be held by or on behalf of the originals Gibbs held that under modern conditions a responsible Govt Parliament could not always be relied on to check excesses of power by the Crown or its Ministers The court could ensure that the statutory power is exercised only for the purpose it is granted The secrecy of the counsel of the Crown is by no means complete and if evidence is available to show that the Crown acted for an ulterior purpose it is difficult to see why it should not be acted upon It was concluded thus In my opinion no convincing reason can be suggested for limiting the ordinary power of the courts to inquire whether there has been a proper exercise of a statutory power by giving to the Crown a special immunity from review If the statutory power is granted to the Crown for one purpose it is clear that it is not lawfully exercised if it is used for another The courts have the power and duty to ensure that statutory powers are exercised only in accordance with law The factors to decide the public interest immunity would include a where the contents of the documents are relied upon the interests affected by their disclosure b where the class of documents is invoked where the public interest immunity for the class is said to protect c the extent to which the interests referred to have become attenuated by the passage of time or the occurrence of intervening events since the matters contained in the documents themselves came into existence d the seriousness of the issues in relation to which production is sought e the likelihood that production of the documents will affect the outcome of the case f the likelihood of injustice if the documents are not produced In President Nixon s case the Supreme Court of the United States held that it is the court s duty to construe and delineate claims arising under express powers to interpret claims with respect to powers alleged to derive from enumerated powers of the Constitution In deciding whether the matter has in any measure been committed by the Constitution to another branch of Government or whether the action of that branch exceeds whatever authority has been committed is itself a delicate exercise in constitutional interpretation and is the responsibility of the court as ultimate interpreter of the Constitution Neither the doctrine of separation of powers nor the need for confidentiality of high level communications without more can sustain an absolute unqualified Presidential privilege of immunity from judicial process under all circumstances The separation of powers given in the Constitution were not intended to operate with absolute independence when essential criminal statute would upset the constitutional balance of a workable government and gravely impair the role of the courts under article III The very integrity of the judicial system and public confidence in the system depend on full 849 disclosure of all the facts within the framework of the rules of evidence To ensure that justice is done it is imperative to the function of courts that compulsory process be available for the production of needed evidence The afore discussion lead to the following conclusions The President while exercising the Executive power under Art73 read with article 53 discharges such of those Powers which are exclusively conferred to his individual discretion like appointing the Prime Minister under article 75 which are not open to judicial review The President exercises his power with the aid and advice of the Council of Ministers with the Prime Minister at the head under article 74 1 They exercise the power not as his delegates but as officers subordinate to him by constitutional mechanism envisaged under article 77 and express in the name of President as per Rules of Business made under Art773 They bear two different facets i the President exercise his power on the aid and advice ii the individual minister or Council of Minister with the Prime Minister at the head discharge the functions without reference to the President Undoubtedly the Prime Minister is enjoined under article 78 to communicate to the President all decisions of the Council of Minister relating to the administration of the affairs of the Union and proposals for legislation and to furnish such information relating to the administration or reconsideration by the Council of Ministers if the President so requires and submit its decisions thereafter to the President That by itself is not conclusive and does not get blanket public interest immunity from disclosure The Council of Ministers though shall be collectively responsible to the House of the People their acts are subject to the Constitution Rule of law and judicial review are parts of the scheme of the Constitution as basic structure and judicial review is entrusted to this Court High Court under Art226 When public interest immunity against disclosure of the state documents in the transaction of business by Council of Ministers of the affairs of State is made in the clash of those interests it is the right and duty of the court to weigh the balance in the scales that the harm shall not be done to the nation or the public service and equally of the administration of justice Each case must be considered on its backdrop The President has no implied authority under the Constitution to withhold the documents On the other hand it is his solemn constitutional duty to act in aid of the court to effectuate judicial review The Cabinet as a narrow centre of the national affairs must be in a possession of all relevant information which is secret or confidential At the cost of repetition it is reiterated that information relating to national security diplomatic relations internal security or sensitive diplomatic correspondence per se are class documents and that public interest demands total immunity from disclosure Even the slightest divulgence would endanger the lives of the personnel engaged in the services etc The maxim Salus Popules Cast Supreme Lax which means that regard 850 for public welfare is the highest law is the basic postulate for this immunity Political decisions like declaration of emergency under article 356 are not open to judicial review but it is for the electorate at the polls to decide the executive wisdom In other areas every communication which preceded from one officer of the State to another or the officers inter se does not necessarily per se relate to the affairs of the State Whether they so relate has got to be determined by reference to the nature of the consideration the level at which it was considered the contents of the document or class to which it relates to and their indelible impact on public administration or public service and administration of justice itself Article 742 is not a total bar for production of the records Only the actual advice tendered by the Minister or Council or Ministers to the President and the question whether any and if so what ad ice was tendered by the Minister or Council of ministers to the President shall not be enquired into by the court In other words the bar of judicial review is confined to the factum of advice its extent ambit and scope but not the record ie the material on which the advice is founded In SP Gupta s case his court held that only the actual advice tendered to the President is immuned from enquiry and the immunity does not extend to other documents or records which form part of the advice tendered to the President There is discernible modern trends towards more open government than was prevalent in the past In its judicial review the court would adopt in camera procedure to inspect the record and evaluate the balancing act between the competing public interest and administration of justice It is equally the paramount consideration that justice should not only be done but also would be publicly recognised as having been done Under modern conditions of responsible government Parliament should not always he relied on as a check on excess of power by the Council of Ministers or Minister Though the court would not substitute its views to that of the executive on matters of policy it is its undoubted power and duty to see that the executive exercises its power only for the purpose for which it is granted Secrecy of the advice or opinion is by no means conclusive Candour frankness and confidentiality though are integral facets of the common genus ie efficient governmental functioning per se by no means conclusive but be kept in view in weighing the balancing act Decided cases how that power often was exercised in excess thereof or for an ulterior purpose etc Sometimes the public service reasons will be decisive of the issue but they should never prevent the court from weighing them against the injury which would be suffered in the administration of justice if the documents was not to be disclosed and the likely injury to the cause of justice must also be assessed and weighed Its weight will very according to the nature of the proceedings in which disclosure is sought level at which the matter was considered the subject matter of consideration the 851 relevance of the documents and the degree of likelihood that the document will be of importance in the litigation it striking the balance the court may always if it thinks it necessary itself inspect the documents It is therefore the constitutional legitimate and lawful power and duty of this court to ensure that powers constitutional statutory or executive are exercised in accordance with the constitution and the law This may demand though no doubt only in limited number of cases yet the inner workings of government may be exposed to public gaze The contentions of Attorney General and Solicitor General that the inner workings of the government would be exposed to public gaze and that some one who would regard this as an occasion without sufficient material to ill informed criticism is no longer relevant Criticism calculated to improve teh nature of that working as affecting the individual citizen is welcome In so far as unpublished government policy is concerned it may be relevant to know the extent to which the policy remains unfulfilled so that its success might be prejudiced by disclosure of the considerations which led to it In that context the time element becomes relevant Details of affairs which are stale and no longer of significance might be capable of disclosure without risk of damage to the public interest But depending on teh nature of he litigation and the apparent importance to it of the documents in question may in extreme case demand production even of the most be considered on its backdrop President has no implied authority to withhold the document On the other hand it is his solemn constitutional duty to act in aid of the court to effectuate judicial review The Cabinet as a narrow centre of the national affairs must be in possession of all relevant information which is secret or confidential Decided cases on comparable jurisdiction referred to earlier did held that executive had no blanket immunity to withhold cabinet proceedings or decisions We therefore hold that the communication decisions or policy to teh President under article 741 gives only protection by article 742 of judicial review of the actual advice tendered to the president of India The rest of the file and all the records forming part thereof are open to in camera inspection by this court Each case must be considered on its own facts and surrounding scenario and decision taken thereon In Jyoti Prokash Mitter vs Chief Justice Calcutta High Court the question was whether the President exercised the powers under article 2173 of the Constitution was his discretionary one or acts with the aid and advice of Council of Ministers The Constitution Bench held that the dispute as be decided by the President The satisfaction on the correctness of age is that of he President Therefore the matter has to be placed before the President The 852 President has to give an opportunity to the judge to place his version before teh President considers and decides the age of the judge Accordingly it would be the personal satisfaction of the President and not that of the Council of Ministers In the latter judgement sequential to this judgement in Union of India vs Jyoti Prakash 1971 3SCR 4831 it was held that the mere fact that the President was assisted by teh machinery of Home Affaris Ministry in serving notices or receiving communications addressed to the learned judge cannot lead to an inference that he was guided review this court upheld the decision of the President In this context it was held that the orders of the president even though made final can be set aside by court in an appropriate case though the Court will not sit in appeal over order and will not substitute its own opinion to that of the president by weighing the evidence placed before the president The third category of case namely the decision taken at level of the minister or by the authorised Secretary at the Secretary level though expressed in the name of the President is not immured from judicial scrutiny and are to be produced and inspected by the court If public interest immunity under article 742 or Sec 123 of Evidence ACt is claimed the court would first consider it in camera and decide the issue as indicated above Teh immunity must not be claimed on administrative route and it must be for valid relevant and strong grounds or reasons stated in the affidavit filed in that behalf Having perused the file and given our anxious considerations We are of the view that on th facts of the case and in the light of the view we have taken it is not necessary to disclose the contents of the records to the petitioner or his counsel The first schedule of the business rules provide constitution of Cabinet Standing committees with function specified therein Item 2 is Cabinet Committee on appointments Which is empowered to consider in item 1 all recommendations and to take decisions on appointments specified in the Annexure to the first Schedule Therein under the residuary heading all other appointments item 4 provides that all other appointments which are made by the Govt of India or which required the approval of the Govt of India carrying a salary excluding allowances or a maximum salary excluding allowances of less than Rs 5 300 require the approval of the Cabinet Sub Committee As per item 37 of the Third Schedule read with Rule 8 of the business Rules it shall be submitted to the Prime Minister for appointment Mr Harish Chander was appointed as judicial Member on October 29 1982 He was later on appointed on january 15 1991 as Senior Vice President of 853 CEGAT after the direction were issued by this Court he was appinted as the President Mr Jain assailed the validity of his appointment on diverse grounds It was pleaded and Sri Thakur his learned senior counsel argued that as per the convention a sitting or a retired judge of the High JCourt should have beenappointed as president of the CEGAT in consultation with the Chief Jusftice ofIndia and Harish Chander has been appointed in disregafrd of the express directions of this Court It was therefore contended that it was in breach jof the judicial orderpassed by this Court It was therefore contended that it was in breach of the judicial orderpassed by this Court under Art 32 Secondly it was contended that before the Actwas made a positive commitment was made time and again by the Govt on the floor of the House that judicial independence of CEGAT is sifne qua non to sustain the confidence of the litigant public The appointment of any person other thansitting or a retired judge of the High Court as President would be in its breach Inits support it was cited the instance of Mr Kalyansundaram as being the seniormost member his claim should have been considered before Harish Chander was appointed Sri Thakur further argued that when recommendations of HarishChander for appointment as a Judge of the Delhi High Court was turned down by the Chief Justice of India doubting his integrity the appointment of such personof doubtful integrity as President would erode the independence of the judiciary and undermine the confidence of the litigant public in the efficacy of judicial adjudication even though the rules may permit such an appointment The rules are ultra vires of the basic structure namely independence of judiciary Sri Thakur to elaborate these conditions sought permission to peruse the record Sri Venugopal the learned Senior Counsel for Harish Chander argued that his client being the senior Vice President was fvalidly appointed as President of the CEGET Harish Chander has an excellent and impeccable record of service without any adverse remarks His recommendation for appointment as a judge of the Delhi High Court was apparently dropped which would not be construed to be adverse to Harish Chander On behalf ofCentral Govt it was admitted in thecounter affidavit that since rules do not envisage consultation with the Chidf Justice consultation was not done It was argued that the Govt have prerogative to appoint any member or Vice Chairman or Senior Vice President as President of CEGAT Harish Chander being the senior Vice President his case was considered and was recommended by the cabinet sub Committee for appointment Accordingly he was appointed Under section 129 of the Customs Act 52 of 1962 for short the Act The Central Govt shall constitute the CEGAT consisfting of as many judicial and technical members as it thinks fit to exercise the powers and discharge the functions conferred by the Act Subject to making the statement of the case for 854 decision on any question of law arising out of orders of the CEGAT by the High Court under section 130 it resolve conflict of decisions by this Court under section 130A the orders of the CEGAT by operation of sub sectiton 4 of Section 129B shall be final The President of CEGAT is the controlling authority as well as Presiding authority of the tribunals constituted at different places Constitution of the CEGAT came to be made pursuant to the 5th Schedule of the Finance Act 2 of 1980 with effect from October 11 1982 The President of India exercising the power under proviso it article 309 of the Constitution made the Rules Rule 2c defined member means a member of the Tribunal and unless the context otherwise requires includes the President the Senior Vice President a Vice President a judicial member and a technical member 2d defines President means the President of the Tribunal Rule 6 prescribes Method of Recruitment Under Sub rule 1 thereof for the purpose of recruitment to the Post of member there shall be a Selection Committee consisting of i a judge of the Supreme Court of India as nominated by the Chief Justice of India to preside over as Chairman ii the Secretary to the Govt of India in the Ministry of Finance Department of Revenue iii the Secretary to the Govt of India in the Ministry of Law Department of legal Affairs iv the President v such other persons not exceeding two as the Central Govt may nominate Sub Rule 4 Subject to the provisions of Section 10 the Central Govt shall after taking into consideration the recommendations of the Selection Committee make a list of persons selected for appointment as members Rule 10 provides thus 1 The Central Govt shall appoint one of the member to be the President 2 Notwithstanding anything contained in rule 6 a sitting or retired judge of a High Court may also be appointed by the Central Government use member and President simultaneously 3 Where a member other than a sitting or retired judge of a High Court is appointed as President he shall hold the office of the President for a period of three years or till he attains the age of 67 years whichever is earlier 4 Where a serving judge of a High Court is appointed as a member and President he shall hold office as President for a period of three years from the date of his appointment or till he attains the age of 62 years whichever is earlier Provided that where a retired judge of a High Court above the age of 62 years is appointed as President he shall hold office for such period not exceeding three 855 years as may he determined by the Central Govt At the time of appointment or reappointment The Jha Committee in its report in para 1622 recommended to constitute an independent Tribunal for excise or customs taking away the appellate powers from the Board The Administrative Inquiry Committee in its report 1958 59 in para 415 also recommended that every effort should be made to enhance the prestige of the appellate tribunal in the eyes of the public which could be achieved by the appointment of a High Court Judge as the President They therefore recommended to appoint the serving or retired High Court Judge as President of the Tribunal for a fixed tenure In Union of India vs Pares Laminates Pvt Ltd Court this Court held that GEGAT is a judicial body and functions as court within the limits of its jurisdiction As a fact the Minister time and again during the debates when the Bill was under discussion assured both the Houses of Parliament that the CEGAT would be a judicial body presided over by a High Court Judge In Keshwa nand Bharti vs Union of India 1973 Supp SCR 1 Mathew and Chandrachud JJ held that rule of law and judicial review are basic features of the Constitution It was reiterated in Waman Rao vs Union of India As per directions therein the Constitution Bench reiterated in Sri Raghunathrao Ganpatrao vs Union of India In Krishna Swami vs Union of India at 649 para 66 one of us KRSJ held that judicial review is the touchstone and repository of the supreme law of the land Rule of law as basic feature permeates the entire constitutional structure Independence of Judiciary is sine quo non for the efficacy of the rule of law This court is the final arbiter of the interpretation of the constitution and the law In SP Sampat Kumar vs Union of India Ors1987 1 SCR 435 this Court held that the primary duty of the judiciary is to interpret the Constitution and the laws and this would preeminently be a matter fit to be decided by the judiciary as judiciary alone would be possessed of expertise in this field and secondly the constitutional and legal protection afforded to the citizen would become illusory if it were left to the executive to determine the legality of its own action The Constitution has therefore created an independent machinery ie judiciary to resolve the disputes which is vested with the power of judicial review to determine the legality of the legislative and executive actions and to ensure compliance with the requirements of law on the part of the executive and other authorities This function is discharged by the judiciary by exercising the power of judicial review which is a most potent weapon in the hands of the judiciary for maintenance of the rule of law The power of judicial review is an integral part of our constitutional system and without it there will be no government of laws and the rule of law would become a teasing illusion and a promise of unreality The judicial review therefore is a basic and essential feature of the Constitution and it cannot be 856 abrogated without affecting the basic structure of the Constitution The basic and essential feature of judicial review cannot be dispensed with but it would be within the competence of Parliament to amend the Constitution and to provide alternative institutional mechanism or arrangement forjudicial review provided it is no less efficacious than the High Court It must therefore be read as implicit in the constitutional scheme that the law excluding the jurisdiction of the High Court under articles 226 and 227 perrmissible under it must not leave a void but it must set up another effective institutional mechanism or authority and vest the power of judicial review in it which must be equally effective and efficacious in exercising the power of judicial review The Tribunal set up under the Administrative Tribunal Act 1985 was required to interpret and apply articles 14 15 16 and 311 in quite an large number of cases Therefore the personnel manning the administra tive tribunal in their determinations not only require judicial approach but also knowledge and expertise in that particular branch of constitutional and administrative law The efficacy of the administrative tribunal and the legal input would undeniably be more important and sacrificing the legal input and not givino it sufficient weityhtage would definitely impair the efficacy and effectiveness of the Administrative Tribunal Therefore it was held that the appropriate rule should be made to recruit the members and consult the Chief Justice of India in recommending appointment of the Chairman Vice Chairman and Members of the Tribunal and to constitute a committee presided over by judge of the Supreme Court to recruit the members for appointment In MB Majiundar vs Union of lndia when the members of CAT claimed parity of pay and superannuation as is available to the Judges of the High Court this court held that they are not on par with the judges but a separate mechanism created for their appointment pursuant to article 323 A of the Constitution Therefore whatwas meant by this court in Sampath Kumar s ration is that the Tribunals when exercise the power and function the Act created institutional alternative mechanism or authority to adjudicate the service disputations It must be effective and efficacious to exercise the power of judicial review This court did not appear to have meant that the Tribunals are substitutes of the High Court under articles 226 and 227 of the Constitution JB chopra vs Union of lndia merely followed the ratio of Sampath Kumar The Tribunals set up under articles 323A and 323B of the Constitution or under an Act of legislature are creatures of the Statute and in no case can claim the status as Judges of the High Court or parity or as substitutes However the personnel appointed to hold those oft7ices under the State are called upon to dischargee judicial or quasi judicial power So they must have judicial approach and also knowledge 857 and expertise in that particular branch of constitutional administrative and tax laws The legal input would undeniably be more important and sacrificing the legal input and not giving it sufficient weightage and teeth would definitely impair the efficacy and effectiveness of the judicial adjudication It is therefore necessary that those who adjudicate upon these matters should have legal expertise judicial experience and modicum of legal training as on many an occasion different and complex questions of law which baffle the minds of even trained judges in the High Court and Supreme Court would arise for discussion and decision In Union of India vs Sankal Chand Himatlal Sheth Anr at 442 this court at p 463 laid emphasis that independence of the judiciary is a fighting faith of our Constitution Fearless justice is the cardinal creed of our founding document It is indeed a part of our ancient tradition which has produced great judges in the past In England too judicial independence is prized as a basic value and so natural and inevitable it has come to be reorded and so ingrained it has become in the life and thought of the people that it would be regarded an act of insanity for any one to think otherwise At page 471 it was further held that if the beacon of the judiciary is to remain bright court must be above reproach free from coercion and from political influence At page 491 it was held that the independence of the judiciary is itself a necessitous desideratum of public interest and so interference with it is impermissible except where other considerations of public interest are so strong and so exercised as not to militate seriously against the free flow of public justice Such a balanced blend is the happy solution of a delicate complex subtle yet challenging issue which bears on human rights and human justice The nature of the judicial process is such that under coercive winds the flame of justice flickers faints and fades The true judge is one who should be beyond purchase by threat or temptation popularity or prospects To float with the tide is easy to counter the counterfeit current is uneasy and yet the Judge must be ready for it By ordinary obligation for written reasoning by the moral fibre of his peers and elevating tradition of his profession the judge develops a stream of tendency to function without fear or favour affection or ill will taking care of course to outgrow his prejudices and weaknesses to read the eternal verities and enduring values and to project and promote the economic political and social philosophy of the Constitution to uphold which his oath enjoins him In Krishnaswaini s case in para 67 at p 650 it was observed that to keep the stream of justice clean and pure the judge must be endowed with sterling character impeccable integrity and upright behaviour Erosion thereof would undermine the efficacy of rule of law and the working of the constitution itself In Krishna Sahai Orsv State of UP Ors1990 2 SCC 673 this court 858 emphasised its need in constitution the UP Service Tribunal that it would he appropriate for the State of Uttar Pradesh to change it manning and a sufficient number of people qualified in law should he on the Tribunal to ensure adequate dispensation of justice and to maintain judicial temper in the functioning of the Tribunal In Rajendra Singh Yadav Ors vs State of UP Ors 1990 2 SCC 763 it was further reiterated that the Services Tribunal mostly consist of Administrative Officers and the judicial element in the manning part of the Tribunal is very small The disputes require judicial handling and the adjudication being essentially judicial in character it is necessary that adequate number of judges of the appropriate level should man the Services Tribunals This would create appropriate temper and generate the atmosphere suitable in an adjudicatory Tribunals and the institution as well would command the requisite confidence of the disputants In Shri Kumar Padma Prasad vs Union of India Ors this court emphasised that Needless to say that the independence efficiency and integrity of the judiciary can only he maintained by selecting the best persons in accordance with the procedure provided under the Constitution The objectives enshrined in the constitution cannot be achieved unless the functionaries accountable for making appointments act with meticulous care and utmost responsibility In a democracy governed by rule of law surely the only acceptable repository of absolute discretion should be the courts Judicial is the basic and essential feature of the Indian constitutional scheme entrusted to the judiciary It cannot he dispensed with by creating tribunal under article 323A and 323B of the Constitution Any institutional mechanism or authority in negation of judicial review is destructive of basic structure So long as a the alternative institutional mechanism or authority set up by an Act is not less effective than the High court it is consistent with constitutional scheme The faith of the people is the bed rock on which the edifice of judicial review and efficacy of the adjudication are founded The alternative arrangement must therefore be effective and efficient For inspiring confidence and trust in the litigant public they must have an assurance that the person deciding their causes is totally and completely free from the influence or pressure from the Govt To maintain independence and imperativity itis necessary that the personnel should have at least modicum of legal training learning and experience Selection of competent and proper people instill people s faith and trust in the office and help to build up reputation and acceptability Judicial independence which is essential and imperative is secured and independent and impartial administration of justice is assured Absence thereof only may get both law and procedure wronged and wrong headed views of the facts and may likely to give rise to nursing grievance of injustice Therefore functional fitness 859 experience at the liar and aptitudinal approach are fundamental for efficient judicial adjudication Then only as a repository of the confidence as its duty the tribunal would properly and efficiently interpret the law and apply the law to the given set of facts Absence thereof would be repugnant or derogatory to the constitution The daily practice in the courts not only gives training to Advocates to interrect the rules but also adopt the conventions of courts In built experience would play vital role in the administration of justice and strengthen and develop the qualities of intellect and character forbearance and patience temper and resilience which are very important in the practice of law Practising Advocates from the Bar generally do endow with those qualities to discharge judicial functions Specialised nature of work gives them added advantage and gives benefit to broaden the perspectives Judges by David Pannick 1987 Edition at page 50 stated that we would not allow a man to perform a surgical operation without a thorough training and certification of fitness Why not require as much of a trial judge who daily operates on the lives and fortunes of others This could be secured with the initial training given at the Bar and later experience in judicial adjudication No one should expect expertise in such a vast range of subjects but famliarity with the basic terminology and concept coupled with knowledge of trends is essential A premature approach would hinder the effective performance of judicial functions Law is a serious matter to be left exclusively to the judges because judges necessarily have an important role to play in making and applying the law There is every reason for ensuring that their selection training and working practice facilitate them to render their ability to decide the cases wisely on behalf of the community If judges acts in injudicious manner it would often lead to miscarriage of justice and a brooding sense of injustice rankles in an agrieved person The CEGAT is a creature of the statute yet intended to have all the flavour of judicial dispensation by independent members and President Sri Justice YV Chandrachud Chief Justice of India in his letter dated October 5 1982 stated that Govt had Created a healthy convention of providing that the Tribunals will be headed by a President who will be a sitting or a retired judge of the High Court Added to that is the fact that selection of the members of the Tribunal is made by a Committee headed by a judge of the Supreme Court I am sure that the Tribunal will acquire higher reputation in the matter of its decision and that the litigants would look upon it as an independent forum to which they can turn in trust and confidence This court to elongate the above objective directed the Govt to show whether the convention is being followed in appointment of the President of 860 CEGAT and further directed to consider appointment of a Sr Judge or a retired Chief Justice of the High Court as its President Admittedly Chief justice of India was not consulted before appointing Sri harish Chander as President Several affidavits filed on behalf of the Govt do not also bear out whether the directions issued by this court were even brought to the notice of the Hon ble Prime Minister before finalising the appointment of Sri Harish Chander The solemn assurance given to the Parliament that the Tribunal bears a judicious blend by appointment of a High Court Judge as President was given a go bye While making statutory rules the executive appears to have made the appointment of it sitting or retired High Court Judge as President unattractive and directory frustrating the legislature animation A sitting Judge when is entitled to continue in his office upto 62 years would he he willing to opt to serve as President if his superannuation as President is conterminous with 62 years He would be attracted only it he is given extended three years more tenure after his superannuation But Rule 103 says that the total period of the tenure of the President by a sitting or retired judge is a period of three years or till he attains the age of 62 years whichever is earlier ie coterminus with superannuation as a Judge of the High Court The proviso is only discretionary at the whim of the executive depleting independence and as an exception to the rule Thereby practically tile spirit of the Act the solemn assurance given by the Govt to the Parliament kindling hope in the litigant public to have a sitting or a retired judge appointed as President has been frustrated deflecting the appointment of a judicially trained judge to exercise judicial review We are constrained to observe that the rules though statutory were so made as to defeat the object of the Act The question then is can and if yes whether this court would interfere with the appointment made of Flarish Chander as President following the existing rules Judicial review is concerned with whether the incumbent possessed of qualification for appointment and the manner in which the appointment came to be made or the procedure adopted whether fair just and reasonable Exercise of judicial review is to protect the citizen from the abuse of the power etc by an appropriate Govt or department etc In our considered view granitic the compliance of the above power of appointment was conferred on the executive and confided to be exercised wisely When a candidate was found qualified and eligible and was accordingly appointed by the executive to hold an office as a Member or Vice President or President of a tribunal we cannot sit over the choice of the selection but it be left to tile executive to select the personnel as per law or procedure in this behalf In Sri Kumar Prasad case KN Srivastava MJS Legal Remembrance Secretary to law and Justice of Mozoram did not possess the requisite qualifications for appointment as a Judge of the High Court prescribed under Art217 of the Constitution namely that he was not a District Judge for 10 years in State Higher Judicial Service which is a mandatory 861 requirement for a valid appointment Therefore this Court declared that he was not qualified to be appointed as a judge of the High Court and quashed his appointment accordingly The facts therein are clearly glaring and so the ratio is distinguishable Sri Harish Chander admittedly was the Sr Vice President at the relevant time The contention of Sri Thakur of the need to evaluate the comparative merits of Mr Harish Chander and Mr Kalyansundaram a senior most Member for appointment as President would not be one into in a public interest litigation Only in a proceedings initiated by an aggrieved person it may be open to be considered This writ petition is also not a writ of quo warranto In service jurisprudence it is settled law that it is for the aggrieved person ie non appointee it assail the legality of the offending action Third party has no locus stand it to canvass the legality or correctness of the action Only public law declaration would be made at the behest of the petitioner a public spirited person But this conclusion does not give quietus at the journey s end There are persistent allegations against malfunctioning of the CEGAT and against Harish Chander himself Though we exercised self restraint to assume the role of an Investigator to charter out the ills surfaced suffice to say that the union Govt cannot turn a blind eye to the persistent public demands and we direct to swing into action an indepth enquiry made expeditiously by an officer or team of officers to control the mal functioning of the institution It is expedient that the Govt should immediately take action in the matter and have fresh look It is also expedient to have a sitting or retired senior Judge or retired Chief Justice of a High Court to be the President The rules need amendment immediately A report on the actions taken in this behalf be submitted to this court Before parting with the case it is necessary to express our anguish over the ineffectivity of the alternative mechanism devised for judicial reviews The Judicial review and remedy are fundamental rights of the citizens The dispensation of justice by the tribunals is much to be desired We are not doubting the ability of the members or Vice Chairmen non Judges who may be experts in their regular service But judicial adjudication is a special process and would efficiently be administered by advocate Judges The remedy of appeal by special leave under article 136 to this Court also proves to be costly and prohibitive and far flung distance too is working as constant constraint to litigant public who could ill afford to reach this court An appeal to a Bench of two Judges of the respective High Courts over the orders of the tribunals within its territorial jurisdiction on questions of law would as usage a growing feeling of injustice of those who can ill effort to approach the Supreme Court Equally the need for recruitment of members of the Bar to man 862 the Tribunals as well as the working system by the tribunals need fresh look and regular monitoring is necessary An expert body like the Law Commission of India would make an indepth study in this behalf including the desirability to bring CEGAT under the control of Law and Justice Department in line with Income tax Appellate Tribunal and to make appropriate urgent recommendations to the Govt of India who should take remedial steps by an appropriate legislation to overcome the handicaps and difficulties and make the tribunals effective and efficient instruments for making Judicial review efficacious inexpensive and satisfactory The writ petitions are disposed of with the above direction but in the circumstances with no order as to costs TNA Petitions disposed of

The appellants as the Mahants of the respective maths or asthals were served with notices under section 59 of the Bihar Hindu Religious Trusts Act 195o by the President Bihar State Board of Religious Trusts asking them to furnish statements and accounts of the properties in their possession They challenged the constitutional validity of the Act by proceedings taken in the High Court on the grounds 1 that sections 2 5 6 7 and 8 of the Act infringe article 14 Of the Constitution inasmuch as there was inequality of treatment as between Hindu religious trusts on one hand and Sikh religious trusts on the other the latter having been excluded from the purview of the Act and that there was inequality of treatment even as between Hindu religious trusts and Jain religious trusts though both came under the Act 2 that the provisions of ch V of the Act and in particular sections 28 and 32 violate article 191f of the Constitution as under those provisions the mahant or Shebait practically loses his right of management and is reduced to the position of a mere servant of the Board 3 that the provisions of the Act contravene articles 25 and 26 of the Constitution as the power to alter or modify the budget relating to a religious trust or the power to give directions to a trustee may be exercised by the Board in such a way as to affect the due observance of religious practices in the math or temple 4 that section 70 imposes an unauthorised tax and 5 that section 552 contravenes article I33 of the Constitution Held 1 that in view of the fact that in the matter of religious trusts in the State of Bihar there are differences between Sikhs Hindus and jains and that the needs of jains and Hindus are not the same in the matter of the administration of 564 their respective religious trusts it is open to the Bihar Legislature to exclude Sikhs who might have been in no need of protection and to distinguish between Hindus and jains Accordingly SS 2 5 6 7 and 8 of the Act do not infringe article 14 Of the Constitution It is well settled that while article 14 forbids class legislation it does not forbid reasonable classification for the purposes of legislation and in order to pass the test of permissible classification two conditions must be fulfilled namely 1 that the classification must be founded on an intelligible differentia which distinguished persons or things that are grouped together from others left out of the group and 2 that that differentia must have a rational relation to the object sought to be achieved by the statute in question Shri Ram Krishna Dalmia vs Shri Justice section R Tcndollkar relied on 2 that having regard to the position of a trustee in respect of the trust property which he holds and the object or purpose of the Act the restrictions imposed in Ch V of the Act are really for the purpose of carrying out the objects of the trust and for the better administration protection and preservation of the trust properties and are reasonable restrictions in the interests of the general public within the meaning Of cl 5 Of article 19 of the Constitution 3 that the Act does not contravene articles 25 and 26 of the Constitution as the provisions of the Act relating to the power of the Board to alter the budget and to give directions to the trustee are subject to restrictions namely that they must be for the proper administration of the religious trust and further none of the provisions interfere with matters of religion including practices which a religious denomination regards as part of its religion 4 that section 70 Of the Act is a valid provision as it only provides for the levy of a fee for the purpose of defraying the expenses incurred or to be incurred in the administration of the Act and is not a tax Mahant Sri jagannath Ramanuj Das vs The State of Orissa followed 5 that section 552 Of the Act does not contravene article I33 Of the Constitution as it does not override or is not intended to override article 133 or any other Article of the Constitution relating to appeals to the Supreme Court

Appeal Nos 2653 54 of 1991 From the Judgment and Order dated 15291 of the Punjab and Haryana High Court in Civil Revision Nos 2998 and 2919 of 1990 DV Sehgal and NK Aggarwal for the Appellant GL Saghi PP Tripathi and Suchinto Chatterji for the Respondent The Judgment of the Court was delivered by PUNCHHI J The point which requires determination in these two appeals arising from a common judgment and order dated February 15 1991 of a Division Bench of the Punjab and Haryana High Court at Chandigarh in Civil Revision Nos 2918 and 2919 of 1990 is whether the payment of alimony is admissible 957 without the relationship between the spouses being terminated The wife appellant was married to the husband respondent on September 191972 at Amritsar in the State of Punjab Three children were born from the wed lock and are at present living with their father Out of them two are males their respective years of birth being 1973 and 1980 and the third is a female born in the year 1976 On 28 8 1985 a petition under section 13 B of hereafter referred to as the Act seeking divorce by mutual consent was received by the court of the Additional District Judge Amritsar purported to have been failed jointly by the two spouses It was stated therein that the parties had been living separately for over a year due to incompatibility of temperament and their effort to settle their differences amongst themselves or with the aid of friends and relatives had been futile On receipt the petition was kept pending as was the requirement of section 13 B of the Act According to the wife she was not a consenting party to the filing of such petition at all Her version was that the husband had duped her in obtaining her signatures on blank papers on a false pretext and in turn had employed those papers in the said petition for divorce On coming to know of the pendency of the petition she immediately filed objections before the court obstructing the grant of petition The respective pleas of the parties were put to issue and evidence was led According to the wife some understanding later was reached between the parties on the basis of which she was to be put back in the matrimonial home and thus the petition was got dismissed on 19 8 1987 on the basis of the joint statement of the parties before the Additional District Judge Amritsar which was to the following effect We agree that applications under sections 24 and 25 of may be dismissed We also agree that since the parties have not been able to make a joint statement within a period of six months of the original petition the main petition under section 13B of the may be dismissed Otherwise too the parties to the marriage do not want to proceed with their main application under section 13 of the and the same be also dismissed and the parties may be left to bear their own costs On the basis of the above statement the court passed the following order the same day The applicant and counsel for the parties have made their statements recorded separately the main petition under section 13 and 958 also applications under sections 24 and 25 of the Hindu marriage Act are dismissed as withdrawn The parties are left to bear their own costs The file be consigned It appears that the dismissal of the petition under section 13 B led only to a temporary truce and not peace as hoped Rehabilitation in the matrimonial home evaded the wife The husband who in the meantime had established his business at Ghazibad in Utter Pradesh barely three months after the dismissal of the petition under section 13 B approached the District Court at Ghaziabad in a regular petition for divorce under section 13 of the Act levelling amongst others allegations of adultery against the wife To meet the offensive the wife refuted the charge of adultery and prayed to the Ghaziabad Court grant of maintenance pendente lite which the Court fixed at Rs 1000 per month It appears since the husband had obstacled payment of maintenance pendente lite divorce proceedings stand stayed under orders of the High Court of Allahabad until the order of grant of maintenance pendente lite was obeyed The matter thus stands stagnated there The wife then went in an offensive She moved the court of Additional District Judge Amritsar on 22 3 1990 under section 15 of the for the grant of permanent alimony on the plea that she was facing starvation when her husband was a multi millionaire having cars telephone facilities and other amenities of life Simultaneously she moved the court under section 24 of the for maintenance pendente lite and litigation expenses After a grim contest between the parties the Additional District Judge Amritsar on September 20 1990 allowed the petition under section 24 of the Act granting her a sum of Rs 6000 as litigation expenses and Rs 2000 per month as maintenance pendente lite from the date of application The husband challenged the said order of grant in revision before the High Court of Punjab and Haryana at Chandigarh The wife too approached the High Court in revision seeking enhancement of sums under both counts Both the revision petitions being referred to a larger bench were disposed of by the common judgment under appeal sustaining the objection of the husband that an application under section 25 of the Act was in the facts and circumstances not maintainable the Matrimonial Court at Amritsar in the earlier litigation having not passed any decree of the variables known as Restitution of Conjugal Rights Judicial Separation Nullity of Marriage or Divorce so as to quash proceedings under section 25 and sequally quashing the order under section 24 of the Act granting litigation expenses and maintenance pendente lite Hence these appeals 959 Section 25 of the Act as it now stands after amendment by Act 68 of 1976 is reproduced hereunder 25 PERMANENT ALIMONY AND MAINTENANCE 1 Any court exercising jurisdiction under this Act may at the time of passing any decree or at any time subsequent thereto on application made to it for purpose by either the wife o r the husband as the case may be order that the respondent shall pay to the applicant for her or his maintenance and support such cross sum or such monthly or periodical sum for a term not exceeding the life of the applicant as having regard to the respondent s own income and other property if any the income and other property of the applicant the conduct of the parties and other circumstances of the case it may seem to the court to be just and any such payment may be secured if necessary by a charge on the immovable property of the respondent 2If the court is satisfied that there is a change in the circumstances of either party at any time after it has made an order under sub section 1 it may at the instance of either party very modify or rescind any such order in such manner as the court may deem just 3If the court is satisfied that the party in whose favour an order has been made under this section has remarried or if such party is the wife that she has not remained chaste or if such party is the husband that he has had sexual intercourse with any woman outside wedlock it may at the instance of the other party very modify or rescind any such order in such manner as the court may deem just It is relevant to reproduce Section 28 as well 28 APPEAL FROM DECREES AND ORDERS 1 All decrees made by the court in any proceeding under this Act shall subject to the provisions of sub section 3 be appealable as decrees of the court made in the exercise of its original civil jurisdiction and every such appeal shall lie to the court to which appeals ordinarily lie from the decisions of the court given in the exercise of its original civil jurisdiction 2 Orders made by the court in any proceeding under this Act under 960 section 25 or Section 26 shall subject to the provisions of sub section 3 be appealable if they are not interim orders and every such appeal shall lie to the court to which appeals ordinarily lie from the decisions of the court given in exercise of its original civil jurisdiction 3 There shall be no appeal under this section on the subject of costs only 4 Every appeal under this section shall be preferred within a period of thirty days from the date of the decree or order Right from its inception at the unamended stage the words at the time of passing any decree or any time subsequent thereto posed difficulty The majority of the High Courts in the country took the view that those words indicated that an order for permanent alimony or maintenance in favour of the wife or the husband could only be made when a decree is passed granting any substantive relief and not where the main petition itself is dismissed or withdrawn It was also gathered that if no request for alimony was made at the time of passing the decree the same relief could be sought subsequently on an application The relief of permanent alimony was deduced to be ancilliary or incidental to the substantive relief and it was given to the party to whom such relief was due The expression any decree was viewed to have been used having regard to the various kinds of decrees such as decree for Restitution of Conjugal Rights Judicial Separation Nullity of Marriage and Divorce which could be passed either on contest or consent Some of the High Courts also had occasion to distinguish between the expression passing any decree referred to in section 25 1 with decrees made referred to in section 28 providing for appeals from decrees and orders made by the Court in any proceeding under the Act and such decrees being appealable as decrees of the Court made in exercise of its original civil jurisdiction It led to the determination of the question whether the denial of relief under the Act when making a decree in the sense appealable under section 28 could be it a decree passed within the meaning of Section 25 entitling the respective spouses to claim permanent alimony thereunder On this question too there has been rife a difference of opinion A Division Bench of the Gujarat High Court in Kadia Harilal Purshottam vs Kadia Lilavati Gokaldas AIR 1961 Gujarat 202 ruled that the words at the time of passing any decree or any time subsequent thereto occurring in section 25 meant passing of any decrees of the kind referred to in the earlier provisions of the Act and not at the time of dismissing the petition for any relief provided in those 961 sections or any time subsequent thereto It was viewed that the expression any decree did not include an order of dismissal and that the passing of an order of dismissal of the petition could not be regarded as the passing of decree within the meaning of section 25 On that view a petition for permanent alimony preferred by the wife was dismissed when the petition of the husband for restitution of conjugal rights had been dismissed In Shantaram Gopalshet Narkar vs Hirabai AIR 1962 Bombay 27 Vol 49 a learned Single Judge of the Bombay High Court took the view that in order to confer jurisdiction upon the court to proceed under section 251 there must be a decree as contemplated under the and one of the decrees can be under section 101 B And when the petition was allowed to be withdrawn there was no decree passed in favour of the husband and if there was no decree the court had no jurisdiction to pass any order granting permanent alimony to the wife under section 251 In Minarani Majumdar vs Dasarath Majumdar AIR 1963 Calcutta 428 Vol 50 a Division Bench of the Calcutta High Court ruled that an order dismissing a petition by the husband for divorce under section 13 is not a decree within the meaning of section 25 and as such when no substantive relief is granted under sections 9 to 14 there is no passing of a decree as contemplated by section 25 and hence no jurisdiction to make an order for maintenance under the said section Harilal s case supra of the Gujarat High Court was noticed and relied upon A learned Single Judge of the Bombay High Court in Shantaram Dinkar Karnik vs Malti Shantaram Karnik AIR 1964 Bombay 83 vol 51 relying on the earlier decision of that court in Shantaram Gopalshet s case supra and kadia Hiralal s case supra reaffirmed the view that the expression passing of any decree only referred to passing of any decrees provided for in section 9 to 13 of the Act even though technically speaking dismissal of a suit or a petition may be called a decree but not for the purpose of section 25 confering jurisdiction on the Matrimonial Court to grant permanent alimony A Division Bench of the Orissa High Court in Akasam Chinna Babu vs Akasam Parbati Another AIR 1967 Orissa 163 Vol 54 denied the relief of permanent alimony when the petition for divorce of the husband had been dismissed The views of the Bombay High Court and the Gujarat High Court above referred to were taken in aid to get to that view A three Judge full bench of the Punjab and Haryana High Court in Durga 962 as vs Smt Tara RaniAIR 1971 Punjab and Haryana 141 Vol 58 in a different context while determining the question whether a party to a decree or divorce could apply for maintenance under sub section 1 of section 25 of the Act after which decree has been granted ruled that the proceedings for grant of permanent alimony were incidental to the main proceeding and as such an application for alimony could be made even after the grant of the decree for divorce A learned Single Judge of that Court however in Gurcharan Kaur vs Ram chand AIR 1979 Punjab and Haryana 206 Vol 66 even while relying on the full bench decision afore referred went on to deny permanent alimony to the wife hose claim for decree of Nullity of Marriage stood dismissed and on that basis the petition for alimony was held not maintainable In Darshan Singh vs Mst Daso AIR Vol 67 a learned single Judge of the Rajasthan High Court made a distinction between the expression passing any decree occurring in section 25 and the expression decree made under section 28 He viewed that the former expression meant granting any relief of the nature stated in sections 9 to 13 while the later meant granting or refusing the relief In other words it meant that passing of any decree as to mean granting any relief and the making of any decree was to mean granting or refusing any relief A Division Bench of the Delhi High court too in Smt Sushma vs Shri Satish Chander AIR 1984 Delhi 1 Vol 71 taking stock of the above referred to views of the Rajasthan Orissa Bombay Calcutta and Gujarat High Courts affirmedly took the view that the passing of the decree in section 25 meant the passing of a decree of divorce Nullity Restitution of Conjugal Rights or Judicial Separation and not the passing of a decree dismissing the petition It was further held that if the petition fails then no decree is passed ie the decree is denied to the applicant and therefore alimony cannot be granted in a case where a decree is refused because in such a case the marriage subsists The word decree in matrimonial cases was held to have been used in a special sense different from that in which it is used in the Civil Procedure Code Following Delhi High Court s decision in Sushma s case supra a learned Single Judge of the Allahabad High Court in Vinod Chandra Sharma vs Smt Rajesh Pathak AIR 1988 Allahahad 150 Vol 75 opined that when an application for divorce is dismissed there is no decree passed and obviously therefore alimony cannot he granted because in such a case the marriage subsists 963 A learned Single Judge of the Madras High Court in Ranganatham vs Shyamla AIR 1990 Madras 1 Vol 77 too following the above decisions held that the existence of any of the decrees referred to in sections 9 to 13 is a condition precedent to the exercise of jurisdiction under section 25 1 of the Act and the granting of ancilliary relief for permanent alimony and maintenance when the main petition was dismissed was not permissible A divergent view however was struck by a learned Single Judge of the Punjab and Haryana High Court in Smt Swaran Lata vs Sukhvinder Kumar1986 1 Hindu Law Reporter 363 taking the view that when the rights of the parties stand determined conclusively with regard to matters in controversy irrespective as to whether relief is granted or not it culminates in a decree and on the basis of that decree the wife would be entitled to claim maintenance or permanent alimony under section 25 of the Act Not only was on such interpretation of sections 25 and 28 the view taken but liberality of interpretation was injected to justify the view It was expressed that when the right of the wife to maintenance was assured under section 125 of the Code of Criminal Procedure 1973 and section 18 of the and when that right of the wife was not being disputed the court in order to avoid multiplicity of proceedings could give effect to that right wherever possible in a proceeding under section 25 of the Act itself There the objection of the husband to the jurisdiction was termed as technical and the maintainability of claim under section 25 was upheld A learned Single Judge of the Bombay High Court in Sadanand Sahadeo Rawool vs Sulochana Sadanand Rawool AIR 1989 Bombay 220 Vol 76 also took a similar view and based his decision on necessity of the times expressing that technicalities should not be allowed to away any court In the situation the dismissal of petition for divorce was held to be no bar to grant maintenance under section 25 to the successful spouse Then in Surendra Singh Chaudan vs Mamta Chauhan II1990 Divorce Matrimonial Cases 208 a learned Single Judge of the Madhya Pradesh High Court taking the view that the dismissal of a petition amounts to passing of a decree for the purposes of Section 25 of the Act held that claim for permanent alimony was maintainable The learned Judge ruled that there appeared to be no justification for curtailing the ambit of the words to go on to hold that a decree is not a decree for the purposes of section 25 of the Act though a decree for the purposes of section 28 of the Act Here again the intention of the legislature was gathered avoiding multiplicity of proceedings so that every dispute between the parties particularly connected with matters like maintenance etc should be settled in the 964 same proceedings A learned Single Judge of the Bombay High Court in Modilal Kalaramji Jain vs Lakshmi Modilal Jain AIR 1991 Bombay 440 Vol 78 omitting the word passing from the expression interpreted the expression any decree to include an order refusing to grant matrimonial relief and on that basis held adjudication of claim of permanent maintenance to be within the jurisdiction of the matrimonial court Same is the view of the Andhra Pradesh High Court in Shilla Jagannadha Prasad alias Ram vs Smt Shilla Lalitha Kumari 1988 1 Hindu Law Reporter 26 and some other cases which need not be multiplied The preamble to the suggests that it is an Act to amend and codify the law relating to marriage among Hindus Though it speaks only of the law relating to marriage yet the Act itself lays down rules relating to the solemnization and requirements of a valid Hindu marriage as well as Restitution of Conjugal Rights Judicial Separation Nullity of Marriage Divorce legitimacy of children and other allied matters Where the statute expressly codifies the law the court as a general rule is not at liberty to go outside the law so created just on the basis that before its enactment another law prevailed Now the other law in the context which prevailed prior to that was the unmodified Hindu law on the subject Prior to the year 1955 or 1956 maintenance could be claimed by a Hindu wife through court intervention and with the aid of the case law developed Now with effect from December 21 1956 the is in force and that too in a codified form Its preamble too suggests that it is an Act to amend and codify the law relating to adoptions and maintenance among Hindus Section 18 1 of the entitles a Hindu wife to claim maintenance from her husband during her life time Sub section 2 of section 18 grants her the right to live separately without forfeiting her claim to maintenance if he is guilty of any of the misbehaviours enumerated therein or on account of his being in one of objectionable conditions as mentioned therein So while sustaining her marriage and preserving her marital status the wife is entitled to claim maintenance from her husband On the other hand under the in contrast her claim for maintenance pendente lite is durated on the pendency of a litigation of the kind envisaged under sections 9 to 14 of the and her claim to permanent maintenance or alimony is based on the supposition that either her marital status has been strained or affected by passing a decree for restitution of conjugal rights or judicial separation in favour or against her or her marriage stands dissolved by a decree of nullity or divorce 965 with or without her consent Thus when her marital status is to be affected or disrupted the court does so by passing a decree for or against her On or at the time of the happening of that event the court being siezen of the matter invokes its ancilliary or incidental power to grant permanent alimony Not only that the court retains the jurisdiction at subsequent stages to fulfil this incidental or ancilliary obligation when moved by an application on that behalf by a party entitled to relief The court further retains the power to chance or alter the order in view of the changed circumstances Thus the whole exercise is within the gammit of a diseased of a broken marriage And in order to avoid conflict of perceptions the legislature while codifying the Hindu Marriage Act preserved the right of permanent maintenance in favour of the husband or the wife as the case may be dependent on the court passing a decree of the kind as envisaged under sections 9 to 14 of the Act In other words without the marital status being affected or disrupted by the matrimonial court under the the claim of permanent alimony was not to be valid as ancilliary or incidental to such affectation or disruption The wife s claim to maintenance necessarily has then to be agitated under the which is a legislative measure later in point of time than the though part of the same socio legal scheme revolutionizing the law applicable to Hindus Section 41 of the Evidence Act inter alia provides that a final judgment order or decree of a competent court in the exercise of matrimonial jurisdiction which confers upon or takes away from any person any legal character or which declares any person to be entitled to such character is relevant And that such judgment order or decree is conclusive proof as to the conferral accrualor taking away of such legal character from a point of time as declared by the court Such judgments are known as judgments in rem binding the whole world But the judgment of that kind must have done something positive onwards This provision is indicative of the quality of matrimonial jurisdiction We have thus in this light no hesitation in coming to the view that when by court intervention under the affection or disruption to the marital status has come by at that juncture while passing the decree it undoubtedly has the power to grant permanent alimony or maintenance if that power is invoked at that time It also retains the power subsequently to be invoked on application by a party entitled to relief And such order in all events remains within the jurisdiction of that court to be altered or modified as future situations may warrant In contrast without affectation or disruption of the marital status a Hindu wife sustaining that status can live in separation from her husband and 966 whether she is living in that state or not her claim to maintenance stands preserved in codification under section 18 1 of the The court is not at liberty to grant relief of maintenance simplicitor obtainable under one Act in proceedings under the other As is evident both the statutes are codified as such and are clear on their subjects and by liberality of interpretation inter changeability cannot be permitted so as to destroy the distinction on the subject of maintenance Relief to the wife may also be due under section 125 of the Code of Criminal Procedure whereunder an order of maintenance can be granted after contest and an order of interim maintenance can be made at the outset without much contest This provision however has two peculiar features i the provision applies to all and not only to Hindus and ii maintenance allowance cannot exceed a sum of Rs 500 per mensem But this is a measure in the alternative to provide destitute wives This court has ruled that if the language used in a statute can be construed widely so as to salvage the remedial intendment the court must adopt it Of course if the language of a statute does not admit of the construction sought wishful thinking is no substitute and then not the court but the legislature is to blame for enacting a damp squib statute These are the observations of VK Krishna Iyer J in Carew and Company vs Union of India at pages 803 804 Towards interpreting statutes the court must endeavour to see its legislative intendment Where the language is ambiguous or capable of more than one meaning the court must sympathetically and imaginatively discover the true purpose and object of the Provision by filling gaps clearing doubts and mitigating hardships harshness or unfair consequences See Motor Owners Insurance Company Limited vs Jadavji Keshavji Modi and others 1981 4 SCC 660 paras 14 15 and 16 These principles were pressed into service by learned counsel for the appellant contending that if the claim of the wife for maintenance was otherwise justified on fact and law the procedures and the for a should not stand in her way and let her cash on her claim over ruling all objections It was asserted that the Amritsar court had jurisdiction to grant relief as asked for because once upon a time it was seisin of the petition for dissolution of marriage by mutual consent though such petition was withdrawn On the afore analysis and distinction drawn between the fora and perceptives 967 it is difficult to come to the view that a claim which is ancilliary or incidental in a matrimonial court under the could be tried as an original claim in that court a claim which may for the moment be assumed as valid otherwise agitable in the civil court under the As said before these two enactments keeping apart the remaining two ie and Hindu Minority and and Guardianship Act 1956 are a package of enactments being part of one socio legal scheme applicable to Hindus When distinctive claims are covered distinctly under two different statutes and agitable in the courts conceived of thereunder it is difficult to sustain the plea that when a claim is otherwise valid choosing of one forum or the other should be of no consequence These are not mere procedural technicalities or irregularities as termed by one line of reasoning by some of the High Courts These are matters which go to the root of the jurisdiction The matrimonial court a court of special jurisdiction is not meant to pronounce upon a claim of maintenance without having to go into the exercise of passing a decree which implies that unless it goes onwards moves or leads through to affect or disrupt the marital status between the parties By rejecting a claim the matrimonial court does make an appealable degree in terms of section 28 but neither affects nor disrupts the marriage It certainly does not pass a decree in terms of section 25 for its decision has not moved or done anything towards or led through to disturb the marriage or to confer or take away any legal character or status Like a surgeon the matrimonial court if operating assumes the obligation of the post operatives and when not leaves the patient to the physician On the afore analysis we have been led to the conclusion that the step of the wife to move the court of Additional District Judge Amritsar for rant of maintenance under section 25 of the was ill advised The judgment of the High Court under appeal could be no other than the one that it was in the present state of law and the facts and circumstances It is still open to the wife to stake her claim to maintenance in other fora The judgments of the High Courts earlier quoted and others which have been left out which are not in line with our view are over ruled The earlier and predominant view was the correct one and the later an aberration something unfortunate from the precedential point of view The appeals thus inevitably have to and are hereby dismissed but without any order as to costs Before we part with this judgment we need to mention that while this judgment was reserved an Interlocutory Application was received by the Registry which unnumbered Interlocutory Application was duly transmitted to us It is for directing the appellant to pay arrears of maintenance While granting leave 968 this Court on 8th July 1991 had ordered that during the pendency of the appeal but without prejudice to the respective stands of the spouses the husband shall pay a sum of Rs 1000 per mensem by way of maintenance to the wife month to month by bank draft In the Interlocutory Application there is an allegation that this Court s orders have not been complied with Let notice on the application separately be issued to the respondent returnable within six weeks to show cause why payment of arrears of maintenance be not secured to the wife forthwith UR Appeal dismissed

The respondents were small scale manufactures of fertilizers They were entitled to payment of subsidy on meeting prescribed standard in the manufacture of single super phosphate SSP The Government of Madhya Pradesh requested PDIL a consultancy and R D Organisation to test the rock phosphate at Hirapur mines for determining disability allowance payable to SSP producers On the basis of this report the payment of subsidy was withheld and a show cause notice issued to the respondents A writ petition filed in the High Court was allowed by a Division Bench which quashed the show cause notice and ordered that the subsidy be paid It found that the PDIL report had been made without notice to the manufacturers or inviting their participation and that the laboratory report furnished by the manufacturers on which the payment of subsidy was dependent had not been questioned On appeal before this Court the questions to be decided were whether the withholding of payment of subsidy to the respondent was justified whether the High Court committed any error in interfering at the stage of show cause in exercise of its extraordinary jurisdiction and whether tile report of PDIL prepared behind the back of the respondents could be used to reject the standard fertilizer of the respondent It was contended for the appellants that a detailed technical examination was pending and the subsidy worked out had on in been provisional and that PDIL had carried out the examination PDIL being independent and reputed it was not required to here the manufacturers Further the non release of 761 subsidy was also on the basis of input cost data It was urged that the High Court was not justified in quashing the show cause notice and issuing directions for paying the subsidy without giving the department an opportunity to verify if the respondents had in fact compiled with the Control Order Dismissing the appeal this Court HELD 1 PDIL was engaged to rind out the grade of phosphate from Hirapur mines to enable the manufacturers to claim disability allowance and not whether they were producing fertilizer in accordance with the standard provided in the Control Order The purpose being entirely different the report could not be utilised for a different purpose 767 G 2 There is no evidence to doubt the authority of the reports submitted by the inspectors appointed under the Control Order that the fertilizer produced was of specified standard 768 B 3 On facts in the absence of any reliable data or any material the inference drawn by the appellants in the notice that the fertiliser was not of a specified standard was baseless The entire exercise was therefore vitiated being tainted with arbitrariness 770 F G 4 The High Court should normally not interfere at the stage of show cause notice But where from the facts it is apparent that there was no material available with the department to doubt the statement on behalf of the respondent it would be failing to exercise jurisdiction if the Court does not discharge its constitutional obligation of protecting the manufacturers who are in perilous condition as they are not able to meet their liabilities to pay to financial institutions and various other authorities and are facing proceedings on various counts and have virtually closed their unit The authorities did not realise either the purpose of granting subsidy or the harassment to which the manufacturers have been exposed Entire litigation appears to be a sad plight for those who have set up small scale units in the hope that they will stand on their own on the subsidy given by the Government as admittedly the price of manufacturing fertilisers is much more than the price fixed by the Government for which it assured to pay subsidy 771 B D 762

Appeal No 2854 of 1993 From the Judgment and Order dated 641992 of the Karnataka High Court in RSA No 534 of 1990 SD Bajaj and P Mahale for the Appellants Ms Kiran Suri for the Respondent The Judgment of the Court was delivered by VENKATACHALA J We grant Special Leave Since we heard learned counsel for parties on the merits of the appeal we are finally deciding it An extent of 4 acres and another extent of 6 acres 26 guntas are agricultural lands comprised in Survey No 242A and Survey No 342B of Kubihal Village in Kundgol Taluk of Dharwad District They are the disputed lands in this appeal The disputed lands were Watans appertaining to hereditary village offices under the Bombay Hereditary Offices Act 1874 known as Watan Act Basappa Bheemappa who was the Watandar of the disputed lands leased them in the year 1950 in favour of appellant 1 and father of appellant 2 for their personal cultivation With the coming into force on 25th January 1951 of the Bombay Paragana and Kulkarni Watans Abolition Act 1950 known s the Watan Abolition Act all the Watans were resumed by the State of Bombay resulting in extinguishment of all the rights held by Watandars in such Watans But there was a right conferred under the Watan Act on every Watandar the holder of the 782 Watan land to obtain its regrant subject to payment of occupancy price After the resumption of the disputed lands by the State of Bombay under the Watan Abolition Act Basappa Bheemappa claiming to be their former holder applied for the irregrant before the Assistant Commissioner Savannah as by then Dharwad District where the disputed lands were located had come to Karnataka State from Bombay State by reason of the reorganisation of States under the Thereafter by his Order dated 30th November 1968 the Deputy Commissioner of Dharwad District made the regrant of disputed lands resumed Watan lands in favour of their former Watandar Basappa Bheemappa The tenancy of the disputed lands had since been regulated by the provisions of the Bombay Tenancy and Agricultural lands Act 1948 the BT Al Act from the time Bassppa Bheemappa as their Watandar had leased them in favour of appellant 1 and father of appellant 2 in the year 1950 the regrant of the disputed lands in favour of Basappa Bheemappa under the Watan Abolition Act did not entitle him to obtain possession of them except under the BT AL Act Although the Karnataka Land Reforms Act 1961 the KLR Act which came into force in Karnataka on 2101965 repealed by its section 141 the Watan Abolition Act and by its section 143 the BT A L Act 1948 nothing thereunder adversely affected the rights of the appellants tenancy in the disputed lands However the said Basappa Bheemappa sold the disputed lands in favour of their tenants the appellant 1 and father of appellant 2 on 3 1st March 1969 under a registered sale deed The land Tribunal under the KLR Act before which the appellants sought registration of their occupancy rights in the disputed lands found it unnecessary to so register them because of its view that the disputed lands had been sold to them by the landlord regrade Basappa Bheemappa But on 8th December 1976 the respondent filed a suit in the Court of Munsiff at Kundogol against his eldest brother Basappa Beemappa the seller of the disputed lands and two other brothers arraying them as defendants 1 to 3 That was a suit for partition of 14th share in the disputed lands and putting him ink separate possession of that share His claim for partition and separate possession of his share in the disputed lands was based on the plea that the sale deed dated 31st March 1969 by which defendant 1 his eldest brother had sold the disputed lands joint family lands in favour of the tenants without the prior consent of his brothers and for no legal necessity of the family was void ab initio The impleaded in that suit appellants 1 and 2 as defendants 4 and 5 since they were in possession of the disputed lands Defendants 1 4 and 5 resisted the plaintiff s claim for 783 partition and separate possession of his 14th share in the disputed lands urging inter alia that he had no right to get any share in them After trial of the suit the Munsiff Court ranted a decree in favour of the respondent That decree of the Munsiff Court was based on its findings i that the disputed lands were Hindu joint family properties of the plaintiff and defendants 1 to 3 ii that the sale of the disputed lands in favour of defendant 4 and father of defendant 5 had since been made by defendant 1 without the consent of his brothers the plaintiff and defendants 2 and 3 and without legal necessity of the family the same was void ab initio iii that the plea of defendants 1 4 and 5 that the tenancy revived if the sale by defendant 1 in favour of defendant 4 and father of defendant 5 was found to be vs d was unacceptable and iv that the sale by defendant in favour of defendant 4 and father of defendant 5 of the disputed lands was also void since sale of them Fragments was prohibited under the provision 1 of the Karnataka Prevention of Fragmentation and Consolidation of Holdings Act 1966 the Karnataka Prevention of Fragmentation Act However defendants 4 and 5 challenged the correctness of the decree of the Munsiff Court by filing an appeal before the Court of the Civil Judge at Hubli In that appeal the Court of the Civil Judge held that the sale deed date 3 1st March 1969 by which defendants had sold the disputed lands was void because of the provisions of the Karnataka Prevention of Fragmentation Act prohibiting such sale and this situation itself enabled the plaintiff to ignore the sale effected by defendant 1 and claim his share in the disputed lands Accordingly it dismissed the appeal A Regular Second Appeal filed by defendants 4and 5 before the High Court of Karnataka against the decree of the Civil Judge s Court affirming the decree of the Munsiff s Court was dismissed in limine It is those decrees which are impugnned by defendants 4 and 5 in the present appeal by Special Leave Shri Padmanabha Mahale the learned counsel for the appellants contended that the Courts below ought to have held that the agricultural tenancy of the appellants in respect of the disputed lands revived when according to them sale of the disputed lands by defendant 1 in favour of defendants 4 and 5 appellants 1 and 2 was ab initio void either i because the sale was of the joint family lands effected by the eldest brother in the family without the consent of the other brothers and for no legal necessity or ii because the sale was effected when such a sale was prohibited under the provisions of the Karnataka Prevention of Fragmentation Act Had it been so held it was argued there would not have been scope for the 784 Munsiff Court to have made a decree in favour of the respondent for partition of his 14th share in the disputed lands and putting him in possession thereof to the extent of such share and granting him mesne profits and that decree to have been affirmed by the Appellate Court On the other hand Mrs Kiran Surj the learned counsel for the respondent submitted that the tenancy or lease hold rights in the disputed lands held by the appellants got merged in the sale effected in their favour by defendant 1 on 31st March 1969 That sale when was found to be void by the Courts below such finding did not have the effect of reviving the marked tenancy of the appellants as would restore their tenancy rights in the disputed lands This appeal was therefore liable to be dismissed The Court of Munsiff the Trial Court and the Court of Civil Judge the First Appellant Court have recorded a concurrent finding that the sale by defendant 1 in favour of defendant 4 and father of defendant 5 of the disputed lands by registered sale deed dated 3 1 st March 1969 was void ab initio that being a sale prohibited under the provisions of the Karnataka Prevention of Fragmentation Act Besides the Trial Court has recorded a finding that the said sale deed was void on its view that the 34th share of the plaintiff and defendants 2 and 3 in the disputed lands belonging to there joint family had been sold by their eldest brother defendant 1 without their consent and when there was no legal necessity of the family for such sale The Trial Court has accordingly made the decree in the suit in favour of the plaintiff and that decree is affirmed by the Appellate Court because of the said findings recorded by them The Second Appeal filed before the High Court by defendants 4 and 5 has been dismissed in limine That the sale deed dated3 1st March 1969 if is void being a prohibited sale under the provisions of the Karnataka Prevention of Fragmentation Act as is held by the Court of Munsiff and also the Court of Civil Judge the consequence contained in sub section 3 of section 39 of that Act should have followed that is Any person unauthorisedly occupying or wrongfully in possession of any land the transfer or partition of which is void under the provisions of this Act may be summarily evicted by the Deputy Commissioner and after such eviction such land shall be deemed to 785 be in the possession of the person lawfully entitled to such possession In the instant case the tenants on the lands defendants 4 and 5 being the persons deemed to be in possession of the disputed lands and entitled to continue in possession thereof the Court below ought to have seen that the partition decree sought for by the plaintiff respondent here could have been ranted in respect of such tenanted lands only if the same was permissible in law and not otherwise The other finding of the Courts below is that the sale deed dated 31st March 1969 was void because defendant 1 could not have sold the undivided interest of his brothers the plaintiff respondent here and defendants 2 and 3 in the disputed lands being their joint family properties without their consent and without the legal necessity of the family If that be so defendant 1 had to be regarded as having sold in favour of defendant 4 and father of defendant 5 under sale deed dated 31st March 1969 only his 14th undivided interest in the disputed lands and not 34th of the undivided interest of the plaintiff and defendants 2 and 3 That means that the lessors entire interest or entire reversion in the disputed lands cannot be regarded as having been sold under the sale deed of 31st March 1969 From this it following that the lease hold interests of defendant 4 and father of defendant 5 in the disputed lands and lessors entire reversion could not have merged in one and some person so as to constitute merger envisaged under section 111 d of the in that for constituting merger under that provision the interests of the lessee and the interests of the lessor in the whole of the property had to vest at the same time in one person in the same right Thus on the basis of the finding of the Courts below if it has to be held that defendant 1 had not sold the undivided interest of the plaintiff and defendants 2 and 3 in the disputed lands to the extent of their 34th share there could not have been any merger of tenancy rights of defendant 4 and father of defendant 5 in the disputed lands with that of lessors landlords whole rights If so tenancy rights of the appellants in the disputed lands ought to be regarded as not affected or disturbed by the sale deed of 31st March 1969 Hence consideration of the question whether there arose revival of the right of tenancy of the appellants in the disputed lands is unnecessary In the result we allow this appeal set aside the judgments and decrees of the Courts below and remit the case to the Court of Munsiff at Kundgol Dharwad 786 District of Karnataka State with a direction to it to take back the suit on to its file and decide after affording the parties an opportunity of hearing the question whether the plaintiff would be entitled to the decree sought for in the suit if the disputed lands had continued as tenanted lands as found by us No costs UR Appeal allowed

By a letter dated December 26 1991 addressed to the Chief Justice of India the petitioner Editor Excise Law Times complained that ever since the retirement of president of the Customs Excise and Gold control Appellate Tribunal CEGAT in 1985 no appointment of President was made as a result of which the functioning of the Tribunal was adversely affected He also alleged malfunctioning in the CEGAT and sought directions for immediate appointment of the President as well as an enquiry into the mal functioning of CEGAT The letter was treated as a Writ Petition in public interest litigation and on February 251992 this Court issued Rule Nisi to Union of India to make immediate appointment of the President of CEGAT preferably a senior High Court Judge After the directions were issued by this Court Respondent No 3 who was initially appointed as judicial Member and subsequently as Senior Vice President of the Tribunal was appointed as President The petitioner filed another petition challenging the appointment of President and sought to quash the same on the grounds that 1 the appointment was in breach of judicial order passed by this Court on February 25 1992 because as per the convention a sitting or retired Judge of the High Court should have been appointed as President in consultation with the Chief Justice of India even though High Court Judges were available no serious attempt was made to requisition the services of one of them for appointment as President 2 before the Act was made a positive commitment was made time and again by the Government on the floor of the House that judicial independence of CEGAT is sine qua non to sustain the confidence of the 804 litigant public The appointment of any person other than sitting or a retired judge of the High Court as President would be in its breach and 3 the appointment of Respondent No 3 as a Judge of the Delhi High Court was turned down by Chief Justice of India doubting his integrity therefore appointment of such a person as President of CEGAT would undermine the confidence of the litigant public in the efficacy of judicial adjudication even though Rules may permit such appointment The petitioner also prayed that Rules 1013 and 4 of the CEGAT Members Recruitment and Conditions of Service Rules 1987 should be struck down as violative of Article 43 of the Constitution the rules were ultra vires of the basic structure of the Constitution namely independence of Judiciary On May 41992 this Court issued Rule Nisi and on the next date of bearing the relevant rile on which decision regarding the appointment of President was made produced in the Court but on behalf of the Union of India an objection was taken by the Additional Solicitor General that this Court cannot inspect the rile as he intended to claim privilege Accordingly pursuant to the directions given by this Court that a formal application may be made setting out the grounds on which the claim for privilege was founded the Finance Secretary and the Minister of State for Finance filed affidavits claiming privilege under Sections 123 and 124 of the and Article 74 2 of the Constitution stating that the Government had no objection for the Court to peruse the rile but claimed privilege to disclose the contents of the rile to the petitioner On behalf of the Union of India it was contended that a Cabinet SubCommittee approved the appointment of Respondent No 3 as President of CEGAT and by operation of Article 773 and 741 the appointment was made by the President The rile constitutes Cabinet documents forming part of the preparation if the documents leading to the formation of the advice tendered to the President Section 123 of the Evidence Act and Article 74 2 precluded this Court from enquiring into the nature of the advice tendered to the President and the documents were therefore immune from disclosure The disclosure would cause public injury preventing candid and frank discussion and expression of views by the bureaucrats at higher level and by the MinisterCabinet Sub Committee causing serious injury to public service On behalf of Respondent No3 it was contended that 1 he had an excellent and impeccable record of service without any adverse remarks and dropping of his recommendation for appointment as a Judge of Delhi High 805 Court could not be construed adverse to him 2 the Government had prerogative to appoint any member or Vice Chairman or Senior Vice President as President and Respondent No3 being the Senior Vice President was considered and recommended by the Cabinet Committee for appointment Hence he was validly appointed as President Disposing the petitions this Court HELD Per Ramaswamy J 1The claim in the affidavits of the State Minister for Finance and the Secretary for immunity of state documents from disclosure is unsustainable However having perused the file and given anxious considerationsthe Court is of the view that on the facts and circumstances of the case and in the light of the view taken it is not necessary to disclose the contents of the records to the petitioner or his counsel 11Section 123 of the Evidence Act gives right to the Government to claim privilege in other words immunity from disclosure of the unpublished official state documents in public interest The initial claim for immunity should be made through an affidavit generally by the Minister concerned in his absence by the Secretary of the department or head of the Department indicating that the documents in question have been carefully read and considered and the deponent has been satisfied supported by reasons or grounds valid and germance as to why it is apprehended that public interest would be injured by disclosure of the document summoned or called for The claim for immunity should never he on administrative routine nor be a garb to avoid in convenience embarrassment or adverse to its defence in the action the latter themselves a ground for disclosure 12When a claim for public interest immunity has been laid for nondisclosure of the State documents it is the Minister s due discharge of duty to state on oath in his affidavit the grounds on which and the reasons for which he has been persuaded to claim public interest immunity from disclosure of the State papers and produce them He takes grave risk on insistence of oath of secrecy to avoid filing an affidavit or production of State documents and the Court may be constrained to draw such inferences as are available at law Accordingly the oath of office of secrecy adumbrated in Article 754 and Schedule III of the Constitution does not absolve the Minister either to state the reasons in support of the public interest immunity to produce the State documents or as to how the matter was dealt with or for their production when discovery order nisi or rule nisi was issued On the other hand it is his due 806 discharge of the duty as a Minister to obey rule nisi or discovery order nisi and act in aid of the Government Attorney General vs Jonathan Cape Ltd Sankey vs Whitlan and Whitlam vs Australian Consolidated Press referred to If the Court is satisfied from the affidavit and the reasons assigned for withholding production or disclosure the Court may pass an appropriate order in that behalf If the Court still desired to peruse the record for satisfying itself whether the reasons assigned in the affidavit would justify withholding disclosure the court would in camera examine the record and satisfy itself whether the public interest subserves withholding production or disclosure or making the documents as part of the record By operation of Section 162 of Evidence Act the final decision in regard to the validity of an objection against disclosure raised under Section 123 would always be with the Court The Court is not bound by the statement made by the Minister or the Head of the Department in the affidavit and it retains the power to balance the injury to the State or the public service against the risk of injustice The real question which the Court is required to consider is whether public interest is so strong to override the ordinary right and interest of the litigant that he shall he able to lay before a Court of justice the relevant evidence In balancing the competing interests it is the duty of the court to see that there is the public interest that harm shall not be done to the nation or the public service by disclosure of the document and there is a public interest that the administration of justice shall not be frustrated by withholding documents which must he produced if justice is to be done The basic question to which the court would therefore have to address itself for the purpose of deciding the validity of the objection would be whether the document relates to affairs of State or the public service and if so whether the public interest in its non disclosure is so strong that it must prevail over the private interest in the administration of justice and on that account it should not be allowed to be disclosed State of UP vs Raj Narain Ors SP Gupta Ors 807 etc vs Union of India Ors etc etc 1982 2 SCR 365 relied on Conway vs Rimmer D vs National Society for the Prevention of Cruelty to Children 1978 AC 171 HL Burmah Oil Co Ltd vs Governor and Company of the Bank of England Butters Gas and Oil Co vs Hammer Air Canada vs Secretary of State for Trade Council of Civil Service Unions vs Minister for the Civil Service United State vs Reynolds Environmental Agency vs Pats T Mink 35 L Ed 2nd 11 9 Newyond Times vs US US vs Richard M Nixon 1035 Robindon vs State of South Australia Shankey vs Whitlan FAI Insurances Ltd vs The Hon Sir Henn Arthur Winneke and Ors Whitlan vs Australian Consolidated Press Ltd Minister for Arts Heritage and Environment and Ors vs Peko Wallsend Ltd and Ors Commonwealth of Australia vs Northern Land Council and Anr R vs Shinder Gagnon vs Ouebec Securities Commission Bruce vs Waldron Re Tunstall exhibit P Brown 19661 84 WN Pt2 NSW Corbett vs Social Security Commission Greednz Inc vs Governor General Apponhamy vs Illangarutute 1964 66 CLW 17 Jamaica in Allen vs Byfields No2 1964 7 WIR69 and Scotland in Glasgow Corporation vs Central Land Board 1956 Scotland Law Time 4 referred to Mecormic on Evidence 4th Edn by John w Strong referred to 17Every communication which proceeded from one of ricer of the State to another or the officers inter se does not necessarily per se relate to the affairs of the State Whether they so relate has got to be determined by reference to the nature of the consideration the level at which it was considered the contents of the document or class to which it relates to and their indelible impact on public administration or public service and administration of justice itself The power to issue discovery order nisi is express as well as inherent as an integral power of judicial review and process in the Court to secure the attendance of any person or discovery or production of any document or to order investigation in that behalf However in an appropriate case depend 808 ing on facts on hand Court may adopt such other procedure as would be warranted The petitioner must make a strong prima facie case to order discovery order nisi etc and it must not be a haunting expedition to fish out some facts or an attempt to cause embarrassment to the respondents nor for publicity But on issuance of rule nisi by this Court under Article 32 or a discovery order nisi the Government or any authority constitutional civil judicial statutory or otherwise or any person must produce the record in their custody and disobedience thereof would be at the pain of contempt The Cabinet known as Council of Ministers headed by Prime Minister under Article 75 3 is the driving and steering body responsible for the governance of the country Collective responsibility under Article 753 of the Constitution inheres maintenance of confidentiality as enjoined in oaths of office and of secrecy set forth in Schedule III of the Constitution that the Minister will not directly or indirectly communicate or reveal to any person or persons any matter which shall be brought under his consideration or shall become known to him as Minister except as may be required for the due discharge of his duty as Minister The base and basic postulate of its significance is unexceptionable But the need for and effect of confidentiality has to be nurtured not merely from political imperatives of collective responsibility envisaged by Article 753 but also from its pragmatism Satwant Singh Sawhney vs D Ramarathnam Asstt Passport Officer Magnbhai Ishwarbhai Patel vs Union of India and Anr Shamsher Singh vs State of Punjab Rai Sabhib Ram Jawaya Kapur Ors vs State of Punjab and Commonwealth of Australia vs Northern Land Council Anr referred to Sir Ivor Jennings Cabinet Government Patrick Gordon Walker The Cabinet 1973 Revised Ed P 178 John P Mackintosh The British Cabinet 2nd Edn p1 1 0 Hood Phillips and Paul Jackson Constitutional and Administrative Law 7th Edn P 301 Walker The Cabinet p 183 Halsbury Laws of England 4th Edn 8 para 820 Bagehot and The English Constitution 1964 Edn referred to The Court would be willing to respond to the executive public interest immunity to disclose certain documents where national security or high policy high sensitivity is involved Information relating to national security diplomatic relations internal security or sensitive diplomatic corre 809 spondence per se are class documents and that public interest demands total immunity from disclosure Even the slightest divulgence would endanger the lives of the personnel engaged in the services etc The maxim Salvs Populs Cast Suprema Lax which means that regard for public welfare is the highest law is the basic postulate for this immunity Asiatic Petroleum vs Anglo Persian oil Duncan vs Cammell Laird 1942 AC 624 Council of Civil Service Union vs Minister for Civil Service and Mark Hosemball R vs Home Secretary exparte Hosenball referred to But it would be going too far to lay down that no document in any particular class or one of the categories of Cabinet papers or decisions or contents thereof should never in any circumstances be ordered to he produced Robinson vs State of South Australia SP Gupta vs Union of India Ors 1982 2 SCR 365 State of U P vs Raj Narain Ors 1975 2 SCR333 Conway vs Rimmerl968AC910 HLBurmah Oil Co Ltd vs Governor and Company of the Bank of England Reg vs Lewes Justices Ex Parte Secretary of State for the Home Department and D V National Society for the Prevention of Cruelty to Children Air Canada vs Secretary of State for Trade 1983 2 AC 394 HL Shankey vs Whitlan 1979 53 ALR 1 Harbour Corp of Queensland vs Vessey Chemicals Pvt Ltd Manthal Australia Pvt Ltd vs Minister for Industry Technology and Commerce Koowarta vs Bjelke Petersen United States vs Richard M Nixon Lawyers Ed 2nd Ed 1039 Attorney General vs Jonathan Cape Ltd Minister for Arts Heritage and Environment and Ors vs Pekowallsend Ltd and Ors 1987 75 ALR 218 Commonwealth of Australia vs Northern Land Council and Anr Australian Community Party Ors vs Commonwealth Ors and Queen vs Tohey referred to Undoubtedly the Prime Minister is enjoined under Article 78 to communicate to the President all decisions of the Council of Minister relating to the administration of the affairs of the Union and proposals for legislation and to furnish such information relating to the administration or reconsideration by the Council of Minister if the President so requires and submit its 810 decisions thereafter to the President That by itself is not conclusive and does not get blanket public interest immunity from disclosure The Council of Ministers though shall be collectively responsible to the House of the people their acts are subject to the Constitution Rule of law and judicial review are parts of the scheme of the Constitution as basic structure and judicial review is entrusted to this Court High court under Article 226 331The communication of cabinet decisions or policy to the President under Article 741 gives only limited protection by Article 742 of judicial review of the actual tendered to the President of India The rest of the file and all the records forming part thereof are open to in camera inspection by this Court Each case must be considered on its own facts and surrounding scenario and decision taken thereon Jyoti Prakash Mitter vs Chief Justice Calcutta High Court and Union of India vs Jyoti Prakash referred to 332Article 742 is not a total bar for production of the records Only the actual advice tendered by the Minister or Council of Ministers to the President and the question whether any and if so what advice was tendered by the Minister or Council of Ministers to the President shall not be enquired into by the Court In other words the bar of judicial review is confined to the factum of advice its extent ambit and scope but not the record ie the material on which the advice is founded SP Gupta vs Union of India Ors 1982 2 SCR 365 referred to 4Judicial review is concerned with whether the incumbent possessed of qualification for appointment and the manner in which the appointment came to made or the procedure adopted whether fair just and reasonable Exercise of Judicial Review is to protect the citizen from the abuse of the power etc by an appropriate Government or department etc In Court s considered view granting the compliance of the above power of appointment was conferred on the executive and confided to be exercised wisely When a candidate was found qualified and eligible and was accordingly appointed by the executive to hold an office as a Member or Vice President or President of Tribunal this Court cannot sit over the choice of the selection but it be left to the executive to select the personnel as per law or procedure in this behalf Shri Kumar Padma Prasad vs Union of India Ors 811 distinguished In service jurisprudence it is settled law that it is for the aggrieved person ie non appointee to assail the legality of the offending action Third party has not locus standi to canvass the legality or correctness of the action Only public law declaration would be made at the behest of the petitioner a public spirited person Therefore the contention that there was need to evaluate the comparative merits of Respondent and the senior most Member for appointment as President would not be gone into in a public interest litigation Only in a proceedings initiated by an aggrieved person it may be open to be considered It is expedient to have a sitting or retired senior Judge or retired Chief Justice of a High Court to be the President The rules need amendment immediately Government had created a healthy convention of providing that the Tribunals will be headed by a President who will be a sitting or a retired judge of the High Court This Court to elongate the above objective directed the Government to show whether the convention is being followed in appointment of the President of CEGAT and further directed to consider appointment of a Senior Judge or a retired Chief Justice of the High Court as it President Admittedly Chief Justice of India was not consulted before appointing Respondent No3 as President of CEGAT The solemn assurance given to the Parliament that the Tribunal bears a judicious blend by appointment of a High Court Judge as President was given a go bye 61While making statutory rules the executive appears to have made the appointment of a sitting or retired High Court Judge as President unattractive and Directly frustrating the legislative animation A sitting Judge when he is entitled to continue in his office upto 62 years would not he willing to opt to serve as President if his superannuation as President is co terminus with 62 years He would he attracted only if he is given extended three years more tenure after his superannuation But Rule 10 3 says that the total period of the enure of the President by a sitting or retired Judge is a period of three years or till he attains the age of 62 years whichever is earlier ie co terminus with superannuation as a Judge of the High Court The proviso is only discretionary at the whim of the executive depleting independence and is an exception to the rule Thereby practically the spirit of the Act the solemn assurance given by the Government to the Parliament kindling hope in the litigant public to have a sitting or a retired Judge appointed as President has been frustrated deflecting the appointment of a 812 judicially trained judge to exercise judicial review Court is constrained to observe that the rules though statutory were so made as to defeat the object of the Act 7There are persistent allegations against mal functioning of the CEGAT and against Respondent No 3 himself Though this Court exercised self restraint to assume the role of an investigator to charter out the ills surfaced suffice to say that the Union Government cannot turn a blind eve to the persistent public demands and the Court directs to swing into action an indepth enquiry made expeditiously by an officer or team of officers to control the malfunctioning of the institution It is expedient that the Government should immediately take action in the matter and have fresh look The Tribunals set up under Articles 323A and 323B of the Constitution or under an Act of legislature are creatures of the Statute and in no case can claim the status as Judges of the High Court or parity or as substitutes However the personnel appointed to hold the office under the State are called upon to discharge judicial or quasi judicial powers So they must have judicial approach and also knowledge and expertise in that particular branch of constitutional administrative and tax laws The legal input would undeniably be more important and sacrificing the legal input and not giving it sufficient weightage and teeth would definitely impair the efficacy and effectiveness of the judicial adjudication It is therefore necessary that those who adjudicate upon these matters should have legal expertise judicial experience and modicum of legal training as on many an occasion different and complex questions of law which baffle the minds of even trained judges in the High Court and Supreme Court would arise for discussion and decision MB Majumdar vs Union of India Union of India vs Paras Laminates Ltd Krishna Sahai Ors vs State of U P Ors and Rajendra Singh Yadav Orsv State of UP Ors 1990 2 SCC 763 referred to 81Equally the need for recruitment of members of the Bar to man the Tribunals as well as the working system by the Tribunals need fresh look and regular monitoring is necessary An expert body like the Law Commission of India should make an in depth study in this behalf including the desirability of bringing CEGAT under the control of Law and Justice Department in line with Income tax Appellate Tribunal and make appropriate urgent recommendations to the Government of India who should take remedial steps by an 813 appropriate legislation to overcome the handicaps and difficulties and make the Tribunals effective and efficient instruments for making judicial review efficacious inexpensive and satisfactory For inspiring confidence and trust in the litigant public they must have an assurance that the person deciding their causes is totally and completely free from the influence or pressure from the Government To maintain independence imperativity it is necessary that the personnel should have at least modicum of legal training learning and experience Selection of competent and proper people instill people s faith and trust in the office and help to build up reputation and acceptability Judicial independence which is essential and imperative is secured and independent and impartial administration of justice is assured Absence thereof only may get both law and procedure wronged and wrong headed views of the facts and may likely to give rise to nursing grievance of injustice Therefore functional fitness experience at the Bar and aptitudinal approach are fundamental for efficient judicial adjudication Then only as repository of the confidence as its duty the Tribunal would properly and efficiently interpret the law and apply the law to the given set of facts Absence thereof would be repugnant or derogatory to the Constitution Union of India vs Sankal Chand Himatlal Sheth Anr referred to Judicial review is the basic and essential feature of the Indian constitutional scheme entrusted to the judiciary It cannot be dispensed with by creating Tribunal under Articles 323A and 323B of the Constitution Any institutional mechanism or authority in negation of judicial review is destructive of basic structure So long as the alternative institutional mechanism or authority set up by an Act is not less effective than the High Court it Ls consistent with constitutional scheme The faith of the people is the bed rock on which the edifice of judicial review and efficacy of the adjudication are founded The alternative arrangement must therefore be effective and efficient Keshwanand Bharati vs Union of India Waman Rao vs Union of India Raghunathrao Ganpatrao vs Union of India Krishna Swathi vs Union of India 1199214 SCC 605 SP Sampat Kumar vs Union of India Ors and JB Chopra vs Union of India referred to 814 91 It is necessary tip express Court s anguish over the ineffectivity of the alternative mechanism devised for judicial review The judicial review and remedy are fundamental rights of the citizens The dispensation of justice by the Tribunals is much to be desires Court is not doubting the ability of the members or Vice Chairman non judges who may be experts in their regular service But judicial adjudication is a special process and would efficiency be administered by advocate Judges The remedy of appeal by special leave under Article 136 to this Court also proves to be costly and prohibitive and far flung distance too is working as a constant constraint to litigant public who could ill afford to reach this Court An appeal to a Bench of two Judges of the respective High Courts over the orders of the Tribunals within its territorial jurisdiction on questions of law would assuage a growing feeling of iNjustice of those who can ill afford to approach the Supreme Court No one can suppose that the executive will never be guilty of the sins common to all people Sometimes they may do things which they ought not to do or will not do things they ought to do The Court must be alive to that possibility of the executive committing illegality in its process exercising its powers reaching a decision which no reasonable authority would have reached or otherwise abuse its powers etc If the proceeding decision or order is influenced extraneous considerations which ought not to have been taken into account it cannot stand and needs correction no matter of the nature of the statutory body or status or stature of the constitutional functionary though might have acted in good faith It is therefore the function of the Court to see that lawful authority is not abused Under modern conditions of responsible Government Parliament should not always be relied on as a check on excess of power by the Council of Ministers or Minister Though the Court would not substitute its views to that of the executive on matters of policy it is its undoubted power and duty to see that the executive exercises its power only for the purpose for which it is granted It is the constitutional legitimate and lawful power and duty of this Court to ensure that powers constitutional statutory or executive are exercised in accordance with the Constitution and the law This may demand though no doubt only in limited number of cases Yet the in networkings of government may be exposed to public gaze Per Ahmadi J For himself and Punchhi J Concurring 1 This Court cannot sit in judgment over the wisdom of the Central 815 Government in the choice of the person to be appointed as a President so long as the person chosen possesses the prescribed qualification and is otherwise eligible for appointment Respondent No 3 was a Senior Vice President when the question of filling up the vacancy of the President came up for consideration He was fully qualified for the post under the Rules No challenge is made on that count Under Rule 10 1 the Central Government is conferred the power to appoint one of the Members to be the President Since the validity of the Rule is not questioned there can be no doubt that the Central Government was entitled to appoint Respondent No 3 as President This Court cannot interfere with the appointment of Respondent No 3 on the ground that his track record was poor or because of adverse reports on which account his appointment as a High Court Judge had not materialised Assuming that the allegations against Respondent No 3 are factually accurate this Court cannot sit in judgment over the choice of the person made by the Central Government over the choice of the person made by the Central Government for appointment as a President if the person chosen is qualified and eligible for appointment under the Rules However to instill the confidence of the litigating public in the CEGAT the Government must make a sincere effort to appoint a sitting Judge of the High Court as a President of the CEGAT in consultation with the Chief justice of India and if a sitting Judge is not available the choice must fall on a retired Judge as far as possible Sub rule 4 of Rule 10 of the CEGAT Members Recruitment and Conditions of Service Rules 1987 needs a suitable change to make it sufficiently attractive for sitting High Court judges to accept appointment as the President of the CEGAT The rules empower the Central Government to appoint any member as the President of the CEGAT It is true that under subrule 4 a serving Judge and under the proviso thereto a retired Judge can also be appointed a Member and President simultaneously In the case of a serving Judge his age of superannuation is fixed at 62 years but in the case of the retired Judge he may be appointed for a period of three years at the most Insofar as a service High Court Judge is concerned he holds office until he attains the age of 62 years vide Article 217 of Constitution It therefore beats common sense why a sifting Judge of tile High Court would opt to serve as the President of the CEGAT if he is to retire at the same age without any benefit On the contrary he would lose certain 816 perks which are attached to the office of a High Court Judge Even status wise he would suffer as his decisions would he subject to the writ jurisdiction of the High Court under Article 226227 of the Constitution He may agree to accept the offer only if he had an extended tenure of at least three years The allegations made by Petitioner in regard to the working the CEGAT are grave and the authorities can ill aford to turn a Nelson s eye to those allegations made by a person who is fairly well conversant with the internal working of the Tribunal Refusal to inquire into such grave allegations some of which are capable of verification can only betrays indifference and lack of a sense of urgency to tone up the working of the Tribunal It is high time that the administrative machinery which is charged with the duty to supervise the working of the CEGAT wakes up from its slumber and initiates prompt action to examine the allegations by appointing a high level team which would immediately inspect the CEGAT identify the causes for the crises and suggest remedial measures This cannot brook delay The time is ripe for taking stock of the working of the various Tribunals set up in the country after the insertion of Articles 323A and 323B in the Constitution A sound justice delivery system is a sine qua non for the efficient governance of a country wedded to the rule of law An independent and impartial justice delivery system in which the litigating public has faith and confidence alone can deliver the goods After the incorporation of these two articles Acts have been enacted where under Tribunals have been constituted for dispensation of justice Sufficient time has passed and experience gained in these last few years for taking stock of the situation with a view to finding out if they have served the purpose and objectives for which they were constituted Complaints have been heard in regard to the functioning of other Tribunals as well and it is time that a body like the Law Commission of India ha a comprehensive look in with a view to suggesting measures for their improved functioning That body can also suggest changes in the different statutes and evolve a model on the basis where of Tribunals may be constituted or reconstituted with a view to ensuring greater independence An intensive and extensive study needs to be undertaken by the Law Commission in regard to the constitution of Tribunals under various statutes with a view to ensuring their independence so that the public confidence in such Tribunals may increase and the quality of their performance may improve It is strongly recommended to the Commission of India to undertake such an exercise 817 on priority basis On the facts of the case it is not necessary to disclose the contents of the records to the petitioner or his counsel

Appeal No 2847 of 1993 From the Judgment and Order dated 3181990 of the Delhi High Court in CW 2617 of 1989 Yogeshwar Prasad US Prasad AK Lal Sinha VS Pandey Mrs Nidhi Pandey and SM Tripathi for the Appellant VC Mahajan and SN Terdol for the Respondents The Judgment of the Court was delivered by KRAMASWAMY J Special leave granted In response to the advertisement No 33 dated August 19 1989 the appellant had applied for recruitment to the post of Examiner of Personnel in the Department of Civil Aviation He was unsuccessful in the selection He later on challenged paras 3i and 3ii of the advertisement on the ground that the qualifications prescribed are discriminatory and were tailor made He also contends that in 1969 for the said post the qualifications prescribed were 1st Class British or Indian Navigator or a British Flight Navigator licence with not less than 100 hours of air experience The method of recruitment was direct recruitment and the age prescribed was 45 years relaxable to Government Servants He claims that he is having the first Class licence with 100 hours of air navigation experience With a view to deprive him of the change the offending rules have been amended in 1978 substituting 300 hours of instructional flying and experience of not less than 2500 hours as Flight Navigator with category A and endorsement to fly VIPs and VVIPs on all routes in IAF air crafts or should hold or have held or Indian Flight Navigator Licence According to him this rule was made with a view to deprive him of his chance The Delhi High Court dismissed the writ petition summarily To appreciate the contention it is necessary to read to rules As per the 1969 rules 774 which are statutory made under proviso to article 309 of the Constitution the method of recruitment with qualification prescribed thereafter are thus Essential i First Class British or Indian Navigators Licence with not less than 100 hours air experience Desirable i Degree in Mathematics or in Engineering ii Experience of Goedetic Surveying In 1978 clause A was amended and in its place Clauses Ai and ii were brought on the rules which reads thus Ai Experience of an minimum of 300 hours of instructional flying as qualified Navigation Instructor ii Experience of not less than 2500 hours as Flight Navioator with category A and endorsement to fly VIPs VVIPs on all routes in IAF aircraft OR B i Should hold or have held an Indian Flight Navigators licence ii Experience of 2000 hours as Flight Navigator on international Routes Desirable i Degree in Science with Physics and Mathematics as subject of recognised University or equivalent ii Experience as Navigation Instructor in a recognised Institution or in an Air Corporation iii Commercial Pilot s licence Method of recruitment is direct recruitment through the Union Public Service 775 Commission When the candidates in required number did not apply for the rules have been further amended in 1989 with the following modified qualifications Essential 1 102 with Physics Chemistry Mathematics 2i should have held a senior Commercial Pilot s Licence ii should have flying experience of not less than 2500 hours on multiengine aircraft of which not less than 250 hours should be as pilot in command OR i should hold or should have held an Indian Flight Navigator s licence ii should have not less than 500 hours experience as Flight Navigator Desirable 1 Degree in Science with Physics and Mathematics of a recognised University or its equivalent 2 Experience as Navigation Instructor in a recognised instituteFlying Club or in an Airline Method of recruitment by direct recruitment failing which by transfer or deputation including short term contract Age 50 years It is not in dispute that these rules have been made by the President exercising the power under proviso to article 309 of the Constitution which read thus 309 Recruitment and conditions of service of persons serving the Union or a State Subject to the provisions of this Constitution Acts of the appropriate Legislature may regulate the recruitment and conditions of service of persons appointed to public services and posts in connection with the affairs of the Union or of any State 776 Provided that it shall be competent for the President or such person as he may direct in the case of services and posts in connection with the affairs of the Union and for the Governor of a State or such person as he may direct in the case of services and posts in connection with the affairs of the State to make rules regulating the recruitment and the conditions of service of persons appointed to such service and posts until provision in that behalf is made by or under an Act of the appropriate Legislature under this Article and any rules so made shall have effect subject to the provisions of any such Act It would thus clear that the rules made by the President or authorised person under proviso to article 309 are subject to any law made by the Parliament and the power includes rules regulating the recruitment and the conditions of service or post They are statutory and legislative in character The statutory rules thus made are subject to the law that may be made by the Parliament In BS Vadera vs Union of India Ors reported in this Court held that the rules made under the proviso to article 309 of the Constitution shall have effect subject to the provisions of the Act ie if the appropriate legislature has passed an Act In its absence the rules made by the president or by such person as he may direct are to have full effect In The General Manager Southern Railway vs Rangachari reported in at 596 another Constitution Bench held that equality of opportunity need not be confused with absolute equality as such What is guaranteed is the equality of opportunity and nothing more Article 161 or 162 does not prohibit the prescription of reasonable rules for selection to any employment or appointment to any office or post Any provision as to the qualifications for the employment or appointment to an office or post reasonably fixed and applicable to all citizens would certainly he consistent with the doctrine of the equality of opportunity In State of Mysore Anr vs P Narasing Rao report in at 411 this Court held that the provisions of article 14 or article 16 do not exclude the laying down of selective tests nor do they preclude the Government from laying down qualifications for the post in question Such qualifications need not be only technical but they can also be general qualifications relating to the suitability of the candidate for such service as such The same was the view in another Constitution Bench decision reported in The State of Jamu and Kashmir vs Triloki Nath Khosa Ors In State of Orissa Ant vs NN Swamy Ors reported in 1977 1 2 SCC 508 in paragraph 18 this Court held that 777 the eligibility must not be confused with the suitability of the candidate for appointment Thus it would be clear that in the exercise of the rule making power the president or authorised person is entitled to prescribe method of recruitment qualifications both educational as well as technical for appointment or conditions of service to an office or a post under the State The rules thus having been made in exercise of the power under proviso to article 309 of the Constitution being Statutory cannot he impeached on the ground that the authorities have prescribed tailor made qualifications to suit the stated individuals whose names have been mentioned in the appeal Suffice to state that it is settled law that no motives can be attributed to the Legislature in making the law The rules prescribed qualifications for eligibility and the suitability of the appellant would be tested by the Union Public Service Commission It is next contended that several persons whose names have been copiously mentioned in the appeal were not qualified to hold the post of examiner and they were not capable even to set the test papers to the examiners nor capable to evaluate the papers We are not called upon to decide the legality of their appointments nor their credentials in this appeal as that question does not arise nor are they before the court It is next contended by Mr Yogeshwar prasad the learned Senior counsel that on account of inefficiency in the pilots operational Capability repeatedly air accidents have been occurring endangering the lives of innocent travellers and this Court should regulate the prescription of higher qualifications and strict standard to the navigators or to the pilots be instead on We are afraid that we cannot enter into nor undertake the responsibility in that behalf It is for the expert body and this Court does not have the assistance of experts Moreover it is for the rule making authority or for the legislature to regulate the method of recruitment prescribe qualifications etc It is open to the President or the authorized person to undertake such exercise and that necessary tests should be conducted by UPSC before giving the certificates to them This is not the province of this Court to trench into and prescribe qualifications in particular when the matters are of the technical nature It is stated in the counter affidavit that due to advancement of technology of the flight aviations the navigators are no longer required and therefore they are not coming in large number Despite the repeated advertisements no suitable candidate is coming forward We do not go into fault aspect also and it is not necessary for the purpose of this case Suffice to state that pursuant to another advertisement made in July 1992 the appellant is stated to have admittedly applied for and appeared before the 778 UPSC for selection and that he is awaiting the result thereof Under these circumstances we do not find any substance in this appeal The appeal is accordingly dismissed No costs U R Appeal dismissed

The parties were married in 1972 in Punjab In 1985 a petition for divorce by mutual consent was filed in court at Amritsar The appellant wife alleged that she was not a consenting party and the petition was dismissed in 1987 following an agreement on the basis of which she would be put back in the matrimonial home However barely three months later the respondent husband filed a regular petition for divorce at Ghaziabad inter alia alleging adultery against his wife The appellant wife refuted the charge The Court granted her maintenance pendente lite at Rs 1000 pm The husband not paving this amount the divorce proceedings stand stayed On 22nd March 1990 the appellant moved the District judge Amritsar and was granted Rs 6000as litigation expenses and Rs 2000as maintenance pendente lite from the date of application under section 24 She also claimed permanent alimony and maintenance under section 25 of the On appeal the High Court held that an application under section 25 was not 955 maintainable as the matrimonial court at amritsar had not passed any decree for restitution of conjugal rights judicial separation nullity or divorce Sequelly it quashed the order under section 24 of the Act Dismissing the appeal this Court HELDThe right of permanent maintenance in favour of the husband or the wife is dependent in the Court passing a degree of the kind envisaged under Ss 9to 14 of the Act In other words without the marital status being affected or disrupted by the matrimonial court under the the claim of permanent alimony was not to be valid as ancilliary or incidental to such affectation or disruption Kadia Martial Purshotham vs Kadia Lilavati Gokaldas AIR 1961 Guj 202 Shantaram Gopalshet Narkar vs Hirabai AIR 1962 Bom 27 Minarani Majumdar vs Dasarath Majumdar AIR 1963 Cal 428 Shantaram Dinkar Karnik vs Malti Shantaram Karnik AIR 1964 Bom 83 Akasam Chinna Babu vs Akasam Parbati AIR 1967 Ori 163 Gurcharan Kaur vs Ram Chand AIR 1979 P H 206 Darshan Singh vs Mst AIR 1980 Raj 102 Smt Sushama vs Satish Chander AIR 1984 Del 1 Vinod Chandra Sharma vs Smt Rajesh Pathak AIR 1988 All 150 and Ranganatham vs Shyamala AIR 1990 Mad 1 affirmed Swaran Lata vs Sukhvinder Kumar 1986 1 Hindu LR 363 Sadanand Sahadeo Rawool vs Sulochana Sadanand Rawool AIR 1989 Bom 220 Surendra Singh Chauhan vs Mamta Chauhan 11 1990 Divorce Matrimonial Cases 208 Modilal kalaramji Jain vs Lakshmi Modilal Jain AlR and Shilla Jagannadha Prasad vs Smt Shilla Lalitha Kumari 1988 Hindu LR 26 overruled Durga Das vs Smt Tara Rani AIR H 141 referred to 2A Court intervening under the undoubtedly has the power to grant permanent alimony or maintenance if that power is invoked at the juncture when the marital status is affected or disrupted It also retains the power subsequently to be invoked on application by a party entitled to relief A nd such order in all events remains within the jurisdiction of that court to be altered or modified as future situations may warrant 3While sustaining her marriage and preserving her marital status a Hindu wife s claim to maintenance is codified is S18 of the Hindu Adoptions 956 and Maintenance Act 1956 and must necessarily be agitated thereunder 4The court is not at liberty to grant relief of maintenance simplicitor obtainable under one Act in proceedings under the other As is evident both the statutes are codified as such and are clear on their subjects and by liberality of interpretation inter changeability cannot be permitted so as to destroy the distinction on the subject of maintenance Carew Co vs Union of India and Motor Owners Insurance Co Ltd vs Jadavjit Keshavji Modi 1981 4 SCC 660 referred to 5When distinctive claims are covered distinctly under two different statutes choosing of one forum or the other are not mere procedural technicalities or irregularities These are matters which go to the root of the jurisdiction The matrimonial court a court of special jurisdiction is not meant to pronounce upon a claim of maintenance without having to go into the exercise of passing a decree which implies that unless it goes onwards Moves or leads through to affect or disrupt the marital status between the parties By rejecting a claim the matrimonial court does make an appealable decree in terms of section 28 but neither affects nor disrupts the marriage It certainly does not pass a decree in terms of section 25 for its decision has not moved or done anything towards or led through to disturb the marriage or to confer or to take away any legal character or status

Appeal Nos 2914 16 of 1993 etc From the Judgment and Order dated 2331993 and 29 3 93 of the Madras High Court in WP Nos 1508191 800292 and 1606891 WITH Civil Appeal Nos 293793 3040 40A B93 3026 2793 302593 990 3015 2493 302893 308493 300293 303293 2993 9493 3003 0493 3086 8793 299593 3005 0793 2987 8993 301493 3008 1093 3086 8793 2940 4193 3011 301 IA93 2998 300093 298693 3101 0793 299293 310893 2982 82A93 2983 8593 3029 3193 3093 9493 2943 4493 991 2955 5793 2996 9703 3042 308093 303593 303993 304193 309593 3033 3493 3090 9293 3096 9793 298193 3088 8993 297993 2976 7793 2960 6193 299093 296893 2958 5993 297193 297893 297293 294293 3082 8393 2969 7093 2965 6793 299193 992 2973 7593 3036 3893 2962 6493 308593 3127 2993 3012 1393 301893 2938 3993 299093 2945 5493 WITH Special Leave Petition CIVIL Nos 7375 8009 11 8108 7416 7560 62 OF 1993 Shanti Bhushan KK Venugopal Soli J Sorabjee N Santosh Hegde Shivasubramaniam K Parasaran P Chidambaram Mrs Revathy Raghavan MA Krishna Moorthy Kailash Vasdev Pawan Kumar B Rabu Manohar Dr A Francis Julian For Ms Arputham Aruna and Co P Chandrasekhran Aruneshwar Gupta A Chandrasekar Pushpendra Singh Bhati V Ramajagadesan V Balachandran V Krishnamurthy KV Vijaya Kumar Ajit Kumar Sinha Selvar thenave Martin KV Mohan R Mohan R Nedumaran and PD Dinakaran for the Appellants PR Seetharaman for the Respondents The Judgment of the Court was delivered by KULDIP SINGHJ These bunch appeals are by the Teachers Training Institutes in the State of Tamil Nadu They claim to be the minority educational institutions in terms of Article 301 of the Constitution of India The State Government has declined to recognise these institutes on lie ground that they have failed to satisfy the conditions for grant of recognition as provided under the Tamil Nadu Minor 993 ity SchoolsRecognition and Payment of Grants Rules 1977 as amended by the Government Order No 536 dated May 17 1989 and Government Order No 861 dated June 12 1991 Recognition Rules The appellants challenged before the Madras High Court by way of writ petitions under Article 226 of the Constitution the validity of the Recognition Rules inter alia on the rounds that the said Rules are violative of Articles 301 and 14 of the Constitution of India A Division Bench of the High Court consisting of M Srinivasan and Thangamani JJ dismissed the writ petitions M Srinivasan J who spoke for the Bench has given a scholarly judgment The case law on the subject has been dealt with in detail and the conclusions culled out succinctly The High Court judgment has been of utmost assistance to us These appeals via special leave are by the Teachers Training Institutes against the judgment of the Division Bench of the High Court We announced our conclusions in these matters dismissing the appeals and special leave petitions on May 25 1993 Now we proceed to give our reasoned judgment The Recognition Rules provide for instructions and teaching practice to be followed minimum qualifications for teaching and non teaching staff and the following additional Conditions to be satisfied by a teachers training institute to quality for grant of recognition 1The Teachers Training Institute should have at least 10 acres of suitable land of its own to he used for construction of Building for Institution and Administration and for Hoste l accommodation and staff quarters and also for Play Ground purposes 2The Institution Building must consist of suitable rooms to provide for class rooms with roughly 60 sq feet of carpet area per inmate one Auditorium cum projection hall with an area of about 2000 Sq Laboratory and Special Rooms Library Staff rooms separately for Men and Women staff Principal s Room Off ice Room Store Room for Craft and Physical Education articles Toilet facili ties separately for men and women and women s Common Room 3Bath rooms and toilets should be provided if the Institution is meant for both sexes separate Such facilities should be provided for 994 men and women teaching staff non teaching staff and men and women candidates As far as bath rooms and toilets are concerned arrangements should he made at the rate of one for ten inmates 4a Adequate furniture and office equipment including furnitures for class rooms Library Laboratory and other rooms should be provided to the value of at least a lakh of rupees bLaboratory equipments worth at least a lakh of rupees should be provided for Science Geography Home cTeaching appliances audio visual aids charts maps etc worth about Rs 50000 should be provided dSportsGamesArtsMusic Equipments worth about Rs should be provided eEquipment and Material for work experience worth about Rs 50000 should be provided 5A room with a space of approximately 1000 sq with sufficient storage space to keep the equipment furnishing to organise various learning situations and provision to observe the trainees at work in the laboratory situations without being noticed has to be provided Sufficient furnitures such as working tables and almirahs should be provided Each Teacher Training Institution should have a good library with at least 10000 volumes of back and reference books worth at least a lakh of rupees 7 Play ground space for sports gymnastics and other Physical Education activities with an area about 5 acres should be provided If the Institute is meant for both sexes another 3 acres of and should he provided exclusively for women candidates The Play ground should he provided adjacent to the main Institution building within the campus and not in a remote place away from the Institution 995 8 At least one full fledged recognised Middle School with Standards I to VIII should be functioning under the same management of every Teacher Training Institute seeking recognition for the purpose of providing teaching practice to the trainess This will be a precondition even at the time of sending in applications for recognition of Teachers Training Institutes The practical aspects of the Training will be assessed by a competent board to be constituted by the concerned authority a The need for the opening of the institution in that area will be assessed by a District Committee with a Joint Director nominated by Director of School Education as Chairman with Chief Educational Officer and District Educational OfficerInspectors of Girls Schools as members as the case may This committee will submit a report about satisfaction of norms based on which the competent authority will consider Recognition for the institution b The Authority competent to grant recognition shall take into account the need for granting such recognition to Teacher Training Institutes taking into consideration the trained teachers already available and waiting for appointment and potential to absorb the Teachers to be trained in future in the services of Government and Private Schools There should he economic strength as prescribed by the education department The teachers training institutes should not admit more than forty students in all for the course and should not exceed this limit either in the first or second year It was argued before the High Court that as the minorities have a fundamental right under Article 301 of the Constitution to establish and administer educational institutions of their choice the conditions provided under the Recognition Rules are wholly arbitrary and have been designed to oust the appellants from the educational fieled and the provisions regarding having a middle school ten acres of land play grounds library with 10000 books laboratory hostel staff quarters bathrooms for students etc are so onerous that it is difficult rather impossible to comply with the same 996 While dealing with the argument based on Article 301 of the Constitution of India the High Court discussed in detail the judgments of this Court in Kerala Education Bill1959 SCR 995 Rev Sidhajbhai Sabhai Ors vs State of Bombay and Anr S Azeez Basha vs Union of India State of kerala etc vs Very Rev Mother Provincial etc Regina vs St Aloysius Higher Elementary School and Anr 19711 Supp SCR 6 The Gandhi Faiz e am College Shahjahanpur vs University of Agra and Anr 19751 2 SCC 283 Lilly Kurian vs Sr Lewina and Ors 1 979 1 SCR 820All Saints High School Hyderabad etc vs Government of Andhra Pradesh Ors etc The Managing Board of the Milli Talimi Mission Bihar Ranchi Ors vs The State of Bihar Ors AP Christians Medical Educational Society vs Government ofAndhra Pradesh and Anr Frank Anthony Public School Employees Association vs Union of India and ors19864 SCC 707All Bihar Christion Schools Association andAnr vs State of Bihar and Ors 1 988 1 SCC 206 St Stephen s College vs The University of DelhiJT 19914 SC 548 Unni Krishnan andAnr vs State ofAndhra Pradesh and Ors Writ Petition C No 60792 decided on February41993 and TheAhmedabad St Xaviers College Society Anr vs State of Gujarat and Anr 1 975 1 SCR 173 On the analysis of the above judgments the High Court culled out the following principles 1The fundamental right declared by Article 301 of the Constitution is absolute in terms but subject to regulatory measures 2There is no fundamental right under Article 191 g of the Constitution to establish or administer an educational institution if recognition is sought therefor 3 The institutions must be educational institutions of the minorities in truth and reality and not mere masked phantoms 4 There is no fundamental right to recognition and any institution seeking recognition should abide by the regulationsprescribed by the State as conditions therefor 5The minority institutions must be fully equipped with educational excellence to keep in step with other institutions in the State 6 The regulations framed by the State cannot abridge the fundamental right of the minorities and they should be in the interests of 997 the minority institutions themselves and not based on State necessity or general societal necessities 7 The regulations should be with a view to promoting excellence of educational standards and ensuring security of the services of teachers and others employees of the institutions and in the true interests of efficiency of institutions discipline health sanitation morality public order and the like 8 Even unaided institutions are not immune from the operations of general laws of the land such as Contract Law Tax measures Economic Laws Social Welfare Legislations Labour and Industrial Laws and similar other laws which are intended to meet the need of the Society No fault can he found with the above quoted legal principles enunciated by the High Court Mrs Kitty Kumar Manglam Mr Shanti Bhushan Mr KK Venugopal Mr K Parasaran Mr P Chindambram and other learned counsel appearing for the appellants fairly conceded that the High Court has correctly summed upthe conclusions arising out of the interpretation of Article 301 of the Constitution of India Before dealing with the Recognition Rules the High Court referred to the Guidelines framed pursuant to the National Educational Policy introduced in the year 1986 the recommendations of the Education Commission 1964 1966 the role of the National Council for Teacher Education under the National Council of Educational Research and Training the views of various eminent educationists and came to the conclusion that there is a need for drastic change in the basic concept of teachers training in the country Comprehensive overhauling of administrative structure of these institutions was urgently needed The High Court dealt with in detail the revised syllabus for the diploma in teacher education course and also the curriculum of the institutes of Education Training set up by the Tamil Nadu Government which shows that the Stateof Tamil Nadu is in the process of overhauling the methodology of teaching and administration of the teachers training institutes in the State of Tamil Nadu The High Court referred to various judgments of this Court wherein the importance of teacher training and need to uplift the standard of such institutions was repeatedly highlighted The High Court rightly emphasised the need for maintaining very high standards of Education Sports administration and maintenance of the Teachers 998 Training Institutes These Institutions are established with the avowed object of training teachers and educationists who have to shoulder the responsibility of moulding the nation This Court in NM Nageshwaramma vs State of Andhra Pradesh Anr 1986 Supp SCC 166 observed as under The Teachers Training Institutes are meant to teach children of impressionable age and we cannot let loose on the innocent and unwary children teachers who have not received proper and adequate training True they will be required to pass the examination but that may not be enough Training for a certain minimum period in a properly organised and equipped Training Institute is probably essential before a teacher may be duly launched Jagannatha Shetty J speaking for this Court in Andhra Kesari Education Society vs Director of School Education Ors JT1988 4 SC 431 observed as under Though teaching is the last choice in the job market the role of teacher is central to all processes of formal education The teacher alone could bring out the skills and intellectual capabilities of students He is the engine of the educational system He is a principal instrument in awakening the child to cultural values He needs to be endowed and energised with needed potential to deliver enlightened service expected of him His quality should be such as would inspire and motivate into action the benefitter He must keep himself abreast of ever changing conditions He is not to perform in a wooden and unimaginative way He must eliminate fissipasrous tendencies and attitudes and infuse nobler and national ideas in younger minds His involvement in national integration is more important indeed indispensable It is therefore needless to state that teachers should be subjected to rigorous training with rigid scrutiny of efficiency It has greater relevance to the needs of the day The ill trained or sub standard teachers would be detrimental to our educational system if not a punishment on our children The Government and the University must therefore take care to see that inadequacy in the training of teachers is not compounded by any extraneous consideration In State of Maharashtra vs Vikas Sahebrao Roundale Ors JT 1992 5 999 SC 175 K Ramaswamy J speaking for this Court observed as under The teacher plays pivotal role in moulding the careercharacter and moral fibres and aptitude for educational excellence in impressive young children The formal education needs proper equipment by the teachers to meet the challenges of the day to impart lessons with latest technics to the students on secular scientific and rational outlook A well equipped teacher could bring the needed skills and intellectual capabilities of the students in their pursuits The teacher is adorned as Gurudevobhava next after parents as he is a Principal instrument to awakening the child to the cultural ethos intellectual excellence and discipline The teachers therefore must keep abreast ever changing technics the needs of the society and to cope up with the psychological approach to the aptitudes of the children to perform that pivotal role In short teachers need to he endowed and energised with needed potential to serve the needs of the society The qualitative training in the training colleges or schools would inspire and motivate them into action to the benefit of the students For equipping such trainee students in a school or a college all facilities and equipments are absolutely necessary and institutions bereft thereof have no place to exist nor entitled to recognition In that behalf compliance of the statutory requirement is insisted upon Slackening the standard and judicial fiat to control the mode of education and examining system are detrimental to the efficient management of the education The teacher education programme has to be redesigned to bring in a system of education which can prepare the student teacher to shoulder the responsibility of imparting education with a living dynamism Education being closely interrelated to life the well trained teacher can instill anesthetic excellence in the life of his pupil The traditional stereotyped lifeless and dull pattern of chalk talk and teach method has to be replaced by a more vibrant system with improved methods of teaching to achieve qualitative excellence in teacher education Keeping in view the National Policy of Education the Government of Tamil Nadu has published a revised syllabus for the diploma in teacher education course in the Government Gazette of August 15 1990 The aims and objectives of the said syallbus and curriculum as given by the State of Tamil Nadu are as under 1000 LM15 A sound Programme of Elementary Teacher Education is inevi table for the qualitative improvement of Education Education must become all effective instrument of social change and the part played by the teacher should be suitable and significant for this purpose The gap between the Teacher Education curriculum and the school curriculum has to he minimized for enabling the teachers to act as agents of social change which necessitates that the education imparted in schools has relevance to the personal as well as social life of individuals and to the needs and aspirations of the people In order to be a catalyst in the process of developing a citizen who is productive and who believes in social justice and national integration tile teacher himself needs to become such a citizen through appropriate learning experience The High Court has examined the legality of the impugned Recognition Rules in the above background It has discussed in detail the object and utility of laying down the impugned conditions for recognition The High Court has found that none of the conditions infract Articles 14 and Article 301 of the Constitution of India We agree with the reasoning and the conclusions reached by the High Court This Court cannot go into the question as to whether a Teachers Training Institute should be set up on a campus consisting of 10 acres or 5 acres It is also not for this Court to lay down the sizes of the class rooms laboratories number of toilets or the number of books to he kept in the library It is entirely for the State Government to lay down tile requirements of a teachers training institute campus The learned Advocate General appearing for the State of Tamil Nadu has contended that the Recognition Rules are also applicable to Government run teachers training institutes and also to the institutes which are Government aided According to him the new Recognition Policy of the Government has been designed with the object of closing the teaching shops and encouraging the genuine institutions According to him the policy is based on the Guidelines issued by the Central Government from time to time He further stated that the condition of having an area of 10 acres for the campus has now been reduced to five acres in case of the institutions which are set up within the area of Municipal Corporation He has clarified that the only requirement for setting up the library is that it must have reference books worth at least a lakh of rupees According to him the number of toilets bathrooms etc and other conditions regarding the institute building are in the nature of guidelines and are to he substantially complied with On our suggestion the learned Advocate General has agreed to command to the State Government not to insist on additional 3 acres of land in case of co 1001 educational institutes in case these institutes are having 10 acres5 acres of area as provided under the Recognition Rules Mr Shanti Bhushan appearing in civil appeals arising out of Special Leave Petitions No 6762 6393 has contended that the appellants institutes started functioning in the year 1984 They were refused recognition and as such they challenged the order by way of a writ petition before the High Court The learned counsel has invited our attention to the judgment of the High Court dated November 3 1987 in the said writ petition wherein it is held as under Consequently the orders of the respondents 2 and 3 are set aside a writ of mandamus will issue directing the third respondent to grant recognition to the petitioner institute with effect from 27th September 1984 This writ petition is allowed with costs Mr Shanti Bhushan contended that the impugned Recognition Rules cannot be made applicable to the institutions which have already been established and given recognition by the State Government under directions of the Court Relying upon the above quoted judgment of the High Court learned counsel has contended that his clients were given recognition with effect from 1984 under the directions of the High Court and as such the impugned Recognition Rules which came into force in the year 1989 cannot be made applicable to them It is not disputed by Mr Shanti Bhushan that under the directions of the High Court temporary recognition was given to his clients though according to him the order of the Government granting temporary recognition was challenged before the High Court and the said petition was also disposed of by the impugned judgment We see no force in the contention of the learned counsel All those institutes which did not have permanent recognition before the issue of the Recognition Rules are bound to comply with the said conditions before they are entitled to permanent recognition The High Court was justified in holding that the institutions which were operating on the basis of temporary recognitions either under the orders of the Courts or otherwise shall to comply with the recognition rules to enable them to earn recognition Mr KK Venugopal contended that a distinction has to be made between the institutions which are functioning earlier to the coming into force of the recognition rules and those which have applied for recognition for the first time According to him change over period should be given to the existing institutes which are functioning on the basis of temporary recognition We do not agree with Mr Venugopal The training institutes which are functioning on the basis of 1002 temporary recognitions are neither properly organised nor fully equipped to train the teachers These institutes have done more harm than good to the cause of education Mr Venugopal and Mr K Parasaran have further argued that the students who have already taken the examinations their results be directed to be declared and if successful certificates be awarded to them Mr Chindambram appearing for some of the appellants has argued that there are students who have already taken the examination and their results have also been declared but they have not been given certificates on the ground that the institutes which sponsored them have not been recognised It is no doubt correct that temporary recognitions have been granted to some of the institutions either under the orders of the Court or otherwise and the students of such institutions were permitted to write the examinations In number of cases under orders of the Court permission to the students to write the examinations have been given The High Court also directed in some cases to publish the results of the students who wrote the examination in April 1992 All these situations were brought to the notice of the High Court in Writ Petition No 3674 of 1992 and Writ Petition No 5469 of 1993 which were heard together The High Court refused to grant relief to the students who had written the examination or who had passed the examination and were being denied the certificates The High Court observed as under Based on the above orders learned counsel for the petitioner contends that the students of the petitioner Institution have validly written the examination when the order of recognition was in force and the results of the examination have already been published pursuant to the orders of this Court It is contended that the students of the petitioner are certainly entitled to the consequential relief of issue of certificates Another interlocutory application is now filed in WMP No 5469 of 1993 on 22293 for a direction to the third respondent to publish the results of the students who wrote the examination held in July 1992 In similar cases we have given directions to the authorities to publish the results But we have taken care to observe that such publication of results will not confer any right on the students as the Institutions have not complied with the rules framed in GOMS No 536 They cannot take advantage of the interim orders passed by this court directing the government to grant temporary recognition Orders of such temporary recognition 1003 are expressly made subject to the result of the main writ petitions Now we have held that GO Ms No 536 is valid and the orders of temporary recognition will not confer any other remedies on the students of the petitioner So far as these institutions are concerned they should be treated only as non recognised Just because the students have written the examinations and results are published they are not entitled to any further relief The writ petition is dismissed with the above observations It has come to the notice of this Court that many institutions claiming themselves to be minority institutions within the meaning of Article 301 of the Constitution invoke the jurisdiction of the High Court under Article 226 or of this Court under Article 32 for a writ of mandamus to recognise the institutions in question as minority institutions and pending the final disposal of such applica tions an interim direction is sought to allow the students of such institutions to appear at the examinations concerned In connection with such interim prayer this Court in the case of A P Christians Medical Educational Society vs Government of Andhra Pradesh supra said Shri KK Venugopal learned counsel for the students who have been admitted into the MBBS course of this institution pleaded that the interests of the students should not be sacrificed because of the conduct or folly of the management and that they should be permitted to appear at the University examination notwithstanding the circumstance that permission and affiliation had not been granted to the institution He invited our attention to the circumstance that students of the Medical college established by the Daru Salam Educational Trust were permitted to appear at the examination not with standing the fact that affiliation had not by then been granted by the University Shri Venugopal suggested that we might issue appropriate directions Lo the University to protect the interests of the students We do not think that we can possibly accede to the request made by shri Venugopal on behalf of the students Any direction of the nature sought by Shri Venugopal would be in clear transgression of the provisions of the University Act and the regulations of the University We cannot by our fiat direct the University to disobey the statute to which it owes its existence and the regulations made by the University itself We cannot imagine anything more destructive of the rule of law that a direction by the court to disobey the laws 1004 In view of the aforesaid pronouncement of this Court the High Court should not have passed interim order directing the respondents to allow the teachers of unrecognised institutions to appear at the examinations in question Such teachers cannot derive any benefit on basis of such interim orders when ultimately the main writ applications have been dismissed by the High Court which order is being affirmed by this Court The same view has been expressed by this Court in connection with the minority unrecognised teachers training institutions in the State of Tamil Nadu itself in the case of State of Tamil Nadu and others vs St Joseph Teachers Training Institute and another 1991 3 SCC 87 As such no equity or legal right can be pleaded on behalf of the Teachers admitted for training by such minority institutions for publication of their results because they were allowed to appear at the examinations concerned during the pendency of the writ applications before the High Court on basis of interim orders passed by the High Court which were in conflict with the view expressed by this Court in the aforesaid cases We see no ground to differ with the view taken by the High Court This court in NM Nageshramma s case supra has held that training in a properly organised and equipped training institute is essential before a candidate becomes qualified to receive teachers training certificate Simply passing the examination is not enough The future teachers of the country must pass through the institutions which have maintained standards of excellence at all levels We see so ground to interfere with the impugned judgment of the High Court We agree with the views expressed by the High Court on various aspects of teachers training institutes We also agree with the reasoning and the conclusions reached by the High Court Before we part with this judgment we consider it necessary to strike a note of caution in respect of passing of interim orders by Courts directing the students of unrecognised institutions to appear at the examinations concerned In view of the series of judgments of this Court the Courts should not issue fiat to allow the students of unrecognised institutions to appear at the different examinations pending the disposal of the writ applications Such interim orders affect the careers of several students and cause unnecessary embarrassment and harassment to the Authorities who have to comply with such directions of the Court It is a matter of common knowledge that as a part of strategy such writ applications for directions to recognise the institutions in question and in the meantime to allow the students to appear at the examinations are filed only when the dates for examinations are justified Many of such institutions are not only masked phantoms but are 1005 established as business ventures for admitting sub standard students without any competitive tests on basis of considerations which cannot serve even the interest of the minority There is no occasion for the Courts to be liberal or generous while passing interim orders when the main writ applications have been filed only when the dates for the examination have been announced In this process students without knowing the design of the organisers of such institutions become victim of their manipulations The appealsspecial leave petitions are dismissed No costs RP Appeals dismissed

Basappa Bheemappa Kas the Watandar of the disputed agricultural lands admeasuring 4 acres and 6 acres 26 guntts in Kubihal Village in Kundgol Taluk of Dhwarwad District which became a part of Karnataka State in 1956 In 1950 he leased the disputed lands to appellant 1 and the father of appellant 2 for their personal cultivation With the coming into force of the Bombay paragana and Kulkarni WatansAbolition Act 1950 the lands were resumed by the State of Bombay Bheemappa applied under this Act for regrant of the wattan land and the Dy Commissioner of Dhawad District made the regrant in his favour on 30111968 On 3131969 he sold the land to appellant No 1 and the father of appellant No 2 under a registered sale deed The land tribunal under the Karnataka land Reforms Act 1961 found it unnecessary to register the occupancy rights of the appellants in view of the sale In 1976 respondent field a suit against Bheemappa and 2 other brothers for partition to the disputed property and separate possession He impleadcd appellants 1 and 2 as defendant in the suit since they were in possession of the disputed lands He contended that Bheemappa had sold the lands without the prior consent of his brothers and for nor legal necessity of the family and the sale was void ab initio 780 The Munsiff Court granted a decree in favour of the respondent on its finding that the disputed funds were Hindu joint family properties that the sale as void ab initio for tile reasons stated and that the plea if the defendants appellants that if the sale was void the tenancy revived as unacceptable The Munsiff Court and in appeal the Civil Judge concurrently held that the sale was void since sale it fragments was prohibited under the Karnataka prevention of Fragmentation Act 1966 A regular second appeal before the High Court was dismissed in limine The appellants contended before this Court that if the sale was ab initio void the agricultural tenancy of the appellant revived For the respondents it was submitted that the tenancy on lease hold rights in the disputed lands held by the appellant got merged in tile sale effected in their favour When that sale was found to be void it did not have the effect if reviving the merged tenancy of the appellantsas would restore their tenancy right in the disputed lands Allowing the appeal this Court HELD 1 Tile tenants being the persons deemed to be in possession of the disputed lands and entitled to continue in possession thereof a partition decree could have been granted in respect of such tenanted lands only if permissible by law 784 H 2 The courts below having found that the sale deed was void because Bheemappa could not having sold the undivided interest of his brother only his 14 undivided interest in the disputed lands had to be regarded as having been sold by him 784 H The lessors entire interest or entire reversion in the disputed lands cannot therefore be regarded us having been sold under the sale deed of 31 st March 1969 From this it follows that the lease hold interests of the leases and the lessors entire reversion could not have merged in one and the same person so as to constitute merger envisaged under section 111d of the Transfer of Property Act 1982 For constituting merger under that procession the interests of the lessee and the interests of the lessor in the whole of the 781 property had to vest at the same time in one person in the same right 785 BC The tenancy rights of the appellants in the disputed lands was not affected or disturbed by the sale deed of 31st March 1969 and it is unnecessary to consider the question of revival of the right of tenancy of the appellants in the disputed lands 785 D 3 Case remitted to the Court of Munsiff at Kundgol Dharwad District to decide the claim for partition if the disputed lands had continued as tenanted lands as found by this Court 785 E

Petition Civil Nos 7900 02 of 1982 WITH Writ Petition Nos 837 853 of 1982 Under Article 32 of the Constitution of India WITH Civil Appeals Nos 3137 38 of 1993 1021 From the Judgment and Order dated 26784 27784 of the Rajasthan High Court in DB Civil Special Appeal Nos 182 184 of 1984 WITH CMP Nos 19643 45 of 1988 CMP No 8272 of 1986 RK Garg Aruneshwar Gupta RK Kamal and SK Gupta for the Petitioners in WP Nos 7900 790282 SLPS 126828483085 and for the Respondent No 4 in CANo 164978 T Sridharan for the Petitioner in WPs Nos 837 853 of 1982 MK Ramamurthi and Parijat Sinha for the Appellants in CA No 164978 and for the Respondent No 4 in WPs 7900 8282 R F Nariman and PH Parekh for the intervenor in WPs Nos 7900 0282 VR Reddy Additional Solicitor General VC Mahajan Ms B Sunita Rao VK Verma and Ms A Subhashini for the Respondent in UOI CVS Rao NP for the Respondent in SLP Nos 126828483085 CV Rappai for the Respondent No 14 in WP 7900 0282 The Judgment of the Court was delivered by PUNCHHI J These are a handful of writ petitions and special leave petitions which on grant of leave hereby and having become appeals can conveniently be disposed of by a common judgment The fulcrum of the controversy herein and the shadow in which it works is a three judge Bench decision of this Court in Katyani Dayal Ors vs Union of India Ors decided on March 26 1980 Before adverting to the facts and circumstances in which this cause has been presented to this Court it would be fruitful to give a broad outline of Katyani Dayal s case in the immediately succeeding paragraphs Connected with Katyani Dayal s case were writ petitions filed in a represen 1022 tative capacity purporting to represent all temporary Assistant Engineers on a later point of time known as temporary Assistant Officers appointed by the Railway Board pursuant to the authority given by the President of India on the recommendations of the Union Public Service Commission selection based on interview alone There was a separate classification of such temporary Assistant Officers when compared with India Railway Service Engineers Class 1 Direct recruits to the Indian Railway Service of Engineers Class 1 were subjected to competitive written and personality tests and in the nature of things only the very best could emerge out successfully On the other hand temporary Assistant Officers hereafter referred as Officers at places were neither subjected to written nor to a personality test but as said before were selected on the basis of interview Besides the minimum educational qualification which was the same for both the services three years experience as a Civil Engineer was additionally required for the aspirants to the Indian Railway Service of Engineers Class 1 hereafter referred to as the Engineers at places While the President was the appointing authority of the Engineers the Railway Board was the appointing authority of the Officers Both the members of these services on selection were due for different courses of training earmarked separately There were a host of other factors which distinguished the quality and character of the personnel of the two parallel services as elaborately detailed in Katyani Dayal s case supra Between the years 1955 and 1964 as many as 553 officers temporary Assistant Engineers were appointed by the Railway Board through the Union Public Service Commission Though in the letters of appointment the officers temporary Assistant Engineers and others concerned were told that six of them would be absorbed into the Indian Railway Service of Engineers Class 1 every year this figure in the subsequent years was increased from time to time when in 1975 the figure as increased stood at 25 per year The net result was that after absorption 107 Officers were residually left unabsorbed in the year 1976 by the time of the filing of the connected writ petitions in Katyani Dayal s case and they too were finally absorbed in 1979 by What was described as a blanket order Before hand on September 17 1965 the Railway Board had taken a decision to the effect that the Officers so absorbed into the Indian Service of Engineers would be given weightage in seniority on the basis of half the total years of continuous service in working posts in Railways prior to their permanent absorption into Class 1 subject to a maximum weightage of five years The then writ petitioners describing themselves as members of the Federation of Temporary Officers Association Indian Railways joining with them their President Vice President and Secretary of the aforesaid Federation as writ petitioners approached this Court 1023 in a representative capacity to seek relief in their seniority status The principal claim of the writ petitioners was that Officers were appointed to temporary posts on the cadre of Engineers and that their seniority had to be reckoned on the basis of their length of continuous service though they conceded that in any given year the candidates appointed as Engineers on the basis of the results of the competitive examinations were placed above those appointed on the basis of selection by the Union Public Service Commission The challenge was to the authority of the Railway Board to create such an unclassified parallel service something outside the preview of the Indian Railway Establishment Board Notwithstanding the procedure of selection so adopted the writ petitioners contended that they were recruited in Class I service and supported their claim on diverse grounds so as to obtain the result that all Assistant Engineers formed one class under the Indian Railway Establishment Board Challenge was made to the classification of personnel into those that were recruited on the basis of the competitive examinations and those that were recruited by selection but both by Union Public Service Commission terming it as arbitrary and not permissible under the equality clause in the Constitution Grievance was voiced that the right of absorption of a handful of temporary Engineers Officers every year into the Service of Engineers was arbitrary and inequituous resulting in grave injustice rendering decades of service of the Officers to a mere waste Unfortunately the then writ petitioners did not sue the respondents across in a representative capacity In the fitness of things it would have been appropriate for the then writ petitioners to either involve all parties who could possibly have an interest or a likely affectation in the litigation or to sue them in a representative capacity if not individually However some people did get impleaded as parties in that case to project their point of view and due to the nature of dispute those predominantly were members of the Indian Railways Service of Engineers Class 1 This Court while dismissing the writ petitions held that the classification of temporary Assistant Officers separately from the Indian Railway Service Engineers of Class I was neither discriminatory nor violative of Articles 14 and 16 of the Constitution for the reason that it had nexus to the object sought to be achieved which mainly was efficiency of service and that both the services had started separately and never became one This Court further viewed that the object of recruitment being different the methods of recruitment dissimilar the appointing authority being not the same the training imparted to the two unlike the tenure of temporary Assistant Officers being precarious and their maximum aspiration being only to be absorbed into the Indian Railway Service of Engineers Class 1024 were distinctive features and therefore no question of their entitlement to equal rights arose until and unless the temporary Assistant Officers got absorbed into the Indian Railway Service of Engineers Class 1 This court also ruled that the seniority of theabsorbed temporary Assistant Officers would ordinarily reckon from the date of their absorption into the Indian Railway Service of Engineers Class I as stipulated in their letters of appointments With regard to the time factor this Court also took into account the long wait involved in the process but all the same approved of the measures of the Railway Board in lessening the Iona wait by giving them weightage of half of the length of service as temporary Assistant Officers subject to the maximum of five years And lastly this court rejected the claim of the temporary Assistant Officers asking for equal status for equal pay and equal work leaving a ray of hope that such goal might be achieved in the not too distant future The instant batch of matters is virtually on the same lines as of Katyani Dayal s case claiming the same relief and this time by the Temporary Assistant Officers through a body styled as the Federation of Directly Appointed Officers Suppressed of Indian Railways and a few others in a representative capacity across which stand arrayed the Union of India and the Railway Board as respondents When this matter came up for hearing on 15 March 1990 before a three judge Bench in which one of us Punchhi J was a member it was It that the affected parties should be impleaded in their representative capacity so as to make the decision of this Court binding on every member of both the classes of employees The requisite direction was thus made and carried out Pursuant thereto some private respondents on record represent the entire body of similarly placed Engineers Thus both sides have sued and are being sued in their representative capacity Mr RK Garg learned counsel for the petitioners has spear headed the claim of the temporary Assistant Officers on the basis of the so called developing concept of Article 14 in the years gone by especially in the field of the right to equality in matters relating to employment on appointment in service He asserts that the development of law has gone a long way so as to shed the views expressed in Katyani Dayal s case justifying demolition of the demarcation between the two services made as it was in Katyani Dayal s case examining the question afresh in the light of Raghunandan Prasad Singh vs Secretary Home Police Department Government of Bihar Ors 1988 Supp SCC 519 Dr OZ Hussain vs Union of India 1990 Supp SCC 688 at 691 Direct Recruit Class II Engineering of officers Association vs State of Maharashtra Others and 1025 other cases It was contended that Katyani Dayal s case upholding the creation of temporary posts outside the service was on the basis which has since been eroded and equal pay for equal work with equality in all other conditions of service including avenues of confirmation absorption promotion pension and security have become inflexible postulates of service jurisprudence On the other hand learned counsel for the respondents has opposed such method contending that what is being asked is a virtual review of Katyani Dayal s case which is not permissible by means of successive writ petitions Addedly it is urged that principles of constructive res judicata would bar the re agitation of the issues decided in Katyani Dayal s case if not the strict principles of res judicata Lastly it was urged that when the matter has been settled in this particular service its unsettling by means of a petition under Article 32 of the Constitution is impermissible We were taken through Katyani Dayal s case extensively What we find is that the distinction and the classification of the temporary Assistant Officers and members of the Indian Railway Service of Engineers Class I fell clearly to be identified and marked The only method of fusion was by means of a phased absorption as noticed in paragraph 9 of the Report detailed above The scheme having met with approval of this Court cannot by mere passage of time be taken to have become vulnerable by subsequent exponence and dimension of Article 14 of the Constitution This Court in Katyani Dayal s case specifically said that relief of equality was being denied to the then petitioners because of the history origin and structure of the Services No opinion was expressed however as to the validity of the given weightage of half the length of service to Temporary Assistant Officers subject to a maximum of five years because of its being questioned elsewhere We are unable to make any headway or act in judicial indiscipline towards widening the scope of these matters in the face of the Constitution Bench decision of Direct Recruit s case supra Amongst the conclusions summed up by the Constitution Bench conclusion J and K seal the fate of these matters These are J The decision dealing with important questions concerning a particular service given after careful consideration should be respected rather than scrutinised for finding out any possible error It is not in the interest of service to unsettle a settled position KThat a dispute raised by an application under Article 32 of the 1026 Constitution must be held to be barred by principles of res judicata including the rule of constructive res judicata if the same has been earlier decided by a competent court by a judgment which became final The distinction between the two services was well marked in Katyani Dayal s case supra and the important question of equality was once for all settled To find fault with it at this juncture again on the touch stone of equality dimension would be to unsettle a settled position That venture is neither in the interest of justice nor in the interest of service When there has been complete absorption of the personnel of one service into the other and the seniority of the absorbers is to be reckoned from their date of absorption as stipulated in their appointment matters and as held by this Court with weightage of half the length of service subject to a maximum of five years it would otherwise be imprudent now at this point of time to dig up old issues The rule of weightage also appears to us to be reasonable and this is a pattern which has been noticed and approved in many a Service Similarly when the dispute raised between the Officers in a representative capacity and Engineers not so represented in Katyani Dayal s case supra still it was a dispute raised before this Court which has been decided finally A dispute now sought to be raised under Article 32 of the Constitution between the Officers in a representative capacity and Engineers across also in a representative capacity must be held to be barred by principles of res judicata as also in the rule of constructive res judicata The cases aforementioned relied upon by learned counsel for the petitionersappellants do not remove this hurdle however broadly may Article 14 and 16 be viewed and expanded It is thus unnecessary to elaborate those cases and discover their ratio The are argument of learned counsel for the appellant that the State is prohibited to create separate channels of service and create discrimination by making one as an isolated one and not providing for promotional avenues reasonably falls to the ground in view of the bar of re agitation erected by Direct Recruit s case supra Equally when absorption had been made possible and its pace quickened with weightage it is difficult to find fault with the scheme at this point of time to look for a substitution at our end as that would unsettle a settled position established more than a decade ago We also do not see any compelling reasons to deviate from the principles enunciated in the judgment At this point of time the bars erected by Direct Recruit s case supra appear to us to have further thickened goading us to refrain from the exercise of any undoing We thus leave the matter as it is It needs mentioning that the appeals being decided instantly are against the judgments and orders of the High Court rejecting writ petitions of the petitioners 1027 before it on the basis of Katyani Dayal s case supra No details of these cases are necessary to dispose of these appeals for the reasons stated above As a result these petitions and appeals tail but without any order as to costs In view of the dismissal of the main matters no orders are necessary on all the CMPs GN Matters dismissed

The appellant had applied for recruitment as Examiner of Personnel in the Department of Civil Aviation but was unsuccessful He challenged the qualifications detailed in the advertisement as being discriminatory and tailor made with a view to exclude him He contended that while he would have qualified under the 1969 Rules framed under the proviso to Article 309 the rules were amended in 1978 and 1989 with a view to deprive him of his chance He submitted that the court should regulate the prescription of higher qualifications and strict standards for navigators and pilots in view of the frequent air accidents Dismissing the appeal this Court HELD 1 In exercise of rule making power under Proviso to article 309 the President or authorised person is entitled to prescribe the method of recruitment educational and technical qualifications or conditions of service for appointment to an office or post under the State These rules being statutory cannot be impeached as being tailor made to suit specific individuals 777 B Bs Vadera vs Union of India Ors General manager Southern Railway vs Rangachari at 596 State of Mysore vs PNarasing Rao 19681 1 SCR 407 at 411 State of J K vs Triloki Nath Khosa AIR 1974SCI and Sate of Orissa vs NNSwamy para 18 followed 2 No motives can he attributed to the Legislature in making the law 777 C 773 3 The prescribed qualifications and the suitability of the applicant would be tested by the UPSC 777 C 4 It is for the rule making authority or for the Legislature to regulate the method of recruitment prescribe qualifications etc It is not for this court to trench into and prescribe qualifications in particular where the matters are of a technical nature 777 F

Appeals Nos 722 and 723 of 1993 From the Judgment and Order dated 131192 of the Allahabad High Court in WP Nos 688 1246 of 1992 WITH CIVIL APPEALS NOS 386 and 387 of 1993 From the Judgment and Order dated 131192 of the Allahabad High Court in W P Nos 8 19 and 888 of 1992 Rajiv Dhawan PK Dey and Rakesh Gosian Ms Rani Jethmalani NP for the Appellants in CA Nos 722 2393 RP Saxena for the Appellants in CA Nos 386 8793 Yogeshwar Prasad and Ms Rachna Gupta for the Respondent J The appellants in Civil Appeals Nos 722 723 of 1993 had been appointed as Assistant District Government Counsel Criminal to appear in different criminal cases on behalf of the State in different Courts in the District of Moradabad They filed the connected Writ Applications before the High Court against the decision of the State Government refusing to extend their term for a farther period of three years which were dismissed by the High Court It appears that the appellants except appellant No 3 Gopal Sharma had been appointed by Government Order dated 25291 as Assistant District Government Counsel Criminal in the District of Moradabad in accordance with the provisions of Section 24 of the Criminal Procedure Code hereinafter referred to as the Code and the Legal Remembrancer Manual hereinafter referred to as the Manual against the substantive vacancies Appellant No 3 however had been appointed on 13121990 The last date of the tenure of the appellants other than appellant No 3 as mentioned in the aforesaid Government Order dated 25 21991 was 3112199 1 The tenure of appellant No 3 was up to 1312199 1 It is not in dispute that before the expiry of the term aforesaid the District Judge Moradabad by his letter dated 27121991 recommended the names of appellants for extension of their terms The District Judge prepared two lists ie A and B List A contained the name of those lawyers whose work and conduct has been approved for their extension as Government Counsel whereas List B contained the names of the remaining Government Counsel who in the opinion of the District Judge were average lawyers The names of the appellants are in List A The District Judge requested the District Magistrate Moradabad to send his recommendation to the State Government for extension of the term of tile Government Counsel mentioned in List A The District Magistrate after receipt of the recommendation of the District Judge aforesaid by a communication dated 2192 did not recommended the names of the appellants for extension of their terms saying that on the inquiry at his level reputation professional work behaviour and conduct of the above mentioned Government Counsel was not found in accordance with public interest It may be mentioned that on 28129 1 tile State Government had extended the terms of the appellants till further orders Ultimately without assigning any reason the extension recommended by the District Judge was rejected by the State Government which decision is the subject matter of the controversy in the present appeals In the State of UP the Manual is an authoritative compilation of the government orders and instructions for the conduct of legal affairs of the State Government Para 100 of Chapter VII gives the details of the Law Officers of the Government which includes the Government Counsel Civil Revenue Criminal 975 along with many others like Judicial Secretary and Legislative Secretary The Chapter VII of the contains the procedure in respect of appointment and conditions of engagements of District Government Counsel The District Officer is required it consider all the applications received in consultation with the District Judge and to submit in order of preference the names of the legal practitioners along with the opinion of the District Judge on tile suitability and merit of each candidate to the State Government giving due wightage to the claim of the existing incumbents if any After the receipt of such recommendations the Legal Remembrancer is required is required to submit the said recommendations with his own opinion for the orders of the State Government In Para 706 of the Manual the procedure regarding the appointment and renewal has been prescribed 706 Appointment and renewal 1 The legal practitioner finally selected by the Government may be appointed District Government Counsel for one year from the date of his taking over charge 2At the end of the aforesaid periodic the District Officer after consulting the District Judge shall submit a report on his work and conduct to the legal Rememberancer together with the statement of work done in Form No 9 Should his work or conduct be found to he unsatisfactory the matter shall be reported to the Government for orders If the report in respect of his work and conduct is satisfac tory he may be furnished with a deed of engagement in Form No 1 for a term not exceeding three years On his first engagement a copy of Form No2 shall he supplied to him and lie shall complete and return it to the legal Remembrancer for record 3The appointment of any legal practitioner as a District Government Counsel is only professional engagement terminable at will on either side and is not appointment to a post under the government Accordingly the government reserves the power to terminate the appointment of any District Government Counsel at any time without assigning any cause Para 708 contains the procedure for renewal after expiry of the original term 708 Renewal of term 1 At least three months before the expiry 976 of the term of a District Government Counsel the District Officer shall after consulting tile District Judge and considering his past record of work conduct and age report to the Legal Remembrancer together with the statement of work done by him in Form No9 whether in his opinion the term of appointment of such counsel should be renewed or not A copy of the opinion of the District Judge should also he sent along with the recommendations of the District Officer 2Where recommendation for the extension of the term of a District Government Counsel is made for a specified period only the reasons therefore shall also he stated by the District Officer 3 While forwarding his recommendation for renewal of the term District Government Counsel i the District Judge shall give an estimate of the quality of the Counsel s work from the judicial standpoint keeping in view the different aspects of a lawyers capacity as it is manifested before him in conducting State cases and specially his professional conduct ii the District Officer shall give his report about the suitability of the District Government Counsel from the administrative point of view his public reputation in general his character integrity and professional conduct 4 If the Government agrees with the recommendations of the District Officer for the renewal of the term of the Government Counsel it may pass orders for re appointing him for a period not exceeding three years 5 If the government decides not to re appoint a Government Counsel the Legal Remembrancer may call upon the District Office r to forward fresh recommendations in the manner laid down in para 703 6 The procedure prescribed in this para shall be followed on the expiry of every successive period of renewed appointment of a 977 Dist Government Counsel Note The renewal beyond 60 years of age shall depend upon continuous good work sound integarity and physical fitness of the Counsel It was pointed out on behalf of the appellants that any legal practitioner finally selected by the Government may be appointed as District Government Counsel for one year from the date of his taking over charge but in view of Para 706 of the Manual at the end of the aforesaid period the District Magistrate after consulting the District Judge has to submit a report on his work and conduct to the Legal Remembrancer in the form prescribed If the report in respect of his workand conduct is satisfactory then such Counsel shall be furnished with a deed of engagement in form No 1 for a term not exceeding three years Para 708 of the Manual contains the procedure for renewal of the term of the District Government Counsel after the expiry of original term It requires the District Officer at least three months before the expity of the term of a District Government Counsel to report to the Legal Rmembrancer after consulting the District Judge and considering the past record of work conduct and age of such District Government Counsel If the Government agrees with the recommendation it may pass an Order re appointing him for a period not exceeding three years The stand of the appellants is that in view of Para 7062 the appointment of any legal practitioner as a District Governemnt Counsel does not automatically come to an end rather it indicates and element of continuity and that is why Para 7062 requires the District Officer at the end of period of one year to submit a report after consulting the District Judge concerned in respect of the work and conduct of such District Government Counsel to the Legal Remembrancer in a form prescribed If the report in respect of work and conduct is satisfactory then such District Government Counsel shall be furnished with a deed of engagement in a form prescribed for a term not exceeding three years As such after the period of one year if the engagement for a further period upto three years is not given it amounts to a stigma On behalf of the appellants attention of this Court was drawn to a letter addressed to the District Magistrate by Dr Nepal Singh M LC the District President of the party then in power recommending the names of other Government Counsel for renewalextension of their term It was pointed out that in respect of all those persons The District Magistrate has recommended for extension There is however no material before us to show that the District 978 Magistrate was influenced by the said letter in any manner A part form that the persons so resommended by the District Magistrate were not impleded as respondents to the Writ applications As such we are not inclined to go into this aspect The different paragraphs of the Manual aforesaid were examined in detail in the case of Kumari Shrilekha Vidyarthi vs State of U P in connection with an order dated February 6 1990 issued by the State of U P terminating the appointments of all Government Counlsel Civil Criminal and Revenue in all the districts of the State of UP with effect from February 28 1990 and directing the preparation of fresh panels for making appointments in places of the existing incumbents while quashing such general order it was said Viewed in any manner the impugned circular dated February 6 1990 is arbitrary It terminates all the appointments of Government Counsel in the districts of the State of Uttar Pradesh by an omnibus order even though these appointments were all individual No common reason applicable to all of them justifying their termination in one stroke on a reasonable ground has been shown The submission on behalf of the State of UttarPradesh at the hearing that many of them were likely to be re appointed is by itself ample proof of the fact that there was total non application of mind to the individual cases before issuing the general order terminating all the appointments This was done in spite of the clear provisions in the L R manual lying down detailed procedure for appointment termination and renewal of tenure and the requirement to first consider the existiong incumbent for renewal of his tenure and to take steps for a fresh appointment in his place only if the existing incumbent is notfound suitable in comparison to more suitable persons available for appointment at the time of renewal In the case of existing appointees a decision has to be first reached about their non suitability for renewal before deciding to take steps for making fresh appointments to replace them None of these steps were taken and no materialhas been produced to show that any existing incumbent was found unsuitable for the office on objective assessment before the decision to replace all by fresh appointees was taken The prescribed procedure laid down in the LR Manual which has to regulate exercise of this power was tatally igonered In the present case it appears to be an admitted position that appointments of the appellants as assistant District Government Counsel Criminal is governed 978 979 LM0 by Section 24 of the Code as well different paragraphs of Chapter VII of the Manual It was not disputed on behalf of the State that appellants shall be deemed to be Additional Public Prosecutors within the meaning of Section 24 of the Code although in the order of appointment they have been designated as Assistant District Government Counsel Criminal The procedure prescribed in the Manual can be observed and followed as supplemental to the provisions of Section 24 of the Code Needless to say that if there is any conflict then Section 24 of the Code being statutory in nature will override the procedure prescribed in the Manual The relevant part of Section 24 is as such 24 Public Prosecutors 1 For every High Court the Central Government of the State shall after consultation with the High Court appoint a Public Prosecutor and may also appoint one or more Additional Public Prosecutors for conducting in such Court any prosecutionappeal or other proceedings on behalf of the Central Government or State Government as the case may be 2 3 For every district the State Government shall appoint a Public Prosecutor and may also appoint one or more Additional Public Prosecutors for the district Provided that the Public Prosecutor or Additional Public Prosecutor appointed for one district may he appointed also to be a Public Prosecutor as the case may be for another district 4The District Magistrate shall in consultation with the Sessions Judge prepare a panel of names of persons who are in his opinion fit to he appointed as Public Prosecutors or Additional Public Prosecutors for the district 5 No Person shall be appointed by the State Government as the Public Prosecutor or Additional Public Prosecutor for the district unless his name appears in the panel of names prepared by the District Magistrate under sub section 4 The Code prescribes the procedure for appointment of Public Prosecutor and Additional Public Prosecutor for the High Court and the District Courts by the State Government The framers of the Code were conscious of the fact that the Public Prosecutor and the Additional Public Prosecutor have an important role 980 while prosecuting on behalf of the State accused persons who are alleged to have committed one or the other offence Because of that provisions have been made for their selection in the Code It is for the Sessions Judge to assessee the merit and professional conduct of the persons recommended for such appointments and the District Magistrate to express his opinion on the suitability of persons so recommended from the administrative point of view Sub section 5 of Section 24 provides that no person shall be appointed by the State Government as the Public prosecutor or as an Additional Public Prosecutor unless his name appears in the panel of names prepared by the District Magistrate under sub section 4 The aforesaid section requires an effective and real consultation between the Sessions Judge and the District Magistrate about the merit and suitability of person it he appointed as Public Prosecutor or as an Additional Public Prosecutor That is why it requires a panel of names of persons to be prepared by the District Magistrate in consultation with the Sessions Judge The same is the position so far the Manual is concerned It enumerates in detail how for purpose of initial appointment extension or renewal the District Judge who is also the Session Judge is to give his estimate of the quality of the work of the Counsel from the judicial Standpoint and the District Officer ie the District Magistrate is to report about the suitability of such person from administrative point of view On behalf of the State our attention was drawn to the expression in his opinion occurring in sub section 4 of Section 24 of the Code It was urged that as the Code vests power in the District Magistrate to consider the suitability of the person concerned for appointment according to his opinion there is not much scope of judicial review by Courts unless a clear case of malice on the part of the District Magistrate is made out In view of the series of judgments of this Court in Barium Chemicals Ltd vs Company Law Board State of Assam Bhatrai Kala Bhandar Ltd AIR Rohtas Industries Ltd vs SD Agarwal The Purtapur Company Ltd vs Cane Commissioner of Bihar AIR 1970 SC 1896 and MA Rasheed vs The State of Kerala it is almost settled that although power has been vested in a particular authority in subjective term still judicial review is permissible In the present case the District Session Judge strongly recommended extension for the appellants saying that so far their work and conduct were concerned the same had been approved But the District Magistrate simply said that on the inquiry at his level reputation professional work behaviour and conductor the appellants as government counsel was not found in accordance with the public interest The quality of the Counsel work has to be judged and assessed 981 by the District Sessions Judge The District Magistrate is required to consider the suitability of such person from the administrative point of view According to us in view of the strong recommendation about the quality of the appellants professional work the District Magistrate should have applied his mind in consultation with the Sessions Judge in respect of each individual case instead of making a general and identical comment against all the appellants Apart from that the mandate of sub section 4 of Section 24 is that the District Magistrate shall in constitution with the Session Judge prepare a panel of names of persons Sub section 5 of Section 24 prescribes a statutory bar that no person shall be appointed by the State Government as the Public Prosecutor or Additional Public Prosecutor for the district unless his name appears in the panel of names prepared by the District Magistrate under sub section 4 When sub section 4 and sub section 5 of Section 24 of the Code speak about preparation of a panel out of which appointments against the posts of Prosecutor or Additional Public Prosecutor have to he made then the Sessions Judge and the District Magistrate are required to consult and discuss the names of the persons fit to be included in the panel and to include such names in the panel The expressions panel of names of persons do not mean that some names are to be suggested by the Sessions Judge and some comments are to be made in respect of those names by the District Magistrate without proper consultation and discussion over such names The statutory mandate ought to have been complied with by the District Magistrate and the Sessions Judge in its true spirit In the facts of the present case no such panel appears to have been prepared by the District Magistrate in terms of sub section 4 of Section 24 As Section 24 of the Code does not speak about extension or renewal of the term of the person so appointed the same procedure as provided under sub section 4 of Section 24 of the Code has to be followed In the present case the District Magistrate instead of having an effective and real consultation with the District Sessions Judge simply made some vague and general comments against the appellants which cannot be held to he the compliance of the requirement of subsection 4 of Section 24 In the case of Kumari Shrilankha Vidyarthi supra this Court was not concerned with the question regarding the extensionrenewal of the terms of the Government Counsel The primary question which was examined by this Court in that case was as to whether it was open to the State Government by the impugned circular dated February 6 1990 to terminate appointments of all the Government Counsel in the different districts of the State by an omnibus order even though those appointments were all individual It was held that any such exercise of power by the State Government cannot satisfy the test of Article 14 of the Constitution 982 and as such was unreasonable and arbitrary In that connection reference was made to the Manual aforesaid and it was pointed out that the said Manual has laid down detailed procedure for appointment termination and renewal of the tenure of the District Government Counsel It was pointed out that different paragraphs of the Manual require first to consider the existing incumbents for extension and renewal of their tenure and to take steps for fresh appointment in their place if the existing incumbents were not found suitable in comparison to more suitable persons available for appointment at the time of the renewal As already mentioned above Section 24 of the Code does not speak about the extension or renewal of the term if the Public Prosecutor or Additional Public Prosecutor But after the expiry of the term of the appointment of persons concerned it requires the same statutory exercise in which either new persons are appointed or those who have been working as Public Prosecutor or Additional Public Prosecutor are again appointed by the State Government for a fresh term The procedure prescribed in the Manual to the extant it is not in conflict with the provisions of Section 24 shall he deemed to be supplementing the statutory provisions But merely because there is a provision for extension or renewal of the term the same cannot he claimed as a matter of right It is true that none of the appellants can claim as a matter of right that their terms should have been extended or that they should be appointed against the existing vacancies but certainly they can make a grievance that either they have not received the Pair treatment by the appointing authority or that the procedure prescribed in the Code and in the Manual aforesaid have not been followed While exercising the power of judicial review even in respect of appointment of members of the legal profession as District Government Counsel the Court can examine whether there was any infirmity in the decision making process Of course while doing so the Court cannot substitute its own judgment over the final decision taken in respect of selection of persons for those posts It was said in the case of Chief Constable of the North Wales Plice vs Evans1982 The purpose of judicial review is to ensure that the individual receives fair treatment and not to ensure that the authority after according Pair treatment reaches on a matter which it is authorised or enjoined by law to decide for itself a conclusion which is correct in the eyes of the court In the facts of the present case the procedure prescribed by Section 24 of the Code have not been followed by the District Magistrate There is nothing on the 983 records of the case to show that any panel as required by sub section 4 of Section 24 was prepared by the District Magistrate in consultation with the District Sessions Judge The District Magistrate simply made some general comment in respect of the appellants When the District Sessions Judge had put them in List A of his recommendation According to us this shall not amount to either the compliance of sub section 4 of Section 24 of the Code or Para 7062 of the Manual It appears there has been no effective or real consultation between the Sessions Judge and the District Magistrate for preparation of the panel as contemplated by sub section 4 of Section 24 of the Code The members of the legal profession are required to maintain high standard of legal ethics and dignity of profession They are not supposed to solicit work or seek mandamus from courts in matters of professional engagements We have been persuaded to interfere in these matters to a limited extent as we are satisfied that there is patent infraction of the statutory provisions of the Code As we are of the view that the District Magistrate has not performed his statutory duty as enjoined by law the appeals of the appellants have to be allowed In the result the appeals are allowed We direct the District Magistrate Moradabad to perform his statutory duty afresh in accordance with the requirement of Section 24 of the Code read with the relevant paragraphs of Chapter VII of the Manual which are not inconsistent with Section 24 of the Code so far the appellants are concerned if the vacancies are still there The necessary steps shall be taken preferably within four months from the date of this judgment the State Government shall thereafter perform its part in accordance with Section 24 and different paragraphs of the Manual which are applicable in the facts and circum stances of the case We make it clear that we are not expressing any opinion on the merit of the claim of the appellants to get extension or appointment against the posts of Assistant District Government Counsel Criminal There will he no order as to costs CIVIL APPEALS NOS 386 387 OF 1993 So far the appellants of these appeals are concerned their names were put under List B by the District Sessions Judge in his recommendation saying that they were average lawyers Their case stands on a different footing The District Sessions Judge who is required to express his opinion on the merit and the conduct of the persons recommended for appointment or extension of the period 984 as District Government Counsel has expressed the opinion that appellants are average lawyers and has put them in List B In other words neither the District Sessions Judge has recommended the case of the appellants of these appeals for extension nor the District Magistrate Their case cannot be treated at par with the appellants of the other appeals In such as situation no useful purpose will be served by directing the District Magistrate to perform his statutory duty as required by sub section 4of Section 24 of the Code again even the respect of these appellants Accordingly these appeals are dismissed there will be no orders as to costs VPR CA Nos 722 and 72393 allowed CA Nos 386 and 38793 dismissed

The respondent state in the process of overhauling the methodology of teaching and administration of teachers training institutes in order to achieve qualitative excellence in teacher education amended the Tamil Nadu Minority Schools Recognition and Payment of Grant Rules 1977 by GO No536 dated 17 5 1989 and No 661 dated 12 6 1991 The Rules besides providing for instructions teaching practice to be followed and minimum qualification for the staff prescribed certain other conditions regarding landbuilding hotel 986 furniture library teaching appliances sports facilities recognised middle school for providing teaching practice to trainees etc to be satisfies by a teachers training institute to qualify for grant of recognition The appellantpetitioners are various Teachers Training Institute in the State of Tamil Nadu claiming to be minority educational institutions in terms of Article 301 of the Constitution of India The State Government declined to recognise these institutions on the ground that they failed to sutisfy the conditions for grant of recognition as provided under the Recognition Rules The appellantspetitioners filed writ petitions before the High Court challenging the validity of the Recognition Rules on the ground that the same were violative of Articles 301 and 14 of the Constitution It was contended that as the minorities have a fundamental right under r Article 301 of the Constitution to establish and administer educational institutions of their choice the conditions provided under the recognitions Rules were wholly arbitrary and were designed to oust the appellants from the educational field and the the provisions were so onerous that it was difficult rather impossible to comply with the same The High Court dismissed the writ petitions The appellantspetitioners filed the appeals and the special leave petitions It was contended on behalf of the appellants that the Rules could not be made applicable to the institutions already established and given recognition by the State Government under the directions of the Court and that the successful students of these institutions who had taken examinations be given certificates This Court dismissed the appeals and the special leave petitions by its order dated 25 5 1993 indicating that reasons therefor would follow Giving reasons for its order dated 25 5 1993 this Court HELD 1 The High Court was right in holding that none of the conditions for grant of recognition to teachers training institutes prescribed under the Tamil Nadu Minority Schools Recognition and Payment of Grants Rules 1977 infracted Articles 14 301 of the Constitution It rightly culled out the following principles i The fundamental right declared by Article 301 of the Constitution is absolute in terms but subject to regulatory measures 987 iiThere is no fundamental right under Article 191 gof the Constitution to establish or administer an educational institution if recognition is sought therefore iii The institutions must he educational institutions of the minorities in truth and reality and not mere masked phantoms iv There is no fundamental right to recognition and an institution seeking recognition should abide by the regulations prescribed by the State as conditions therefor v The minority institutions must be fully equipped with educational excellence to keep in step with other institutions in the State vi The regulations framed by the State cannot abridge the fundamental right of the minorities and they should be in the interests if the minority institutions themselves and not based on State necessity or general societal necessities vii The regulations should be with a view to promoting excellence of educational standards and ensuring security of the services of teachers and other employees of the institutions and in the true interests of efficiency if institutions discipline health sanitation morality public order and the like viii Even unaided institutions are not immune from the operations of general laws of the land such as Contract Law Tax measures Economic Laws and Social Welfare legislations Labour and Industrial Laws and similar other laws which are intended to meet the need of the Society Kerala education bill1959 SCR 995 Rev Sidhajbai Sabhai section vs State of Bombay and Anr1963 3 SCR 837 section Azeesh Basha vs Union of India State o Kerala etc vs Very Rev Mother Provincial etc Regina vs St Alosius Higher Elementary School and Anr1971 Supp SCR 6 The Ahmedabad St Xaviers College Society and Anr etc vs State of Gujarat and Anr1975 1 SCR 173 The Gandhi Faiz e am College Shajahanpur University of Agra and Anr1975 2 SCC 283 Lilly Kurian vs Sr Lewina and 988 Ors1979 1 SCR 320 All Saints High School Hyderabad etc vs Government of Andhra Pradesh Ors etc The Managing Board of the Milli Talimi Mission Bihar Ranchi Ors vs The State of Bihar Ors AP Christians Medical Educational Society vs Government of Andhra Pradesh and Anr1986 2 SCC 667 Frank Anthony Public School Employees Association vs Union of India and Ors 19864 SCC 707 All Bihar Christian Schools Association and Anr vs State of Bihar and Ors St Stephon s College vs The University of Delhi JT1991 4 SCC 548 and Unni Krishnan and Anr vs State of Andhra Pradesh and Ors cited 21 The teacher education programme has to he redesigned to bring in a system of education which can prepare the student teacher to shoulder the responsibility of imparting educating with a living dynamism and the traditional pattern of chalk talk and teach method has to be replaced by more vibrant system with improved methods of reaching to achieve qualitative excellence in teacher education NM Nageshwaramma vs State of Andhra Pradesh Anr 1986 Supp SCC 166 Andhra Kesari Education Society vs Director of School Education Ors and State of Maharashtra vs Vikas Sahebrao Roundale Ors JT1992 5 SC 175 relied on 22 It is entirely for the State Government and not for this Court to lay down the requirements of a teachers training institute campus All those institutes which did not have permanent recognition before the issue of the Recognition Rules 1977 are bound to comply with the said conditions before they are entitled to permanent recognition The High Court was Justified in holding that the institutions which were operating on the basis of temporary recognitions either under the orders of the Courts or otherwise shall have to comply with the recognition rules to enable them to earn recognition These institutions are neither properly organised nor fully equipped to train the teachers and have done more harm than good to the cause of education 31 In view of the series of the judgments of this Court the Courts should not issue fiat to allow the students of unrecognised institutions to appear the different examinations pending the disposal of the writ applications Such interim orders affect the career of several students and cause unnecessary embarrassment and harassment to the authorities who have to comply with such directions of the Courts 989 AP Christians Medical Educational Society vs Government of Andhra Pradesh relied on 32 The High Court should not have passed interim orders directing authorities concerned to allow the teachers of unrecognised institutions to appear at the examinations It is a matter of common knowledge that many institutions claiming themselves to be minority institutions within the meaning of Article 301 of the Constitution invoke the jurisdiction of the High Court under Article 226 or of this Court under Article 32 for a writ of mandamus to recognise the institutions as minority institutions only when the dates for examinations are notified and as a part of strategy seek directions to allow meanwhile the students to appear at the examinations Many of such institutions are not only masked phantoms but are established as business ventures for admitting sub standard students without any competitive tests on basis of considerations which cannot serve even the interest of the minority The teachers of such institutions cannot derive any benefit on basis of interim orders when ultimately the main writ applications have been dismissed As such no equity or legal right can be pleaded on behalf of the students admitted for traning by such minority institutions for publication of their results or award of certificates AP Christians Medical Educational Society vs Government of Andhra Pradesh and State of Tamil Nadu and others vs St Joseph Teachers Training Institute and another relied on

Appeal No 1690 of 1993 From the Judgment and Order dated 1421991 of the Central Administrative Tribunal Jabalpur in OA No 217 of 1987 MK Ramamurthi and VJ Francis for the Appellants Narayan B Shetye K Lahiri Vineet Kumar Ms Sushma Suri Ms Kitty Kumar Mangalam SN Terdo and BK Prasad for the Respondents The Judgment of the Court was delivered by KULDIP SINGH J Special leave granted This appeal is a sequel to the checkered litigation over a period of two decades between members of the Indian Ordnance Factories Class III Service the Service The first round of litigation was concluded in favour of KKM Nair and others the appellants on July 281986 when the special leave petitions filed by the Union of India against the judgment of Madhya Pradesh High Court were dismissed by this court As a consequence the Director General Ordnance Factories DG issued an order dated February 2025 1987 granting benefits to the appellants towards seniority 909 in different grades of the Service SK Chattopadhyay and others the respondents who were not parties to the earlier litigation challenged the order dated February 2025 1987 before the Central Administrative Tribunal The Tribunal by its judgment dated February 141991 allowed the application of SK Chattopadhyay and others and set aside the order dated February 2025 1987 This appeal by KKM Nair and others is against the judgment of the Central Administrative Tribunal Jabalpur The recruitment and seniority of the members of the Service are governed by the statutory rules called Indian Ordnance Factories Recruitment and Conditions of Service of Class III Personnel Rules 1956 the rules Rules 31 8 and 12 of the rules which are relevant are reproduced hereunder 31 The Class III personnel service in the Indian Ordnance Factories to which these rules shall apply consists of the posts of the following grades namely Foreman including ForemanDesign Storeholder Assistant Foreman Assistant Storeholder Chargeman Grade I including Chargeman Grade IDesign Chargeman Grade II Supervisor Grade A Supervisor Grade B 81 Appointments by promotion shall be made by the Director General on the basis of selection lists prepared for the different grades by the duly constituted Depart mental Promotion Committees 2 Such Selection lists shall be prepared 910 a In respect of appointment to the grade of Foreman Storeholder Assistant Foreman Assistant Storeholder by the Departmental Promotion Committee 11 consisting of the Director General and two officers of the Directorate General Ordnance Factories nominated by the Director General b In respect of appointments to the grade of Chargeman Grade I and Chargeman Grade 11 by the Departmental Promotion Committee III Central consisting of the Deputy Director General Ordnance Factories and two officers of the Directorate General Ordnance Factories nominated by the Director General after perusal of the recommendations of the Departmental Promotion Committee III Factories which shall be set up in each Factory and shall consist of the Superintendent of the Factory and two other gazetted officers of the Factory nominated by the Director General and c In respect of appointments to the grades of Supervisor A and B Grades by the Departmental Promotion Committee III Factories consisting of the Superintendent of the Factory and two other gazetted officers of the Factory nominated by the Director General 3 The Departmental Promotion Committee shall meet periodically at least once a year and as more often as may be necessary and shall prepare for each grade and category in order of merit a list of names of persons considered at for promotion 4 A vacancy to be filled by promotion shall be filled by persons on the approved list strictly in the order in which names are arranged in that list provided that i appointments to the grade of Supervisors Grade A shall normally be confined to employees in the particular Factory in which the Vacancy has arisen and ii in respect of appointment to other posts the next 911 person on the list working in the Factory in which the vacancy has arisen may be appointed out of turn if the vacancy is not likely to last for more than nine months No appointment to the posts to which these rules apply shall be made otherwise than as specified in these rules Appellants 1 6 11 and 12 were appointed Supervisor Grade B during the years 196162 The remaining appellants were appointed Supervisor Grade A during the period 196465 Appellants 1 to 11 were promoted as Chargeman Grade II on different dates during 197277 They were promoted to Chargeman Grade I during the years 197980 They were further promoted to the post of Assistant Foreman during the period 1981 to 1984 SK Chattopadhyay and others are respondents 4 to 9 in this appeal Respondents 4 and 5 joined as Chargeman Grade II in the year 1966 respondent 9 in the year 1967 respondent 6 in the year 1971 and respondents 7 and 8 in the year 1974 They were promoted to Chargeman Grade I during the years 19781979 Respondents 4 to 9 were further promoted to the post of Assistant Foreman during the period from 1980 to 1984 It is not disputed that the recruitment and promotions of the appellants and respondents were made in accordance with the rules It is necessary to lay down the factual matrix which led to the passing of the order dated February 2025 1987 by the DG The DG issued circular dated November 6 1962 first circular which is reproduced hereunder DGOF has decided that Diploma holders serving as Supervisor A TechSupervisor B Tech and in equivalent grades should be treated as follows i All those Diploma holders who have been appointed as Supervisor B Tech and in equivalent grades should on completion of one year s satisfactory service in ordnance factories be promoted to Supervisor A Tech and in equivalent grades ii All those Diploma holders who work satisfactorily as Supervisor A Tech or in equivalent grades for 2 years in Ordnance Factory should be promoted to Chargeman 912 Subsequently the DG issued circular dated January 20 1966 second circular The operative part of the second circular is as under The question of promotion of Diploma holders in MechElec Engineering and Ex apprentices serving as Supr A Gr or in equivalent grades has received further consideration of the DGOF who has decided that in future promotions of all such individuals will be effected in accordance with the normal rules ie on the basis of their listing by the relevant DPC and not merely on completion of 2 years satisfactory continuous service as Super or equivalent grades It is thus obvious that after the issue of second circular no Supervisor Grade A could claim to have become eligible for promotion merely on completion of two years satisfactory service and his promotion thereafter could be effected only in accordance with the rules In a nut shell the first circular was withdrawn by the second circular Seventy Five supervisors Grade A other than the appellants and the respondents before us filed a writ petition in the Allahabad High Court in the year 1972 claiming benefit of the first circular Their grievance was that they were not being promoted to the post of Chargeman Grade 11 on completion of two years satisfactory service even though large number of Supervisors Grade A had already been promoted in terms of the first circular The writ petition was contested by the Union of India inter alia on the ground that under rule 8 of the rules promotion from Supervisor Grade A to Chargeman Grade II was to be made on the basis of selection In the first instance the selection was to be made by the Departmental Promotion Committee at the Factory level and thereafter by the Departmental Committee at the central level The promotions were to be made by the DG on the basis of the select list prepared as a result of the selections made by the two committees It was further asserted that all the writ petitioners were considered for promotion in accordance with the rules but they were not found fit for promotion The learned Single Judge of the Allahabad High Court however did not go into the merits of the controversy and dismissed the writ petition on the ground of delay Against the judgment of the learned Single Judge appeal was preferred before a Division Bench of the High Court The Division Bench went into the merits 913 of the controversy and came to the conclusion that promotion from Supervisor Grade A to Chargeman Grade II could only be made in accordance with the procedure laid down under the rules The learned Judges further took the view that the first circular was to be interpreted in conformity with the rules It was further held that even if it was to be assumed that the DG promoted some Supervisors Grade A to the post of Chargeman Grade II immediately on the completion of two years service without following rule 8 of the rules no right would accrue in favour of the writ petitioners inasmuch as such promotions would be contrary to the rules and would confer no legal right on the writ petitioners for likewise promotion in breach of the rules The argument based on Article 16 was also rejected The Division Bench of the Allahabad High Court thus dismissed the writ petition on merits Against the judgment of the Allahabad High Court Civil Appeal No 441 of 1981 was preferred in this Court Since the order dated February 2 1981 passed in Virendra Kumar Ors vs Union of India and Ors Civil Appeal No 44181 is the backbone of the appellants claim we reproduce the said order hereunder Heard counsel Special leave granted Our attention has been invited by learned counsel for both the sides to the relevant rules which govern promotion to the post of Chargeman Grade 11 It appears that a large number of persons have been promoted to those posts though they have completed only two years of service The Government now appears to insist that in so far as the appellants are concerned they cannot be considered for promotion unless they complete three years of service We see no justification for any such differential treatment being given to the appellants If a large number of other persons similarly situated have been promoted as Chargeman Grade 11 after completing two years of service there is no reason why the appellants should also not be similarly promoted after completing the same period of service We are not suggesting that the appellants are entitled to be promoted to the aforesaid posts even if they are found unfit to be promoted We therefore direct that the concerned authorities will 914 consider the cases of the appellants for promotion as Chargeman Grade 11 and promote them to the said posts unless they are found to be unfit If the appellants are promoted they will naturally have to be promoted with effect from the date on which they ought to have been promoted This order will dispose of the appeal There will be no order as to costs Thereafter KKM Nair and 124 others the appellants filed six writ petitions before the Madhya Pradesh High Court during the period 1981 82 It was contended before the High Court that the reasons which weighed with this Court in allowing Civil Appeal No 44181 applied to the six writ petitions also and it was prayed that the same relief be granted to the petitioners The Madhya Pradesh High Court relying upon the judgment of this Court in Civil Appeal No 44181 allowed the writ petitions by its judgment dated April 4 1983 Against the aforesaid judgment of the Madhya Pradesh High Court special leave petitions Civil Nos 5987 9286 were filed in this Court by the Union of India and were dismissed on July 28 1986 Pursuant to the judgment of the Madhya Pradesh High Court dated April 4 1983 the DG issued the order dated February 2025 1987 giving ante dated seniority to the appellants for the purposes of promotion to the next higher grades The appellants were thus given deemed dates of promotion to the post of Chargeman Grade 11 from the date when they completed two years of service as Grade A and consequent seniority in the other higher grades SK Chattopadhyay and others who were senior to the appellants in the cadre of Chargeman Grade 11 and other higher grades in the service were made junior to the appellants as a consequence of the order dated February 2025 1987 At this stage we may notice the judgment of this Court in Palun Ramkrishnaiah Others etc vs Union of India Anr delivered by a Three Judge Bench of this Court dismissing a bunch of nineteen writ petitions under Article 32 of the Constitution of India The petitioners in the aforementioned writ petitions claimed to have been appointed as Supervisors Grade A in various ordnance factories between 1962 to 1966 and had filed the writ petitions with the prayer that the same relief be granted to them as was given by this Court to seventy five 915 Supervisors Grade A in Civil Appeal No 441 of 1981 This Court in Paluru s case considered the rules the first circular the second circular and the order of this court in Civil Appeal No 44181 dated February 2 1981 Dismissing the writ petitions this Court held as under 1 The executive instruction could make a provision only with regard to a matter which was not covered by the rules and such executive instruction could not over ride any provisions of the rules Notwithstanding the issue of the instructions dated November 6 1962 the procedure for making promotion as laid down in rule 8 of the Rules had to be followed and the said procedure could not be abrogated by the executive instructions dated November 6 1962 The only effect of the circular dated November 6 1962 was that Supervisors Grade A on completion of two years satisfactory service could be promoted by following the procedure contemplated by rule 8 of the Rules This circular had indeed the effect of accelerating the chance of promotion The right to promotion on the other hand was to be governed by the rules This right of promotion as provided by the rules was neither affected nor could be affected by the circular After coming into force of the circular dated January 20 1966 promotions could not be made just on completion of two years satisfactory service tinder the earlier circular dated November 6 1962 the same having been superseded by the latter circular Supervisor Grade A who had been promoted before the coming into force of the circular dated January 20 1966 stood in a class separate from those whose promotions were to be made thereafter The fact that some Supervisors Grade A had been promoted before the coming into force of the circular dated January 20 1966 could not therefore constitute the basis for an argument that those Supervisors Grade A whose cases came up for consideration thereafter and who were promoted in due course in accordance with the rules were discriminated against There are sufficient indications that when Civil Appeal No 44181 was heard by this Court the circular dated January 20 1966 and the legal consequences flowing therefrom were not brought to the notice of this Court by the learned counsel for the respondents or the same were not 916 properly emphasised It is thus obvious that the Three Judge Bench of this Court in Paluru s case did not approve the order dated February 2 1981 of Two Judge Bench in Civil Appeal No 44181 Since the judgment of this Court in Civil Appeal No 44181 had become final inter partes it had to be implemented While considering the extent of the relief to be given to the appellants in Civil Appeal No 44181 this Court in Paluru s case observed as under As already noticed earlier certain writ petitions filed in Madhya Pradesh High Court were allowed by that Court were allowed by that Court on 4th April 1983 relying on the judgment of this Court dated 2nd February 1981 in Civil Appeal No 44181 Against th e aforesaid judgment of the Madhya Pradesh High Court dated 4th April 1983 Special Leave Petitions Civil Nos 5987 92 of 1986 were filed in this Court by the Union of India and were dismissed on 28th July 1986 The findings of the Madhya Pradesh High Court in its judgment dated 4th April 1983 thus stand approved by this Court In this view of the matter to put them at par it would be appropriate that the appellants in Civil Appeal No 441 of 1981 may also be granted the same relief which was granted to the petitioners in the writ petitions before the Madhya Pradesh High Court The appellants have raised an argument based on the above quoted observations of this Court in Paluru s case which we shall consider at a later stage in this judgment We may come back to the point of time when the Director General issued the order dated February 2025 1987 giving ante dated seniority to the appellants in various grades of the service As mentioned above SK Chattopadhyay and others were not impleaded as parties at any stage of the litigation earlier to the issue of the said orders They were adversely affected in the matter of seniority for the first time by the order dated February 2025 1987 SK Chattopadhyay and others challenged the said order before the Central Administrative Tribunal Jabalpur Bench The 917 Tribunal by its judgment dated February 14 1991 allowed the application of SK Chattopadhyay and others and set aside the order dated February 2025 1987 giving ante dated seniority to the appellants We agree with the conclusions reached by the Tribunal though we do not appreciate the reasoning adopted by the Tribunal in reaching the said conclusions This Court has authoritatively laid down in Paluru s case that Civil Appeal No 44181 was not correctly decided by this Court The appellants have through out been basing their claim on the order dated February 21981 in Civil Appeal No 44181 Once the base is knocked out by the judgment of this court in Paluru s case the appellants are left with no ground to sustain the order dated February 2025 1987 by which they were given ante dated seniority Following the judgment of this Court in Paluru s case and the reasoning therein we uphold the impugned judgment of the Central Administrative Tribunal Jabalpur Mr MK Ramamurthy learned counsel for the appellants has vehemently argued that the judgment dated April 4 1983 by the Madhya Pradesh High Court in favour of the appellants having been approved by this Court in Palunt s case the Tribunal had no jurisdiction to negate the same We do not agree with the learned counsel We have reproduced above the paragraph from the judgment in Paluru s case wherein this Court has observed findings of the Madhya Pradesh High Court in its judgment dated 4th April 1983 thus stand approved by this Court It is not disputed that the said approval by this Court was by dismissing the special leave petitions against the judgment of the Madhya Pradesh High Court There is no reasoned judgmentorder by this Court approving the judgment of the Madhya Pradesh High Court It is not necessary for us to go into the question whether in a situation like this any court below could have reversed the judgment by review or otherwise because in this case we are faced with different situation SK Chattopadhyay and others were not parties to the proceedings before the Madhya Pradesh High Court which ended by the dismissal of the special leave petitions by this Court on July 28 1986 Till that date no action adverse to them had been taken by the DG or any other authority It was incumbent on the appellants to have impleaded all the persons who were likely to be adversely affected in the event of appellants success in the writ petition before the Madhya Pradesh High Court Under the circumstances 918 even if it is assumed that the Madhya Pradesh High Court judgment had become final and could not have been reviewed by the High Court or the Tribunal it became final only between the parties inter se The first circular was issued in the year 1962 The appellants filed writ petitions in the Madhya Pradesh High Court twenty years thereafter seeking enforcement of the first circular The petitioners wanted the clock to be put back by two decades through the process of the Court All those persons who were promoted in accordance with the rules during that long period and were not parties before the Madhya Pradesh High Court cannot be made to suffer for no fault of theirs On the other hand SK Chattopadhyay and others challenged the order dated February 2025 1987 which affected them adversely within the period of limitation before the Central Ad ministrative Tribunal In any case the judgment of this Court in Civil Appeal No 441 of 1981 having been over ruled by Three Judge Bench of this Court in Paluru s case the appellants have neither the law nor the equity on their side The judgment of the Tribunal being in conformity with the law laid down by this Court in Paluru s case we see no ground to interfere with the same Before parting with this judgment we may mention that because of contradictory judgments of various courts and Central Administrative Tribunals in the country the seniority position of the members of the service all over the country numbering about twenty thousand could not be crystallised over a period of two decades We have been informed by the Union of India that the Central Administrative Tribunals all over the country have by and large taken uniform view following the judgment of this Court in Paluru s case and the seniority lists have been issued in conformity therewith It has been a long drawn out battle in the court corridors causing lot of expense and suffering to the members of the service We hope that this judgment has finally drawn the curtains over the con troversy The appeal is therefore dismissed No costs GN Appeal dismissed

There were two parallel Services of Engineers in the Indian Railways One was the Indian Railways Service of Engineers Class I who were subjected to competitive written and personality tests and appointed by the President of India The other Service was the temporary Assistant Engineers later known as Temporary Assistant Officers appointed by the Railway Board on selection based on interview alone In addition to the minimum educational qualifications which was the same for both the services three years experience as Civil Engineer was required for the Railway Service of Engineers The temporary Assistant Officers were gradually absorbed into the Indian Railway Service of Engineers and the Railway Board took a decision that they would be given weightage in seniority on the basis of half the total length of continuous service in working posts in Railways prior to their permanent absorption into Class I subject to a maximum weightage of five years Writ Petitions were filed in this Court by the Federation of Temporary Officers Association in a representative capacity seeking relief in their seniority status This Court dismissed the Writ Petitions holding that the classification of temporary Assistant Officers separate from the Indian Railway Service 1019 Engineers Class I was neither discriminatory nor violative of Articles 14 and 16 of the Constitution and that the object of recruitment methods of recruitment appointing authority and training imparted being different no question of their entitlement to equal rights arose fill they were absorbed into the Indian Railway Service of Engineers Class 1 This Court also approved the measures of the Railway Board in regard to giving weightage of half the length of service as temporary Assistant Officers subject to a maximum of five years Their claim for equal status for equal pay and equal work was also rejected Katyani Dayal Ors vs U01 In the present Writ Petitions and Civil Appeals filed in a representative capacity the relief claimed were on the same lines as in Katyani Dayals case As directed by this Court the affected parties were impleaded in their representative capacity so that the decision of this Court would he binding on every member of both the classes of employees On behalf of the PetitionersAppellants it was contended that equal pay for equal work with equality in all other conditions of service including avenues of confirmation absorption promotion pension and security have become inflexible postulates of service jurisprudence The respondents contended that what was being asked was a virtual review of Katyani Dayal s case which could not be permitted It was also contended that principles of constructive res judicata would bar the re agitation of the issues decided in Katyani Dayal s case if not the strict principles of res judicata and that when the matter has been settled in this particular service its unsettling by means of a petition under Article 32 of the Constitution was impermissible Dismissing the matters this Court HELD 1 The distinction between the two services was well marked in Katyani Dayal s case and the important question of equality was once for all settled To find fault with it at this juncture again on the touch stone of equality dimension would be to unsettle a settled position That venture is neither in the interest of justice nor in the interest of service When there has been complete absorption of the personnel of one service into the other and the seniority of the absorbers is to he reckoned from their date of absorption as stipulated in their appointment letters with weightage of half the length of 1020 service subject to a maximum of give years it would otherwise be imprudent now at this point of time to dig up old issues The rule or weightage also appears to be reasonable and this is a pattern which has been noticed and approved In many a Service Similarly when the dispute raised between the Officers in a representative capacity and Engineers riot so represented still it was a dispute raised before this Court which has been decided finally 1026 B D Katyani Dayal Ors vs Union of India Ors1980 3 SCR 139 referred to The dispute now sought to he raised under Article 32 of the Constitution between the Officers in a representative capacity and Engineer across also in a representative capacity is barred by principles of res judicata as also by the rule of Constructive res judicata 1026 D E 3 It cannot he said that the State is prohibited from creating separate channels of service Equally when absorption had been made possible and its pace quickened with weight age it is difficult to find fault with the scheme at this point of time to look for a substitution as that would unsettle a settled position established more than a decade ago 1026 E F Direct Recruit Class II Engineering Officers Association vs State of Maharashtra Others followed Raghunandan Prasad Singh vs Secretary Home Police Department Government of Bihar and Ors Dr OZ Hussain vs Union of India1990 Supp SCC 688 referred to

Appeal Nos 2919 20 of 1981 From the Judgment and Order dated 1591981 of the Calcutta High Court in Civil Rule No3567 W of 1981 section Murlidhar Rathin Das and RF Nariman for the Appellant SS Ray SM Jain AP Dhamija Sudhanshu Atreya BK Jain SK Jain and PK Mukherjee for the Respondents The Judgment of the Court was delivered by KASLIWAL J Both the above appeals by grant of special leave are directed against the common order of the High Court dated 1591981 as such the same are disposed of by one single order The respondent Messrs Singel Tea and Agricultural Industries Limited a private limited company incorporated under the in short The Company filed a writ petition under Article 226 of the Constitution in the High Court on 2241981 challenging the order dated 1641981 issued by the Collector Darjeeling whereby possession of the tea garden known as Ms Singell Tea Estate were taken over with effect from 1641981 In view of the fact that the West Bengal Tea Development Corporation Limited a Government Company in short The Corporation had been handed over the possession of the tea garden on 2141981 the said Corporation was also impleaded as a party respondent The State of West Bengal enacted The West Bengal Estates Acquisi 882 tion Act 1953 hereinafter referred to as The Act to provide for the State acquisition of estates of rights of intermediaries therein and of certain rights of raiyats and under raiyats and of the rights of certain other persons in lands comprised in estates The State Government also issued a notification under Section 4 of the Act vesting all estates and rights of every intermediary in the State free from all encumbrances This notification also covered the land comprised in the tea garden know as Ms Singell Tea Estate The Revenue Officer Kurseong Darjeeling issued notices to the Company initiating proceedings for assessment of rent of the said tea garden The Company appeared in the said proceedings and contended that it was not an intermediary within the meaning of the Act and the provisions of the Act were not applicable to the said tea garden as the same was a freehold land and the Revenue Officer had not jurisdiction to assess the rent under Section 422 of the Act The Revenue Officer rejected the contentions of the Company and passed two orders fixing the rent at Rs237594 per year The Government being not satisfied with the quantum of rent determined by the Revenue Officer took further proceedings for the revision of the entries in the record of rights in respect of the tea garden and in those proceedings the Revenue Officer by order dated 2281968 redetermined the rent at Rs876924 per year The Company aggrieved against the aforesaid order of the Revenue Officer preferred two appeals before the District Judge Darjeeling acting as Tribunal under sub section 3 of Section 44 of the Act Both the appeals were dismissed in default The company filed two applications for restora tion of the appeals under Order 41 Rule 19 of the Code of Civil Procedure but both the applications were dismissed by the Learned District Judge by his order dated 1681975 The Company then filed two applications under Section 115 of the Code of Civil Procedure read with Article 227 of the Constitution in the High Court challenging the aforesaid orders of the District Judge dated 1681975 A Division Bench of the High Court by its order dated 1101975 granted interim stay of the operation of the order of the Revenue Officer dated 2281968 During the pendency of the aforesaid cases in the High Court the Additional Deputy Commissioner of Darjeeling by his letter dated 2061979 informed the Manager of Singell Tea Estate that inspite of repeated reminders the Company had not executed the long term lease for 30 years on prepayment of the requisite number of instalments of rent and cesses 883 The above mentioned letter of the Additional Deputy Commissioner Darjeeling was received by the Company on 81979 and was replied by the Solicitor of the Company by letter dated 1381979 In the reply it was pointed out that the High Court had granted the stay order and as such requested the Additional Deputy Commissioner to stay his hands till the disposal of the said cases Thereafter the Collector of Darjeeling served upon the Company a notice under Section 106 of the determining the tenancy of the Company in respect of the tea garden on the expiry of 1441981 The Company was requested to hand over vacant and peaceful possession of the tea garden to the Junior Land Reforms Officer or the Sub Divisional Land Reforms Officer of the area or the Executive Magistrate immediately on the expiry of 1441981 failing which it was directed that the Company would be deemed a trespasser and would also be liable to pay mesne profits till the Company was evicted in due course of law The above notice was received by the Company on 15111980 In reply to the said notice under Section 106 of the the Solicitor of the Company replied by letter dated 15121980 agains pointing out the issuance of the stay orders by the High Court and requested the Collector of Darjeeling to stay his hands until further order from the High Court Thereafter the Collector Darjeeling issued the order dated 1641981 which reads as under To The Proprietor Ms Singella Tea Estate PO Kurseong District Darjeeling I do hereby take over the possession of your tea garden known as Singel Tea Estate with effect from 16th April 1981 as you have failed to execute Long Term LeaseSummary Lease by paying the government dues by 14th April 1981 as required in the notice served upon you section 106 of Sd Illegible Collector Darjeeling According to the Company by the impugned order the Collector intimated the Company that he would take possession of the estate But the language of the order shows as if the Collector had taken possession of the tea estate on 1641981 and he recorded the fact of taking possession 884 of the tea garden in the said order According to the Company the said order did not mention as to how and in what manner the possession of the tea garden was taken by the Collector The stand of the State Government in this regard was that possession of the tea garden was taken by the Collector on 1641981 as stated in the order The further case of the Government was that the possession of the tea garden was handed over to the Corporation on 2141981 As already stated above the Corporation was subsequently added as a party and an affidavit was filed by Shri Aninda Mohan Bose the Managing Director of the Corporation stating therein that possession of the tea garden was taken by one Shri RB Subba Circle Inspector Land Reforms Kurseong LR Circle on behalf of the Government on 2141981 and handed over to the Corporation The High Court from the above circumstances concluded that the statement made by the Collector in the impugned order dated 1641981 about his taking over the possession of the tea garden on that date was incorrect The High Court however observed that it was not disputed that tea garden was now in the possession of the West Bengal Tea Development Corporation Limited since 2141981 The High Court examined the question whether the tenancy of the Company in respect of the tea garden could be terminated and the possession of the same could be taken over by the Government The High Court in the circumstances mentioned above held that the Collector of Darjeeling was fully aware of the stay order dated 1101975 passed by tile High Court against the order of the Revenue Officer dated 2281968 fixing the rent at Rs876924 per year before issuing the notice under Section 106 of the as well as on the date of issuing the impugned order dated 1641981 According to the High Court there was no question of granting a lease so long as the rent was not determined under Section 42 2 of the Act As the order fixing the rent was stayed by the High Court the question of granting on execution of the lease by the Company could not arise Thus the action of the Collector in taking possession of the tea garden by the impugned order dated 1641981 on the ground that the Company had failed to execute a long terms lease or summary lease by paying the Government dues by 1441981 as required in the notice given under Section 106 of the was not correct The High Court further held that the Collector did not make any order of summary settlement as required by paragraph 1 of Schedule F of The West Bengal Estates Acquisition Rules 1954 Thus the Collector failed to 885 perform his statutory duty by not granting a summary settlement specifying the terms and conditions of the tenancy and violated the provisions of the Rules As regards the contention on behalf of the State Government that the Company should have paid at least the rent at the rate of Rs237594 per year initially determined by the Revenue Officer under Section 42 2 of the Act the High Court rejected the same on the ground that the Government had not accepted the same and had not made any demand for payment of rent at that rate The High Court took the view that the rent was fixed for the second time by order dated 2281968 but the demand for payment of rent was made after a long time in 1979 and obviously such demand would be for the enhanced rent as fixed for the second time and the same having been stayed by the High Court it was doubtful whether the tenancy could be terminated and possession could be recovered on the ground of non payment of rent The High Court as such held that the Collector had taken the law into his own hands and took over possession otherwise than in accordance with law and such action on the part of the responsible officer like the Collector cannot be approved As a result of the above findings the High Court allowed the writ petition and issued a writ of mandamus commanding the State Government and other authorities to deliver the possession of the tea garden to the Company within a month from the date of the order Both the State of West Bengal as well as the Corporation have come in appeal challenging the order of the High Court We have heard learned counsel for the parties and have persued the record The two revisions filed under Section 115 of the Code of Civil Procedure read with Article 227 of the Constitution challenging the two orders passed by the District Judge dismissing the two applications filed under Order 41 Rule 19 of the Code of Civil Procedure for restoration of the two appeals filed against the determination of the rent for the second time at the rate of Rs876924 per year are still pending before the Calcutta High Court This Court on 13121991 had passed the following order The Calcutta High Court is requested to dispose of finally within the three months from today Civil Rule Nos3741 42 of 1975 These appeals to be on board on 7th April 1992 The order communicated to the Calcutta High Court forthwith 886 However inspite of the above order we were informed by the learned counsel for the parties that the Civil Rule Nos3741 42 of 1975 have not been disposed of by the High Court As the above mentioned two appeals directed against the order of the High Court dated 1591981 are pending in this Court for the last more than 11 years we do not consider it proper to further wait for the decision of the Civil Rule Nos3741 42 of 1975 pending in the High Court and we propose to decide these appeals The West Bengal Estates Acquisition Act 1953 abolished the intermediaries and upon the due publication of a notification under Section 4 of the Act the estates and the rights of intermediaries in the estates vested in the State free from all intermediaries under Section 5 of the Act Section 6 provides for retaining certain lands by the intermediaries Section 42 provides for retaining possession of any land subject to the liability to pay rent as determined by the Revenue Officer Sub section 2 of Section 42 provides that when an intermediary is entitled to retain possession of any land comprised in a tea garden under Clause f of sub section 1 as read with sub section 3 of Section 6 of the Act the Revenue Officer shall determine the rent payable in respect of such land in the manner provided in the said sub section In the present case the Revenue Officer had initially determined the rent at the rate of Rs237594 per year and on the representation of the State Government the same was refixed at Rs876924 per year So far as the Company is concerned it had taken a clear stand before the Revenue Officer that it was not an intermediary nor the provisions of the Act applied in the case as the land was claimed as freehold The admitted facts of the case are that the Revenue Officer had initially determined the rent at the rate of Rs237594 per year but the same was not accepted by the Government and on a representation made by the State Government the Revenue Officer had refixed the rent at Rs876924 per year by order dated 2281968 The Company had challenged the rent refixed at Rs876924 and the High Court in Civil Rule Nos 3741 42 of 1975 had stayed the order of the Revenue Officer dated 2281968 fixing the rent at the rate of Rs876924 in view these circumstances it was necessary on the part of the Collector to have passed an order of summary settlement as contemplated under Form I Schedule F of The West Bengal Estates Acquisition Rules 1954 The High Court in these circumstances was right in holding that the Collector had no jurisdiction 887 to terminate the tenancy on the ground of non payment of rent or for not executing a lease deed inasmuch as the Collector had not mentioned in the notice terminating the tenancy under Section 106 of the that he was prepared to accept the rent at the rate of Rs237594 per year as determined initially by the Revenue Officer We agree with the reasoning and conclusion arrived at by the High Court Now taking in the view the entire facts and circumstances of the case and in order to do complete justice between the parties we deem it proper that the respondent Company should be given the possession of the tea garden provided the Company pays the entire areas of rent from 2771965 to 2141981 the date when the Company was dispossessed calculated at the rate of Rs876924 per year after adjusting any amount already paid within three months from today There would be no necessity for the Collector to make any order of summary settlement and a long term lease shall be executed as contemplated under sub section 3 of Section 6 of the Act As soon as the arrears of rent as mentioned above are paid by the Company and a lease deed is executed the Company shall be handed over the possession of the tea garden In case any increase in the amount of rent is permissible under the law due to lapse of time the State Government would be free to take the same into consideration while granting the long term lease The learned counsel appearing for the respondent Company had not objected for determining the arrears of the rent at the rate of Rs876924 per year to put an end of this litigation These appeals are disposed of in the manner indicated above In the facts and circumstances of the case we make no order as to costs GN Appeals disposed of

On 25291 the appellants except appellant No 3 were appointed as Assistant District Government Counsel Criminal in accordance with the provisions of Section 24 of the Criminal Procedure Code and the Legal Remembrancer Manual The appellant No3 was appointed on 13121990 The last date of the tenure of the appellants except appellant No3 was 31121991 where as the tenure of appellant No3 was upto 13121991 Before 970 the expiry of their terms the District Judge preparing two lists A and B recommended the appellants names for extension of their tenures List A contained the names of Lawyers including the appellants whose work and conduct was approved for their extension whereas List B contained the remaining names of the lawyers including appellants in CA Nos 386 387 1993 who were considered as average lawyers The District Judge requested the District Magistrate to send his recommendation to the State Government The District Magistrate did not recommend the appellants names as their reputation professional work behaviour and conduct was not found in accordance with public interest On 28121991 the State Government extended the terms of the appellants till further orders Later without assigning any reason the extension recommended by the District Judge was rejected by the State Government The appellants filed writ petitions in the High Court against the Government s decision The High Court dismissed their writ applications against which the present appeals were filed by special leave before this Court CA Nos 386 387 OF 1993 The appellants names were included in the List B prepared by the District Judge The State Government rejected the recommendation of the District Judge without assigning any reason The writ petitions preferred by them in the High Court were dismissed Hence these appeals by special leave As there was a common issue arose in these appeals same were heard and decided together The appellants contended that in view of Para 7062 of the Legal Remembrancer Manual the appointment of any legal practitioner as a District Government Counsel did not automatically come to an end The State submitted that as Section 244 of the Code of Criminal Procedure vested power in the District Magistrate to consider the suitability of the person concerned for appointment according to his opinion as such there was not much scope of judicial review by Courts unless a clear case of malice on the part of the District Magistrate was made out 971 Allowing the Civil Appeals Nos 722 and 723 of 1993 and dismissing the Civil Appeal Nos 386 and 387 of 1993 this Court HELD11 When sub section 4 and sub section 5 of Section 24 of the Code of Criminal Procedure speak about preparation of a panel out of which appointments against the posts of Prosecutor or Additional Public Prosecutor have to be made then the Sessions Judge and the District Magistrate are required to consult and discuss the names of the persons fit to be included in the panel and to include such names in the panel 12The expressions panel of names of persons do not mean that some names are to be suggested by the Sessions Judge and some comments are to be made in respect of those names by the District Magistrate without proper consultation and discussion over such names The statutory mandate ought to have been complied with by the District Magistrate and the Sessions Judge in its true spirit 13Section 24 of the Code does not speak about the extension or renewal of the terms of the Public Prosecutor or Additional Public Prosecutor But after the expiry of the term of the appointment of persons concerned it requires the same statutory exercise in which either new persons are appointed or those who have working as Public Prosecutor or Additional Public Prosecutor are again appointed by the State Government for a fresh term The procedure prescribed in the Manual to the extent it is not in conflict with the provisions of Section 24 shall be deemed to be supplementing the statutory provisions But merely because there is a provision for extension or renewal of the term the same cannot be claimed as a matter of right 14While exercising the power of judicial review even_in respect of appointment of members of the legal profession as District Government Counsel the Court can examine whether there was any infirmity in the decision making process Of course while doing so the Court cannot substitute its own judgment over the final decision taken in respect of selection of persons for those posts Chief Constable of the North Wales Police vs Evans 19823 All ER 141 referred to 15In the facts of the present case the procedure prescribed by Section 24 of the Code have not been followed by the District Magistrate There is 972 nothing on the records of the case to show that any panel as required by sub section 4 of Section 24 was prepared by the District Magistrate in consulon with the District Sessions Judge The District Magistrate simply made some general comment in respect of the appellants when the District Sessions Judge had put them in List A of his recommendation This shall not amount to either the compliance of sub section 4 of Section 24 of the Code or Para 7062 of the Manual It appears there has been no effective or real consultation between the Sessions Judge and the District Magistrate for preparation of the panel as contemplated by sub section 4 of Section 24 of the Code 16The members of the legal profession are required to maintain high standard of legal ethics and dignity of profession They are not supposed to solicit work or seek mandamus from courts in matters of professional engagements 17In view of the strong recommendation about the quality of the appellant s professional work the District Magistrate should have Applied his mind in consultation with the Sessions Judge in respect of each individual case instead of making a general and identical comment against all the appellants 18As the District Magistrate has not performed his statutory duty as enjoined by law the appeals of the appellants have to allowed 19The District Magistrate is directed to perform his statutory duty afresh in accordance with the requirement of Section 24 of the Code read with the relevant paragraphs of Chapter VII of the Manual which are not inconsistent with Section 24 of the Code so far the appellants are concerned if the vacancies are still there The necessary steps shall be taken preferably within four months from the date of this judgment The State Government shall thereafter perform its part in accordance with Section 24 and different paragraphs of the Manual which are applicable in the facts and circum stances of the case Kumari Shrilekha Vidyarthi vs State of UP referred to 2The District Sessions Judge who is required to express his opinion ton the merit and the conduct of the persons recommended for appointment or extension of the period as District Government Counsel has expressed the 973 opinion that appellants in C As 386 387 of 93 are average lawyers and has put them in List B In other words neither the District Sessions Judge has recommended the case of the appellants of these appeals for extension nor the District Magistrate Their case cannot be treated at par with the appellants of the other appeals In such a situation no useful purpose will be served by directing the District Magistrate to perform his statutory duty as required by sub section 4 of Section 24 of the Code again even in respect of these appellants 3Although power has been vested in a particular authority in subjective terms still judicial review is permissible Barium Chemicals Ltd vs Company Law Board AIR State of Assam vs Bharat Kala Bhandar Ltd AIR Rohtas Industries Ltd vs SD Agarwal AIR The Purtabpur Company Ltd vs Call e Commissioner of Bihar AIR 1970 SC 1989 and MA Rasheed vs The State of Kerala AIR relied on

Appeal No 298 of 1955 Appeal from the judgment and order dated April 28 1953 of the Patna High Court in Appeal from Original Order No 90 of 1949 arising out of the judgment and order dated January 25 1949 of the Sub Judge Purnea in Misc Case No 54 of 1947 Sir lqbal Ahmad section N Andley J B Dadachanji and Rameshwar Nath for the appellant 366 MC Setalvad Attorney General for India and R C Prasad for the respondent March 16 The Judgment of the Court was delivered by SARKAR J This appeal arises out of a proceeding in execution of an adjudication made under the provisions of the United Provinces Encumbered Estates Act 1934 U P XXV of 1934 an Act passed by the legislature of the United Provinces now called the Uttar Pradesh The questions that arise in this appeal largely turn on the provisions of that Act and they have therefore to be referred to The Act was intended to give relief to the proprietors of certain landed properties in the United Provinces Section 4 of the Act enabled a proprietor of such landed properties to make an application in writing to the Collector of the District in which any of his lands is situate stating the amount of his debts and asking for the application of the Act to him Upon such an application being made the Collector is to make an order under section 6 forwarding it to a Special Judge appointed under the Act who under section 3 is any civil judicial officer appointed for a local area to exercise the powers conferred and to perform the duties imposed by the Act Section 7 of the Act provides that upon the making of an order by the Collector under section 6 subject to certain exceptions which it is not necessary to enumerate all proceedings pending in the courts in the United Provinces in respect of a debt due by the applicant shall be stayed and all execution processes issued against him by such courts shall become null and void and no fresh process in execution shall be issued against him nor any fresh suit or other proceeding instituted The Special Judge after he has received the application sent to him by the Collector is required by section 8 to call upon the applicant to submit a written statement verified in the manner of a plaint setting out full particulars of his debts the names and addresses of his creditors and the nature and extent of his proprietary rights in land as also of all his properties which are liable to attachment under section 60 of 367 the Code of Civil Procedure Under section 9 the Special Judge has then to publish a notice calling upon persons having claims against the applicant to submit the same within a time specified Section 10 states that the claimant shall give full particulars of his claim and of the applicant s properties Section 11 provides that the Special Judge will publish a further notice specifying the properties mentioned by the applicant as belonging to him and any person wishing to make a claim to any such property has to do so within a certain period The same section gives power to the Special Judge to decide the claims made to the properties and provides that the decision made by him is to be deemed to be a decree of a civil court of competent jurisdiction Section 14 lays down that the Special Judge will inquire into the claims submitted by the creditors against the applicant and decide the questions in issue on the same principles as those on which a court of law would have decided them but he has the power to reduce the interest due and to give relief to the applicant in respect of such claims under certain specified United Provinces Acts Sub section 7 of section 14 provides that if upon enquiry the Special Judge finds that any amount is due to any claimant he shall pass a simple money decree for such amount together with costs and interest and such decree shall be deemed to be a decree of a civil court of competent jurisdiction but it shall not be executable within the United Provinces except under the provisions of the Act The next section to be referred to is section 19 which requires the Special Judge to send the decrees granted under section 147 to the Collector for execution in accordance with the provisions of Chapter V of the Act and to inform him of the nature and extent of the property which he has found to be liable to satisfy the debts of the applicant Then come the provisions as to execution contained in Chapter V The sections in this Chapter provide that the Collector will himself and without being required to be moved for the purpose by any person proceed to execute the decree against the properties of the applicant within the United Provinces by the various methods indicated and for 368 realising the value of the applicant s properties the Col lector shall have all the powers of a civil court for the execution of a decree With regard to the properties of the applicant outside the United Provinces the Act could not provide for execution To cover such cases it was enacted by section 243 that for the purpose of execution against property outside the United Provinces the decrees passed by the Special Judge would be deemed to be decrees in favour of the Collector These are all the provisions of the Act that need be referred to for the purposes of this case The facts may now be stated The respondent was the proprietor of landed properties in the United Provinces and was entitled to claim relief under the Act He became heavily encumbered in debts It is not necessary to go into his financial embarrassment in great detail and it will be enough to say that in 1926 and 1927 he had created several mortgages on his properties in favour of the Allahabad Bank the Banaras Bank and a person called Kalia for very large sums In 1929 the Banaras Bank filed a suit against the respondent in the Court of the Additional Sub Judge Banaras in the United Provinces for enforcement of its mortgage making the other creditors of the respondent named above parties to the suit A decree was passed in that suit giving the creditors priority in a certain order The Allahabad Bank not being satisfied with that order of priority filed an appeal in the High Court at Allahabad which was decided in its favour While the appeal was pending the respondent applied to the Collector of Banares for relief under the Act The procedure laid down in the Act as earlier summarised was duly followed and on March 21 1940 the Special fudge of Banares to whom the application had been forwarded by the Collector passed three money decrees in favour of the three creditors of the respondent mentioned above in a certain order of priority with which we shall not be concerned in this case The total amount of such decrees came nearly to rupees nine lacs He then sent the decrees to the Collector of Banaras for execution as required by the Act The execution of the decrees 369 was thereafter commenced by the Additional Collector Banaras under the provisions of the Act against the properties in the United Provinces The respondent owns an estate in the district of Purnea in Bihar called the Semapur estate Under section 243 of the Act earlier mentioned the decrees passed by the Special Judge are to be deemed to be decrees in favour of the Collector for the purpose of execution against the Semapur estate The Additional Collector Banaras applied to the Additional Civil Judge Banaras for transmission of the said decrees to the Court of the Subordinate Judge Purnea for execution and an order for transmission of the decrees to the Court at Purnea was accordingly made by that Judge on January 4 1947 Thereafter on March 17 1947 the Additional Collector Banaras applied to the Subordinate Judge Purnea as the transferee Court to execute the decrees by attachment and sale of the Semapur estate The Subordinate Judge thereupon made an order directing execution to issue as sought The respondent preferred an appeal to the High Court at Patna from this order of the Subordinate Judge Purnea and his appeal was allowed with the result that the execution of the decrees against the Semapur estate failed The present appeal is by the Additional Collector Banaras against the order of the High Court The first question that arises in this appeal is whether the Subordinate Judge Purnea bad jurisdiction to order execution of the decree transferred to him The High Court held that he did not have that jurisdiction The matter was put in this way The decree was not a decree under the Code of Civil Procedure It was only to be deemed as such because of section 147 of the Act The Act was an Act of the United Provinces legislature which could not pass a legislation having effect outside the United Provinces The operation of section 147 of the Act had therefore to be confined within the borders of the United Provinces The Subordinate Judge Purnea could not apply that section in Bihar and treat the decree as a decree 47 370 under the Code If he could not do so he could not order execution of the decree If he were permitted so to apply the Act then an Act of the legislature of the United Provinces would be indirectly affecting property outside the United Provinces which it could not directly do The Act could be applied in Bihar only by giving it an extra territorial operation This the law did not allow So the decree could not be executed in Purnea We think that this argument is fallacious No question of any extra territorial application of the United Provinces Act either directly or indirectly arises in this case It is clear that by virtue of section 147 of the Act a decree of the Special Judge under the Act is within the United Provinces a decree for all purposes of the Code It could therefore be transferred decree under section 39 of the Code of Civil Procedure to a court outside the United Provinces for execution Now when a decree is transferred it is the duty of the transferee court to execute it by all methods provided by the Code of Civil Procedure But it is said that the transferee court must be satisfied that it is a decree under the Code of Civil Procedure before it can order execution under that Code How then is the transferee court to decide that It has before it a decree passed not by itself but by another court It has therefore to satisfy itself that the decree was one which for that court was a decree passed under the Code In order to do that it is asked to apply the United Provinces Act to the decree passed within the United Provinces How can it be said that if it so applies the United Provinces Act it is giving it an extra territorial operation It is doing nothing of the kind It is applying an Act of the United Provinces to something which happened within the territories of those Provinces it is applying an United Provinces Act to a matter within the competence of the legislature of the United Provinces to legislate upon No doubt a court outside the United Provinces is applying a statute of those Provinces but that does not amount to giving extra territorial operation to that statute If the statute is being so applied 371 to one of its legitimate objects it is not being given any extra territorial operation at all We further find it difficult to appreciate how the application by the Subordinate Judge of Purnea of the United Provinces Act to the decree of the Special Judge Banaras sent to him for execution results in the United Provinces Act affecting property outside the United Provinces The only result of such application is to remove the objection that that decree is not a decree of a court in the United Provinces passed under the Code the Act is not thereby made to affect property outside the United Provinces Of course if that decree is a decree under the Code it can be executed against any property outside the United Provinces That however is not the result of the United Provinces Act but of the Code of Civil Procedure which is a central legislation and applies to Bihar also The High Court was therefore wrong in thinking that the Subordinate Judge Purnea had no jurisdiction to execute the decree passed under the Act within the United Provinces and sent to him for execution It was then contended that the order of transfer of the decree was invalid because under section 39 of the Code such an order could be made only on the application of the decree holder and in the present case it had not been made on his application His point was this Under section 243 of the Act a decree of the Special Judge is to be deemed to be a decree in favour of the Collector for the purpose of execution against property outside the United Provinces Therefore in the present case it was the Collector Banaras who was the decree holder and he alone could apply for the transfer of the decree Actually however the order for the transfer had been made in this case on the application of the Additional Collector Banaras So it was said the order was invalid Now this argument depends upon the Collector and the Additional Collector being different persons It is clear however that they are not That appears from sections 14 and 14A of the United Provinces Land Revenue Act 1901 to which our attention was drawn Section 14 gives power to the Government to appoint a Collector for discharging the 372 duties mentioned in the Act or any other law for the time being in force Section 14A1 gives power to the Government to appoint an Additional Collector Sub section 3 of section 14A provides that the Additional Collector shall exercise such powers and perform such duties of a Collector as the Government may direct The Additional Collector therefore exercises such of the powers and discharges such of the functions of the Collector as the Government directs him to do We have before us a document containing such an order by which the work of sale and execution which under the Encumbered Estates Act had to be done by a Collector had been entrusted to the Additional Collector It follows that for the purposes of execution and sale under the Act the Additional Collector is to be deemed to be the Collector as he exercises the latter s powers in this regard The Additional Collection was hence quite competent to apply for the transfer of the decree The third point against the validity of the order of the learned Subordinate Judge was that under section 39 of the Code the decree could be transferred only by the Court which passed it It was said that in the present case it is only by virtue of section 14 of the Act that the decision of the Special Judge is deemed to be a decree that since it was his decision he must be deemed to have passed it It was then pointed out that the order for the transfer of the decree had in fact been made by the Additional Civil Judge Banaras and not by the Special Judge Banaras and hence that order was of no effect This is an argument with which we are not much impressed It has been pointed out to us that the powers of a special Judge under the Act were conferred on the Court of the Additional Subordinate Judge Banaras by the United Provinces Government s Revenue Department notification No 767 Rev published in the United Provinces Gazette of the 12th October 1935 The Additional Subordinate Judge later came to be called the Additional Civil Judge It is therefore the same court which exercises the powers of an Additional Civil Judge as also those of a Special Judge under the Act We find 373 no difficulty in treating the order of transfer as having been made by the Special Judge The fact that the order purported to be made by the Additional Civil Judge was a matter of mere irregularity and cannot make it invalid Nor do we find any lack of power in the Special Judge to order a transfer of the I decrees The Act provides that his adjudication would be treated as a decree of a civil court of competent jurisdiction The execution of such a decree outside the United Provinces is also clearly contemplated by section 243 We have earlier held that such execution is permissible in law That being so in order to give effect to the provisions of the Act it has to be held that the Special Judge must be deemed to be a court which passed the decree within the meaning of section 39 of the Code of Civil Procedure Nor does there seem to be any objection to think that the Special Judge is a civil court From the provisions of the Act earlier set out there is no doubt that he adjudicates upon rights of the parties and acts in the same way as any other civil court would do Indeed apart from the fact that the proceedings before him do not commence by the filing of a plaint we find no distinction between him and a court as ordinarily understood The order of transfer of the decree is hence in our view clearly a good order Lastly it was said that the decree was barred by limitation long before the order for its transfer was made It was contended that article 182 of the Limitation Act governed the case and the application for its execution had been made beyond the time limited The question is does the article apply The High Court held that that article had no application to the present case and that no question of limitation arose for the execution proceeding in Purnea Court is merely a continuation of the execution proceeding pending before the Collector of Banares In our opinion the High Court was right in the view that it took It is quite clear that if the application for execution with which we are concerned was made in a pending execution proceeding notion of the application of article 182 arises It long been 374 recognised by the courts in our country that a right to continue a proceeding which is pending is a right which arises from day to day and no question of any bar of limitation with regard to the enforcement of such a right arises See Kedar Nath Dutt vs Harra Chand Dutt 1 Subba Chariar vs Muthuveeran Pillai 2 The question then is was the application for execution which has resulted in the order under appeal one for continuing a pending execution proceeding It is not disputed that all along since the decree was sent by the Special Judge to the Collector for execution and before that date the decree was not executable it has continuously been in execution under the provisions of the Act by the Additional Collector Banaras and that such execution proceeding was pending on the date of the present application for execution The question thus is whether the execution proceeding started in the Court of the Subordinate Judge Purnea was a continuation of the execution proceeding by the Additional Collector Banaras We think it was We have to remember that section 147 of the Act which said that an adjudication of the special Judge was to be deemed to be a decree also provided that that decree would not be executable within the United Provinces except under the provisions of the Act We have also to remember that the Act provided that as against the properties within the United Provinces the decree could only be executed by the Collector on his own by the various methods provided We may also point out that section 244 provides that for the purpose of such execution the Collector is to have all the powers of a civil court for the execution of a decree It is therefore clear that the only mode of execution of the decree within the United Provinces contemplated by the Act is the execution by the Collector Within the United Provinces the execution of the decree by the Collector would be deemed to be an execution under the Civil Procedure Code The execution by the Collector is execution of what is a decree within the Code When the decree is executed outside the United Provinces where as already stated it can be legally 1 Cal 420 2 Mad 375 executed the amount realised by the execution by the Collector has to be taken into account When the Subordinate Judge Purnea has to decide the question whether the application for execution made to him is in continuance of an existing execution proceeding he has to recognise the proceeding before the Additional Collector Banares as a proceeding in execution under the Code for it is so under the Act In doing this for the reasons earlier mentioned he would not be giving any extra territorial operation to the Act It seems to us therefore that the execution of the decree by the Collector must be deemed to be execution of a decree for all purposes and therefore an application made to the Subordinate Judge Purnea for execution of the same decree while an execution proceeding was pending before the Collector must be a continuation of the execution last mentioned No question of limitation can arise in regard to such an application We think therefore that this appeal must succeed We set aside the order of the High Court and restore the order of the Subordinate Judge Purnea The respondent will pay the costs of the appellant in this Court and in the High Court Appeal allowed

The Director General Ordnance Factories DG issued a Circular dated 6111962 to the effect that the Diploma holders who have been appointed as Supervisor Grade B technical or in equivalent grades should on completion of one year s satisfactory service be promoted the post of Supervisor Grade A Tech and the Diploma holders who worked satisfactorily as Supervisor A Tech or in equivalent grades for 2 years should be promoted as Chargeman Subsequently the DG issued another Circular dated 2011966 according to which promotions were to be in accordance with normal rulesie on the basis of their listing by the relevant Departmental Promotion Committee and not merely on satisfactory completition of 2 years continuous service as Supervisor A Grade or equivalent grades In effect the first Circular was withdrawn by the second Circular In 1973 some Supervisors Grade Al riled a Writ Petition before the High Court claiming benefit of the first circular Without going into the merits of the controvery a Single Judge of the High Court dismissed the Writ Petition on the ground of delay On appeal a Division Bench of the High Court dismissed the Writ Petition on merits On further appeal this Court directed that the cases of those appellants be considered for promo906 907 tion as Chargeman Gr II and they promoted them unless they were found unfit from the dates on which they ought to have been promoted Virendra Kumar Ors vs UOI CA No 4411981 decided on 2281 Thereafter the present appellants riled Writ Petitions before the High Court praying for the same relief as was granted by this Court in Virendra Kumar s case The High Court allowed the Writ Petitions The Special Leave Petitions filed by the Union of India against the Judgment came to be dismissed Consequently the DG issued an order giving antedated seniority to the appellants for the purposes of promotion The appellants were also given deemed dates of promotion to post of chargeman Gr11 from the dates when they completed two years of service as Supervisor Gr A and consequent seniority in the other higher grades This resulted in some employees who were senior to the appellants in the cadre of Chargeman Gr II and other higher grades becoming junior to the appellants These employees who were adversely affected by the order of the DG giving ante dated seniority to the appellants and were not impleaded as parties at any stage of the litigation challenged the DG s order before the Central Administrative Tribunal The Tribunal allowed the application and set aside the DG s order giving ante dated seniority to the appellants Aggrieved by the Judgment of the Tribunal the appellants preferred the present appeal Dismissing the appeal this Court HELD 1 This Court has authoritatively laid down in Paluru s case that Civil Appeal No 44181 Virendra Kumar vs UOI was not correctly decided The appellants have throughout been basing their claim on Virendra Kumar s case Once the base is knocked out by the judgment of this Court in Paluru s case the appellants are left with no ground to sustain the order dated February 2025 1987 issued by the DG by which they were given ante dated seniority 917 B C 12 Even if it is assumed that the High Court judgment had become final with the dismissal of the SLP against it and could Rot have been reviewed by the High Court or the Tribunal it became final only between the parties inter se The first circular was issued in the year 1962 The appellants riled writ petitions in the High Court twenty years thereafter seeking enforcement of the first circular The petitioners wanted the clock to be put back by two decades through the process of the Court All those 908 persons who were promoted in accordance with the rules during that long period and were not parties before the High Court could not be made to suffer for no fault of theirs On the other hand some employees challenged the order dated February 2025 1987 which affected them adversely within the period of limitation before the Central Administrative Tribunal In any case the judgment of this Court in Virendra Kumar having been over ruled in Paluru s case the appellants have neither the law nor the equity on their side The judgment of the Tribunal being in conformity with the law laid down by this Court in Paluru s case there is no ground to interfere with the same 918 A D Paluru Ramkrishnaiah Ors etc vs Union of India Anr followed Virendra Kumar Ors vs Union of India Ors Civil Appeal No 44181 decided on 221981 referred to

Appeal No 228 NT of 1987 From the Judgment and Order dated 841982 of the Karnataka High Court in STRPNo 10081 M Veerappa and KH Nobin Singh for the Appellant The judgment of the Court was delivered by KULDIPSINGHJ The question for consideration in this appeal is whether the mandate under Section 20 3 of the Karnataka Sales Tax Act 1957 the Act to pay the undisputed tax before the appeal is entertained is also applicable to the additional tax payable under Section 6B of the Act In other words whether it is obligatory under the Act to deposit the tax and the additional tax before the appeal is entertained The respondent assessee challenged the best judgment assess ment made against him for the year 1972 73 before the First Appellate Authority which was dismissed in limine on the ground that the respondent failed to pay the tax not disputed in appeal The second appeal filed by the assessee before the Karnataka Appellate Tribunal was also dismissed On a revision petition under the Act the Karnataka High Court reversed the findings of the authorities below on the ground that unpaid not disputed tax was the additional tax which was different than the tax envisaged under Section 20 3 of the Act The High Court allowed the revision petition of the assessee and remanded 83 the matter to the appellate authority to dispose of the appeal in accordance with law This appeal by way of special leave against the judgment of the High Court is by the State of Karnataka Before the appellate authority it was the admitted case of the parties that no part of the undisputed tax levied under Section 5 1 of the Act had remained unpaid It was only the undisputed additional levy under Section 6B of the Act which had not been paid Section 20 1 of the Act confers a right of appeal Sub section 2 of Section 20 refers to the period of limitation Sub Section 3 A of section 20 is as under No appeal against an order of assessment shall be entertained by the appellate authority unless it is accompanied by satisfactory proof of the payment of the tax and penalty not disputed in the appeal The High court on the interpretation of various provisions of the Act came to the conclusion that the additional tax under Section 613 is a levy distinct from the impost under section 5 1 of the Act The High Court thus came to the conclusion that the nonpayment of the additional tax would not bar the entertainment of the appeal under the Act The findings of the High Court are based on the following reasoning Though the tax under section 6B is and impost of a similar nature it is a levy distinct from the impost under Section 51 or under Section 6 This is the clear outcome of the scheme of Section 6B and the effect of Section 6B2 of the Act Section 6B2 by providing for the application of the provisions of the Act to the tax under Section 6B as they apply to the sales or purchase tax under the Act recognises the distinction between the additional tax on the one hand and the other imposts under the Act on the other Section 201 creates and confers a right of appeal Sub Section 3 of Section 20 seeks to restrict that right and subject it to certain conditions It appears us 84 that the tax in Section 20 3 on the payment of which the right of appeal is mad e dependent should receive a construction which would advance that right and one which would not make that right dependent upon or subject to payment of a tax which is distinct from the tax constituting the subject matter of the appeal In the present case the appeal is one directed against the main impost and no part of the assessment relating to the additional tax is the subject matter of the appeal That being so the view that non payment of the additional tax would bar the entertainment of the appeal is not unjustified We are not inclined to agree with the view taken by the High Court Section 6B of the Act as it stood at the relevant time reads as under 6 B Levy of additional tax 1 There shall be levied and collected from every dealer liable to pay tax under section 5 or under section 6 and from every dealer liable to pay tax under Section 25 B an additional tax at the rate of ten paise in the rupee on the sales tax or purchase tax or both payable by such dealer Provided that in respect of the sale or purchase of any of the declared goods mentioned in the Fourth Schedule the tax together with the additional tax shall not exceed four percent of the sale or purchase price thereof 2The provisions of this Act and the rules made thereunder including those relating to refund or exemption from tax shall so far as may be apply in relation to the levy assessment and collection of the additional sales tax or purchase tax or both as they apply in relation to the levy assessment and collection of sales tax or purchase tax under this Act 85 It is obvious that the additional tax is leviable at the rate of ten paise in the rupee on the sales tax or purchase tax or both payable by such dealer The additional tax is computed with reference to the tax payable by the dealer When once the assessing authority determines the sales tax or purchase tax under the Act the additional tax is levied automatically and becomes part and parcel of the assessment order The expression tax has been defined to mean a tax leviable under the provisions of the Act and as such includes the additional tax levied under section 6B of the Act When Section 203 talks of payment of the tax and penalty not disputed in the appeal it obviously includes the additional tax On the plain language of Section 203 of the Act it is not possible to make any distinction between the tax and the addition tax and the only conclusion which can be drawn is that the undisputed tax which includes additional tax has to be deposited before the appeal is entertained The fact that the quantum of the additional tax is determined with reference to the sales taxpurchase tax impost would not alter its character The additional tax is nothing but an enhancement in the rate of the sales taxpurchase tax under the Act As soon as the assessing authority determines the levy of sales taxpurchase tax the additional tax under Section 6B become part of the assessment order Similarly if the main impost under Section 5 1 is successfully challenged the reasoning sustaining the challenge would also ipso facto affect the validity of the additional impost under Section 6B of the Act We are therefore of the view that the High court was not justified in holding that additional tax under Section 6B was not a tax for the purposes of Section 20 3 of the Act We allow the appeal set aside the judgment of the High court and dismiss the revision petition filed by the assessee before the High Court No costs UR Appeal allowed

The appellant State issued a notification under section 4 of the West Bengal Estates Acquisition Act 1953 covering the land comprised in the tea garden of the respondent company The Revenue Officer issued notices to the respondent company initiating proceedings for assessment of rent The Company objected stating that it was not an intermediary within the meaning of the Act and since its tea estate comprised of free hold land the Revenue Officer had no jurisdiction to assess the rent under Section 422 of the Act The Revenue Officer rejected the contention and fixed the rent at Rs237594 per year On revision preferred by the State the Revenue Officer determined the rent at Rs876524 per year The Company preferred appeals before the Tribunal The appeals were dismissed in default and the restoration applications were also rejected Thereafter the Company preferred applications before the High Court under Section 115 CPC read with Article 227 of the Constitution for restoration of the two appeals and obtained stay of the operation of the Revenue Officer s order During the pendency of the cases the Additional Deputy Commissioner informed the respondent that inspite of the repeated reminders the company had not executed the long term lease for 30 years on prepayment of the requisite number of instalments or rent and cess The respondent company replied pointing out that the High Court had granted the stay order and therefore the matter stood stayed till the disposal of the said cases Thereafter the Collector served upon the Company a notice under section 106 of the Transfer of Property Act 880 1882 determining the tenancy of the company In respect of the tea garden on the expiry of the specified date The company was required to hand over the vacant and peaceful possession of the tea garden In reply to the said notice the company stated that in view of the stay order granted by the High Court no further proceedings be taken Thereafter the Collector took over the possession of the tea garden The applications before the High Court were still pending However aggrieved by the order of the Collector taking over its tea garden the Respondent preferred a Writ Petition before the High Court Allowing the writ petition the High Court directed the appellant State Government and other authorities to deliver the possession of the tea garden to the Company within a month Aggrieved by the High Court s order the State as also the West Bengal Tea Development Corporation to whom the possession of the tea garden is transferred by the State preferred appeals before this Court Disposing of the appeals this Court HELD1 The Revenue Officer had initially determined the rent at the rate of Rs237194 per year but the same was not accepted by the Government and on a representation made by the State Government the Revenue Officer had refixed the rent at Rs876924 per year by order dated 2281968 The Company had challenged the rent refixed at Rs 876924 and the High Court had stayed the order of the Revenue Officer fixing the rent at the rate of Rs876924 In view of these circumstances it was necessary on the part of the Collector to have passed an order of summary settlement as contemplated under Form I Schedule F of the West Bengal Estates Acquisition Rules 1954 The High Court was therefore right in holding that the Collector had no jurisdiction to terminate the tenancy on the ground of non payment of rent for not executing a lease deed inasmuch as the Collector had not mentioned in the notice terminating the tenancy under Section 106 of the Transfer of Property Act that he was prepared to accept the rent at the rate of Rs 237594 per year as determined initially by the Revenue Officer 886 F H 887 AB 2In order to do complete justice between the parties it is proper that the respondent Company should be given the prosession of the tea garden provided the Company pays the entire arrears of rent from 2771965to 2141981 the date when the Company was dispossessed 881 calculated at the rate of Rs 876924 per year after adjusting any amount already paid within three months There would be no necessity for the Collector to make any order of summary settlement and a long term lease should be executed as contemplated under sub section 3 of Section 6 of the West Bengal Estates Acquisition Act 1953 As soon as the arrears of rent are paid by the Company and a lease deed is executed the Company should be handed over the possession of the tea garden In case any increase in the amount of rent is permissible under the law due to lapse of time the State Government would be free to take the same into consideration while granting the long term lease 887 B D

Appeal No 2881 of 1993 From the Judgment are Order dated 16185 of the Bombay High Court in WP No 1755 of 1983 VM Tarkunde R Karanjawala Rajesh Kumar and Ms Suruchi Aggarwal for the Appellant SB Bhasme and AS Bhasme for the Respondent AHMADI J Special leave granted The appellant landlord filed an eviction suit No 419 of 1968 for possession of the demised premises mainly on the ground of arrears of rent under section 123 of the Bombay Rents Hotel and Lodging House Rates Control Act 1947 hereinafter called the Act That suit was settled between the parties the relevant terms whereof read as under 1 The possession of the suit premises is to be given by the defendant to the plaintiff by 10th October 1970 If the defendant does not give possession then the plaintiff is to take possession by execution on the basis of this decree 2 3The defendant is given a concession that if the defendant paid the entire amount mentioned in clause 2 above ie the amount involved in the suit future mesne profits electricity charges water charges the rent of the godown expenses of the suit by 10th October 1970 the plaintiff will not execute the decree for possession Under clauses 2 and 4 of the compromise terms the rent in respect of the suit premises was to be calculated on the basis of standard rent of Rs 30 per month the rent of the store room godown was to be calculated at the standard rent of Rs 9 per month and electricity and water charges at Rs 3 per month and so calculated the entire arrears had to be paid on or before 10th October 1970 to avail of the concession given in clause 3 of the compromise terms The Trial Court passed a decree in terms of the compromise 733 The arrears so calculated worked out to Rs 3353 as on 10th October 1970 The tenant however paid a sum of Rs 2040only on 9th February 1970 and therefore did not comply with the terms regarding payment of entire arrears on or before 10th October 1970 Thereupon the decree holder filed execution proceedings on 2nd November 1970 The tenant raised objections in regard to the executability of the decree The Executing Court rejected the objections raised by the tenant and issued a warrant for possession of the demised premises under order 21 Rule 35 of the Code of Civil Procedure 1908 hereinafter called the Code The tenant preferred an appeal against the order of the Executing Court which came to be allowed The order of the Executing Court was set aside and the prayer for eviction was dismissed The decree holder moved the High Court under Article 227 of the Constitution The High Court set aside the order of the Appellate Court and remitted the matter to the Appellate Court with a direction to decide the character of the compromise terms on the basis of which eviction was sought After the matter went back to the Appellate Court that court reconsidered the matter and once again allowed the appeal setting aside the order of the Executing Court directing issuance of warrant under Order 21 Rule 35 of the Code The Appellate Court dismissed the execution proceedings altogether Against that order passed by the Appellate Court the decree holder once again moved the High Court under Article 227 of the Constitution The High Court considered the various submissions made before it by the rival parties and summarised the propositions emerging from the relevant provisions and the case law in paragraph 32 of the judgment as under 1 If by a consent decree the status of a landlord and tenant is established between the plaintiff and the dependent the Court in exercise of its equitable jurisdiction is not precluded from granting relief against forfeiture of a term contained in the consent decree 2Where the question is not one of the creation of a tenancy or the continuation of a tenancy and where a decree passed either by consent or in invitum permits payment of the decrement amount in installments and provides that the decretal amount becomes payable at once in the event of failure in the payment of one or more installments there is no question of granting relief The Courts are bound to execute the decree in accordance with its terms 3Where however the relationship of landlord and tenant is continued between the parties by a compromise decree the judo 734 ment debtor who is a tenant would be entitled to relief against forfeiture resulting from his failure to pay the rent on the stipulated date 4Where the consent decree provides for the continuance of the possession of the tenant up to a particular date beyond which he has no right to remain in possession at all and on which date the landlord is entitled to execute the decree for possession the time given from the date of the decree till the other date is by way of concession and in such a case there is no creation of new tenancy or continuation of the existing tenancy 5 If the consent decree provides possession for the continuation of the of the tenant on certain terms up to a particular date and also provides for the continuation of the tenant s possession after the date if lie complies with certain conditions then such a decree provides for the continuance of the possession of the tenant from the date of the consent decree itself In such a case it cannot be said that the plaintiffs allowing the defendant to continue up to and beyond that specified date is by way of concession The High Court therefore concluded that the refusal by the Appellate Court to exact the tenant on the basis of the consent decree was correct in law and hence it was not required to interfere with the order of the Appellate Court It came to the conclusion on a true interpretation of the relevant clauses of the consent decree that the clause by which eviction was permitted was penal in nature and therefore not enforceable Clause 3 of the compromise term was treated is granting relief against forfeiture In this view of the matter the judgment creditor landlord having failed to secure possession of the demised premises by putting the consent decree to execution has approached this Court under Article 136 of the Constitution The Act was enacted to amend and consolidate the law relating to the control of rents and of evictions from demised premises It imposes certain restrictions on the right of the landlord from recovering possession so long as the tenant pays or is ready and willing to pay standard rent and permitted increases and observes and performs the other conditions of the tenancy which are consistent with the provisions of the Act If the tenant has failed to pay the rent and permitted increases due from him he can be evicted for that neglect in the manner set out in section 12 735 of the Act The other provision which confers a right of eviction is section 13 of the Act with which we are not concerned in this case The facts of the case clearly reveal that the landlord had sought eviction under section 12of the Act as the tenant had committed a breach of sub section 1 thereof in that he had failed to pay the rent to the landlord To comply with the requirement of sub section 2 of that provision the landlord had served the tenant with a notice prior to the institution of the suit seeking eviction under section 123 of the Act This sub section is in two parts and may be extracted for ready reference 12 3 a Where the rent is payable by the month and there is no dispute regarding the amount of standard rent or permitted in creases if such rent or increases are in arrears for a period of six months or more and the tenant neglects to make payment thereof until the expiration of the period of one month after notice referred to in sub section 2 the court may pass a decree for eviction in any such suit for recovery of possession 123 b In any other case no decree for eviction shall be passed in any such suit if on the day of hearing of the suit or on or before such other date as the court may fix the tenant pays or tenders in court the standard rent and permitted increases then due and thereafter continues to pay or tender in court regularly such rent and permitted increases till the suit is finally decided and also pays costs of the suit as directed by the court Clause a sets out the circumstances in which the tenant forfeits the protection of the statute and entitles and landlord to evict him If the case does not fall within the scope of clause a the question to be considered is whether eviction should be ordered under clause b This is clear from the opening words in any other case If however the tenant satisfies the conditions of the said clause the law protects him from eviction as is clear from the words no decree of eviction shall be passed in any such suit The suit in the present case was filed under section 123 of the Act but before the court could adjudicate whether clause a or clause b was attracted the parties arrived at a settlement the relevant terms hereof have been extracted hereinbefore It is well settled that a decree passed on the basis of a cc promise by and between the parties is essentially a contract between the names which derives supporting by the court superadding its seal to the contract But all the same the consent terms retain all the elements of a contract to which the court s imprimatur is affixed to give it the sanctity of an executable court 736 order We must however point out that the court will not add its seal to the compromise terms unless the terms are consistent with the relevant law But if the law vests exclusive jurisdiction in the court to adjudicate on any matter eg fixation of standard rent the court will not add its seal to the consent terms by which the parties have determined the standard rent unless it has applied its mind to the question and has satisfied itself that the rent proposed by consent is just and reasonable In such a case it is the independent satisfaction of the court which changes the character of the document from a mere contract to a court s adjudication which will stop the tenant from contending otherwise in any subsequent proceedings and operate as resjudicata If the standard rent is fixed solely on the basis of agreement between the parties such a decree in invitum will not preclude the tenant from contending in any subsequent proceeding that the rent is excessive and require the Court to fix the standard rent Therefore the character of the consent decree will depend on the nature of the dispute resolved and the part played by the court while superadding its seal to it Under clause a of section 12 3 of the Act if the conditions stated therein are satisfied the court has to pass a decree to evict the tenant from the demised premises So also under clause b of that sub section if the tenant fails to pay or tender in court the standard rent and permitted increases due on the first date of hearing of the suit or on or before such date as the court may fix the court has to pass a decree for ejectment In the present case the suit was governed by section 123 of the Act and even if we assume that it fell within the purview of clause b the tenant was liable to be evicted as admittedly the tenant had failed to pay or tender in court the standard rent and permitted increases due to the landlord as is obvious from clause 2 of the consent terms It is for this reason that the tenant suffered a decree for eviction and agreed to deliver possession of the suit premises by 10th October 1970 By clause 2 of the consent terms the tenant further agreed to pay to the landlord by 10th October 1970 the entire amount due including legal fees and expenses from the date of the suit till delivery of possession Clause 3 of the consent terms carries the crucial term that the tenant is given a concession and that concession is that if he pays the entire amount mentioned in clause 2 by 10th October 1970 the landlord will not execute the decree for possession That has given rise to the question whether clause 1 of the consent decree is in the nature of a penalty for non payment of the outstanding dues upto 10th October 1970 or clause 3 of the consent decree is merely a concession given to the tenant if he complies with the terms or requirements of that provision Now as pointed out earlier the ejectment suit was filed on the allegation that the tenant had neglected to pay the rent and other charges in respect of the demised 737 premises The suit was therefore founded on the right to evict conferred by section 123 of the Act We will assume that it was a case to which clause b to that sub section was attracted It is evident from the terms of the compromise that even on the date of the compromise in July 1970 the tenant was in arrears of rent If the suit had gave to trial the landlord may have secured a decree in ejectment for the tenant s failure to comply with the requirements of clause b of section 123 of the Act By clause 1 of the compromise decree it was therefore provided that the tenant will vacate and deliver possession of the demised premises by 10th October 1970 Failure to deliver peaceful possession by that date would entitle the landlord to take possession by execution of the decree Clause 2 indicates the rate at which the arrears will be calculated and clause 4 describes those rates as standard rent Clause 4 describes those rates as standard rent Clause 3 which is the crucial clause gives a concession What is that concession It is that if the tenant pays up the entire amount of arrears ie the amount involved in the suit meaning thereby the claim of arrears set out in the suit future mesne profits electricity and water charges the rent of the godown cost of the suit by 10th October 1970 the landlord will not execute the decree for possession Counsel for the appellant argued that as the tenant had failed to clear the arrears of rent and other charges payable under the terms of the lease he was liable ton be evicted under clause b of section 123 of the Act That is reflected in clause 1 of the compromise terms However the landlord gave a concession by clause 3 to the effect that if the entire arrears are cleared by 10th October 1970 he would not execute the decree for possession This counsel argued does not show that the decree for possession was provided for as in terrorism to be construed as a penalty and not a concession Counsel contended that while a penal stipulation on cannot be enforced a grant of a concession cannot undo the main operative part of the eviction decree unless it is shown that the tenant had done all that was necessary to avail of the concession Counsel for the tenant however insisted that the provision for delivery of possession is in the nature of a penalty and was therefore unenforceable He supported the judgment of the High Court and submitted that the appeal should be dismissed with costs It is settled law that unless the terms of contract are ambiguous the intention of the parties must be gathered from the terms themselves It is only where the terms are ambiguous and capable of more than one meaning that evidence aliunde can be permitted to gather the intention of the parties In our view the terms forming the basis of the consent decree in the instant case are clear and unambiguous and do not call for extrinsic material to gather the intention of the parties Two questions therefore arise for consideration namely i did the parties to the compromise intend to create or continue the relationship of landlord and tenant 738 and ii is the Clause providing for eviction penal in character Now as pointed out earlier by clauses 1 and 2 of the compromise terms the tenant is required to deliver vacant possession of the demised premises to ether with arrears of rent etc by 10th October 1970 It is further provided that if the tenant fails to deliver possession and defaults in paying the arrears due from him by 10th October 1970 the landlord will be entitled to recover both possession and arrears of rent etc by executing the decree Thus by the first two clauses of the consent terms the landlord secured a decree for possession as well as arrears of rent etc giving a grace period to the tenant to comply therewith by 10th October 1970 Thereafter by clause 3 of the consent terms the tenant is given a concession in that if he pays the entire arrears of rent mesne profits electricity and water charges cost of the suit etc by 10th October 1970 the landlord agrees not to execute the decree for possession In other words on the fulfillment of the obligation to clear the entire arrears of rent and other charges by 10th October 1970 the tenant is given a concession that the decree for possession passed against him will not be put to execution Such a clause cannot in our opinion be said to be penal in character It is necessary to understand when a clause in the contract can be described as penal in character Let us illustrate by taking two concrete situations A plaintiff files a suit to recover Rs 20000 with interest and costs from the defendant They enter into a compromise the terms whereof are as under Situation 1 The defendant shall pay to the plaintiff a sum of Rs 15000 and costs on or before 31st December 1993 If however he fails to pay the said amount of Rs 15000 with costs within the time stipulated the plaintiff will be at liberty to recover the entire sum of Rs 20000 with interest and costs from the defendant by executing the decree The latter clause of such a decree will clearly be in terrorem and therefore penal in character No court will execute the same Situation 2 The decree provides that the defendant shall pay Rs 20000 with interest and costs to the plaintiff However if the defendant pays Rs 1 5000 and costs on or before 3 1 st December 1993 to the plaintiff the plaintiff will treat the decree as fully satisfied and will not claim the balance amount from the defendant In such a case the latter clause operates as a concession and the 739 plaintiff waives his right to the balance amount Such a decree will be executable to the full extent if the defendant fails to avail of the concession by paying Rs 15000 and costs on or before 3 1 st December 1993 From the above two illustrations it should become clear that if the defendant is required to suffer the consequence for his failure to abide by the terms by a stipulated date such a consequence would be penal in nature but on the other hand if the defendant gets some benefit by complying with the requirement by the stipulated date such a clause granting benefit can never be treated as penal in character Applying this test to the decree in question it is obvious that by the first two clauses of the consent terms a decree for possession of the demised premises as well as arrears of rent etc is passed and the tenant is given a grace period upto 10th October 1970 to comply with the same failing which the landlord is given the right to put the decree to execution and obtain possession of the premises and recover the arrears of rent etc through court By clause 3 of the consent terms however the tenant is granted a concession that if he pays the entire rent etc due from him by 10th October 1970 the landlord will not put the decree to execution for recovery of possession This stipulation is clearly to secure his dues ie arrears of rent etc Depending on the situation in which a landlord is placed he may grant the concession to the tenant to ensure that the huge amount of arrears is not lost If he grants such a concession and agrees that if the entire arrears is cleared by a stipulated date he will not insist on possession that will not render the clause penal in nature In a given situation where the tenant is in financial difficulty and is not in a position to comply with the requirement of section 123 of the Act he can request the landlord to grant him a concession in the nature of relief against forfeiture If such a concession is to be read as penalty rendering the decree nonexecutable even where the tenant fails to satisfy the requirements of availing the concession no landlord will in future grant such a concession thereby causing hardship in deserving cases We are therefore of the opinion that the First Appellate Court as well as the High Court were in error in treating clause 3 of the consent terms as penal in character and incapable of execution If the condition precedent for availing of the benefit or concession under clause 3 of the consent terms is satisfied the relationship of landlord and tenant continues but if the tenant fails to comply with the condition precedent for availing of the benefit or concession the forfeiture operates and the tenant becomes liable for eviction under the decree The High Court has placed reliance on the Full Bench decision in Krishnabai vs Hari 8 BLR 8 13 and Gajanand Govind vs Pandurang Keshav 53 BLR 100 in 740 taking the view that the Executing Court can rant relief against forfeiture on the strength of section 114 of the The High Court seems to think that in execution of a consent decree such as the one with which we are concerned it is open to the Executing Court to go behind the decree by invoking section 114 TPAct notwithstanding section 123 of the Act In our view After the enactment of clause b to section 123 which is a special provision incorporating the equity provision contained in section 1 14TPAct in a modified form cases governed under the Act must be resolved in accordance with section 123 of the Act and not under section 1 14 TPAct The landlord s right to seek eviction has been drastically reduced and circumscribed by section 12 and 13 of the Act Similarly the tenant must also seek protection from eviction by complying with the requirements of the Act If such is not the legal position section 123 a of the Act which mandates the Court to pass a decree for eviction if the requirements of that clause are satisfied would be rendered wholly nugatory Same would be the position in the case of application of section 123 b of the Act because that clause precludes the passing of the decree if the tenant satisfies the requirements of that provision It must be remembered that after the enactment of the Act the landlord s right to reenter on expiry of the lease is curtailed by the provisions of the Act which has made special provisions granting protection from eviction if the tenant abides by his obligations under the Act Under the Act a tenant is allowed to continue in possession notwithstanding the termination of the contractual tenancy if he abides by the provisions of the Act If he fails to abide by the requirement of section 123 of the Act he must take the consequences flowing therefrom There is no question of granting him double protection That is what this Court clarified in Pradesh Kumar Bajpai vs Binod Behari Sharkar That was a case arising under the provisions of the UP Temporary Control of Rent and Eviction Act 1947 The question which was seriously debated at the Bar before this Court was whether in addition to the safeguards provided to the tenant under the said Act the tenant was also entitled to the benefit of section 1 14 TPAct The right of the landlord to have the tenant evicted was restricted under the said rent restriction legislation As that law had restricted the power of the landlord to evict the tenant except in accordance with the provisions therein contained the terms of the contract and the provisions of the TPAct it was urged were no longer attracted Clause a of section 31 inter alia provided that the suit may be filed with the permission of the District magistrate when the tenant is in arrears of rent for more than three months and has failed to pay the same to the landlord within one month of the service upon him of the notice of demand Dealing with this contention this Court held that once the requirements of the rent legislation are satisfied the tenant cannot claim the double protection of invoking the provisions of the TPAct or the terms of the contract and the provision of 741 section 114 TPAct cannot be read into the rent legislation This Court concluded thus In the case before us it is not indispute that after the Rent Act came into force the landlord cannot avail himself of clause 12 which provides for forfeiture even if the tenant neglected to pay the rent for over two months The landlord cannot enter into possession forthwith without notice The only remedy for him is to seek eviction under the provisions of the Rent Act In such circumstances the tenant cannot rely on section 114of the and claim that he should be given an opportunity to pay the arrears of rent even though the requirements of section 31 had been fulfilled It is therefore obvious that the tenant cannot avail of the benefit of section 114 TPAct since his case was governed by the provisions of section 123 b of the Act For the foregoing reasons we are of the opinion that the executing court was right in issuing a warrant for possession under order 21 Rule 35 of the Code against the tenant since the tenant had failed to take advantage of the concession clause by clearing the arrears of rent mesne profits etc by 10th October 1970 The First Appellate Court as well as the High Court were in error in holding that the decree was not executable as clause 3 thereof was in the nature of a penalty We set aside the order of the First Appellate Court as well as the High Court and remit the matter to the executing court to proceed further in accordance with law We may however make it clear that if there have been subsequent developments between the parties creating any de novo relationship that will not be affected by this order In the facts and circumstances of the case we make no order as to costs UR Appeal allowed

The respondent who owned landed properties at Banaras in Uttar Pradesh and at Purnea in Bihar was heavily indebted and applied to the Collector Banaras under section 4 of the U P Encumbered Estates Act 1934 for liquidation of his debts The Collector acting under section 6 forwarded the application to the Special judge appointed under the Act who on March 21 1940 passed after the enquiry directed by the Act three money decrees in favour of three creditors of the respondent and forwarded them to the Collector for execution Section 147 of the Act provided that such decrees were to be deemed to be decrees of a civil Court 365 of competent jurisdiction Section 243 of the Act provided that for purposes of execution against property outside U P such decrees were to be deemed to be in favour of the Collector The execution of the decrees was commenced by the Additional Collector Banaras against the respondent s properties in U P Thereafter the Additional Collector applied to the Additional Civil judge Banaras and on January 4 1947 got the said decrees transferred to the Subordinate judge Purnea and on March 17 1947 he applied to the Subordinate Judge for execution of the decrees by attachment and sale of the respondents properties at Purnea The Subordinate judge made an order directing execution to issue but on appeal the High Court set aside the order on the ground that the Subordinate Judge had no jurisdiction to entertain the execution application Held that the Subordinate judge Purnea had jurisdiction to execute the decrees By virtue of section 147 of the Act a decree of the Special judge was within U P a decree for all purposes of the Code of Civil Procedure and could properly be transferred under section 39 Of the Code for execution to a Court outside U P No question of extra territorial operation of the Act arose in the application of section 147 to the decrees as the Purnea Court was merely applying the U P Act to decrees passed in U P For the purposes of execution and sale the Additional Collector was to be deemed to be the Collector as he exercised the Collector s powers in this regard As such the applications for transfer and execution of the decree were properly made by the Additional Collector It was the same Court which exercised the powers of the Additional Civil Judge as also those of the Special judge The order of transfer of the decree made by the Additional Civil judge could be treated as having been made by the Special judge As such it was made by the same Court which passed the decrees and was a good order under section 39 of the Code The application for execution before the Subordinate judge Purnea was made while execution proceedings in respect of the same decrees were pending before the Additional Collector Banaras and was a continuation of the same No question of limitation could arise in respect of such an application

Appeal No 343 of 1955 Appeal from the judgment and order dated September 13 1954 of the Patna High Court in Misc Case No 39 of 1954 L K Jha B K P Sinha and R C Prasad for the appellant Mahabir Prasad Advocate General for the State of Bihar Ishwari Nandan Prasad and section P Varma for the respondents April 15 The Judgment of the Court was delivered by section K DAS J This appeal on a certificate granted by the High Court of Patna is from a judgment of the said High Court dated September 13 1954 in a writ proceeding numbered as Miscellaneous Judicial Case No 39 of 1954 in that court which the appellant had instituted on an application made under article 226 of the Constitution in the circumstances stated below It was alleged that one Mahatma Mast Ram Hindu saint owned and possessed considerable properties in the district of Monghyr in the State of Bihar About two hundred years ago he built a small temple at Salouna in which he installed a deity called Sri Thakur Lakshmi Narainji This temple came to be known as the Salouna asthal Mast Ramji died near about the year 1802 He was succeeded in turn by some of his disciples one of whom was Mahant Lakshmi Dasji He built a new temple in 1916 into which he removed the deity from the old temple and installed two new deities Sri Ram and Sita in 1919 Mahant Lakshmi Dasji died He left three disciples Vishnu Das Bhagwat Das and Rameshwar Das A dispute arose among these disciples about succession to the gaddi which was settled sometime in February 1919 By that settlement it was arranged that Vishnu Das would succeed Mahant Lakshmi Das as the shebait and would be succeeded by Bhagwat Das and thereafter the ablest bairagi of the asthal born of Brahmin parents would be eligible for appointment as 585 shebait Bhagwat Das died sometime in 1935 and again a dispute arose between one Rameshwar Das the youngest chela of Mahant Lakshmi Das and Ram Saroop Das who is the present Mahant and appellant before us Rameshwar Das it appears filed an application under the Charitable and Religious Trusts Act XIV of 1920 for a direction upon Mahant Ram Saroop Das to render an account of the usufruct of the asthal This application was contested by Mahant Ram Saroop Das who said that the properties appertaining to the Salouna asthal did not constitute a public trust within the meaning of the provisions of the Charitable and Religious Trusts Act XIV of 1920 and therefore he was not accountable to any person Mahant Ram Saroop Das also applied for and obtained permission under section 5 of the aforesaid Act to institute a suit for a declaration that the Salouna asthal and the properties thereof did not constitute a public trust Such a suit was brought in the court of the Subordinate Judge of Monghyr who however dismissed the suit Then there was an appeal to the High Court of Patna and by the judgment and decree passed in First Appeal No 10 of 1941 dated March 5 1943 the High Court gave a declaration to the effect that the Salouna asthal and the properties appertaining thereto did not constitute a public trust within the meaning of the provisions of the Charitable and Religious Trusts Act XIV of 1920 Some eight years later the Bihar Hindu Religious Trust Act 1950 Bihar I of 1951 hereinafter referred to as the Act was passed by the Bihar Legislature and received the President s assent on February 21 1951 It came into force on August 15 1951 The Bihar State Board of Religious Trusts one of the respondents before us was constituted under this Act to discharge in regard to religious trusts other than Jain religious trusts the functions assigned to it under the several provisions of the Act On November 14 1952 this Board in exercise of the powers conferred on it under section 59 of the Act asked the appellant to furnish to the Board a return of the income and expenditure of the asthol 74 586 The appellant replied by a letter dated December 1 1952 that the Salouna asthal was a private institution to which the Act did not apply and also drew the attention of the Board to the judgment and decree of the High Court in First Appeal No 10 of 1941 The Board however gave a reply to the effect that it was not bound by the declaration made by the High Court and asked the appellant to obtain a declaration in respect of his claim under the provisions of the Act or to submit a return Thereafter on January 22 1954 the appellant made his application under article 226 of the Constitution in which he averred a that the Salouna asthal was not a religious trust within the meaning of the Act b that the properties appertaining thereto did not constitute a religious trust and the appellant was not a trustee within the meaning of the Act e that the Act did not apply to private trusts and d that the demand made by the respondent Board amounted to an interference with the appellant s fundamental right to hold the asthal properties The appellant accordingly prayed for the issue of a writ quashing the order of the respondent Board requiring the appellant to submit a return of income and expenditure and also for an order directing the respondent Board and its officers to refrain from interfering with the appellant in his right of management of the Salouna asthal and the properties appertaining thereto The High Court of Patna by its judgment complained against dismissed the petition on the main ground that the language of section 21 of the Act which defined a I religious trust for the purposes of the Act was wide enough to cover within its ambit both private and public trusts recognised by Hindu law to be religious pious or charitable and that the Salouna asthal did not come within any of the two exceptions recognised by the section namely 1 a trust created ac cording to Sikh religion or purely for the benefit of the Sikh community and 2 a private endowment created for the worship of a family idol in which the public are not interested The High Court also held that the materials on the record were not sufficient to decide 587 the question whether the Salouna asthal and the properties thereof constituted a religious trust of a public character but proceeding on the footing that the Act applied to private trusts it expressed the view that the restrictions imposed on the trustee by the several provisions of the Act were not violative of the fundamental right guaranteed under article 191f of the Constitution inasmuch as there was no legal reason why the State should not exercise superintend ence and control over the administration of private trusts as in the case of public trusts In a judgment dated October 5 1953 dealing with the same question in some earlier cases the High Court had however expressed a somewhat different view It had then referred to the principle that when a legislature with limited power makes use of a word of wide and general import the presumption must be that it is using the word with reference to what it is competent to legislate and adopting that principle it said that section 21 of the Act should be read in a restricted sense so as to include only Hindu religious or charitable trusts of a public character and the provisions of the Act would accordingly apply to such trusts only The principal point urged before us on behalf of the appellant is one of construction do the provisions of the Act apply to private religious trusts The contention of the appellant is that they do not It is necessary to refer at this stage to some of the relevant provisions of the Act In connected Civil Appeals Nos 225 226 228 229 and 248 of 1955 1 in which also we are delivering judgment today we have referred to the provisions of the Act in somewhat greater detail In this appeal we shall refer to such provisions only as have a bearing on the principal point We start with the definition clause in section 2 1 It says religious trust means any express 6r constructive trust created or existing for any purpose recognised by Hindu Law to be religious pious or charitable but shall not include a trust created according to the Sikh religion or purely for the benefit of the Sikh 1 Mahant Moti Das vs SP Sahi see P 563 ante 588 community and a private endowment created for the worship of a family idol in which the public are not interested The expression trust property in a 2 p means the property appertaining to a religious trust and the expression trustee in section 2 n is defined in the following terms I trustee means any person by whatever designation known appointed to administer a religious trust either verbally or by or under any deed or instrument or in accordance with the usage of such trust or by the District Judge or any other competent authority and includes any person appointed by a trustee to perform the duties of a trustee and any member of a Committee or any other person for the time being managing or administering any trust pro perty as such The next important section for our purpose is section 4 as amended by Bihar Act XVI of 1954 which gives effect to certain amendments and repeals Sub section 5 of section 4 is in these terms The XX of 1863 and section 92 of the Code of Civil Procedure 1908 V of 1908 shall not apply to any religious trust in this State as defined in this Act Chapter V of the Act contains a series of sections which delimit the powers and duties of the State Board of Religious Trusts Section 28 the opening section of the chapter states the general powers and duties of the Board Section 291 has a bearing on the question at issue before us It states inter alia that where the supervision of a religious trust is vested in any committee or association appointed by the founder or by a competent court or authority such committee or association shall continue to function under the general superintendence and control of the Board unless superseded by the Board under sub section 2 of the section If an order of supersensible is passed the committee or association or any other person interested in the religious trust may within 30 days of the order of the Board under sub section 2 make an application to the District Judge for varying modifying or setting aside 589 the order of supersession Section 30 so far as it is relevant for our purpose states When any object of a religious trust has ceased to exist or has in the opinion of the Board become impossible of achievement the Board may of its own motion or on the application of any Hindu after issuing notice in the prescribed manner to the trustee of such trust and to such other person as may appear to the Board to be interested therein and after making such inquiry as it thinks fit determine the object which sfiall be similar or as nearly similar as practicable to the object which has ceased to exist or become impossible of achievement to which the funds property or income of the trust or so much of such fund property or income as was previously expended on or applied to the object which has ceased to exist or become impossible of achievement shall be a plied Section 32 defines the power of the Board to settle schemes for proper administration of religious trusts It states 321 The Board may of its own motion or on application made to it in this behalf by two or more persons interested in any trust a settle a scheme for such religious trust after making such inquiry as it thinks fit and giving notice to the trustee of such trust and to such other person as may appear to the Board to be interested therein b in like manner and subject to the like conditions modify any scheme settled under this section or under any other law or substitute another scheme in its stead Provided that any scheme so settled modified or substituted shall be in accordance with the law governing the trust and shall not be contrary to the wishes of the founder so far as such wishes can be ascertained 2 A scheme settled modified or substituted instead of another scheme under this section shall unless otherwise ordered by the District Judge on an application if any made under sub section 3 come into force on a day to be appointed by the Board in this behalf and shall be published in the official gazette 590 3 The trustee of or any other person interested in such trust may within three months from the date of the publication in the official gazette of the scheme so settled modified or substituted instead of another scheme as the case may be make an application to the District Judge for varying modifying or setting aside the scheme but subject to the result of such application the order of the Board under sub sections 1 and 2 shall be final and binding upon the trustee of the religious trust and upon every other person interested in such religious trust 4 An order passed by the District Judge on any application made under sub section 3 shall be final It may be here stated that the expression person interested in religious trust is defined in section 2g The definition is in these terms person interested in a religious trust means any person who is entitled to receive any pecuniary or other benefit from a religious trust and includes 1 any person who has a right to worship or to perform any rite or to attend at the performance of any worship or rite in any religious institution connected with such trust or to participate in any religious or charitable ministration under such trust ii the founder and any descendant of the founder and iii the trustee The only other section which need be quoted in full is section 48 of the Act which is in these terms 481 The Board or with the previous sanction of the Board any person interested in a religious trust may make an application to the District Judge for an order a removing the trustee of such religious trust if such trustee 1 acts in a manner prejudicial to the interest of the said trust or ii defaults on three or more occasions in the payment of any amount payable under any law for the time being in force in respect of the property or income of the said trust or any other statutory charge on such property or income or 591 iii defaults on three or more occasions in the payment of any sum payable to any beneficiary under the said trust or in discharging any other duty imposed upon him under it or iv is guilty of a breach of trust b appointing a new trustee e vesting any property in a trustee d directing accounts and inquiries or e granting such further or other relief as the nature of the case may require 2 The order of the District Judge under sub section 1 shall be final Now the argument on behalf of the appellant is that on a true and proper construction of the aforesaid provisions of the Act considered in the background of previous legislative history with regard to religious charitable or pious trusts in India the definition clause in section 2 1 of the Act is confined to religious pious or charitable trusts of a public nature recognised as such by Hindu law In order to appreciate this argument it is necessary to state first the distinction in Hindu law between religious endowments which are public and those which are private To put it briefly the essential distinction is that in a public trust the beneficial interest is vested in an uncertain and fluctuating body of persons either the public at large or some considerable portion of it answering a particular description in a private trust the beneficiaries are definite and ascertained individuals or who within a definite time can be definitely ascertained The fact that the uncertain and fluctuating body of persons is a section of the public following a particular religious faith or is only a sect of persons of a certain religious persuasion would not make any difference in the matter and would not make the trust a private trust see the observations in Nabi Shirazi vs Province of Bengal 1 The distinction in this respect between English law and Hindu law has been thus stated by Dr Mukherjea in his Tagore Law Lectures on the Hindu Law of Religious and Charitable Trusts 1952 Edition pp 392 396 In English law charitable trusts are synonymous 1 1942 ILR I cal 211 228 592 with public trusts and what is called religious trust is only a form of charitable trust The beneficiaries in a charitable trust being the general public or a section of the same and not a determinate body of individuals the remedies for enforcement of charitable trust are somewhat different from those which can be availed of by beneficiaries in a private trust In English law the Crown as parens patriae is the constitutional protector of all property subject to charitable trusts such trusts being essentially matters of public concern One fundamental distinction between English and Indian law lies in the fact that there can be religious trust of a private character under Hindu law which is not possible in English law On behalf of the appellant it has been pointed out that so far as public religious and charitable trusts are concerned there are a number of legislative enactments both general and local which aim at controlling the management and administration of such trusts and provide for remedies in cases of maladministration So far as private religious trusts are concerned there are no specific statutory enactments and such trusts are regulated by the general law of the land The British Government when it was first established in India following the tradition of the former rulers asserted by virtue of its sovereign authority the right to visit public religious and charitable endowments and to prevent and redress abuses in their management A Regulation for that purpose was passed in Bengal in 1810 Regulation XIX of 1810 and one for Madras in 1817 Regulation VII of 1817 In Bombay also there was a Regulation XVII of 1827 which related to endowments of the same character In 1863 was passed the XX of 1863 which repealed the Bengal and Madras Regulations in so far as they related to purely religious institutions and their control was transferred from the Board of Revenue to non official committees constituted under the Act of 1863 It is worthy of note however that the Act of 1863 also applied to public religious endowments only In course of time it was found that the Act of 1863 did not provide adequate protec 593 tion to public religious trust against abuses which led to their control by the State and the remedies provided by that Act did not go far enough Then came the VI of 1890 and the Charitable and Religious Trusts Act 1920 XVI of 1920 both of which related to public trusts the former related exclusively to public trusts for charitable purposes unconnected with religious teaching or worship while the latter related to trusts created for public purposes of a charitable or religious nature In the Civil Procedure Code of 1877 a specific section was introduced viz section 539 under which a suit could be instituted in case of any alleged breach of any express or constructive trust created for public religious or charitable purposes This section was later amended and in this amended form it became section 92 of the present Civil Procedure Code the first condition necessary to bring a case within its purview being the existence of a trust whether express or constructive for public purposes of a religious or charitable nature It is clear beyond doubt that a private trust is outside the operation of section 92 Civil Procedure Code Of the local Acts the earliest was that of the Bombay Presidency of the year 1863 In more recent years were passed the Orissa Hindu Religious Endowments Act 1939 the Bombay Public Trusts Act 1950 and the Madras Hindu Religious and Charitable Endowments Act 1951 all of which relate to public religious institutions and endowments No local Act has been brought to our notice which clearly or unmistakenly sought to include within its ambit private religious trusts On behalf of the appellant it has been submitted that though the definition clause in section 2 1 of the Act is expressed in wide language other provisions of the Act make it clear that it is confined to public trusts only Section 2 1 of the Act we have pointed out recognises two exceptions first a trust created according to the Sikh religion or purely for the benefit of the Sikh community and second a private endowment created for the worship of a family idol in which the public are not interested It is not disputed 75 594 that the second exception is an instance of a private trust in which the public are not interested The High Court has taken the view that inasmuch as the definition clause mentions by way of an exception only one instance of a private endowment all private endowments created otherwise than for the worship of a family idol must be included within the definition Of the maxim of expression unius exclusio alterius We do not think that this view is quite correct First of all let us examine some other provisions of the Act which specifically refer to the definition clause and see what the legislature has itself taken it to mean Take for example section 4 of the Act as amended by Bihar Act XVI of 1954 This section amends and repeals certain earlier Acts like the and the Charitable and Religious Trusts Act 1920 both of which we have already pointed out related exclusively to public trusts Sub section 5 of section 4 states that the and section 92 of the Code of Civil Procedure 1908 shall not apply to any religious trust in the State as defined in this Act The and section 92 Civil Procedure Code both apply to public trusts they have no application to private trusts If the definition clause was intended to include within its ambit private trusts other than those created for the wor ship of a family idol then it is difficult to understand why sub section 5 of section 4 should be worded as it has been done That sub section in effect says that two earlier enactments which apply exclusively to public trusts shall not apply to any trust we emphasise the word any as defined in the Act If private trusts created otherwise than for the worship of a family idol were included in the definition of religious trust then sub section 5 was entirely otiose or redundant so far as those private trusts were concerned for the earlier enactments never applied to them The obvious indication is that all trusts defined in the Act are public trusts and therefore it became necessary to exclude the operation of earlier enactments which but for the exclusion would have applied to such trusts If the intention of sub section 5 of section 4 was to exclude some trusts 595 only out of many included within the definition clause from the operation of the earlier enactments as is contended for by the learned Advocate General of Bihar then the use of the word any appears to us to be particularly inapt Sub section 5 of section 4 was amended by Bihar Act XVI of 1954 Before the amendment it read as follows section 45 The and section 92 of the Code of Civil Procedure 1908 shall not apply to any Hindu Religious Trust in the State of Bihar Prior to the amendment sub section 5 made no reference to the definition clause it merely said that two of the earlier enactments shall not apply to any Hindu Religious Trust in the State of Bihar The amended subsection however specifically refers to the definition clause and states that two of the earlier enactments which apply only to public trusts shall not apply to any trusts as defined in the Act In our opinion by sub section 5 of section 4 the Legislature itself has spoken and indicated the true scope and effect of the definition clause Secondly it may be asked why the legislature having before it the earlier enactments which applied to public trusts only failed to use the word public before the word purpose in the definition clause This is a pertinent question which must be faced The answer we think is this Charitable trusts are public trusts both under the English and Indian law in England a religious trust being a form of charitable trust is also public but in India according to Hindu law religious trust may be public or private But the most usual and commonest form of a private religious trust is one created for the worship of a family idol in which the public are not interested Any other pri vate religious trust must be very rare and difficult to think of Dealing with the distinction between public and private endowments in Hindu law Sir Dinshah Mulla has said at p 529 of his Principles of Hindu Law 11th edition Religious endowments are either public or private In a public endowment the dedication is for 596 the use or benefit of the public When property is set apart for the worship of a family god in which the public are not interested the endowment is a private one Obviously enough the definition clause merely quotes the typical example of a private endowment mentioned above It is also significant that the exclusion of an endowment created for the worship of a family idol is based on the adjectival clause which follows it viz in which the public are not interested In other words the exclusion is based on the essential distinction between a public and private trust in Hindu law If the test is that the public or any section thereof are not interested in the trust such a test is characteristic of all private trusts in Hindu law It also shows that there may be a trust created for the worship of a family idol in which the public may be interested Those are cases of trust which began as a private trust but which eventually came to be thrown open to the public This also indicates that the definition was intended to cover only public trusts We now turn to some of the other provisions of the Act which we have earlier quoted Section 291 which talks of supervision of a religious trust being vested in any committee or association appointed by the founder or by a competent court or authority is ordinarily appropriate in the case of a public trust only Section 301 which embodies the doctrine of cypress permits any Hindu to make an application for invoking the power of the Board to determine the object to which funds property and income of a religious trust shall be applied where the original object of the trust has ceased to exist or has become impossible of achievement This section is also inappropriate in the case of a private trust the obvious reason being that any and every Hindu cannot be interested in a private trust so as to give him a locus stand to make the application Further it is difficult to visualise that a Hindu private rebutter will fail for a deity is immortal Even if the idol gets broken or is lost or stolen another image may be consecrated and it cannot be said that the original object has ceased to exist Sec 597 tion 32 is an important section of the Act and confers power on the Board to settle schemes for proper administration of religious trusts Now the section says that the Board may exercise the power of its own motion or on application made to it in this behalf by two or more persons interested in any trust The language of the section follows closely the language of section 92 Civil Procedure Code so far as the phrase two or more persons interested in any trust is concerned It is difficult to understand why in the case of a private trust it should be necessary that two or more persons interested in the trust must make the application to settle a scheme for such a trust In a private or family rebutter the beneficiaries are a limited and defined class of persons as for example the members of a family If the trustee or shebait is guilty of mismanagement waste wrongful alienation of debutter property or other neglect of duties a suit can certainly be instituted for remedying these abuses of trust Under the general law of the land the founder of the endowment or any of his heirs is competent to institute a suit for proper administration of the debutter for removal of the old trustee and for appointment of a new one It is not necessary in such a case that two or more persons interested in the trust must join in order to institute the suit The condition of two or more persons is appropriate only to a public trust the reason being that a public trust is a matter of public concern Section 48 of the Act is also analogous to section 92 of the Code of Civil Procedure and one of the reasons for excluding the operation of section 92 of the Code of Civil Procedure from trusts as defined by the Act is the existence of provisions in the Act which are analogous to section 92 of the Code of Civil Procedure This section is also more appropriate to public trusts than to private trusts In fact the Act contains provisions as the preamble states for the better administration of Hindu religious trusts in the State of Bihar and for the protection and preservation of properties appertaining to such trusts and for that purpose certain earlier enactments like the the 598 the Charitable and Religious Trusts Act 1920 and the Civil Procedure Code 1908 have either been amended or excluded from operation All those earlier enactments related only to public trusts and if the intention was that the Act would apply to private trusts as well one would expect that intention would be made clear by the use of unambiguous lan guage We find on the contrary that though the definition clause in section 21 is expressed in somewhat wide language sub section 5 of section 4 makes clear what the true scope and effect of the definition clause is For the reasons given above we hold that the definition clause does not include within its ambit private trusts and the Act and its provisions do not apply to such trusts Learned counsel for the appellant has in the alternative argued before us that if the Act applies to private trusts several of its provisions will be violative of the fundamental right guaranteed to citizens under article 191f of the Constitution inasmuch as the restrictions imposed thereby on trustees of private trusts in which the public are not interested cannot be justified as reasonable restrictions in the interests of the general public within the meaning of cl 5 of article 19 The High Court negatived this argument by adopting the rule of English law that in the case of a charitable corporation where the founder is a private person he and his heirs become visitors in law and where such heirs are extinct or incompetent their powers devolve on the Crown or the State therefore it is in the interests of the general public that the State should exercise superintendence and control over the administration of private trusts as in the case of public trusts This view of the High Court has been seriously contested before us and learned counsel for the appellant has submitted that there is no war rant for the adoption of the rule of English law in view of the fundamental distinction between English and Hindu law as to private religious trusts He has also drawn our attention to the following observations of Dr Mukherjea Hindu Law of Religious and Charitable Trust 1952 Edition p 393 on this point 599 In English law there is a visitatorial power attached to all eleemosynary corporations A visitor has the right to settle disputes between members of the corporation to inspect and regulate their actions and generally to correct all abuses and irregularities in the administration of charity The law allows to the founder of an eleemosynary institution full powers to make regulations for its creation and such powers include the right of nominating visitors Under the law of England as it stood before 1926 if a private person was the founder of a charitable corporation then he and his heirs became automatically the visitors The descent of the rights of a visitor to heirs has now been abolished by the Administration of Estates Act 1925 and it is not clear as to who would be visitor in default of appointment by the founder Most probably such rights would devolve upon the Crown as they did when the founder s heirs became extinct or could not be found or the heir was a lunatic He has further submitted that whatever be the position in English law the guarantee of a fundamental right must depend on the terms of article 19 of the Constitution and such guarantee cannot be whittled down by importing artificial rules of English law In view of our finding on the question of construction of the definition clause read with section 4 5 and other provisions of the Act we consider it unnecessary to pronounce finally on the contentions referred to in the preceding paragraph except merely to state that a serious question of the constitutional validity of several provisions of the Act would have undoubtedly arisen if the Act were held to apply to private trusts as well On our finding that the Act does not apply to private trusts the appellant is entitled to succeed in his appeal The High Court has said that the materials on the record of the case are not sufficient to decide the question whether the Salouna asthal and the properties of the mahant constitute a trust of a public character This question however was the subject of a contested litigation and the appellant had obtained a declaration in First Appeal No 10 of 1941 that the Salouna asthal 600 and the properties appertaining there to did not constitute a public trust The respondents were not parties to that litigation and may not be bound by that judgment but on behalf of the respondents no affidavit was filed nor were any materials placed to show that the position is different from what was declared by the High Court The High Court commented on the fact that the appellant did not produce before the court all the documents in his possession A petition has been filed before us for taking in evidence the documents which were considered by the High Court in First Appeal No 10 of 1941 We do not think that in the circumstances of this case it is necessary to consider that evidence afresh As long as the declaration made by the High Court in First Appeal No 10 of 1941 stands and in the absence of some evidence to the contrary the appellant is entitled to say that the Salouna asthal and the properties appertaining thereto do not Constitute a public trust and the Act and its provisions do not apply to it Our attention has been drawn to section 43 of the Act as amended by Act XVII of 1956 That section says inter alia that all disputes as to whether any immovable property is or is not a trust property shall be inquired into either on its own motion or on an application by the authority appointed in this behalf by the State Government by notification in the official gazette Without expressing any opinion as to the constitutional validity of section 43 of the Act we merely point out that no decision has been given under section 43 of the Act as it stood prior or after the amendment against the appellant in respect of the Salouna asthal and the properties appertaining thereto It would be open to the respondents to take such steps as may be available to them in law to get it determined by a competent authority that the trust in question is a public trust We would accordingly allow this appeal set aside the judgment and order of the High Court dated September 13 1954 and direct the issue of an appropriate writ quashing the order of the respondent Board calling upon the appellant to file a statement of income and expenditure with regard to the properties of the Salouna 601 asthal and also prohibiting the respondents from interfering with the rights of the appellant in the management of the Salouna asthal and the properties appertaining thereto unless and until the respondents have obtained the necessary determination that the Salouna asthal is a public trust The appellant will be entitled to his costs throughout Appeal allowed

The respondent assessee challenged the best judgment assess ment for the ear 1972 73 The First Appellate Authority dismissed it its limine on the ground that the respondent had failed to pay the tax not disputed In appeal A second appeal was dismissed by the Karnataka Appellate Tribunal The High Court allowed the revision petition of the assessee on the ground that the additional tax payable under section 6B was distinct from the tax in S20 3 on the payment of which the right of appeal is made dependent In the appeal by the State to this Court the question was whether the mandate unders 203 to pay the undisputed tax before the appeal is entertained is also applicable to additional tax payable under s6B of the Act Allowing the appeal this Court HELD 1 The expression tax has been defined to mean a tax leviable under the provisions of the Act and as such includes the additional tax levied under section 6B of the Act When Section 20 3 talks of payment of the tax and penalty not disputed in the appeal it obviously includes the additional tax 85 B On the plain language of section 20 3 the only conclusion which can he drawn is that the undisputed tax which includes additional tax has to he deposited before the appeal is entertained 85 C 82 2 The fact that the quantum in of the additional tax is determined with reference to the sales tax purchase tax imposts would not alter its character The additional tax is nothing but an enhancement in the rate of the sales taxpurchase tax under the Act As soon as the assessing authority determines the levy of sales taxpurchase tax the additional tax under Section 6B become part of the assessment order Similarly if the main impost under Section 5 1 is successfully challenged the reasoning sustaining the challenge would also ipso facto affect the validity if the additional impost under Section 6B of the Act 85 D E

ION Criminal Appeal No 66 of 1954 Appeal from the judgment and order dated the 31st December 1953 of the Punjab High Court in Criminal Appeal No 540 of 1953 arising out of the judgment and order dated the 14th September 1953 of the Court of Special Judge Amritsar in Corruption Case No 131 103 of 1953 Shaukat Hussain for the appellant Gopal Singh and T M Sen for the respondent October 25 The following judgment of the Court was delivered by 763 KAPUR J The sole point in this appeal against the judgment and order of the Punjab High Court pronounced on December 31 1953 is the validity and effect of the sanction given under section 61 of the Prevention of Corruption Act Act 2 of 1947 hereinafter termed the Act The appellant was prosecuted for receiving illegal gratification and the charge against him was in the following terms That you Jaswant Singh while employed as a Patwari Fatehpur Rajputan habitually accepted or obtained for yourself illegal gratification and that you received in the sum of Rs 50 on 19 3 1953 at Subzi Mandi Amritsar from Pal Singh P W as a reward for forwarding the application Es P A with your recommendation for helping Santa Singh father of Pal Singh in the allotment of Ahata No 10 situate at village Fatehpur Rajputan and thereby committed an offence of Criminal misconduct in the discharge of your duty mentioned in section 51a of the Prevention of Corruption Act 1947 punishable under sub section 2 of section 5 of the aforesaid Act and within my cognizance The Special Judge found that the appellant had accepted illegal gratification from Pal Singh Hazara Singh Harnam Singh Joginder Singh Atma Singh Hari Singh and Ganda Singh and that he had received Rs 50 from Pal Singh on March 19 1953 at Subzi Mandi Amritsar He then held The charge under section 5 1a of the Prevention of Corruption Act 1947 has been established against him beyond reasonable doubt He is guilty of an offence punishable under sub section 2 of section 5 of the said Act The appellant took an appeal to the High Court of the Punjab and Dulat J held that taking into consideration the sanction which will be quoted hereinafter The appellant could neither have been charged nor convicted of what is probably a much graver offence of habitually accepting bribes 97 764 But he held that sanction was valid qua the charge of accepting illegal gratification of Rs 50 from Pal Singh The conviction was therefore upheld but the sentence was reduced to the period already undergone and the sentence of fine maintained The argument raised by the appellant in this court is that as the sanction was confined to illegal gratification of Rs 50 paid by Pal Singh and the charge was for habitually accepting illegal gratification the trial was without jurisdiction and the appellant could not be convicted even for the offence which was mentioned in the sanction The sanction was in the following terms Whereas I am satisfied that Jaswant Singh Patwari son of Gurdial Singh Kamboh of village Ajaibwali had accepted an illegal gratification of Rs 50 in 5 currency notes of Rs 10 denomination each from one Pal Singh son of section Santa Singh of village Fatehpur Rajputan Tehsil Amritsar for making a favorable report on an application for allotment of an ahata to section Santa Singh father of the said section Pal Singh And whereas the evidence available in this case clearly discloses that the said section Jaswant Singh Patwari had committed an offence under Section 5 of the Prevention of Corruption Act Now therefore 1 N N Kashyap Esquire ICS Deputy Commissioner Asr as required by Section 6 of the Prevention of Corruption Act of 1947 hereby sanction the prosecution of the said section Jaswant Singh Patwari under section 5 of the said Act Section 61 of the Act provides for sanction as follows No Court shall take cognizance of an offence punishable under Section 161 or Section 165 of the Indian Penal Code or under sub section 2 of section 5 of this Act alleged to have been committed by a public servant except with the previous sanction Section 5 1a relates to a case of a public servant if he habitually accepts illegal gratification and section 51d 765 if he obtains for himself any valuable thing or pecuniary advantage The contention comes to this that as the sanction was only for receiving Rs 50 as illegal gratification from Pal Singh and therefore an offence under section 5 1d the prosecution the charge and conviction should have been under that provision and had that been so there would have been no defect in the jurisdiction of the court trying the case nor any defect in the conviction but as the appellant was tried under the charge of being a habitual receiver of bribes and the sanction was only for one single act of receiving illegal gratification the trial was wholly void as it was a trial by a court without jurisdiction The sanction under the Act is not intended to be nor is an automatic formality and it is essential that the provisions in regard to sanction should be observed with complete strictness Basque Agarwala vs King Emperor 1 The object of the provision for sanctions is that the authority giving the sanction should be able to consider for itself tile evidence before it comes to a conclusion that the prosecution in the circumstances be sanctioned or forbidden In Gokulchand Dwarkadas Morarka vs The King 2 the Judicial Committee of the Privy Council also took a similar view when it observed In their Lordships view to comply with the provisions of cl 23 it must be proved that the sanction was given in respect of the facts constituting the offence charged It is plainly desirable that the facts should be referred to on the face of the Sanction but this is not essential since cl 23 does not require the sanction to be in any particular form nor even to be in writing But if the facts constituting the offence charged are not shown on the face of the sanction the prosecution must prove by extraneous evidence that those facts were placed before the sanctioning authority The sanction to prosecute is an important matter it constitutes a condition precedent to the institution of the prosecution and the Government have an absolute discretion to grant or withhold their sanction 11945 FCR 9398 2 1948 LR 75 IA30 37 766 It should be clear from the form of the sanction that the sanctioning authority considered the evidence before it and after a consideration of all the circumstances of the case sanctioned the prosecution and therefore unless the matter can be proved by other evidence in the sanction itself the facts should be referred to indicate that the sanctioning authority had applied its mind to the facts and circumstances of the case In Yusofalli Mulla Noorbhoy vs The King 1 it was held that a valid sanction on separate charges of hoarding and profiteering was essential to give the court jurisdiction to try the charge Without such sanction the prosecution would be a nullity and the trial without jurisdiction In the present case the sanction strictly construed indicates the consideration by the sanctioning authority of the facts relating to the receiving of the illegal gratification from Pal Singh and therefore the appellant could only be validly tried for that offence The contention that a trial for two offences requiring sanction is wholly void where the sanction is granted for one offence and not for the other is in our opinion unsustainable Section 61 of the Act bars the jurisdiction of the court to take cognizance of an offence for which previous sanction is required and has not been given The prosecution for offence under section 51d therefore is not barred because the proceedings are not without previous sanction which was validly given for the offence of receiving a bribe from Pal Singh but the offence of habitually receiving illegal gratification could not be taken cognizance of and the prosecution and trial for that offence was void for want of sanction which is a condition precedent for the courts taking cognizance of the offence alleged to be committed and therefore the High Court has rightly set aside the conviction for that offence In Hori Ram Singh vs The Crown1 the charges against a public servant were under sections 409 and 477A Indian Penal Code one for dishonestly converting and misappropriating certain medicines entrusted to the public servant and the other for wilful omission with intent to defraud to record certain entries in the 11949 LR 76 IA158 21939 FCR159 767 account books of the hospital where he was employed Thus two distinct offences were committed in the course of the same transaction in which the one under section 477A Indian Penal Code required sanction unders 2701 of the Government of India Act and the other under section 409 Indian Penal Code did not But the bar to taking cognizance of the former offence was not considered a bar to the trial for an offence for which no sanction was required and therefore the proceedings under section 477A were quashed as being without jurisdiction but the proceedings under section 409 Indian Penal Code were allowed to proceed Similarly the Supreme Court in Basir ul Huq vs The State Of West Bengal 1 held section 195 Criminal Procedure Code to be no bar to the trial for a distinct offence not requiring sanction although disclosed by the same facts if the offence is not included in the ambit of an offence requiring such sanction The want of sanction for the offence of habitually accepting bribes therefore does not make the taking of cognizance of the offence of taking a bribe of Rs 50 from Pal Singh void nor the trial for that offence illegal and the court a court without jurisdiction The submission next raised is that the evidence in support of being habitually a receiver of bribes has caused serious prejudice to the defence of the appellant but no such prejudice has been shown nor does the judgment of the High Court which has proceeded on the evidence in support of the charge of Pal Singh s transaction indicate the existence of any prejudice and there was nothing indicated before us leading to the conclusion of prejudice or to consequent failure of justice The High Court came to the conclusion that the trial for the offence of habitually accepting illegal gratification could not be validly tried and evidence led on that charge could not be considered but the conviction of receiving a bribe of Rs 50 from Pal Singh is well founded and also that the appellant has not been prejudiced in the conduct of his defence 1 768 No arguments were addressed to this court on the correctness of the finding of the High Court in regard to the conviction for receiving illegal gratification from Pal Singh We agree with the opinion of the High Court that the offence under section 51 d of receiving illegal bribe of Rs 50 has been made out and would therefore dismiss this appeal Appeal dismissed

The appellant landlord filed an eviction suit for possession of the demised premises mainly on the ground of arrears of rent under Section 123 of the Bombay rent Act 1947 The suit was settled between the parties By the terms of the compromise possession would be given by the tenant to the landlord by 10 October 1970 or the landlord may recover possession by execution based on this decree but if the tenant paid the entire arrears in full by 10 October 1970 the landlord would not execute the decree for possession The tenant failing to pay the entire arrears as stipulated the landlord decree holder filed execution proceedings The executing Court issued a warrant for possession but the Appellate Court set aside the order and dismissed the prayer for eviction The High Court remanded the matter to the Appellate Court to determine the character of the compromise terms That court again allowed the appeal and dismissed the execution proceedings altogether On appeal the High Court agreed with the Appellate Court It found 730 that clause permitting eviction was penal in nature and therefore not enforceable The questions before this court weredid the parties to the compromise intend to create or continue the relationship of landlord and tenant whether the compromise terms in the consent decree were penal in nature or merely gave a concession and whether Section 114 Transfer of Property Act could be invoked while executing a decree for possession notwithstanding Section 123 of the Bombay Act Allowing the appeal this Court HELD It is well settled that a decree passed on the basis of a compromise by and between the parties is essentially a contract between the parties which derives sanctity by the court superadding its seal to the contract But all the same the consent terms retain all the elements of a contract to which the court s imprimaturs is affixed to give it the sanctity of an executable court order The court will not add its seal to the compromise terms unless the terms are consistent with the relevant law 735 H If the law vests exclusive jurisdiction in the court to adjudicate on any matter the court will not add its seal to the consent terms unless it has applied its mind to the question In such a case it is the independent satisfaction of the court which changes the character of the document from a mere contract to a court s adjudication which will stop the tenant from contending otherwise in any subsequent proceedings and operate as resjudicata 736 B The character of the con sent decree will depend on the nature of the dispute resolved and the part played by the court while superadding its seal to it 736 C 2 If a defendant is required to suffer the consequence of his failure to abide by terms stipulated such consequence would he penal in nature But if the defendant gets some benefit by complying with a requirement such as clause can never be penal in character 739 B 3 Admittedly the tenant had failed to pay or tender in court the 731 standard rent and permitted increases due to the landlord 736 E The clause in the consent terms whereby upon payment of the entire rent etc due from the tenant by a stipulated date was dearly to secure his dues ie arrears of rent etc This is in the nature of a concession Where a landlord grants a concession and agrees that if the entire arrears is cleared by a stipulated date he will not insists possession that will not render the clause penal in nature 739 E 4 If the condition precedent for availing of the benefit of concession under clause 3 of the consent terms is satisfied the relationship of landlord and tenant continues but if the tenant fails to comply with the condition precedent for availing of the benefit or concession the forfeiture operates and the tenant becomes liable for eviction under the decree 739 G 5 After the enactment of clause b to section 123 which is a special provision incorporating the equity provision contained in section 114 TP Act in a modified form cases governed under the Act must he resolved in accordance with section 123 of the Act and not under section 114 TP Act The landlord s right to seek eviction has been drastically reduced and circumscribed by sections 12and 13 of the Act Similarly the tenant must also seek protection from eviction by complying with the requirements of the Act 740 B If such is not the legal position Sections 12 3 a and 12 3 b would be rendered wholly nugatory Under the Act a tenant is allowed to continue in possession notwithstanding the termination of the contractual tenancy if the abides by the provisions of the Act If he fails to abide by the requirement of section 123 of the Act he must take the consequences flowing therefrom There is no question of granting him double protection 740 C E Krishnabai vs Hari 8 BLR 813 and Gajanand Govind vs Pandurang Keshav 53 BLR 100 referred to 840 B Pradesh Kumar Bajpai vs Binod Behari Sharkar 1980 3SCR 93 relied on 840 H

Appeal No 4 of 1956 Appeal by special leave from the judgment and order dated June 10 1953 of the Calcutta High Court in Income tax Reference No 39 of 1952 K N Rajagopal Sastri R H Dhebar and D Gupta for the appellant B Sen P K Ghosh and P K Bose for the respondent April 20 The following Judgments were delivered SINHA J The question for determination in this appeal by special leave is whether the assesses the Calcutta National Bank Ltd in liquidation is liable to Excess Profits Tax in respect of Rs 86000 which it realised by way of rent of the building at its headquarters in Calcutta during the accounting period 663 ending March 31 1946 The Department and the Income tax Appellate Tribunal answered the question in the affirmative On a statement of the case to the High Court under section 661 of the Income tax Act a Bench of the Calcutta High Court Chakravartti C J and Lahiri J answered it in the negative reversing the orders of the Department and the Tribunal As the Bench refused to grant the necessary certificate of fitness the appellant applied for and obtained special leave to appeal by an order of this Court dated September 27 1954 The facts of this case are short and simple The assessee was a banking company in a large way of business It owns a six storeyed building where its offices are located on the ground floor and a part of the 6th floor while the rest of the building is let out to tenants The annual rental income derived from the portion let out is about Rs 86000 The Tribunal found that the portion let out is about four to five times the floor area of the portion of the building occupied by the assessee for the purposes of its own business By an order dated March 31 1949 the Excess Profits Tax Officer assessed the respondent on the said rental income in respect of the accounting period ending March 31 1946 under sub r 4 of r 4 of Schedule I to the Excess Profits Tax Act 1940 XV of 1940 which hereinafter will be referred to as the Act On appeal by the respondent the Appellate Assistant Commissioner by his order dated January 3 1950 upheld the assessment on the basis of sub r 2 of r 4 of Schedule I to the Act He pointed out that the assessee carries on banking business which includes holding investments and thus the rental in come in respect of its investments in immovable property is included in its business income even though it was not chargeable to income tax under section 10 of the Income tax Act Income from securities like shares and properties is chargeable to income tax under sections 8 9 and 12 of the Act but that head of income is chargeable under the Act as business profits He also pointed out that the assessee had itself included the value of these assets in the computation of its capital 664 for claiming standard profits This had been done in If the previous years and the assessee bank had accepted the basis and the computation of capital assets during the previous years On a further appeal by the respondent to the Appellate Tribunal the Tribunal held that there was no doubt that the premises were built with a view partly to housing the head office of the company and partly for the purpose of being let out to tenants and that it was an investment by the Bank in immovable property The Tribunal also found that this was within the terms of the Memorandum of Association of the respondent company Hence by its order dated March 22 1951 the Tribunal held that the letting out of so much of the building as was not occupied by the company itself for its own business was a part of its business and the rental income was thus liable to tax under the Act It made a particular reference to sub r 4 of r 4 of Sch I to the Act though the Department appears to have also relied upon sub r 2 of r 4 aforesaid Thereupon the respondent got the Tribunal to state the case to the High Court and the following question was accordingly referred to the High Court under section 661 of the Income tax Act Whether in this case the rental income from immovable property is part of the business income taxable under section 25 read with rule 44 of Schedule I attached to the Excess Profits Tax Act 1940 The matter was heard by the High Court with the result indicated above Hence this appeal by special leave There is no doubt that excess profits are not chargeable under the Act unless the income falls within the ambit of business profits Section 25 of the Act defines business as under business includes any trade commerce or manufacture or any adventure in the nature of trade commerce or manufacture or any profession or vocation but does not include a profession carried on by an individual or by individuals in partnership if the profits of the profession depend wholly or mainly on his or their personal qualifications unless such profession 665 consists wholly or mainly in the making of contracts on behalf of other persons or the giving to other persons of advice of a commercial nature in connection with the making of contracts Provided that where the functions of a company or of a society incorporated by or under any enactment consist wholly or mainly in the holding of investments or other property the holding of the investment or property shall be deemed for the purpose of this definition to be a business carried on by such company or society Provided further that all businesses to which this Act applies carried on by the same person shall be treated as one business for the purposes of this Act The definition of business under the Act is wider than the definition of that term under the Income tax Act section 24 Section 2 19 of the Act defines profits as follows I profits means profits as determined in accordance with the First Schedule Section 2 20 defines standard profits as follows Standard profits means standard profits as computed in accordance with the provisions of Section 6 And the charging section section 4 of the Act provides that in respect of any business to which the Act applies excess profits that is profits during any chargeable accounting period exceeding the standard profits shall be charged levied and paid Section 5 of the Act provides as follows This Act shall apply to every business of which any part of the profits made during the chargeable accounting period is chargeable to income tax by virtue of the provisions of sub clause 1 or sub clause ii of clause b of sub section 1 of Section 4 of the Indian Income tax Act 1922 or of clause c of that sub section Provided that this Act shall not apply to any business the whole of the profits of which accrue or arise without British India where such business is carried on by or on behalf of a person who is resident 84 666 but not ordinarily resident in British India unless the business is controlled in India Provided further that where the profits of a part only of a business carried on by a person who is not resident in British India or not ordinarily so resident accrue or arise in British India or are deemed under the Indian Income tax Act 1922 so to accrue or arise then except where the business being the business of a person who is resident but not ordinarily resident in British India is controlled in India this Act shall apply only to such part of the business and such part shall for all the purposes of this Act be deemed to be a separate business Provided further that this Act shall not apply to any business the whole of the profits of which accrue or arise in an Indian State and where the profits of a part of a business accrue or arise in an Indian State such part shall for the purposes of this provision be deemed to be a separate business the whole of the profits of which accrue or arise in an Indian State and the other part of the business shall for all the purposes of this Act be deemed to be a separate business The First Schedule which contains the rules for computation of profits provides in sub r 4 of r 4 as follows 4 In the case of a business which consists wholly or partly in the letting out of property on hire the income from the property shall be included in the profits of the business whether or not it has been charged to income tax under Section 9 of the Indian Income tax Act 1922 or under any other section of that Act Having set out the relevant provisions of the Act the first question that arises for consideration is whether the letting out of the promises in question can be said to be a business of the assessee bank The definition of business is only an inclusive one and includes any sort of trade commerce or Manufacture Can it be said that realization of income from its investments which may be either in shares securities or in immovable properties is not a part of the business of a banking corporation In my opinion it will 667 be taking a very narrow view of the functions of a bank to hold that such activities are not within the ambit of the business activities of a bank In the Memorandum of Association of the assessee bank the objects of the company are stated to be a To carry on all kinds of banking business that are generally carried on by Joint Stock Banks b To carry on the business of banking in all its branches and departments including borrowing raising or taking up money the lending or advancing money securities or properties the acquiring holding issuing and dealing with investment of all kinds the managing of properties c To purchase take on lease or in exchange or otherwise acquire any moveable or immoveable property which the Company may think necessary or convenient for the purpose of its business and to construct maintain and alter any buildings or works necessary or convenient for the purpose of the company Apparently the bank constructed the six storeyed building not only for its own use and occupation but also according to the finding of the Appellate Tribunal for the major part for the purpose of realising rent from tenants Where land in a big city like Calcutta is taken for building purposes it is common knowledge that erecting a multi storeyed building is by itself an investment besides affording accommodation for the bank to carry on and advertise its business and house its head office and records The High Court answered the question referred to in the negative on the ground that though the income was derived from the holding of property the fuilctions of the assessee company did not consist wholly or mainly in the holding of investments or other property as required by the proviso to section 25 of the Act Since the requirement of the first proviso to section 25 of the Act was not satisfied no question of the application of sub r 4 of r 4 could arise and even if such a question could arise the word business in that sub rule must take its colour from the main provisions of the section This conclusion was reached by 668 the learned Chief Justice who delivered the opinion of the Court by starting with the premise that for determining the nature of the income of the company it was not necessary to consider the provisions of the definition of business contained in the main clause of section 25 which was also assumed to be parallel to the connotation of the term business under the Indian Income tax Act Having thus excluded without giving any reasons why they had to be excluded the provisions of the main clause of the definition of business as contained in the Act the learned Chief Justice addressed himself to the question whether the first proviso to the definition clause which was in the nature of an additional provision could govern the facts of the case and bring it within the ambit of that kind of business to which the Act applied The learned Chief Justice rightly pointed out that the first proviso is limited to incorporated bodies and had no reference to individuals Then the learned Chief Justice observed It is to be noticed that in the contemplation of this proviso property is something different from investments for it speaks of I investments or other property It is also to be noticed that if the requirements of the proviso are satisfied the holding of investments or other property shall be deemed to be a business which implies that it is not really a business and but for the special provisions made by proviso would not be within the general definition contained in the main clause It is doubtful whether these observations are entirely correct but as will presently appear we are not so much concerned with the _proviso as with the main provisions of the definition clause section 25 The conclusion of the learned Chief Justice may better be stated in his own words as follows It appears to me that the first matter to which we must address ourselves in answering the question before us is are the functions of the assessee company such that the holding of the building in question or buildings or other property and investments in general must be deemed to be its business for the purposes of the Excess Profits Tax Act under the first 669 proviso to section 25 In order that question may be answered in favour of the Revenue it is necessary that the holding of investments or other property should be the only or the principal function of the assessee company As I have said the assessee company is a banking company in a large way of business It is hardly disputable and indeed it was not disputed before us that the holding of investments or other property was not its sole or primary occupation much less the holding of the particular building in question In my opinion the aforesaid conclusion of the High Court suffers from two fundamental errors namely1 that the main clause of the definition section is out of the way in determining the present controversy and 2 that it was the proviso only which had to be considered in order to answer the question referred In the first instance the learned Chief Justice is not entirely correct in observing that the definition of the term business follows the definition of the same term in the Indian Income tax Act As already observed the definition under the Act is wider than that under the Income tax Act in so far as it includes certain types of profession or vocation The scheme of the Act as compared to that of the Income tax Act will have to be considered presently but it is enough to point out that the connotation of the term business under the Act is wider than that of the same term under the Income tax Act The learned Chief Justice set aside from his consideration the provisions of the main clause of section 25 and did not indicate his reasons for doing so Ordinarily the Court has first to consider whether the main clause of the defini tion of the term business would govern the facts of the case The question of the application of the first proviso which it is common ground is in the nature of an additional provision which brings within its ambit certain types of income to use a neutral term which would not otherwise have come within the terms of the main clause of the definition can arise only if the Court first comes to the conclusion that the main clause of the definition is out of the way I will 670 assume that the holding of investments or other pro property is not the whole or main business of the Respondent Company That assumption will put aside the first proviso aforesaid but that does not by itself lead to the inference that the main provision of the definition clause cannot be applied to the respondent An argument on these lines was advanced and was repelled by Lord Greene M R in the case of Commissioners of Inland Revenue vs Desoutter Bros Ltd 1 In that case sub section 4 of section 12 of the Finance No which deals with Excess Profits Tax was under consideration by the Court of Appeal The learned Master of Rolls considered the question and made the following observations which apply with full force to the arguments which found favour in the High Court The first argument is based on the language of Section 124 of the Finance No which deals with Excess Profits Tax The first Sub section speaks of the profits I arising in any chargeable accounting period from any trade or business to which this section applies It is in respect of those profits that the tax is exigible It will be observed that the language only extends to the profits arising from I any trade or business Sub section 4 says I Where the functions of a company or society incorporated by or under any enactment consist wholly or mainly in the holding of investments or other property the holding of the investments or property shall be deemed for the purpose of this section to be a business carried on by the company or society I should have thought that the objects of that Sub section were manifest In my view it was intended and quite clearly intended to bring into the net a type of corporation which otherwise would or might have escaped it The commonest type of corporation with which the Sub section is dealing is what may be called a trust investment company whose business is the holding of investments and deriving income from them Such a corporation would not be said to be carrying on a trade or business within the meaning of 1 160 671 Sub section 1 Anyhow if it were not absolutely clear Sub section 4 makes it quite certain that type of corporation is to be included and its operations are to be regarded as the carrying on of a trade or business That seems to me to be the real and sole object of Sub section 4 The argument really amounted to this by implication the profits from investments or property held by any other type of corporation is excluded I cannot begin to see the shadow of a foundation for any such argument In my opinion it breaks down completely once the real significance of Sub section 4 is appreciated I respectfully adopt the reasoning and the conclusion arrived at by the Court of Appeal extracted above It follows that the first proviso to section 25 does not determine the controversy arising in this case This conclusion completely displaces the ratio of the opinion of the High Court but it does not answer the question referred to it It has therefore to be considered whether the main definition clause in section 25 can come into play in giving the answer to the question referred for the opinion of the High Court The term business is a word of very wide though by no means determinate scope It has rightly been observed in judicial decisions of high authority that it is neither practicable nor desirable to make any attempt at de limiting the ambit of its connotation Each case has to be determined with reference to the particular kind of activity and occupation of the person concerned Though ordinarily business implies a continuous activity in carrying on a particular trade or avocation it may also include an activity which may be called I quiescent This is illustrated by the case which went up to the House of Lords in The Commissioners of Inland Revenue vs The South Behar Railway Co Ltd 1 In that case the facts were these Dowri to 1906 the South Behar Railway was held by the Res pondent Company and worked by another Company on behalf of the Secretary of State for India the Respondent Company being entitled to a share in the 1 672 profits in consideration of its having supplied funds and materials for the construction of the Railway In 1906 the Respondent Company relinquished possession of the Railway to the Secretary of State on the stipulation that until the option to purchase was exercised a fixed annuity of pound 30000 should be paid to the Company in lieu of the share of profits so far paid After that arrangement in 1906 the Company did nothing but receive and distribute the said annuity to its share holders It was held by the House of Lords that the Company was carrying on a trade or business and was therefore liable to Corporation Profits Tax The House of Lords while affirming the decision of the Court of Appeal observed that the finding of the Commissioners which was reversed by the Court of Appeal was not a finding of pure fact but was an inference of law derived from the specific facts found in the case and that consequently the decision was open to review The House of Lords in upholding the decision of the Court of Appeal observed that by the agreement of 1906 the Company s income which previously was a fluctuating income derived from the share of the profits had been converted into a fixed annuity irrespective of the earnings of the Railway and that the new arrangement did not materially affect the position of the Company as a business concern The House of Lords approved of the decision in the case of the Commissioners of Inland Revenue vs The Korean Syndicate Ltd 1 In that case a Syndicate was registered in 1905 as a Company for the purposes of acquiring and working concessions and turning them to account and of investing and dealing with any moneys not immediately required In 1905 the Syndicate acquired part of a right to a concession in Korea which included a gold mine but in 1908 it assigned its rights to another Company under an agreement of lease in consideration of certain royalties but which were really a percentage of the profits in working the property In 1911 the Syndicate placed in deposit at a bank certain sums of money received from the sale of shares which had 1 673 been obtained by the Syndicate in exchange for other shares During the relevant period the Syndicate s activities were confined to receiving bank interest and royalties and distributing that income amongst its shareholders Rowlatt J held that the Company was not carrying on a business On appeal it was held that the Syndicate was carrying on a business and that the profits derived therefrom were liable to Excess Profits Tax In order to ascertain the business of a Company its Memorandum has to be looked into The Memorandum provides the key to what the business objects of the Company are and it has further to be ascertained whether those objects are still being pursued In the present case the relevant clauses of the Memorandum of Association have been set out and there cannot be the least doubt that the managing of property and realisation of rents therefrom was within the objects of the Company if it found it necessary and convenient for carrying on its business It may be that this line of business activity may not be the main part of its business but even so if reali sation of rent is one of the sources of business income to the Company it has got to be included in the computation of its profits for the purposes of the Act This becomes clear on a reference to sub r 4 of r 4 quoted above But it has been contended that the words wholly or partly in the Rule are in excess of the provisions of section 25 where in tile first proviso the words are wholly or mainly The suggestion is that the rule in so far as it substituted Partly for It mainly is in excess of the provisions of the statute In my opinion this argument is based on an assumption which is not well founded As will presently appear from an examination and comparison of the provisions of the Act and the lncome tax Act r 44 does not necessarily derive its operative force from the first proviso to the main clause of the definition in section 25 The proviso as already observed is limited to an incorporated body of a particular type and has reference to the holding of investments or other property Rule 44 is of a more general application to 85 674 a business which consists wholly or partly in the letting out of property on hire In the rule a reference to section 9 of the Indian Income tax Act also makes it clear that the rule is concerned with property It is also clear that the basis for taxation of property under section 9 of the Income tax Act is different from the basis of taxation under the Act in respect of income from property and the latter is irrespective of whether income from property has been the subject matter of charge under the Income tax Act In this connection a reference to the second proviso is also relevant in so far as it implies that a person may carry on businesses of different kinds and all those different lines of business have for the purposes of the Act to be treated as one business Thus the Bank may be carrying on the business of holding deposits securities and property as also lending money on different kinds of securities Its income from all those activities would have to be taken into account in order to determine its total business profits A similar question arose in the case of Punjab Co operative Bank Ltd vs Commissioner of Income tax Punjab 1 which went up to the Judicial Committee of the Privy Council In that case the question arose whether the realisation of higher values by sale and purchase of shares and securities by the Bank could be said to be business profits and thus taxable under the Indian In come tax Act On behalf of the Bank it had been contended throughout without success that the realisation of higher values by the sale of shares and securities was not a separate business of the Bank but was in the way of its business as a banking corporation which had to deal with money and credit and that the Bank had always to have in its hands cash and easily realisable securities to meet any probable demands by its depositors But it had been found as a fact that the Bank had been selling shares and secu rities not only for the purpose aforesaid but also for augmenting its reserve funds It was held by the Judicial Committee that it had been rightly decided by the Department and by the High Court on a I 675 reference that the purchase and sale of shares and securities were a part of the banking business of the Company and the profits thus realised were liable to income tax Their Lordships of the Judicial Committee also observed that it was not necessary to establish that the Bank had been carrying on a separate business of buying and selling shares and investments in order to make profits thus made taxable Once it is found that such transactions were entered into by the Bank not merely with a view to realisation or change of investments but with a view to carrying on a business in the sense of earning profits the Bank was really carrying on a business within the meaning of the Income tax Act Following this decision of the Privy Council this Court decided in the case of Sardar Indra Singh and Sons Ltd vs Commissioner of Income tax West Bengal 1 that the question whether a certain income is profit from business and not an appreciation of capital arising from a change of investment depends Upon the answer to the further question whether that income was so connected with the carrying on of the assessee s business that it could fairly be said that it is the profits and gains of the business in its normal working It was not necessary further to show that the income had resulted from a course of dealing which by itself would amount to the carrying on of a business In that case the assessee company had as one of its objects to carry on the business of financiers and to purchase and sell stock shares business concerns and other undertakings In carrying out that objective the company held a large number of shares in other companies and was realising its holdings and acquiring new shares In the background of those facts it was held by a Bench of five Judges of this Court that the profits made from the sale of investments and the making of fresh investments were assessable to income tax In the course of his judgment Patanjali Sastri C J speaking for the Court made the following very pertinent observations The principle applicable in all such cases is well 1 170171 676 settled and the question always is whether the sales which produced the surplus were so connected with the carrying on of the assessee s business that it could fairly be said that the surplus is the profits and gains of such business It is not necessary that the surplus Should have resulted from such a course of dealing in securities as by itself would amount to the carrying on of a business of buying and selling securities It would be enough if such sales were effected in the usual course of carrying on the business or in the words used by the Privy Council in Punjab Co operative Bank Ltd vs Income Tax Commissioner Lahore 1 if the realisation of securities is a normal step in carrying on the assessee s business Though that case arose out of the assessment of a banking business the test is one of general application in determining whether the surplus arising out of such transactions is a capital receipt or a trading profit But the learned counsel for the Respondent Bank argued that in the present case the earning of rental income by the Bank could not come within section 10 of the Income tax Act and the definition of business in the Act and in the Income tax Act in so far as they are relevant to the present case must be the same In other words it was contended that as realisation of rents from house property of the Bank could not come within the purview of section 10 of the Income tax Act it could not also come within the purview of the Act we are now concerned with In my opinion there is a fallacy in this argument The scheme of the two Acts is not the same The Income tax Act has brought within its taxing ambit not only income from what is ordinarily called business but income from several other sources Sections 3 and 4 of the Income tax Act render liable to tax all income profits and gains from whatever source derived and section 6 of the Income tax Act classifies the different heads of income profits and gains into 1 salaries and the manner of charging the same is laid down in section 7 2 interest on securities and the manner of charging the tax is laid down in section 8 3 income from property to be taxed in 1 67 accordance with the provisions of section 9 and 4 profits and gains from business profession or avocation to be taxed in accordance with the provisions of section 10 The fifth and the sixth heads of income may be omitted from the present discussion On the other band under the Act in question only tax on excess profits arising out of certain businesses has been imposed The Act is not concerned with all kinds of income but only with profits if made beyond a certain standard laid down under the Act from business described in section 5 Under the Act the ambit of the term business covers the fourth head though not the whole of it as also the second and the third heads set out above again though not perhaps the whole of them It is not therefore correct to say that what would not come within the ambit of section 10 of the Income tax Act would also not come within the ambit of the Act On a proper construction of the provisions of the Act it has got to be held that what has been covered by sections 8 9 and 10 at least in parts of the Income tax Act comes within the purview of the Act This is not intended to be a complete statement of the comparative ambits of the two Acts but it is enough to dispose of the argument that business as understood tinder the Act is completely covered by the provisions of section 10 of the Income tax Act In this connection another argument advanced by the learned counsel for the respondent as an additional reason for not treating rental income as Coming within the purview of the Act may now be considered It was argued that the first proviso to section 25 set out above would become redundant if rental income were to be covered by the main clause of the definition This argument again ignores some of the crucial words of the proviso It speaks only of holding of investments or other property which is not the same thing as dealing with shares investments or other property This proviso was perhaps inserted out of abundant caution to repel arguments like those advanced in the case of The Commissioners of Inland Revenue vs The Tyre Investment Trust Ltd 1 In that case the Respondent Company was incorporated in 1917 with the I 678 main objects of acquiring and holding shares etc and was formed mainly with a view to acquiring shares in two foreign companies and selling them to an English Company which was likely to be interested in them After the Respondent Company had purchased the shares it took an active interest in the affairs of those two companies and in 1920 negotiations were proceeding for the sale of those shares The Company was assessed to Excess Profits Duty On appeal the Special Commissioners accepted the argument on behalf of the Company that it was not carrying on a trade or business within the meaning of the taxing statute and that it was only a holding company and stood in the same position as an individual who had acquired and held investments On appeal by the Revenue it was held in the King s Bench Division that the principal business of the Company consisted of making investments and was therefore liable to Excess Profits Duty In support of the second branch of his argument that rental income was not included in business the learned counsel for the respondent called our attention to the decision of this Court in The United Commercial Bank Ltd Calcutta vs The Commissioner of Income tax West Bengal 1 with special reference to the observations at p 97 to the effect that various heads of income profits and gains under the Income tax Act must be held to be mutually exclusive each head having been meant to cover income from a particular source The case before their Lordships was concerned with the question of set off of the carried over loss of the previous year That case was not in any way concerned with the provisions of the statute now before us It was concerned only with the scheme of the Income tax Act with particular reference to the classification of income into different heads That case does not throw any light on the interpretation of the term business In view of the considerations set forth above it must be held that the realisation of rental income by the assessee Bank was in the course of its business in 1 679 prosecution of one of the objects in its Memorandum it was therefore liable to be included in its business profits and thus was assessable to Excess Profits Tax The appeal must therefore be allowed with costs here and below KAPUR J I have read the judgment prepared by my learned brother Sinha J but I respectfully disagree with it and my reasons are these The sole question for decision is whether a sum of Rs 86000 received by the respondent during the chargeable accounting period ending March 31 1946 as rent of its building at Calcutta can be included in the profits of its business for the purposes of Excess Profits Tax The respondent the assessee was a banking company which at one time did considerable banking business but it has gone into liquidation it owned a six storeyed building in a commercial locality of Calcutta During the relevant period it was occupying the ground floor and a portion of the sixth floor and had let out the rest to tenants for which it received the sum of Rs 86000 as rent which is the amount Dow in controversy The liability of this sum to Excess Profits Tax depends upon the interpretation of the relevant provisions of the Excess Profits Tax Act Act XV of 1940 which for the sake of brevity will hereinafter be termed the Act The object of the Act was to impose a tax on excess profits which as the very name implies must have reference to and be the result of a business activity Such profits for the purposes of the Act were to be computed in the manner provided by the Act The scheme of the Act is as follows Section 2 is the definition section section 4 the charging section and section 5 deals with the application of the Act Section 6 is a provision for determining standard profits and their computation Excess Profits Tax was chargeable on the excess of profits during the chargeable accounting period over the standard profits ie profits during the standard period Section 5 of the Act provides This Act shall apply to every business of which 680 any part of the profits made during the chargeable accounting period is chargeable to income tax by virtue of the provisions of sub clause i or sub clause ii of clause b of sub section 1 of section 4 of the Indian Income tax Act 1922 The charging section under the Act is section 4 the relevant portion of which is Charge of tax 1 Subject to the provisions of this Act there shall in respect of any business to which this Act applies be charged levied and paid on the amount by which the profits during any chargeable accounting period exceed the standard profits Thus the Act applies to every business any part of the profits of which are chargeable to income tax section 5 and in respect of any business to which the Act is applicable excess profits tax shall be chargeable on the amount by which the profits during the charge able accounting period exceed the profits during the standard period section 4 It is in respect of those profits that the tax is exigible In order to determine whether income received during a chargeable accounting period is for the purposes of the Act profits arising out of Business or not it becomes necessary to examine what these words ie Business and profits mean Section 25 of the Act defined Business as follows Business includes any trade commerce or manufacture or any adventure in the nature of trade commerce or manufacture or any profession or vocation but does not include a profession carried on by an individual or by individuals in partnership if the profits of the profession depend wholly or mainly on his or their personal qualifications unless such profession consists wholly or mainly in the making of contracts on behalf of other persons or the giving to other persons of advice of a commercial nature in connection with the making of contracts Provided that where the functions of a company or of a society incorporated by or under any enactment consists wholly or mainly in the holding of investments or other property the holding of the investments or property shall be deemed for the purpose of 681 this definition to be a business carried on by such company or society Provided further that all business to which this Act applies carried on by the same person shall be treated as one business for the purposes of this Act The definition of business in the main section ie section 25 is analogous to the definition of business as given in section 24 of the Income Tax Act but proviso 1 to section 25 of the Act enlarges the scope of the word business in the case of companies and societies incorporated under any enactment The words deemed to be make something business which otherwise it would not have been In the case of an incorporated company therefore business under tile Act is not merely any trade commerce or manufacture or any adventure in the nature of trade commerce or manufacture but also that which is deemed to be business under proviso 1 which makes the holding of investments or other property by an incorporated Society or company business if one of the following two conditions is fulfilled eg 1 If its functions consist wholly or mainly in the holding of investments or 2 If its functions consist wholly or mainly in the holding of other property It is manifest from this that in the absence of the proviso 1 to section 25 of the Act the word business would comprise no function beyond what it comprises under the Income Tax Act and such functions as the holding of investments or the holding of other property would escape the operation of the Act The heads of income falling under section 6 ii 6 iii and 6 v of the Income Tax Act ie of interest on securities and income from property and income from other sources are not business in the Income tax Act and would not be business within the Act This Court in United Commercial Bank Ltd vs Commissioner of Income tax 1 held that the heads of income mentioned in section 6 of the Income tax Act are mutually exclusive each head being specific to cover the item 1 1958SCR 79 86 682 arising from a particular source and therefore even if securities are held as trading assets or dealt with in the course of a business by a banker or a dealer in securities the interest must be charged and computed under the head Interest on securities under section 8 of the Income tax Act and not as business profits under section 10 of that Act This wider connotation of the word business in the Act was clearly intended to bring within its net those incorporated societies and companies which otherwise would or might have escaped it One such company would be a trust investment company whose business is the holding of investments and getting profit therefrom Such a company cannot be said to be carrying on business ie any trade commerce or manufacture within the meaning of the main provision ie section 25 but it is the proviso which makes it clear that type of a company is included and its operations are to be regarded as carrying on of a business See also COmmissioners of Inland Revenue vs Desoutter Bros Ltd 1 Another such company or society would be a housing society or company which owns houses for the purpose of letting on rent Such a company or society also cannot be said to be carrying on business within the definition in the main sub section 5 of section 2 Under proviso 1 however that class of company or society would also be deemed to be carrying on business In both these cases their profits would be chargeable to excess profits tax The word profits in section 219 of the Act means profits as determined in accordance with the First Schedule which provides the method of computation of profits Rule 4 of this Schedule deals with income from investments and is as follows SEE SECTION 219 Rules for the computation of profits for purposes of Excess Profits Tax 1 2 3 41 Income received from investments shall be included in the profits in the cases and to the 1 160 683 extent provided in sub rules 2 2A and 4 of this rule and not otherwise In the case of the business of a building society or of a money lendidg business banking business insurance business or business consisting wholly or mainly in the dealing in or holding of investments the profits shall include all income received from investments whether or not such income is included in the profits charged under section 10 of the Indian Income Tax Act 1922 or is charged under any other section of that Act or has been subjected to deduction of tax at source or is free of or exempt from income tax In the case of a business part of which consists in banking insurance or dealing in investments not being a business to which sub rule 2 of this rule applies the profits shall include all income received from investments held for the purpose of that part of the business being income to which the persons carrying on the business are beneficially entitled Sub rule 1 deals with business which consists wholly or mainly in the dealing in or holding of investments in the case of various kinds of companies mentioned and sub rule 2A deals inter alia with banking business The respondent being a banking company its business essentially consists in dealing with money and credit Such a company has always to keep cash or realizable securities and other realisable investments in order to meet withdrawals by depositors and the holding of such securities and other investments would be the holding of investments and that is its normal and main activity Punjab Co operative Bank Ltd vs Commissioner of Income tax Punjab 1 See also section 277F of the Indian Companies Act which is now a part of the Banking Companies Act Therefore the respondent qua the holding of investments of this kind was carrying on business under proviso 1 to section 25 of the Act but it is not that kind of business which is the subject matter of controversy in this appeal What we have to decide is was the income received as rents from the portion of the respondents 1 684 Calcutta building which was not required by the respondent for its own purposes and let out on hire profit within section 219 and chargeable under section 4 of the Act Two arguments were addressed in favour of the contention that such income was profits of business within the Act 1 that the laying out of money in a multi storeyed building was itself an investment and 2 that even if the business consisted partly in letting out of property the income from that property was profit within the Act In support of the first submission it was argued that one of the objects in Memorandum of Association was the acquisition of immoveable property which the company may think convenient for the purpose of its business and therefore the construction of a multistoreyed building would itself be an investment Reference was made to cl e of the Memorandum of Association which relates to acquisition of moveable and immoveable property This clause is as follows e To purchase take on lease or in exchange or otherwise acquire any moveable or immoveable property which the Company may think necessary or convenient for the purpose of its business and to construct maintain and alter any building or works necessary or convenient for the purpose of the Company Now this argument loses sight of the fact that the Legislature has chosen to use two words investments and other property with a disjunctive or in between To both these words a meaning must be assigned because it cannot be said that one or the other of them is redundant or they mean the same thing Investments has been defined thus something acquired as a result of laying out money is an investment Commissioners of Inland Revenue vs Rolls Royce Ltd 1 but this general test as a test was not accepted in a later case Commissioners of Inland Revenue vs Desoutter Bros Ltd 2 at p 161 where Lord Greene said Speaking for myself I am always disinclined to I 2 160 685 accept any general definition or test for the purpose of solving this type of question The question whether or not a particular piece of income is income received from an investment must in my view be decided on the facts of the case In every case the facts have to be ascertained and then the question can be determined whether the profits arising from a particular function are business profits within the Act or not As above stated the essential function of a banking company consists in money and credit and to carry on such functions it has to hold investments which under the Income tax Act would fall under sections 8 and 12 See also section 277F of the Companies Act of 1913 which is now incorporated in the Banking Companies Act Property is a word of wide connotation and includes moveable and immoveable properties all interests therein and even investments would fall within that word but in the context it would not comprise investments If a Banking Company as in the present case constructs a multi storeyed building used a part of it and lets out the rest it cannot be said to carry on business unless its main function is the holding of property and we have already seen that the main function of a Banking Company is dealing in money or credit and for that purpose it holds investments in the form of easily realisable securities Merely because for the carrying out of its functions a Banking Company constructs a building its functions will not change from that of a Banking Company into one of a company engaged in the letting out of property on hire As the Excess Profits Tax is a taxing measure and the object of the Act also is to tax excess profits it is reasonable to say that the words investment and property as used in the case of a Banking Company are used in the same sense as they are used in the Income tax Act but if their holding by the company is its sole or main function then they will be deemed to be business so as to make the income derived therefrom chargeable to excess profits tax even if otherwise they 686 would not have been so chargeable The two enactments are in pari materia and are intended to charge tax on income profits and gains only the Act is confined to profits of business as therein defined and income tax is chargeable on all incomes profits and gains If the mere owning of immoveable property and letting out that portion which was not needed for its own use by a company was intended to be covered by the definition then the use of the word wholly or mainly would be wholly redundant In construing the proviso effect has to be given to every word used The word functions is defined in the dictionary to mean activities appropriate to any business and if that is substituted in the proviso to section 25 it would read where the activities appropriate to any business consist wholly or mainly in the holding Of investments or other property So read can it be said that the activities appropriate to the business of a banking company consists wholly or mainly in the holding of a multi storeyed building or such other property for the purpose of letting out the unused portion on hire Obvious answer to this question would be in the negative It is manifest that rents received from the multi storeyed property are not income received from a business within the Act It is not a trading receipt in the case of banking company Under the Income tax Act it falls under section 9 and there is nothing to indicate in the definition of the word business as given in the main portion of section 25 of the Act that it has a different complexion there In the case of hotel proprietors it has been held that compensation paid by the Crown for requisitioning during the war of hotel premises is not its trading profits Salisbury House Estate Ltd vs Fry 1 Mellows vs Buxton Palace Hotel Ltd 2 Even under the enactment imposing Profits Tax corresponding to our Excess Profits Tax it was held not to be income receivable from investments or other property Commissioners of Inland Revenue vs Buxton palace Hotel Ltd 3 1 I 930 2 3 333 687 But it was urged that sub r 4 of r 4 of Schedule I lays down a different method of computation and qualifies the qualities of a business when it relates to holding of property Sub rule 4 of r 4 is as follows In the case of a business which consists wholly or partly in the letting out of property on hire the income from the property shall be included in the profits of the business whether or not it has been charged to income tax under section 9 of the Indian Income tax Act 1922 or under any other section of that Act But before this rule becomes applicable the functions of the company have to fall within the definition of Business as given in the Act The definition Schedule I is confined to computing of profits and has relation to section 219 wherein it is mentioned It cannot be used to affect the quality of the word business as used in the Act It only means that when the functions of a company i e the activities appropriate to any business consist wholly or mainly in the holding of other property then in the case of that portion of the business which wholly or partly consists in the letting of property for hire the income from the property shall be included in profits in spite of the fact that the income has been assessed under section 9 of the Income Tax Act It is a far step from saying that the definition of business has been modified by sub r 4 of r 4 It relates to a business of letting out of property The word business can either mean what is contained in the main provision in section 2 5 or the extended meaning given by the first proviso of that section In either case it is inapplicable to the case of the respondent It cannot be said that letting out of property is either wholly or even partly business of the respondent In my view the income received from rents of the portion of the building let out on hire i e Rs 86000 does not fall within the word profits as used in the Act and is not chargeable to Excess Profits Tax The judgment of the High Court is therefore sound and I would dismiss this appeal with costs 688 HIDAYATULLAH J I have had the advantage of reading the judgments of my learned brothers Sinha and Kapur JJ I agree with Sinha J that the appeal must be allowed with costs here and below The question which was referred for the opinion of the Calcutta High Court was whether in this case rental income from immovable property was part of the business income taxable under section 25 read with r 4 4 of Sch I attached to the Excess Profits Tax Act 1940 In my opinion the question must be answered in the affirmative for the following reasons The Calcutta National Bank Ltd in liquidation hereinafter called the Bank was doing business as a bank prior to going into liquidation Its income it appears was also subject to excess profits tax in the past and we are concerned in the present case with the chargeable accounting period ending March 31 1946 The Bank had constructed a six storeyed building of which it occupied the ground and the top floors The rest of it was rented out and in the chargeable accounting period rents totaling Rs 86000 were received by the Bank The question was as already stated whether this rental income was chargeable to excess profits tax under the Act According to Kapur J the renting out of a building was not the business of the Bank within the definition of business in the Act This income therefore was not properly assessable to excess profits tax Sinha Jholds the contrary view Under the Act the charge of tax is laid on any business to which the Act applies The Act does not define I business exhaustively but shows what may be included in it The definition follows to a point the definition given in the Indian Income tax Act but by a proviso which enlarges its scope provides as follows Provided that where the functions of a company or of a society incorporated by or under any enactment consist wholly or mainly in the holding of investments or other property the holding of the investments or property shall be deemed or the purpose of this definition to be a business carried on by such company or society 689 The charging section is section 4 and it shortly provides that the charge is laid on the amount by which the profits in a chargeable accounting period exceed the standard profits of a business According to another definition I profits mean profits as determined in accordance with the First Schedule of the Act In the schedule which is enacted as part of the Act r 4 4 to which reference has been made in the question reads as follows In the case of a business which consists wholly or partly in the letting out of property on hire the income from the property shall be included in the profits of the business whether or not it has been charged to income tax under section 9 of the Indian Income tax Act 1922 or under any other section of that Act The difference between the definition of I business and the rule above quoted is that while the former mentions that the business must be wholly or mainly holding of investments or other property the rule says that if the business consists wholly or partly of letting out of property the income of the property shall be included in the profits Kapur J is of the opinion that the business of the Bank being quite different the rule cannot be made applicable because the definition requires that the assessee s business should be wholly or mainly the holding of investments or other property He also thinks that there is neither holding of an investment nor of property as investment The definition of the term I business in the Act is helpful where it applies but not being an exhaustive one it cannot shut out something which can be appropriately described as a business Even the opening words of the definition show that it is meant to cover most of the activities designed to produce income or profits or gain Under the Memorandum of Association the Bank can acquire property just as it acquires investments for purposes of its business and even otherwise Clause e enables the Bank to purchase take on lease or in exchange or otherwise acquire any moveable or immoveable property which the Bank 87 690 may consider necessary or convenient for the purpose of its business and to construct maintain and alter any buildings or works necessary or convenient for the purpose of the Bank The acquisition of a sixstoreyed building was therefore within the terms of the Memorandum and the only question is whether the income from such building if rented out can be taken as profits of the Bank for purposes of excess profits tax The definition mentions the holding of investments or other property and the words other property must necessarily take their colour from what precedes that is to say investments The holding of other property must itself be investment for earning profits otherwise the definition does not apply The word I investments is a word of large import In one sense every mode of application of one s money intended to yield a return by way of interest income or profit is investment When the Bank builds a building more than necessary to house itself and with a desire to earning rents from it it cannot but be stated that the building was constructed as an investment or in other words the Bank was holding other property within the meaning of the definition in addition to the investments which it is the normal business of the Bank to hold In my opinion the income from the property would be regarded as profits from property held as investment and the profits will have to be calculated as laid down in Sch 1 r 44 The only difficulty is in the change of language between the definition and the rule inasmuch as the former speaks of the business which is wholly or mainly the holding of investments or other property and the latter speaks of a part of the business being the letting out of property Kapur J is of the view that the section defining the word I business must prevail because the Schedule is enacted only for the purpose of computing the profits as laid down in the definition and as the heading f the Schedule shows That there is a difference between the Schedule and the Act is not to be denied and the question that naturally falls for consideration is whether the 691 Schedule should be given effect to independently in the circumstances of the case The Schedule really tends for the purposes of collection to widen the definition of a business to include any letting of property for earning rents The rule to be applied was stated by Lord Sterndale M R in Inland Revenue Commissioners vs Gittus 1 in the following words It seems to me there are two principles or rules of interpretation which ought to be applied to the combination of Act and schedule If the Act says that the schedule is to be used for a certain purpose and the heading of the part of the schedule in question shows that it is prima facie at any rate devoted to that purpose then you must read the Act and the schedule as though the schedule were operating for that purpose and if you can satisfy the language of the section without extending it beyond that purpose you ought to do it But if in spite of that you find in the language of the schedule words and terms that go clearly outside that purpose then you must give effect to them and you must not consider them as limited by the heading of that part of the schedule or by the purpose mentioned in the Act for which the schedule is prima facie to be used You cannot refuse to give effect to clear words simply because prima facie they seem to be limited by the heading of the schedule and the definition of the purpose of the schedule contained in the Act In my opinion the second of the two propositions laid down by Lord Sterndale M R applies to the exposition of the Schedule with which we are concerned It may be pointed out that the decision of Lord Sterndale M R was accepted by the House of Lords without question in Gittus vs Commissioners of Inland Revenue1 in an appeal from the decision of the Court of Appeal in the earlier case Though the heading of the Schedule and the definition of the word profits show that the Schedule is designed to assist in the computation of profits the mention of other kinds of businesses in r 4 taken with an incomplete definition of the term in the Act clearly I 576 2 692 shows that the legislature was defining the term business as and when necessary as it laid down the rules for calculation of profits of a business It was including different kinds of businesses within the Act and indicating how in those cases the profits had to be calculated I do not think that the definition given in the Act can be said to control everything in the Schedule in spite of the definition of I profits and the heading given to the Schedule As I have said above the second of the two alternatives is really applicable to the present case For these reasons and those given by my brother Sinha J I hold that this appeal should be allowed with costs here and below BY THE COURT In accordance with the judgment of the majority the decision under appeal is set aside and the appeal is allowed with costs here and below

The appellant as the Mahant of the Salouna asthal made an application in the High Court under article 226 of the Constitution praying inter alia for the issue of a writ quashing the order of the Bihar State Board of Religious Trusts requiring the appellant to submit a return of income and expenditure under section 59 Of the Bihar Hindu Religious Trusts Act 1950 on the grounds inter alia that the Salouna as that was a private institution and not a religious trust within the meaning of the Act and that the Act did not apply to private trusts The High Court took the view that the language of section 21 of the Act which defined a religious trust was wide enough to cover within its ambit both private and public trusts recognised by Hindu law and that the Salouna asthal did not come within any of the two exceptions recognised by the section Held that on a true and proper construction of the provi sions of the Act considered in the background of previous legislative history with regard to religious charitable or pious trusts in India the definition clause in section 21 of the Act does not include within its ambit private trusts and that the provisions of the Act do not apply to such trusts The essential distinction in Hindu law between religious endowments which are public and those which are private is that in a public trust the beneficial interest is vested in an uncertain and fluctuating body of persons either the public at large or some considerable portion of it answering a particular description in a private trust the beneficiaries are definite and ascertained individuals or who within a time can be definitely ascertained The fact that the uncertain and fluctuating body of persons is a section of the public following as particular religious faith or is only a sect of persons of a certain religious persuasion would not make any difference in the matter and would not make the trust a private trust

Appeal No 768 of 1957 Appeal by special leave from the judgment and order dated September 21 1956 of the Labour Appellate Tribunal of India at Calcutta in Appeal No Cal 101 of 1956 M C Setalvad Attorney General for India section N Mukherjee and B N Ghosh for the appellants Dipak Dutta Choudhri for the respondents April 21 The Judgment of the Court was delivered by WANCHOO J This is an appeal by special leave against the decision of the Labour Appellate Tribunal of India in an industrial matter The appellant is the Ranipur Colliery hereinafter called the company which carries on the business of coal mining in Dishergarh West Bengal The respondents are six workmen employed by the company They along with another person were working as tub checkers It was found that they were making false reports both as to quality and quantity of coal which it was their duty to check with the result that the company suffered loss Consequently the company served charge sheetS on them and a regular enquiry was held on April 13 1955 at which they were present and bad full opportunity to give their explanation cross examine witnesses and generally contest the charge The company came to the conclusion after the enquiry that the workmen were guilty of the misconduct with which they were charged and should be dismissed As how ever an industrial dispute between the company and its workmen was pending before the Industrial Tribunal the company applied under section 33 of the hereinafter called the Act for permission to dismiss the workmen It appears that five out 721 of seven workmen filed two applications under section 33 A of the Act before the Industrial Tribunal on the ground that they had been suspended without pay from May 4 1955 and that this was against the provision of the Standing Orders governing their conditions of service These three applications were heard together by the Industrial Tribunal which came to the conclusion that the permission should be granted to the company to dismiss the seven workmen and accordingly did so Having granted this permission the Industrial Tribunal in consequence dismissed the applications under section 33 A Six of the workmen then went up in appeal to the Labour Appellate Tribunal against the grant of permission to dismiss and the dismissal of their applications under section 33 A Their case was i that no permission to dismiss should have been granted and ii that five of them had been placed under suspension without wages for an indefinite period in violation of the express provision of the Standing Orders and therefore they were entitled to relief The Appellate Tribunal dismissed the appeal with respect to the grant of permission to dismiss It however came to the conclusion that there was a breach of cl 27 of the Standing Orders and therefore allowed the appeal of five workmen other than Akhey Roy who had applied under section 33 A and ordered that they should be paid their wages from the date of suspension without pay to the date of the Industrial Tribunal s order less ten days as provided in cl 27 of the Standing Orders Thereupon the company applied to this Court for special leave which was granted and that is how the matter has come before us It appears that Akhey Roy has been unnecessarily joined as a respondent for the order of the Appellate Tribunal does not show that any relief was granted to him and his appeal to the Appellate Tribunal must therefore be taken to have been dismissed Thus the only point that falls for consideration is whether suspension without pay pending permission of the Industrial Tribunal under section 33 of the Act is a 91 722 breach of cl 27 of the Standing Orders The brief facts necessary in this connection are these Seven workmen were served with charge sheets on April 1 1955 After their replies had been received an enquiry was held on April 13 1955 and they were found guilty of misconduct It was decided thereupon to apply for permission for their dismissal under section 33 of the Act The application was made to the Tribunal on April 29 1955 Thereafter the workmen were suspended on May 4 1955 without pay pending orders of the Industrial Tribunal Clause 27 of the Standing Orders on which reliance has been placed reads thus An employee may be suspended fined or dismissed without notice or any compensation in lieu of notice if he is found to be guilty of misconduct provided suspension without pay whether as a punishment or pending enquiry shall not exceed ten days The contention on behalf of the workmen is that the words pending enquiry appearing in cl 27 include enquiry under section 33 of the Act before the Industrial Tribunal also Therefore if the Industrial Tribunal takes longer than ten days to decide the application under section 33 and the workman is suspended without pay there would be a breach of cl 27 of the Standing Orders after ten days are over On the other hand it is contended on behalf of the company that the words pending enquiry in el 27 refer only to the enquiry by the employer and not to the proceedings before the Industrial Tribunal under section 33 The Appellate Tribunal has come to the conclusion that the words pending enquiry in cl 27 include proceedings before the Industrial Tribunal under section 33 and therefore if suspension without pay is for more than ten days even though it may be pending orders of the Industrial Tribunal under section 33 there is a breach of el 27 of the Standing Orders In this connection it has relied on an earlier decision of its own in Rampalat Chamar vs The Assam Oil Co Ltd 1 where the words were pending full enquiry It was of opinion that there was no difference between pending 1 723 enquiry and pending full enquiry and that the proceedings before the Industrial Tribunal under section 33 are also included in these words We agree that there is no real difference between pending enquiry which appears in cl 27 of the Standing Orders and pending full enquiry which appeared in the Standing Orders in The Assam Oil Company case 1 But we are of opinion that the view taken by the Labour Appellate Tribunal both in The Assam Oil Company case 1 and in this case is incorrect This Court has held in The Automobile Products of India Ltd vs Rukamji Bala 2 that section 33 imposes a ban on the employer to dismiss a workman and it gives power to the Industrial Tribunal on an application made to it to grant or withhold the permission to dismiss ie to lift or maintain the ban So far however as the employer is concerned his enquiry is or at any rate should be over when he comes to the finding that the case against the employee is proved and that the punishment of dismissal is the proper punishment It is only then that the employer applies under section 33 for permission to dismiss the employee Further the proceedings under section 33 are not an enquiry by the Industrial Tribunal into the rights or wrongs of the dismissal all that it has to see is whether a prima facie case has been made out or not for lifting the ban imposed by the section and whether a fair enquiry has been made by the employer in which he came to the bona fide conclusion that the employee was guilty of misconduct Once it found these conditions in favour of the employer it was bound to grant the permission sought for by him It is thus clear that proceedings under section 33 are not in the nature of an enquiry into the conduct of the employee by the Industrial Tribunal see Lakshmi Devi Sugar Mills Ltd vs Pt Ram Sarup 3 The proceedings therefore before the Industrial Tribunal cannot be called an enquiry into the conduct of the employee On the other hand the enquiry which is contemplated by cl 27 is an enquiry into the conduct of the employee That enquiry could 1 2 3 724 only be by the employer Therefore when cl 27 uses the words pending enquiry these words can only refer to the enquiry by the employer into the conduct of the employee It is in our opinion entirely unnecessary that the words pending enquiry should have been qualified by the words by the employer before they can be interpreted as referring to the enquiry by the employer Standing Orders are concerned with employers and employees and not with tribu nals Therefore when an enquiry is mentioned in cl 27 it can in the context only refer to the enquiry by the employer and not to a proceeding under section 33 before the tribunal We are therefore of opinion that in the context in which these words have been used in cl 27 they mean an enquiry by the employer and are not referable to the proceedings under section 33 of the Act before the Tribunal The scheme and object of section 33 also show that this conclusion is reasonable Section 33 of the Act as already stated imposes a ban on the employer thus preventing him from dismissing an employee till the permission of the tribunal is obtained But for this ban the employer would have been entitled to dismiss the employee immediately after the completion of his enquiry on coming to the conclusion that the employee was guilty of misconduct Thus if section 33 had not been there the contract of service with the employee would have come to an end by the dismissal immediately after the conclusion of the enquiry and the employee would not have been entitled to any further wages But section 33 steps in and stops the employer from dismissing the employee immediately on the conclusion of his enquiry and compels him to seek permission of the Tribunal in case some industrial dispute is pending between the employer and his employees It stands to reason therefore that so far as the employer is concerned he has done all that he could do in order to bring the contract of service to an end To expect him to continue paying the employee after he had come to the conclusion that the employee was guilty of misconduct and should be dismissed is in our opinion unfair simply because of the accidental 725 circumstance that an industrial dispute being pending he has to apply to the tribunal for permission It seems to us therefore that in such a case the employer would be justified in suspending the employee without pay after he has made up his mind on a proper enquiry to dismiss him and to apply to the tribunal for that purpose If this were not so he would have to go on paying the employee for not doing any work and the period for which this will go on will depend upon an accidental circumstance viz how long the tribunal takes in concluding the proceedings under section 33 In the present case the application for permission was made on April 29 1955 and the Tribunal s award was given on March 10 1956 more than ten months later So if the view taken by the Appellate Tribunal is correct the employer has to pay the employee for this period of more than ten months even though the employer had completed his enquiry and made up his mind to dismiss the employee long before and would have done so but for the ban imposed by section 33 The purpose of providing ten days as the maximum period of suspension without pay pending enquiry in cl 27 obviously is that the employer should not abuse the provision of suspension pending enquiry and delay the enquiry inordinately thus keeping the employee hanging about without pay for a long period The object further seems to be to see that the employer finishes his enquiry promptly within ten days if the suspension of the employee is without pay But it could not have been intended that the Industrial Tribunal should also conclude the proceedings under section 33 within ten days and if that was not done there would be a breach of cl 27 In any case the time taken by the proceedings before the tribunal under section 33 is beyond the control of the employer and as the provisions of el 27 would be inappropriate and inapplicable to the said proceedings We are therefore of opinion that the words pending enquiry in cl 27 both in the context and in justice and reason refer only to the enquiry by the employer and not to the proceedings before the tribunal under section 33 This interpretation would not cause any serious 726 hardship to the employee for if the tribunal grants permission to the employer to dismiss the employee he will not get anything from the date of his suspension without pay on the other hand if the tribunal refuses to grant the permission sought for he would be entitled to his back wages from the date of his suspension without pay We may in this connection refer to the case of Lakshmi Devi Sugar Mills Ltd 1 where a similar point arose for decision In that case the Standing Orders provided suspension without pay only for four days It was there held that suspension without pay pending enquiry as also pending permission of the tribunal could not be considered a punishment as such suspension without pay would only be an interim measure and would last only till the application for permission to punish the workman was made and the tribunal had passed orders thereon It was also held that if the permission was accorded the workman would not be entitled to payment during the period of suspension but if the permission was refused he would have to be paid for the whole period of suspension The principle laid down in that case applies to this case also We would only like to add that that principle will apply only to those cases where there is a ban under section 33 and the employer has to apply under that section for lifting the ban after completing the enquiry The matter will be different if there is no question of applying under section 33 and under the relevant Standing Orders the employer is competent to dismiss the employee immediately after his enquiry is complete In such a case if the Standing Orders provide that suspension without pay will not be for more than a certain number of days the enquiry must either be completed within that period or if it goes beyond that period and suspension for any reason is considered necessary pay cannot be withheld for more than the period prescribed under the Standing Orders In the present case the suspension without pay took place even after the application under section 33 had been made and was pending permission under that section As the Industrial Tribunal has accorded permission to dismiss the employees in this case and 1 727 as that part of the award has been upheld by the Appellate Tribunal there is no question of the employees being paid during the period of suspension without pay We therefore allow the appeal set aside the order of the Labour Appellate Tribunal and restore the order of the Industrial Tribunal dismissing the two applications under section 33 A In the circumstances we pass no order as to costs Appeal allowed

Sanction was given under section 6 of the Prevention of Corruption Act 1947 for the prosecution of the appellant for having received illegal gratification from one Pal Singh He was charged with and tried for two offences under section 51a of the Act for habitually accepting or obtaining illegal gratification and under section 51d for receiving illegal gratification from Pal Singh The Special judge found both charges proved and convicted the appellant On appeal the High Court held that the appellant could neither be tried nor convicted of the offence under section 51a as no sanction had been given in respect of it but upheld the conviction for the offence under section 51d for which sanction had been given It was argued that the conviction even for the offence under section 51d was illegal as the trial was wholly void and without jurisdiction Held that the contention that the trial for two offences requiring sanction is wholly void where the sanction is granted for only one offence and not for the other is unsustainable The want of sanction for the offence of habitually accepting bribes does not make the taking of cognizance of the offence of taking a bribe from Pal Singh void nor the trial for that offence illegal and the Court a Court without jurisdiction Hori Ram Singh vs The Crown and Basirul Huq vs The State of West Bengal referred to

Appeal No 230 of 1955 Appeal from the judgment and order dated October 5 1953 of the Patna High Court in M J C No 128 of 1953 Mahabir Prasad Advocate General for the State of Bihar and R C Prasad for the appellants N C Chatterjee and P K Chatterjee for the respondent April 15 The Judgment of the Court was delivered by section K DAS J This appeal relates to a trust known as the Srimati Charusila Trust and the properties appertaining thereto By its judgment and order dated October 5 1953 the High Court of Patna has held that the trust in question is a private trust created for the worship of a family idol in which the public are not interested and therefore the provisions 604 of the Bihar Hindu Religious Trusts Act 1950 Bihar I of 1951 hereinafter referred to as the Act do not apply to it Accordingly it allowed an application made to it under article 226 of the Constitution and quashed the proceedings taken against the respondent herein under sections 59 and 70 of the Act The State of Bihar the President of the Bihar State Board of Religious Trusts and the Superintendent of the said Board who were respondents to the petition under article 226 are the appellants before us The trust in question was created by a trust deed executed on March 11 1938 Srimati Charusila Dasi is the widow of one Akshaya Kumar Ghose of No 3 Jorabagan Street in Calcutta She resided at the relevant time in a house known as Charu Niwas at Deoghar in the district of Santhal Parganas in the State of Bihar In the trust deed she described herself as the settlor who was entitled to and in possession of certain properties described in schedules B C and D Schedule B property consisted of three bights and odd of land situate in mohalla Karanibad of Deoghar town together with buildings and structures thereon schedule C property was Charu Niwas also situate in Karanibad of Deoghar and schedule D properties consisted of several houses and some land in Calcutta the aggregate value of which was in the neighborhood of Rs 850000 In a subsequent letter to the Superintendent Bihar State Board of Religious Trusts it was stated on behalf of Srimati Charusila Dasi that the total annual income from all the properties was about Rs 87839 In the trust deed it was recited that the settlor had installed a deity named Iswar Srigopal in her house and had since been regularly worshipping and performing the puja of the said deity that she had been erecting and constructing a twin temple jugal mandir and a Nat Mandir entrance hall to be named in memory of her deceased son Dwijendra Nath on the plot of land described in schedule B and was further desirous of installing in one of the two temples the deity Srigopal and such other deity or deities as she might wish to establish during her lifetime and also of installing in 605 the other temple a marble image of Sri Sri Balanand Brahmachari who was her religious preceptor and who was regarded by his disciples as a divine person It was further recited in the trust deed that the settlor was also desirous of establishing and founding a hospital at Karanibad for Hindu females to be called Akshaya Kumar Female Hospital in memory of her deceased husband By the trust deed the settler transferred to the trustees the properties described in schedules B C and D and the trustees were five in number including Srimati Charusila Dasi and her deceased husband s adopted son Debi Prasanna Ghosh the other three trustees were Amarendra Kumar Bose Tara Shanker Chatterjee and Surendra Nath Burman but they were not members of the family of the settlers Amarendra Kumar Bose resigned from the office of trusteeship and was later replaced by Dr Shailendra Nath Dutt The trusts imposed under the trust deed were 1 to complete the construction of the two temples and the Nat Mandir at a cost not exceeding three lakhs to be met out of the trust estate and donations if any 2 after the completion of the two temples to instal or cause to be installed the deity Iswar Srigopal in one of the temples and the marble image of Sri Balanand Brahmachari in the other and to hold a consecration ceremony and a festival in connection therewith 3 after the installation ceremonies and festivals mentioned above to provide for the payment and expenditure of the daily sheba puja and periodical festivals each year of the deity Srigopal and such other deities as might be installed at an amount not exceeding the sum of Rs 13600 per annum and also to provide for the daily sheba of the marble image of Sri Balanand Brahmachari and to celebrate each year in his memory festivals on the occasion of a the Janma tithi the anniversary of the installation of the marble image b Gurupurnima full moon in the Bengali month of Ashar and c Tirodhan anniversary of the day on which Sri Balanand Brahmachari gave up his body at a cost not exceeding Rs 4500 per annum and 4 to establish or cause to be established and run and 606 manage in Deoghar a hospital for Hindu females only to be called Akshaya Kumar Female Hospital and an attached outdoor charitable dispensary for all out patients of any religion or creed whatsoever and pay out of the income for the hospital and the outdoor dispensary an annual sum of Rs 12000 or such other sum as might be available and sufficient after meeting the charges and expenditure of the two temples and after paying the allowance of the shebait and trustees and members of the temple committee It was further stated that the work of the establishment of the hospital and the out door charitable dispensary should not be taken in hand until the construction of the temples and the installation of the deities mentioned above It may be here stated that it is the case of both parties before us that the temples and the Nat Mandir have been constructed and the deity and the marble image installed therein but neither the hospital nor the charitable dispensary has yet been constructed The powers functions and duties of the trustees were also mentioned in the deed and in schedule A detailed rules were laid down for the holding of annual general meetings special meetings and ordinary meetings of the trustees To these details we shall advert later On October 27 1952 the Superintendent Bihar State Board of Religious Trusts Patna sent a notice to Srimati Charusila Dasi under section 59 of the Act asking her to furnish a return in respect of the trust in question Srimati Charusila Dasi said in reply that the trust in question was a private endowment created for the worship of a family idol in which the public were not interested and therefore the Act did not apply to it On January 5 1953 the Superintendent wrote again to Srimati Charusila Dasi informing her that the Board did not consider that the trust was a private trust and so the Act applied to it There was further correspondence between the solicitor of Srimati Charusila Dasi and the President of the Bihar State Board of Religious Trusts The correspondence did not however carry the matter any further and on February 5 1953 the President of the State Board of 607 Religious Trusts said in a notice that he had been authorised to assess a fee under section 70 of the Act in respect of the trust Ultimately on April 61953 Srimati Gharusila Dasi made an application to the High Court under article 226 of the Constitution in which she prayed that a writ or order be issued quashing the proceedings taken against her by the Bihar State Board of Religious Trusts on the grounds a that the trust in question was a private trust to which the Act did not apply and b that the Act was ultra vires the Constitution by reason of the circumstance that its several provisions interfered with her rights as a citizen guaranteed under article 19 of the Constitution This application was contested by the State of Bihar and the Bihar State Board of Religious Trusts though no affidavit was filed by either of them On a construction of the trust deed the High Court came to the conclusion that the trust in question was wholly of a private character created for the worship of a family idol in which the public were not interested and in that view of the matter held that the Act and its provisions did not apply to it Accordingly the High Court allowed the application and issued a writ in the nature of a writ of certiorari quashing the proceedings under sections 59 and 70 of the Act and a writ in the nature of a writ of prohibition restraining the Bihar State Board of Religious Trusts from taking further proceedings against Srimati Charusila Dasi in respect of the trust in question The appellants then applied for and obtained a certificate from the High Court that the case fulfilled the requirements of article 133 of the Constitution The present appeal has been filed in pursuance of that certificate In connected Civil Appeals numbered 225 226 228 229 and 248 of 1955 1 judgment has been pronounced to day and we have given therein a conspectus of the provisions of the Act and have further dealt with the question of the constitutional validity of those provisions in the context of fundamental rights guaranteed by Part III of the Constitution We have held therein that the provisions of the Act do not take away or 1 Mahant Moti Das vs section P Saki see P 563 ante 608 abridge any of the rights conferred by that Part In Civil Appeal No 343 of 1955 1 in which also judgment has been pronounced today we have considered the definition clause in section 21 of the Act and come to the conclusion that the Act does not apply to private endowments and have further explained therein the essential distinction in Hindu law between private and public religious trusts We do not wish to repeat what we have said in those two decisions but in the light of the observations made therein the two questions which fall for decision in this appeal are I if on a true construction of the trust deed dated March 11 1938 the Charusila Trust is a private endowment created for the worship of a family idol in which the public are not interested as found by the High Court and 2 if the answer to the first question is in the negative does the Act apply by reason of section 3 thereof to trust properties which are situate outside the State of Bihar We now proceed to consider and decide these two questions in the order in which we have stated them On behalf of the appellants it has been contended that on a true construction of the deed of trust the Charusila Trust must be held to be a public religious trust The learned Judges of the High Court emphasised that part of the preamble wherein it was stated that the settler had installed a deity called Iswar Srigopal in her house and had been regularly worshiping the said deity which circumstance according to them showed that in its origin the endowment was a private endowment created for the worship of a family idol in which the public were not interested and the learned Judges were further of the view that the installation of the said deity in one of the two temples and of the marble image of Sri Balanand Brahmachari in the other temple did not alter the nature of the endowment which continued to be a expressed the opinion that deed for the establishment of a females and a charitable dispensary for patients of any main objects of the endowment These findings of the private endowment they also the provision in the trust hospital for Hindu religion or creed was merely incidental to the other 1 Mahant Ram saroop Dasji vs section e sahi see 609 High Court have been seriously and strenuously challenged before us We say this with respect but we consider that the learned Judges of the High Court have failed to give to several material clauses of the trust deed their due weight and these have an important bearing on the question in issue It is true that the settler said that she had installed the deity Iswar Srigopal in her house and she had been regularly worshipping the deity since such installation if the trust had been created only for the purpose of continuing such family worship the conclusion would no doubt be that the endowment was wholly of a private character in which the public had no interest That was not however what was done The settlor created the trust for the construction of two temples in one of which was to be installed the deity Iswar Srigopal and in the other the marble image of her preceptor the trustees consisted of persons three of whom were strangers to the family though the settlor reserved to herself the power to remove in her absolute discretion any one or more of the trustees for misconduct by reason of change of religion etc One of the relevant considerations is if by the trust deed any right of worship has been given to the public or any section of the public answering a particular description One of the clauses of the trust deed reads The pronamis and perquisites to be offered to the deities and image in the Jugal Mandir shall form part of the Srimati Charusila Trust Estate and neither the shebait nor any one else shall have interest or claim in or over same This clause to which the learned Judges of the High Court have made no reference shows that the right of worship was not confined to the family of the settlor or founder but was given to other members of the Hindu public who could offer pronamis and perquisites to the deities and those I pronamis and perquisites were to form part of the trust estate Schedule E of the deed gives details of the festivals and ceremonials to be performed for the deity and the image of Sri Balanand Brahmachari One of the cere monials is a Jal Chhatra free distribution of 77 610 water another is annakoot distribution of food at the time of Diwali the approximate expenditure being fixed at Rs 500 A third ceremony is a bhandara culminating in free distribution of food of the Mataji of Sri Balanand Brahmachari These are ceremonies which even if ancillary to deva sheba appear prima facie to confer benefit on the general body of worshippers Though not conclusive by them selves they have to be considered in the light of the other main provisions of the trust deed The other festivals which have to be performed as a rule for the deity are such well known festivals as Rath Yatra Jhulan Janmastami Rash and Dol Holi in which members of the Hindu community usually take part in large numbers and the scale of expenses laid down shows that the festivals are to be performed on a large scale so as to enable a large number of persons to take part in them Even with regard to the special festivals for Sri Balanand Brahmachari on the occasion of the Janmatithi Gurupurnima and Tirodhan the provisions of the trust deed contemplate that they are to be performed on a large scale so that other disciples of Sri Balananda Brahmachari may also join in them Even the constitution of the committee of trustees is such as would show that the endowment is not a mere private endowment The trust deed says In filling up a vacancy the trustees shall see that in the Board of Trustees there shall be if available one who is the seniormost lineal male descendant of Akshaya Kumar Ghose the deceased husband of the settlor who is eligible and willing and capable of acting as a trustee another who is a trustee of the Sree Sree Balanand Trust created at Deoghar by the said Sree Balanandji Brahmachari Maharaj of sacred memory and a third who shall be disciple of Sree Sree Balanand order that is to say any one of the disciples of the said Sree Sree Balanand Brahmachari Maharaj of sacred memory and his disciples and the disciples of the latter and so on if such a disciple is willing eligible and capable of acting as a trustee of the said Trust hereby created provided always that the full number of trustees shall at all times be five in number and no one 611 shall be eligible to be a trustee unless he be adult male pious Bengali Hindu and provided also that the shebait of Sree Gopal and the shebait of Sree Baleshwari Devi of the Ashram Deoghar shall under no circumstances be eligible to be a trustee tinder these presents save and except in the case of the settlor who shall so long as she lives to both a trustee and a shebait We may here draw attention to the formation of the temple committee as envisaged by the trust deed It says that the temple committee shall consist of the Jugal Mandir shebait for the time being who shall be the ex officio member and president of the committee and the other members who will be appointed or nominated by the trustees shall consist of six pious Hindus who must be residents of Deoghar and of whom at least four shall be Bengalis If the trust were created for the worship of a family idol one would not expect provisions of this nature which vest the management of the temple and the sheba puja in members of the public outside the family of the settlor Besides the aforesaid provisions there is in express terms the imposition of a trust in favour of the public so far as the hospital and the charitable dispensary are concerned It is necessary to quote here el 8 of the trust deed That clause reads To establish or cause to be established and run and manage in Deoghar a hospital for Hindu females only to be called in memory of the husband of the settlor since deceased the Akshaya Kumar Female Hospital and an attached out door Charitable Dispensary for all out patients of any religion or creed whatsoever and out of the said income to pay andor spend for the objects of the said Hospital and out door Dispensary annually a sum of rupees twelve thousand or such sum as will be available and sufficient after meeting the aforesaid charges and expenditure and after paying the allowance of the shebait and trustees and members of the temple committee and the establishment charges of offices at Calcutta and Deoghar and of the temple establishment hereinafter mentioned provided however that the work of the establishment 612 of the Hospital and out door Charitable Dispensary shall not be taken in hand by the trustees until the construction of the temple and installation of the deities hereinbefore mentioned The trust deed further states that the female hospital and charitable dispensary shall so long as the settlor is alive be located in a house to be rented in Deoghar and after her death shall be shifted to and located in Charu Niwas Charu Niwas was however sold by an order of the Calcutta High Court and the sale proceeds it is stated were appropriated towards the satisfaction of the debts and liabilities of the trust estate One clause of the trust deed relating to the hospital and the charitable dispensary says The object of the said Hospital shall be to provide Hindu females with gratuitous medical and surgical and maternity advice and aid and also to admit them as indoor patients in conformity with such rules and regulation as may be made by or with the sanction of the Board of Trustees The outdoor Charitable Hospital shall be run as the trustees shall provide by rules In furtherance of these objects its funds may be expended in subscriptions or contributions to convalescent and other similar institutions and to other special hospitals and in sending patients to and maintaining them in such institution and hospitals provided that the sum so expended in any one year shall not exceed rupees one thousand or such sum as may be fixed by the trustees from time to time The learned Judges of the High Court have expressed the view that these provisions for the establishment of a hospital and charitable dispensary are merely incidental or ancillary to the other main objects of the trust With great respect we are unable to appreciate how the establishment of a hospital and charitable dispensary of the nature indicated in the trust deed can be said to be ancillary or incidental to other objects of the trust viz the construction of two temples and the installation of the deities therein In clear and unequivocal terms the trust deed imposes a distinct and independent trust in favour of a considerable section of the public for whose benefit the hospital 613 and the charitable dispensary are to be established It is true that the establishment of the hospital and the charitable dispensary is to be taken in hand after the construction of the temples and the installation of the deities that circumstance however does not make the trust in relation to the hospital and the dispensary any the less important or even merely incidental or ancillary to the other trusts It merely determines the priority of time when the different trusts created by the deed are to be given effect to The High Court has placed reliance on the decision in Prasaddas Pal vs Jagannath Pal 1 That was a case in which by the deed of endowment were dedicated certain houses and premises to the sheba of a family idol established in one of the said houses and for feeding the poor and carrying out other charitable objects the deity was installed inside one of the residential quarters the shebaitship was confined to the members of the family of the founder and the feeding of the poor and of students in case the income of the debutter property increased was found to be part and parcel of the debasheba and in those circumstances it was held that the feeding of the poor etc was not an independent charity but incidental to the main purpose of the endowment viz the puja of the deity We are unable to hold that the same considerations apply to the trust before us In Deoki Nandan vs Murlidhar 2 this Court considered the principles of law applicable to a determination of the question whether an endowment is public or private and observed The cardinal point to be decided is whether it was the intention of the founder that specified individuals are to have the right of worship at the shrine or the general public or any specified portion thereof In accordance with this theory it has been held that when property is dedicated for the worship of a familyidol it is a private and not a public endowment as the persons who are entitled to worship at the shrine of the deity can only be the members of the family and that is an ascertained group of individuals But 1 Cal538 2 762 614 where the beneficiaries are not members of a family or a specified individual then the endowment can only be regarded as public intended to benefit the general body of worshippers One of the facts which was held in that case to indicate that the endowment was public was that the idol was installed not within the precincts of residential quarters but in a separate building constructed for that very purpose on a vacant site We do not suggest that such a fact is by itself decisive of the question The fact that the temple is outside the dwelling house is only a circumstance in favour of it being regarded a public temple particularly in Madras except Malabar there are however private temples in Bengal which are built outside the residential houses of donors see the Hindu Law of Religious and Charitable Trust Tagore Law Lectures by the late Dr B K Mukherjea 1952 edition p 188 In the case before us the two temples were constructed outside the residential quarters but that is only one of the relevant circumstances We must construe the deed of trust with reference to all its clauses and so construed we have no doubt that the trusts imposed constitute a public endowment There is one other point to be noticed in this connexion The deed of trust in the presept case is in the English form and the settlor has transferred the properties to trustees who are to hold them for certain specific purposes of religion and charity that in our opinion is not decisive but is nevertheless a significant departure from the mode a private religious endowment is commonly made It is necessary now to refer to a decision of the Calcutta High Court In re Charusila Dasi 1 relating to this very trust The question for consideration in that case was the assessment of income tax on the income of this trust estate for the accounting year 193839 The trustees were assessed upon the whole income of the trust The trustees appealed against the assessment and contended that the entire trust was for public religious and charitable purposes and the whole income 1 ILR 615 fell within cl 1 of sub section 3 of section 4 of the Income tax Act The contention of the Commissioner of Income tax was that the trust was no more than a private religious trust and the income did not enure for the public benefit save with respect to that part of the income which was to be devoted to the hospital and dispensary and to which the latter part of cl 1 applied A reference was accordingly made to the High Court and the question framed was whether on a proper construction of the deed of trust so much of the income of the trust as was not applied for the purpose of constructing and maintaining the female hospital was exempt from tax under the provisions of section 43 of the Indian Income tax Act It was pointed out before the High Court that no part of the income of the trust during the accounting year was devoted to the hospital and dispensary and it was conceded that part of the income which would be devoted to those institutions would fall within the exempting clause It so happens that the learned counsel who argued the case on behalf of the trustees in the Calcutta High Court in the income tax reference is the same counsel who has argued the case before us on behalf of Srimati Charusila Dasi The contention now is that the trust in its entirety is a private religious trust Eleven circumstances were referred to by learned counsel in the income tax reference in support of his contention that the entire trust as ascertained from the trust deed was of a public nature Gentle J with whom Ormond J agreed held that on a proper construction of the deed of trust so much of the income of the trust as was not applied for the purpose of constructing an maintaining the female hospital was not exempt from tax under the provisions of section 43 of the Indian Income tax Act This decision it must be stated at once does not wholly support the present respondent So far as the hospital and the dispensary are concerned the trust was held to be a public trust We are of the view that having regard to the main clauses of the trust deed to which we have already made a reference the trusts in favour of the deity Iswar Srigopal and the image of Sri Balanand Brahmachari are also of a public nature 816 One of the points which was emphasised before the Calcutta High Court was the provision with regard to pronamis and perquisites to be offered to the deity and the image The High Court said This provision does not indicate the creation of a trust in favour of the public but on the contrary it denies the right of any one which must include any member of the public having a right to the pronamis In its terms the deed negatives that benefit is conferred upon the public The aforesaid observations appear to us with respect to be based on a misconception When a member of the public makes an offering to a deity he does not retain any right to what he has offered What he offers belongs to the deity When we talk of the right of members of the public or a considerable section thereof we refer to the right of worship or the right to make offerings in worship of the deity and not of the right to the offerings after they have been made With regard to other clauses of the trust deed also we take a view different from that of the learned Judges who decided the income tax reference We have already explained our view in the preceding paragraphs and it is unnecessary to reiterate it The conclusions at which we have arrived on a construction of the deed of trust is that it creates a religious and charitable trust of a public nature Now we proceed to a consideration of the second point Section 3 of the Act says This Act shall apply to all religious trusts whether created before or after the commencement of this Act any part of the property of which is situated in the State of Bihar The argument before us on behalf of the respondent is this Under article 245 of the Constitution Parliament may make laws for the whole or any part of the territory of India and the legislature of a State may make laws for the whole or any part of the State Clause 2 of the said Article further states that no law made by Parliament shall be deemed to be invalid on the ground that it would have extra territorial operation Article 246 gives the distribution of legislative power 617 Parliament has exclusive power to make laws with respect to any of the matters enumerated in what has been called the Union List Parliament as also the legislature of a State have power to make laws with respect to any of the matters enumerated in the Concurrent List the legislature of a State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in the State List Item 28 of the Concurrent List is charities and charitable institutions charitable and religious endowments and religious institutions Learned counsel for the respondent contends that by reason of the provisions in articles 245 and 246 of the Constitution read with item 28 of the Concurrent List the Bihar legislature which passed the Act had no power to make a law which has operation outside the State of Bihar he further contends that under section 3 the Act is made applicable to all religious trusts whether created before or after the commencement of the Act any part of the property of which is situated in the State of Bihar therefore the Act will apply to a religious institution which is outside Bihar even though a small part of its property may lie in that State It is contended that such a provision is ultra vires the power of the Bihar Legislature and Parliament alone can make a law which will apply to religious institutions having properties in different States Alternatively it is contended that even if the Act applies to a religious institution in Bihar a small part of the property of which is in Bihar the provisions of the Act can have no application to such property of the institution as is outside Bihar such as the Calcutta properties in the present case It is necessary first to determine the extent of the application of the Act with reference to sections 1 2 and 3 of the Act read with the preamble The preamble states Whereas it is expedient to provide for the better administration of Hindu religious trusts in the State of Bihar and for the protection and preservation of properties appertaining to such trusts 78 618 It is clear from the preamble that the Act is intended to provide for the better administration of Hindu religious trusts in the State of Bihar Section 1 2 states that the Act extends to the whole of the State of Bihar and section 3 we have quoted earlier If these two provisions are read in the context of the preamble they can only mean that the Act applies in cases in which a the religious trust or institution is in Bihar and b any part of the property of which institution is situated in the State of Bihar In other words the aforesaid two conditions must be fulfilled for the application of the Act It is now well settled that there is a general presumption that the legislature does not intend to exceed its jurisdiction and it is a sound principle of construction that the Act of a sovereign legislature should if possible receive such an interpretation as will make it operative and not in operative see the cases referred to In re the Hindu Women s Right to Property Act 1937 and The Hindu Women s Rights to Property Amendment Act 1936 and In re a Special Reference under section 213 of The Government of India Act 1935 1 and the decision of this Court in R M D Chamarbaugwalla vs The Union of India 2 We accordingly hold that section 3 makes the Act applicable to all public religious trusts that is to say all public religious and charitable institutions within the meaning of the definition clause in section 2 1 of the Act which are situate in the State of Bihar and any part of the property of which is in that State In other words both conditions must be fulfilled before the Act can apply If this be the true meaning of section 3 of the Act we do not think that any of the provisions of the Act have extra territorial application or are beyond the competence and power of the Bihar Legislature Undoubtedly the Bihar Legislature has power to legislate in respect of to use the phraseology of item 28 of the Concurrent List charities charitable institutions charitable and religious endowments and religious institutions situate in the State of Bihar The question therefore narrows down to this in so legislating has it power to affect trust 1 27 30 2 619 property which may be outside Bihar but which appertains to the trust situate in Bihar In our opinion the answer to the question must be in the affirmative It is to be remembered that with regard to an interest under a trust the beneficiaries only right is to have the trust duly administered according to its terms and this right can normally be enforced only at the place where the trust or religious institution is situate or at the trustees place of residence see Dicey s Conflict of Laws 7th edition p 506 The Act purports to do nothing more Its aim as recited in the preamble is to provide for the better administration of Hindu religious trusts in the State of Bihar and for the protection of properties appertaining thereto This aim is sought to be achieved by exercising control over the trustees in personam The trust being situate in Bihar the State has legislative power over it and also over its trustees or their servants and agents who must be in Bihar to administer the trust Therefore there is really no question of the Act having extraterrestrial operation In any case the circumstance that the temples where the deities are installed are situate in Bihar that the hospital and charitable dispensary are to be established in Bihar for the benefit of the Hindu public in Bihar gives enough territorial connection to enable the legislature of Bihar to make a law with respect to such a trust This Court has applied the doctrine of territorial connection or nexus to income tax legislation sales tax legislation and also to legislation imposing a tax on gambling In Tata Iron Steel Co Ltd vs State of Bihar 1 the earlier cases were reviewed and it was pointed out that sufficiency of the territorial connection involved a consideration of two elements namely a the connection must be real and not illusory and b the liability sought to be imposed must be pertinent to that connection It cannot be disputed that if the religious endowment is itself situate in Bihar and the trustees function there the connection between the religious institution and the property appertaining thereto is real and not illusory indeed the religious institution I 620 and the property appertaining thereto form one integrated whole and one cannot be dissociated from the other If therefore any liability is imposed on the trustees such liability must affect the trust property It is true that in the Tata Iron Steel Co s case this Court observed It is not necessary for us on this occasion to lay down any broad proposition as to whether the theory of nexus as a principle of legislation is applicable to all kinds of legislation It will be enough for disposing of the point now under consideration to say that this Court has found no apparent reason to confine its application to income tax legislation but has extended it to sales tax and to tax on gambling We do not see any reason why the principles which were followed in The State of Bombay vs R M D Chamarbaugwala 2 should not be followed in the present case In R M D Chamarbaugwala s case 2 it was found that the respondent who was the organiser of a prize competition was outside the State of Bombay the paper through which the prize competition was conducted was printed and published outside the State of Bombay but it had a wide circulation in the State of Bombay and it was found that all the activities which the gambler is ordinarily expected to undertake took place mostly if not entirely in the State of Bombay These circumstances it was held constituted a sufficient territorial nexus which entitled the State of Bombay to impose a tax on the gambling that took place within its boundaries and the law could not be struck down on the ground of extra territoriality We are of the opinion that the same principles apply in the present case and the religious endowment itself being in Bihar and the trustees functioning there the Act applies and the provisions of the Act cannot be struck down on the ground of extra territoriality We proceed now to consider some of the decisions on which learned counsel for the respondent has placed reliance These are 1 Sirdar Gurdyal Singh vs The Rajah of Faridkote 3 2 Commissioner of Wakfs Bengal 1 21957 SCR 874 3 1894 21 IA 17r 185 621 V Narasingh Chandra Daw and Co 1 3 Madangopal Bagla vs Lachmidas 2 and 4 Maharaj Kishore Khanna vs Raja Ram Singh 3 Those decisions in our opinion are not in point as they related to different problems altogether In Sirdar Gurdyal Singh s case 4 a Faridkote court passed an ex parte money decree against a defendant who had been a treasurer of Faridkode but who at the time of suit had ceased to be such and was resident in Jhind of which State he was a domiciled subject it was held that the decree was a nullity by international law The ratio of the decision was thus expressed by Lord Selborne Territorial jurisdiction attaches with special exceptions upon all persons either permanently or temporarily resident within the territory while they are within it but it does not follow them after they have withdrawn from it and when they are living in another independent country In a personal action to which none of these causes of jurisdiction apply a decree pronounced in absentem by a foreign Court to the jurisdiction of which the defendant has not in any way submitted himself is by international law an absolute nullity The decision in Commissioner of Wakfs Bengal vs Narasingh Chandra Daw Co 1 proceeded on a construction of section 70 of the Bengal Wakf Act which also had a section similar to section 3 of the Act Section 70 of the Bengal Wakf Act required notice to the Commissioner of Wakfs before any wakf property could be sold and the question was whether a court in Assam was under any obligation to send such a notice It was held that the Bengal Act did not apply to Assam and section 70 stood in a different category from the other sections of the Bengal Act The ratio of the decision was thus explained So far as the status of the Commissioner is concerned it is conferred by the Bengal Act to operate even outside the province Therefore the Commissioner may bring suits under section 72 or section 73 of the Bengal Act in courts outside the province But section 70 lies 1 ILR 3 AIR 1954 Pat 164 2 ILR 4 1894 21 IA 171 185 622 in a different category because it imposes an obligation on the court to issue notice to the Commissioner in certain circumstances Section 701 refers to a suit or proceeding in respect of any wakf property etc and if this wakf property is situated outside the province so that the court having jurisdiction over it is also outside the province then the Act cannot operate beyond its extent that is to say outside the province of Bengal The decision in Madangopal Bagla vs Lachmidas and the decision in Maharaj Kishore Khanna vs Raja Ram Singh 1 both related to the interpretation of some of the provisions of the United Provinces Encumbered Estates Act U P Act 25 of 1934 In the former case the limited question for decision was if the decreeholder under a decree of the Original side of the Calcutta High Court was precluded from executing the decree by reason of certain proceedings which had taken place before the Special Judge Banaras under the United Provinces Encumbered Estates Act 1934 The answer given was that the decreeholder was not so precluded and the decision proceeded on a construction of section 18 of the United Provinces Encumbered Estates Act 1934 read with sections 7 13 and 147 of that Act It was held that the exclusive jurisdiction intended to be conferred on the Special Judge in supersession of those of civil and revenue courts extended as indicated by section 7 only over debts enforceable through the courts within the province and the word creditor in section 10 must be limited to those of them who would have to enforce their rights through such courts alone In the Patna case the question for decision was if section 147 of the U P Encumbered Estates Act 1934 should be construed to mean that the decree of a Special Judge is to be deemed to be the decree of a civil court of competent jurisdiction even beyond the territorial jurisdiction of the State Legislature It was held that the decree passed by the Special Judge of Banaras had not the effect of a decree of a civil court outside the territorial limits of the United Provinces and the Sub 1 ILR 2 AIR 1954 Pat 164 623 ordinate Judge of Purnea in Bihar had no jurisdiction to execute such a decree or to direct that the properties of a judgment debtor in Purnea should be attach ed in execution of the decree As we have said earlier these decisions relate to an altogether different problem namely the proper construction of certain sections of the Bengal Wakf Act or of the United Provinces Encumbered Estates Act The problem before us is of a more general nature and the aforesaid decisions are no authorities for the solution of that problem There is a decision of this Court to which our attention has been drawn Petition No 234 of 1953 decided on March 18 1953 A similar problem arose in that case where the head of a math situate in Banaras made an application under article 32 of the Constitution for a writ in the nature of mandamus against the State of Bombay and the Charity Commissioner of that State directing them to forbear from enforcing against the petitioner the provisions of the Bombay Public Trusts Act 1950 on the ground inter alia that the Bombay Act could have no application to the math situate in Banaras or to any of the properties or places of worship appurtenant to that math In the course of the hearing of the petition the learned Attorney General who appeared for the State of Bom bay made it clear that there was no intention on the part of the Government of Bombay or the Charity Commissioner to apply the provisions of the Bombay Act to any math or religious institution situated outside the State territory The learned Attorney General submitted that the Bombay Act could be made applicable if at all to any place of religious instruction or worship which is appurtenant to the math and is actually within the State territory In view of these submissions no decision was given on the point urged The case cannot therefore be taken as a final decision of the question in issue before us For the reasons which we have already given the Act applies to the Charusila Trust which is in Bihar and its provisions cannot be struck down on the ground of extra territoriality 624 The result is that the appeal succeeds and is allowed with costs the judgment and order of the High Court dated October 5 1953 are set aside and the petition of Srimati Charusila Dasi must stand dismissed with costs Appeal allowed

The respondent was a banking company and the question was whether it was liable to pay excess profits tax on a sum of Rs 86000 received by it as rent in respect of the major part of a six storeyed building owned and constructed by it which it had let out the rest being occupied by its headquarters in Calcutta The Department and the Income tax Appellate Tribunal found against the respondent but the High Court on a reference under section 661 of the Income Tax Act reversed their decision The Memorandum of Association of the Company provided as one of its objects as follows e To purchase take on lease or in exchange or otherwise acquire any moveable or immoveable property which the company may think necessary or convenient for the purpose of its business and to construct maintain and alter any buildings or works necessary or convenient for the purpose of the Company The question referred to the High Court for decision wag whether the said income was part of the business income taxable under section 25 read with r 44 of the Sch I to the Excess Profits Tax Act 1940 The High Court held that although the income was derived from the holding of property since the functions of the assessee company did not consist wholly or mainly in the holding of investments or other property as required by the first proviso to section 25 Of the Act no question of the application of r 44 could arise Held Per Sinha and Hidayatullah jj Kapur J dis senting that the question must be answered in the affirmative Per SINHA J The High Court was fundamentally in error in overlooking the main provision Of section 25 of the Act for even though the first proviso might not apply that by itself would not render the main provision of the definition which was wider than that under the Indian Income tax Act inapplicable Commissioners of Inland Revenue vs Desoutter Bros Ltd applied 661 The term business was of wide import and each case had to be determined with reference to the particular kind of acti vity or occupation of the person concerned Though ordinarily it implied a continuous activity in carrying on a particular trade or avocation it might also include an activity which might be called quiescent The Commissioners of Inland Revenue vs The South Behar Railway Co Ltd and Commissioners of Inland Revenue vs The Korean Syndicate Ltd 1921 12 T C 181 referred to The Memorandum of Association of a company provided the key to its business objects and the relevant clause in the instant case clearly showed that the managing of property and realisation of rents therefrom were within the objects of the company and therefore such rents must be included in calculating its profits under r 44 of the Sch I to the Act It was not correct to suggest that the rule in substituting the word partly for mainly occurring in the first proviso to section 25 exceeded the provisions of the statute Rule 44 did not derive its operative force from that proviso limited to an incorporated body of a particular type and was of wider application as evident from its own terms as also from the second proviso to section 25 of the Act Punjab Co operative Bank Ltd vs Commissioner of Income tax Punjab 1940 8 ITR 636 and Sardar lndra Singh and Sons Ltd vs Commissioner of Income tax West Bengal referred to It was not correct to say that if rental income were to be covered by the main clause of section 25 the first proviso to that section would become redundant Commissioners of Inland Revenue vs The Tyre Investment Trust Ltd referred to Nor was it correct to say that business could not be said to include rental income The United Commercial Bank Ltd Calcutta vs The Commis sioner of Income tax West Bengal held inapplicable Per KAPUR J The word business could either mean what was contained in the main provision of section 25 or have the extended meaning given by the first proviso to that section In either case it was inapplicable to the case of the respondent whose essential function was to deal in money and credit letting out of property being neither wholly or even partly its business The income received by the respondent therefore by way of rent did not fall within the definition of the word profits contained in section 219 of the Act and was not chargeable to excess profits tax under section 4 Of the Act Salisbury House Estate Ltd vs Fry 662 Mellows vs Buxton Palace Hotel Ltd and Commissioners of Inland Revenue vs Buxton Palace Hotel Ltd referred to In construing the first proviso effect must be given to every word used If the mere owning of immoveable property and the letting out of what was not needed for its own use by a company was intended to be covered by the definition the use of the words wholly or mainly would be wholly redundant Rule 44 Of the first Schedule to the Act did not modify the definition of business so far as it related to holding of property and before it could apply the functions of the company which meant the activities appropriate to its business must fall within the definition of business as given in the Act Per HIDAYATULLAH J The rents realised by the respondent must be regarded as profits from property held as investment and included in the computation of profits under r 44 Of the first schedule There was undeniably a difference between the wording of the schedule and the Act and the tendency of the schedule was to widen the definition of business so as to include letting of property for earning rents It could not therefore be said that the definition contained in the Act wholly controlled the Schedule and r 44 must be given effect to Inland Revenue Commissioners vs Gittus 192O 1 K B 563 applied Gittus vs Commissioners of Inland Revenue referred to

N Criminal Appeal No 13 of 1951 Appeal by special leave from the judgment and order of the High Court of Madras Rajamannar CJ and Balakrishna Ayyar J dated 10 th April 1950 in Contempt Application No 10 of 1949 426 SP Sinha SS Prakasam with him for the appellant R Ganapathy Iyer for the respondent February 14 The Judgment of the Court was delivered by MUKHERJEA J This appeal has come up before us on special leave granted by this court on May 23 1950 and it is directed against a judgment of a Division Bench of the Madras High Court dated April 10 1950 by which the learned Judges found the appellant guilty of contempt of court and sentenced him to serve simple imprisonment for three months The appellant is the publisher and managing editor of a Telugu Weekly known as Praja Rajyam which is edited and published at Nellore in the State of Madras In the issue of the said paper dated 10th February 1949 an article appeared under the caption Is the Sub Magistrate Kovvur corrupt The purport of the article was that Surya Narayan Murthi the stationary Sub Magistrate of Kovvur was known to the people of the locality to be a bribe taker and to be in the habit of harassing litigants in various ways He was said to have a broker through whom negotiations in connec tion with these corrupt practices were carried on Several specific instances were cited of cases tried by that offi cer where it was rumoured that he had either taken bribes or had put the parties to undue harassment because they were obdurate enough to refuse the demands of his broker The article which is a short one concludes with the fol lowing paragraph There are party factions in many villages in Kovvur Taluk Taking advantage of those parties many wealthy persons make attempt to get the opposite party punished either by giving bribes or making recommendations To appoint Magistrates who run after parties for a Taluk like this is to betray the public It is tantamount to failure of justice Will the Collector enquire into the matter and allay the public of their fears 427 The attention of the State Government being drawn to this article an application was filed by the AdvocateGener al of Madras before the High Court on November 14 1949 under section 2 of the Contempt of Courts Act Act XII of 1926 praying that suitable action might be taken against the appellant as well as three other persons of whom two were respectively the editor and sub editor of the paper while the third was the owner of the Press where the paper was printed On receiving notice the appellant appeared before the High Court and filed an affidavit taking sole responsibility for the article objected to and asserting that the article was published because of his anxiety to uphold the highest traditions of the judiciary in the land and to create popular confidence in courts the duty of which was to dispense justice without fear or favour and without any discrimination of caste creed or community It was said that before the article was published numerous complaints had reached him from various quarters imputing corruption and disreputable conduct to this Magistrate and the only desire of the appellant was to draw the attention of the higher authorities to the state of public opinion in the matter and to invite an enquiry into the truth or otherwise of the allegations which were not asserted as facts but were based only on hearsay The High Court after hearing the parties came to the conclusion that the publication in question did amount to contempt of court as it was calculated to lower the pres tige and dignity of courts and bring into disrepute the administration of justice As the appellant was not prepared to substantiate the allegations which he made and which he admitted to be based on hearsay and did not think it proper even to express any regret for what he had done the court sentenced him to simple imprisonment for three months The other three respondents through their counsel tendered unqualified apology to the court and the learned Judges considered that no further action against them was necessary 428 The propriety of the decision of the High Court so far as it relates to the appellant has been challenged before us in this appeal and Mr Sinha who appeared in support of the same raised before us a two fold contention his first and main contention is that as the contempt in this case was said to have been committed in respect of a court subordi nate to the High Court and the allegations made in the article in question constitute an offence under section 499 of the Indian Penal Code the jurisdiction of the High Court to take cognizance of such a case is expressly barred under section 2 3 of the Contempt of Courts Act The other contention advanced by the learned counsel relates to the merits of the case and it is urged that in publishing the article objected to the appellant acted in perfect good faith and as the article amounted to nothing else but a demand for enquiry into the conduct of a particular person who was believed to be guilty of corrupt practices in the discharge of his judicial duties there was no contempt of court either intended or committed by the appellant So far as the first point is concerned the determina tion of the question raised by the appellant would depend upon the proper interpretation to be put upon section 23 of the Contempt of Courts Act which runs as follows No High Court shall take cognizance of a contempt alleged to have been committed in respect of a court subor dinate to it where such contempt is an offence punishable under the Indian Penal Code According to Mr Sinha what the sub section means is that if the act by which a party is alleged to have commit ted contempt of a subordinate court constitutes offence of any description whatsoever punishable under the Indian Penal Code the High Court is precluded from taking cognizance of it It is said that in the present case the allegations made in the article in question amount to an offence of defama tion as defined by section 499 of the Indian Penal Code and consequently the jurisdiction of the High Court is barred Reliance 429 is placed in support of this proposition upon the decision of the Nagpur High Court in Kisan Krishna Ji vs Nagpur Conference of Society of St Vincent de Paul1 This con tention though somewhat plausible at first sight does not appear to us to be sound In our opinion the sub section referred to above excludes the jurisdiction of High Court only in cases where the acts alleged to constitute contempt of a subordinate court are punishable as contempt under specific provisions of the Indian Penal Code but not where these acts merely amount to offences of other description for which punishment has been provided for in the Indian Penal Code This would be clear from the language of the sub section which uses the words where such contempt is an offence and does not say where the act alleged to consti tute such contempt is an offence It is argued that if such was the intention of the Legislature it could have express ly said that the High Court s jurisdiction will be ousted only when the contempt is punishable as such under the Indian Penal Code It seems to us that the reason for not using such language in the sub section may be that the expression contempt of court has not been used as descrip tion of any offence in the Indian Penal Code though certain acts which would be punishable as contempt of court in England are made offences under it It may be pointed out in this connection that al though the powers of the High Courts in India established under the Letters Patent to exercise jurisdiction as Superi or Courts of Record in punishing contempt of their authority or processes have never been doubted it was a controversial point prior to the passing of the Contempt of Courts Act 1926 as to whether the High Court could like the Court of King s Bench in England punish contempt of courts subordi nate to it in exercise of its inherent jurisdiction The doubt has been removed by Act XII of 1926 which expressly declares the right of the High Court to protect subordinate courts against contempt but 1 1943 AIR 1943 Nag 430 subject to this restriction that cases of contempt which have already been provided for in the Indian Penal Code should not be taken cognizance of by the High Court This seems to be the principle underlying section 23of the Contempt of Courts Act What these cases are need not be exhaustively determined for purposes of the present case but some light is undoubtedly thrown upon this matter by the provision of section 480 of the Criminal Procedure Code which empowers any civil criminal or revenue court to punish summarily a person who is found guilty of committing any offence under sections 176 178 179 180 or section 228 of the Indian Penal Code in the view or presence of the court We are not prepared to say as has been said by the Patna High Court in Jnanendra prasad vs Gopal1 that the only section of the Indian Penal Code which deals with contempt committed against a court of justice or judicial officer is section 228 Offences under sections 175 178 179 and 180 may also as section 480 of the Criminal Proce dure Code shows amount to contempt of court if the public servant referred to in these sections happens to be a judicial officer in a particular case It is well known that the aim of the contempt proceeding is to deter men from offering any indignities to a court of justice and an essential feature of the proceeding is the exercise of a summary power by the court itself in regard to the delin quent In the cases mentioned in section 480 of the Indian Penal Code the court has been expressly given summary powers to punish a person who is guilty of offending its dignity in the manner indicated in the section The court is competent also under section 482 of the Criminal Proce dure Code to forward any case of this description to a Magistrate having jurisdiction to try it if it considers that the offender deserves a higher punishment than what can be inflicted under section 480 Again the court is enti tled under section 484 to discharge the offender on his submitting an apology although it has already adjudged him to punishment under section Pat 172 431 or forwarded his case for trial under section 482 The mode of purging contempt by tendering apology is a further char acteristic of a contempt proceeding It seems therefore that there are offences which are punishable as contempt under the Indian Penal Code and as subordinate courts can sufficiently vindicate their dignity under the provisions of criminal law in such cases the legislature deemed it proper to exclude them from the jurisdiction of the High Court under section 23 of the Contempt of Courts Actbut it would not be correct to say that the High Court s juris diction is excluded even in cases where the act complained of which is alleged to constitute contempt is otherwise an offence under the Indian Penal Code This view has been taken and in our opinion quite rightly in a number of decisions by the Calcutta1 Patna2 Allahabad3 and Lahore4 High Courts The only authority which Mr Sinha could cite in support of his contention is the decision of the Nagpur High Court in Kisan Krishna Ji vs Nagpur Conference of Society of St Vincent de Paul The authority is undoubtedly in his favour as it proceeds upon the assumption that the idea underlying the provision of section 23 of the Contempt of Courts Act is that if a person can be punished by some other tribunal then the High Court should not entertain any proceeding for contempt It is to be noticed that the learned Judge who decided this case himself took the opposite view in the case of Subordinate Judge First Class Hoshangabad vs Jawaharlal6 and definitely held that the prohibition contained in section 23 of the Contempt of Courts Act refers to offences punishable as contempt of court by the Indian Penal Code and not to offences punishable otherwise than as contempt This decision was neither noticed nor dissented from in the subsequent case and it is quite possible that 1 Narayan Chandra vs Panehu Pramanik AIR Naresh Kumarv Umaromar AIR 1951 Cal 2Kaulashia vs Emperor 12 Pat 1 3 State vs Brahma Prakash AIR 1950 All 556 Emperor vs Jagannath AIR 1938 All 358 4 Bennett Coleman vs G section Monga ILR 5 AIR 1943 Nag 6 AIR 1940 Nag 56 432 the attention of the learned judge was not drawn to this earlier pronouncement of his in which case the matter would certainly have been more fully discussed We think further that the decision of the Calcutta High Court in VM Bason vs A H Skone1 which was the basis of the decision of the learned Judge in the subsequent case does not really support the view taken in it In the Calcutta case what happened was that a clerk of the Attorney who appeared for the respondent decreeholder went to serve a notice under Order 21 Rule 371 of the Civil Procedure Code upon the appellant judgment debtor The judgmentdebtor refused to take the notice and abused and assaulted the Attorney s clerk Upon that contempt proceedings were started against him and Mr Justice CC Ghosh sitting on the Original Side of the High Court of Calcutta held the appellant guilty of contempt and fined him Rs 200 On appeal this judgment was affirmed by the appellate Bench and there was a general observation made by Chief Justice Sanderson at the close of his judgment that it is not desirable to invoke the special inherent jurisdiction of the High Court by way of proceeding for contempt if ordinary proceedings in a Magistrate s court are sufficient to meet the requirements of a case This was not a case under section 23 of the Contempt of Courts Act at all and no question either arose or was decided as to whether if an act is otherwise punishable as an offence under the Indian Penal Code the jurisdiction of the High Court under that section would be ousted Undoubtedly the High Court had jurisdiction in that case and whether such jurisdiction which is certainly of a special character and is exercised summarily should be called in to aid in the circumstances of a particular case would depend upon the discretion of the court This has however no bearing on the point that has arisen for consideration before us We would hold therefore that the right view was taken by the learned Judge of the Nagpur High Court in the earlier case and not in the later one 1 IL R 433 It is next urged by Mr Sinha that even assuming that this view is correct the language of section 499 of the Indian Penal Code is wide enough to cover a case of contempt of court What is said is that if a libel is published against a judge in respect of his judicial functions that also is defamation within the meaning of section 499 of the Indian Penal Code and as such libel constitutes a contempt of court it may be said with perfect propriety that libel on a judge is punishable as contempt under the Indian Penal Code We do not think that this contention can be accepted as sound A libellous reflection upon the conduct of a judge in respect of his judicial duties may certainly come under section 499 of the Indian Penal Code and it may be open to the judge to take steps against the libeller in the ordinary way for vindication of his character and personal dignity as a judge but such libel may or may not amount to contempt of court As the Privy Council observed in Surendra Nath Banerjee vs The Chief Justice and Judges of the High Court1 although contempt may include defamation yet an offence of contempt is something more than mere defamation and is of a different character When the act of defaming a judge is calculated to obstruct or interfere with the due course of justice or proper administration of law it would certainly amount to contempt TIle offence of con tempt is really a wrong done to the public by weakening the authority and influence of courts of law which exist for their good As was said by Willmot CJ2 attacks upon the judges excite in the minds of the people a general dissatisfaction with all judicial determi nations and whenever man s allegiance to the laws is so fundamentally shaken it is the most fatal and dangerous obstruction of justice and in my opinion calls out for a more rapid and immediate redress than any other obstruction whatsoever not for the sake of the judges as private indi viduals but because they are the channels by which the King s justice is conveyed to the people 1 ILR at 131 2 Willmot s Opinions page 256 Rex vs Davies 30 at p 40 41 434 What is made punishable in the Indian Penal Code is the offence of defamation as defamation and not as contempt of court If the defamation of a subordinate court amounts to contempt of court proceedings can certainly be taken under section 2 of the Contempt of Courts Act quite apart from the fact that other remedy may be open to the aggrieved officer under section 499 of the Indian Penal Code But a libel attacking the integrity of a judge may not in the circumstances of a particular case amount to a contempt at all although it may be the subject matter of a libel pro ceeding This is clear from the observation of the Judicial Committee in the case of The Matter of a Special Reference from the Bahama Islands1 The first contention of Mr Sinha therefore fails The second point raised by the learned counsel does not appear to us to have any real substance The article in question is a scurrilous attack on the integrity and honesty of a judicial officer Specific instances have been given where the officer is alleged to have taken bribes or behaved with impropriety to the litigants who did not satisfy his dishonest demands If the allegations were true obviously it would be to the benefit of the public to bring these matters into light But if they were false they cannot but undermine the confidence of the public in the administration of justice and bring judiciary into disrepute The appel lant though he took sole responsibility regarding the publication of the article was not in a position to sub stantiate by evidence any of the allegations made therein He admitted that the statement was based on hearsay Ru mours may have reached him from various sources but before he published the article it was incumbent upon him as a reasonable man to attempt to verify the informations he received and ascertain as far as he could whether the facts were true or mere concocted lies He does not appear to have made any endeavour in this direction As the appel lant did not act with reasonable care and caution he cannot be said to have acted 1 435 bona fide even if good faith can be held to be a defence at all in a proceeding for contempt What is more he did not express any regret for what he had done either in the High Court or before us and his behaviour does not show the least trace of contrition In these circumstances we think that the appeal cannot succeed and must be dismissed Appeal dismissed

The Company after regular enquiry and pending permission of the Industrial Tribunal under section 33 of the suspended some workmen without pay whereupon the workmen filed applications under section 33A of the Act before the Industrial Tribunal on the ground that their suspension without pay beyond ten days was against the provisions of the Standing Orders governing their conditions of service to the effect that an employee might be suspended provided the suspension without pay whether as punishment or pending enquiry did not exceed ten days The Tribunal dismissed the workmen s applications under section 33A and granted permission to the Company to dismiss the workmen concerned The workmen appealed The Appellate Tribunal upheld the order granting permission to dismiss the workmen but came to the conclusion that the words pending enquiry in cl 27 Of the Standing Orders included proceedings before the Industrial Tribunal and that there was breach of the Standing Orders Held that the employer could apply under section 33 Of the for permission to dismiss an employee when after a regular enquiry he had come to the finding that the case against the employee was proved and that the punishment of dismissal was the proper punishment The Industrial Tribunal had not to enquire into the conduct of the employee or the merits of dismissal but see whether a Prima facie case had been made out and a fair enquiry made by the employer The time taken before the Tribunal in such proceedings was beyond the control of the employer Standing Orders were concerned with employers and employees and not with Tribunals In the instant case the words pending enquiry in cl 27 of the Standing Orders referred only to the enquiry by the employer and not to the pro ceedings before the Tribunal The principle laid down in Lakshmi Devi Sugar Mill s case that workmen would not be entitled to payment of wages during the whole period of suspension if the Tribunal gave permission to dismiss them would apply only to cases where there was a ban under section 33 and the employer had to apply under that section for lifting the ban after completing the enquiry 720 Rampalat Chamay vs The Assam Oil Co Ltd 195 4 LAC 78 dissented from The Automobile Products of India Ltd vs Rukamji Bala referred to Lakshmi Devi SugaR Mills Ltd vs Pt Ram Sarup followed and explained

ivil Appeal No 13 of 1958 Appeal by special leave from the judgment and order dated June 29 1954 of the former Nagpur High Court in Misc Civil Case No 219 of 1952 R Ganapathy Iyer and D Gupta for the appellant M C Setalvad Attorney General for India K G Chondke J B Dadachanji and K K Raizada for the respondents I N Shroff for the Intervener State of Madhya Pradesh April 21 The Judgment of the Court was delivered by DAS C J This is an appeal by special leave against the order of the High Court of Judicature at Nagpur dated June 29 1954 answering against the 704 appellant certain questions referred to it by the Board of Revenue under section 231 of the Central Provinces Berar Sales Tax Act 1947 hereinafter referred to as the Act The reference arose out of an order of assessment made on the respondent for payment of sales tax for the period June 1 1947 to November 12 1947 on a taxable turnover of Rs 30067 9 0 The facts leading up to the present appeal may shortly be stated as follows The respondent deals in matchwood called sawar Bombay Malabaricum His place of business is situate at Chanda in the erstwhile Central Provinces In January 1948 the respondent entered into an agreement with the Western India Match Co Ltd which is popularly known and will hereinafter be referred to as WIMCO for the supply of a minimum quantity of 2500 tons of sawar logs during the season 1947 48 This agreement is evidenced by WIMCO s letter dated January 7 1948 accepting and confirming it Unfortunately that letter although a part of the record has not been printed in the Paper Book It is common ground however that the agreement of sale was subject to the conditions appearing in a formal contract in writing dated March 2 1945 which is said to have been renewed from year to year It appears that prior to the execution of the last mentioned contract there was another contract between the respondent and WIMCO which was dated October 18 1940 Evidently that contract was superseded by the later one of March 2 1945 the terms and conditions whereof were renewed year after year It is therefore not easily intelligible why both the contracts were filed before the Sales Tax authorities and actually mentioned in the first question that was referred to the Hight Court Both the contracts have been printed in the Paper Book and reference has been made to some of the terms of both of them in the course of the arguments before us The reason for referring to the terms of the earlier contract is presumably to emphasise the variation in the language used in the corresponding provisions of the later contract as indicative of a definite change in the intention of the parties It is therefore 705 as well that the relevant clauses of both the contracts should be set out here for properly following the arguments advanced on both sides Reference may first be made to the earlier contract dated October 18 1940 Clause I sets out the specifications that is to say the dimensions and quality of the logs to be delivered under the contract which need not be reproduced here The other material clauses omitting the unnecessary portions thereof may now be set out 2 The Contractor agrees that any logs supplied by him which do not conform with the specification herein shall not be accepted or paid for by the company and he the contractor undertakes to remove all logs so rejected at his own expense from the Company s premises within fifteen days after date of notice to him or his representative from the Company so to remove such logs Should the Contractor fail to ie move such logs from the Company s premises within the period stipulated it is hereby mutually agreed that such failure shall be construed as being the Contractor s consent to relinquish all claims whatsoever to such rejected logs and the Contractor agrees to such logs thereupon becoming the property of the company and that the contractor shall have no claim whatsoever upon the company for payment either in respect of the supply by him of such rejected logs or arising out of the disposal by the Company of such logs 3 The said goods shall be delivered at Ambernath in the quantities and at the times hereinafter mentioned ie 4 The goods to be supplied under this Contract shall be despatched by the Contractor from Railway Stations on the BNR and GIPR Sections between the following Stations 5 Measurements The goods under this contract shall be measured under the supervision of the 89 706 Company s Factory Manager at Ambernath on arrival of the goods at the Factory in accordance with the following stipulations The Contractor agrees to accept the decision of the Company s Factory Manager at Ambernath as final and binding The prices of the logs to be supplied are set out in cl 6 of the contract as FOR Ambernath We now pass on to the later contract of March 2 1945 Clause 1 sets out the specifications of the logs to be supplied under the contract in exactly the same language as in el I of the earlier contract The other material clauses again omitting the unnecessary portions are as follows 2 The contractor agrees that any logs supplied by him which on arrival at Ambernath are found in the opinion of the Company s Factory Manager not to conform with the specifications herein shall not be accepted or paid for by the Company notwithstanding the fact that such logs may have been accepted by the Company s representatives before being railed to Ambernath It may be mentioned here that Ambernath is a place situate in the erstwhile province of Bombay and outside the Central Provinces The goods to be supplied under this contract shall be despatched by the Contractor from railway stations on the B N Railway N section Railway and G 1 P Railway sections between the following stations It is unnecessary to set out the names of the stations which it may however be stated are all in the erstwhile Central Provinces Clause 6 provides 6 Measurements The goods under this contract shall be measured under the supervision of the Company s representative in accordance with the following stipulations 707 The contractor agrees to accept the decision of the Company s Factory Manager at Ambernath as final and binding The prices of the logs to be supplied under the contract are specified as FOR Ambernath in cl 7 which concludes with the following sentence The money so due and payable shall be paid by the Company to the Contractor when the measurements of the goods have been completed under the supervision of the Company s representative Pursuant to the agreement between the respondent and WIMCO the former loaded diverse quantities of Sawar logs on railway wagons and despatched the same by railway from Chanda or other railway stations in the Central Provinces to Ambernath in the erstwhile province of Bombay and outside the Central Provinces It is not disputed that on many occasions the representative of WIMCO was present at the railway station when the logs were sorted out and loaded into the wagons The statement of the case submitted along with the reference under section 231 of the Act is silent on the point as to whether the railway receipts were made out with WIMCO as the consignee but it is abundantly clear from the order of the Assistant Commissioner Sales Tax which is part of the record and it has not been disputed before us that the railway receipt which is a document of title according to section 24 of the Indian is taken in the name of the consignee The course of dealings between the parties also appears to be that on arrival of the logs at Ambernath the consignee buyer WIMCO paid the railway freight and the logs were inspected and measured by WIMCO s Factory Manager and the prices calculated at the agreed rates were paid to the respondent s agent at Bombay There is no doubt that the price of the logs supplied by the respondent to WIMCO under the agreement and accepted by the latter during the period in question amounted to Rs 30067 9 0 The question for our 708 decision is whether the respondent is liable to pay any sales tax under the Act It will be convenient at this stage to refer to the relevant provisions of law applicable to the facts of this case Section 4 of that Act is the charging section According to this section safes tax is payable on all sales effected after the commencement of the Act Sale is defined by section 2g of the Act At the relevant period that section omitting Explanation 1 which is not material for our purpose ran as follows Sale with all its grammatical variations and cognate expressions means any transfer of property in goods for cash or deferred payment or other valuable consideration including a transfer of property in goods made in course of the execution of a contract but does not include a mortgage hypothecation charge or pledge Explanation II Notwithstanding anything to the contrary in the Indian the sale of any goods which are actually in the Central Provinces and Berar at the time when the contract of sale as defined in that Act in respect thereof is made shall wherever the said contract of sale is made be deemed for the purpose of this Act to have taken place in the Central Provinces and Berar The Act being a piece of legislation enacted by the legislature of the erstwhile Province of Central Provinces and Berar its operation is limited to the territories of that province Therefore the question arises Does the sum of Rs 30067 9 0 represent the prices of logs sold by the respondent within the Central Provinces Sale being the transfer of property in the goods agreed to be sold we have to enquire if the property in the goods which fetched the sale proceeds on which the sales tax is sought to be levied was transferred in the Central Provinces as contemplated in the main definition or if those goods were actually in the Central Provinces at the time when the contract for sale as defined in the in respect thereof was made as required by Explanation II set 709 out above This takes us to the Section 4 of the is expressed in the words following 4 Sale and agreement to sell I A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price There may be a contract of sale between one part owner and another 2 A contract of sale may be absolute or conditional 3 Where under a contract of sale the property in the goods is transferred from the seller to the buyer the contract is called a sale but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled the contract is called an agreement to sell 4 An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred There can be no doubt that the agreement pursuant to which the logs were supplied by the respondent to WIMCO was an agreement to sell within the meaning of the above section There is also no controversy between the parties that at the date when this agreement was entered into the logs were unascertained goods The question is When did that agreement to sell unascertained goods become a sale and where did such sale take place In other words when and where did the property in those goods pass from the respondent to WIMCO The transfer of property in the goods as between the seller and buyer is dealt with in Ch III of the Section 18 of the runs thus 18 Goods must be ascertained Where there is a contract for the sale of unascertained goods no property in the goods is transferred to the buyer unless and until the goods are ascertained Passing over sections 19 to 22 which except as to sub section 3 of section 19 apparently apply to contracts for the sale of 710 specific or ascertained goods we come to section 23 which provides 23 Sale of unascertained goods and appropriation I Where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract either by the seller with the assent of the buyer or by the buyer with the assent of the seller the property in the goods thereupon passes to the buyer Such assent may be expressed or implied and may be given either before or after the appropriation is made 2 Delivery to carrier Where in pursuance of the contract the seller delivers the goods to the buyer or to a carrier or other bailee whether named by the buyer or not for the purpose of transmission to the buyer and does not reserve the right of disposal he is deemed to have unconditionally appropriated the goods to the contract Reference may next be made to section 33 and section 391 Section 33 says 33 Delivery Delivery of goods sold may be made by doing anything which the parties agreed shall be treated as delivery or which has the effect of putting the goods in the possession of the buyer or of any person authorised to hold them on his behalf Section 391 runs as follows 39 Delivery to carrier or wharfinger 1 Where in pursuance of a contract of sale the seller is authorised or required to send the goods to the buyer delivery of the goods to a carrier whether named by the buyer or not for the purpose of transmission to the buyer or delivery of the goods to wharfinger for safe custody is prima facie deemed to be delivery of the goods to the buyer Keeping the provisions of the above quoted sections of the two Acts in view we have to decide when and where the property in the logs passed from the respondent to WIMCO The Assistant Commissioner of Sales Tax assessed the respondent to a tax of Rs 939 10 0 and imposed on the respondent a penalty of Rs 100 under section 25 of 711 the Act for not having submitted its return in contravention of r 19 of the Central Provinces and Berar Sales Tax Rules The Assistant Commissioner took the view that the loading of the logs into the wagons at railway stations within the Central Provinces and the taking out of the railway receipts in the name of the consignee WIMCO and the delivery of the same to WIMCO had the effect of putting the latter in pos session of the goods as laid down in section 391 of the Indian and he accordingly held that the sale of the goods took place at Chanda and other railway stations in the Central Provinces and that the assessee was consequently liable to pay the sales tax under the Act The respondent preferred an appeal to the Sales Tax Commissioner who upheld the Assistant Commissioner s order of assessment as well as of the penalty He laid greater emphasis on Explanation II to section 2g of the Act as over riding the provisions of the Indian in respect of the transfer of property in the logs and held that as the logs were in the Central Provinces at the date when the contract for sale was made the transfer in them must be deemed to have taken place there under that Explanation He also agreed with the Assistant Commissioner that the delivery of the logs to the railway company and the sending of the documents of title to WIMCO had under section 391 of the the effect of putting WIMCO in possession of the logs The respondent preferred what in form appeared to be a second appeal to the Board of Revenue As however there could be no second appeal under section 224 of the Act the Board treated the memorandum of appeal as an application for revision under sub section 5 of section 22 of the Act read with r 57 Both the members of the Board of Revenue came to the same conclusion namely that the sales were liable to assessment under the Act but the reasonings adopted by them were somewhat different Shri Shrivastava a member of the Board of Revenue took the view that as soon as logs answering the description agreed upon were brought to the railhead at Chanda and sorted out and 712 loaded in the wagons in the presence of WIMCO s re presentatives there was an implied contract of sale of specific and ascertained goods as evidenced by the conduct of parties and the property in each consignment passed immediately from the respondent to WIMCO at the railway station in the Central Provinces where such implied contracts were made The Chairman of the Board of Revenue however took the view that the contract of sale was made outside the Central Provinces namely in Bombay and that under the the property in the logs passed to WIMCO in Ambernath outside the province but that as the logs were in the Central Provinces either in the form of logs or in the form immediately preceding namely trees standing on the land which had been impliedly agreed to be severed from the land before actual sale Explanation II to section 2g of the Act applied and the sale must accordingly be deemed to have taken place within the Central Provinces and must therefore be liable to sales tax under the Act The Board rejected the application but remitted the penalty On the application of the respondent under section 231 of the Act the Board of Revenue submitted to the High Court a statement of case raising the following questions 1 Did the agreements of the kind on record the one dated 18 10 40 and the other dated 2 3 45constitute contracts of sale either express or implied in respect of sawar wood supplied by the assessee to WIMCO 2 If the answer to question No I be in the affirmative did the contracts relate to specific or ascertained goods or to unascertained or future goods 3 Did the property in the goods pass to WIMCO by consignment simpliciter at different railway stations within this province or did it pass at Ambernath when the goods were approved as provided in the contract 4 Was reliance on the definition of I goods contained in section 27 of the in order in applying Explanation II to section 2g of the Sales Tax 713 Act in cases where the goods sold were in the form of trees standing on the land in this province at the time of the contract of sale In its judgment dated June 29 1954 the High Court took the view that the sales in question did not take place in the Central Provinces and Berar and consequently were not sales within the meaning of the Act and therefore not liable to tax It gave the following answers to the above questions Our answers to the questions referred for decision are 1 The agreement in question was an express agreement to sell sawar logs to WIMCO There was neither an express nor an implied contract each time goods were railed 2 The contract was not for delivery of specific goods but of unascertained or future goods by description 3 The property in the goods did not pass to the buyer by the delivery to the railway for carriage It passed at Ambernath where the goods were appropriated by the buyer to the contract with the assent of the seller 4 The word goods in the definition of I sale in the Sales Tax Act must be interpreted according to its definition in section 2d of the Act and not according to the definition in section 27 of the The standing sawar trees are not goods within the meaning of the former Act The effect of the answers being to nullify the assessment order the Commissioner of Sales Tax has come up on appeal before us after obtaining special leave of this Court The answers to the first two questions have not been questioned before us The main arguments have centred round the answers to questions 3 and 4 The answer to question 3 turned on the construction placed by the High Court on section 23 of the After quoting section 23 the High Court observed as follows After sorting the logs with the assent of the buyer s representative the applicant appropriated the 90 714 logs to the contract by railing them to the buyer s destination at Ambernath The statement of the case is silent on the point whether the railway receipts were made out with the Company as the consignee The assent of the representative was provisional and was not binding on the Company Under the agreement it did not agree to unconditionally appropriate the logs to the contract as soon as they were delivered to the railway with the assent of its representative for carriage to Ambernath It had expressly reserved its right to reject the goods on examination at Ambernath The agreement therefore was that the buyer should with the assent of the seller appropriate the goods to the contract at Ambernath The appropriation under section 23 was not complete till the goods reached Ambernath and were appropriated by the Company to the contract The appropriation of the goods by the applicant at the railheads was conditional on their acceptance by the buyer at Ambernath There is nothing in the statement of the case to show that the logs were not so appropriated Therefore the property in the logs passed to the buyer at Amber nath The learned counsel for the department appearing in support of this appeal contends that property in the logs passed from the respondents to WIMCO under section 23 when sawar logs were brought to the railway station and loaded in the wagon and the railway receipts taken in the name of WIMCO were forwarded to the latter There was an unconditional appropriation of the goods to the contract by the respondent There was according to learned counsel assent on the part of WIMCO to this appropriation in two ways namely a expressly given by its representative who was present at the railway station and b impliedly given by WIMCO by having agreed in advance that the goods should be despatched by rail from the stations mentioned in cl 4 of the agreement all of which were situate in the Central Provinces There is no doubt and indeed it has been categorically conceded by learned counsel for the department that the contract was for sale of unascertained goods and consequently the property in them could 715 not under section 18 pass unless and until the goods were ascertained His contention is that logs of the contract quality and description having been unconditionally appropriated by the respondent to the contract without reserving to itself any right of disposal and WIMCO having expressly through its representative or impliedly by the very terms of the contract assented to such appropriation property in them passed under section 23 from the respondent to WIMCO at the railway stations within the Central Provinces as soon as the sawar logs were loaded on the wagons and the railway receipts were taken out in the name of WIMCO It is said that so far as the respondent is concerned it unconditionally appropriated the logs to the contract Seeing that they were actually accepted by WIMCO on their arrival at Ambernath it is quite clear that the logs were of the contract quality and description The only question according to learned counsel for the department therefore is whether there was assent of WIMCO to such appropriation It has been found as a fact that WIMCO s representative was not present on all occasions when sawar logs used to be loaded on the railway wagons There is no evidence that he was actually present when these particular sawar logs with the sale proceeds of which we are concerned were put into the wagons Nor is there an iota of evidence that the representative of WIMCO had any authority to bind WIMCO by any assent In view of these difficulties learned counsel for the department did not press the case of express assent of the representative of WIMCO and concentrated on the case of implied assent It is quite clear from the language of section 23 itself that the appropriation may be by the seller with the assent of the buyer or by the buyer with the assent of the seller that assent to representation may be express or implied and that it may be given after the appropriation or in advance before such appropriation Learned counsel for the department lays strong emphasis on the provision of cl 4 in the contract that the sawar logs should be despatched by rail from certain stations within the Central Provinces and contends that delivery by the seller of sawar logs of the contract quality and 716 description to the railways in terms of the contract without the reservation of any right of disposal has the effect of passing the property therein to WIMCO at the railway stations in the Central Provinces under section 23 as well as of constituting delivery of them at the railway stations under sections 33 and 391 The argument is prima facie sound unless there be some other provision in the contract to negative this conclusion e g that the logs must be carried to Ambernath and delivered there See The Badische Anilin and Soda Fabrik vs The Basle Chemical Works Bindschedler 1 Learned counsel for the department does not urge that if the matter had to be decided on the terms of the earlier contract dated October 18 1940 he could properly say that there was nothing in the contract negativing the idea of the passing of property in the logs within the Central Provinces The cumulative effect of the provisions of el 2 that the property in the rejected logs would pass to WIMCO upon the failure of the respondent to remove the same after rejection of el 3 that the goods shall be delivered at Ambernath in the presence of WIMCO s Factory Manager and of el 6 providing that the prices will be FOR Ambernath clearly militate against the theory of passing of property immediately on the goods being loaded into the wagons While not contesting this learned counsel for the department urges that there is no such contrary intention indicated in the later contract of March 2 1945 which really governs the case We are unable to accept this distinction as of any substance It is true that in this later contract cl 2 is differently worded and there is no express provision that the goods should be delivered at Ambernath There are nevertheless several other provisions in the later contract indicating that property in the logs loaded in the wagon will not pass to WIMCO until after the goods arrive at Ambernath and are inspected measured and accepted by WIMCO s Factory Manager Clause 2 of the later contract quite clearly reserves the right of WIMCO to examine the goods on arrival and to reject the same if they are found in the opinion of its Factory Manager not to 1 717 conform with the specifications This reservation which is made notwithstanding the fact that the logs may have been accepted by its representative before they were railed to Ambernath clearly indicates that the so called acceptance by the representative was not final but was entirely tentative and subject to approval of the logs by WIMCO s Factory Manager at Ambernath after their arrival This circumstance certainly militates against the property in them having already passed to WIMCO at the railway stations in the Central Provinces The provisions of cl 6 that the goods shall be measured under the supervision of WIMCO s representative the decision of its Factory Manager at Ambernath being binding on the respondent and of el 7 that the prices shall be FOR Ambernath and shall be payable after such measurement of the logs by WIMCO s representative further reinforce the conclusion that the intention of the parties was that property in the goods shall not pass until the logs arrive at Ambernath and are there inspected measured and accepted by WIMCO In our judgment the prima facie case of what might have been the appropriation of the logs by the respondent by loading on the wagons logs of the contract quality and description with the assent of WIMCO given in advance by the terms of el 4 is effectively displaced by the provisions of cls 2 6 and 7 of the later contract which clearly indicate a contrary intention On a proper construction of the contract as a whole the intention of the parties clearly was that the respondent would send the logs by rail from the different stations in the Central Provinces to Ambernath where WIMCO s Factory Manager would inspect measure and accept the same if in his opinion they were of the description and quality agreed upon In other words the respondent sent the logs and left it to WIMCO to appropriate to the contract such of them as they accepted as of contract quality and description The respondent therefore gave in advance its assent to WIMCO s appropriation of the goods at Ambernath Therefore the decision of the High Court cannot be assailed but must be accepted as well founded in fact and in law Learned counsel for the department then falls back 718 upon the Argument founded on Explanation II to section 2g and argues somewhat halfheartedly that notwithstanding the provisions of the regarding the passing of property in the goods the sale under consideration must be deemed in the light of that Explanation to have taken place within the Central Provinces The question of the constitutional validity of that Explanation was not raised in the High Court and indeed in view of the decision of this Court in Poppatlal Shah vs State of Madras 1 and other cases cannot now be raised and we must proceed on the footing that Explanation 11 did not transgress the legislative competency of the Legislature which enacted the same It will be noticed that Explanation II can apply only if the goods in respect of which the contract of sale is entered into are at the date of such contract actually in the Central Provinces Learned counsel for the department urges that the logs delivered must have been in existence in the Central Provinces either in the shape of logs or in the shape of standing timber There is no evidence that at the date when the agreement for sale was made the particular logs delivered thereunder were in the Central Provinces in the shape of logs at all Learned counsel says that at any rate they must have been in existence there in the shape of standing timber Apart from anything else the agreement here was riot in respect of any standing timber and there was no provision in the agreement as between the respondent and WIMCO for severance of the standing timber before sale under that agreement In order to attract Explanation II the goods in respect of which the contract of sale is made must at the date of the contract be in existence in the Central Provinces that is to say that the goods must at the date of the contract be there in the form in which they are agreed to be sold There is not an iota of evidence on that point In our judgment there is no force in this alternative argument The result therefore is that this appeal is dismissed with costs Appeal dismissed

A deed of trust was executed by the respondent on March II 1938 when she was residing at D in the State of Bihar in respect of the properties described in the Schedules referred to in the deed some of which were situate outside the State of Bihar In the trust deed she described herself as the settlor and it was recited therein that the settlor had installed a deity named Iswar Srigopal in her house and had since been regularly worshiping and performing the puja of the said deity and that she had been erecting a Nat Mandir to be named in memory of her deceased son The recitals also showed that the settlor had provided for the construction of two temples jugal Mandir in one of which was to be installed the deity Srigopal and other deities and in the other the marble image of her preceptor and that the temple committee shall consist of the Jugal Mandir shebait for the time being and six pious Hindus who must be residents of D and of whom at least four shall be Begalis One 76 602 of the clauses of the trust deed recited The pronamis and perquisites to be offered to the deities and image in the jugal Mandir shall form part of the Srimati Charusila Trust Estate and neither the shebait nor any one else shall have interest or claim in or over same The provisions of the trust deed in regard to the ceremonials relating to free distribution of food and water and the festivals to be performed for the deity and the image which were well known festivals in which members of the Hindu Community usually take part contemplated that they were to be done on a large scale so as to enable a large number of persons to take part in them There was also a provision in the trust deed for the establishment of a hospital for Hindu females and a charitable dispensary for patients of any religion or creed After the coming into force of the Bihar Hindu Religious Trusts Act 1950 the President of Bihar State Board of Religious Trusts started proceedings under sections 59 and 70 Of the Act against the respondent in respect of the trust on the footing that it was a public trust to which the Act applied The respondent made an application to the Patna High Court under article 226 of the Constitution in which she prayed that a writ or order be issued quashing the proceedings taken against her by the Bihar State Board of Religious Trusts on the grounds I that the trust deed dated March II 1938 was a private endowment created for the worship of a family idol in which the public were not interested 2 that the Act did not apply to private trusts 3 that the Act was ultra vires the Constitution by reason of the circumstance that its several provisions interfered with her rights as a citizen guaranteed under Part III of the Constitution and 4 that in any case the Act was not applicable to the trust deed in question as some of the properties were situate outside the State of Bihar Held 1 that on its true construction the deed of trust dated March 11 1938 created a religious and charitable trust of a public nature Deoki Nandan vs Murlidar considered In re Charusila Dasi ILR 1946 I Cal 473 explained One of the relevant considerations as to whether the trust was a public trust will be if by the trust deed any right of worship has been given to the public or any section of the public answering a particular description 2 that the Act does not apply to private endowments Mahant Ram Saroop Dasji vs section P Sahi 1959 SUPP 2 SCR 583 followed 3 that the provisions of the Act do not take away or abridge any of the rights conferred by Part III of the Constitution Mahant Moti Das vs section P Sahi 1959 Supp 2 SCR 563 followed 603 4 that section 3 of the Act makes the Act applicable to all public religious and charitable institutions within the meaning of the definition clause in section 21 Of the Act which are situate in the State of Bihar and any part of the property of which is in that State 5 that where the trust is situate in Bihar the State has legislative power over it and also over its trustees or their servants and agents who must be in Bihar to administer the trust and as the object of the Act is to provide for the better administration of Hindu Religious Trusts in the State of Bihar and for the protection of properties appertaining thereto in respect of the property belonging to the trust outside the State the aim is sought to be achieved by exercising control over the trustees in Personam and there is really no question of the Act having extra territorial operation 6 that in the present case the circumstance that the temples where the deities were installed are situate in Bihar and that the hospital and charitable dispensary are to be established in Bihar for the benefit of the Hindu Public in Bihar gives enough territorial connection to enable the legislature of Bihar to make a law with respect to such trust Tata Iron Steel Co Ltd vs State of Bihar 1958 SCR 1355 and The State of Bombay vs RMD Chamaybaugwala 1957 SCR 874 relied on Saydar Gurdyal Singh vs The Rajah of Faridkote 1894 LR 21 IA I71 distinguished

Appeal No 284 of 1958 Appeal from the judgment and order dated April 21 1956 of the former Judicial Commissioner s Court Rewa in Misc Civil Writ No 27 of 1956 Naunit Lal for the appellant 694 Bhagwan Das Jain for respondent No 1 1959 April 21 The Judgment of the Court was delivered by SARKAR J This appeal arises out of an application for a writ of certiorari and involves questions of interpretation of the 4 of 1939 by which grants of permits to run stage carriages and all matters connected therewith are governed The appellant was the holder of a permit to run a stage carriage on a stretch of the public highway called the Rewa Singrauli route in the State of Vindhya Pradesh which is now merged in the State of Madhya Pradesh That permit was due to expire on December 11 1955 and so on September 12 1955 he made an application for its renewal for a further period The respondent Anant Prasad who will be referred to as the respondent made a representation against the renewal of the appellant s permit He also applied for the grant of the permit to himself On December 9 1955 the State Transport Authority Vindhya Pradesh made an order in the following terms Renewed for three years It is not in dispute that the order meant that the appellant s permit was renewed for three years No express order was made on the respondent s application for the grant of the permit to him The respondent preferred an appeal against this order to the Vindhya Pradesh Transport Appellate Tribunal the appellate authority under the Act It was contended by the appellant before the Appellate Tribunal that the appeal was not competent The Appellate Tribunal rejected this contention and passed an order cancelling the Permit granted to the appellant by the State Transport Authority and issuing the permit to the respondent The appellant then moved the Judicial Commissioner Vindhya Pradesh for a writ of certiorari quashing the order of the Appellate Tribunal on the ground that it disclosed an error on the face of it because under the Act no appeal lay from the order that was passed by the subordinate authority The learned Judicial Commissioner held that the appeal 695 was competent and dismissed the application for the writ Hence the present appeal The question is Did an appeal lie to the Appellate Tribunal from the order made by the State Transport Authority in the present case Section 64 of the Act contains the provisions for appeals Whether the appeal lay or not will have to be decided by reference to these provisions The portion of the section which will have to be considered is in these terms Section 64 Any person a aggrieved by the refusal of the State or a Regional Transport Authority to grant a permit or e aggrieved by the refusal of renewal of a permit or f being a local authority or police authority or an association which or a person providing transport facilities who having opposed the grant of a permit is aggrieved by the grant thereof may appeal to the prescribed authority The prescribed authority was as we have earlier stated the Appellate Tribunal Clearly the respondent was not a person contemplated by cl e of the section It is also not in dispute that he was not one of those mentioned in cl The respondent does not claim that any of these clauses gave him the right of appeal He however claims a right of appeal under cl In our view that claim is justified He had applied for a permit and had not got it He was therefore a person aggrieved by the refusal to grant a permit and clearly came within cl It is true that the order of the State Transport Authority did not expressly refuse him the permit But that no doubt was the effect of the order that was made He had made an application for the grant of the permit to him and the application was disposed of without granting him the permit but granting it to a competing applicant There was only one permit which could be granted 696 and the result of the order was to give it to the appellant The permit was thereby necessarily refused to the respondent The fact that an express order was not made cannot operate to his prejudice In section Gopala Reddi vs Regional Transport Authority North Arcot 1 in circumstances identical to those in the present case an order was made by the Transport Authority in the same terms as we have here and it was said The grant of a permit to one would automatically mean the refusal of the permit to the other We are in entire agreement with the view expressed there Therefore it seems to us that the respondent was a person who had been aggrieved by the refusal to grant him a permit and the appeal by him was fully competent But it was said on behalf of the appellant that in the present case it would be wrong to imply an order refusing the permit to the respondent for none such could be made under the Act and therefore here there was no scope for applying section 64a The contention was put in this way When there are a number of applications in respect of the same permit one of which is by way of renewal to which objections have been filed and the others fresh applications the latter could not be taken up for consideration till the former and the objections made to it had been considered If the objections to the renewal failed the application for renewal had to be granted and the fresh applications for permit could not then be considered at all If on the other hand the objections to the renewal succeeded the renewal could not be granted and the choice had then to be made from the new applicants for the permit In the present case the objection to the renewal of the applicant s permit raised by the respondent failed and the appellant s permit was in consequence renewed Therefore the respondent s application for a permit which was an application for a new permit never fell to be considered and that is why no order on it was made at all We think this contention completely lacks substance It was said that was the result of sections 47 1 697 57 and 58 of the Act but we find nothing in any of them to support it Section 47 does not deal with the order in which applications for the renewal or grant on a new permit are to be heard and does not help at all Section 57 3 provides that after an application for a permit had been made others can make representations against it These are the objections to an application for the grant or renewal of a permit earlier referred to Sub section 5 of section 57 provides that the application for a permit which includes an application for the renewal of a permit and the representations against it shall be disposed of at a public hearing at which the person making the application and the persons making the representations shall be given an opportunity of being heard But this does not show that all other applications for the same permit and all other repre sentations in connection therewith cannot be disposed of at the same hearing Indeed section 58 2 puts it beyond doubt that an application for renewal of a permit and the fresh applications for the same permit have to be heard together That section so far as is relevant is in these terms Section 58 2 A permit may be renewed on an application made and disposed of as if it were an application for a permit a b Provided further that other conditions being equal an application for renewal shall be given preference over new applications for permits The section therefore requires an application for the renewal of a permit to be dealt with in the same way as a new application for a permit Such an application has therefore to be heard along with new applications for the permit Again no question of giving an application for renewal preference over new applications for permits which the section requires to be given can arise unless they are considered together We are therefore unable to hold that in the present case the 88 698 State Transport Authority had no jurisdiction to consider the respondent s application or to make any order in respect of it as it granted the appellant s application for renewal It follows that the order that was made amounted in fact to a refusal to grant the permit to the respondent It was then said that a renewed permit was a continuation of the old permit and hence once the old permit was renewed no question of considering the applications for new permit arose We find nothing to support this view It is true that in V C K Bus Service Ltd vs Regional Transport Authority Coimbatore1 this Court held that a renewed permit was a continuation of the old permit but it did not hold that the appropriate authority could not consider the applications for a fresh permit along with the application for renewal of the permit This case does not assist the appellant at all It was then contended that section 64 did not provide for an appeal by a person aggrieved by the renewal of a permit unless he was one of those mentioned in section 64 f which the respondent was not and therefore even if an appeal by the respondent was competent under section 64 a in such an appeal the Appellate Tribunal could not set aside the order of renewal made by the State Transport Authority It was said that if in such an appeal the order granting a renewal could be set aside in effect an appeal against an order renewing a permit would become competent though the law did not per mit this We were referred to Dholpur Co operative Transport Etc Union Ltd vs The Appellate Authority Rajasthan 2 in support of this contention It was there said Where an appeal has been made under el aagainst the refusal of a permit the Appellate Authority will generally have the right to give relief to the appellant by the grant of a permit but will not have any jurisdiction to cancel the permit granted to another person unless a foundation has been laid before the Regional Transport Authority for an appeal provided 1 2 AIR 26 699 by el f by an objection of somebody entitled to appeal under that clause If such an objection has been made then it does not matter whether that particular person appeals or not In such a case on an appeal under section 64a the Appellate Authority may consider the objection of the nature specified in cl f before the Regional Transport Authority and give its own decision in the matter It was said that the respondent though he had filed objections was not a person who can claim a right of appeal under el f of section 64 It was therefore contended on the authority of the observations referred to above that no foundation had been laid for an appeal provided by cl f and so the Appellate Tribunal could not cancel the permit granted to the appellant by the subordinate authority We are unable to agree that in an appeal which is competent under cl a of the section the order renewing or granting a permit cannot be set aside unless the case was such that an appeal under el f would have also been competent So to hold would result in making the right of appeal given by cl a wholly infructuous in those cases where no relief can be given in the appeal except by setting aside the order granting or renewing a permit for example where there was only one permit to grant as in the present case Such an interpretation has to be rejected It is based on cl But this clause cannot be construed in a manner so as to render infructuous another clause in the same section Nor do we find anything in el f to justify such a construc tion The different clauses in the section deal with different situations Each is independent of the others Clause f deals with a case where an objection had been filed against the fresh grant or the renewal of a permit but the permit has none the less been granted or renewed The clause gives the objector a right of appeal against the result of the rejection of his objection if he is one of the persons mentioned in it The clause gives him that right irrespective of the fact whether he has a right of appeal under any of the other clauses or not It does not say that a permit granted or renewed cannot be questioned except at the 700 instance of the persons mentioned in cl f it does not affect the right of appeal under the other clauses If an appeal lies under any of the other clauses that of course must be an effective appeal and the appellate authority must therefore have all powers to give the relief to which the appellant is found entitled Again section 64 is not concerned with defining the powers of the appellate authority and does not purport to do so Nor is there anything in the Act to lead to the conclusion that an applicant for a permit is bound to put in objections against the applications of competing applicants for the grant or the renewal of the permit The relief that can be granted in an appeal by any person which is competent would not depend on whether he bad put in objections against the applications of the competing applicants or not We do not therefore think that cl f of section 64 in any way restricts the power of the Appellate Tribunal to grant all proper reliefs in an appeal competent under el a of the section If cl f does not so restrict the power of the Appellate Tribunal nothing else has been pointed out to us as having that effect In our view there is nothing in the Act to prevent the Appellate Tribunal from setting aside the order of the State Transport Authority renewinu the appellant s permit We think the matter was correctly put in section Gopala Reddi s case 1 when it was said at p 132 The appeal was in our opinion perfectly competent as an appeal against the order of the Regional Transport Authority refusing to grant a permit The fact that such an appeal involved an attack on the order granting a renewal of a permit to the 4th respondent would not prevent the appeal being what it was viz an appeal against a refusal to grant a permit to the appellant The Central Road Traffic Board erred in presuming that it was not open to them in the appeal to consider the merits of the order granting renewal of the 4th respondent s permit Indeed the first question which had to be determined in the appeal filed by the appellant would be the propriety of the action of the Regional Transport Authority in granting 1 701 renewal to the 4th respondent The filing of the appeal by the appellant set at large the order of the Regional Transport Authority granting the renewal In the Dholpur Co operative Transport etc Union Ltd case on which the appellant relies no objection had been filed against any of the competing applications for the grant of a permit and it was held that the appellate authority had no power in such circumstances on appeal by a person whose application for the grant of the permit had been refused to give relief by cancelling a permit granted by the subordinate authority to one of the applicants It was there thought that Nadar Transport Tiruchirapalli vs State of Madras 2 led to this conclusion For the reasons earlier mentioned we are unable to agree with this part of the decision in the Dholpur Co operative Transport etc Union Ltd case 1 With the rest of the decision there we are not concerned and as to that we do not say anything We also find nothing in the Nadar Transport case 2 to support the conclusion arrived at in Dholpur Co operative Transport etc Union Ltd case1 In the Nadar Transport case2 on the contrary it was observed that see 64 sub sees a and f are intended in our opinion to apply to different situations and that the power of the appellate authority is not restricted in any manner either by the provisions of section 64 or by any of the rules made under the powers conferred by the Act It was there held that in an appeal under section 64 a no grounds other than those taken before the lower authority could be canvassed That does not lead to the conclusion that on proper grounds all reliefs necessary to make the appeal effective cannot be granted We think that the Nadar Transport case 2 was misunderstood The result is that this appeal fails and it is dismissed with costs Appeal dismissed 1 A I R 26 2 A I R 3

Sub sec 3 of section 2 of the Contempt of Courts Act 1926 excludes the jurisdiction of the High Court to take cognisance of a contempt alleged to have been committed in respect of a Court subordinate to it only in cases where the acts alleged to constitute contempt are punishable as con tempt under specific provisions of the Indian Penal Code but not where these acts merely amount to offences of other description for which punishment has been provided for in the Indian Penal Code The fact that defamation of a judge of a subordinate Court constitutes an offence under sec 499 of the Indian Penal Code does not therefore oust the jurisdiction of the High Court to take cognisance of the act as a contempt of court Defamatory statements about the conduct of a judge even in respect of his judicial duties do not necessarily consti tute contempt of Court It is only when the defamation is calculated to obstruct or interfere with the due course of justice or proper administration of justice that it amounts to contempt Kisan Krishna Ji vs Nagpur Conference of Society of St Vincent de Paul AIR 1943 Nag 334 disapproved VM Bason vs AH Skone LR explained Subordi nate Judge First Class Hoshangabad vs Jawaharlal AIR Narayan Chandra vs Panchu Pramanick A L R Naresh Kumar vs Umaromal AIR 1951 Cal 489 Kaulashia vs Emperor ILR 12 Pat 1 State vs Brahma Prakash AIR 1950 All 556 Emperor vs Jagannath AIR 1938 All 358 Bennet Colman vs CS Monga ILR approved

Appeal No 343 of 1958 Appeal by special leave from the judgment and order dated March 8 1958 of the Madhya Pradesh High Court in First Appeal No 141 of 1957 arising out of the judgment and order dated December 5 1957 of the Election Tribunal Jabalpur in Election Petition Case No I of 1957 G C Mathur for the appellant P Rama Reddy and R Mahalingier for respondent No 1 1959 April 9 The Judgment of the Court was delivered by GAJENDRAGADIKAR J This appeal by special leave arises out of an election petition filed by respondent I No 320 of 1957 before the Election Commission New Delhi in which he prayed that the appellant s election to the Madhya Pradesh Legislative Assembly from Bargi constituency should be declared to be void and that it should be further declared that he had himself been duly elected from the said constituency The polling for the election in question was taken on March 9 1957 and the result was declared on March 12 1957 Of the three candidates who had stood for election the appellant secured 9308 votes respondent 1 8019 votes and the third candidate respondent 2 3210 votes The petition filed by respondent I was entrusted to the Election Tribunal Jabalpur for trial On October 12 1957 the appellant filed before the Election Tribunal an objection under section 90 sub section 3 of the Representation of the People Act 1951 hereinafter called the Act alleging that respondent 1 had not complied with the provisions of section 117 of the Act in regard to 529 the making of the deposit of the security for costs and praying that his election petition should be dismissed on that account under section 90 sub section 3 of the Act Respondent I disputed these allegations and urged that there was no justification for dismissing his petition under section 90 sub section 3 of the Act By its order passed on December 5 1957 the Election Tribunal held that the provisions of section 117 were mandatory and that they had not been complied with by respondent 1 ID the result the application filed by the appellant was allowed his objection was upheld and the election petition presented by respondent I was dismissed under section 90 sub section 3 of the Act On December 27 1957 respondent I preferred an appeal in the High Court of Madhya Pradesh at Jabalpur against the said order Appeal No 141 of 1957 In the High Court a preliminary objection was urged on behalf of the appellant that the appeal preferred by respondent I was incompetent under section 116A of the Act This objection was overruled and the merits of the appeal were considered by the High Court On the merits the High Court held that respondent I had substantially complied with section 117 and so the order passed by the Election Tribunal dismissing the election petition filed by respondent I was set aside and the said petition was sent back to the Election Tribunal for disposal in accordance with law On February 22 1958 the appellant applied to the High Court for a certificate of fitness but his application was dismissed Thereupon the appellant applied for and obtained special leave to appeal from this Court on April 14 1958 That is how this appeal has come to this Court The first point which calls for our decision in this appeal is whether the High Court was right in holding that the appeal preferred before it by respondent I was competent The appellant s contention is that the impugned order was passed under section 90 sub section 3 and no appeal is provided against such an order under section 116A Section 116A provides that an appeal shall lie from every order made by the tribunal under section 98 67 530 or section 99 to the High Court of the State in which the tribunal is constituted We are not concerned in the present appeal with section 99 The case for respondent I is that in substance and in law the impugned order must be deemed to have been passed under section 98 That is the view which the High Court has taken and we are satisfied that the High Court is right It is true that in terms and in form the order was passed under section 90 sub section 3 and it is also true that the right to prefer on appeal is a creature of the statute and no appeal can be held to be competent unless it is shown that such a right flows from the relevant statutory provision itself In order to decide whether or not an order passed under section 90 sub section 3 can be regarded in law and in substance as an order passed under section 98 it would be relevant to consider the scope and effect of the provisions of the said two sections Section 98a provides that at the conclusion of the trial of an election petition the tribunal shall make an order dismissing the election petition There is no doubt that in the present case the Election Tribunal has dismissed the election petition filed by respondent 1 But the appellant s contention is that this dismissal cannot be said to be under section 98a because the order dismissing the petition has not been passed at the conclusion of the trial of the election petition This argument is not well founded Section 90 subs 3 under which the impugned order purports to have been passed occurs in ch III of Pt VI which deals with the trial of election petitions In other words section 90 sub section 3 confers power on the tribunal to dismiss the election petition after the trial of the election petition has commenced The scheme of ch III clearly indicates that once an election petition is referred to an Election Tribunal for trial under section 86 the tribunal is possessed of the petition and all proceedings before it are proceedings in the trial of the said petition Section 85 shows that for failure to comply with the provisions of sections 819 82 and 117 the Election Commission is empowered to dismiss the election petition If the Election Commission exercises its jurisdiction and passes an order 531 dismissing any election petition it may be said that the election petition never reached the stage of trial but once the petition has passed the scrutiny of the Election Commission under section 85 and it has been referred to the Election Tribunal for trial any further action taken by the parties or any order passed by the tribunal under the said petition would constitute a part of the trial of the said petition This question has been incidentally considered by this Court in Harish Chandra Bajpai vs Triloki Singh 1 while it was dealing with section 90 sub section 2 of the Act and it has been held that the provisions of ch III read as a whole clearly show that I the trial is used as meaning the entire proceedings before the tribunal from the time the petition is transferred to it under section 86 until the pronouncement of the award Therefore there can be no doubt that the order passed under section 90 sub section 3 is an order passed at the conclusion of the trial It is true that it is an order on a preliminary point of law raised by the appellant but even so the decision of the preliminary issue is undoubtedly a part of the trial of the petition and it cannot be said that the order passed on such a preliminary point is not an order passed at the conclusion of the trial when it in fact concludes the trial Section 90 sub section 3 provides that the tribunal shall dismiss an election petition which does not comply with the provisions of sections 81 82 or 117 notwithstanding that it has not been dismissed by the Election Commission under section 85 It would thus be clear that an objection raised against the competence of the election petition on the ground that the provisions of the aforesaid sections have not been complied with can be considered by the Election Commission suo motu under section 85 and if it is upheld the election petition can be dismissed without any further enquiry but if the Election Commission does not dismiss the petition under section 85 then the same objection can be raised before the Election Tribunal by the respondent to the election petition and when it is so raised it assumes the character of a preliminary objection and 1 387 532 is dealt with by the Election Tribunal as any preliminary objection would be dealt with by a civil court under the Code of Civil Procedure That being so a preliminary objection has been tried and the decision on the preliminary objection being in favour of the respondent the election petition is dismissed Though the order of dismissal in form may be under section 90 subs 3 it is in substance and in law an order of dismissal passed at the conclusion of the trial and must be deemed to be an order under section 98a That is the view which the Madhya Pradesh High Court has taken in Gulshar Ahmed vs Election Tribunal1 and it was this decision which was followed by the High Court in the present proceedings In our opinion therefore the contention raised by the appellant that the appeal preferred by respondent I before the High Court was incompetent must be rejected The question of construing section 90 can be considered from another point of view It provides for the procedure before the tribunal and lays down that it is open to the tribunal to dismiss an election petition under section 90 sub section 3 but this being a procedural provision is would not be unreasonable to hold that when the actual order dismissing the petition is passed it would be referable to the provisions of section 98a The same conclusion would follow if we consider the provisions of sections 103 106 and 107 It cannot be suggested that the order passed by the tribunal dismissing the election petition for noncompliance of section 117 is not required to be communicated to the Election Commission under section 103 or transmitted by the Election Commission to the appropriate authority under section 106 Similarly it cannot be said that such an order would not take effect as soon as it is pronounced by the tribunal under section 107 It would thus be noticed that though the provisions of these sections are obviously applicable to an order dismissing the election petition on the ground of non compliance of section 117 in terms the said sections refer to orders passed under section 98 or section 99 Therefore we think it would be reasonable to hold that where the tribunal dismisses an election petition by virtue of the provi 1 AIR 1958 Madh Pra 224 533 sions contained in section 90 sub section 3 the order of dismissal must be deemed to have been made under section 98 Similarly section 991 b which empowers the tribunal to fix the total amount of costs payable and to specify the person by and to whom that shall be paid in terms refers to cases where an order is made under section 98 It cannot be suggested that where an order of dismissal is passed under section 90 sub section 3 the tribunal cannot make an appropriate order of costs This provision also indicates that the order passed under section 90 sub section 3 is in law and in substance an order passed under section 98a It is true that in cases where such ail order is passed section 991a would not come into operation but that can hardly affect the position that an order under section 90 sub section 3 is nevertheless an order under section 98 We would like to add that by Act 58 of 1958 an explanation has been added to section 90 sub section 3 which clarifies the legislative intention on this point This explanation provides that an order of the tribunal dismissing an election petition under this sub section shall be deemed to be an order made under cl a of section 98 After the enactment of this explanation there can be no doubt that ail order passed under section 90 sub section 3 would be appealable under section 116 A of the Act That takes us to the second point raised by the appellant that the High Court was in error in holding that respondent I bad complied with the provisions of section 117 of the Act Section 117 provides that the petitioner shall enclose with the petition a Government Treasury Receipt showing that a deposit of Rs 1000has been made by him either in a Government Treasury or in the Reserve Bank of India in favour of the Secretary to the Election Commission as security for costs of the petition In the present case respondent 1 has deposited the requisite security but it is urged that the security has not been deposited as required by section 117 This is how the security deposit has been made 534 Under Amount By whom On what account rupees in brought words Rs A P Shiv Prasad Security deposits for Rs One 1000 0 0 Chanpuria Election Petition of Thous Bargi Assembly Con and and stituency No 97 one D i s t t Jabalpur only Madhya Pr ad es h Refundable by order of the Election Commission of India New Delhi Total 1000 0 0 The argument is that the security has not been deposited in the name of the Secretary to the Election Commission as required by section 117 and it is deposited with the condition that it is refundable by the order of the Election Commission of India In other words the only power which the Election Commission of India can exercise in respect of the security is to refund the amount to respondent I and it would not be competent to the Commission to direct the amount to be paid to the appellant even if the election petition filed by respondent I is dismissed with costs In our opinion this objection is purely technical It has recently been held by this Court in Kamaraj Nadar V Kunju Thevar 1 that s117 should not be strictly or technically construed and that wherever it is shown that there has been a substantial compliance with its requirements the tribunal should not dismiss the election petition under section 90 sub section 3 on technical grounds Indeed it is clear that the receipt with which this Court was concerned in the case of Kamaraj Nadar 1 was perhaps slightly more defective than the receipt in the present case The argument based on the use of the word refundable ignores the fact that the security in terms has been made in respect of the election petition in question and it has been duly credited as towards the account of the Election Commission Therefore there can be no doubt that if an 1 AIR 1958 SC 687 535 occasion arises for the Election Commission to make an order about the payment of this amount to the successful party the use of the word refundable will cause no difficulty whatever We hold that the security has been made by respondent 1 as required by section 117 of the Act and would be at the disposal of the Election Commission in the present proceedings We would like to add that even section 117 has been subsequently amended by Act 58 of 1958 and the reference to the Secretary has been deleted The result is the appeal fails and must be dismissed with costs Appeal dismissed

The respondent company was a dealer in matchwood called sawar and his place of business was situate in Chanda in the erstwhile Central Provinces Pursuant to an agreement between the respondent and a match factory the former loaded diverse quantities of sawar logs on railway wagons and despatched the same by rail from Chanda and other railway stations in the Central Provinces to Ambernath a town in the erstwhile Province of Bombay Under cl 4 Of the agreement the goods to be supplied under the contract shall be despatched by the contractor from certain railway stations within the Central Provinces while cl 2 reserved the right of the consignee to examine the goods on arrival at Ambernath and to reject the same if they were found in the opinion of the factory manager not to conform with the specifications Clause 6 provided that the goods shall be measured under the supervision of the factory s repre sentative the decision of the factory manager at Ambernath being binding on the contractor and by cl 7 the prices of the goods shall be F OR Ambernath The course of dealings between the parties was that on arrival of the logs at Ambernath the logs were inspected and measured by the factory manager and the prices calculated at the agreed rates were paid to the respondent s agent at Bombay The question was as to when and where the property in the logs passed from the respondent to the consignee and whether the respondent was liable to pay sales tax under the provisions of the Central Provinces and Berar Sales Tax Act 1947 At the date when the agreement was entered into the logs were unascertained goods There was also no evidence that at that date the particular logs delivered thereunder were in the Central Provinces in the shape of logs at all The sales tax department levied the tax on the respondent on the grounds inter alia that 1 the property in the logs passed from the respondent to the factory consignee under section 23 Of the Indian when the logs were loaded in the wagons at railway stations within the Central Provinces and the railway 703 receipts taken in the name of the factory were forwarded to the latter and that 2 in any case as the logs were in the Central Provinces at the date when the contract for sale was made the transfer in them must be deemed to have taken place there under Explanation II to section 2g Of the Central Provinces and Berar Sales Tax Act 1947 Held 1 that on a proper construction of the contract as a whole the intention of the parties was that the respondent would send the logs by rail from the different stations in the Central Provinces to Ambernath where the factory manager would inspect measure and accept the same if in his opinion they were of the description and quality agreed upon Conse quently as the respondent sent the logs and left it to the factory to appropriate to the contract such of them as they accepted as of contract quality and description the property in the logs did not pass to the buyer by the mere delivery to the railway for carriage but passed only at Ambernath when the logs were appropriated by the factory with the assent of the seller within the meaning of section 23 of the Indian 2 that Explanation II to section 2g of the Central Provinces because under the Explanation the goods in respect of which the contract of sale is made must at the date of the contract be in existence in the Central Provinces that is to say that the goods must at the date of the contract be there in the form in which they are agreed to be sold and there was no evidence in the present case for this

ppeal No 39 of 1959 Appeal by special leave from the judgment and order dated November 26 1957 of the Bombay High Court at Rajkot in Special Civil Application No 119 of 1956 A V Viswanatha Sastri section P Mehta J B Dadachanji section N Andley and Rameshwar Nath for the appellants M C Setalvad Attorney General for India R Ganapathy Iyer and D Gupta for the respondent April 14 The Judgment of the Court was delivered by KAPUR J This is an appeal by special leave against the judgment and order of the High Court of Judicature at Bombay dismissing the appellant s petition under article 226 The appellant before us is a private limited company carrying on the business of manufacturing and selling textiles and the respondent is the Income tax Officer of Porbander Previous to the year 1949 in Porbander which became a part of the State of Saurashtra there was no income tax In 1949 the Saurashtra Income tax Ordinance hereinafter termed the Ordinance was promulgated which was applicable to the State of Saurashtra By that Ordinance income tax became leviable and from 1950 onwards when Saurashtra became part of the Union of India the Indian Income tax Act hereinafter referred to as the Act became applicable by reason of the Finance Act of 1950 Act XXV of 1950 550 The appellant Was taxed for the accounting year 1949 ie the assessment year 1950 51 In that year the amount of depreciation allowed under section 102vi of the Act was Rs 343869 The appellant continued to be assessed to income tax in the assessment years 1952 53 and 1953 54 and the present appeal relates to the assessment of year 1953 54 According to the assessment order dated June 30 1965 the amount of depreciation allowed for the assessment year 1953 54 was Rs 348105 On August 8 1955 the appellant made an application for rectification under section 35 of the Act In this application he pointed out several mistakes in calculations in regard to the depreciation amount By his order of February 27 1956 the Income tax Officer corrected the Written Down Value of the different properties of the appellant and determined the total allowable depreciation to be Rs 194074 The order of the Income tax Officer was as follows To arrive at the Written Down Value of the assets it was necessary to maintain depreciation record This being not done so far is done now and working attached Depreciation allowance as per rules is worked out at Rs 194074 as per working sheet attached The correct computation of income is as under Income before allowing depreciation as per original assessment orderRs100674 Less charity disallowed wrongly written Rs 21889 instead of Rs 20124 Rs1765 Income Rs98909 Less depreciation Rs194074 Rs95165 Less Dividend income as per origi nal assessment order Rs11870 Loss Rs83295 Loss on account of depreciation to be carried forward Declared N A 551 And thus the unabsorbed depreciation amount which under the assessment order of June 30 1955 was Rs 231944 was reduced to Rs 83295 and this was set off against the appellant s income of the assessment year 1954 55 On February 29 1956 the Income tax Officer passed two provisional assessment orders for the years 1954 55 and 1955 56 In both these orders he calculated the depreciation amounts on the basis of the same Written Down Value as he had determined for the year 1953 54 The reasons for calculating them on the new basis were set out by the Income tax Officer in his order dated May 18 1956 and they were Less Depreciation The depreciation of the Company has not been properly calculated by arriving at Written Down Value as per the Saurashtra Income Tax Ordinance and also as per Indian Income tax Act The assessee Company was being assessed regularly even as per Indian Income tax Act So Written Down Value of all assets are arrived at by working out the depreciation as per above Ordinance as well as Income Tax Act The depreciation is worked out as per separate statement keeping in view the following i Definition of assessee as per Indian Income tax Act ii The exact meaning of WD V as per Income tax Act iii The meaning of W D V as per the Saurashtra Income tax Ordinance 1949 and Rules Page 20 para 13 5 A iv 1 T R Volume 25 558 Decision of Calcutta High Court as regards C I T West BengalMs Karnani Industrial Bank Ltd v Views expressed by Taxation Enquiry Commissioner 1953 54 Volume II page 84 para vi Taxation Laws Part B State Removal of Difficulties Order 1950 The depreciation thus worked out as per separate statement On August 81955the appllant made an application under section 35 for certain corrections in the calculations and the order thereon was passed on February 552 27 1956 but no written notice of the intended rectifi cation of the Written Down Value and the depreciation amount was given by the Income tax Officer to the appellant under s 35 read with section 63 of the Act On March 9 1956 the appellant wrote to the Income tax Officer protesting against the order You have exercised powers not vested in you under the said Section and you have gone beyond the purview of the Act by preparing statements and records which are prejudicial to the rights of the Company The appellant requested the Income tax Officer to cancel his previous order and to pass a fresh order correcting onlv those mistakes which had been pointed out by it On the same day the appellant sent another letter asking for the cancellation of the provisional assessment order for 1954 55 and requested for a revised assessment order on the basis of the return filed by it The reply of the Income tax Officer of the same date was that the order was correct and a similar order was made on the second application in regard to the assessment of 1954 55 On April 16 1956 the appellant filed a petition in the High Court of Bombay under articles 226 and 227 in which it alleged that the Income tax Officer had exceeded the limits of jurisdiction vested in him and exercised illegally jurisdiction not vested in him by law under Section 35 and passed orders inter alia and suo motu and without giving any prior notice and altered the entire procedure and basis of calculating depreciation on the written down value of buildings and machinery of the petitioners The appellant prayed that the order made under section 35 of the Act be quashed and an injunction issued restraining the Income tax Officer from recovering the assessed tax The High Court dismissed this petition on the ground that it contained misstatements of fact that The advantage of this jurisdiction is not available to the subject when adequate and efficacious remedy is available to him under the ordinary law that the appellant could under section 33A of the Act 553 have gone in revision to the Commissioner The High Court also held against the appellant on merits The appellant has come to this Court by special leave and three questions were raised 1 that no notice as required under section 35 was given to the appellant 2 that there was no record on the basis of which the rectifica tion in the Written Down Value of the property could be made and 3 that there was no mistake apparent from the record The learned Attorney General contended in the first instance that the remedy available under article 226 is a discretionary one and if the High Court had exercised its discretion no appeal was competent and in support of his contention he relied upon the judgment of this Court in K section Rashid Son vs Income tax Investigation Commission etc 1 where Mukherjee J as he then was said For purpose of this case it is enough to state that the remedy provided for in article 226 of the Constitution is a discretionary remedy and the High Court has always the discretion to refuse to grant any writ if it is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere It is not necessary to decide in this case whether the order passed under article 226 is of a discretionary nature and therefore in appeal this Court would not interfere with the exercise of discretion because in our opinion the case can be decided on other grounds of substance The first question is that of notice under section 35 of the Act The affidavit of the Income tax Officer shows that the correctness of the figures for determining the depreciation was discussed with the appellant s Secretary The Income tax Officer stated that The depreciation which was calculated in the assessment order of 1953 54 was as per the statement given by the petitioner On submission of the said application the petitioner Shri Ganatra the Secretary of the Mills was told that the depreciation will be given after rectifying mistakes The petitioner had 1 747 70 554 agreed to the same There being no record of the working out from the first available record in the Assessment order for the Assessment year 1943 44 the petitioner was also supplied with the copy of the working of the depreciation along with the necessary rules and regulation for calculating the same He also stated that the order of rectification was passed almost at the end of the financial year after explaining and discussing all the above calculation along with the relevant rules and regulation of the calculated depreciation that the order was not passed without giving a reasonable opportunity to the appellant that the matter was discussed with its representative more than once thattheassessment for the year 1954 55 was made final after calculatitig the depreciation that the point of depreciation was notraised by the applicantat any hearingand that even though no written notice was given the represen tative of the appellant was given notice of the intended determination of the Written Down Values He also stated Thus though no written notice is given applicant is given notice of the intention of calculating depreciation on record basis and is also allowed a reasonable opportunity of being heard inasmuch as he was given the calculation of depreciation on 21 2 1956 The orders placed on the record show that the Income tax Officer made calculation for the purpose of determining the depreciation amount and after giving deductions allowed by the Act and the Rules made thereunder arrived at the corrected figure of Rs 194074 for the assessment year 1953 54 Apart from the fact that the petition of the appellant does not set out clearly all the facts which should have been set out there is the affidavit of the respondent that the matter was discussed with the representative of the appellant although no written notice was given In this connection the learned Attorney General has further submitted 1 that the order determining the depreciation amount allowable was not final 2 that the effect of the order making the rectification 555 was not of enhancing the assessment or reducing the refund and 3 that the question of depreciation could be raised at the time of assessment in any subsequent year The object of the provision as to notice in section 35 is that no order should be passed to the detriment of an assessee without affording him an opportunity but it cannot be said that the Rule is so rigid that if as a matter of fact the assessee knows of the proceedings and the matter has been discussed with him then an adverse order would be invalid merely because no notice under section 63 was given Of course this postulates that a reasonable opportunity has been given to show cause Secondly this provision is applicable only where the assessment is enhanced or refund is reduced Neither of those contingencies has arisen in the present case The depreciation allowed to the appellant in the year of assessment 1943 44 when the appellant was assessed as a non resident was Rs 191224 In the year 1944 45 there was no asssessable income in British India and so also in 1945 46 In the year 1946 47 there was a loss In the year 1947 48 as in the preceding years the sales were effected at Porbander and there was no collection made in British India The total tax due was calculated at Rs 43 11As In 1948 49 the sales were Rs 38656 and they were assessed to income tax on a total income of Rs 9326 For the accounting year 1948 ie the assessment year 1949 50 when the Ordinance came into force the total depreciation amount allowed was Rs 366925 which was much more than what was allowable on the Written Down Values determined in accordance with the provisions of the Ordinance which defined Written Down Value Written Down Value means a In the case of assets acquired in the previous year the actual cost to the assessee b In the case of assets acquired before the previous year the actual cost to the assessee less all depreciation actually allowed to him under this Ordinance or allowed under any Act repealed hereby or 556 which would have been allowed to him if the Indian Income tax Act 1922 was in force in past On the basis of this Ordinance and the other Statutes and Rules mentioned in his affidavit which have been set out above the Income tax Officer made the various calculations and determined the depreciation amounts which have given rise to the controversy before us These calculations were based on the Written Down Values for the successive assessment years up to the year of assessment 1953 54 But it was argued by counsel for the appellant that according to section 105b of the Act the Written Down Value in the case of assets acquired before the previous year mean the actual cost to the assessee less all depreciation actually allowed to him under the Act or under any Act repealed thereby and therefore the provisions of the Saurashtra Ordinance which came to an end when the Act became applicable cannot form the basis of determining the Written Down Value for the purposes of assessment of the years 1950 51 onwards In reply it was submitted that the Written Down Values were calculated and depreciation deter mined for the year 1943 44 and should in subsequent years have been calculated in accordance with the provisions of the Ordinance and they could not become higher for purposes of section 105b of the Act merely because the Ordinance was replaced by the Act In this connection reference was made to section 12 of the Finance Act 1950 section 12 of which empowered the Central Government to make provision for the removal of difficulties in giving effect to the provisions of any of the Acts Rules or Orders extended by section 3 or section 11 of that Act i e Finance Act 1950 Under that section section 12 the Taxation Laws Part B States Removal of Difficulties Order 1950 was promulgated on December 2 1950 and by cl 2 of this Order provision was made for computation of aggregate depreciation allowance and Written Down Values To this Order the following explanation was added on March 9 1953 Notification No section R 0 477 For the purposes of this paragraph the expression all depreciation actually allowed under any 557 laws or rules of a Part B State means and shall be deemed to have always meant the aggregate allowance for depreciation taken into account in computing the Written Down Value under any laws or rules of a Part B State or carried forward under the said laws or rules But the appellant s counsel contended that this explanation is ultra vires because it was promulgated under section 60 A of the Act and that section was inapplicable to the Order made under section 12 of the Finance Act 1950 He relied on two cases decided by the Hyderabad High Court in section V Naik vs Commissioner of Income tax 1 and Commissioner of Income tax vs D B R Mills Ltd 2 but we are informed that one of those judgments is under appeal to this Court and we therefore do not wish to express any opinion upon the cor rectness or otherwise of this contention raised by the appellant It was next argued by the learned Attorney General that the Written Down Values determined under section 35 are not final and can be redetermined in the following assessment years and in support he referred to Karnani Industrial Bank vs Commissioner of Income tax 3 where the original cost of the machinery purchased Rs 340000 was accepted in the successive assessment years till it was doubted in the assessment order 1946 47 and was determined at Rs 280000 and it was contended that the Income tax Officer had to take the Written Down Value of the previous year as correct Thus the question there raised was whether the Income tax Officer was entitled in law to go behind the original cost accepted by his predecessor ever since the assessment year 1939 40 It was held that neither the principle of res judicata nor estoppel nor the terms of section 10 2 vi of the Act prevented the Income tax Officer from determining for himself what the actual cost of the machinery had been and that depreciation had to be calculated for every year and it was open to the Income tax Officer not merely to perform a mathematical operation on 1 2 3 558 the basis of the Written Down Value of the previous year but one of determining the Written Down Value himself The limit to which the Income tax Officer can go back does not stop at the Written Down Value of the previous year but extends up to the figure of the original cost and the method enjoined by section 105b is not that the Income tax Officer should merely scale down the Written Down Value of the previous year but that he should take into consideration the actual cost determining it for himself if necessary take also into consideration the allowances granted in the past and then make his own computation as to the Written Down Value for the assessment year with which be is concerned Thus it cannot be said that merely because under section 35 some Written Down Value and the depreciation amount have been determined they are a final determination binding for all times to come nor does the determination operate as estoppel or resjudicata for the following years Therefore it cannot be said that there is no other efficacious and adequate remedy open to the appellant to challenge the depreciation amount determined under section 35 Counsel for the appellant contended that the provision under which the Income tax Officer acted i e 35 was not meant for the purpose of making corrections in Written Down Values and that for the purpose the appropriate and correct provision was section 34 which specifically refers to excessive depreciation There are two sections under which an Income tax Officer can act i e sections 34 and 35 and the question for decision that arises is whether section 35 was open to him Section 35 provides The Commissioner or Appellate Assistant Commissioner may at any time within four years from the date of any order passed by him in appeal or in the case of the Commissioner in revision under section 33A and the Income tax Officer may at any time within four years from the date of any assessment order or refund order passed by him on his own motion rectify any mistake apparent from the record of the appeal revision assessment or refund as the case may be and shall within the like period rectify any such mistake which has been brought to his notice by an assessee The question therefore is was it a mistake apparent from the record which the Income tax Officer has rectified It was submitted that recalculation is not rectifying a mistake which is apparent from the record The words used in the section are apparent from the record and the record does not mean only the order of assessment but it comprises all proceedings on which the assessment order is based and the Income tax Officer is entitled for the purpose of exercising his jurisdiction under section 35 to look into the whole evidence and the law applicable to ascertain whether there was an error If he doubts the Written Down Value of the previous year it is open to him to check up the previous calculations and if he finds any mistake it is open to him to make fresh calculations in accordance with the law applicable including the rules made thereunder The Privy Council in Commissioner of Income tax vs Khem Chand Ramdas1 held section 35 to be applicable where the facts were that the assessee did not produce books of account and an assessment was made by the Income tax Officer to the best of his judgment An application for the registration of the firm was however allowed and it was registered on January 17 1927 On the same day assessment was made under section 234 As it was a registered firm no super tax was assessed The Commissioner called for the record under section 33 and cancelled the registration on January 28 and ordered the Income tax Officer to take necessary con sequential action The result of that was that the assessee became liable to super tax Consequently an order for super tax was made on May 4 1929 and three days later notice of demand was issued The Privy Council held that as the fresh action taken by the Income tax Officer was hopelessly out of time the demand for super tax was illegal because after the final assessment the Income tax Officer could not go on making fresh computations and issuing fresh notices of demand to the end of all time but it was held that 1 1938 L R 65 IA 236 560 the provisions of sections 34 and 35 prescribed the only circumstances in which fresh assessment could be made and fresh notice of demand could be issued At p 426 Lord Romer observed In the present case it is a debatable question r whether the circumstances were such as to bring it within the provisions of Section 34 It is not necessary to determine that question inasmuch as in their lordship s opinion the case clearly would have fallen within the provisions of section 35 had the Income tax Officer exercised his powers under the section within one year from the date on which the earlier demand was served upon the respondents For looking at the record of the assessments made upon them as it stood after the cancellation of the respondent s registration and the order affecting the cancellation would have formed part of that record it would be apparent that a mistake had been made in stating that no super tax was leviable Thus the order effecting the cancellation of the regis tration of the assessee s firm was considered to have formed part of the record of the case In Sidhramappa Andannappa Manvi vs Commis sioner of Income tax 1 the facts were that a debt belonging to a joint family fell on partition to the share of the assessee This debt was held not to be recoverable by a judgment of the Bombay High Court dated September 29 1941 Holding it to be within the accounting year the Appellate Tribunal allowed this sum to be taken into consideration for the purpose of the accounting year It subsequently corrected the error It was held that under section 35 the Tribunal was entitled to rectify the mistake and was competent to pass a consequential order dismissing the appeal instead of allowing it The power under section 35 is no doubt limited to rectification of mistakes which are apparent from the record A mistake contemplated by this section is not one which is to be discovered as a result of an argument but it is open to the Income tax Officer to examine the record including the evidence and if he discovers any I 2 SCR SUPREME COURT REPORTS 561 mistake he is entitled to rectify the error provided that if the result is enhancement of assessment or reducing the refund then notice has to be given to the assessee and he should be allowed a reasonable opportunity of being heard The scope and effect of the expression mistake apparent from the record and the extent of the powers of the Income tax Officer under section 35 of the Act were discussed by this Court in M K Venkatachalam vs Bombay Dyeing and Manufacturing Co Ltd 1 where the facts were these A sum of Rs 50063 being interest on tax paid in advance was given credit for under section 18A5 of the Act Subsequently there was an amendment of the Act by which the interest became allowable only on the difference between the amount of tax paid and what was actually determined As a consequence of this the Income tax Officer purporting to act under section 35 of the Act rectified the mistake and reduced the amount of interest credited to Rs 21157 and issued a demand for the difference The assessee obtained a writ of prohibition against the Income tax Officer on the ground that the mistake contemplated under that provision had to be apparent on the face of the Order and it was not contemplated to cover a mistake resulting from an amendment of the law even though it was retrospective in its effect The Revenue appealed to this Court Thus the question for decision in that case was whether ail order proper and valid when made could be said to disclose a mistake apparent from the record merely because it became erroneous as a result of a subsequent amendment of the law which was retrospective in its operation In delivering the judgment of the Court Gajendragadkar J said At the time when the Income tax Officer applied his mind to the question of rectifying the alleged mistake there can be no doubt that he had to read the principal Act as containing the inserted proviso as from April 1 1952 If that be the true position then the order which he made giving credit to the 1 7I 562 respondent for Rs 50603 15 0 is plainly and obviously inconsistent with a specific and clear provision of the statute and that must inevitably be treated as a mistake of law apparent from the record If a mistake of fact apparent from the record of the assessment order can be rectified under section 35 we see no reason why a mistake of law which is glaring and obvious cannot be similarly rectified The decision of the Privy Council in Commissioner of Income tax vs Khem Chand Ram Chand 1 was referredto Counsel for the appellant sought to distinguish both these cases Venkatachalam s case 2 and Khem Chand s case1 on the ground that the record there considered was the assessment record of that year and the Income tax Officer did not have to go to the records of the previous year That is a distinction without a difference If for instance the Income tax Officer had found that in the assessment year 1952 53 there was an apparent arithmetical mistake in the account of the Written Down Value of the pro parties which resulted in a corresponding mistake in the assessment of the year in controversy could he not take the corrected figure for the purposes of the assessment and could it be said that the mistake was not apparent from the record A fortiori if lie discovered that the very basis of the different assessments was erroneous because of an initial mistake in determining the Written Down Value could it be said that this would not be a mistake apparent from the record And if in order to determine the correct Written Down Value the Income tax Officer makes correct calculations can it be said that is not rectifying a mistake apparent from the record but is dehors it In our opinion this appeal is without force and we would therefore dismiss it with costs Appeal dismissed 1 1938 LR 651A 236

The appellant who was the holder of a permit to run a stage carriage which was about to expire made an application to the State Transport Authority for its renewal for a further period The respondent made a representation against the renewal of the appellant s permit and also applied for the grant of the permit to himself The State Transport Authority made an order in the terms Renewed for three years in respect of the appellant s permit but no express order was made on the respondent s application for the grant of the permit to him On appeal by the respondent the Appellate Tribunal cancelled the appellant s permit and granted the permit to the respondent The appellant then moved the judicial Commissioner Vindhya Pradesh for a 693 writ of certiorari quashing the order of the Appellate Tribunal on the ground that it disclosed an error on the face of it because under the Act no appeal lay from the order that was passed by the subordinate authority The learned judicial Commissioner held that the appeal was competent and dismissed the application for the writ It was contended for the appellant that the respondent s appeal to the Appellate Tribunal was not maintainable on the grounds 1 that no express order was made against the respondent by the State Transport Authority and so section 64a of the Act did not give him a right of appeal and 2 that in view Of sections 47 57 and 58 Of the Act the State Transport Authority had no jurisdiction to consider the respondents application or to make an order in respect of it after the appellant s permit was renewed and therefore could not make an order rejecting it It was also contended that section 64 of the Act did not provide for an appeal by a person aggrieved by the renewal of a permit unless he was one of those mentioned in cl f of that section which the respondent was not and therefore even if an appeal by the respondent was competent under section 64a in such an appeal the Appellate Authority could not set aside the order of renewal Held 1 that the order made by the State Transport Authority in the present case did amount infact to a refusal to grant the permit to the respondent The respondent s appeal to the Appellate Authority was therefore maintainable under section 64a of the Act section Gopala Reddi vs Regional Transport Authoyity North Arcot1955 approved V C K Bus Service Ltd vs Regional Transport AuthoyityCoimbatore distinguished 2 that section 582 Of the Act shows that an application for the renewal of a permit and a fresh application for the same permit have to be heard together and that there was nothing in sections 47 and 57 indicating a contrary course 3 that cl f of section 64 Of the Act does not in any way restrict the power of the Appellate Tribunal to grant all reliefs in an appeal under cl a of the section Consequently the order of the Appellate Tribunal setting aside the order of renewal was valid Dholpur Co operative Transport Etc Union Ltd vs The Appellate Authority Rajasthan AIR in so far as it decided to the contrary disapproved

13 of 1959 Petition under Article 32 of the Constitution of India for enforcement of Fundamental Rights Harnam Singh and Sadhu Singh for the petitioners section M Sikri Advocate Gencral for the State of Punjab Gopal Singh and D Gupta for respondent No 1 1959 April 1 The judgment of the Court was delivered by section K DAS J This is a petition under article 32 of the Constitution in which the petitioners challenge the constitutional validity of section 148 B of the Sikh Gurdwaras Act 1925 Punjab VIII of 1925 hereinafter called the principal Act the said section having been added to the principal Act by the Sikh Gurdwaras Amendment Act 1959 hereinafter called the amending Act of 1959 The petitioners profess and practice the Sikh faith and they allege that they are interested in the maintenance and management of Sikh Gurdwaras scheduled and notified under the principal Act Their main contention is that section 148 B violates the fundamental right granted under article 26b of the Constitution to every religious denomination or any section thereof including the Sikh denomination to 502 manage its own affairs in matters of religion The respondents to the petition are firstly the State of Punjab and secondly President and twelve members of the Interim Gurdwara Board Patiala who under cl a of sub section 1 of section 148 B shall be deemed to be members of the Board constituted under section 43 of the principal Act That Board is now known by the name of the Sikh Gurdwara Prabandhak Committee The application has been contested before us by respondent No 1 only namely the State of Punjab on the ground that section 148 B does not in any way violate the fundamental right granted to the petitioners or other members of the Sikh denomination under article 26b of the Constitution Therefore the only question for consideration before us is if section 148 B of the principal Act does or does not contravene the fundamental right granted to the Sikhs under article 26b of the Constitution We shall presently set out the provisions of section 148 B and also of some other relevant sections of the principal Act But before we do that it is necessary to state a few facts with regard to the passing of the amending Act of 1959 It has been stated before us that in or about the year 1919 there was considerable unrest amongst the Sikhs in the Punjab in respect of the management of their gurdwaras and shrines and in 1922 an Act called the Sikh Gurdwaras and Shrines Act was passed this did not satisfy the Sikhs and in 1925 the principal Act was passed as its preamble states for the better administration of certain Sikh gurdwaras and for enquiries into matters and settlement of disputes connected therewith The principal Act was amended from time to time On November 1 1956 there was merger of the erstwhile State of Patiala and the East Punjab States Union hereafter called Pepsu in brief with the State of Punjab Sometime in February 1957 the Government of the State of Punjab appointed an advisory committee to report as to whether the principal Act should be extended to the area which was formerly within Pepsu In September 1957 the committee recommended in favour of such extension On April 8 1958 a bill called the Sikh 503 Gurdwaras Amendment Bill 1958 was introduced in the Punjab Vidhan Sabha and the Bill was sent to the regional committees constituted by an order of the President called the Punjab Regional Committees Order 1957 made under el 1 of article 371 of the Constitution The regional committees dealt with the Bill and made certain recommendations For the purposes of the application before us it is unnecessary to go into details of the proceedings before the regional committees Sometime in November 1958 there was a meeting of the Sikh Gurdwara Prabandbak Com mittee for the purpose of the annual election Learned counsel for the petitioners has stated before us that at this meeting there was a majority by a very small margin three votes only in favour of a particular group of Sikhs and against another group known as the Shiromoni Akali Dal Within one week however a notice was given for calling a meeting to consider the provisions of the amending Bill this meeting could not however be held as an order of stay was obtained from the Judicial Commission constituted under the principal Act In December 1958 a special session of the Vidhan Sabha was summoned to consider the amending Bill It has been stated that originally the amending Bill did not contain provisions like those later embodied in section 148 B The Bill was accordingly sent back to the regional committees and on December 27 1958 the regional committees submitted a final report and recommended the addition of provisions which subsequently became the provisions of section 148 B of the principal Act It may be here stated that even in the regional committees there was some opposition to the provisions in question On December 31 1958 the Bill was passed by the Vidhan Sabha and on January 3 1959 it was passed by the Legislative Council On January 8 1959 it received the assent of the Governor and became Punjab Act No 1 of 1959 which is the Amending Act of 1959 It came into force at once and some rules under the Act were made a few days after On February 2 1959 the present petition was filed and on February 14 1959 the election of 35 Sikhs contemplated under el b of sub section 1 of section 148 B was completed 504 It is necessary at this stage to refer to some of the old provisions of the principal Act as also the new provisions added by the amending Act of 1959 The Board which is known as the Sikh Gurdwara Prabandhak Committee acts as the committee of management in respect of some of the principal Sikh gurdwaras in addition it also has the duty of ensuring that every committee of management deals with the property and income of the gurdwara or gurdwaras managed by it in accordance with the provisions of the Act and for the fulfilment of this duty it exercises control direction and general superintendence over all committees appointed under the provisions of the principal Act see section 125 The Board is constituted under section 43 of the principal Act Previous to the passing of Punjab Act No 44 of 1953 section 43 said that the Board shall consist of i 84 elected members ii the bead ministers of certain well known Sikh gurdwaras iii 12 members nominated by the Rajpramukh of Pepsu and iv 17 members resident in India of whom not more than four shall be residents in Punjab co opted by the members of the Board as described in i ii and iii above In 1953 was passed Punjab Act No 44 of 1953 and section 43 of the principal Act was amended The amended section was in these terms section 43 1 The Board shall consist of i one hundred and thirty two elected members ii the head ministers of the Darbar Sahib Amritsar and the following four Takhts namelythe Sri Akali Takht Sahib Amritsar the Sri Takht Kesgarh Sahib Anandpur the Sri Takht Patna Sahib Patna and the Sri Takht Nazur Sahib Hyderabad Deccan and iiitwenty five members resident in India of whom at least twelve shall be residents of Pepsu at least nine of other parts of India than Punjab and Pepsu and not more than four of Punjab co opted by the members of the Board as described in clauses 1 and ii 2 It would thus appear that after the passing of Punjab 505 Act No 44 of 1953 the Board consisted of only three categories of members namely 1 elected members 2 certain designated members and 3 25 co opted members Now we come to section 148 B which was added by the amending Act of 1959 That section in so far as it is material for our purpose is in these terms section 148 B 1 As from the commencement of the Amending Act in addition to the members of the Board constituted under section 43 and till the next election of the new Board under section 43 A aevery person in the extended territories who immediately before the commencement of the Amending Act is a member of the Interim Gurdwara Board Patiala constituted by Punjab Government Home Department Notification No 18 Gurdwaras dated the 10th January 1958 shall be deemed to be a member of the Board constituted under section 43 and bthirty five Sikhs including six Sikhs belonging to the Scheduled Castes residents in the extended territories to be divided among different districts thereof in proportion to the Sikh population of each district in the prescribed manner who shall within forty days of the commencement of the Amending Act be elected by the persons specified in subsection 2 in accordance with the rules made in this behalf by the State Government shall become the members of the Board from the date specified in subsection 3 2 The thirty five persons referred to in clause b of sub section 1 shall be elected by i the persons who are deemed to be the members of the Board under clause a of sub section 1 ii the twelve members of the Board being residents of Pepsu as are referred to in clause iii of sub section 1 of section 43 iii the sitting Sikh members of Parliament and the two Houses of State Legislature returned from any constituency or part thereof from the extended territories iv the Sikh members of Municipal Committees in the extended territories 64 506 vthe Presidents or Chairmen of such Singh Sabhas and the Managers or Secretaries of such Sikh educational institutions or Sikh religious organisations as are registered on or before the 1st December 1958 in the extended territories and vi the Sikh Sarpanches and Sikh Nayay Pardhans of Nagar Panchayats and Panchayati Adalats respectively Provided that the electors under clauses iii iv v and vi are not disqualified under the proviso to section 49 of the Act 3 4 5 It is worthy of note here that section 148 B occurs in chapter XII A and the heading of the chapter is Temporary and Transitional Provisions which indicates clearly enough that the provisions in sections 148 B to 148 F ate temporary and transitional provisions It has been stated at the Bar that in about a year a fresh election of the Board is due under section 43 A and the temporary and transitional provisions in chapter XII A are to be in force only for the intervening period Section 43 A which was also added by the amending Act of 1959 says section 43 A 1 Whenever a new Board within the meaning of section 51 is constituted it shall consist of i one hundred and forty elected members ii the Head Ministers of the Darbar Sahib Amritsar and the following four Takhats namely the Sri Takhat Sahib Amritsar the Sri Takhat Keshgarh Sahib Anandpur the Sri Takhat Patna Sahib Patna and the Sri Takhat Hazur Sahib Nanded and iii fifteen members resident in India of whom not more than five shall be residents of Punjab coopted by the members of the Board as described in clauses i and ii 2 The State Government shall as soon as may be call a meeting of the members of the Board described in clauses i and ii of sub section 1 for the 507 purpose of co opting the members described in clause iii of that sub section and after the members have been co opted the State Government shall notify the fact of the Board having been duly constituted and the date of the publication of the notification shall be deemed to be the date of the constitution of the Board Thus the new or permanent Board which will be constituted under section 43 A will consist of 1 one hundred and forty elected members 2 five designated members and 3 fifteen co opted members and there will be no room for any nominated members therein The petitioners have raised no objections to the constitution of the Board under section 43 A all their objections are confined to the constitution of the Board under section 148 B even though it is a transient provision for the transitional period only What then are these objections in so far as they bear on the alleged violation of the petitioners fundamental right under article 26 b of the Constitution Learned counsel for the petitioners has first commented on what he has characterised as undue haste in passing the amending Act of 1959 He has submitted that the Pepsu area came within the State of Punjab in November 1956 and for about two years the Punjab Government evinced no serious anxiety to extend the principal Act to that area but from November 16 1958 when the annual election of the Sikh Gurdwara Prabandhak Committee was held up to January 1959 when the amending Act of 1959 was passed hurried proceedings were taken to enact the amending law in question and so constitute the Board that a particular group of Sikhs might not regain the majority it had lost on November 16 1958 In our opinion these submissions we do not say whether they are right or wrong have no hearing on the question at issue before us The petitioners have not specifically alleged in their petition that the State Government has acted in any mala fide manner and whatever justification some people may feel in their criticisms of the political wisdom of a particular legislative or executive action this Court cannot be called 508 upon to embark on an enquiry into public policy or investigate into questions of political wisdom or even to pronounce upon motives of the legislature in enacting a law which it is otherwise competent to make We do not say that in pronouncing on the rights of the parties before it this Court must always stand aloof on the chill and distant heights of abstract logic and pay no heed to the great tides and currents which move society and men If and when the occasion demands for example when there is violation of a fundamental right guaranteed by the Constitution it will never hesitate to act But it is well to remember that a fundamental right such as freedom of religion is of an enduring character and must stand beyond the sweep of changing and deflecting forces of current opinion Our limited function in this case therefore is to examine the constitutionality of section 148 B and to that task we must now confine our attention The main argument of learned counsel for the petitioners is that article 26b gives to every religious denomination or any section thereof the right to manage its own affairs in matters of religion and the right is subject only to public order morality and health In this case according to him the right is given to all members of the Sikh denomination and not to any particular members thereof to manage Sikh gurdwaras therefore the right must be exercised by all Sikhs and they alone must elect their representatives to manage Sikh gurdwaras and to the extent that section 148 B departs from the aforesaid principle it con stitutes an infringement of the right guaranteed to the petitioners under article 26b of the Constitution We are unable to accept this argument as correct Article 26 of the Constitution so far as it is relevant for our purpose says article 26 Subject to public order morality and health every religious denomination or any section thereof shall have the right a b to manage its own affairs in matters of religion 509 d to administer such property in accordance with law The distinction between cls b and d strikes one at once So far as administration of its property is con cerned the right of a religious denomination is to be exercised in accordance with law but there is no such qualification in el In The COmmissioner Hindu Religious Endowments Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt 1 this distinction was pointed out by this Court and it was there observed The administration of its property by a religious denomination has thus been placed OD a different footing from the right to manage its own affairs in matter of religion The latter is a fundamental right which no legislature can take away whereas the former can be regulated by laws which the legislature can validly impose Secondly the expression used in cl b is in matters of religion In what sense has the word religion been used This was considered in two decisions of this Court The Commissioner Hindu Religious Endowments Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shiru Mutt 1 and Sri Venkataramana Devaru vs The State of Mysore 2 and it was hold that freedom of religion in our Constitution is not confined to religious beliefs only but extends to essential religious practices as well subject to the restrictions which the Constitution has laid down In The Commissioner Hindu Religious Endowments Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt 1 it was observed at p 1026 that under article 26b a religious denomination or Organisation enjoys complete autonomy in the matter of deciding as to what rites and ceremonies are essential according to the tenets of the religion they hold we emphasise here the word essential The same emphasis was laid in the later decision of Sri Venkataramana Devaru vs The State of Mysore 2 where it was said that matters of religion in article 26b include practices which are regarded by the community as part of its religion Two questions therefore 1 1023 1026 2 510 arise in connection with the argument of learned counsel for the petitioners 1 does section 148 B added to the principal Act by the amending Act of 1959 have reference only to administration of property of Sikh gurdwaras and therefore must be judged by cl d of article 26 or 2 does it affect matters of religion within the meaning of cl b of the said Article The argument on behalf of the petitioners is that the principal Act to which section 148_B has been added relates not merely to administration of properties of Sikh gurdwaras but also to matters of religion and in so far as section 148 B brings in new members into the Board it affects Sikhs in their religious affairs The argument on behalf of the respondent State is that matters of religion in the sense of essential beliefs and practices of the Sikh faith are left untouched by section 148 B and even other relevant sections of the principal Act do not interfere with Sikh religion In this connection our attention has been drawn to the provisions in Ch X which deal with the powers and duties of the Board and to those in Ch XI which deal with powers and duties of Committees Section 125 to which we have already referred states that the duty of the Board is to ensure that every Committee deals with the property and income of the gurdwara or gurdwaras it manages in accordance with the provisions of the Act and in fulfilment of that duty the Board has vested in it control direction and general superintendence over all committees appointed under the provisions of the Act Section 129 states section 129 The Board in any meeting may consider and discuss any matter with which it has power under this Act to deal and any matter directly connected with the Sikh religion but shall not consider or discuss or pass any resolution or order upon any other matter If section 129 is read subject to section 125 as the learned Advocate General for the State contends it should be read then the powers and duties of the Board in substance and effect relate to administration of gurdwara properties and matters ancillary thereto They have 511 hardly any reference to matters of religion Section 133 states generally the powers of Committees and one of the powers is I enforcing the proper observance of all ceremonies and religious observances in connexion with such gurdwara or gurdwaras and of taking all such measures as may be necessary to ensure the proper management of the gurdwara or gurdwaras and the efficient administration of the property income and endowments thereof Learned counsel for the petitioners has emphasised that part of the section which relates to I proper observance of all ceremonies and religious observances and has contended that as the Board is the committee in respect of some of the principal gurdwaras it has a duty to ensure proper observance of all essential religious ceremonies of the Sikh faith which according to him is a I matter of religion Under section 134 the Committee has power inter alia to dismiss an office holder or minister if he fails in the performance of any rituals and ceremonies in accordance with the teachings Of Sri Guru Granth Sahib or has ceased to be a Sikh it is contended that this power also relates to a matter of religion within the meaning of article 26b Without a fuller and more detailed examination of the provisions of the principal Act we hesitate to pronounce finally on the larger question if any of the other provisions of the principal Act affect matters of religion nor do we think it necessary to decide that larger question in the present case We are of the view that the present petition can be decided on a shorter ground even if we proceed on the assumption that some of the provisions of the principal Act relate to matters of religion and the Board either acting in exercise of its power of control direction and superintendence over other committees or in its capacity as the committee for certain gurdwaras can pass orders about matters of religion We may point out however that the preamble of the principal Act indicates that it is mainly a law to provide for the better administration of certain Sikh gurdwaras and it is admitted that in so far as the powers of the Board relate to mere administration of gurdwara properties in either 512 of its two capacities such administration must be in accordance with law and the appropriate legislature can lay down what the law should be The question which is decisive of the present petition is does section 148 B interfere in matters of religion Sections 133 and 134 of the principal Act are not impugned before us what is impugned is section 148 B That section has not in any way affected whatever powers the Board or Committee has under sections 133 and 134 of the principal Act The gravamen of the objections urged on behalf of the petitioners is that section 148 B introduces even though as a temporary measure some more designated Sikh Members into the Board by cl a of subs 1 thereof and further introduces the election of thirty five Sikhs from the Pepsu area into the Board by means of an indirect method that is by a limited Sikh electorate the members of which electorate are in their turn elected by Sikhs as well as non Sikhs In order to establish their case the petitioners must prove not merely that some provisions Of the principal Act refer to matters of religion but that the introduction of new members into the Board in respect of the extended territories of the Pepsu area in the manner envisaged by section 148 B violates by itself the right of the Sikhs in a matter of religion Learned counsel for the petitioners is thus forced to take up the stand that a direct election of the members of the Board by the entire Sikh community is itself a matter of the Sikh religion and therefore part of the content of the right Guaranteed under article 26b We do not think that such a stand is correct or justified by article 26 of the Constitution nor has any authoritative text been placed before us to show that a direct election by the entire Sikh community in the management of gurdwaras is part of the Sikh religion The principal Act as it stood before the amending Act of 1959 does not support any such contention However great our respect may be for the democratic principle of direct elections we do not think that having regard to the provisions of the principal Act and the circumstances in which section 148 B came to be added thereto the principle of direct 513 election on universal denominational suffrage can be raised to the pedestal of religion within the meaning of article 26b of the Constitution If it were so raised then the co option of some members which has not been challenged by the petitioners would also be violative of their fundamental right so also any restrictions which the principal Act or the rules made thereunder may impose in the matter of election or the exercise of the vote such as restrictions with regard to the age of the voter etc Obviously these are not matters of religion and we say without meaning any offence to anybody that to treat these as matters of religion is tantamount to confusing religion with current politics It is to be remembered that the principal Act constituted a Board representative of the Sikhs both inside Punjab and outside it that is why in the constitution of the Board there was provision for election nomination designation of the head ministers of certain principal Sikh gurdwaras and also co option The purpose obviously was to make the Board as representative as possible and because an Act passed by the Punjab legislature could not contain provisions for the election of members from constituencies outside the Punjab there arose the necessity for nomination designation and co option The designation of the head ministers of the five principal Sikh shrines may be also attributed to the reason that they were important functionaries who should be on the Board In 1953 nomination was done away with and the number of co opted members was increased to twentyfive of whom at least twelve were to be residents of Pepsu This was even before the principal Act was extended to the Pepsu area When the amending Act of 1959 extended the principal Act to the Pepsu area the problem at once arose as to how to give some representation to the Sikhs in the extended areas for the intervening period before the next election of the Board and also as a permanent measure section 148 B gives representation to those areas as an interim measure and section 43 A as a permanent measure Considering section 148 B in the light of these circumstances we 65 514 are unable to hold that it violates the fundamental right of the Sikhs under article 26b of the Constitution The method of representation for the extended areas during the interim period appears to us to be an arrangement dictated merely by considerations of convenience and expediency and does not involve any principle of religion The question before us is not whether a more satisfactory arrangement could have been made even for the interim period perhaps it could have been Learned counsel for the petitioners has pointed out that many Sikhs of influence and standing in the Pepsu area will have no vote for the interim period That may be unfortunate but is not a relevant consideration for determining the question before us namely whether there has been interference with freedom of religion We now proceed to consider the specific grievances which the petitioners have made in respect of the persons who come into the Board under section 148 B As to the members of the Interim Board Patiala who under cl a of sub section 1 of section 148 B are deemed to be members of the Board constituted under section 43 it is argued that they were appointed under a Punjab Government notification dated January 10 1958 and though they are Sikhs they do not represent the Sikh community and are mere nominees of Government furthermore they are not subject to the disqualifications mentioned in sections 45 and 46 of the Act in respect of elected and co opted members respectively We have pointed out earlier that the principal Act contained a provision before 1953 for nomination of 12 members by the Rajpramukh of Pepsu and after 1953 the co opted members included twelve residents of Pepsu By an order of the Maharaja of Patiala the Interim Gurdwara Board Patiala was constituted to look after certain gurdwaras of the Pepsu area and after merger the appointment was made by the Governor of the Punjab Under section 148 A which was also added to the principal Act by the amending Act of 1959 the Interim Gurdwara Board Patiala has ceased to function and under section 148 B1a the members of the Interim Board Patiala have become members 515 of the Board constituted under section 43 We are unable to hold that the designation of such members as an interim measure to represent those gurdwaras in the Pepsu area which they were actually managing is violative of any fundamental right nor do we think that the non application of the disqualifications stated in sections 45 and 46 of the Act to these members advances the case of the petitioners any further The principal Act did not contain any provisions as to disqualification of designated members it contained provisions for disqualification of elected nominated or co opted members and after nomination had ceased in 1953 of elected or co opted members only It is permissible to presume that the legislature knows that the members it is designating do not suffer from any disqualifications furthermore the petitioners have not even suggested in their petition that the members of the Interim Board Patiala suffer from any Of the disqualifications stated in section 45 or section 46 With regard to the thirty five Sikhs to be elected under cl b of sub section 1 of section 148 B there is a threefold contention It has been submitted that 1 the electorate detailed in sub section 2 of section 148 B is not representative of all the Sikhs 2 some of the members of the electorate like Sikh members of Parliament and Municipal Committees are in their turn elected by joint constituencies of Sikhs and non Sikhs and 3 some of the members of the electorate like Sikh Sarpanches and Sikh Naya Pradhans are in the service and under the influence of Government We do not agree that these considerations are determinative of the problem before us We have already said that the method of representation to the Board for the extended areas as an interim measure is not a matter of religion The circumstance that some members of the electorate are in their turn elected by constituencies consisting of Sikhs and non Sikhs is far too remote and indirect to constitute an infringement of freedom of religion The members of the electorate itself are all Sikhs and they have to elect thirty five Sikhs Unless one proceeds mechanically on mere abstract considerations there is no real basis for the 516 contention that non Sikhs can in any way influence the Board We do not agree that Sikh Sarpanches and Naya Pradhans are in the service of Government or that their inclusion as members of the electorate violates the right of the Sikhs under article 26 b of the Constitution It may not be quite irrelevant to point out here that the twelve members of the Interim Gurdwara Board Patiala plus thirty five elected Sikhs from the Pepsu area will be a minority as against 132 elected members and twenty five co opted members of the Board For the reasons given above we hold that the petitioners have failed to make out a case of violation of their fundamental right Accordingly the petition fails and is dismissed with costs Petition dismissed

Respondent I filed an election petition challenging the election of the appellant The security required to be deposited under section 117 Of the Representation of the People Act 1951 was made in the following terms Security deposits for Election Petition of Bargi Assembly Constituency No 97 Distt Jabalpur Madhya Pradesh Refundable by order of the Election Commission of India New Delhi Before the Election Tribunal the appellant made an applica tion alleging that there was non compliance with the provisions section 117 inasmuch as i the deposit was not in favour of the Secretary to the Election Commission and ii the amount was only refundable to the depositor and would not be payable to appellant in case the petition was dismissed under section 903 The Tribunal upheld the objections and dismissed the petition under section 003 Respondent I preferred an appeal under section 116 A of the Act to the High Court The High Court allowed the appeal set aside the order of the Tribunal and sent back the petition for trial The appellant contended that no appeal lay to the High Court and that there was non compliance with the provisions of s117 Held that an appeal lay to the High Court under section 116 A of the Act against the dismissal of the election petition under section 903 by the Tribunal The order passed by the Tribunal under section 903 was an order passed at the conclusion of the trial of the petition and was in substance and in law one under section 98 Once an election petition was entrusted to the Tribunal the trial started and any order passed by the Tribunal which concluded the trial was an order at the conclusion of the trial Harish Chandra Bajpai vs Tirloki Singh referred to Gulsher Ahmad vs Election Tribunal AIR 1958 Madh Pra 224 approved Held further that there had been substantial compliance with the provisions of section 117 of the Act Section 117 was not to be strictly or technically construed and a substantial compliance with its requirements was sufficient The security in this case 528 had been made in respect of the election petition in question and it had been credited towards the accounts of the Election Commission The use of the words refundable would not prevent the Election Commission from making an order of payment of the amount to the successful party Kamraj Naday vs Kunju Thevar AIR applied

Appeal No 296 of 1955 Appeal by special leave from the judgment and decree dated September 8 1952 of the Punjab High Court in Civil Regular Second Appeal No 327 of 1948 arising out of the judgment and decree dated November 21 1947 of the Court of District Judge Amritsar in Appeal No 212 of 1946 from the judgment and decree dated August 20 1946 of the Subordinate Judge 1st Class Amritsar in Suit No 297 of 1945 Achhru Ram and R section Narula for the appellant Gurbachan Singh and Madan Lal Kapur for the respondent April 23 The Judgment of the Court was delivered by SARKAR J The suit out of which this appeal arises concerns the right to certain plots of land in village Sultanwind Tehsil and District Amritsar in the Punjab It raises a question of the Punjab customs Sahib Singh the last male owner of the lands in dispute died in December 1918 leaving a widow Nihal Kaur The widow succeeded to the lands but on tier remarriage soon thereafter she was divested of them and they passed to Sahib Singh s mother Kishen Kaur who died on November 121942 On Kishen Kaur s death disputes arose between Sahib Singh s sister Jeo the respondent in this appeal 783 and his agnatic relation the appellant Ujagar Singh as to the ownership of the lands The Tehsildar entered the respondent s name as the owner of the lands in the revenue records but on appeal by the appellant the Collector of Amritsar directed the name of the respondent to be removed and the appellant s name to be entered in its place On June 11 1945 the respondent filed a suit against the appellant asking for a declaration that she was the owner of the lands In paragraph 3 of the plaint it was stated that the respondent came into possession of the properties left by Kishen Kaur as the heir of her father and brother according to the Zamindara Custom prevalent in Mauza Sultanwind among the people of the Got Sub caste Bheniwal and the custom of the family of her father In paragraph 5 it was stated According to the afore mentioned special custom the right of inheritance of the daughter and her descendants and in their absence that of the sister and her descendants to the property left by her father and brother is preferential to that of the collaterals beyond the fifth degree no matter whether the property is ancestral or self acquired The defence taken in the written statement of the appellant was that According to the General Custom and the Custom of the District of Amritsar the plaintiff as his sister is in no way the heir of the property left by her brother in presence of the reversionary heirs no matter whether the land is ancestral qua reversionary heirs or it is self acquired There is no particular family Got or village custom of the District of Amritsar In substance the position taken by the appellant was that he as the agnatic relation or collateral of Sahib Singh was entitled to the properties under the general custom of the Punjab in preference to the respondent The question that the suit involved was who was the preferential heir of Sahib Singh The suit was heard by the Subordinate Judge Amritsar who found that the appellant was a collateral of Sahib Singh of the eighth degree and that the properties in dispute were not ancestral He held that the respondent had based her claim on a special 784 custom but bad not been able to establish it by necessary evidence and therefore the appellant was to be considered as the preferential heir under the general Custom The respondent then appealed to the District Judge Amritsar That learned Judge confirmed the findings of the Court below that the land was not ancestral and that the appellant was a collateral of Sahib Singh of the eighth degree He then held that the general custom of the Punjab among the agriculturists which the parties were was as stated in para 24 of Rattigan s Digest of the Customary Law of the Punjab that sisters are usually excluded as well as their issues and therefore put the onus of proving any special custom entitling the sister to succeed on the respondent On the evidence led by the respondent he came to the conclusion that she had failed to discharge the onus and thereupon dismissed the appeal The respondent took the matter up in further appeal to the High Court of Punjab Kapur J who delivered the main judgment of the High Court observed that para 24 of Rattigan s Digest did not lay down the custom correctly and that the statement there was too broad He held that the onus of proving the custom whereby a sister was excluded from the inheritance lay on the appellant and that he had failed to discharge that onus He also held that even if the onus lay on the respondent of proving a custom giving her the right to succeed she had succeeded in discharging that onus Soni J another member of the bench which heard the appeal delivered a short judgment in effect agreeing with the view of Kapur J In the result the High Court allowed the appeal and upheld the respondent s claim The present appeal is from this judgment of the High Court It is not in dispute that the parties belong to an agriculturist Jat tribe and are members of the Bheniwal sub caste of village Sultanwind in Tehsil and District Amritsar The genealogical table on the record would show that the appellant was a ninth degree collateral of Sahib Singh and this is what the High Court found It was not in dispute in the High Court 785 nor before us that the properties were not the ancestral properties of Sahib Singh Mr Achhru Ram appearing for the appellant contended that the learned Judges of the High Court were wrong in placing the onus on his client His contention was that the general custom in the Punjab among the agriculturist tribes was that sisters were excluded by collaterals in the matter of succession to both ancestral and non ancestral properties and that custom had been correctly set out in Rattigan s Digest That being so according to him the respondent was not entitled to the properties unless she established a special custom of the tribe or family entitling her to succeed in preference to the collaterals and the onus of doing this must therefore be on her He contended that she had failed to discharge the onus Eminent Judges have from time to time pointed out that the use of the expression the general custom of the Punjab is inaccurate Plowden J in Ralla vs Buddha 1 at page 223 said It seems expedient to point out that there is strictly speaking no such thing as a custom or a general custom of the Punjab in the same sense as there is a common law of Englanda general custom applicable to all persons throughout the province subject like the English common law to modification in its application by a special custom of a class or by a local custom Young C J said in Mussammat Semon vs Shahu 2 There is no such thing as general customary law known to the Legislature In Kesar Singh vs Achhar Singh 3 Addison A C J said that the expression general custom of the Punjab was clearly a misnomer The reason given for saying that there is no such thing as general custom in the Punjab is that custom there is tribal and even with the same tribe there are different customs for different localities So Sir Charles Roe had said in his Tribal Law in the Punjab Under such circumstances seeing that the origin of all the tribes is not the same and that even with 1 50 PR I893 2 Lah 10 11 3 Lah 101 106 99 786 tribes of the same origin local and social conditions have greatly differed it would be impossible that there could be a single body of Customary or Tribal law common to the whole of the Punjab see Rattigan s Digest 13th Ed p 157 Each tribe has its own customs and in the Punjab there are many tribes None the less however the expression general custom of the Punjab has been frequently used It has been used for a purpose which appears clearly from the observations of Addison J in Kartar Singh vs Mst Preeto 1 set out below In fact it had become customary even in the Courts to look upon custom as a thing generally followed and to place the burden of proof upon any person who asserted that his custom was not the same as the so called general custom of the Province If this person succeeded in proving the custom he alleged the name I special custom was given to it The reported decisions very often proceeded on the basis that if there was a general custom it did not have to be proved that anybody wishing to rely on a custom at variance with the general custom must prove it or fail in his claim It seems to us wrong to say that a general custom need never be proved It is stated in Halsbury s Laws of England 3rd Ed Vol 11 article 319 at p 171 All customs of which the Courts do not take the judicial notice must be clearly proved to exist the onus of establishing them being upon the parties relying upon their existence No distinction is here made between a general custom and other customs Section 48 of the Evidence Act also contemplates the Proof of a general custom In Daya Ram vs Sohel Singh Robertson J said at p 410 It lies upon the person asserting that he is ruled in regard to a particular matter by custom to prove that he is so governed and not by personal law and further to prove what the particular custom is These observations were approved by the Judicial 1 Lah 296 299 2 110 PR 1906 787 Committee in Abdul HuSsein Khan vs Bibi Sona Dero 1 It therefore appears to us that the ordinary rule is that all customs general or otherwise have to be proved Under section 57 of the Evidence Act however nothing need be proved of which courts can take judicial notice Therefore it is said that if there is a custom of which the courts can take judicial notice it need not be proved Now the circumstances in which the courts can take judicial notice of a custom were stated by Lord Dunedin in Raja Rama Rao vs Raja of Pittapur 2 in the following words When a custom or usage whether in regard to a tenure or a contract or a family right is repeatedly brought to the notice of the Courts of a country the Courts may hold that custom or usage to be introduced into the law without necessity of proof in each individual case When a custom has been so recognised by the courts it passes into the law of the land and the proof of it then becomes unnecessary under section 571 of the Evidence Act It appears to us that in the courts in the Punjab the expression general custom has really been used in this sense namely that a custom has by repeated recognition by courts become entitled to judicial notice as was said in Bawa Singh vs Mt Taro and Sukhwant Kaur vs Balwant Singh 4 Is there then a custom that sisters are excluded by collaterals in the matter of inheritance to non ancestral properties of which the courts ought to take judicial notice Mr Achhru Ram contends that such is the position and it is recognised as such in Rattigan s Digest paragraph 24 There is no doubt that Rattigan s Digest is of the highest authority on questions of the customs of the Punjab But we can take judicial notice of a statement of custom therein contained only if it has been well recognised by decisions of courts of law We have been taken through a large number of reported decisions on the question and it seems to us that the custom as stated by Rattigan 1 1917 LR 45 IA 1O 13 3 AIR 1951 Simla 239 2 1918 LR 45 IA 148 154 155 4 AIR 1951 Simla 242 788 cannot be said to have been so well recognised as to have become entitled to judicial notice from courts without further proof We find in the law reports a very large number of cases on the subject of a sister s right to inherit one group of which takes the view that there is no custom excluding sisters from inheritance when there are collateral relations of the last male holder and another group taking the contrary view It would neither be possible nor profitable to refer to all these cases here but some may be mentioned We shall first mention the cases which do not recognise that a custom excluding sisters from the inheritance exists In Makhan vs Musammat Nur Bhari 1 certain seventh degree collaterals of the last male holder sued the latter s sister for possession of his properties No claim appears there to have been made by the collaterals that there was any general custom entitling them to succeed in preference to the sister The case having been returned to the Chief Court after the enquiry directed by it Elsmie J held The result of the further enquiry is to show that the plaintiffs have been unable to prove that they are by custom entitled to exclude the sister of the last owner On the other hand there is some evidence though not much to show that sisters have inherited It is indeed quite clear that no well defined custom is made out one way or the other The result was that the sister was held entitled to a share of the properties that came to her under the Mohammedan law the parties being Mohammedans and no custom having been proved one way or the other This was a case decided in 1884 In Sheran vs Mussammat Sharman 2 in which the collaterals were the plaintiffs and the sister the defendant it was observed On the question of inheritance for the plaintiffs it has been contended that under the general Customary Law of the Punjab governing agricultural communities the collaterals in the male line fifth in 1 116 PR 1884 2 117 PR 1901 789 descent from the common ancestor exclude sisters but we are not prepared to Assent to the wide proposition that such a general custom exists It was also there held that there was no general custom in the Mooltan District whereby collaterals were preferred to a sister In the end no custom having been found to exist favouring either side and the parties being Mahomedans the Mohammedan law was applied and the sister got a share In Bholi vs Kahna 1 it was remarked that paragraph 24 of Rattigan s Digest was rather broadly stated and hardly warranted by the authorities quoted for and against In Mussammat Bhari vs Khanun 2 where the contest was between the ninth degree collaterals and a sister the onus of proving that the collaterals were entitled to succeed in preference to the sister was placed on the collaterals who were the plaintiffs in the suit and as the collaterals were unable to discharge the onus placed on them they lost In Mst Fatima Bibi vs Shah Nawaz 3 it was said that the general rule laid down in paragraph 24 of Rattigan s Digest was open to the criticism that it was based mainly on authorities regarding ancestral property and on the generally accepted principles of agnatic succession which do not apply in the case of self acquired property It was also held that the reported decisions were not such that a general rule could be said to exist on the question of a sister s right to succeed which was so widely accepted that it would justify a court in coming to any definite conclusion based on custom In Samo vs Sahu 4 it was said that the court below was wrong in placing the onus on the sister in a contest between her and the collaterals of the fourth degree for there was no such thing as general customary law known to the legislature and that Rattigan s Digest on Customary Law merely showed that according to judicial decisions a large number of tribes were governed by certain customs in certain matters 1 35 PR 1909 2 20 P R 1919 3 Lah 4 Lah 10 11 790 In Jagat Singh vs Puran Singh 1 a case decided in 1944 it was observed at p 369 As I have indicated above there is no rule of special custom when a contest arises between a sister or a sister s on against a near collateral Then one has to fall back on general custom There is no rule of general custom on that point It is no doubt true that in paragraph 24 of Rattigan s Digest it has been stated that sisters and their sons are in general not heirs but that has been said in very wide terms It may be applicable to cases of ancestral property but it is difficult to say there is any special rule of general custom when a contest arises between a sister and collaterals of the third or fifth degree and the property is self acquired In this case neither a general nor a special custom having been proved to exist the Court based its decision on the personal law of the parties namely the Hindu law The cases decided since 1950 all take the view that there is no general custom giving collaterals preference to sisters in matters of inheritance They are Sukhwant Kaur vs Balwant Singh supra Maulu vs Mst Ishro 2 Harnam Singh vs Mst Gurdev Kaur 3 and Shrimati Bui vs Ganga Singh 4 We now come to the other group of cases which seem to recognise the general custom excluding sisters from inheritance when there are collaterals of the last male holder In Hamira vs Ram Singh 5 the Court approved of the decision in Shidan vs Fazal Shah 6 the judgment in which is set out as an appendix to the report In the latter case the contest was between a sister and collaterals of the seventh degree and it was held that the onus of proving a custom entitling the sisters to succeed rested on them and this was based on paragraph 24 of Rattigan s Digest an entry in the Riwaji i am which applied to the parties and certain reported decisions Obviously Rattigan was relied upon 1 2 1050 3 4 5 134 PR 1907 6 1907 PR at p 646 791 In Harnamon vs Santa Singh 1 it was said that the burden of proving that the sister was entitled to succeed in preference to a collateral lay on her The same view was taken in Musammat Nurbhari vs Abdul Ghani Khan 2 Mussammat Hussein Bibi vs Nigahia 3 Jagu vs Bhago 4 Began vs Ali Gohar 5 Kirpa vs Bakshi Singh 6 case decided in 1944 Santi in 1944 and Mussammat Ratni vs Harwant Singh 7In some of these cases paragraph 24 of Rattigan s Digest was expressly approved of as applying to nonancestral properties It will thus appear that there is a formidable array of authorities in support of either view In this state of conflict of judicial decisions we are not prepared to say that a custom giving preference to collaterals over sisters in the matter of inheritance to non ancestral properties has been so widely or uniformly recognised by courts as would justify us in taking judicial notice of it It is important also to note that it is recognised that a Punjab custom is fluid and capable of adapting itself to varying conditions as stated in Hassan vs Jahana 8 and that the decisions for the last ten years are uniformly against the view expressed in paragraph 24 of Rattigan s Digest We there fore come to the conclusion that the High Court was right in its view that it could not be held on the authority of paragraph 24 in Rattigan s Digest that a general custom excluding sisters from inheritance as against collaterals existed It was then said that in the plaint it had been admitted by the respondent that there was a general custom as alleged by the appellant and so no proof of that general custom was required in this case We do not think this contention is justified No doubt in her plaint the respondent referred to a custom entitling her to succeed and termed it a special custom We are unable to read the reference to a special custom as 1 I 2 100 PR 1916 3 4 5 AIR 1934 Lah 6 7 8 71 PR 1904 792 amounting to an admission of a general custom or its terms That being the position we have to see if either side led any evidence in support of its claim So far as the appellant is concerned he has relied on the alleged general custom and sought to support it by reference to paragraph 24 of Rattigan s Digest It view of what we have said earlier we do not think that Rattigan s Digest can be taken as correctly laying down the custom on the point Neither do we think that the reported decisions show the existence of any such general custom There is nothing else on which the appellant has sought to rely We therefore think that the appellant has failed to establish the custom alleged by him We have next to see whether the respondent has proved the custom which she set up We think that she has The High Court has discussed the evidence led by the respondent and found it acceptable We have no reason to take a contrary view Some reference to the evidence may now be made exhibit P 4 Settlement Record of 1852 proves that in the village Sultanwind Sajja Singh and Majja Singh succeeded to the properties of Nodh Singh as his sister s sons in the presence of collaterals Mr Achhru Ram contended that the statement in exhibit P 4 that Sajja Singh and Majja Singh were the sister s sons of Nodh Singh was wrong for in exhibit P 5 the Settlement Records of 1891 and 1892 they were described as the daughter s sons of Nodh Singh and Baghel Singh his brother He contended that on the authorities it is clear that on a conflict between two settlement records the later one in date has to be accepted That appears to have been held in a number of cases of which Alo vs Sher 1 may be mentioned But it seems to us that this is a point which should have been raised in the trial Court which does not appear to have been done for then the respondent could have led evidence to show which of the two settlement records put the matter correctly exhibit P 9 which is a settlement record of 1852 of the same village shows that on Gandhi s 1 AIR 1927 Lah 793 death his sister s son succeeded to his properties though there were collaterals Mr Achhru Ram s comment was that in 1852 things were so unsettled in the Punjab that no one cared for lands and that was the reason why the collaterals allowed Gandhi s sister s son to succeed to his properties This is an explanation which we are unable to accept Exhibit P 7 is a settlement document of the Bheniwal tribe in the village Sultanwind prepared in 1891 92 It shows that Mst Chandi the sister of Buta Singh succeeded to his properties It was said that the pedigree did not show that any collateral was alive But this is not right because it shows that Buta Singh s great grand uncle Tara Singh was alive Mr Achhru Ram says that that must be a mistake and Tara Singh who was Buta Singh s great grand uncle could not have been alive when the latter died This again is a matter which should have been cleared up in the trial Court and we do not think it right to speculate about it It remains to consider two entries in the Riwaji iam We have first the Riwaji i am of 1913 14 The entry there is in this form Q 70 Does property ever devolve on sisters andor upon their sons A All tribes The property never devolves upon sisters and their issues At the foot the case of Bholi vs Kahna 1 is cited Now it is well established that Riwaji i am entries are to be taken as referring to customs relating to succession to ancestral properties unless it is stated to be otherwise So it was stated in the Full Bench decision of the Lahore High Court in Mst Hurmate vs Hoshiaru 2 at p 235 It is reasonable therefore to assume that when manuals of Customary law were originally prepared and subsequently revised the persons questioned unless specifically told to the contrary could normally reply in the light of their own interest alone and that as stated above was confined to the ancestral property 1 35 PR 1909 2 Lah228 235 100 794 only The fact that on some occasions the questioner had particularly drawn some distinction between ancestral and non ancestral property would not have put them on their guard in every case considering their lack of education and lack of intelligence in general Similarly the use of the term in no case or under no circumstances would refer to ancestral property only and not be extended so as to cover selfacquired property unless the context favoured that construction The Full Bench was really authoritatively laying down a rule which had been the prevailing opinion in the courts in the Punjab In the Riwaji i am of 1913 14 we find nothing in the context to show that the answer there recorded was intended to apply to self acquired property That being so it does not prove any custom against the right of a sister to inherit the self acquired property of her brother The other Riwaji i am was that of the year 1940 It was in these terms Q 68 Does property ever devolve upon sisters or sister s son A All tribe 1 In the case of an unmarried sister or sisters the property is entered in her or their name till marriage 2 Married sister or sisters or their descendants did not get the property in any case Here again there is nothing in the context to indicate that the answers were given in regard to nonancestral property So this does not help the appellant either In this Riwaji i am eight instances are given Some of them deal with the self acquired property That does not in our opinion indicate that the answer recorded in the Riwaji i am was intended to cover succession to self acquired property also It is not disputed that the instances mentioned under the entries in the Riwaji i am are often collected by the officer in charge of the preparation of the record It is impossible to say whether any and if so which instance recorded in the Riwaji i am had been supplied 795 by the tribesmen in answer to questions put to them by the Settlement Officer It is not possible therefore to say that there is any indication in the instances in this Riwaji i am entry that the answers were intended to cover self acquired property also Now of the eight instances given in the Riwaji i am two are concerned with self acquired property where there were no collatetals and the sisters were allowed to succeed The remaining six are concerned with ancestral property In four of these the last male owner died without leaving any reversioner and in each such case the married sisters succeeded to the property In the fifth one the sisters were unmarried at the time of the brother s death and they were allowed to take possession of the properties But this instance shows that on their marriages taking place they were dispossessed of the properties which apparently thereupon went to the collaterals These seven instances therefore do not help either side They show that sisters were allowed to succeed in respect of both kinds of properties in the absence of any collaterals and that sisters were on their marriages divested of the ancestral properties to which they had succeeded on their brothers deaths they being at that time unmarried The last instance deals with the Rajput Mohammedan tribe of Tehsil Ajnala which is in the District Amritsar the district to which the parties to the present litigation belong This instance shows that a sister was allowed to succeed to the ancestral property left by the brother in preference to his collaterals of the sixth degree This therefore is an instance of a custom in a neighbouring Tehsil under which sisters were allowed to succeed in the presence of collaterals nearer in degree than the collateral in the present case In these circumstances we agree with the learned Judges of the High Court that the respondent was able to prove a custom whereby a sister was entitled to succeed in preference to the collateral relations of her brother We think it also right to say that even if it had been held that the respondent was not able to establish a custom entitling her to succeed she would get the 796 properties under the Hindu law The parties are Sikhs to whom the Hindu law applies Since the Hindu Law of Inheritance Amendment Act 1929 a sister is an heir under the Hindu law in preference to collaterals and that Act would be applicable to the devolution in this case It is however said that as the respondent had not made any claim in the plaint on the basis of Hindu law but on the contrary relied on custom it was not open to her to fall back on the Hindu law on failing to establish the custom We do not think that this is the correct position Section 5 of the provides that in questions regarding succession the rule of decision shall be a any custom applicable to the parties b the personal law of the parties except in so far as modified by custom or legislation In the Full Bench case of Daya Ram vs Sohil Singh 1 Robertson J said at p 410 It therefore appears to me clear that when either party to a suit sets up custom as a rule of decision it lies upon him to prove the custom which be seeks to apply If he fails to do so clause b of section 5 of the applies and the rule of decision must be the personal law of the parties subject to other provisions of the clause As we have earlier said this observation was approved by the Judicial Committee in Abdul Hussain Khan vs Bibi Sona Dero 2 In Fatima Bibi vs Shah Nawaz 3 a case to which we have earlier referred the Court allowed the plaintiff s sisters who had based their claim on custom and not on the personal law to fall back on Mohammedan law the personal law of the parties on their failure to establish the custom no custom against them having been proved by the collaterals There are a number of other authorities to which it is not necessary to refer in which personal law was resorted to when no custom on either side was established We agree that that is the correct view to take We therefore think that even if the respondent had been unable to prove the custom in 1 110 PR 1906 2 1917 LR 45 IA 10 13 3 Lah 797 her favour she is entitled to succeed in the suit on the basis of the personal law of the parties namely the Hindu law Further we see no prejudice to the appellant if such a course is adopted It is not disputed that if the Hindu law applied the respondent would be entitled to the properties in preference to the appellant The only defence to the claim under the Hindu law that the appellant could take would be a custom The custom on which the appellant relied for his case was a general custom entitling the collaterals to succeed in preference to sisters We have earlier held that no such general custom has been proved in this case There fore it seems to us in the interest of justice and for the reason that litigation should come to an end that it is right that the respondent should succeed in the suit as her brother s heir under the Hindu law There remains one other matter to be mentioned The respondent had filed an application for an order that by reason of certain agreements and certain proceedings arising out of the decree in her favour passed in this case by the High Court the appellant should not have been given leave by this Court to institute the present appeal and the leave granted under article 136 of the Constitution should be revoked As in our view the respondent succeeds on the merits of the case we think it unnecessary to express any opinion on this question In the result we dismiss the appeal with costs Appeal dismissed

Sub section 1 Of section 35 of the Indian Income tax Act 1922 provided the Income tax officer may on his own motion rectify any mistake apparent from the record and shall rectify any such mistake which has been brought to his notice by an assesses Provided that no such rectification shall be made having the effect of enhancing or reducing a 548 refund unless the Income tax Officer has given notice to the assessee of his intention so to do and has allowed him a reasonable opportunity of being heard The appellant a private limited company was assessed to income tax for the assessment year 1953 54 under the provisions of the Indian Income tax Act 1922 and as per the assessment order dated June 30 1955 the amount of depreciation allowed under section 102vi of the Act was Rs 3481O5 On August 8 1955 the appellant made an application before the Income tax Officer for rectification of the order under section 35 of the Act pointing out certain mistakes in calculation in regard to the depreciation amount By his order of February 27 1956 the Income tax Officer corrected the written down value of the different properties of the appellant and determined the total allowable depreciation to be Rs 194074 The appellant challenged the order dated February 27 1956 on the grounds inter alia 1 that he was not given a written notice of the intended rectification of the written down value 2 that the provisions under which the Income tax Officer acted ie section 35 of the Act was not meant for the purpose of making corrections in written down values the correct provision being section 34 which specifically refers to excessive depreciation and 3 that in any case he had exceeded his jurisdiction under section 35 of the Act in calculating the depreciation on the written down value of the buildings and machinery of the appellant acting suo motu and that he could correct only those mistakes which had been pointed out by it It was found that notice was given to the appellant of the intended determination of the written down value though it was not a written notice and that the matter was discussed with its representative Held i that the object of the provision as to notice under section 35 Of the Indian Income tax Act 1922 is that no order should be passed to the detriment of an assessee without affording him an opportunity for being heard and that if as a matter of factthe assessee knew of the proceedings and the matter had been discussed with him an adverse order would not be invalid merely because no written notice was given 2 that the word record used in the phrase mistake apparent from the record in section 35I of the Act refers not only to the order of assessment but comprises all proceedings on which the assessment order is based and the Income tax Officer is entitled for the purpose of exercising his jurisdiction under section 35 to look into the whole evidence and the law applicable to ascertain whether there was an error If he doubts the written down value of the previous year it is open to him to check up the previous calculations and if he finds any mistake to make fresh calculations in accordance with the law applicable including the rules made thereunder A mistake contemplated by this section is not one which is 549 to be discovered as a result of an argument but it is open to the Income tax Officer to examine the record including the evidence and if he discovers any mistake he is entitled to rectify the error provided that if the result is enhancement of assessment or reducing the refund then notice has to be given to the assessee and he should be allowed a reasonable opportunity of being heard Venkatachalam vs Bombay Dyeing Mfg Co Ltd Commissioner of Income tax vs Khemchand Ramdas 1938 LR 65 IA 236 and Sidhramappa Andannappa Manviv Commissioner of Income tax relied on

iminal Appeal No 19 of 1957 Appeal by special leave from the judgment and order dated March 7 1956 of the former PEPSU High Court in Criminal Revision No 45 of 1956 arising out of the judgment and order dated February 22 1956 of the Additional Sessions Judge Patiala in Criminal Appeal No 17536 of 1955 56 Pritam Singh Safe for the appellant N section Bindra and T M Sen for the respondent April 21 The Judgment of the Court was deliveredby KAPUR J This is an appeal by special leave against the judgment and order of the High Court of PEPSU passed in revision The appellant was a sub Inspector of Police who at the relevant time was the Station House Officer in charge Shehna police station in the erstwhile PEPSU State He was convicted under section 193 Indian Penal Code by a First Class Magistrate and his appeal to the Sessions Judge Patiala was dismissed except as to sentence He took a revision to the PEPSU High Court but that was also dismissed This appeal has arisen in the following circumstances One Surjit Singh so Risaldar Waryam Singh was arrested on September 25 1953 at Barnala in PEPSU State by the Police Inspector Jaswant Singh He was kept in the lock up at Barnala and on the following day his custody was handed over to the appellant and he was taken to Shehna and was kept in custody it 729 is not clear under what section in the police station lock up at Shehna Surjit Singh was there kept in custody from September 26 1953 till October 10 1953 when at about 10 pm he was surreptitiously removed to Police Station Dialpur and then to Police Post Hamirgarh and from there was taken to Police Station Baga Purana in Ferozepur District of the then Punjab An application under section 491 of the Criminal Procedure Code and under article 226 of the Constitution was made for a writ of Habeas Corpus and Mandamus in the High Court of PEPSU In that petition it was alleged that Surjit Singh was being kept in unlawful custody without any charge being made and without obtaining a remand by a Magistrate In reply to this an affidavit dated October 13 1953 was filed by the appel lant in which he stated that Surjit Singh had association with notorious dacoits that he the appellant had never taken him into custody at any time that the said Surjit Singh was absconding and had not been arrested in spite of the best efforts of the police that at the time of the making of the affidavit he was not in the appellant s custody and that it was incorrect that Inspector Jaswant Singh had ever entrusted Surjit Singh to his appellant s custody He also stated that no petition had been brought to him nor had he received any telegram in connection with the custody of Surjit Singh This affidavit was affirmed as follows I solemnly affirm that the facts stated from paras Nos I to 7 are true to the best of my knowledge and belief and nothing which is relevant to this case has been kept back from this Hon ble Court As both the parties admitted before the High Court that Surjit Singh was not in the custody of the appellant the petition was dismissed On November 9 1953 the brother of Surjit Singh made an application under section 476 Criminal Procedure Code for the prosecution of Inspector Jaswant Singh and the appellant for perjury under section 193 Indian Penal Code in that they had filed false affidavits This matter was heard by another learned Judge of that Court who ordered the 92 730 prosecution of the appellant and directed the Registrar of the High Court to file a complaint which was filed The complaint was taken cognizance of by the First Class Magistrate at Patiala who convicted the appellant and sentenced him to nine months imprisonment and a fine of Rs 300 and in default to undergo simple imprisonment for two months The appellant took an appeal to the Sessions Judge Patiala who confirmed the order of conviction but reduced the sentence to one of three months simple imprisonment and a fine of Rs 50 and in default one month s simple imprisonment a revision against this order was dismissed in limine by the Chief Justice although he gave reasons for dismissing it The appellant then obtained special leave from this Court On behalf of the appellant the first contention raised was that the appellant was not bound to file an affidavit and therefore he could not be convicted under section 193 Indian Penal Code because his case did not fall under section 191 Indian Penal Code In support of his contention he relied upon the Rules of the PEPSU High Court framed for the purpose of proceedings under article 226 and section 4912 Criminal Procedure Code for the issuing of writs of Habeas Corpus He also referred to the Rules made by that Court for the issuing of writs of Mandamus Prohibition Quo Warranto and Certiorari under article 226 and submitted that there was no Rule in the former ie for writ of Habeas Corpus requiring a return to be made on behalf of the res pondent to be sup ported by an affidavit whereas in the latter ie issuing of writs of Mandamus etc an affidavit was necessary and therefore it was submitted that section 191 was inapplicable Rule 2 of the Rules of the Court required that when a Judge was of the opinion that prima facie case had been made out for granting the application a rule nisi was to issue calling upon the person or persons against whom the order was sought to appear before the Court and to show cause why such an order should not be made As has been pointed out in Greene vs Home Secretary 1 which was a case under Reg 18 B of the Defence of the 1 302 731 Realm Act the whole object of proceedings for a writ of Habeas Corpus is to make them expeditious to keep them as free from technicality as possible and to keep them as simple as possible The incalculable value of Habeas Corpus is that it enables the immediate determination of the right to the appellant s freedom Lord Wright When there is no question of fact to be examined or determined no affidavit is needed As soon as there emerges a fact into which the Court feels it should enquire the necessity for an affidavit arises Ordinarily an affidavit may not be necessary in making the return if the detention is under orders of the detaining authority in exercise of its plenary discretion as in Liversidge vs Anderson 1 and in Greene s case 2 or a person is detained under the orders of a Court But where the detention is as it was in the present case it becomes necessary for the detaining authority to justify its action by disclosing facts which would show to the satisfaction of the Court that the custody is not impro per Where the prisoner says I do not know why I have been detained I have done no wrong it is for the detaining authority to justify the custody When issues of fact are raised and the actions of the police officers as in the present case are expressly challenged and facts are set out which if unrebutted and unexplained would be sufficient for the writ to issue an affidavit becomes necessary It cannot be said therefore that in the present case the appellant was not legally bound to place facts and circumstances before the Court to justify the detention of Surjit Singh and this could be done by an affidavit Section 4 of the Oaths Act lays down the authority to administer oaths and affirmations and it prescribes the courts and persons authorised to administer by themselves or by their officers empowered in that behalf oaths and affirmations in discharge of the duties or in exercise of the powers imposed upon them and they are all courts and persons having by law the authority to receive evidence Section 5 prescribes the persons by whom oaths or affirmations must be 1 2 302 732 made and they include all witnesses i e all persons who may lawfully be required to give evidence by or before any court These two sections show that the High Court or its officers were authorised to administer the oath and as the appellant was stating facts as evidence before the High Court he had to make the oath or affirmation and was bound to state the truth Section 14 of that Act is in the following words section 14 Every person giving evidence on any subject before any Court or person hereby authorised to administer oaths and affirmations shall be bound to state the truth on such subject As the appellant was giving evidence on his own behalf in that he was denying the allegation made in the affidavit of the brother of Surjit Singh he was bound to state the truth on the subject on which he was making the statement The contention therefore that under section 191 of the Indian Penal Code the relevant portion of which is section 191 Whoever being legally bound by an oath or by an express provision of law to state the truth makes any statement which is false and which he either knows or believes to be false or does not believe to be true is said to give false evidence the appellant was not legally bound by oath to state the truth cannot be supported On the other hand at the stage of the proceedings in the High Court where it was being alleged that Surjit Singh was being detained by the appellant illegally it was necessary for the appellant to make an affidavit in making a return and therefore if the statement is false as it has been found to be then he has committed an offence under section 193 The opening words of section 191 whoever being legally bound by an oath or by an express provision of law to state the truth do not support the submission that a man who is not bound under the law to make an affidavit can if he does make one deliberately refrain from stating truthfully the facts which are within his knowledge The meaning of these words is that whenever in a court of law a person binds himself on oath to state the truth he is bound to state the 733 truth and he cannot be heard to say that he should not have gone into the witness box or should not have made an affidavit and therefore the submission that any false statement which he had made after taking the oath is not covered by the words of section 191 India Penal Code is not supportable Whenever a man makes a statement in court on oath he is bound to state the truth and if he does not he makes himself liable under the provisions of section 193 It is no defence to say that he was not bound to enter the witness box A defendant or even a plaintiff is not bound to go into the witness box but if either of them chooses to do so he cannot after he has taken the oath to make a truthful statement state anything which is false Indeed the very sanctity of the oath re quires that a person put on oath must state the truth In our opinion this contention is wholly devoid of force and must be repelled It was then contended that the officer before whom the appellant swore the affidavit i e the Deputy Registrar of the High Court of PEPSU was not authorised to administer oaths That officer as a witness for the prosecution has stated that he could administer an oath and therefore this contention of the appellant is also without any force and must be repelled It was also argued that the affidavit filed by the appellant was affirmed as being true to the best of knowledge and belief and therefore it could not be said as to which part was true to the appellant s knowledge and which to his belief We have read the affidavit which consists of 7 paragraphs and each paragraph relates to affirmation of a fact which if true could only be so to the appellant s knowledge But even belief would fall under Explanation 2 to section 191 which is as under Explanation 2 to section 191 A false statement as to the belief of the person attesting is within the meaning of this section and a person may be guilty of giving false evidence by stating that he believes a thing which he does not believe as well as by stating that he knows a thing which he does not know 734 The appellant relied upon a judgment of the Allahabad High Court in Emperor vs Lachmi Narain 1 But unless there was something peculiar in the facts of that case it cannot be considered to be good law It does not even take into consideration Explanation 2 of section 191 Lastly it was urged that the procedure adopted by the Magistrate was erroneous in that he did not hold an enquiry as required under sections 200 and 202 Criminal Procedure Code the former of which is expressly mentioned in sub section 2 of section 476 Criminal Procedure Code That contention is equally untenable because under section 200 proviso aa it is not necessary for a Magistrate when a complaint is made by a court to examine the complainant and neither section 200 nor section 202 requires a preliminary enquiry before the Magistrate can assume jurisdiction to issue process against the person complained against In our opinion the appellant has been rightly convicted and we would therefore dismiss this appeal Appeal dismissed

In 1925 the Sikh Gurdwaras Act 1925 was passed inter alia for the better administration of certain Sikh Gurdwaras and after the merger of the erstwhile State of Patiala and the East Punjab States Union called Pepsu with the State of Punjab the Act was amended by the Sikh Gurdwaras Amendment Act 1959 in order to extend the Act to the area which was formerly within Pepsu Under section 43 of the Act before it was amended in 959 a Board had been constituted called the Sikh 1 Lah 500 Gurdwara Prabandhak Committee to act as the committee of management in respect of some of the principal Sikh Gurd waras and in addition to exercise control direction and general superintendence over all committees appointed under the provisions of the Act the Board consisted of three categories of members namely 1 elected members 2 certain designated members and 3 co opted members which included persons residing in Pepsu and other parts of India By the Amending Act of 1959 S 148B was added to the main Act which provided 1 As from the commencement of the Amending Act in addition to the members of the Board constituted under section 43 a every person in the extended territories who immediately before the commencement of the Amending Act is a member of the Interim Gurdwara Board Patiala constituted by Punjab Government shall be deemed to be a member of the Board constituted under section 43 and b thirty five Sikhs including six Sikhs belonging to the Scheduled Castes residents in the extended territories who shall be elected by the persons specified in sub section 2 in accordance with the rules made in this behalf by the State Government shall become the members of the Board The petitioners who profess and practice the Sikh faith filed a petition under article 32 Of the Constitution challenging the constitutional validity of section 148B on the ground that the section violated the fundamental right granted under article 26b of the Constitution to every religious denomination or any section thereof including the Sikh denomination to manage its own affairs in matters of religion They contended inter alia 1 that the amending Act of 1959 was passed with a view that a particular group of Sikhs might not regain the majority it had lost on November 16 1958 when the annual election of the Sikh Gurdwara Prabandhak Committee was held 2 that the members of the Interim Board Patiala who under section 148B1a are deemed to be members of the Board constituted under section 43 were appointed under a Punjab Government notification and being merely nominees of Government did not represent the Sikh Community that under section 148B thirty five Sikhs from the extended area were introduced into the Board by means of an indirect method that is by a limited Sikh electorate the members of which electorate were in their turn elected by Sikhs as well as non Sikhs that the right guaranteed under article 26b was given to all members of the Sikh denomination to manage Sikh Gurdwaras that the right must be exercised by all Sikhs who alone must elect their representatives and that the introduction of new members into the Board in respect of the extended territories in the manner envisaged by section 148B violated by itself the right of the Sikhs in a matter of religion and constituted an infringement of their fundamental right under article 26b Held 1 that in considering the question as to whether a 501 provision of law is constitutionally valid the court cannot be called upon to embark on an enquiry into public policy or investigate into questions of political wisdom or even to pronounce upon motives of the legislature in enacting a law which it is otherwise competent to make 2 that a direct election by the entire Sikh Community in the management of Gurdwaras is not part of the Sikh religion and 3 that the method of representation for the extended areas under section 148B of the Act was an arrangement dictated merely by considerations of convenience and expediency and did not involve any principle of religion Accordingly section I48B of the Act lid not affect matters of religion within the meaning of article 26b of the Constitution and consequently did not contravene the fundamental right under that Article The Commissioner Hindu Religious Endowments Madyas v Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt and Sri Venkataramana Devaru vs The State of Mysore referred to

Appeal No 206 of 1954 Appeal from the judgment and decree dated March 9 1951 of the Orissa High Court in Appeal from Original decree No 14 of 1946 arising out of the judgment and decree dated January 31 1946 of the Court of Subordinate Judge at Sambalpur in Title Suit No 16 of 1944 L K Jha Rameshwar Nath section N Andley and J B Dadachanji for the appellant section C Issacs and R Patnaik for the respondents April 27 The Judgment of the Court was delivered by section K DAS J This appeal on a certificate granted by the High Court of Orissa is from the judgment and decree of the said High Court dated March 9 1951 by which it substantially affirmed the decision of the learned Subordinate Judge of Sambalpur in Title Suit No 16 of 1944 except for a modification of the decree for damages awarded by the latter Two questions of law arise in this appeal one relating to the interpretation of section 32 sub section 5 and the other to section 50 of the Indian Evidence Act I of 1872 hereinafter referred to as the Evidence Act The material facts relating to the appeal are susceptible of a simple and concise statement Three persons Nimai Charan Misra Lakshminarayan Misra and Baikuntha Pati brought a suit for a declaration of their title to and recovery of possession of certain properties details whereof are not necessary for our purpose This suit was numbered Title Suit 16 of 1944 in the court of the Subordinate Judge of Sambalpur The claim of the plaintiffs now respondents before us was founded on the following pedigree 817 Sankarsan Balaram Bhubana Baidyanath Raghunath Purushottam Satyabhama Lokanath Haripriya alias Srihari died 1942 2nd wife Satyananda died 1902 Natabar Deft 1 Janardan Devendra Deft 3 Radha Krushna Dolgovind Ramhari Deft 4 Deft 5 Deft 6 Must Ahalya Mst Brindabati Mst Malabati dead married dead married dead married Lakhan Pati Raghumani Mandhata Misra Satyabadi Dasarath Baikuntha Nimai Lakshminarayanm dead Deft8 Plaintiff3 Plaintiff1 Plaintiff2 given in adoption in another family 818 The last male owner was Satyananda who died unmarried sometime in 1902 1903 and his mother Haripriya succeeded to the estate She lived till 1942 but in 1916 she had sold a portion of the property to one Indumati daughter of Dharanidhar Misra plaintiffs witness No 4 and some of the reversioners namely Natabar and Janardan who were agnates of Haripriya s husband Lokenath Parichha brought a suit challenging the alienation This suit was Suit No 31 of 1917 in the court of the Subordinate Judge Sambalpur The suit was decreed on August 31 1918 and the alienation was declared to be without legal necessity and not binding on the reversion after the death of Haripriya In 1929 was passed the Hindu Law of Inheritance Amendment Act II of 1929 which inter alia gave to a sister s son a place in the order of Mitakshara succession higher than the agnates before the amending Act a sister s son ranked as a bandhu but under it he succeeded next after the sister The question whether a half sister was entitled to get the benefit of the amending Act gave rise to a difference of opinion but the Privy Council held in 1942 settling the difference then existing between the various High Courts that the term I sister included a half sister but a full sister and a half sister did not take together and the latter took only in default of the full sister See Mst Sahodra vs Ram Babu 1 The plaintiffs respondents claimed on the strength of the pedigree which they set up that they were sons of the half sister of Satyanand and therefore came before the agnates The suit was contested by some of the defendants who were agnates of Lokenath Paricha and of whom the present appellant was one The contesting defendants challenged the correctness of the pedigree alleged by the plaintiffs respondents and their main case was that Ahalya and Malabati were not the daughters of Lokenath Parichha but were daughters of Baidyanath Misra father of Haripriya The relevant pedigree which the appellant set up was 1 1942 LR 69 IA I45 819 Baidyanath Misra Haripriya Bisseswar AliaJ Malabati died on Misra Laksh Pati Mandhata 6 4 1942 Dayasagar Satyanand Sushila P W 3 died in 1903 Dasarathi Baikuntha Plff 3 Nimai Lakshmi Plff1 narayan Plff 2 As the High Court has put it the essential controversy between the parties centred round the question if the plaintiffs respondents were the sons of the daughters of Lokenath Parichha by his first wife Satyabhama On this question the parties gave both oral and documentary evidence On a consideration of that evidence the learned Subordinate Judge held that they were the sons of the daughters of Lokenath Parichha and on that finding the suit was decreed There was an appeal to the High Court and it affirmed the finding Of the learned Subordinate Judge The High Court relied on exhibit 1 a petition dated November 2 1917 which Satyabadi on his own behalf and on behalf of his brothers Baikunth Pati and Dasarath Pati had filed in Suit No 31 of 1917 this petition contained a pedigree which showed that Ahalya Brindabati and Malabati were daughters of Lokenath Parichha by his first wife and Satyabadi Baikunth and Dasarath were the sons of Ahalya The admissi bility of this document was challenged on behalf of the appellant but the learned Judges of the High Court held that the document was admissible under section 325 of the Evidence Act The contention before us is that the document was not so admissible and this is one of the questions for decision before us As to the oral evidence Narasimham J held that the testimony given by three of the witnesses of the plaintiffs respondents namely Janardan Misra plaintiffs witness No 2 Sushila Misrain plaintiffs witness No 3 and Dharanidhar Misra plaintiffs witness No 4was admissible under section 50 of the Evidence Act and 820 he relied on that testimony in support of the pedigree set up by the plaintiffs respondents The learned Chief Justice relied on the evidence of Dharanidbar Misra which be held to be admissible but with regard to the other two witnesses he said With regard to the other two witnesses relied on by the plaintiffs namely that of P Ws 2 Janardan Misra aged 62 and 3 Susila Misrani aged 43 knowledge of relevant facts as to relationships can seldom be attributed to them Their evidence though true and otherwise acceptable must be based upon their having heard the declarations of such members of the family as were their contemporaries or upon the tradition or reputation as to family descent handed down from generation to generation and recognised and adopted by the family generally This may partly if not wholly be based upon conduct within the meaning of section 50 such as treating and recognising the mothers of the plaintiffs as Lokenath s daughters and the plaintiffs as his daughter s sons They judged from their respective ages could not be considered to have direct knowledge of the matters in issue Scanning their evidence closely I find that they have in no way deposed about such conduct of the members of the family of Lokenatb as could be attributed to the knowledge or belief or consciousness of those who had special means of knowledge of the relationships or that the relationship was recognised and adopted by the family generally In the circumstances I entertain some doubt as to the acceptability of their statements in evidence On behalf of the appellant it has been contended that the testimony of none of the aforesaid three witnesses fell within the purview of section 50 of the Evidence Act and the High Court was in error in admitting and accepting that evidence or any part thereof and according to learned counsel for the appellant the whole of it was hearsay pure and simple some of it being even second or third hand hearsay Thus the second question for our consideration is if the testi mony of the witnesses mentioned above or of any of them is admissible evidence within the meaning of section 50 of the Evidence Act 821 We proceed to consider the second question first The Evidence Act states that the expression facts in issue means and includes any fact from which either by itself or in connection with other facts the existence non existence nature or extent of any right liability or disability asserted or denied in any suit or proceeding necessarily follow evidence means and includes 1 all statements which the Court permits or requires to be made before it by witnesses in relation to matters of fact under enquiry and 2 all documents produced for the inspection of the Court It further states that one fact is said to be relevant to another when the one is connected with the other in any one of the ways referred to in the provisions of the Evidence Act relating to the relevancy of facts Section 5 of the Evidence Act lays down that evidence may be given in any suit or proceeding of the existence or non existence of every fact in issue and of such other facts as are declared to be relevant and of no others It is in the context of these provisions of the Evidence Act that we have to consider section 50 which occurs in Chapter 11 headed Of the Relevancy of Facts Section 50 in so far as it is relevant for our purpose is in these terms section 50 When the Court has to form an opinion as to the relationship of one person to another the opinion expressed by conduct as to the existence of such relationship of any person who as a member of the family or otherwise has special means of knowledge on the subject is a relevant fact On a plain reading of the section it is quite clear that it deals with relevancy of a particular fact It states in effect that when the Court has to form an opinion as to the relationship of one person to another the opinion expressed by conduct as to the existence of such relationship of any person who has special means of knowledge on the subject of that relationship is a relevant fact The two illustrations appended to the section clearly bring out the true scope and effect of the section It appears to us that the essential requirements of the section are I there must be a case where the court has to form an opinion as to the 822 relationship of one person to another 2 in such acase the opinion expressed by conduct as to the existence of such relationship is a relevant fact 3but the person whose opinion expressed by conduct is relevant must be a person who as a member of the family or otherwise has special means of knowledge on the particular subject of relationship in other wordsthe person must fulfil the condition laid down in the latter part of the section If the person fulfils that condition then what is relevant is his opinion expressed by conduct Opinion means something more than more retailing of gossip or of hearsay it means judgment or belief that is a belief or a conviction resulting from what one thinks on a particular question Now the belief or conviction may manifest itself in conduct or behaviour which indicates the existence of the belief or opinion What the section says is that such conduct or outward behaviour as evidence of the opinion held is relevant and may therefore be proved We are of the view that the true scope and effect of section 50 of the Evidence Act has been correctly and succinctly put in the following observations made in Chandu Lal Agarwala vs Khalilar Rahman 1 It is only opinion as expressed by conduct which is made relevant This is how the conduct comes in The offered item of evidence is the conduct but what is made admissible in evidence is the opinion the opinion as expressed by such conductThe offered item of evidence thus only moves the Court to an intermediate decision its immediate effect is only to move the Court to see if this conduct establishes any I opinion of the person whose conduct is in evidence as to the relationship in question In order to enable the Court to infer the opinion the conduct must be of a tenor which cannot well be supposed to have been willed without the inner existence of the I opinion When the conduct is of such a tenor the Court only gets to a relevant piece of evidence namely the opinion of a person It still remains for the Court to weigh such evidence and come to its own opinion as 1 ILR 309 823 to the factum probandum as to the relationship in question We also accept as correct the view that section 50 does not make evidence of mere general reputation without conduct admissible as proof of relationship Lakshmi Reddi vs Venkata Reddi 1 It is necessary to state here that how the conduct or external behaviour which expresses the opinion of a person coming within the meaning of section 50 is to be proved is not stated in the section The section merely says that such opinion is a relevant fact on the subject of relationship of one person to another in a case where the court has to form an opinion as to that relationship Part 11 of the Evidence Act is headed On Proof Chapter III thereof contains a fascicule of sections relating to facts which need not be proved Then there is Chapter IV dealing with oral evidence and in it occurs section 60 which says inter alia section 60 Oral evidence must in all cases whatever be direct that is to say if it refers to a fact which could be seen it must be the evidence of a witness who says he saw it if it refers to a fact which could be heard it must be the evidence of a witness who says he heard it if it refers to a fact which could be perceived by any other sense or in any other manner it must be the evidence of a witness who says he perceived it by that sense in that manner if it refers to an opinion or to the grounds on which that opinion is held it must be the evidence of the person who holds that opinion on those grounds If we remember that the offered item of evidence under section 50 is conduct in the sense explained above then there is no difficulty in holding that such conduct or outward behaviour must be proved in the manner laid down in section 60 if the conduct relates to something which can be seen it must be proved by the person who saw it if it is something which can be heard then it must be proved by the person who heard it and so on The conduct must be of the 1 AIR 1937 PC 201 824 person who fulfils the essential conditions of section 50 and it must be proved in the manner laid down in the provisions relating to proof It appears to us that that portion of section 60 which provides that the person who holds an opinion must be called to prove his Opinion does not necessarily delimit the scope of section 50 in the sense that opinion expressed by conduct must be proved only by the person whose conduct expresses the opinion Conduct as an external perceptible fact may be proved either by the testimony of the person himself whose opinion is evidence under section 50 or by some other person acquainted with the facts which express such opinion and as the testimony must relate to external facts which constitute conduct and is given by persons personally acquainted with such facts the testimony is in each case direct within the meaning of section 60 This in our opinion is the true inter relation between section 50 and section 60 of the Evidence Act In Queen Empress vs Subbarayan 1 Hutchins J said That proof of the opinion as expressed by conduct may be given seems to imply that the person himself is not to be called to state his own opinion but that when he is dead or cannot be called his conduct may be proved by others The section appears to us to afford an exceptional way of proving a relationship but by no means to prevent any person from stating a fact of which he or she has special means of knowledge While we agree that section 50 affords an exceptional way of proving a relationship and by no means prevents any person from stating a fact of which he or she has special means of knowledge we do not agree with Hutchins J when he says that the section seems to imply that the person whose opinion is a relevant fact cannot be called to state his own opinion as expressed by his conduct and that his conduct may be proved by others only when he is dead or cannot be called We do not think that section 50 puts any such limitation Let us now apply the tests indicated above to the testimony of the two witnesses Janardan Misra and 1 Mad 9 11 825 Dharanidhar Misra As to Sushila Misrain she was aged about 43 when she gave evidence in 1946 It is unnecessary to consider in detail her evidence because if the evidence of the other two older witnesses be admissible that would be sufficient to support the finding arrived at by the courts below another evidence would also be admissible on the same criteria as the evidence of the other two witnesses The first question which we must consider is if Janardan Misra and Dharanidhar Misra had special means of knowing the disputed relationship Janardan Misra was aged about 62 in 1946 and he was related to the family of Baidyanath Misra Kashi Nath Misra was his grand father and was a brother of Baidyanath Misra Obviously therefore Janardan Misra had special means of knowing the disputed relationship being related to Baidyanath and therefore to Haripriya who was the second wife of Lokenath He said in his evidence that he knew Lokenath Parichha had seen his first wife Satyabhama and remembered the marriage of Haripriya with Lokenath Parichha Obviously therefore he fulfilled the condition of special knowledge He further said that he attended the marriage of Malabati daughter of Lokenath when Lokenath was living That marriage took place in the house of Lokenath He also said that he was present when the first two daughters of Malabati were married and also at the time of the Upanayan ceremonies of plaintiffs I and 2 According to the witness Shyam Sundar Pujari a son of a sister of Lokenath acted as a maternal uncle at the time of the marriage of the eldest daughter of Malabati and Dayasagar Misra carried Radhika second daughter of Malabati at the time of her marriage The question is whether these statements of Janardan Misra as to his conduct are admissible under section 50 Evidence Act Learned counsel for the respondent has contended before us that even apart from section 50 the evidence of Janardan Misra is direct evidence of facts which he saw and which should be treated as directly proving the relationship between Lokenath 104 826 and his daughters We do not think that learned counsel for the respondent is right in his submission that Janardan s evidence directly proves the relation between Lokenath and his alleged daughters Abalya Brindabati and Malabati Janardan does not say that he was present at the birth of any of these daughters What be says is that he was present at the marriage of Malabati which took place when Lokenath was living and in Lokenath s house he was also present at the marriages of the first two daughters of Malabati and also at the time of the Upanayan ceremonies of plaintiffs I and 2 This evidence in our opinion properly comes within section 50 Evidence Act it shows the opinion of Janardan Misra as expressed by his conduct namely his attending the marriage of Malabati as daughter of Lokenath and his attending the marriages and Upanayan ceremonies of the grandchildren of Lokenath We do not think that it can be suggested for one moment that Janardan Misra attended the marriage and other ceremonies in the family as a mere casual invitee He must have been invited as a relation of the family and unless he believed that Malabati was a daughter of Lokenath and the others were grand children of Lokenath to whom the witness was related he would not have said that he attended those ceremonies as those of the children and grand children of Lokenath This in our opinion is a reasonable inference from the evidence and if that is so then the evidence of Janardan Misra was clearly evidence which showed his belief as expressed by his conduct on the subject of the relationship between Lokenath and his daughters and Lokenath and his grandchildren Janardan also said that one Shyamsundar Pujari acted as maternal uncle at the time of the marriage of the eldest daughter of Malabati There is some evidence in the record that Shyamsundar Pujari was son of Lokenath s sister This was however disputed by the appellant The High Court has not recorded any finding on the relation of Shyamsundar Pujari to Lokenath If it were proved that Shyamsundar was a son of Lokenath s sister he would have special 827 means of knowledge as a relation of the family and his conduct at the time of the marriage of Malabati s daughter would also be admissible under section 50 But in the absence of any finding as to any special means of knowledge on the part of Shyamsundar the latter s conduct will not be admissible under section 50 We need not say anything more about Shyamsundar as the High Court has not based its finding on the conduct of Shyamsundar The same criteria apply to the evidence of Dharanidhar Misra who was aged 96 at the time when he gave evidence He was the maternal uncle of Janardan Misra Dharanidhar s evidence showed that he knew Lokenath Parichha and his two wives Satyabhama and Haripriya He also had special means of knowing the disputed relationship though he was not directly related to Lokenath He said that Lokenath was two years older than him and the witness attended the marriages of Radhika and Sarjoo and the thread ceremonies of Lakshminarayan and Nimai The witness further added that though he did not remember if he was invited to the marriage of Mandhata s daughters he was invited to the feasts which followed the marriage He said that the feasts took place in the house of Mandhata and he attended the gansana and marriage feasts of Mandhata s daughters The same criteria which make the evidence of Janardan Misra admissible under section 50 also make the evidence of Dharanidhar Misra admissible under the same section We may in this connection refer to one of our own decisions Sitaji vs Bijendra Narain Choudhary wherein the following observations were made A member of the family can speak in the witness box of what he has been told and what he has learned about his own ancestors provided what he says is an expression of his own independent opinion even though it is based on hearsay derived from deceased not living persons and is not merely repetition of the hearsay opinion of others and provided the opinion is expressed by conduct His sources of 1 AIR 1954 SC 601 828 information and the time at which he acquired the knowledge for example whether before the dispute or not would affect its weight but not its admissibility This is therefore legally admissible evidence which if believed is legally sufficient to support the finding It is true that Dharanidhar Misra was not directly related to the family of Lokenath He was however distantly related to Haripriya He was a friend of Lokenath Parichha and lived in the same neighbourhood His evidence showed that he knew him and the members of his family quite well That being the position his evidence that he attended the marriage ceremonies and the Upanayan ceremonies of several members of the family undoubtedly showed his opinion as expressed by his conduct We are accordingly of the view that the evidence of both Janardan Misra and Dharanidhar Misra was admissible under section 50 and the learned Judges of the High Court committed no error of law in admitting and considering that evidence We are concerned here with the question of admissibility only As to what weight should be given to their evidence was really a matter for the courts below and both the learned Chief Justice and Narasimham J accepted the testimony of Dharanidhar Misra and Narasimham J further relied on the testimony of Janardan Misra also We now proceed to a consideration of the first question namely the admissibility of the document Ext The High Court has held the document to be admissible under sub section 5 of section 32 of the Evidence Act We must first read section 32 5 section 32 Statements written or verbal of relevant facts made by a person who is dead or who cannot be found or who has become incapable of giving evidence or whose attendance cannot be procured without an amount of delay or expense which under the circumstances of the case appears to the Court unreasonable are themselves relevant facts in the following cases 1 2 829 3 4 5 When the statement relates to the existence of any relationship by blood marriage or adoption between persons as to whose relation ship by blood marriage or adoption the person making the statement had special means of knowledge and when the statement was made before the question in dispute was raised 6 7 8 Now four conditions must be fulfilled for the application of sub section 5 of section 35 firstly the statements written or verbal of relevant facts must have been made by a person who is dead or cannot be found etc as mentioned in the initial part of the section secondly the statements must relate to the existence of any relationship by blood marriage or adoption thirdly the person making the statement must have special means of knowledge as to the relationship in question and lastly the statements must have been made before the question in dispute was raised There is no serious difficulty in the present case as to the first two conditions Exhibit I contained a pedigree which showed that Lokenath had three daughters by his first wife the daughters being Ahalya Brindabati and Malabati it also showed that Ahalya had three sons Satyabadi Baikuntha and Dasarath of whom Baikuntha was one of the plaintiffs in the present suit and the other two plaintiffs Nimai and Lakshminarayan were shown as sons of Malabati Exhibit I was signed by Satyabadi on his own behalf and on behalf of his brothers Baikuntha and Dasarath Satyabadi is now dead So far as Satyabadi is concerned there can be no doubt that the first two conditions for the application of sub section 5 of section 32 are fulfilled It has been contended that as Dasarath and Baikuntha are alive Baikuntha being one of the plaintiffs and as the statement was the joint statement of three persons of whom one alone is dead the first and preliminary condition necessary for the application of section 32 is not 830 fulfilled We do not think that this contention is correct and we are of the view that the position is correctly stated in Chandra Nath Roy vs Nilamadhab Bhattacharjee 1 that was a case in which the statements were recitals as to a pedigree and were contained in a patta executed by three sisters two of whom were dead and it was pointed out that the statement in the patta was as much the statement of the sisters who were dead as of the sister who was alive In the case before us the statements as to pedigree in exhibit I were really the statements of Satyabadi who signed for self and on behalf of his brothers Assuming however that the statements were of all the three brothers they were as much statements of Satyabadi as of the other two brothers who are alive We therefore see no difficulty in treating the statements as to pedigree in exhibit I as statements of a dead person as to the existence of a relationship by blood between Lokenath and his daughters Ahalya Brindabati and Malabati the relationship which is in dispute now The more important point for consideration is if the statements as to pedigree in exhibit I were made to use the words of sub section 5 before the question in dispute was raised The High Court held that the statements were made ante litem motam Learned counsel for the appellant has very strongly contended before us that the High Court took an erroneous view in this matter Let us first see the circumstances in which exhibit I was filed and dealt with in Suit No 31 of 1917 We have said earlier what that suit was about It was a suit brought by some of the reversioners for a declaration that the alienation made by Haripriya in favour of Indumati was without legal necessity and therefore not binding on the reversion after the death of Haripriya The suit was filed on August 27 1917 On November 2 1917 certain other persons made an application to be added as parties to the suit on the footing that they had the same interest in the suit as the plaintiffs That application was disposed of by the learned Subordinate Judge by the following order In a suit like the present it is not necessary 1 Cal 236 831 that all the reversioners should be made parties So I reject the petition Exhibit I was filed on November 5 1917 In that petition Satyabadi alleged The applicants are the legal claimants to inherit the properties left by Lokenath the applicants therefore beg that they may kindly be made co defendants It was further alleged that the plaintiffs of that suit had no legal right over the share in dispute and this was followed by a pedigree given in para IV of the petition This petition exhibit 1 was put up on November 27 1917 and the learned Subordinate Judge disposed of the petition by the following order The petition of Satyabadi Pati and others was put up in the presence of the plaintiffs pleader He objects to the same The petition is therefore rejected Ultimately the suit was decreed on August 31 1918 on the finding that the alienation by Haripriya was without legal necessity and did not bind the reversion after her death The learned Judges of the High Court took the view that in Suit No 31 of 1917 no dispute arose as to the alleged relation between Lokenath on one side and Ahalya Brindabati and Malabati on the other The dispute in that suit was about the validity of the alienation made by Haripriya and the suit having been filed by some of the reversioners on behalf of the reversion no issue was raised or could be raised as to whether Lokenath had any daughters by his first wife Such an issue was not relevant to the suit and furthermore nobody could anticipate in 1917 that the sons of a sister or half sister would be preferential heirs in the order of Mitakshara succession They therefore held that the statements in exhibit 1 were ante litem motam and admissible under sub section 5 of section 32 Evidence Act On behalf of the appellant it has been argued that for a declaratory decree in respect of an alienation made by a Hindu widow or other limited heir the right to sue rests in the first instance with the next reversioner and the reversioner next after him is not entitled to sue except in some special circumstances 832 and therefore the question as to who the next reversioner was arose in the suit of 1917 and exhibit I did raise a dispute as to who the last male owner was Lokenath or Satyanand and also showed that there was a dispute if the plaintiffs of that suit were entitled to the property in dispute there The existence of such a dispute it has been argued affected the statements in exhibit I and what Satyabadi said therein were not the natural effusions of a party who must know the truth and who speaks upon an occasion when his mind stands in an even position without any temptation to exceed or fall short of the truth as per Lord Chancellor Eldon in Whitelocke vs Baker 1 Learned counsel has also relied on the decision in Naraini Kuar vs Chandi Din 2 where it was held that section 325 did not apply to statements made by interested parties in denial in the course of litigation of pedigrees set up by their opponents We do not think that in Suit No 31 of 1917 any question as to the relationship of Lokenath with Ahalya Brindabati and Malabati arose at all It is to be remembered that even according to the pedigree set up by the appellant one of the plaintiffs is a son of Ahalya and two others are sons of Malabati What is now in dispute is whether Ahalya and Malabati were daughters of Lokenath Parichha That is a question which did Dot at all arise for consideration in Suit No 31 of 1917 nor did it arise in the proceedings which the application of Satyabadi exhibit 1 gave rise to Prima facie there is nothing to show that a dispute as to the relationship of Lokenath with Ahalya and Malabati arose at any stage prior to or in the course of the proceedings which arose out of exhibit I that would be sufficient to discharge the onus of proving that the statements in exhibit 1 were ante litem motam Natabar one of the plaintiffs in the suit of 1917 who might have given evidence of any such dispute if it existed said nothing about it We have referred to the circumstances in which exhibit I was filed and disposed of It is true that the order of the learned Subordinate Judge rejecting the petition exhibit 1 is somewhat cryptic and it does not show what objection the 7 1807 13 ves 510 514 8 All 467 833 plaintiff of that suit took and on what ground the learned Subordinate Judge rejected the petition If however the various orders made by the learned Subordinate Judge particularly the orders dated November 2 1917 and November 27 1917 to which we have earlier made reference are examined it seems clear to us that the learned Subordinate Judge was proceeding on the footing that in a suit of that nature it was not necessary to make all the reversioners parties because the reversioners who brought the suit represented the entire body of reversioners From the judgment passed in the suit exhibit Cl it does not appear that the question as to who the next reversioners were was at all gone into That may be due to the circumstance pointed out by the High Court that Purushottam uncle of Janardan and Natwar was then alive He was admittedly then the nearest reversioner but as he did not join as a plaintiff he was made a proforma defendant The nearest reversioner having been added as a party defendant in the suit of 1917 no question of title arose in that suit as between the reversioners inter se Such a question of title was wholly foreign to the nature of that suit Nor do we find anything in the judgment exhibit Cl to show that it was ever suggested in that suit that the last male owner was not Satyanand The sons of the half sister of Satyanand were not preferential heirs at the time and we agree with the learned Judges of the High Court that no question arose or could have arisen in that suit as to the relation between Lokenath on one side and Ahalya and Malabati on the other That being the position the statements as to pedigree con tained in exhibit 1 were made before the precise question in dispute in the present litigation had arisen It has next been argued by learned counsel for the appellant that in admitting exhibit I under section 325 the courts below assumed that Satyabadi had special means of knowledge as to the relation between Lokenath and his alleged daughters Ahalya and Malabati The argument has been that unless it is assumed that Satyabadi is the grand son of Lokenath he can have 105 834 relationship Learned counsel for the appellant has referred us to the decision in Subbiah Mudaliar vs Gopala Mudaliar 1 where it was held that for a statement in a former suit to be admissible under section 325 the fact that the person who made the statement had special means of knowledge must be shown by some independent evidence otherwise it would be arguing in a circle to hold that the document itself proves the relation and therefore shows special means of knowledge In Hitchins vs Eardley 2 the question of the legitimacy of the declarant was in issue and the same question was necessary to be proved in order to admit his declarations That was a jurv case and the ques tion relating to the admissibility of evidence being a question of law had to be determined by the Judge but the same question being the principal question for decision in the case had to be determined by the jury at the conclusion of the trial In the difficulty thus presented prima facie evidence only was required at the time of admission We do not think that any such difficulty presents itself in the case under our consideration As to Satyabadi s special means of knowledge we have in this case the evidence of Janardan Misra and Dharanidhar Misra which evidence independently shows that Satyabadi was the grand son of Lokenath being the son of his daughter Ahalya It may be stated here also that it was admitted that Ahalya was Satyabadi s mother and that would show that Satyabadi had special means of knowledge as to who his mother s father was Therefore we agree with the High Court that exhibit I fulfilled all the conditions of section 325 Evidence Act and was admissible in evidence We have already said that it is not for us to consider what weight should be given to the oral evidence of Janardan and Dharanidhar or to the statements in exhibit 1 The courts below have considered that evidence and have assessed it We do not think that we shall be justified in going behind that assessment Learned counsel for the appellant wished also to 1 AIR 1936 Mad 808 2 1871 LR 2 P D 248 835 argue the point that the Privy Council decision in Mst Sahodra s case 1 was wrong and that a halfsister was not entitled to get the benefit of the amending Act of 1929 The Privy Council decision was given at a time when it was binding on the courts in India and it settled differences of opinion which then existed in the different High Courts That decision was taken as settling the law on the subject and on the faith of that decision a half sister has been held in subsequent cases to be entitled to the benefit of the Amending Act The High Court dealt with the case in 1951 after the Constitution had come into force and the Privy Council jurisdiction in Indian appeals had ceased No point was taken on behalf of the appellant in the High Court that the Privy Council decision should be reopened and the question of the right of a half sister re examined In these circumstances we did not allow learned counsel for the appellant to argue the correctness or otherwise of the Privy Council decision The contentions as to the admissibility of exhibit 1 and the oral evidence of Janardan Misra and Dharanidhar Misra being devoid of merit the appeal fails We accordingly dismiss the appeal with costs in favour of the contesting respondents Appeal dismissed 1 1942 LR 69 IA 145

The question involved in this appeal was whether under the customary law of the Punjab a sister was a preferential heir in respect of her brother s self acquired property to a collateral The respondent the sister relied on a custom which she termed a special custom and on that basis claimed her brother s property and the appellant a collateral of the 8th degree of her brother resisted her claim relying solely on a general custom stated in paragraph 24 Of the Rattigan s Digest of the Customary Laws of the Punjab to the effect that sisters were excluded by collaterals in the matter of inheritance to non ancestral property The Subordinate judge and the District judge on appeal held in favour of the appellant but the High Court reversed their decisions holding that there was no such general custom as recorded by Rattigan and that it was in any event for the appellants to prove that custom and this he had failed to do The High Court also held that the respondent had succeeded in proving the custom set up by her It was contended on behalf of the appellant that the High Court was in error in placing the onus of proving the custom on him since the custom was a general custom as stated by Rattigan Held that no distinction could be made between a general custom or other customs so far as the need of proof was con cerned and the ordinary rule was that all customs general or otherwise had to be proved unless by repeated recognition by the courts a custom had become entitled to judicial notice under section 571 of the Evidence Act Raja Rama Rao vs Raja of Pittapur 1918 LR 45 IA 148 relied on Although there could be no doubt that Rattigan s Digest was of the highest authority on questions of custom of the Pun jab it was not possible regard being had to the formidable array of conflicting decisions of the courts as to its existence to take judicial notice of the custom mentioned in paragraph 24 of the Digest without further proof Case law reviewed Although the respondent had in the plaint relied on a custom and termed it a special custom that could not amount to an 782 admission which would obviate the necessity of proof of the general customs or its terms by the appellant Even supposing that the High Court was not correct in its finding that the respondent had proved the custom entitling her to succeed as the custom set up by the appellant had not also been established section 5 Of the applied and the case had to be decided by the personal law of the parties The respondent was entitled to base her claim on the personal law although in her plaint she had relied on a custom The personal law of the parties was the Hindu law and the respondent was entitled to succeed under that law also Daya Ram vs Sohel Singh 110 PR 1906 Abdul Hussein Khan vs Bibi Sona Dero 1917 LR 45 IA 10 and Mst Fatima Bibi vs Shah Nawaz Lah 98 relied on

Appeal No 347 of 1955 Appeal by special leave from the judgment and order dated March 26 1954 of the Income tax Appellate Tribunal Calcutta in Income tax Appeal No 5263 of 1953 54 A V Viswanatha Sastri and Sukumar Chosh for the appellant G K Daphtary Solicitor General of India B Ganapathy R H Dhebar and D Gupta for the respondent May 4 The Judgment of Bhagwati and Sinha JJ was delivered by Sinha J Kapur J delivered a separate Judgment 848 SINHA J The only question for determination in this appeal by special leave is whether the solitary transaction in respect of about three quarters of an acre of land in the suburbs of Calcutta was an adventure in the nature of trade and therefore liable to income tax The assessee is the appellant He challenges the correctness of the order of the Income tax Appellate Tribunal Calcutta Bench Calcutta dated March 26 1954 passed in ITA 5263 of 1953 54 in respect of the Assessment year 1948 49 reversing that of the Appellate Assistant Commissioner of Incometax Range C Calcutta dated September 5 1953 The facts of this case leading upto this appeal are as follows The appellant is engaged in various types of business activities being a share holder and Director or Managing Director of several limited liability concerns and is also a partner in the firm known as Pioneer Engineering Works In respect of his income during the previous two assessment years the appellant was assessed to income tax on the sums of Rs 53000 1946 47 and Rs 59000 1947 48 The appellant holds investments in shares of the value of Rs 245000 out of which according to the assessee shares of the value of Rs 195000 though standing in his name belong to other members of his family including his father and his wife The Hindusthan Co operative Insurance Society Limited of Calcutta hereinafter referred to as the Society acquired a block of about 578 bighas of land lying between Diamond Harbour Road and Tolly s Nullah within the Municipal limits of the Corporation of Calcutta between the years 1940 and 1942 The Society decided to level the land thus acquired and to open out roads and after developing the same it subdivided it into small plots and sites in different blocks suitable for residential purposes under its scheme called The New Alipore Land Development Scheme No XV The Society offered such plots for sale One such plot being plot No 77 in block E of the said Scheme was agreed by an agreement dated January 10 1946 to be sold to the assessee at the rate of Rs 2550 per katha In pursuance of the said agreement the assessee paid to the Society a sum of 849 Rs 13099 being 10 of the estimated price of the plot with an approximate area of 51 kathas which subsequently on exact measurement was found to be 45 56 kathas Subsequently on the acceptance of his offer the appellant paid another SUM of Rs 19649 omitting annas being 15 of the estimated price Thus in all a sum of Rs 32748 being 25 of the estimated total price of the land was paid by the assessee to the Society All this area which the Society had undertaken to develop and sell to different purchasers in small plots was in occupation of the Government which had requisitioned it for purposes connected with the prosecution of the Second World War Hence one of the terms of the transaction between the assesee and the Society was that the transaction of purchase would be completed within six months of the lands being released from Government occupation It was further stipulated that the assessee would be entitled to apply within three months of the receipt of the notice of de requisition for extension of time not exceeding one year for the completion of the transaction on the condition that he paid interest at the rate of 7 per annum on the outstanding amount during the extended period If the assessee as purchaser paid to the Society another sum which together with Rs 32748 already paid would amount to 50 of the total price of the plot in question within six months of the notice of de requisition he could get a conveyance of the property on his executing an English Mortgage for the remaining 50 of the price carrying interest at the rate of 7 on the expiry of these aforesaid six months As there was an apprehension that the Government might acquire the whole property for its own purpose it was further stipulated that in the event of such an acquisition by Government the agreement for sale would stand rescinded and the assessee in that event would be entitled to re payment of the amounts paid by him to the Society by way of advance for the completion of the transaction The assessee s case is that as the terms of the payment of purchase price in several instalments as aforesaid were convenient to him 107 850 he agreed to take the plot on the conditions aforesaid with a view to building a residential house for himself and constructing a workshop in connection with his business activity At the end of the Second World War the assesee s construction activities began to decline and there was no immediate prospect of the land in question being de requisitioned by Government In those circumstances the assessee negotiated for the assignment of his rights under the agreement with the Society to Rani Yuddha Rajya Devi of Nepal The Rani appeared to have taken a fancy to the plot and to have made an attractive offer to the appellant Hence after exchange of letters between the parties it was agreed between them that a sum of Rs 107000 odd would be deposited by the Rani with the assessee on suspense account until the transaction of sale between the Society as the vendor and the Rani or her nominee as the vendee would be executed and the transaction of purchase finalised upon her undertaking to pay the sum of Rs 98000 odd to the Society which was the outstanding amount of the sale price in respect of the plot agreed by the assessee to be purchased by him from the Society After a good deal of correspondence on December 27 1950 the Society executed a deed of conveyance in respect of the said plot to the daughter of the said Rani as the vendee The aforesaid vendee executed a deed of mortgage in favour of the Society for the outstanding amount of Rs 50900 after payment of Rs 32700 odd to the Society In the result the assessee received on April 3 1947 a sum of Rs 107000 odd from the Rani in pursuance of the agreement between her and the assessee Until the execution of the sale deed between the Society and the Rani s nominee as aforesaid the assessee continued to be liable to the Society in respect of the agreement of January 10 1946 The assessee thus received from the Rani a sum of Rs 74000 odd in excess of the amount paid by him to the Society The property including the plot in question was not de requisitioned until some time in 1949 In respect of the assessment year 1948 49 the assessee filed a return of his income to the Income tax 851 Department showing a loss of Rs 2000 odd for the financial year 1947 48 In pursuance of the notice under section 232 of the Income tax Act the assessee appeared before the Income tax Officer Calcutta and produced all his books of account including his bank accounts The Income tax Officer on an examination of the accounts and after questioning the assessee came to the conclusion that the assessee had made a profit of Rs 74000 odd from the transaction in question which according to him was an adventure in the nature of trade Hence on an examination of the assessee s accounts the Income tax Officer included the sum of Rs 74485 as profit from an adventure in the nature of trade taxable under section 10 of the Income tax Act as one of the items of income accrued to the assessee during the assessment year 1948 49 The assessee went up in appeal to the Appellate Assistant Commissioner of Income tax and challenged the conclusion of the Income tax Officer that the sum of Rs 74000 odd was profit from an adventure in the nature of trade It was also taken as one of the grounds of appeal by him that in any event the receipt accrued to the assessee only in 1950 after the transaction of sale had been completed as between the Rani s nominee and the Society The Appellate Assistant Commissioner did not agree with the Income tax Officer that the assessee was not in a position either to complete the transaction of purchase by paying the full amount of consideration or to erect a building thereon or to use the land in any other way He pointed out that under the Scheme the Society had offered terms of purchase on instalments and on execution of a mortgage in respect of the vended property to the extent of 50 of the consideration money He also pointed out that the assessee bad considerable investments to the extent of Rs 245000 in shares of different limited concerns He therefore came to the conclusion that the assessee was a man of means and that it could not be said that he had not intended to purchase the plot for his own use He further hold that the motive of making a profit at the time of the purchase had not been established by the Department 852 and that it was a solitary transaction On these findings he found himself unable to confirm the finding of the Income tax Officer that the profit was from an adventure in the nature of trade He took the view that the appellant had made an investment which had appreciated considerably in value and that it was undoubtedly a case of appreciation of capital Treating it as a Capital Gain he came to the conclusion that as the payment bad been made in 1947 the gain accrued in that year and not in the year 1950 as contended on behalf of the assessee In the result he made him liable to pay Capital Gains tax The Department went up in appeal to the Incometax Appellate Tribunal which by its judgment dated March 26 1954 allowed the appeal The Tribunal pointed out that the assessee was not a man of such large means as to think of acquiring the plot for his own residential or business purposes The admitted shares worth Rs 245000 standing in his name the Tribunal pointed out were held by the assessee in respect of the major portion on behalf of other members of his family The Tribunal also observed that Rs 32748 paid by the assessee to the Society had been paid out of borrowed money This conclusion does not appear to have been well founded in fact The accounts do show credits in favour of the assessee of a larger amount The Tribunal also pointed out that undoubtedly the assessee is a keen businessman and has a number of varied business interests Admittedly he is a director of about a dozen concerns and managing director of two or three Her is 8 annas partner in an Engineering concern which is carrying out a number of construction and other contract works He is an Engineer by profession and a resident of Calcutta The Tribunal based its conclusion that the sale was an adventure in the nature of trade and that the profits thus made were assessable to income tax on the following grounds That the payment by the assessee to the Co operative Society of Rs 32748 came out of a loan taken for the purpose from a company which conclu sion as already pointed out is not borne out by the entries in the books of account of that company 853 2 That the assessee could not have paid the balance of Rs 98000 odd the outstanding amount of the purchase money to the Insurance Company 3 That the assessee had no means to construct a house on the land and lastly 4 That the site itself fetched no income thus showing that it could not be an investment but only an excursion into the realm of trade Against this decision of the Appellate Tribunal the assessee moved this Court and obtained special leave to appeal Before we deal with the main question in controversy in this appeal we would like to make some general remarks on the nature of the questions involved in this case It is not disputed on behalf of the respondent that the question now before us is a question of law or a mixed question of fact and law as has been recently laid down by this Court in the case of G Venkataswami Naidu and Co vs The Commissioner of Income tax 1 Speaking for the Court Gajendragadkar J after a detailed discussion of the decisions of this Court Meenakshi Mills Madurai vs Commis sioner of Income tax Madras 2 and The Oriental Investment Co Ltd vs Commissioner of Income tax Bombay 3 and of the House of Lords in Edwards vs Bairstow 4 came to the conclusion that the question arising in the case is a mixed question of law and fact and therefore open to examination by this Court In G Venkataswami Naidu and Co vs The Commissioner of Income tax supra the question raised was exactly similar to the question now before us though in a different setting of facts His conclusion may be stated in his own words as follows In other words in reaching the conclusion that the transaction is an adventure in the nature of trade the tribunal has to find primary evidentiary facts and then apply the legal principles involved in the expression adventure in the nature of trade used by section 2 sub section It is patent that the clause in the nature of trade postulates the existence of certain elements in 1 2 3 4 854 the adventure which in law would invest it with the character of a trade or business and that would make the question and its decision one of mixed law and fact In that view of the matter this Court further pointed out that the more proper form of the question is whether on the facts and circumstances proved in the case the inference that the transaction in question is an adventure in the nature of trade is in law justified The recent decision of this Court has examined almost all the relevant cases decided in Indian as also English and Scotch Courts and thus our task in the present case has been very much simplified It has further been observed in that case more than once that judicial opinion was unanimous that no general principles or universal tests could be laid down which could govern the decision of all cases in which the question for determination is similar to the one now before us Each case must be determined on the total impression created on the mind of the Court by all the facts and circumstances disclosed in that particular case Hence no decided case can strictly speaking be a precedent which could govern the decision of a later case involving a similar question Those decisions can be used only by way of illustrations of the different view points which have a bearing on the decision of the case in hand It has also not been disputed that in a case where a transaction under examination is not in the line of the business of the assessee and is ail isolated or a single instance of a transaction like that the burden lies on the Revenue to bring the case within the words of the statute namely that it was an adventure in the nature of trade That the onus is on the Department has been clearly laid down by Lord Garmount in the case of Commissioners of Inland Revenue vs Reinhold 1 That was a case in which the respondent the assessee was a director of a company carrying on the business of WarehousemeD and had bought four houses in January 1945 and sold them at a profit in December 1947 He admitted that he had bought the property with a 1 393 855 view to resale and had instructed his agents to sell the same whenever a suitable purchaser was forthcoming The assessee was made liable for tax in respect of the profit made by him on the resale On an appeal by the assessee before the General Commis 7 sioners it was contended on his behalf that the profit on the resale was not taxable On behalf of the Crown it was contended that the transaction of purchase and sale in question constituted an adventure in the nature of trade and that therefore the profits arising out of the transaction were chargeable to income tax The General Commissioners being eqally divided allowed the appeal It was held by the Court of Session First Division that the fact that the property was purchased with a view to resale did not of itself establish that the transaction was an adventure in the nature of trade and that therefore the determination by the Commissioners was justifiable in law The Court in coming to that conclusion took into account the con siderations that the respondent was not a property agent and that his business was not in any way associated with the purchase and sale of estates It was an isolated transaction even though the assessee had purchased a hotel and sold it again ten years previously The Court made a reference to the following observations of Lord Buckmaster in the case of Leeming vs Jones 1 an accretion to capital does not become income merely because the original capital was invested in the hope and expectation that it would rise in value if it does so rise its realization does not make it income Placing that decision along side of the present case let us see what its salient features are Though the appellant is engaged in various types of business as a share holder or a director in limited liability concerns as also in building contracts dealing in landed estates is not in the line of his business If such a transaction were in the line of his business it would not matter much whether in the assessment year he had several such transactions or only one Even a single 1 420 856 transaction of dealing in landed estates being a part of his business would be liable to income tax if a profit is made in that transaction But admittedly the transaction in question is the only one of its kind rout of which the appellant has made a considerable profit which appears to have been in the nature of a windfall When he entered into the agreement with the Society for the purchase of the plot in January 1946 he had expected that at the end of the World War the Government would release the property from its requisition and that the Society will develop the land by laying the necessary roads and providing other amenities to the plot holders But as the Government did not release the property and as the appellant was a businessman who was interested in return from his capital and as he had already paid Rs 32000 odd by way of advance towards the purchase price and as in 1947 at the end of the Second World War his business in contracts for building con structions began to decline he naturally thought of making the best of the bargain If he did not get out of the transaction his financial difficulties in meeting his further liabilities under the agreement as a result of slump in his main line of business might lead to the forfeiture of the advance of Rs 32000 odd he would naturally be on the lookout for a good purchaser He was lucky to find a lady with a lot of money to spare who had as he alleged taken a fancy to the plot in question Thus he could assign to her the benefit of his agreement with the Society on terms which were highly profitable to him There is no clear evidence in support of the inference of the Appellate Tribunal that the land was purchased with the sole intention of selling it later at a profit The Tribunal considered two alternatives in relation to this transaction one that the land was purchased in order to build a residential house and the second that it was purchased in hope of selling it later for a profit The first alterna tive the Tribunal rejected on the ground that be does not seem to have very much of means at his disposal That itself is a statement which does not bear close scrutiny During the two years previous to the year under assessment the appellant had 857 been assessed to income tax on Rs 53000 and Rs 59000 as already indicated That does not lend countenance to the surmise that the appellant was not a man of means Admittedly he held marketable shares of the value of about 2 12 lacs of rupees though all those shares standing in his name were not claimed by him as his omn Apparently he was carrying on a lucrative business during the immediately preceding years It is true that in the year of assessment on his own showing in his income tax return he had suffered a loss but that may have been a turning point in his fortunes and that would not necessarily lead to the inference that he was not in a sound financial position on the date of the agreement with the Society It may be that his hopes of flourishing in his business in the years to come were not realized after the conclusion of the Second World War But even assuming that the Tribunal was right in its conclusion as to the second alternative namely that the purchase was made in the hope of making a profit after re sale the matter is not concluded In this connection a reference may be made again to the decision in Commissioners of Inland Revenue vs Reinhold supra at p 392 where it was argued on behalf of the Revenue that a profit made in a transaction which was in the nature of an investment in the hope and expectation of a rise in price may be an accretion of capital but that if at the time of the purchase the purchaser had resolved to sell the property in the event of a profit being made and instructions had been issued to his agents accordingly the transaction could not have been treated as an investment but was truly an adventure in the nature of trade and the profit thus made must be treated as income This argument was not accepted as valid In that connection reference was made to the following observations of Lord Dunedin in the case of Jones vs Leeming 1 The fact that a man does not mean to hold an investment may be an item of evidence tending to show whether he is carrying on a trade or 1 P 423 108 858 concern in the nature of trade in respect of his invest ments but per se it leads to no conclusion whatever The decision of the House of Lords in the case afore said which is also reported in is rather ins tructive In that case the appellant was a member of a syndicate of four persons formed to acquire an option over a rubber estate with a view to selling at a profit The option was secured but the estate was considered to be too small for re sale An option over another joint estate was accordingly secured and it was decided to resell the two estates to a public company to be formed for the purpose Another member of the syndicate undertook to arrange for promotion of the company The syndicate s rights were transferred to a company This company floated another company to which the properties were sold The syndicate s profits were divided between the members and the appellant as one of the members of the syndicate was assessed to income tax in respect of his shares of the profits The General Commissioners on appeal were of the opinion that the interest in the property in question had been acquired with the sole object of making a profit and that there was no intention of holding it as an investment Hence the assessment to income tax was affirmed The King s Bench Division at the first hearing remitted the case to the General Commissioners for a finding as to whether there was a concern in the nature of trade and the Commissioners found that the transaction was not such a concern It was held by the House of Lords that the profits were not liable to tax on the basis that they were income from an adventure in the nature of trade Viscount Dunedin in the course of his opinion referred with apparent approval to the dictum in Ryall vs Noare 1 to the following effect A casual profit made on an isolated purchase and sale unless merged with similar transactions in the carrying on of a trade or business is not liable to tax He also approved of the following dictum of Lawrence L J in the case of Leeming vs Jones 2 _ 1 454 2 302 859 It seems to me in the case of an isolated transaction of purchase and re sale of property there is really no middle course open It is either an adventure in the nature of trade or else it is simply a case of sale and re sale of property Lord Warrington of Clyffe in the course of his opinion in the case of Jones vs Leeming 1 made the following observations which apply with full force to the facts and circumstances of the present case Here we have a case of the acquisition of an item of property and a profit made by the transfer thereof to another In this I can find nothing but a profit arising from an accretion in value of the item of property in question and the realization of such enhanced value There is in this nothing in the nature of revenue or income The fact that the parties intended from the first to make a profit if they could does not in my opinion affect the question we have to determine As already indicated the line of demarcation between cases of isolated transactions of purchase and sale being ventures in the nature of trade and those which are not such ventures if any is very thin The cases in which single transactions have been held not to belong to the class of ventures in the nature of trade have been noticed above and the considerations which led those courts to hold that such ventures were not liable to income tax apply to the case in hand On the other side of the line there is a series of cases in which single transactions have been held to have been ventures in the nature of trade for reasons which do not apply to the present case We may notice some of the typical cases which illustrate the reasons for which a single transaction was brought within the ambit of a venture in the nature of trade The case of Californian Copper Syndicate Limited and Reduced vs Harris Surveyor of Taxes 2 related to the purchase and sale of a mining property In that case a company had been formed for the purpose inter alia of acquiring and re selling a mining property That company acquired some mining property 1 425 2 860 and sold the same to a second company consideration for the sale being paid up shares of the latter company It was held by the Court of Exbhequer Scotland Second Division that the difference between the purchase price and the value of shares for which the property was exchanged was a profit assessable to incometax It was pointed out by the Court that the case involved a deal which was a proper trading transaction one within the Company s power under their Articles and contemplated as well as authorised by their Articles The ratio of the decision in that case appears to have been that though it was a single transaction in which profit was made it was an adventure in the nature of trade being in the line of the business adopted by the company The next case of Martin vs Lowry 1 is another instance of a single transaction of purchase of property being treated as a venture in the nature of trade on account of the very nature and magnitude of the commodity dealt in by a person whose usual line of business was wholly outside the scope of the new venture That was a case in which a wholesale agricultural machinery merchant who never had any dealings in linen trade purchased from the Government its surplus stock of aeroplane linen some 44 million yards In order to dispose of this huge stock of linen purchased by him the assessee embarked upon an extensive advertising campaign rented offices and engaged expert staff to organize the sales The number of transactions of sale of that huge stock of linen ran into thousands The House of Lords affirmed the determination of the courts below holding that the transaction amounted to the carrying on of a trade of which the profits were chargeable to income tax and Excess Profits Duty Another case in the same volume is The Commissioners of Inland Revenue vs Livingston and others 2 In that case the persons sought to be taxed were a ship repairer a blacksmith and a fish salesman s employee who joined in the venture of purchasing a cargo vessel with a view to converting it into a steam drifter and selling it That was a new line of business for them 1 2 861 Extensive repairs and alterations to the ship were carried out and the result was a sale of the converted vessel at a profit It was held that the transaction though an isolated one was a venture in the nature of trade and thus liable to income tax The ratio of the decision was stated in the following words of the Lord President If the venture was one consisting simply in an isolated purchase of some article against an expected rise in price and a subsequent sale it might be impossible to say that the venture was in the nature of trade because the only trade in the nature of which it could participate would be the trade of a dealer in such articles and a single transaction falls as far short of constituting a dealer s trade as the appearance of a single swallow does of making a summer The trade of a dealer necessarily consists of a course of dealing either actually engaged in or at any rate contemplated and intended to continue The case of Rutledge vs The Commissioners of Inland Revenue 1 is another illustration of a case in which a single transaction of purchase and sale was held to be an adventure in the nature of trade for the reason that the commodity purchased was of such a nature and of such a vast magnitude that it could not have possibly been intended for the consumption of the purchaser himself or his family In that case the assessee was a money lender who was also interested in a cinema company In the interest of his cinema business he happened to be in Berlin and there took the opportunity of purchasing for a very cheap price a very large quantity one million rolls of toilet paperfor pound 1000 and realised pound 12000 by sale of that com modity He was taxed on the nett profit of pound 10895 It was held by the Court of Session Scotland First Division that it was certainly an adventure because the assessee made himself liable for the purchase of that vast quantity of toilet paper obviously for no other conceivable purpose than that of re selling it for a large profit As regards the question whether the adventure was in the nature of trade it was contended 1 862 on behalf of the assessee that it was essential to the idea of trade that there should be a continuous series of trading operations The Court rightly pointed out that the question was not whether it was a trade but Whether it was a venture in the nature of trade Hence though the single transaction of purchase and sale may not have amounted to what is ordinarily understood by trade in the sense of a series of transactions it was certainly a venture in the nature of trade because from the very beginning the intention was manifest that the purchase was made not with a view to utilizing the commodity for the personal use of the purchaser but with a view to making profit by a resale which was apparent from the very nature and magnitude of the commodity purchased Another illustration of the same rule is to be found in the case of The Balgownie Land Trust Ltd vs The Commissioners of Inland Revenue 1 That was the case of a landed estate which was left by the owner to trustees with a direction to sell it The trustees being unsuccessful in their efforts to sell the estate formed a company with general powers to deal in real property and transferred the estate to this company The company made certain other purchases of property by way of accretions to the original estate The property was sold in parts during the years 1921 1924 1926 and 1927 The company was assessed to income tax for the profits from the sales of those lands The Court confirming the assessment of the company to income tax on the profits made on those sales held that the company was doing precisely what it meant to do namely carrying on business of a company dealing in a real estate The case of Commissioners of Inland Revenue vs Fraser 2 is another illustration of the rule that if a person enters into a single transaction outside his ordinary avocation of life with the sole object of making a profit by re sale it may amount to an adventure in the nature of trade In that case a wood cutter bought for re sale whisky in large quantities and without taking delivery of the whisky sold it at a profit It was the assessee s sole 1 2 863 dealing in whisky but all the same it was held to be liable to income tax on the ground that the nature of the transaction with reference to the commodity dealt in in large quantities which would not ordinarily be meant for personal or family consumption may indicate that it was an adventure in the nature of trade We have set out the illustrative cases on the two sides of the thin line of demarcation that may possibly be said to distinguish one class of case from the other The question still remains on which side of the line the present case should be placed The learned Solicitor General placed strong reliance on the recent decision of this Court in G Venkataswami Naidu Co vs The Commissioner of Income tax supra The question therefore is whether the present case falls on the same side of the line as the recent decision of this Court which had to deal with a similar question as already indicated In that case the assessee had purchased four plots under four different deeds During the time that the assessee was in possession of those plots he made no efforts to put up any structures or to utilize them in other ways The assessee was in a fiduciary position with the Mills contiguous to which the plots purchased were and it was also found that the assessee was in a position to influence the Mills to purchase those plots at a price favourable to him It was in that setting of the facts that this Court made the following obser vations When section 2 sub section 4 refers to an adventure in the nature of trade it clearly suggests that the transaction cannot properly be regarded as trade or busi It is allied to transactions that constitute trade or business but may not be trade or business itself It is characterized by some pB of the essential features that makeup trade or business but not by all of them and so even an isolated transaction can satisfy the description of an adventure in the nature of trade Can it be said in the setting of the facts and circumstances of the present case set out above that the transaction in question has such characteristics as 864 to point to the conclusion that itwas a venture in the nature of trade It was suggested that the area of the land in question namely three quarters of an acre in the suburbs of Calcutta was large enough to indicate that the assessee would not have intended to take it for his own use and occupation In the first place the area is not so large as to lead necessarily to the inference that it could not have been meant to be used by him in the way of his business or for his own residence Certainly the Society having acquired more than 500 bighas of land in a lot could not claim that the land was meant for its own use On the other side it was meant to be developed into small building sites as they actually did But the Society had without developing the area sub divided it into building sites one of which was sought to be acquired by the appellant He was carrying on an engineering concern and it is not therefore unlikely that he may have intended as he alleged to put up a small workshop on a portion of the land to be acquired and to build his own residential house on the other portion It was not suggested that the appellant had his own house in Calcutta and was therefore not in need of a building site At the time he entered into the agreement of purchase with the Society he was doing good business as is shown by the large amounts on which he was assessed to income tax It was not unnatural for him to look forward to continue his business in as prosperous a way as he had been doing in the recent past and thus to raise sufficient funds to build his own residential house or to construct a workshop for his own engineering business Hence the possibility or the probability that the site may appreciate in value would not necessarily lend itself to the inference that the transaction was a venture in the nature of trade as distinguished from a capital investment In all the circumstances of this case the total impression created on our mind is that it has not been made out by the Department that the dominant intention of the appellant was to embark on a venture in the nature of trade when he entered into the agreement which resulted in the profits sought to be taxed 865 For the aforesaid reasons we would allow this appeal and set aside the orders of the Tribunal below with costs KAPUR J I regret I am unable to agree that the appeal in the present case should be allowed and my reasons are these On the facts which were proved the Income tax Appellate Tribunal came to the conclusion that the purchase of land by the appellant was an adventure in the nature of trade and profit arising therefrom was assessable to income tax In coming to this conclusion the Appellate Tribunal took into consideration certain facts 1 that the only payment the appellant made for the purchase of the land was of a sum of Rs 32748 which he borrowed from his company and he was not in a position to pay the balance of Rs 98246 2 the appellant had no money available at all to pay the part of the purchase price of Rs 130994 and be had no means to construct the house 3 that his financial resources were such as not to justify the purchase of the plot of land for the construction of a house 4 the site itself fetched no income but it was a kind of investment with the hope of making a profit out of it and the land was purchased only for the purpose of sale 5 that the appellant being a keen businessman had intimate knowledge of the trend of the rise in prices of land and therefore the purpose for which he made the purchase was in order to make profit and not merely an investment As against these circumstances various facts were brought to our notice which it has argued militate against the findings of the Tribunal 1 that the appellant was carrying on an engineering concern and therefore it was not unlikely that he intended as he alleged to put up a small workshop on that portion of land 2 that the appellant did not have his own house in Calcutta and therefore he could have been in need of a piece of land on which he could build a house and 3 that at the time he entered into an agreement of purchase he had a prosperous business which is shown by the amount of income tax which he paid for 109 866 two years and he could legitimately expect that his business would continue to remain prosperous 4 that these facts could not lead to the necessary consequence that the transaction was a venture in the nature of trade and that it was not the dominant intention of the appellant at the time when he entered into the transaction to embark upon a venture in the nature of trade Under the Income tax law it is the exclusive function of the Appellate Tribunal to find facts Even though the powers of this Court under article 136 are very wide yet they have to be exercised within the limits imposed by the decisions of this Court and one such limitation is that this Court will not ordinarily interfere with findings of fact It has been held by this Court that the question whether an adventure is in the nature of a trade or not is a mixed question of law and fact The facts have to be found by the fact finding authority and to those facts the law has to be applied and whenever it is necessary to get a correct finding on a question of fact it is the fact finding authority which is called upon to consider the evidence and give its finding See G Venkataswami Naidu Co vs The Commissioner of Income tax 1 Therefore if there arose a question of law out of the order of the Appellate Tribunal then the appellant could have had the case stated to the High Court under section 661 and if the Appellate Tribunal refused to state the case it was open to the appellant to have the case stated under section 662 of the Indian Income tax Act No doubt he did make an application to the Appellate Tribunal to state the case under section 661 but he did not make any application to the High Court till 1957 after he had obtained special leave in this Court and the High Court dismissed the petition on the ground that it was barred by time The position comes to this that the tribunal refused to state the case under section 661 of the Income tax Act and the appellant did not apply to the High Court under section 662 till long after the period of limitation had expired In the circumstances the courses open to this 1 867 Court would be 1 to set aside the order of the Appellate Tribunal and remit the case to the Tribunal for decision in accordance with the observations made by this Court as was done in the case of Omar Saly Mohammed Sait vs The Commissioner of Income tax 1 or it may be open to this Court to direct a reference as was done in Jagta Coal Company vs The Commissioner of Income tax 2 Then in Dhakeswari Cotton Mills vs The Commissioner of Income tax 3 this Court only remitted the case to the Appellate Tribunal to proceed in accordance with law on the ground that certain principles of natural justice had been violated and the assessee was not given an opportunity to rebut the evidence against him The Income tax law has prescribed a procedure to have questions of law determined and an assessee cannot byepass the various steps prescribed under that law The position therefore comes to this that if there is no evidence to support the finding the question is one of law which would fall under sections 661 and 662 of the Income tax Act 2 if in giving its finding the Appellate Tribunal disregards certain pieces of evidence or proceeds in a manner which is violative of natural justice the finding will be vitiated but if there is evidence to support the finding of fact and these findings are properly arrived at then it will be a pure question of fact which this Court will not ordinarily interfere with 3 if there is an error of law arising as above or because of misinterpretation of the Income tax law then the case has to be stated to the High Court in the manner provided in the Income tax Act and if the assessee does not choose to follow the procedure prescribed then he cannot come to this Court disregarding the remedy provided by the Income tax law and 4 the legal effect of facts found where the point for determination is a mixed question of law and fact would fall under section 661 2 of the Income tax Act See G Venkataswami Naidu Co vs The Commissioner of Income tax 4 This is a case in which certain essential facts have 1 CA No 15 Of 1958 2 C A NO 337 Of 1956 3 4 868 not been considered by the Appellate Tribunal and therefore it is a case which should be remitted to the Income tax Appellate Tribunal to determine the facts in accordance with the observations made by this Court and in the light of those findings to determine whether the transaction was an adventure in the nature of a trade or not I would order accordingly ORDER OF THE COURT In view of the opinion of the majority the appeal is allowed with costs

A habeas corpus application was made to the High Court alleging that one S had been illegally arrested and kept in unlawful custody without any charge being made against him and without obtaining remand from a Magistrate By way of a return the appellant a sub Inspector of Police filed a false affidavit controverting the allegations made in the application He was prosecuted and convicted under section 193 Indian Penal Code The appellant challenged his conviction on the grounds that i as he was not bound under the law to file an affidavit the case did not fall under section 191 of the Indian Penal Code and he could not be convicted under section 193 and ii the affidavit having been affirmed as true to the best of the knowledge and belief of the appellant it could not be said which part was true to his knowledge and which to his belief Held that the appellant was rightly convicted It was not necessary for the application of section 191 of the Indian Penal Code that the accused should be bound under the law to make an affidavit If he chose to me one and bound himself on oath to state the truth he was liable under section 193 Of the Code if e made a false statement and it was no defence to say that he was not bound to enter the witness box or make an affidavit In the present case it was necessary for the appellant to file an affidavit as he was bound to place the facts and circumstances justifying 728 the detention which could only be done by an affidavit Ordinarily where the detention is under orders of the detaining authority in exercise of his plenary powers or of a Court an affidavit may not be necessary in making the return but where it becomes necessary for the detaining authority to justify its action by disclosing facts it has to file an affidavit Held further that explanation 2 to section 191 of the Code brings a false statement affirmed to the belief of the accused also within the mischief of section 191 and thus makes it punishable under section 193 of the Code Emperor vs Lachmi Narain I L R 1947 All 155 dis approved

Appeal No 321 of 1958 Appeal by special leave from the Award dated the September 27 1957 of the Industrial Tribunal Bombay in Reference IT No 119 of 1957 C K Daphtary Solicitor General of India J B Dadachanji and section N Andley for the appellant Rajani Patel and Janardan Sharma for respondent No 1 1959 May 5 The Judgment of the Court was delivered by WANCHOO J This is an appeal by special leave against the award of the Industrial Tribunal Bombay in a dispute between the Tata Oil Mills Co Ltd Bombay hereinafter referred to as the company and its workmen in the matter of profit bonus for the year 1955 56 The dispute arose over a demand made by the workmen for payment unconditionally as bonus for the year 1955 56 of a sum equivalent to four months wagessalary for all employees drawing wagessalary of less than Rs 500 per menses This dispute was referred to the Industrial Tribunal by the Government of Bombay by its order dated June 18 1957 The company had already paid 21 months basic wages as bonus to its workmen and the real dispute was thus only about the remaining bonus for a month and half 3 The case of the workmen was that the company had made record profits during the year and declared a dividend of 12 per centum free of income tax the workmen were getting much less than the living wage and the dearness allowance was not sufficient to fill the gap and therefore profit bonus at the rate of four months basic wages should be granted The company on the other hand contended that it was paying graded scale of wages with annual and biennial increments and had already paid profit bonus for 2 12 months It was not possible for the company to pay more than that as bonus as the available surplus according to the Full Bench formula did not justify it It was also pointed out that though the company started as far back as 1917 the shareholders began to get dividends only from 1940 and therefore a dividend of 12 per centum free of income tax was in the circumstances not high The company also claimed that in making calculations for the purposes of the Full Bench formula certain items of extraneous income should not be taken into account Next it claimed that a profit of Rs 3 lacs appearing in the accounts due to the change in the method of valuation was no real profit due to the efforts of labour and should not be taken into account in arriving at the available surplus Lastly it also claimed that it was entitled to 4 per centum interest on the working capital including the amount in the depreciation fund The Industrial Tribunal disallowed the claim of the company on all these three points and after making relevant calculations came to the conclusion that there was a sufficient surplus available to permit the grant of bonus for 3 12 months calculated on basic wages and therefore awarded the same The company thereupon applied for special leave to appeal which was granted and that is how the matter has now come up before us for decision We shall first take the question of extraneous income Six items were sought to be excluded by the company as extraneous income and they were these 4 In lacs Rs i Income earned by way of rent light and power 0 24 iiEstate Revenue 0 08 iii Profit on sale of empty barrels 0 89 iv Excess provision for expenses in the previous year 0 31 V Refund of income tax on revision of Cochin assessment of Excess Profits Tax 0 49 vi Sale proceeds of tin cans scraps logs planks gunnies c 2 11 Total 4 12 The Tribunal rejected the claim with respect to all these items though in the judgment it mentioned only items i ii iii and vi as those in dispute Apparently items iv and v were not in dispute before it but while making calculations it seems to have lost sight of this and disallowed the claim with respect to these two items also Learned counsel for the respondents appearing before us has stated that the claim with respect to items iv and v was conceded by the workmen before the Tribunal and it seems that by over sight these items were not excluded by it He fairly concedes that these two items may be excluded from consideration in making calculations for arriving at the available surplus We are thus left with four items which were disallowed by the Tribunal The reason given by the Tribunal for disallowing these items was that they formed part of the profits earned in the course of the company s business and there was no good reason for deducting them from the profits It further went on to say that as regards income earned by way of rent light and power it was not disputed that expenditure in respect of buildings from which the rent was derived such as on repairs and maintenance is included in the expenditure side of the account and taxes and rates for these buildings were paid by the company There was thus no reason for deducting this amount from the profits It did not consider the 5 other three items specifically and was content to include them on the general ground that they were profits earned in the course of the company s business Mr Daphtary appearing for the company has drawn our attention to a number of cases decided by industrial tribunals as well as labour appellate tribunals where such items of income have been excluded on the ground that they are extraneous income unrelated to the efforts of the workmen We do not think it necessary to refer to all these decisions and it is sufficient to say that these decisions support the contention put forward The main reason given in these decisions for excluding what is termed as extraneous income is that they are unrelated to the efforts of workmen We may refer only to two of these decisions of the labour appellate tribunal in this connection In The Mill Owners Association Bombay vs The Rashtriya Mill Mazdoor Sangh Bombay 1 in which the Full Bench formula was evolved the appellate tribunal remarked at page 1257 No scheme of allocation of bonus could be complete if the amount out of which a bonus is to be paid is unrelated to employees efforts The Appellate Tribunal reiterated this in Shalimar Rope Works Mazdoor Union Howrah vs Messrs Shalimar Rope Works Ltd Shalimar Howah 2 by observing at page 372 that it is however too late in the day to question the view that there are profits unrelated to workers efforts and referred to as extraneous profits and that such profits must be left out of account in deciding the question whether there is available surplus in any particular year Income received by way of rent of quarters and by sale of scrap materials has generally been treated as extraneous income by the industrial tribunals on the basis of these decisions of the Labour Appellate Tribunal It is the correctness of this view which has been canvassed before as in this appeal Reliance has also been placed by some tribunals on the decision of this Court in Muir Mills Co Ltd vs Suti Mills Mazdoor 1 2 6 Union Kanpur 1 in this connection This Court observed at page 998 as follows There are however two conditions which have to be satisfied before a demand for bonus can be justified and they are 1 when wages fall short of the living standard and 2 the industry makes huge profits part of which are due to the contribution which the workmen make in increasing production It was further observed at page 999 It is therefore clear that the claim for bonus can be made by the employees only if as a result of the joint contribution of capital and labour the industrial concern has earned profits If in any particular year the working of the industrial concern has resulted in loss there is no basis nor justification for a demand for bonus It is clear from these observations that this Court was not dealing with the question of extraneous income as such in the Muir Mills Case 1 The principles laid down in that case show that there must be profits in the particular year for which bonus is claimed resulting in an available surplus before profit bonus can be awarded It is only when profits are made that profit bonus can be awarded subject to two further conditions namely 1 wages fall short of the living standard and 2 the industry makes large profits part of which are due to the contribution which the workmen make _in production It is this last condition which seems to have been relied upon by industrial tribunals in holding that there must be direct connection between the efforts of labour and the profits and unless that direct connection is established the profits must be treated as unrelated to the efforts of labour and thus become extraneous income There is no doubt that there must be contribution of the workmen in earning profits before they are entitled to profit bonus but it was not laid down in the Muir Mills Case 1 that direct connection between the efforts of the workmen and the particular item of profit earned must be established before the profit can be taken into account for the purposes of arriving at the available 1 1955 1 SCR 991 7 surplus An industrial concern carries on a certain business In carrying on that business it employs capital as well as labour and generally speaking the profits earned in the normal course of business at the end of year are the result of the joint effort of capital and labour Even so it may be recognized that there may be instances of extraneous income for the purpose of the Full Bench formula due i either to some part of the profits not having been earned in that year ii or to some part of profits arising out of fortuitous circumstances altogether unconnected with the efforts of labour A third category may be the income arising out of sale of fixed or capital assets Such income or profit may be called extraneous income as either it did not really arise in that year or though it has arisen in that year labour has not contributed anything towards its accrual it may therefore not be taken into account in calculations according to the Full Bench formula But apart from these cases we cannot see how income arising during the year in the normal course of business of the concern can be called extraneous income merely on the ground that no direct connection between the efforts of labour and the accrual of the income has been established In this very case we find an instance of the first category in two items relating to return of excess provision for expenses and refund of excess profits tax These two amounts have gone to swell the profits of this year but they have not arisen in this year and may there fore properly be treated as extraneous income An instance of the second kind is to be found in the profit of Rs 3 lacs made in this year by a change in the method of valuation of the company s assets which is entirely unconnected with the efforts of labour But so far as the other four items are concerned they are earned by the company in the normal course Of its business and there is no reason why they should be excluded on the ground that it has not been proved that they are the result of direct efforts of labour in this year Let us take these four items one by one The first is the item of income earned by way of rent light and 8 power It is well known that many industrial concerns provide amenities for their workmen by building quarters which are provided with light and power from the concern s power house The quarters and power house are built out of capital or profits earned in past years If they are built out of capital there is provision for a return which is generally at 6 per centum on the paid up capital Even if they are built out of past profits the depreciation and rehabilitation charges fall on the gross profits before the available surplus is arrived at Besides expenditure with regard to repairs and maintenance and rates and taxes is all paid out of the income of the concern before the gross profits are arrived at In other words these expenses are paid out of the profits in the earning of which the workmen have contributed their labour How can the company claim to exclude the rent etc from the profits while meeting the expenditure relating to such assets out of the profits part of which is attributable to the efforts of labour In short income by way of rent light and power arises in the normal course of business of the concern and there is no reason why a direct contribution by labour during the year in question must be insisted upon in the case of such income The company must also be employing some labour for purposes of maintenance and repairs of the quarters and powerhouse even though the labour may not be wholly allocated to this work only We are therefore of opinion that income from rent light and power arises in the normal course of business of a concern and cannot be treated as extraneous income in the sense described above The next item is estate revenue We are told that the company has coconut groves which produce coconuts used in preparing oil which is one of the main items of the company s business We are also told that sometimes the entire produce of these groves is not used in the manufacture of oil and therefore some part of the produce is sold This income is out of this part sold in the market Here again the income arises in the normal course of business and the expenses for looking after and maintaining the groves are paid 9 by the company and entered into its account The company must also be employing labour to look after the groves In these circumstances we fail to see why this income by sale of surplus coconuts should be excluded from the profits for the purpose of the Full Bench formula Then we come to the profit on sale of empty barrels and sale proceeds of tin cans scraps logs planks gunnies etc These items may be taken together for the nature of the receipt is the same though on account of the method of accounting employed the income in the case of barrels is shown as profit while in the case of scraps etc it is shown as sale proceeds It is said that this is extraneous income because it is unrelated to the efforts of labour We cannot accept this contention for this income again is in the normal course of business Further when the company buys chemicals for example it pays for the chemicals as well as the containers namely the barrels When the chemicals are used up these empty barrels are sold Whatever is the income from the sale of these barrels is in reality a reduction in the cost price of chemicals to the company though by the method of accounting employed it may appear as profit on the sale of barrels We see no reason why the reduction in cost price of chemicals should not be taken into account for the purpose of arriving at gross profits in making calculations for the Full Bench formula Some scraps are normally left over in the process of manufacture Whatever income is derived from such scraps also goes to reduce the cost price of materials used in production and thus to increase the profits We do not see why this income arising in the normal course of the company s business should not be taken into account on the plea that labour has not directly contributed in its accrual We are therefor of opinion that all these four items were rightly taken into account by the Tribunal in arriving at the gross profits Then we come to the profit of Rs 3 lacs made by a change in the method of accounting The Tribunal did not accept this income as extraneous and in so doing it fell into error This income of Rs 3 lacs has 10 nothing whatsoever to do with the efforts of labour even though it has arisen this year It has arisen out of a fortuitous circumstance inasmuch as this year there was a change in the basis of valuation of stock It is not income in the normal course of business because it is not likely to arise ever again In the circumstances this income of Rs 3 lacs must be treated as extraneous income and excluded for the purpose of calculations based on the Full Bench formula The last item with which we are concerned is the return on the amount of depreciation reserve used as working capital An affidavit was made on behalf of the company that it had used its reserve funds comprising premium on ordinary shares general reserve depreciation reserve workmen s compensation reserve employees gratuity reserve bad and doubtful debt reserves and sales promotion reserve as working capital The Tribunal however allowed return at 4 per centum on a working capital of Rs 3188 lacs This excluded the depreciation reserve but included all other reserves which were claimed by the company and having been used for working capital The Tribunal gave no reason why it excluded the amount of the depreciation reserve in arriving at the figure of working capital A return is allowed on the reserves used as working capital on the ground that if these reserves are not used for this purpose the concern would have to borrow money and pay interest on that This being the basis on which a return on reserves used as working capital is allowed there is no reason why if there is in fact money available in the depreciation reserve and if that money is actually used during the year as working capital a return should not be allowed on such money also Further if the money has been converted into such assets as stock in trade and stores etc ie other than capital or fixed assets it will be obviously available from year to year to that extent as working capital subject to adjustments on account of loans secured or otherwise Learned counsel for the respondents wanted to contest that the whole amount in the depreciation reserve was not available for being used as working capital It is enough to say that the 11 affidavit of the Chief Accountant filed on behalf of the company was not challenged before the Industrial Tribunal on behalf of the respondents It would therefore be impossible for us now to over look that affidavit particularly when the Tribunal gave no reason why it treated the working capital as Rs 3188 lacs only So far therefore as the present year is concerned we must accept the affidavit and hold that the working capital was Rs 13909 lacs It will however be open to the workmen in future to show by proper cross examination of the company s witnesses or by proper evidence that the amount shown as the depreciation reserve was not available in whole or in part to be used as working capital and that whatever may be available was not in fact so used in the sense explained above In the present appeal however we must accept the affidavit of the Chief Accountant The Tribunal allowed 4 per centum interest on the working capital and that must be allowed on the total sum of Rs 139 09 lacs We now come to the calculations in accordance with the Full Bench formula subject to what we have said above Rs in lacs Rs in lacs Profit for the year 15 53 Add provision for i tax 14 51 ii depreciation 119 75 iii bonus 7 76 34 02 Gross Profits 49 55 Less extraneous income 3 80 Balance 45 75 Less notional normal depreciation 11 12 Balance 34 63 Less income tax payable according to Meenakshi Mills case 1 Per Note A Below 15 90 Balance 18 73 12 Rs in lacs Rs in lacs Less dividend on paid up 5 54 capital Less return on Reserves used 5 56 as working capital of Rs 139 09 Rs 4 per cent 11 10 Available surplus 7 63 Less bonus actually paid 7 90 Less rebate of income tax at 3 40 7 in the rupee 4 50 Amount remaining with the Company 3 13 Note A Rs in lacs Gross Profits 49 55 Less total statutory depreciation 13 19 Balance 36 36 Income tax at 7 in 15 90 a rupee The available surplus of profit thus works out at Rs 7 63 lacs The company has already paid 2 12 months bonus amounting to Rs 7 90 lacs to the workmen The company would be entitled to a rebate of Rs 3 40 lacs on this sum and therefore the amount which the company has actually to pay is Rs 4 50 lacs This will leave a sum of Rs 3 13 lacs out of the available surplus with the company for its use It will be seen that more than half the available surplus has already gone to labour according to what the company has paid There are three sharers in the available surplus namely the industry share holders and labour In the circumstances no case has been made out for increasing the profit bonus beyond what the company has already paid particularly when we find that the company has claimed no rehabilitation charges in this year We therefore allow the appeal set aside the order of the Industrial Tribunal and dismiss the claim of the workmen for any bonus 13 beyond what has already been granted by the company In the particular circumstances of this case we order the parties to bear their own costs Appeal allowed

On the death of H who as the mother of the last male owner had succeeded to the estate the respondents claimed the estate and brought a suit for its recovery on the strength of the pedigree which they set up that they were the sons of the halfsisters of the last male owner and therefore came before the agnates The suit was contested by some of the agnates of whom the appellant was one who challenged the correctness of the pedigree and maintained that the respondents mothers were not the half sisters of the last male owner The trial court agreed with the respondents case and decreed the suit and this was confirmed by the High Court The High Court relied on exhibit 1 a petition dated November 2 1917 which S one of the brothers of the third plaintiff on his own behalf and on behalf of his brothers had filed in Suit NO 31 Of 19I7 which was a suit instituted by some of the agnates of H s husband questioning the alienations made by H In the petition S alleged that the applicants were the legal claimants to the properties in the suit and prayed to be added as co defendants to the suit The petition contained a pedigree which supported the pedigree set up 815 by the respondents and the High Court held that exhibit I was admissible under section 325 of the Indian Evidence Act The oral evidence of PW 2 and PW 4 supported the respondents case as to the pedigree set up by them and the High Court held that their evidence was admissible under section 50 Of the Indian Evidence Act On appeal to the Supreme Court it was contended for the appellant 1 that exhibit I was not admissible under section 325 Of the Indian Evidence Act because a the statement therein was a joint statement of three persons of whom one alone was dead and b it was not made before disputes had arisen and 2 that the testimony of PW 2 and PW 4 did not fall within the purview Of section 50 Of the Indian Evidence Act and that the High Court erred in admitting and accepting such evidence Held 1 that section 325 Of the Indian Evidence Act was applicable to the statements as to pedigree in exhibit I because a they were really made by S for self and on behalf of his brothers and that in any case they were as much statements of S as of the other two brothers who are alive Chandra Nath Roy vs Nilamadhab Bhattacharjee 1898 ILR approved b they were made before the precise question in dispute in the present litigation had arisen as the respondents were not preferential heirs at the time of the previous suit and no question arose or could have arisen then as to the relationship between them and the last male owner 2 that the evidence of PW 2 and PW 4 that they were present at the marriage of the mother of plaintiffs 1 and 2 as also at the Upanayanam ceremonies of plaintiffs 1 and 2 showed the opinion of those witnesses as to the relationship as expressed by their conduct and was admissible under section 50 Of the Indian Evidence Act The word opinion in section 50 Of the Indian Evidence Act means something more than mere retailing of gossip or hearsay it means judgment or belief that is a belief or a conviction resulting from what one thinks on a particular question Such belief or conviction may manifest itself in conduct or behaviour which indicates the existence of the belief or opinion Under section 50 such conduct or outward behaviour as evidence of the opinion held is relevent and may be proved Chander Lal Agarwala vs Khalilay Rahman ILR approved Conduct as an external perceptible fact may be proved either by the testimony of the person himself whose opinion is evidence under section 50 or by some other person acquainted with the facts which express such opinion and as the testimony must relate to external facts which constitute conduct and is given by persons personally acquainted with such facts the testimony is in each case direct within the meaning of section 60 of the Indian Evidence Act 816 The observations of Hutchins J in Queen Empress vs Subbarayan Mad 9 that section 50 of the Indian Evidence Act seems to imply that a person whose opinion is a relevant fact cannot be called to state his own opinion as expressed by his conduct and that his conduct may be proved by others only when he is dead or cannot be called disapproved

Civil Appeal No 99 of 1951 Appeal from a Judgment and Decree of the High Court of Judicature at Bombay Stone CJ and Dixit 3 dated 14th July 1947 in First Appeal No 128 of 1943 affirming a decree dated 14th October 1942 of the Court of the Dis trict Judge of Kaira at Nadiad in Civil Suit No 15 of 1928 514 CK Daphtary N C Shah with him for the appellant Rajani Patel for the respondent March 7 The judgment of the Court was delivered by MUKHERJEA J This appeal is on behalf of the defendant and it arises out of a suit under section 92 of the Civil Procedure Code commenced by the plaintiffs who were origi nally nine in number in the court of the District Judge of Kaira at Nadiad Out of the nine plaintiffs only one is surviving and he is now the sole respondent in this appeal all the rest having died pending this protracted litigation which began as early as the year 1928 The case of the plaintiffs in substance was that one Kuberdas who was a religious teacher and a holy man rounded a cult known as Kaivalya or Karunasagar Panth the principal tenet of which is that the realization of the Infinite is possible only through the medium of a Guru or spiritual preceptor Kuberdas received money and lands from his followers and disciples and with this fund he built a temple at Sarsa Kuberdas by will appointed his principal disciple Narayandas to succeed him on the Gadi and Narayandas built another and a bigger temple wherein he installed an image of Kuberdas with the images of two staff bearers on two sides The Mahants after Narayandas were Baldevdas Bhagwandas and Pragdasji who is the defendant in the suit and each one of them was appointed by a will executed by his predecessor The defendant it is alleged had been acting in a manner contrary to the usages of the institution and was guilty of incontinence mismanagement and improper alienation of trust properties On these allegations the plaintiffs prayed that 1 the properties described in the schedule to the plaint as well as other properties under the management of the defendant be declared to be religious and charitable trust properties of the Kaivalya or Karuna sagar Panth 515 2 the defendant be removed from the Gadi and posses sion of the properties and a suitable successor appointed in his place 3 the defendant be called upon to render accounts for the period of his management and 4 a scheme might be framed for proper management of the institution The defendant in his written statement traversed all the material allegations in the plaint and contended infer alia that the suit was not maintainable inasmuch as no public trust of a religious and charitable character existed in respect to the suit properties which were the private properties of the defendant himself On these pleadings a number of issues were framed by the District Judge of which the two following were tried as preliminary issues viz 1 Whether the temple and the properties in suit are public charitable properties and 2 if not whether this court has jurisdiction to try the suit By his judgment dated the 18th of July 1935 the Dis trict Judge decided both these issues against the plaintiffs and dismissed the suit Against this decision the plain tiffs took an appeal to the High Court of Bombay The learned Judges of the High Court who heard the appeal took the view that the ownership of the suit properties was so restricted by the obligation to maintain the institu tion for purposes which only could be described as public charitable purposes that the suit must be regarded as one coming within section 92 Civil Procedure Code The result was that the judgment of the trial court was reversed and the case was remanded to that court in order that it might be heard and disposed of on its merits The judgment of the High Court is dated 24th of January 1938 Being aggrieved by this order the defendant prayed leave to appeal to the Judicial Committee but this application was refused He thereupon filed a petition before the privy Council praying for special leave 516 The Privy Council also refused to grant leave on the ground that the matter was still then in an interlocutory stage They however said specifically that the order of refusal was without prejudice to the presentation of a fresh peti tion after all the issues were determined The case then went back to the trial court and on the evidence adduced by the parties the District Judge came to the conclusion that the allegations of misconduct and breach of trust made by the plaintiffs were not proved and in this view he dismissed the suit subject to the declaration already given by the High Court that the temple and the properties in possession of the defendant were public religious and charitable properties The plaintiffs filed an appeal against this decision to the High Court of Bombay and the High Court by its judgment dated 14th of July 1947 affirmed the decision of the District Judge and dismissed the appeal The defendant has now come up to this court on the strength of a certificate granted by the High Court and though formally it is an appeal against the final decree made by the High Court on 14th of July 1947 in substance it challenges the propriety of the order of remand passed on 24th January 1938 by which the High Court reversed the decree of dismissal made by the District Judge and remanded the case being of opinion that the properties in dispute did appertain to a public trust of a religious and charita ble character Mr Daphtary appearing in support of the appeal has contended before us that on the question as to whether or not a public trust existed in respect of the properties in suit the view taken by the trial judge was right and that the decision of the High Court is based upon a misapprecia tion of the evidence on the record We have been taken through the entire evidence by the learned counsel on both sides but having regard to the view which we propose to take in this case we deem it unnecessary to record any finding as to whether the properties in suit do or do not appertain to a public charitable trust In our opinion after the 517 decision arrived at concurrently by both the courts below on the merits of the case it was beyond the scope of a suit framed under section 92 Civil Procedure Code to give the plaintiffs a bare declaration of this character and make it a part of the decree although the suit itself was dis missed A suit under section 92 Civil Procedure Code is a suit of a special nature which presupposes the existence of a public trust of a religious or charitable character Such suit can proceed only on the allegation that there is a breach of such trust or that directions from the court are necessary for the administration thereof and it must pray for one or other of the reliefs that are specifically men tioned in the section It is only when these conditions are fulfilled that the suit has got to be brought in conformity with the provision of section 92 Civil Procedure Code As was observed by the Privy Council in Abdur Rahim vs Barkat Ali1 a suit for a declaration that certain property appertains to a religious trust may lie under the general law but is outside the scope of section 92 Civil Procedure Code In the case before us the prayers made in the plaint are undoubtedly appropriate to the terms of section 92 and the suit proceeded on the footing that the defendant who was alleged to be the trustee in respect of a public trust was guilty of breach of trust The defendant denied the existence of the trust and denied further that he was guilty of misconduct or breach of trust The denial could not certainly oust the jurisdiction of the court but when the courts found concurrently on the evidence adduced by the parties that the allegations of breach of trust were not made out and as it was not the case of the plaintiffs that any direction of the court was necessary for proper adminis tration of the trust the very foundation of a suit under section 92 Civil Procedure Code became wanting and the plaintiffs had absolutely no cause of action for the suit they instituted In these circumstances the finding of the High Court about the existence of a public trust was wholly inconsequential and as it was 1 1928 55 IA 96 67 518 unconnected with the grounds upon which the case was actual ly disposed of it could not be made a part of the decree or the final order in the shape of a declaratory relief in favour of the plaintiffs It has been argued by the learned counsel for the respondents that even if the plaintiffs failed to prove the other allegations made in the plaint they did succeed in proving that the properties were public and charitable trust properties a fact which the defendant denied In these circumstances there was nothing wrong for the court to give the plaintiffs a lesser relief than what they actually claimed The reply to this is that in a suit framed under section 92 of the Civil Procedure Code the only reliefs which the plaintiff can Claim and the court can grant are those enumerated specifically in the different clauses of t he section A relief praying for a declaration that the properties in suit are trust properties does not come under any of these clauses When the defendant denies the existence of a trust a declaration that the trust does exist might be made as ancillary to the main relief claimed under the section if the plaintiff is held entitled to it but when the case of the plaintiff fails for want of a cause of action there is no warrant for giving him a declaratory relief under the provision of section 92 Civil Procedure Code The finding as to the existence of a public trust in such circumstances would be no more than an obiter dictum and cannot constitute the final decision in the suit The result is that in our opinion the decision of the High Court should stand but the decree and the concluding por tion of the judgment passed by the trial court and affirmed by the High Court on appeal shall direct a dismissal of the plaintiff s suit merely without its being made subject to any declaration as to the character of the properties To this extent the appeal is allowed and the final decree modified The order for costs made by the courts below will stand Each party will bear his own costs in this appeal

The question for decision in this appeal was whether a single transaction of sale of land measuring about three quarters of an acre was an adventure in the nature of trade so as to make it liable to income tax The assessee appellant an Engineer by profession was engaged in various business activities including that of an engineering firm but admittedly had no dealing except the one in question in respect of land In 1946 be entered into an agreement with the Hindusthan Co operative Insurance Society Ltd for the purchase of the land in question and paid a sum of Rs 32748 in two instalments being 25 of the estimated total price of the land As his construction activities declined and the Government who had requisitioned the land were not immediately releasing it the appellant sold his rights under the agreement to a third party in 1947 and thereby received a sum of Rs 74000 odd in excess of the amount paid by him to the Society The land however was not released by the Government until 1949 The Income tax Officer held that the transaction was an adventure in the nature of trade and the said sum was a profit therefrom taxable under section 10 of the Incometax Act and included it in the assessable income The Appellate Assistant Commissioner in appeal held that the assessee a man of means had intended to purchase the land for his own use and that the motive of profit was entirely absent when the purchase was made and that as it was a case of appreciation of capital he was liable to pay Capital Gains tax The Appellate Tribunal on appeal by the Department reversed the findings and the decision of the Appellate Assistant Commissioner and affirmed that of the Income tax Officer After the assessee had obtained from this Court special leave to appeal he made an application to the High Court under section 662 of the Income tax Act which that Court dismissed as being barred by limitation Held per Bhagwati and Sinha JJ Kapur J dissenting that admittedly the transaction in question being a single instance of its kind and not in the line of the business of the assessee it was for the Department to prove that the dominant intention of the appellant when he entered into the agreement with the Society was to embark on a venture in the nature of 847 trade as distinguished from a capital investment and they having failed to do so the appeal must succeed Commissioners of Inland Revenue vs Reinhold applied There could be no doubt as held by the Court that the question for decision involved in such cases was one of law or a mixed question of fact and law G Venkataswami Naidu and Co vs The Commissioner of I come tax referred to and distinguished The line of demarcation however between an isolated trans action and a venture in the nature of trade was very thin and each case had to be decided on the total impression all its facts and circumstances made on the mind of the judge Case law reviewed KAPUR J Even though the powers of this Court under article I36 of the Constitution were very wide they had to be exercised within the limits imposed by its own decisions and one such limitation was that this Court would not ordinarily interfere on questions of fact Since the question involved in the instant case was a mixed question of law and fact the facts should properly be found by the body whose exclusive function under the Income tax Act was to do so G Venkataswami Naidu Co vs The Commissioner of Income tax and Dhakeswari Cotton Mills vs The Commissioner of Income tax 1955 i SCR 94I referred to Nor could an assessee be allowed to by pass the procedure prescribed by sections 661 662 of the Income tax Act to have question of law determined Since however the Appellate Tribunal had in the instant case failed to consider certain essential facts the case should be remitted to it for a proper decision in the light of the observations made by this Court

Appeal No 108 of 1959 Appeal from the judgment and order dated November 25 1958 of the Punjab High Court in FA0 No 173 of 1958 A V Viswanatha Sastri and Naunit Lal for the appellant M C Setalvad Attorney General for India V A Syed Mohammad and M K Ramamurthi for respondent No 1 R H Dhebar for respondent No 3 1959 April 23 The Judgment of the Court was delivered by 750 SINHA J When the hearing of the appeal had been concluded on March 18 1959 we had informed the parties as also the counsel for the Election Commission of India that the appeal is dismissed with costs and that the reasons would follow We now proceed to give our reasons This is an appeal on a certificate of fitness granted by the High Court of Judicature for the State of Punjab at Chandigarh against the judgment and order dated November 25 1958 of that Court dismissing an appeal against the order of the Election Tribunal Hissar dated September 14 1958 setting aside the appellant s election to the Punjab Legislative Assembly The appellant was the successful candidate from the general seat which was a double member constituency of Sirsa the other successful candidate being a Harijan candidate respondent No 2 in this Court The first respondent contested the general seat The Election Commission of India was added as the third respondent by an order of this Court dated February 27 1959 when this Court was moved in the stay matter This Court directed the case itself to be heard before the date fixed for the fresh election as a result of the order of the Election Tribunal It appears that for the double member constituency of Sirsa there were a large number of candidates One of the two seats was reserved for members of the scheduled castes After the usual withdrawals sixteen candidates were left in the field to contest the two seats eight candidates being for the general seat and the other eight for the reserved seat We are not here concerned with the seat reserved for members of the scheduled castes In respect of the general constituency the appellant secured 27272 votes whereas the first respondent secured 23329 as a result of the election which took place on March 12 and 14 1957 The result of the election was declared on March 17 1957 The first respondent filed an election petition on April 289 1957 challenging the election of the appellant The election was challenged on a large number of grounds practically exhausting all available 751 grounds under the election law but as a result of the findings of the Election Tribunal and of the High Court we are only concerned with the allegations relating to corrupt practices contained in sub paras I to 3 of para 13B of the election petition which formed the basis for issue No 4 The relevant allegations may be stated in extenso in the words of the election petition as under B That respondent No I himself his agents and other persons with the consent of the respondent No 1 and his agents have committed the corrupt practice of undue influence by interfering directly or indirectly with the free exercise of the electoral right of the electors of this constituency The known details of these corrupt practices are given in the various clauses under the sub para 1 Sat Guru Maharaj Pratap Singh of Jiwan Nagar the religious head of Namdharis sect of the Sikhs had some personal grievances against Shri Devi Lal of Chautala a prominent Congress Leader of the constituency and the chief supporter of the petitioner at this election Respondent No 1 fully knowing of this grievance of the Sat Guru approached him and through him also approached Maharaj Charan Singh of Sikanderpur the religious head of the Radha Swaini Samaj and got issued Farmans orders by both these religious heads to their followers in this constituency to the effect that their Dharma required them to wholeheartedly support respondent No 1 and to oppose the candidature of the petitioner and that if any of the followers dared to act against their Farmans the wrath of the aforementioned Gurus would fall upon him and he would be the object of Divine displeasure These Farmans of the two Gurus were orally conveyed through the Subas of Namdharis Shri Bir Singh the son of Sat Guru Partap Singh and Naginder Singh and Shri Purshotam Singh followers of Guru Charan Singh throughout the Constituency wherever the followers of these two sects resided from the day of withdrawal till the polling began during their canvassing tours for respondent No 1 Shri Bir Singh Purshotam Singh and Naginder Singh aforesaid and Sant Teja 752 Singh MLC in Diwans held in the various villages and towns of the Constituency during their canvassing tour besides repeating these Farmans of the two Gurus also threatened the followers with expulsion from the sect and Samaj if they went against the wish of the Gurus in this matter ii That Sat Guru Pratap Singh himself in the presence of respondent No 1 in the Big Diwan of his followers held on the 25th of February 1957 at Sirsa in Radha Swami Sat Sangh Hall preached and commended all those present that it was the primary Dharma of all his followers to help the candidature of respondent No 1 and to oppose the petitioner with all their might by giving their own votes and by canvassing among their area of influence in the constituency The Sat Guru himself held Diwans at villages Tharaj on the 6th of March 1957 at village Dhiwan on the 5th March 1957 at village Rori on the 6th March 1957 and at Phaggu on the 6th March 1957 In these Diwans he besides repeating his Farmans aforesaid also relied upon the strong appeal of his relationship he being the son of the daughter of village Tharaj A very big diwan of his followers also hold at Khairpur on the 26th February 1957 for the same purpose where the Sat Guru himself commended his followers in the like tune iii That respondent No 1 got issued posters in thousands printed on both the sides in Hindi and Gurumukhi scripts on the 26th of February 1957 containing the orders Farmans of Satguru Partap Singh under the signature of Shri Maharaj Bir Singh son of Satguru Partap Singh These posters were got published at the instance of respondent No 1 at Bansal Press Hissaria Bazar Sirsa These posters contained in verbatim the orders Farmans of the Satguru to the effect that it was the primary Dharma of every Namdhari of this constituency to give his own vote as well as to canvass votes of their all acquaintances for Shri Ram Dayal candidate respondent No 1 A copy of the poster in original together with its English translation is attached with the petition and may be read as to form its part These posters were distributed 753 throughout the constituency after the same were got printed till the polling day in all the villages where Namdhari reside In support of all his allegations quoted above the first respondent adduced a large volume of oral evidence besides some documentary evidence as well The Tribunal came to the conclusion that Maharaj Pratap Singh had issued farmans to his satsanghis that he who will not vote for the appellant would suffer not only in this world but in the next also but it found it not proved that the farmans or orders of the two religious heads of the Namdharis and Radhaswamis were orally conveyed through Maharaj Bir Singh son of Maharaj Partap Singh Naginder Singh and Shri Purshotam Singh to the followers of the two Gurus in the constituency or that they while conveying the farmans of the Gurus threatened the followers with expulsion from the sect if they went against the wishes of the Gurus except what Naginder Singh had said in the Diwan at Sirsa and at other places It also recorded the finding that the Diwans were held for the purpose of canvassing in favour of the appellant at the time and place mentioned in the petition and that those Diwans were addressed by Maharaj Partap Singh and others It was also found that Maharaj Partap Singh actively supported the candidature of the appellant and addressed his followers on the basis of religion and asked them to vote for the appellant and that all this was done at the instance and in the presence of the appellant It was further found that posters like exh P 1 were issued by the appellant under the authority of Maharaj Bir Singh and his father Maharaj Partap Singh and widely distributed throughout the constituency The Tribunal also discussed the question as to whether on those findings the provisions of section 1232 of the Representation of the People Act 1951 which will hereinafter be referred to as I the Act relating to undue influence could be said to have been satisfied and alternatively whether those findings would bring the case within the provisions of cl 3 of section 123 of the Act 95 754 relating to systematic appeal on grounds of caste race community or religion etc The Tribunal appeared to be inclined to the view that a command in terms of exh P 1 emanating from a religious head like the Sat Guru to his followers mostly illiterate and ignorant persons may well be construed as undue influence But alternatively it also held that even if the provisions of cl 2 of section 123 of the Act had not been satisfied the case had been brought well within the purview of el 3 of section 123 Other issues were either not pressed or were decided against the petitioner in that court The Tribunal therefore declared the appellant s election void under section 1001b of the Act In view of the fact that the petitioner had failed to substantiate many of his allegations the Tribunal directed the parties to bear their own costs The appellant preferred an appeal which was heard by a Division Bench Falshaw and Dua JJ of the High Court of Judicature for the State Of Punjab at Chandigarh The High Court substantially affirmed the findings of the Election Tribunal on issue No 4 aforesaid The High Court also accepted the oral evidence adduced on behalf of the respondentwith particular reference to the publication and wide distribution of the poster exh In the course of its judgment the High Court observed The language of the mandate and the general background and circumstances of this case including the obvious consciousness of Maharaj Pratap Singh and Ram Dial of the probable and likely effect of such commands on the illiterate ignorant and credulous followers of the Maharaj can lead but to one conclusion that it was intended to convey to them the threat of divine displeasure and spiritual censure if they dared to disobey the farman of their supreme spiritual and religious head In answer to the contention that the farman had been motivated not by religious considerations but by a personal grievance the High Court did not attach any importance to the alleged difference in the motive and observed If the influence exercised by the religious and 755 spiritual head has the effect of creating in the minds of the voters a feeling of divine displeasure or spiritual censure then whatever the motive the influence would amount to undue influence The contents of the poster reproduced earlier unequivocally establish the mandatory nature of the command Religious sanction is in my opinion implict in it and I think on a reasonable construction of its contents it must be held that Maharaj Pratap Singh intended to convey to his followers who are mostly illiterate ignorant credulous and unsophisticated villagers having blind and implicit faith in their religious head that if they did not vote for Ram Dial they would incur divine dis pleasure and spiritual censure With this class of villagers the displeasure of the religious head is usually associated with divine displeasure Dealing with the scope of section 1232 it held that the language of the poster exh P 1 construed in the light of the oral evidence left the Court in no doubt that Maharaj Partap Singh s farman did necessarily imply divine displeasure and spiritual censure for those who chose to disobey the farman In its view therefore the facts as found attracted the provisions of section 1232 of the Act It also held that the evidence led in the case established that the meetings addressed by Maharaj Partap Singh and others in support of the election of the appellant induced the belief that the voters would incur divine displeasure or spiritual censure if they did not vote in accordance with the mandate issued by the Maharaj thus clearly establish ing the commission of corrupt practice of undue influence The High Court also examined the question whether the corrupt practice falling under cl 3 of section 123 of the Act had been established and decided the question in the negative though not without some hesitation It further held that the publication of the poster exh P 2 did not bring the case within the purview of section 1234 of the Act In the result the High Court agreed with the conclusion of the Tribunal declaring the election void and dismissed the appeal with costs The appellant applied to the High Court praying for the necessary certificate that the 756 case was a fit one for appeal to this Court and that Court granted the certificate Hence this appeal After the decision of the Tribunal and of the High Court the only question for determination in this appeal is whether on the findings of fact recorded as stated above the corrupt practice of undue influence as defined in section 1232 has been made out It has been argued on behalf of the appellant that the main cl 2 of section 123 is out of the way of the parties in this case because it applies only to threats of injury to person or property and not to what may be termed spiritual undue influence which is specifically covered by sub el ii of proviso a to cl 2 of section 123 It was further argued that the word deemed would show that the proviso is by way of an addition to the main provision of el 2 of section 123 that is to say what was not actually covered by the main cl 2 has been added to the ambit of the definition by the proviso It has further been argued that el 2 is directed against unduly influencing individual voters and reliance was placed upon the cases of Cheltenham1 Nottingham 2 and North Durham Reference was also made to the observations in Rogers on Elections 4 and it was argued that anelectoral right as defined in section 79d of the Act is a personal individual right including the right to vote or to refrain from voting at an election Hence there should have been pleading by the petitioner and finding by the Court on evidence that certain named individuals had been subjected to the corrupt practice of undue influence Secondly in the absence of any such pleading or finding a general allegation of the corrupt practice of undue influence without reference to individuals is not enough in law to vitiate an election The corrupt practice of undue influence has been defined in el 2 of section 123 of the Act in these terms 2 Undue influence that is to say any direct or indirect interference or attempt to interfere on the part of the candidate or his agent or of any other 1 64 2 246 3 156 4 Vol II 20th Ed P 329 757 person with the consent of a candidate or his election agent with the free exercise of any electoral right Provided that awithout prejudice to the generality of the provisions of this clause any such person as is referred to therein who ithreatens any candidate or any elector or any person in whom a candidate or an elector is interested with injury of any kind including social ostracism and excommunication or expulsion from any caste or community or iiinduces or attempts to induce a candidate or an elector to believe that he or any person in whom he is interested will become or will be rendered an object of divine displeasure or spiritual censure shall be deemed to interfere with the free exercise of the electoral right of such candidate or elector within the meaning of this clause ba declaration of public policy or a promise of public action or the mere exercise of a legal right without intent to interfere with an electoral right shall not be deemed to be interference within the meaning of this clause It should be observed at the outset that the law in England relating to undue influence at elections is not the same as the law in India as will appear from the following definition of undue influence contained in section 2 of 46 47 Vict c 51 which substantially re enacted the former section 5 of 17 18 Viet c 102 Every person who shall directly or indirectly by himself or by any other person on his behalf make use of or threaten to make use of any force violence or restraint or inflict or threaten to inflict by himself or by any other person any temporal or spiritual injury damage harm or loss upon or against any person in order to induce or compel such person to vote or refrain from voting or on account of such person having voted or refrained from voting at any election or who shall by abduction duress or any fraudulent device or contrivance impede or prevent the free exercise of the franchise of any elector or shall thereby compel induce or prevail upon any 758 elector either to give or to refrain from giving his vote at any election shall be guilty of undue influence The words of the English statute quoted above lay emphasis upon the individual aspect of the exercise of undue influence It was with reference to the words of that statute that Bramwell B made the following observations in North Durham 1 When the language of the Act is examined it will be found that intimidation to be within the statute must be intimidation practised upon an individual The Indian law on the other hand does not emphasise the individual aspect of the exercise of such influence but pays regard to the use of such influence as has the tendency to bring about the result contemplated in the clause What is material under the Indian law is not the actual effect produced but the doing of such acts as are calculated to interfere with the free exercise of any electoral right Decisions of the English Courts based on the words of the English statute which are not strictly in pari materia with the words of the Indian statute cannot therefore be used as precedents in this country In the present case we are not concerned with the threat of temporal injury damage or harm On the pleadings and on the findings of the Tribunal and of the High Court we are concerned with the undue exercise of spiritual influence which has been found by the High Court to have been such a potent influence as to induce in the electors the belief that they will be rendered objects of divine displeasure or spiritual censure if they did not carry out the command of their spiritual head It was argued that exh P 1 on which so much stress was laid by the Tribunal and by the High Court did not contain any such direct threat as would bring the case within the second paragraph of proviso a to section 1232 Exhibit P 1 as officially translated is in these terms A command from Shri Sat Guru Sacha Padshah to the Namdharies of Halqa Sirsa Every Namdhari of this Halqa is commanded by Shri Sat Guru that he should make every effort for 1 156 759 the success of Shri Ram Dayal Vaid a candidate for the Punjab Vidhan Sabha by giving his own vote and those of his friends and acquaintances it being our primary duty to make him successful in the election The election symbol of Shri Vaid is a riding horseman Maharaj Bir Singh So Sat Guru Maharaj Partap Singh Jivan Nagar Hissar We have looked into the original document also and we agree with the High Court that the crucial words like hukam of Shri Sat Guru Sacha Padshah etc have been printed in very bold letters conveying the distinct impression to the large number of Namdharis who are voters in the constituency that it was a mandate from their spiritual guru who wielded great local influence amongst them that it was their bounden duty under the strict orders of their religious leader not only to cast their own votes in favour of the particular candidate but also to exert their influence amongst their friends and acquaintances in favour of that candidate and that any infringement of that mandate had implicit in it divine displeasure or spiritual censure It was contended on behalf of the appellant that a religious leader has as much the right to freedom of speech as any other citizen and that therefore his exhortation in favour of a particular candidate should not have the result of vitiating the election There cannot be the least doubt that a religious leader has the right freely to express his opinion on the comparative merits of the contesting candidate and to canvass for such of them as he considers worthy of the confidence of the electors In other words the religious leader has a right to exercise his influence in favour of any particular candidate by voting for him and by canvassing votes of others for him He has a right to express his opinion on the individual merits of the candidates Such a course of conduct on his part will only be a use of his great influence amongst a particular section of the voters in the constituency but it will amount to an abuse of his great influence if 760 the words he uses in a document or utters in his speeches leave no choice to the persons addressed by him in the exercise of their electoral rights If the religious head had said that he preferred the appellant to the other candidate because in his opinion he was more worthy of the confidence of the electors for certain reasons good bad or indifferent and addressed words to that effect to persons who were amenable to his influence he would be within his rights and his influence however great could not be said to have been misused But in the instant case as it appears according to the findings of the High Court in agreement with the Tribunal that the religious leader practically left no free choice to the Namdhari electors not only by issuing the hukam or farman as contained in exh P 1 quoted above but also by his speeches to the effect that they must vote for the appellant implying that disobedience of his mandate would carry divine displeasure or spiritual censure the case is clearly brought within the purview of the second paragraph of the proviso to section 1232 of the Act This aspect of the case has been dealt with at length by the High Court in a well considered judgment and we do not think it necessary to repeat all those obser vations beyond saying that we agree with them In that view of the matter it is not necessary for us to consider the further question whether el 2 of section 123 of the Act apart from the proviso para ii discussed above covers a case like the present where the undue influence is of a spiritual character as distinguished from threats of injury to person or property As the main ground urged in support of the appeal against the judgment of the High Court fails the appeal must be dismissed with costs to the respondent No 1 Appeal dismissed

In resisting the workmen s claim for bonus for the year 1955 56 the appellant contended that in calculating gross profits for the purpose of the Full Bench formula the following items of income should be excluded i Income earned by way of rent light and power ii estate revenue derived from sale of excess coconuts used in preparing oil grown in the appellant s groves iii profit from sale of empty barrels and iv sale proceeds of tin cans scraps logs planks gunnies etc as they were extraneous income unrelated to the efforts of the workmen The appellant also claimed that a profit of Rs 3 lacs appearing in the accounts due to a change in the method of valuation was no real profit due to the efforts of labour and should not be taken into account In calculating the available surplus the appellant claimed that it was entitled to 4 interest on the depreciation reserve used as working capital Held that the four items were earned by the appellant in the normal course of its business and could no be excluded from the gross profits on the ground that it had not been proved that they were the result of the direct efforts of labour in the bonus year Though there must be contribution of the workmen in earning profits before they could be entitled to profit bonus it was not necessary to establish direct connection between the efforts of the workmen and each item of profit earned Profits earned in the normal course of business were generally the result of the joint effort of capital and labour Income or profit may be extraneous if it either did not really arise in that year or it arose out of fortuitous circumstances altogether unconnected with the efforts of labour or arose out of sale of fixed or capital assets 2 Mill Owners Association Bombay vs The Rashtriya Mill Mazdoor Sangh Bombay Shalimar Rope Works Mazdoor Union Howrah vs Shalimar Rope Works Ltd Howrah referred to The profit of Rs 3 lacs due to change in the method of accounting was extraneous income and had to be excluded It was not income in the normal course of business as it was not likely to arise again It had arisen out of fortuitous circumstances and had nothing whatsoever to do with the efforts of labour The appellant was entitled to a 4 return on the deprecia tion reserves used as working capital If reserves were not used for this purpose the concern would have to borrow money and pay interest thereon

riminal Appeal No 3 of 1957 Appeal from the judgment and order dated August 14 1956 of the former Judicial Commissioner s Court Ajmer in Criminal Appeal No 2 of 1956 arising out of the judgment and order dated January 11 1956 of the Special Judge Ajmer in Criminal Case No I of 1955 R Ganapathy Iyer and R H Dhebar for the appellant B D Sharma for the respondent April 22 The Judgment of the Court was delivered by WANCHOO J This appeal is on a certificate granted by the Judicial Commissioner of Ajmer One Shivji Lal Joshi hereinafter called the accused was prosecuted under section 161 of the Indian Penal Code and section 5 2 of the Prevention of Corruption Act No II of 1947 He was convicted by the Special Judge on both counts and sentenced to suffer rigorous imprisonment for a total period of six months He filed an appeal before the Judicial Commissioner of Ajmer The appeal was allowed on the ground that the accused was not a public servant though the Judicial Commissioner agreed with the findings of the Special Judge so far as the facts were concerned The State applied for a certificate under Art 134 1 c of the Constitution to enable it to appeal to this Court This certificate was granted and that is how the appeal has come before us The facts which have been found by both the courts are these The accused was a teacher in the railway school at Phulera Prem Singh who was the complainant was known to the accused for about a year before the incident which took place on October 6 1954 He was in search of a job and the accused had told him a number of times that he would procure a job for him in the Railway Running Shed at Abu Road if Prem Singh paid him Rs 100 On October 5 1954 the accused had met Prem Singh at Kaiserganj 742 in Ajmer and told him that Dusehra holidays were approaching and if he paid Rs 100 the accused would go to Abu Road to secure a job for him Eventually it was agreed between the two that Prem Singh would pay him Rs 50 on the next day while the remaining Rs 50 would be paid after the job had been secured After this agreement Prem Singh went to the Deputy Superintendent Police Special Police Establishment and made a complaint to the effect that the accused had told him that he could secure employment for him at Abu Road Loco Shed as he bad considerable influence there and had demanded Rs 100 as illegal gratification for that purpose Prem Singh also said that it had been settled that be would pay Rs 50 in advance and Rs 50 after his appointment Conse quently Prem Singh wrote out an application addressed to the Divisional Mechanical Engineer Abu Road and also produced five ten rupee notes before the Deputy Superintendent Police The numbers of these notes were noted down and the Deputy Superintendent Police arranged that one Nathu Singh should accompany Prem Singh as a cousin when Prem Singh met the accused next day to pay him the money On October 6 1954 Prem Singh accompanied by Nathu Singh met the accused as arranged and the accused asked him for an application Prem Singh gave him the application which he bad already written out and the accused said that that would serve the purpose The accused then asked Prem Singh for the money and he handed over the five ten rupee notes adding that he would pay the remaining Rs 50 after getting service and assuring him that he would keep to his part of the bargain Thereafter Prem Singh gave the pre arranged signal and the police party headed by the Deputy Superintendent of Police arrived The Deputy Superintendent Police disclosed his identity and searched the person of the accused In that search the application which Prem Singh had written for the Divisional Mechanical Engineer Abu Road and the five ten rupee notes were recovered Thereafter the accused was prosecuted as already mentioned above 743 The accused admitted that the application as well as the five ten rupee notes were recovered from him by the police His explanation was that one Jiwan Ram had given him the application which was in English and which was said to be a letter for a friend of Jiwan Ram at Abu Road The accused did not know English and took the application to be a letter to be delivered to the friend of Jiwan Ram Jiwan Ram also gave him five ten rupee notes to be given to that very friend of his when the accused went to Abu Road As already stated both the courts below have accepted the prosecution version set out above and disbelieved the explanation given by the accused The Special Judge convicted the accused on the basis of the prosecution story The Judicial Commissioner though he accepted the prosecution story to be true held that the accused was not a public servant and therefore ordered his acquittal The main question that has been raised on behalf of the appellant therefore in this appeal is that the Judicial Commissioner erred in holding that the accused was not a public servant within the meaning of section 21 of the Indian Penal Code The question whether the accused is a public servant under section 21 of the Indian Penal Code depends upon the interpretation of the last part of the Ninth clause of that section which is in these terms every officer in the service or pay of the Government or remunerated by fees or commission for the performance of any public duty The Judicial Commissioner seems to have overlooked this part of the Ninth clause for he says that it had not been shown that it was the duty of the accused to take receive keep or expend any property on behalf of the Government so that he may come under the Ninth clause of section 21 This only refers to the earlier part of the Ninth clause and the last part which we have set out above does not seem to have been considered at all This very question came up for consideration in this Court in G A Monterio vs The State of Ajmer 1 and it was laid down that the true 1 744 test in order to determine whether a person is an officer of the Government is 1 whether he is in the service or pay of the Government and 2 whether he is entrusted with the performance of any public duty It is not disputed in this case that the accused was in the service of Government and was being paid by Government It cannot also in our opinion be doubted that he was entrusted with the performance of a public duty inasmuch as he was a teacher in a school maintained by Government and it was part of his public duty to teach boys In these circumstances the Judicial Commissioner was in error in holding that the accused was not a public servant within the meaning of the Ninth clause of section 21 This however does not dispose of the matter Learned counsel for the accused has urged that even if the accused is held to be a public servant he cannot be held guilty on either of the charges framed against him We shall first take the charge under section 52 of the Prevention of Corruption Act read with section 51 d The charge was that the accused by corrupt or illegal means or by abusing his position as a public servant obtained pecuniary advantage for himself inasmuch as he took As 50 from Prem Singh on October 6 1954 Mere receiving of money by a public servant even if it be by corrupt means is not sufficient to make out an offence under section 5 2 read with section 51d The relevant part of section 51d reads as follows A public servant is said to commit the offence of criminal misconduct in the discharge of his duty if he by corrupt or illegal means or by otherwise abusing his position as a public servant obtains for himself or for any other person any valuable thing or pecuniary advantage The offence under this provision consists of criminal misconduct in the discharge of his duty In order therefore that this offence is committed there should be misconduct by the public servant in the discharge of his duty In other words the public servant must do something in connection with his own duty and thereby obtain money for himself or for any other person by corrupt or illegal means or by otherwise abusing 745 his position If a public servant takes money from a third person in order to corrupt some other public servant and there is no question of his misconducting himself in the discharge of his own duty that action may be an offence under section 161 of the Indian Penal Code but would not be an offence under section 52 read with section 51d of the Prevention of Corruption Act The essence of an offence under section 52 read with section 51d is that the public servant should do something in the discharge of his own duty and thereby obtain any valuable thing or pecuniary advantage for himself or for any other person by corrupt or illegal means or by otherwise abusing his position The words by otherwise abusing his position read along with the words in the discharge of his duty appearing in section 51d make it quite clear that an offence under that section requires that the public servant should misconduct himself in the discharge of his own duty In the present case the accused was a teacher and it was no part of his duty to make appointments in the Running Shed at Abu Road There would therefore be no question of his committing misconduct in the discharge of his duty when he took money for procuring a job for Prem Singh in the Running Shed So far therefore as the charge under section 51d is concerned we are of opinion that there was no question of the accused misconducting himself in the discharge of his own duty in the circumstances of this case and it must fail Now we turn to the charge under section 161 of the Indian Penal Code The relevant part of that section omitting the unnecessary words for the purpose of this case is in these terms Whoever being a public servant accepts from any person for himself any gratification whatever other than legal remuneration as a motive or reward for rendering or attempting to render any service or disservice to any person with any public servant This requires that the person accepting the gratification should be 1 a public servant 2 he should accept gratification for himself and 3 the gratification 94 746 should be as a motive or reward for rendering or attempting to render any service or disservice to any person with any other public servant The charge under section 161 of the Indian Penal Code which was trained in this case stated that the accused being a public servant accepted on October 6 1954 a sum of Rs 50 from Prem Singh as illegal gratification as a motive for securing a job for him in the Railway Running Shed Now the first two ingredients set out above are clearly established in this case but the third ingredient namely that the gratification should have been taken as a motive or reward for rendering or attempting to render any service with any public servant is not even charged against the accused The charge merely says that he took the money as a motive for securing a job for Prem Singh in the Railway Running Shed Abu Road It does not disclose who was the public servant whom the accused would have approached for rendering or attempting to render service to Prem Singh in securing a job for him Even in the complaint made by Prem Singh to the Deputy Superintendent Police all that was said was that the accused told Prem Singh that he would secure a job for him at Abu Road because he had considerable influence there It was not disclosed as to who was the public servant on whom the accused had influence and whom he would approach in order to tender service to Prem Singh In his statement also Prem Singh did not say that the accused had told him that he had influence on any particular public servant at Abu Road whom he would influence in order to render this service to Prem Singh namely procuring him a job It is true that the application was addressed by Prem Singh to the Divisional Mechanical Engineer and was given to the accused who said that it was all right but Prem Singh did not even say that the accused had asked him to address the application to the Divisional Mechanical Engineer It seems that the application was addressed to the Divisional Mechanical Engineer simply because he was obviously the officer in charge of the Railway Running Shed at Abu Road Thus Prem Singh did not say either in his complaint or in 747 his statement that the accused had told him that he would render service to him by approaching a particular public servant In the charge sheet submitted by the police as well as in the charge framed by the court it was not disclosed whether any public servant would be approached to render service to Prem Singh ie by securing him a job In the circumstances one of the ingredients of the offence under section 161 was neither alleged nor charged nor proved against the accused The mere fact that a person takes money in order to get a job for another person somewhere would not by itself necessarily be an offence under section 161 of the Indian Penal Code unless all the ingredients of that section are made out As in this case one of the main ingredients of that section has not been made out the accused would be entitled to acquittal However it has been urged on behalf of the State that presumption under section 41 of the Prevention of Corruption Act arises in this case as money passed hands from Prem Singh to the accused and section 41 provides that if an accused person has accepted any gratification for himself or for any other person it shall be presumed unless the contrary is proved that he accepted that gratification as a motive or reward as is mentioned in section 161 of the Indian Penal Code Assuming that this presumption can be raised even when all that is proved is mere passing of money the question still remains whether a presumption as to the motive or reward such as is mentioned in section 161 of the Indian Penal Code can be raised in this case at all when we know as a fact that Prem Singh never said in the complaint that the accused had told him that he would influence any public servant and did not even say so in his statement in court and there was no mention in the charge sheet by the police or in the charge framed by the court that the accused was going to influence any public servant in order to secure a job for Prem Singh at Abu Road We are of opinion that if the evidence had disclosed that the accused had indicated that he would influence any public servant in order to secure a job for Prem Singh a presumption as to the motive or reward might have 748 been drawn under section 41 assuming again that such a presumption can be drawn where there is simple passing of money But when there is no indication whatever that any public servant was to be approached or influenced by the accused there can in our opinion be no question of making a presumption that the payment was as a motive or reward for endering service with any public servant In this view of the matter we are of opinion that the offence under section 161 of the Indian Penal Code is not made out against the accused for one of its essential ingredients is missing and no presumption can be drawn in the circumstances in that connection We therefore dismiss the appeal though for reasons different from those which commended themselves to the learned Judicial Commissioner Appeal dismissed

In a suit under sec 92 of the Civil Procedure Code alleging that the defendant had been guilty of misconduct and breach of trust as Mahant and praying inter alia that the temple and properties in suit be declared as a religious and charitable trust and the defendant be removed from the Gadi and a suitable successor appointed in his place the District Judge and the High Court held concurrently that the defendant was not guilty of misconduct or breach of trust and dismissed the suit but made a declaration to the effect that the temple and properties in the possession of defend ant belonged to a public trust of a religious and charitable character Held that a suit under sec 92 Civil Procedure Code is a suit of a special character which presupposes the existence of a public trust of a religious or charitable character and it can proceed only when there is a breach of such trust or directions from the Court are necessary for the administration thereof and it must pray for one or other of the reliefs that are specifically mentioned in the sec tion and therefore as the Courts found concurrently that the allegations of breach of trust were not made out and no direction of the Court for proper administration of trust was sought the very foundation of a suit under sec 92 Civil Procedure Code became wanting and the plaintiffs had no cause of action for their suit and in the circumstances the declaration of the High Court about the existence of a public trust was inconsequential and was no more than an obiter dictum and such declaration must be deleted from the decree dismissing the suit

Appeal No 172 of 1955 Appeal by special leave from the judgment and order dated February 26 1953 of the Bombay High Court in Appeal No 108 of 1952 arising out of the Judgment and order dated July 8 1952 of the said High Court in its Ordinary Original and Civil Jurisdiction in Misc No 48 of 1952 R J Kolah J B Dadachanji section N Andley and Rameshwar Nath for the appellant H N Sanyal Additional Solicitor General of IndiaK N Rajagopal Sastri and D Gupta for the respondents May 5 The Judgment of the Court was delivered by HIDAYATULLAH J This appeal by special leave of this Court is directed against the judgment and order of the High Court of Judicature at Bombay dated February 26 1953 in Appeal No 108 of 1952 By that judgment the Divisional Bench Chagla C J and Shah J declined to interfere in Letters Patent Appeal with the judgment of Tendolkar J dated July 8 1952 in Miscellaneous Application No 48 of 1952 In the petition which was originally filed in the High Court under article 226 of the Constitution a writ of mandamus was asked against the Union of India and two Income tax Officers to compel them to give effect to the appellate order of the Appellate Assistant Commissioner of I T F Range Bombay dated April 29 1949 The High Court in both the judgments declined the writ The facts of the case are as follows The appellant Messrs Sarupchand arid Hukamehand and Co hereinafter referred to as the assessee firm was carrying on business inter alia as shroffs merchants and 989 commission agents at Bombay Indore Ujjain and Calcutta It had in the relevant account years two partners Sir Sarupchand Hukamchand and Sri Hiralal Kalyanmal The two partners were also separately liable to income tax the former as a Hindu undivided family and the latter as an individual We are concerned here with the assessment years 1940 41 194142 and 1942 43 These correspond to the account years 1995 1996 Samvat to 1997 1998 Samvat When the assessment of the assessee firm was made the Income tax Officer Section VIII Central Bombay treated the firm as resident and ordinarily resident For the assessment year 1940 41 the Income tax Officer found a profit of Rs 80358 and applying section 235b of the Indian Income tax Act hereafter called the Act he proceeded to treat the firm which was unregistered as registered for the purpose of assessment On March 15 1945 he therefore assessed the two partners carrying the profit into their individual returns and made no demand upon the firm It appears that an application for registration had already been filed under section 26A of the Act before the Income tax Officer but it was rejected and quite correctly because no instrument of partnership was disclosed That order was also passed on the same date For the assessment years 1941 42 and 1942 43 the Income tax Officer by his orders dated July 31 1945 and October 31 1945 respectively treated the firm as resident and ordinarily resident and as an unregistered firm For the first of the two assessment years he assessed the firm on a total income of Rs 230798 to income tax and super tax and for the second year its British Indian income was taken at Rs 262827 and the total income at Rs 700116 and was also treated accordingly The assessee firm appealed against these assessments The Appellate Assistant Commissioner by his order passed in the consolidated appeals on April 29 1949 held that the assessee firm was non resident and excluded the income of the firm outside British India though it was included in the total word income for the purpose of computing the rate of tax 990 He also found error in the computation of income made by the Income tax Officer and held that in the assessment year 1940 41 there was a loss of Rs 161084 in the total world income of the assessee firm For the subsequent years also there were slight variations in the amounts determined by the Income tax Officer but it was held that the assessee firm had made profits in those years The following is the summary of the findings of the Appellate Assistant Commissioner as given by him in his order Assess Income in Income Total ment British outside world year India British income India Rs Rs Rs 1940 41 Loss 226028 74944Loss 161084 1941 42 127062 108236 235298 1942 43 262827 441789 704616 In addition to these findings the Appellate Assistant Commissioner added a direction to the following effect The Income tax Officer is directed to modify the assessments accordingly When the matter reached the Income tax Officer he gave effect to the order of the Appellate Assistant Commissioner under section 31 of the Act and carried the loss to the partners in their assessments for the year 1940 41 and granted a refund of Rs 16977 11 0 to Sir Sarupchand Hukamchand and Rs 68339 to Sri Hiralal Kalyanmal The assessee firm however was not satisfied and embarked upon voluminous correspondence beginning with a letter dated September 10 1949 by which it claimed that inasmuch as it had been shown to have incurred a loss in the first of the three assessment years it could not for that year be treated as a registered firm and that as an unregistered firm it was entitled therefore to carry forward the loss to the subsequent years In addition to the correspondence the assessee firm moved in turn the Income tax Officer 991 as well as the Appellate Assistant Commissioner respectively under section 35 of the Act for rectification of the assessment to the same effect The officers of the Department at both levels declined to interfere and stated that the direction of the Income tax Officer under section 235b was not appealable and had become final They also pointed out that the period during which the original order of the Income tax Officer could be rectified viz 4 years had already run out and that the petitions were accordingly out of time The assessee firm moved the Commissioner as well as the Central Board of Revenue but failed to get the desired order Finally after the receipt of the order of the Central Board of Revenue the assesee firm applied on July 16 1951 to the Additional Income tax Officer Section VIII Central to give effect to an order which the assessee firm had secured from the Appellate Assistant Commissioner earlier By that order the Appellate Assistant Commissioner had at the request of the assessee firm directed the Income tax Officer to take the losses of the first assessment year into the accounts of the partners which direction in the opinion of the Appellate Assistant Commissioner his predecessor had omitted to make in the first instance It was after this that fresh assessment forms were drawn up and the refund was determined It may be pointed out here that the partners withdrew the amount of refund though in making the request to the Additional Income tax Officer the assessee firm had reserved its right to move further in the matter as may be advised and had pointed out that the action was without prejudice to such rights Having failed to obtain relief from the Department the appellate authorities and the Central Board of Revenue the assessee firm filed the petition under article 226 of the Constitution in the High Court of Judicature at Bombay That petition was heard by Tendolkar J and he declined to interfere mainly on the ground that it was possible to take two views of the matter whether after a profit assessment was turned into a loss assessment by the Appellate Assistant 992 Commissioner the original order of the Income tax Officer under section 235b remained outstanding or not He thought that this was not a fit case for the issuance of a writ of mandamus by the High Court In appeal which was taken from this decision Chagla C J looked at proviso d to section 242 and also came to the view that there was a possibility of two views being taken in the matter and that the learned single Judge was right in not interfering Shah J in a concurring judgment explained what he considered was the meaning of section 235b read with section 242 proviso d but he also felt that this was not a case in which a Writ could be claimed against the Union of India or the Income tax Officers Chagla C J however expressed the hope that the taxing authorities would not deny the assessee firm its rights under the Act on any technical ground such as limitation or failure to pursue a particular procedure In the result the Divisional Bench sustained the order of Tendolkar J who had dismissed the petition earlier This Court on May 3 1954 granted special leave to appeal against the judgment of the Divisional Bench Before arguing on merits of the appeal the learned Additional Solicitor General and subsequently Mr Rajagopala Sastri who took over the argument raised three objections to the present appeal According to them the petition in the High Court was directed against the Union of India and the two Income tax Officers who had dealt with this matter and the relief which was claimed could be granted by none of them They further argued that mandamus was an inappropriate writ to issue in this matter when the order passed by the Income tax Officer under section 235b was not appealable and the Appellate Assistant Commissioner could do nothing about it in the appeal against the quantum of assessment They also stated that the relief asked for in the petition could not be granted by the High Court and that the powers of this Court were accordingly limited We shall deal with these objections when we have determined the essence of the matter Under section 235b a power is conferred on the Income tax Officer to treat an unregistered firm as a registered 993 firm if by adopting that method more tax and supertax would be realisable from the individual partners in their own assessments than in assessing the firm I The clause may be quoted in extenso for ready reference here 235 Notwithstanding anything contained in the foregoing sub sections when the assessee is a firm and the total income of the firm has been assessed under sub section 1 sub section 3 or sub section 4 as the case may be b in the case of an unregistered firm the Income tax Officer may instead of determining the sum payable by the firm itself proceed in the manner laid down in clause a as applicable to a registered firm if in his opinion the aggregate amount of the tax including super tax if any payable by the partners under such procedure would be greater than the aggregate amount which would be payable by the firm and the partners individually if the firm were assessed as an unregistered firm The contention of the assessee firm is that the action of the Income tax Officer in treating an unregistered firm as a registered firm is mainly in the interests of the Revenue and he can act if more revenue would be available and not otherwise When an unregistered firm makes a loss it is entitled to carry forward the loss for a certain number of years till it is absorbed in the profits if any of subsequent years By carrying the loss to the account of the individual partners relief is afforded to them in their own income tax payment and there is presently a loss of revenue to the State This according to the assessee firm is outside the jurisdiction of the Income tax Officer because his action is conditioned upon realisation of more revenue and not creating loss for the State Learned counsel for the Department agree that there would be in the assessment year in which there is a loss by an unregistered firm a loss to the Revenue if it is carried into the accounts of the partners but they contend that there is no inhibition against the 125 994 action and refer to proviso d to section 242 as indicating that such a course is perfectly valid The assessee firm also contends that the moment loss was determined by the Appellate Assistant Commissioner the previous order made by the Income tax Officer under section 235b of the Act automatically fell to the ground and the loss could only be carried forward in the future assessments of the unregistered assessee firm and not in the account of the partners The assessee firm contends that the direction by the Appellate Assistant Commissioner to modify the assessments of the three years accordingly implied the reopening of the entire question whether this unregistered firm could be treated as a registered firm for purposes of assessment in the first year The Department on the other hand refers to the provisions of section 30 of the Act to show that an appeal lies to the Appellate Assistant Commissioner on the grounds expressly mentioned there and none other It further points out that this is not one of the grounds on which the appeal could have been taken and the Act cannot by implication be deemed to have conferred on the Appellate Assistant Commissioner a power which he ordinarily did not possess under the Act The order of the Income tax Officer to treat the unregistered firm as registered must therefore be held to be outstanding and all that has happened in the case is to take that order to its logical conclusion in the light of the assessed loss of the firm in the three years under assessment This question was argued before us in great detail as apparently it had also been in the Court below There is no doubt that the matter is one of some complexity which is not unusual in a statute of the type we are considering but in our opinion only one correct view of the matter was possible and with all due respect the High Court made but little attempt to determine it We shall now attempt to lay down the interpretation of the various sections bearing upon the matter Section 235b has already been quoted It will appear from it that the Income tax Officer is given the option to apply the procedure laid down in cl a to an unregistered firm if in his 995 opinion the aggregate amount of tax including supertax if any payable by the partners under such procedure would be greater than the aggregate amount of tax which would be payable by the firm and the partners individually if the firm was assessed as an unregistered firm Clause a provides that the sum payable by the firm shall not be determined but the total income of each partner of the firm including therein his share of its income profits and gains of the previous year shall be assessed and the sum payable by him on the basis of such assessment shall be determined To put it simply in the case of a registered firm its assessable income is first determined but is not processed further to determine the tax Instead the shares of the partners in the assessable income are determined in accordance with the particulars furnished by them and the resultant amounts are respectively carried to each partner s return and included in his income and the tax on the total is determined In the case of an unregistered firm the assessable income is found out and then the tax payable by the unregistered firm is determined and a demand issued If there is a loss then the loss is carried forward to the succeeding years till it is absorbed or for six now eight years but no further Previously the number of years ranged from one to six but there is no need to refer to the provision in detail What happened in this case was that for the assessment year 1940 41 the Income tax Officer determined the assessable income at Rs 80358 He felt that more tax was likely to be realised if the partners were assessed instead of the firm and he accordingly decided to apply the procedure laid down in section 235b to the firm In passing his order the Income tax Officer observed as follows The firm is an unregistered one but the aggregate amount of tax payable by the partners would be greater by applying the procedure laid down in Sec 235a of the Act than the aggregate amount which would be payable by the firm and the partners individually if the firm were assessed as an unregistered one I therefore order under Sec 235b of the 996 Act that the procedure laid down in Sec 235a should be applied and the firm declared N D for the assessment year 1940 41 It is no doubt true that if the Income tax Officer had determined a loss he could not and probably would not have passed this order which would have had the immediate effect of loss to the Revenue of the sums which have now been ordered to be refunded to the partners of this unregistered firm The Department however says that the assessment for 1940 41 except in so far as profit was converted into loss has become final and cannot be set aside now It relies on Commissioner of Income tax Bombay and Aden vs Khemchand Ramdas 1 and Commissioner of Income tax vs Tribune Trust Lahore 1 There is no doubt that an assessment which has once been made does become final subject only to the powers exercisable under sections 34 and 35 of the Act The position however is different when the assessment itself is subject to appeal and the Appellate Assistant Commissioner passes an order converting the profit into a loss and gives a direction to the Income tax Officer to modify the assessment accordingly The position then was that the Income tax Officer had exercised his powers under section 235b as there was a profit When the Appellate Assistant Commissioner found a loss it became clear that the Income tax Officer had by an erroneous finding of profit assumed jurisdiction to act under section 235b The reversal of the finding of profit destroyed the substratum of the jurisdiction of the Income tax Officer to act under that clause and his order automatically fell through The Department s contention that such an order is referable to cl a of section 313 and does not involve the setting aside of the order under section 235b passed earlier by the Income tax Officer is not correct No doubt the right of appeal given to the assessee under section 30 is limited to the matters therein contained but the relief which the appellate authority can give is to be found in section 313 The assessment order having come before the Appellate Assistant Commissioner he 1 2 997 can under cl a confirm reduce enhance or annul the assessment Under cl b he can set aside the assessment and direct the Income tax Officer to make a fresh assessment after making such further enquiries as the Income tax Officer thinks fit or the Appellate Assistant Commissioner directs and the Income tax Officer must thereupon proceed to make fresh assessment and determine the amount of tax payable on the basis of such fresh assessment It is contended by the Department that the order of the Appellate Assistant Commissioner was passed under cl a and not cl b and there being no fresh assessment ordered the only thing that the Income tax Officer could do was to redetermine the tax within the limits of his own order under section 235b of the Act which applied cl a of that sub section to this case In our opinion this is not a correct approach Even if the order be referred to cl a of section 313 the effect in law was the annulment of the assessment which had been made in the case and the necessary consequence of the determination of the loss in the assessable income remained to be worked out The Income tax Officer worked it out by carrying the losses to the return of the partners Under what section could he do so except under section 235b There was no authorisation under section 314 of the Act and the second proviso to section 24 was clear In such a case the Income tax Officer was required once again to apply his mind to determine whether it would be in the interests of Revenue to proceed as he had done before It is manifest that if he had done this duty in the interests of the Revenue as the law indeed contemplates he would never have passed the order that the loss of the firm should be carried to the accounts of the partners immediately in that year of assessment Learned counsel for the Department admits that no Income tax Officer would have with a loss by the firm given relief on the basis of that loss to the partners but he contends that this is not illegal in view of the special provisions of proviso d to section 242 of the Act We accordingly proceed to consider the effect of that proviso which reads as follows 998 Provided that d where an unregistered firm is assessed as a registered firm under clause b of sub section 5 of Section 23 during any year its losses shall also be carried forward and set off under this section as if it were a registered firm From this it is argued as it was argued in the High Court that even the losses of an unregistered firm can be carried to the partners account as if the firm were registered No doubt if the proviso is read in an extended manner the result for would follow but a careful reading of it would show that it was not designed to enable the Income tax Officer to forego the obligation laid on him by cl b of section 235 to find out the interests of the Revenue To read this proviso as enabling the Income tax Officer to overlook the said clause is to give no meaning to the words during any year Those words form a material part of the proviso because the proviso with or without those words makes an entirely different sense Without those words it gives a general power to carry the losses to the partner s account With those words it only provides for a continent in which an unregistered firm treated as such in the previous years is sought in any particular year to be treated as a regis tered firm and by reason of its carrying some business losses in the past arrangement for the carrying forward and absorption of those losses has to be made for the year in which it is to be treated as a registered firm In that event the proviso provides that its losses shall be carried to the partners account as if it were a registered firm It is inconceivable that if the firm was carrying heavy business losses it would suddenly be treated in a year of assessment as a registered firm so that its losses might give relief to the partners and not give revenue to the State This proviso would only be resorted to when in spite of taking the losses to the accounts of the partners more revenue would be available to the State The proviso is an enabling one An unregistered firm treated as such in previous years may during any year be treated as a registered firm provided the Revenue would 999 benefit It may be that the firm may have made a loss in that year or was carrying a loss from the previous years but if by treating the firm as registered the Revenue would be benefited the proviso can be used But there is no general power to act this way to the detriment of the Revenue To give any other interpretation to this proviso will mean that the words during any year have not received any meaning and that the proviso is interpreted to make it not incumbent on the Income tax Officer to consider the interests of the Revenue as required by cl b of section 235 The two Provisions must be read in harmony and when so read yield the only result that proviso d is to be invoked subject to the conditions under section 235b to obtain more revenue for the State by applying section 235a It would appear therefore that the Income tax Officer in the light of the losses determined by the Appellate Assistant Commissioner was under a duty to apply his mind de novo to the problem which he had undertaken when he resorted to section 235 b It is admitted that if the matter had been so plain to him he would not have if he did his duty correctly under that provision carried the losses to the partners account The only question therefore Which survives for determination is whether the order of the Appellate Assistant Commissioner left the Income tax Officer free of his earlier order and whether he was under a duty to reconsider the position under section 235 b When the basis for assessing a profit was gone it is manifest that there was nothing but loss to carry forward to the partners account With the fall of the assessment in this manner fell the need for applying the special provisions of cl b of section 235 to the case Indeed the duty of the Income tax Officer indicated a contrary course if he was to act under section 235 b at all The order of the Appellate Assistant Commissioner was passed in respect of three years assessment and was a consolidated order He set out in parallel columns the income and losses of the firm and not of the partners and directed the Income tax Officer to 1000 modify the assessments accordingly The intention obviously underlying that order was to put the matter at the stage at which the assessable income of the assembly firm was determined before computing the tax thereupon To compute the tax the Income fax Officer had to determine whether the loss occasioned in the first year should be carried forward to the assessee firm in the subsequent year and he could not give effect to the order of the Appellate Assistant Commissioner fully unless he determined once again the question under section 235 b In other words the implication of the appellate order was to take the matter prior to the order regarding the treatment of the unregistered firm as a registered firm and of necessity that order fell to the ground as being passed beyond that stage It is contended on the strength of the ruling of the Privy Council in Commissioner of Income tax vs The Tribune Trust Lahore 1 that once the assessment is final and valid it remains so until it is set aside but once it has become final it cannot be altered except under sections 34 and 35 No exception can be taken to the statement of the law by the Privy Council which with all due respect is absolutely correct but it is impossible to hold on analogy that the order determining that this unregistered firm should be treated as registered had equally become final and not open to further consideration Learned counsel for the Depart ment also urged on the strength of Commissioner of Income tax vs McMillan Co 2 and Commissioner of Income tax vs Amritlal Bhogilal Co 3 that if the powers of the Appellate Assistant Commissioner did not involve a review of the determination by the Income tax Officer under section 235 b this result could not indirectly follow No doubt the Appellate Assistant Commissioner could not if the matter had gone before him in appeal against the order under that section have interfered But the Appellate Assistant Commissioner was exercising his powers under section 31 of the Act and annulling the assessment 1 2 3 1001 of the first year and converting a profit in that year into a loss None can deny that he had that power in the appeal which was before him Section 314 of the Act enjoins that where as the result of an appeal any change is made in the assessment of a firm the Appellate Assistant Commissioner may authorise the Income tax Officer to amend accordingly any assessment made on any partner of the firm This power was implicit in the order which the Appellate Assistant Commissioner passed namely that there was a loss in the assessment year in question and the assessments for the three years had to be modified The Income tax Officer therefore was under a duty to modify the assessments of the partners accordingly and to take the matter up again from the point at which the order of the Appellate Assistant Commissioner had placed it He had once again to determine whether he would in the altered circumstances apply s235b to this case or not In our opinion the Income tax Officers in questiondid not do their duty as required by law and we should therefore by a writ compel them to do so As regards the argument that the petition is directed against wrong persons and for a wrong relief we do not think that it is so The petition sought relief against the Union of India which in any event was not concerned with this matter and was wrongly joined But the two Income tax Officers who dealt with this matter were required under the statute to do their duty once again in the matter of the application of section 235 b of the Act That they failed to apply their mind to this matter under a wrong apprehension of the law is manifest and they did not give effect to the orders of the Appellate Assistant Commissioner The assessee firm having failed to secure this relief from all the authorities superior to the Income tax Officers it was open to the High Court by a writ to order the Income tax Officer concerned to hear and determine this matter in accordance with law This is precisely the relief which was claimed in the High Court and is now claimed in the present appeal We 126 1002 think with due respect that the High Court should have on a correct appraisal of the legal situation ordered this relief and we accordingly after explaining the law applicable to the case order the appropriate Income tax Officer to hear and determine this matter in the light of our observations We may set down here that the two partners of the firm to whom relief has been given by way of refund after the Appellate Assistant Commissioner s order undertook unconditionally to refund the amounts before the matter is considered by the Income tax Officer We order that the two partners shall return the amounts in the manner to be ordered by the Income tax Officer before action is taken to determine the matter In the result the appeal is allowed with costs throughout to be paid by respondents 2 and 3 The Union of India shall however bear its own costs It may be noted that no separate costs were incurred by it either in this Court or in the Court below It joined respondents 2 and 3 in the statement of the case filed in this Court and also appeared through the same counsel in both the Courts Appeal allowed

This appeal was directed against concurrent orders of the Election Tribunal and the High Court on appeal setting aside the appellant s election to the Punjab Legislative Assembly on an election petition filed by the respondent No 1 on the ground of corrupt practice of undue influence within the meaning of proviso aii to section 1232 of the Representation of the People Act 951 A large number of voters of the constituency were Namdhari Sikhs and the appellant under the authority of the supreme religious leader of the Namdhari Sikhs and his son issued the following poster and distributed it widely throughout the constituency 749 A command from Shri Sat Guru Sacha Padshah to the Naindharies of Halqa Sirsa Every Namdhari of this Halqa is commanded by Shri Sat Guru that he should make every effort for the success of Shri Ram Dayal Vaid a candidate for the Punjab Vidhan Sabha by giving his own vote and those of his friends and acquaintances it being our primary duty to make him successful in the election The election symbol of Shri Vaid is a riding horseman Maharaj Bir Singh So Sat Guru Maharaj Pratap Singh Jiwan Nagar Hissar Both the Tribunal and the High Court found that the reli gious leader not only issued the said hukam or command but also delivered speeches to the effect that every Namdhari must vote for the appellant implying that disobedience of his mandate would carry divine displeasure or spiritual censure and practically left no free choice to the Namdhari electors Held that the case clearly fell within the purview of pro viso aii to section 1232 Of the Representation of the People Act and the appeal must be dismissed The law in England relating to undue influence at elections was not the same as the law in India While the law in England laid emphasis upon the individual aspect of the exercise of undue influence under the Indian law what was material was not the actual effect produced but the doing of such acts as were calculated to interfere with the free exercise of an electoral North Durham s case referred to Decisions of the English Courts in this regard therefore could not be used as precedents in India

il Appeals Nos 78 to 83 of 1959 Appeals by special leave from the judgment and orders dated July 28 1954 of the U P Board of Revenue in Second Appeals Nos 430 435 of 1953 54 arising out of the judgment and orders dated April 28 1954 of the Court of the Additional Commissioner Meerut Division Meerut in Appeals Nos 455 460 of 1954 against the judgment and orders dated March 16 1954 of the Addl District Magistrate Meerut in Cases Nos 389 394 of 1950 B C Misra for the appellants section N Andley J B Dadachanji and Rameshwar Nath for the respondent April 24 The Judgment of the Court was delivered by SUBBA RAO J These six appeals by special leave were filed against the judgment of the Board of Revenue dated July 28 1954 The respondent was a Zamindar of Gadhi Baghu and Santokpore Villages in Uttar Pradesh He claimed that the plaint schedule lands were his Sir The appellants set up a dispute claiming that they were admitted by the respondent as hereditary tenants and that they were in possession of the said lands As the dispute was likely to cause breach of the peace the Sub Divisional Magistrate Baghpat took proceedings under section 145 Code of Criminal Procedure and attached the disputed lands on October 8 1948 and directed them to be placed in possession of a superdgidar pending disposal of those proceedings After 800 making the necessary enquiry by an order dated March 20 1950 he found that the appellants were in possession of the said lands and declared that they were entitled to be in possession thereof until evicted therefrom in due course of law On June 30 1950 the respondent filed six suits in the Revenue Court Additional Collector Meerut against the appellants under section 180 of the U P Tenancy Act U P 17 of 1939 hereinafter called the Act for evicting them from the said lands and for damages He alleged therein that the disputed lands were his Sir lands and that the appellants trespassed on the same on the basis of a wrong order of the Criminal Court The appellants pleaded inter alia that they had been admitted as hereditary tenants by the respondent after receiving from them a sum of Rs 40000 towards premium The suits were consolidated but were stayed on August 14 1951 under r 4 of the Rules made under the U P Ordinance No III of 1951 On September 22 1952 on an application made by the respondent the Revenue Court ordered under r 5 for restarting the trial of the suits After the said order the Revenue Court transferred the suits to the Civil Court for retrial but the first Additional Munsif Ghaziabad to whom the suits were transferred held that the said suits were triable only by the Revenue Court and retransferred the same to that Court The Additional Collector Meerut held on evidence that the said lands were Sir and Khud kasht of the respondent and that the appellants were not admitted thereto as hereditary tenants The appellants preferred six appeals against the decrees of the Additional Collector in the six suits to the Court of the Commissioner at Meerut The Additional Commissioner who heard the appeals held that one of the appeals filed by the legal representatives of Jahana the plaintiff in the suit which gave rise to that appeal had not been properly presented on the ground that Shri Brahmanand Sharma Vakil did not file in the suit any vakalat given to him by the legal representatives of the deceased and therefore the appeal had abated and that as all the suits were consolidated with the 801 consent of the parties the decision in the suit became final and operated as res judicata in the other appeals On the merits he agreed with the trial Court in holding that the lands in dispute were Sir and that the appellants were not hereditary tenants Thereafter the appellants preferred six second appeals against the said order of the Additional Commissioner to the Board of Revenue at Allahabad The Board of Revenue accepted the findings of the two Courts and also it negatived the plea raised by the appellants for the first time to the effect that the suits were not maintainable in the Revenue Court In the result the appeals were dismissed The present appeals were filed against the order of the Board of Revenue The learned Counsel for the appellants raised before us the following contentions 1 The appeal by the legal representatives of Jahana against the order of the Additional Collector Meerut was properly presented to the Court of the Commissioner 2 assuming that the said appeal had abated the decision of the Additional Collector in the suit giving rise to the said appeal would not operate as res judicata in the connected appeals 3 the Revenue Court had no jurisdiction to try the suits 4 as the suits had been stayed under r 4 of the Rules made under the U P Zamindari Abolition and Land Reforms Act 1950 hereinafter called the Rules they had abated under r 5 of the said Rules 5 the finding on issue one namely that the appellants were not hereditary tenants was vitiated by errors of law and 6 the finding on issue two namely to what damages if any was the plaintiff entitled was contrary to law inasmuch as the Additional Collector gave damages though neither the witnesses deposed to it nor the Advocate advanced any argument thereon The first two contentions need not detain us As we are rejecting the contentions of the learned Counsel for the appellants on all the other points the correctness of the decision of the Revenue Board on the said two points would not affect the result of the appeals We do not therefore propose to express our opinion thereon 101 802 We shall take the fifth contention next That contention raises the question whether the appellants were hereditary tenants of the disputed lands The three Courts have concurrently held on a consideration of oral and documentary evidence that they were not hereditary tenants The learned Counsel for the appellants made an attempt to reopen the said finding by contending that it was vitiated by the following errors of law i Though the appellants filed a certified copy of the khatauni of 1355 fasli the Courts did not draw the presumption which they were bound to do to the effect that the said certified copy was a genuine document and that the person who purported to have signed it had held the official character which he claimed to hold in the said document ii as the Magistrate made an order in favour of the appellants under section 145 of the Code of Criminal Procedure the Courts should have thrown the burden of proof on the respondent iii the material evidence adduced on the side of the appellants was ignored iv the Courts applied different standards of proof to the appellants and the respondent in regard to the certified copies of khatauni and khasra prepared by the same patwari Ahmed Ali and v the Courts also ignored the rights accrued to the appellants and ss 10 16 and 20 of the U P Tenancy Act For convenience of reference and to distinguish the alleged errors of law from the main contentions we shall refer to the former as points The first point in the manner presented before us does not appear to have been raised in any of the three Courts Section 79 of the Evidence Act reads The Court shall presume to be genuine every document purporting to be a certificate which is by law declared to be admissible as evidence of any particular fact and which purports to be duly certified by any officer of the Central Government or of a State Government Provided that such document is substantially in the form and purports to be executed in the manner directed by law in that behalf The Court shall also presume that any officer by whom any such document purports to be signed or 803 certified held when he signed it the official character which he claims in such paper Under this section a Court is bound to draw the presumption that a certified copy of a document is genuine and also that the officer signed it in the official character which he claimed in the said document But such a presumption is permissible only if the certified copy is substantially in the form and purported to be executed in the manner provided by law in that behalf Section 4 of the Evidence Act indi cates the limits of such a presumption The relevant part of that section reads Whenever it is directed by this Act that the Court shall presume a fact it shall regard such fact as proved unless and until it is disproved To put it differently if a certified copy was executed substantially in the form and in the manner provided by law the Court raises a rebuttable presumption in regard to its genuineness The khatauni of 1355 fasli with which we are concerned gives the relevant details and purports to have been signed by Ahmed Ali the patwari of the village It cannot be disputed that the patwari was an officer appointed by the State Government and that he was authorized to issue certified copies of the record of rights The U P Land Records Manual gives the rules prescribing the form and the manner in which a certified copy of the record of rights should be issued Paragraph 26 of the Manual confers upon him the power to give to the applicants certified copies from his record and tinder el d of the said paragraph he should enter in his diary a note of such extracts He should also note the amount of fee realised by him in the diary as well as on the extract In this case neither the diary was produced to prove that the procedure prescribed was followed nor the extract to disclose that the officer made any note of payment It cannot therefore be said that the certified copy was issued by the patwari in substantial compliance with the provisions of law governing such issue If so it follows that the Court is not bound to draw the presumption in regard to its genuineness 804 That apart a Court is bound to draw only a rebuttable presumption in regard to its genuineness In this case the three Courts rejected the document on the ground that it was not genuine on the basis of not only the internal evidence furnished by the document but also on other evidence They have given convincing reasons for doing so and even if there was any rebuttable presumption it was rebutted in the present case Nor is there any merit in the second point either The order of the Magistrate under section 145 of the Code of Criminal Procedure may at best throw the burden of proof on the plaintiff but in the present case the question of burden of proof is not material for the findings of the three Courts were arrived at on a consideration of the entire evidence Though the learned Counsel says that material evidence has been ignored by the Courts he has not been able to point out what evidence has been excluded The Courts have considered the entire evidence placed before them and the findings were based on an appreciation of the said evidence We are also unable to appreciate the contention that different standards of proof have been applied by the Courts in respect of the different parties This argument is based upon the fact that the Additional Commissioner while rejecting the certified copy of the khatauni of 1355 fasli filed by the appellant relied upon the certified copy of khasra dated June 28 1948 filed by the respondent though both of them were issued by the same patwari Ahmed Ali We do not see any incongruity in the action of the Additional Commissioner He rejected the former as for other reasons he held that it was not genuine and he relied upon the latter as he accepted its genuineness The last of the points has not been made in any of the Courts below and indeed it does not arise on the finding that the appellants are not tenants Sections 10 16 and 20 of the U P Tenancy Act presuppose that the person claiming rights thereunder is a tenant and on the finding that the appellants are not tenants there is no scope for invoking the said provisions Presumably for that very reason 805 no question on the basis of those sections was raised in the Courts below The concurrent finding of the three Courts to the effect that the appellants are not hereditary tenants is essentially one of fact and is not vitiated by any error of law Following the usual practice of this Court we must accept the finding The sixth contention in our view is not open to the appellants at this stage The Additional Collector gave damages though he noticed the fact that no witness deposed in regard to damages and though the respondent s Counsel did not argue on that point Notwithstanding the said fact he gave damages on the basis of the annual rent of the holdings The correctness of this finding was not canvassed either in the first appellate Court or in the second appellate Court nor does the statement of case filed in this Court disclose any grievance on that score In the circumstances we do not feel justified to allow the appellants to raise that plea in this Court We may now advert to the main and substantial contention of the appellants namely that the suits are not maintainable in a Revenue Court This question turns upon the interpretation of section 180 of the Act Before reading the section it would be convenient and useful to notice briefly the scheme of the Act relevant to the question raised The Act as the preamble shows was passed to consolidate and amend the laws relating to Agricultural tenancies proprietary cultivation It regulates the relationship between the landlords and the tenants in respect of the agricultural holdings It confers exclusive jurisdiction on Revenue Courts in respect of rights inter se between the landlord and the tenant It also reconciles the con flicting jurisdictions of Revenue and Civil Courts Briefly stated all disputes between a landlord and his tenant in respect of tenancy are exclusively made triable by Revenue Courts and all disputes in respect of proprietary rights are left to the decision of Civil Courts Incidentally if a question exclusively falling within the jurisdiction of a Revenue Court arises in a suit in a Civil Court that suit is stayed and the relevant issue is submitted for decision of the Revenue 806 Court So too if a question of proprietary right arises in a proceeding before a Revenue Court that issue is submitted for the decision of a Civil Court Jurisdiction is expressly conferred on Revenue Courts to entertain among others suits for ejectment under certain circumstances on specified grounds Section 180 of the Act is one of the fasciculus of sections dealing with ejectment Sections 155 to 179 provide for suits for ejectment against tenants on specified grounds Then comes section 180 the material part of which reads 1 A person taking or retaining possession of a plot of land without the consent of the person entitled to admit him to occupy such plot and otherwise than in accordance with the provisions of the law for the time being in force shall be liable to ejectment under this section on the suit of the person so entitled and also to pay damages which may extend to four times the annual rental value calculated in accordance with the sanctioned rates applicable to hereditary tenants Explanation II A tenant entitled to sublet a lot of land in accordance with the provisions of the law for the time being in force may maintain a suit under this section against the person taking or retaining possession of such plot otherwise than in the circumstances for which provision is made in section 183 2 If no suit is brought under this section or if a person in possession shall become a hereditary tenant of such plot or if such person is a co sharer he shall become a khudkasht holder on the expiry of the period of limitation prescribed for such suit or for the execution of such decree as the case may be Section 242 says that suits of the nature specified in the fourth schedule shall be heard and determined by Revenue Courts Schedule 4 Group B gives succintly the description of the suits and the periods of limitation and the court fee payable thereon Serial No 8 relates to a suit under section 180 of the Act Against that 807 serial number the nature of the suit is described in the following terms For the ejectment of a person occupying land without title and for damages The period of limitation for instituting such a suit is also prescribed thereunder Under section 180 of the Act a person entitled to admit another to a plot of land can file a suit in a Revenue Court to eject him The latter can defend the suit only on two grounds namely 1 that he has taken possession or retained possession of the said plot with the consent of the former and 2 that he took possession or retained possession in accordance with the provisions of law for the time being in force If no suit was brought against the occupier or if the decree obtained against him was not executed he would become a hereditary tenant after the period of limitation prescribed in the fourth Schedule to the Act On the findings of the Courts below the appellants did not take possession of the lands with the consent of the respondent but it is said that they had taken possession of the lands in accordance with the provisions of the law for the time being in force To substantiate this contention reliance is placed firstly on the recitals in the plaints and secondly on the provisions of section 145 of the Code of Criminal Procedure In the plaints it was stated that the Criminal Court had declared on March 20 1950 the appellants possession for some reason and after the order of the said Court they had forcibly reaped the crops raised by the respondent The cause of action was alleged to have accrued after March 20 1950 or near about the date of their taking possession of the said lands The allegations in the plaints do not support the appellants The respondent did not admit that possession was taken in execution of the order made by the Magistrate but lie averred that taking advantage of a wrong order declaring the appellants possession they trespassed upon his lands If the allegations were assumed to be correct the appellants did not take possession in accordance with the provisions of the law for the time being in force 808 Can it be said that the appellants had taken possession in accordance with the provisions of section 145 of the Code of Criminal Procedure The short answer is that section 145 of the said Code does not confer on a Magistrate any power to make an order directing the delivery of possession to a person who is not in possession on the date of the preliminary order made by him under section 1451 of the Code Under section 1451 of the Code his jurisdiction is confined only to decide whether any and which of the parties was on the date of the preliminary order in possession of the land in dis pute The order only declares the actual possession of a party on a specified date and does not purport to give possession or authorise any party to take possession Even in the case of any party who has been forcibly and wrongfully dispossessed within two months next before the date of the preliminary order the Magistrate is only authorised to treat that party who is dispossessed as if lie had been in possession on such date If that be the legal position the appellants could not have taken possession of the disputed lands by virtue of an order made under the provisions of section 145 of the Code of Criminal Procedure They were either in possession or not in possession of the said lands on the specified date and if they were not in possession on that date their subsequent taking possession thereof could not have been under the provisions of the Code of Criminal Procedure If the appellants did not take possession of the disputed lands did they retain possession of the same in accordance with the provisions of the law for the time being in force The dichotomy between taking and retaining indicates that they are mutually exclusive and apply to two different situations The word taking applies to a person taking possession of a land otherwise than in accordance with the provisions of the law while the word retaining to a person taking possession in accordance with the provisions of the law but subsequently retaining the same illegally So construed the appellants possession of the lands being illegal from the inception they could not be described as persons retaining possession of the said 809 lands in accordance with the provisions of any law for the time being in force so as to be outside the scope of section 180 of the Act But the contention may be negatived on a broader basis Can it be said that the possession by virtue of an order of a Magistrate under the provisions of section 145 s of the Code of Criminal Procedure is one in accordance with the provisions of the law for the time being in force It appears to us that the words possession in accordance with the law for the time being in force in the context can only mean possession with title The suit contemplated by the section is one by a landlord against a person who has no right to possession The preceding sections as we have already indicated provided for evicting different categories of tenants on specified grounds Section 180 provides for the eviction of a person who but for the eviction would become a hereditary tenant by efflux of the prescribed time If there is any ambiguity we find none it is dispelled by the heading given to the section and also the description of the nature of the suit given in the Schedule The heading reads thus Ejectment of person occupying land without Title Maxwell On Interpretation of Statutes 10th Edn gives the scope of the user of such a heading in the interpretation of a section thus at p 50 The headings prefixed to sections or sets of sections in some modern statutes are regarded as preambles to those sections They cannot control the plain words of the statute but they may explain ambiguous words If there is any doubt in the interpretation of the words in the section the heading certainly helps us to resolve that doubt Unless the person sought to be evicted has title or right to possession it cannot be said that his possession is in accordance with the provisions of the law for the time being in force If so the appellants must establish that the order of the Magistrate issued under the provisions of section 145 of the Code of 102 810 Criminal Procedure conferred a title or a right to pos session on them This leads us to the consideration of the legal effect of the order made by the Magistrate under section 145 of the Code of Criminal Procedure Under section 1456 of the Code a Magistrate is authorized to issue an order declaring a party to be entitled to possession of a land until evicted therefrom in due course of law The Magistrate does not purport to decide a party s title or right to possession of the land but expressly reserves that question to be decided in due course of law The foundation of his jurisdiction is on apprehension of the breach of the peace and with that object he makes a temporary order irrespective of the rights of the parties which will have to be agitated and disposed of in the manner provided by law The life of the said order is conterminous with the passing of a decree by a Civil Court and the moment a Civil Court makes an order of eviction it displaces the order of the Criminal Court The Privy Council in Dinomoni Chowdhrani vs Brojo Mohini Chowdhrani 1 tersely states the effect of orders under section 145 of the Code of Criminal Procedure thus These orders are merely police orders made to prevent breaches of the peace They decide no question of title We therefore hold that a provisional order of a Magistrate in regard to possession irrespective of the rights of the parties cannot enable a person to resist the suit under section 180 of the Act This leaves us with the fourth contention based upon the U P Zamindari Abolition and Land Reforms Rules To appreciate this contention some relevant facts may be recapitulated On August 14 1951 the six suits were stayed in view of the U P Government Notification dated August 9 1951 issued under Ordinance No III of 1951 Thereafter the suits continued to remain stayed under r 4 of the said Rules The appellants filed an application under subrule 3 of r 5 for restarting the trial of the suits and an order directing the restarting of the suits was made by the Additional Collector Meerut on September 22 1 1901 LR 29 IA 24 33 811 1952 The appellants preferred a revision against that order to the Board of Revenue It was contended before the Board of Revenue that the suits had abated under cl v of r 4 of the Rules but the Board of Revenue rejected their contention on the ground that the suits fell within the exception to r 5 It may also be mentioned that the rules were amended on October 8 1952 i e after the order directing the restarting of the proceedings On the said facts the first question is whether r 5 of the amended Rules would apply to a case which was restarted under the provisions of the original Rules The following are the relevant rules from the two sets of Rules i e the original Rules and the amended Rules Original Rules as publish As amended on 8 10 1952 ed in Gazette dated 30 6 1952 Stay of certain suits and proceedings All suits and proceedings whether of the first instance appeal or revision of the nature as hereinafter specified in respect of the area for which a notification under section 4 has been issued pending in any court on the date of vesting shall be stayed 4v Suits applications and proceedings including appeals references and revisions under section 180 of the U P Tenancy Act 1939 As amended on 8 10 1952 All suits and proceedings whether of the first instance appeal or revision of the nature as hereinafter specified in respect of the area for which a notification under section 4 has been issued pending in any court for hearing on the date of vesting shall be stayed 4v Suits applications and proceedings including appeals references and revisions under section 180 of the U P Tenancy Act 1939 or of similar nature pending in a civil court except where the plaintiff is a tenant or where the land was the Sir khudkhast or grove of an intermediary and in which rights 812 51 Disposal of suits and proceedings stayed under rule 4a1 Every suit or proceeding whether of the first instance appeal or revision stayed under clauses i to iv of rule 4 shall be abated by the court or the authority before which it may be pending after notice to the parties and giving them an opportunity to be heard The abatement of any suit or proceeding under sub rule 1 shall not debar any person from establishing his right in a court of competent jurisdiction in accordance with the law for the time being in force in respect of any matter in issue in such suit or proceeding Where a suit has been stayed under clause v of rule 4 any party to the suit may within six months from the date of vesting apply to the court concerned to restart the issue have not accrued to the defendant under section 16 or any other section of the UP Zamindari Abolition and Land Reforms Act 1950 Disposal of suits and proceedings stayed under rule 4 a1 Every suit or proceeding whether pending in the court of first instance or in appeal or revision stayed under clauses i to v of rule 4 shall together with the appeals or revision if any be abated by the court or the authority before which it may be pending after notice to the parties and giving them an opportunity to be heard The abatement of any suit or proceeding under sub rule 1 shall not debar any person from establishing his right in a court of competent jurisdiction in accordance with the law for the time being in force in respect of any matter in issue in such suit or proceeding 813 From a comparative study of the aforesaid rules it will be seen that there are two fundamental differences B relevant to the present enquiry namely i while under the original Rules all suits under section 180 of the Act are stayed under the corresponding rules of the amended Rules an exception is made in the case of lands which are Sir Khudkast or grove of an intermediary in which rights have not accrued to the defendant under section 16 or any other section of the U P Zamindari Abolition and Land Reforms Act 1950 and ii while under the original Rules there is a procedure for restarting a suit stayed under r 4 there is no such procedure under the amended Rules In the present case the suits were restarted under the old Rules and thereafter no stay order was made under the amended Rules The position therefore is that there was neither a subsisting stay under the old Rules nor any stay order made under the new Rules If so r 5 of the amended Rules cannot be invoked for under that rule only a suit stayed under r 4 ai shall be abated thereunder We therefore hold that r 5 of the amended Rules cannot be invoked in the present case That apart cl v of sub rule 2 of r 4 of the amended Rules does not in terms apply to a land which is Sir unless rights have accrued to a person in possession thereof under section 16 or any other section of the U P Zamindari Abolition and Land Reforms Act 1950 On the findings arrived at by the Courts namely that the appellants were trespassers on the Sir land it cannot be disputed that they have not acquired any rights under the aforesaid provisions As the operation of r 5 is conditioned by cl v of sub rule 2 of r 4 there is no scope for invoking the former provisions unless cl v of sub rule 2 of r 4 applies to a given case and also an order of stay has been made thereunder In this case as the suit lands are found to be Sir lands and as the appellants have not acquired any of the rights mentioned in cl v of sub rule 2 of r 4 the said sub rule cannot apply and therefore r 5 cannot also be invoked Further this contention was raised in the revision 814 petitions filed by the appellants to the Revenue Board and the latter by its order dated September 6 1953 held against them and that order has become final For the said reasons we must hold that the suits could not be abated under r 5 of the amended Rules In the result the appeals fail and are dismissed with costs Appeals dismissed

The respondent who was a teacher in a railway school was prosecuted under section 161 of the Indian Penal Code and section 52 read with section 51d of the Prevention of Corruption Act 1947 The 1 222 740 prosecution case was that the respondent offered to secure a job for the complainant in the Railway Running Shed at Abu Road if the latteR paid him Rs 100 that the complainant agreed to this and that on October 5 1954 the complainant wrote out an application addressed to the Divisional Mechanical Engineer Abu Road and handed it to the respondent and gave him Rs 50 promising to pay the balance of Rs 50 after the Job had been secured The Special judge who tried the case accepted the prosecution story and convicted the respondent on both the charges but on appeal the High Court acquitted him on the ground that he was not a public servant The State appealed to the Supreme Court It was contended for the respondent that even if he were considered to be a public servant he could not be held guilty on either of the charges framed against him It was found that neither in the charge framed under section 161 of the Indian Penal Code nor in the evidence was there anything to show that the respondent intended to approach any public servant in order to secure a job for the complainant Held 1 that the respondent was a public servant within the meaning of the ninth clause of section 2I of the Indian Penal Code as he was in the service of Government was being paid by it and was entrusted with the performance of a public duty inasmuch as he was a teacher in a school maintained by Government and it was part of his public duty to teach boys G A Monterio vs The State of Ajmer followed 2 that in view of the words by otherwise abusing his position read along with the words in the discharge of his duty in section 51d of the Prevention of Corruption Act 1947 an offence under that section requires that the public servant should misconduct himself in the discharge of his duty In the present case as the respondent was only a teacher it was not part of his duty to make appointments in the Railway Running Shed at Abu Road and consequently when he took money for procuring a job for the complainant he was not committing misconduct in the discharge of his duty Accordingly a conviction under section 52 read with section 51dof the Prevention of Corruption Act 1947 was not valid 3 that the mere fact that a person takes money in order to get a job for another person somewhere would not by itself be an offence under section 161 of the Indian Penal Code and that as the charge under section 161 did not disclose who was the public servant whom the respondent would have approached for rendering or attempting to render service to the complainant in securing a job for him the prosecution under that section was not maintainable and 4 that the presumption under section 41 of the Prevention of Corruption Act 1947 could not arise in the present case as section 161 of the Indian Penal Code was not applicable

Appeals Nos 450 451 of 1957 Appeals by special leave from the judgment and order dated July 31 1956 of the Labour Appellate Tribunal of India Calcutta in Appeals Nos 28255 and 656 C K Daphtary Solicitor General of India H N Sanyal Additional Solicitor General of India D N Mukherjee and B N Ghose for the Appellant In CA No 45057 A Roy Mukherjee and H N Hingorani for the respondent In C A No 45057 M C Setalvad Attorney General for India C K Daphtary Solicitor General for India and H N Sanyal Additional Solicitor General of India D N Mukherjee and B N Ghose for the appellants In C A No 45057 Sadhan Chandra Gupta Janardhan Sharma and M K Ramamurthi for the respondents In C A No 45157 Sadhan Chandra Gupta Janardhan Sharma and M K Ramamurthi for the appellant In C A No 45157 1015 M C Setalvad Attorney General for India H N Sanyal Additional Solicitor General of India D N Mukherjee and B N Ghose for the respondent In C A No 51457 G D Ambukar for the Secretary for the Intervener No 1 Sadhan Chandra Gupta and Janardhan Sharma for Intervener No 2 1959 May 5 The Judgment of the Court was delivered by WANCHOO J These are three appeals by special leave from the same decision of the Labour Appellate Tribunal of India and will be dealt with together The first two appeals Nos 450 451 are by Messrs Titaghur Paper Mills Co Ltd and the third No 514 by its workmen Titaghur Paper Mills Co Ltd hereinafter called company own two paper mills one at Titaghur hereinafter called Mill No 1 and the other at Kankinarah hereinafter called Mill No 2 It appears that there had been a dispute between the company and its workmen in 1948 which was referred to the adjudication of a tribunal That was disposed of by the tribunal on November 5 1949 Among the matters then referred was the question of profit bonus for the years 1945 46 and 1946 47 When that matter was under the consideration of the tribunal the company put forward a scheme of production bonus on the basis of a minimum production of 30000 tons of paper in a year in the two mills together The basis of the scheme was that the workmen would get 13 days basic wage this being equivalent to half of one month s basic wage by way of bonus on a production of 30000 tons for both mills Thereafter the workmen were to get an additional one day s basic wage for every 460 tons produced upto a maximum of 36000 tons when the production bonus would come up to 26 days basic wage which would be equivalent to one month s basic wage including weekly holidays The company in putting forward the scheme said that as an admittedly rough basis for such a scheme something on the 1016 following lines might we think be equitable It then gave the scheme mentioned above The tribunal dealing with the question of profit bonus for the years 1945 46 and 1946 47 observed that the scheme of production bonus put forward by the company had been accepted by the union as satisfactory and for the purpose of that proceeding it accepted the scheme as a measure for awarding profit bonus for the years 194546 and 1946 47 The actual bonus worked out to 17 days basic wage for 1945 46 and 19 days basic wage for 1946 47 see award of Sri M C Banerji in the publication of Government of West Bengal Labour Department I Awards made by the Tribunals for the quarter ending December 1949 pp 130_ 150 It further appears that the detailed scheme was later communicated to the union in July 1950 and as the principle had already been accepted by the union before Sri Banerji the scheme was put in operation from April 1 1949 and production bonus has all along been paid in accordance with it after that date Disputes however arose between the company and its workmen in 1953 The workmen of Mill No 2 were the first to raise a dispute in August 1953 in which inter alia they demanded profit bonus for the years 1950 51 and 1951 52 and also prayed for certain changes in the production bonus scheme The workmen of Mill No I also raised a dispute and presented a charter of demands to the company in October 1953 They also demanded profit bonus for the two years mentioned above and revision of the production bonus scheme These disputes were referred by the Government of West Bengal to the Fifth Industrial Tribunal West Bengal There were two references one relating to each mill They were heard separately by the Industrial Tribunal which gave two separate awards rejecting all the demands made by the workmen Consequently two appeals were preferred by the workmen before the Labour Appellate Tribunal There the two appeals were heard together at the request of the parties and disposed of by the Tribunal by the same judgment on July 31 1956 The Fifth Industrial Tribunal rejected the claim of 1017 the workmen for revision of the production bonus scheme and for grant of profit bonus for the years 1950 51 and 1951 52 It was of opinion that the claim for profit bonus for the two years was not maintainable as the workmen had been given production bonus and that met the profit bonus claim of the workmen for the two years and all claims for profit bonus for these two years must be taken to have been fully satisfied The question of delay in making the profit bonus claim was also raised but the Fifth Industrial Tribunal was of the view that the profit bonus claim could not be defeated merely on the ground of delay As to the revision of production bonus scheme it held that scheme had been accepted by the union and no reason had been shown why the rate of one day s basic wage as production bonus for every increase of 460 tons over 30000 tons should be disturbed It was also of the view that increased production was not due to increased efforts on the part of the workmen but was due mainly to increase in labour strength as well as installation of new machinery On appeal the Labour Appellate Tribunal rejected the claim for profit bonus for the year 1950 51 on the ground that it was made too late It however disagreed with the view of the Fifth Industrial Tribunal that the production bonus scheme fully satisfied the claim of the workmen for profit bonus and therefore DO profit bonus should be given even for the year 1951 52 with regard to which it as of opinion that the claim was not belated It therefore went into the figures of profits and arrived at the available surplus in accordance with the formula known as the Full Bench Formula evolved in The Mill Owners Association Bombay vs The Rashtriya Mill Mazdoor Sangh Bombay1 Having arrived at the available surplus it granted one month s profit bonus in addition to what the workmen were entitled to under the production bonus scheme as revised by it As to the production bonus scheme it was of the view that there were reasons for revising it and therefore revised 1 128 1018 it providing for 112 days basic wage for each increase of 460 tons over 30000 tons up to the limit of 36000 tons and two days basic wage for each increase of 460 tons in excess of 36000 tons It may be mentioned however that the change in the production bonus scheme was not made retrospective and would therefore come into force from after the judgment of the Labour Appellate Tribunal The appeals of the workmen were therefore allowed in these two respects which have led to the two appeals by the company be fore us The workmen through their union have also filed an appeal against those portions of the decision of the Labour Appellate Tribunal which rejected their demands In the two appeals by the company two matters relating to i production bonus and ii profit bonus have been raised before us We shall first take up these two matters and then come to the appeal by the workmen The main contentions on behalf of the company with respect to the production bonus scheme are threefold namely 1The Industrial Tribunal has no jurisdiction to go into the question of production bonus scheme at all for such a scheme by its very nature can only be a matter of agreement between the employer and the employees and cannot be imposed by a tribunal 2Even where a production bonus scheme is in force its terms cannot be varied by a tribunal and any variation can only be the outcome of an agreement between the employer and the employees because initiation or introduction of such a scheme is what may be called a I management function and 3 Even if an industrial tribunal has the power to vary the production bonus scheme no material was placed on the record in this case on the basis of which the tribunal could order a variation in the scheme in force in the company As to the award of profit bonus for the year 1951 52 the attack was two fold namely 4It was not open to a tribunal to award both production bonus and profit bonus and in any case it 1019 could not be done in the present case as the production bonus here was nothing more than profit bonus and 5 Even if both production bonus and profit bonus could be awarded there was no available surplus in this case out of which profit bonus for that year could be paid Before we go into the question of jurisdiction of a tribunal under the hereinafter called the Act we should like to consider what production bonus essentially is The payment of production bonus depends upon production and is in addition to wages In effect it is an incentive to higher production and is in the nature of an incentive wage There are various plans prevalent in other countries for this purpose known as Incentive Wage Plans worked out on various bases for example Halsey Premium Plan Bedaux Point Premium Plan Haynes Manit System and Emerson Efficiency Bonus Plan see Labour Law by Smith Second Edition P 723 The simplest of such plans is the straight piece rate plan where payment is made according to each piece produced subject in some cases to a guaranteed minimum wage for so many hours work But the straight piece rate system cannot work where the finished product is the result of the co operative effort of a large number of workers each doing a small part which contributes to the result In such cases production bonus by tonnage produced as in this case is given There is a base or standard above which extra payment is made for extra production in addition to the basic wage Such a plan typically guarantees time wage up to the time represented by standard performance and gives workers a share in the savings represented by superior performance But whatever may be the nature of the plan the payment in effect is an extra emoluments for extra effort put in by workmen over the standard that may be fixed That is the reason why all these plans are known as Incentive Wage Plans and generally speaking have little to do with profits The extra payment depends not on 1020 extra profits but on extra production This extra payment calculated on the basis of extra production is in a case like the present where the payment is made after the annual production is known in the nature of emoluments paid at the end of the year Therefore generally speaking payment of production bonus is nothing more nor less than a payment of further emoluments depending upon production as an incentive to the workmen to put in more than the standard performance Production bonus in this case also is of this nature and is nothing more than additional emoluments paid as an incentive for higher production We shall later consider the argument whether in this case the production bonus is anything other than profit bonus It is enough to say at this stage that the bonus under the scheme in this case also depends essentially on production and therefore is in the nature of incentive wage Let us now turn to the question of jurisdiction of the tribunal under the Act to consider a production bonus scheme at all The argument is that the introduction of a production bonus scheme is purely discretionary with the employer and no tribunal can impose such a scheme Whether there should be increased production in a particular concern is a matter to be determined entirely by the employer and depends upon a consideration of so many complex factors namely the state of the market the demand for the product the range of prices and so on It is therefore entirely for the employer to introduce a production bonus scheme or not There is good deal of force in the argument up to this point but the argument goes further and it is said that even after the scheme is introduced it is for the same reasons in the discretion of the employer whether to continue it or not Therefore it is urged that the tribunal cannot have jurisdiction to consider a production bonus scheme at all for the tribunal would then be doing something which the employer can set at naught by withdrawing the scheme or by nullifying the effect of the tribunal s order by so arranging that the production does not reach the level at which production bonus becomes payable for 1021 example by not providing enough raw material for the purpose It is further urged that if it is entirely in the discretion of the employer to introduce or not to introduce a production bonus scheme the fact that the employer introduces a scheme will not give jurisdiction to the tribunal to interfere with it in any way for otherwise the tribunal would be compelling the employer in the guise of a revision of the scheme to do something which the tribunal could not initially do Our attention in this connection was drawn to Shalimar Rope Works Mazdoor Union Howrah vs Messrs Shalimar Rope Works Ltd Shalimar Howrah 1 where it was observed that though a production bonus scheme may be desirable in the interest of harmonious relationship between the employer and employees there is no obligation on the part of the management to give production bonus and no decision had been brought to the notice of the Labour Appellate Tribunal holding that a scheme of production bonus was obligatory on the part of the company see p 504 We are however not called upon to decide in this case whether a demand for the introduction of a production bonus scheme where there was none before can be made a subject matter of industrial dispute as defined in section 2 k of the Act or whether a scheme of production bonus can for the first time be imposed on the employer by a tribunal under the Act The problem that is before us is whether the tribunal tinder the Act will have jurisdiction to deal with a production bonus scheme in a concern where it has been introduced The answer to this question depends upon the terms of the Act and not on the consideration whether the scheme can be initiated only by the employer in the first instance In order that the tribunal may have jurisdiction all that is necessary is that an industrial dispute within the meaning of section 2 k of the Act should exist or be apprehended and there should be a reference of such dispute by the appropriate government to the tribunal under section 10 Now industrial dispute has been defined in very wide terms in section 2 k and for our purpose it means any 1 1957 LAC 496 1022 dispute or difference between the employers and workmen which is connected with the employment or non employment or the terms of employment or with the conditions of labour of any person We have already held that the production bonus scheme in this case is an incentive wage plan and what is paid under the scheme over and above the basic wage is supplementary emolument depending upon annual production A dispute arising about such an emolument clearly comes within the words terms of employment As soon therefore as an employer introduces a production bonus scheme and the same is put in operation and the workmen accept it becomes a term of employment of the workmen working under him and any dispute with respect to such a term of employment is an industrial dispute and if it is referred to a tribunal under section 10 as has been done in this case it has jurisdiction under section 15 to deal with it The argument therefore on this head must be rejected and it must be held that the tribunal had jurisdiction under the Act to deal with the scheme of production bonus which had been introduced in this company and was in force at all material times This brings us to the second question namely where a scheme of this kind is in force and there is a dispute with regard to its terms what is the extent of the powers of a tribunal to deal with it The argument is put in this way The introduction and continuance of a production bonus scheme is one of the functions of management Therefore when a question of revision of such a scheme comes up before a tribunal all that the tribunal should look into is whether this matter is an exclusive management function If it comes to the conclusion that it is an exclusive management function it should not interfere with the details of the scheme unless it also comes to the con clusion that the employer is guilty of mala fides victimization fraud or unfair labour practice through the introduction or continuance of the scheme It is said that even though the tribunal may have jurisdiction to consider such a scheme it should refuse to interfere 1023 with it as soon as it comes to the conclusion that it is an exclusive management function and there is no question of mala fides etc We think it unnecessary for present purposes to embark on a discussion of what is and what is not an exclusive management function Basically everything connected with the management of an industrial concern is a management function except the internal affairs of any union which may exist The Act has made no distinction between what may be called exclusive management functions and others It is also well settled that the tribunals tinder the Act have power to interfere with management functions falling within their purview in the interest of industrial peace and the Act was enacted with that object Therefore once it is conceded as is the case here that the tribunal has jurisdiction to entertain such an industrial dispute which comes within the terms of section 2k we see no reason why the power of the tribunal to take into consideration an incentive wage plan like a production bonus scheme already introduced should be limited merely to the consideration of the question whether the employer s action is mala fide etc Where a production bonus scheme is in force and has become a term of employment there is no reason why the tribunal should not have the power to vary its terms if circumstances justify it Nor can the power of revision be denied to the tribunal in respect of a scheme actually introduced on the ground that the introduction of such a scheme was an exclusive management function and therefore it should be immune from being touched at all Therefore even assuming that the initiation of a production bonus scheme is an exclusive management function and the final decision with respect to its introduction rests initially with the manage ment the right of the tribunal to take into consideration such an initiated scheme which has become a term of employment and to revise it cannot for a moment be doubted under the Act It is true that the tribunal will not lightly interfere with a scheme introduced by the management and accepted by the union It is also true that the tribunal would only 1024 make a change in the rates for good and sufficient reasons There can be no doubt however that the tribunal has jurisdiction under the Act to take into consideration a production bonus scheme which has been introduced and is in operation and in proper cases to revise it and if necessary to change the rates and other conditions on which such bonus is payable Our attention in this connection was drawn to Indian Iron Steel Co Ltd vs Their Workmen1 where the limits of the power of a tribunal to interfere with an order of dismissal were considered That case is in our opinion of no help to the appellant It was laid down there that undoubtedly the management of a concern had power to direct its own internal administration and discipline but the power was not unlimited and when a dispute arose Industrial Tribunals had the power to see whether the termination of services of a workman was justified and to give appropriate relief It was further laid down under what conditions the Industrial Tribunal will interfere with the order of dismissal On a parity of reasoning the Industrial Tribunal has the power under the Act to revise the production bonus scheme once it has been initiated It will do so only for good and cogent reasons such as a material change in method product tools material design or production Conditions or a saving in labour cost and the like maintaining as far as possible the established relationship between earnings and effort and avoiding rates which will give results out of all proportion to the basic wage We are therefore of opinion that the argument under this head must also be rejected The main contention under this head is that there was no material before the Appellate Tribunal to justify the increase in the rate which it ordered We have already pointed out that the scheme put forward by the company was to pay a production bonus of 13 days basic wage on a minimum production of 30000 tons Thereafter one day s basic wage was to 1 1958 SCR 667 1025 be paid for every 460 tons produced up to the maximum of 36000 tons the rated capacity of the mills being then said to be over 36000 tons The Appellate Tribunal has kept the minimum production at 30000 tons with a bonus of 13 days basic wage Between 30000 and 36000 tons it has raised the rate to 1 12 days basic wage for each increase of 460 tons over 30000 tons to the limit of 36000 tons and thereafter to two days basic wage for each increase of 460 tons in excess of 36000 tons It gave two reasons in support of this increase namely i that the great increase in production since the introduction of the scheme was attributable to a very considerable extent to the increase of efforts on the part of labour and therefore a reasonable proportion of the increased _income on account of increased production should go to labour and ii that one day s wage only as bonus for every 460 tons over 30000 tons is not commensurate with the actual increase of income on that increased block of production It is not clear to us what exactly the Appellate Tribunal had in mind when it talked of the increase of income as a reason for increase in the rate The question of increase in the rate has to be considered in two stages namely i the increase between 30000 and 36000 tons and ii the increase when production goes beyond 36000 tons It appears from what Mr Banerji said in his award of 1949 that the basic principle of the scheme as it was put forward before him was accepted by the union as satisfactory meaning thereby that the union considered that 13 days basic wage for a minimum production of 30000 tons and one day s basic wage for every 460 tons beyond that upto 36000 was fair to labour It has been urged that there was no agreement between the workmen and the company in connection with this scheme It does appear that all the terms which were incorporated in the scheme communicated to labour in July 1950 were not initially evolved with the agreement of the union but so far as the rate of bonus was concerned that was accepted by the union as satisfactory In the company s appeals we are 129 1026 concerned only with the rate The question therefore is whether the Appellate Tribunal was justified in changing this rate which was agreed to as satisfactory by the union up to a production of 36000 tons We are of opinion that in view of the agreement between the parties up to a production of 36000 tons there was no such material before the Appellate Tribunal as would justify interference with the agreed rate The intensification of labour must have been taken into account when the union agreed to the rate up to 36000 tons and there is nothing to show that since then there has been any change in the conditions to call for a change in the rate The order of the Appellate Tribunal so far as it relates to production up to 36000 tons cannot be sustained as no material was placed before it to warrant a change in that agreed rate Then we come to the rate after 36000 tons There the considerations in our view are different The scheme only provided for a production of 36000 tons It is true that thereafter the production has gone up beyond 36000 and the company has been paying the same flat rate of one day s basic wage for every 460 tons for the extra production and the workmen have been accepting that payment At the same time there was no collective acceptance by the union on behalf of the workmen of this rate being satisfactory or fair for production above 36000 tons Production went beyond 36000 tons for the first time in 1951 52 and a dispute was raised in October 1953 by the workmen of Mill No 1 not very long after production for that year was known There was no dispute as to the general revision of the rate by the workmen of Mill No 2 but it was conceded on behalf of the company that the two mills must be treated on the same footing in this matter The company therefore cannot say that the Appellate Tribunal should not have interfered with the rate above 36000 tons because there was a collective agreement by the union on behalf of the Workmen and there was no material before it to change the rate even beyond 36000 tons Two reasons were given by the Appellate Tribunan for the 1027 change it ordered Of these the second is difficult to understand as it is not clearly or happily expressed though the first reason namely increased effort on the part of labour would certainly apply when we consider production beyond 36000 tons It stands to reason that where the labour force is more or less the same production beyond the original target of 36000 tons would mean more intensification of effort by labour for it is not in dispute that the working hours have remained the same Other things being equal the greater the production by the same labour force in the same space of time there is bound to be more intensification of labour to achieve this result This is certainly a matter which the Appellate Tribunal could take into account in considering whether the rate after 36000 tons should be raised A comparison of figures of production and labour force employed between 1948 and 1952 assuming other factors to be the same would show that there must have been intensification of labour effort to got the increased production In 1948 total labour force in the two mills was 5860 Exs F H In 1952 it went up to 6213 an increase of just over 6 per cent Production on the other hand was 28244 tons in 1948 49 while it was 37738 tons in 1951 52 an increase of slightly above 33 per cent So it is obvious that the increase in production is much more than the increase in labour force It is true that in 1950 a new paper making machine was substituted in one of the mills and some bamboo crushers and digesters were also added during this period and other large amounts spent on machinery and that fact certainly accounts for a part of the increase It is however not possible to ascertain with anything like mathematical accuracy as to how much of the increase in production is attributable to improved machinery and how much of it is referable to intensification of labour of the workmen It may nevertheless be taken as fairly certain that the increase in production is referable to a great extent to intensification of the efforts of the workmen for there has been no appreciable increase in the labour force We have not got the figures of labour force in the 1028 later years though production has gone on increasing till it is said it will reach 54000 tons mark in 1958 59 It is apparent therefore that there must have been progressive intensification of labour as the production rose beyond 36000 tons and in the premises that was a circumstance which the Appellate Tribunal was properly entitled to take into account when considering a change in the rate for production over 36000 tons The second ground given by the Appellate Tribunal as we have said above is not quite clear to us Learned counsel for the workmen have however explained that what the Tribunal means is that as the production increases more and more the labour cost per ton goes down and thus there is a saving in labour cost to the company and the workmen are entitled to share in this progressive saving of labour cost The principle which is inherent in this explanation is in fact the basis of progressive increase in production bonus rates as production increases This will be clear from an illustration which we shall give just now This illus tration is based as nearly as possible on the conditions in these two mills with this difference that we have taken round figures for facility of multiplication the result will be more or less the same if actual figures are taken For the purposes of this illustration we shall assume that the labour force and other relevant factors remain constant Let us start with a basic production of 30000 tons with a labour force of 6000 and an average wage of all kinds at Rs 110per menses exhibit E The total labour cost on this basis for 30000 tons per year comes to 792 lacs giving labour cost per ton as Rs 264 Now when production increases to 36000 tons and a production bonus of Rs 25 per year exhibit E is added to the wage labour cost for the extra production of 6000 tons comes to Rs 15 lacs The total labour cost therefore for 36000 tons is 807 lacs which works out to slightly above Rs 224 per ton When production goes up to 42000 tons the labour cost increases by 3 lacs giving a labour outlay of 822 lacs this works out to just below Rs 196 per ton When production increases 1029 to 48000 tons the extra labour cost is 45 lacs making a total of 837 lacs for 48000 tons thus the cost per ton is slightly above Rs 174 When production goes up to 54000 tons labour cost increases by 6 lacs giving a total cost of 852 lacs for 54000 tons which works out to just below Rs 158 per ton When production reaches 60000 tons which is double the basic production the additional sum paid to labour in bonus is 75 lacs and the total cost 867 lacs for 60000 tons which works out to Rs 1445 per ton This is on the basis of the production bonus above 36000 tons being kept at the same rate at which it is provided in the scheme in this case It will be clear therefore that as production increases if other factors are the same namely labour force and machinery there is a progressive increase in the saving of labour cost This in our opinion makes out a clear case where one is dealing with tonnage production bonus for a progressive increase in the bonus We know that in this case there has been an increase but of a small order in the labour force during the period of increased production we also know that a new paper making machine has been put in the place of an old one and new bamboo crushers and digesters have been added and we know that during the period from April 1 1948 to April 1 1959 there has been a total outlay on machinery and plant worth 22394 lacs including the above There is no doubt therefore that when production is expected to reach the figure of 54000 tons in 195859 this outlay on machinery and plant must also have contributed to it The increase in labour force if any after April 1 1952 may also have made its contribution But it appears to us that it is still valid to say that there is saving in labour cost which increases progressively as production goes up and labour can therefore legitimately claim a progressively higher rate Therefore though the Appellate Tribunal s second reason does not appear to have been clearly expressed something like what we have said above must have been at the back of its mind when it decided to change the rate above 36000 tons There can be no doubt that the consideration we have 1030 set out above will be valid to support the view taken by the Appellate Tribunal that there should be a change in the rate though it may not necessarily support the actual change ordered by it We must not forget that there was no collective bargaining resulting in an agreement between the union and the company so far as production above 36000 tons is concerned as was the case so far as production upto 36000 tons went A case has therefore been made out for a change in the rate when production goes above 36000 tons The next question is whether the flat rate of two days basic wage for every 460 tons allowed by the Appellate Tribunal can be supported Usually when tonnage production bonus is worked out the rates progressively increase We may in this connection refer to the illustration given in Payment by Results published by the International Labour Office Geneva at p 102 We think therefore that though there is a case for increasing the rate when production goes above 36000 tons it should be on a progressively in creasing system The present scheme as we have pointed out earlier was evolved as an admittedly rough basis which was thought to be equitable Following the same rough basis and using the same block of 6000 tons with slabs of 460 tons we think that on the data available at present it would be fair to give progressive rates for production from over 36000 tons up to 60000 tons We need not go beyond this for the present and if production increases beyond 60000 tons the matter can be gone into again We consider therefore that the rate should be changed as follows for production over 36000 tons 1 14 days basic wage on the same scale as is provided in the sebeme from 30000 to 36000 tons1 12 days basic wage on the same conditions as above 1 34 days basic wage do i From over 36000 tons to 42000 tons ii From over 42000 tons to 48000 tons iii From over 48000 tons to 54000 tons 1031 iv From over 54000 tons to 2 days basic wage do 60000 tons We therefore modify the change in the rate ordered by the Appellate Tribunal as above The contention under this head is that though this scheme is called a production bonus scheme in reality it is no more than a profit bonus scheme and therefore the workmen are not entitled to any profit bonus worked out on the Full Bench formula referred to above in addition to what they get under this production bonus scheme In this connection reliance is placed particularly on clauses 14 and 18 of the scheme Let us therefore determine the true nature of the scheme The scheme is headed Tonnage Production Bonus Scheme and not a scheme for profit bonus based on the Full Bench formula It is true that this nomenclature is not decisive but is nevertheless a factor which may properly be taken into consideration The primary and basic object of the scheme as given in el 2 is to stimulate the interests and endeavors of the clerks and workers of the company in increasing the production of saleable paper and to ensure that the workers will get by way of incentive an increased return for their labour contributing to the benefits which would accrue from such increased productivity This again shows that this is a production bonus scheme and nothing else Then comes cl 4 which lays down that upto a minimum of 30000 tons the bonus would be 13 days basic wage thereafter there is increase of one day s basic wage for every 460 tons till the figure of 26 days basic wage is reached for a total production of 36000 tons Here again there is no connection between profits and bonus that accrues under this clause If for example pro duction falls below the minimum of 30000 tons there will be no bonus at all under the scheme whatever may be the profits This one circumstance clearly brings out the true nature of this scheme namely that it is a scheme of production bonus and not of 1032 profit bonus under the Full Bench formula That formula had nothing to do with production Bonus tinder that formula depended entirely on the available surplus of profits worked out in the manner provided therein Then we come to clause 14 That clause lays down that the scheme will be subject to one most important general exception namely that the profit earning capacity of the company irrespective of the volume of production of saleable paper remains satisfactory during the financial year Accordingly the clause prescribes that the directors may at their sole discretion either cancel altogether or reduce in scale of monetary payments the bonus in any one or more financial years in which the gross profit earned by the company over the whole financial year is not sufficient to meet fixed dividends and interest depreciation charges and taxation and thereafter pay for the whole year dividend not less than 10 per cent to the ordinary shareholders of the company It is said that this makes the scheme a profit bonus scheme We are unable to agree with this contention It is true that the scale of payment is likely to go down or there may even be no payment of bonus at all in the circumstances mentioned in cl But the circumstances mentioned there are admittedly not the same which have to be taken into account in arriving at the available surplus according to the Full Bench Formula Clause 14 appears to us to be just one condition upon which the payment of production bonus would depend like some other clauses in the scheme For example cl 5 seems to provide that workers who work for less than half the total number of working days in the financial year for which bonus is being paid shall not get any bonus for it only makes those workers who work for more than half the total number of working days worked out according to other rules entitled to bonus Clause 6 says that certain kinds of workers will not be entitled to bonus namely Bungalow servants Budli clerks or workers temporary clerks or workers casual workers or clerks It also provides that any person guilty of any major misdemeanour may at the sole discretion of the Mill Manager or the 1033 Cost Accountant not be given this bonus either in part or in whole as a punishment and that this would be done after taking proceedings in writing for the purpose Clause 7 provides another condition as to what service will count towards earning bonus and what will not for example leave on full or part pay shall count as bonus service while leave without pay will not count as Qualifying service towards bonus Again cl 8 lays down that a worker will be entitled to the maximum bonus if he works for all the working days during the financial year for which the bonus is declared Clause 9 then provides how the maximum bonus can be reduced if a worker does not work for all the working days Clause 14 therefore is also another clause which may either lead to no payment of bonus or less payment than prescribed under cl Further the fact that this is not a profit bonus scheme but a production bonus scheme will also be clear from what cl 14 actually provides It says that if the conditions mentioned in it are not fulfilled the workers would riot be entitled to bonus or may get less This means that if the conditions are fulfilled workers would be entitled to bonus Now suppose that the gross profit in a year is sufficient to meet fixed dividends and interest depreciation charges and taxation and 10 percent dividend to the ordinary shareholders Theereafter the balance of profit left is Only let us say Rs 5 But as the conditions of cl 14 are fulfilled the workers would be entitled to production bonus though the amount of Rs 5 which remains cannot possibly meet the claim of bonus It is clear therefore that this bonus scheme is not the same as the profit bonus worked out under the Full Bench formula and it cannot be called a profit bonus scheme even other wise This is nothing more nor less than a pure production bonus scheme based on tonnage depending on certain conditions one of which is related to profits also The nature of this bonus therefore in our opinion is entirely different from the nature of profit bonus under the Fall Bench formula and we do not see why if there is an available surplus of profits 130 1034 according to the Pull Bench formula the workmen should not get profit bonus in accordance with that formula The two things in our opinion are different Under the scheme what the workers get is a supplementary emolument worked out on certain basis Under the Full Bench formula what they get is something out of the profits if there is an available surplus on the ground that both capital and labour contribute to the accrual of profits and it is only fair that labour should get a part of it In this connection our attention was drawn to Mathuradas Kanji vs Labour Appellate Tribunal 1 where it was observed that one of the categories of bonus is described as incentive bonus The name indicates that it is given as a cash incentive to greater effort on the part of the labour But the essential condition for the payment of incentive bonus just like any other kind of bonus is that the industry concerned must earn profits part of which is due to the contribution which the workmen made in increasing production That was not a case of production bonus at all The bonus dealt with there was included in an agreement between the government and its contractors in a contract relating to clearing and transporting of imported foodgrains It was provided that if the rate of discharge from a ship exceeded 1500 tons per 24 hours and no shed demurrage was incurred the government would pay to the contractors remuneration at the prescribed rates plus a bonus of annas four per ton The workmen employed by the contractors claimed that this bonus should be given to them That claim was negatived on the ground that the workers could not claim on the terms of the contract that the bonus of annas four per ton was payable to them These observations made in a different setting have therefore no relevance in the context of the production bonus scheme with which we are dealing here and which has become a term of employment of the workmen As for el 18 it provides that if during the currency of three years for which the scheme was to 1 AIR 1035 remain in force in the first instance the government en forced by legislation any scheme or provision for bonus or profit sharing the company may decide to cancel or modify the scheme in its entirety It is urged that this shows that the scheme was one for profit sharing or profit bonus because it was likely to be cancelled or modified if legislation was introduced with respect to these It may be that the scheme might have been cancelled or modified if such legislation was passed But that does not mean that the scheme itself provided for profit sharing or profit bonus It is one thing to cancel or modify a scheme because the legislature steps in to provide for extra payment for workmen But the nature of the provision of law which was then expected cannot be imposed on this scheme which must be judged on its own terms these leave no doubt that it is not a profit bonus scheme but an incentive wage plan depending upon production in the main The contention therefore that the bonus under the scheme is a profit bonus and therefore the workmen are not entitled to the profit bonus under the Full Bench formula must fail The contention under this head is that even if profit bonus is payable in addition to production bonus there was no available surplus of profits to justify the Appellate Tribunal in granting one month s bonus The workmen had asked for two month s bonus but the Appellate Tribunal after working out the available surplus on the basis of the Full Bench formula granted them one month s bonus The Full Bench formula was evolved in 1950 in connection with a case relating to the textile industry and has been since then generally applied to many other industries The necessity for evolving that formula arose in this way When prices are stable or falling there is no necessity of making further provision for rehabilitation for the usual depreciation provided for the purposes of the Income tax Act is sufficient to build up a fund for replacement of plant and machinery when they are worn out but when prices are rising the usual depreciation fund is not enough to replace plant and 1036 machinery which become useless This was particularly so after the end of the last war when the question of replacing machinery purchased before the war ie before 1939 came up before the Full Bench of the Labour Appellate Tribunal in 1950 In order therefore to meet this particular situation arising out of a steep rise in prices the Full Bench formula was evolved to provide for a further sum for rehabilitation out of the profits besides the statutory depreciation This was on a notional basis and depended upon a multiplier which was used to find out the current prices of machinery to be replaced and a divisor based on the useful life of the machinery to find out what sum should be provided each year for what was called rehabilitation In order however that this sum nationally provided for rehabilitation each year has a realistic connection with the amount in fact necessary for the purpose it is in our opinion necessary that what is known as the total block of a concern including land buildings plant and machinery should be properly sub divided as otherwise a flat multiplier at the same rate for the total block might not give an accurate amount to be provided for rehabilitation It is therefore necessary in order to arrive at an approximately realistic figure for rehabilitation that the total block should be divided into three heads namely i land ii buildings railway sidings and things of that nature which have a much longer life and where imports are not needed and iii machinery In the case of land no replacement is necessary and therefore nothing need be provided for rehabilitation under this head Even where land is leasehold and the lease is expiring any payment for renewal of lease will be an expense and need not enter into calculations for rehabilitation Further if there are buildings belonging to the concern on leasehold land their rehabilitation charge be will allowable under the head buildings In the case of building railway sidings etc the multiplier will be smaller while the divisor will be larger As for machinery there is again the necessity of further sub division according to when the machinery was purchased The machinery purchased 1037 before the last war stands on one footing and thus there will be a block of machinery which may be know as pre 1939 The second block of machinery may well be that purchased during the war and the last block that purchased after the war The last two are not rigid divisions but they indicate that machinery has to be divided into blocks according to years of purchase to arrive at a correct multiplier and a correct divisor Bearing these principles in mind let us see how the Full Bench formula works in this case We may mention that there is no dispute in this case as to the components of the formula the only dispute being confined to its actual application The company claimed a multiplier of 45 and a divisor of 10 and on that basis gave a chart showing a deficit of 112 lacs in the amount required for rehabilitation for 1951 52 Another chart was also filed by the company in which the multiplier was taken as 35 and the divisor as 10 and the deficit was worked out at 65 lacs What the company did was to take the total block consisting of land buildings railway sidings and machinery valued at 468 lacs and multiply it by 45 or 35 making no distinction between land buildings and railway sidings and machinery The divisor was also taken as 10 making no distinction again between these three categories and further making no distinction between the machinery purchased before 1939 during the last war and after the last war This in our opinion was a completely unrealistic way of working out the amount required for rehabilitation and that is why the company was able to show in its charts such a large deficit The Appellate Tribunal did not accept these charts It left out of account land altogether and rightly so As for buildings it applied a different multiplier and a different divisor and so far as that is concerned no dispute has been raised before us As for machinery consisting of plant machinery bamboo forest block furniture flotilla and vehicles it divided the block for this purpose into two parts namely the block as it existed on April 1 1947 and the additions made 1038 between April 1 1947 to March 31 1951 It applied a multiplier of 3 so far as the block upto April 1 1947 was concerned and took the block of additions after 1 4 1947 at cost price thus using one as multiplier It is not clear why the Appellate Tribunal did not include the additions made in 1951 52 The Appellate Tribunal also accepted the divisor 10 for all this plant machinery etc and made no difference between the useful life of the machinery purchased at different times Eventually after making the relevant calculations it came to the conclusion that there was an available surplus of profits amounting to 22 lacs It therefore awarded one month s profit bonus on basic normal wage It is contended on behalf of the company that evidence had been produced on its behalf to show that the prices of machinery had appreciated 4 12 times as compared to the prices in 1939 and therefore the multiplier of 45 should have been allowed at least on the block of machinery up to 1939 Thereafter it is claimed that some multiplier above one should be given for the block 1939 1947 and also for the block 1947 51 It is further contended that the additions made in 1951 52 should also have been taken into account It may be mentioned that the Labour Appellate Tribunal which evolved the Full Bench formula in 1950 had used the multiplier 27 in that case for prewar block and that multiplier has been used since then in many other cases it is however contended on behalf of the company that multiplier is not sacrosanct and if in fact there has been a greater rise in price there is no reason why a higher multiplier should not be used It may be accepted that if an employer is able to prove that in fact there has been a greater rise in price he should be given a higher multiplier But there has to be good proof tendered by the employer for the multiplier which he claims Let us see therefore what proof the company has tendered in this case for a multipler of 45 for the block upto April 1 1939 In its written statement the company said that it was a known fact that the 1039 price of plant and machinery had increased by 300 per cent to 400 percent since before the war At that stage there was no claim that the price had increased 4 12 times after April 1 1939 The company s claim therefore as put in the written statement was for a maximum multiplier of 4 for the block upto April 1 1939 In the evidence of Mr Taylor who appeared as a witness for the company however claim was made that prices had gone up by 4 12 times This was based on exhibit D produced by the company which was compiled on the basis of inquiries about certain machinery from certain firms and copies of the correspondence with the firms were also produced Nineteen items were mentioned in exhibit D and the average multiplier was worked out as 456 Among the items listed in exhibit D were motors beaters machine drive paper making machine turbo alternator couch roll bamboo crushers bamboo digesters boiler circular tanks and three roaster smelter units The total price of these items was 19 lacs we have converted pounds into rupees for this purpose Besides these there are other items like steam piping steam tee galvanized bend and steam bends which are probably required in large quantities and the price per foot or per piece has been mentioned The correspondence which was attached to exhibit D consists of four letters one of September 1954 and three of June 1955 relating to one paper making machine similar to one installed in Mill No 2 a turbo alternator similar to one installed in Mill No 1 a machine drive similar to one installed in Mill No I and a boiler similar to one installed in Mill No 1 Now the cost of machinery block as at April 1 1939 was of the order of 153 lacs while exhibit D only deals with machinery of the value of 19 lacs as mentioned above Mr Taylor did not say in his evidence that exhibit D was a sample and that other machines were of the same type as mentioned in exhibit D or that the prices of other machinery bad gone up similarly or to the same extent D 1 to D 4 indicate that the price of one out of ten paper making machines was ascertained and nothing was ascertained about nine others Similarly prices of one 1040 turbo alternator one machine drive and one boiler of Mill No I were ascertained We do not know how many more such machines are in the two mills nor do we know that the increase in prices of these types of machines is also four and a half times In the circumstances we feel that the company has failed to provide sufficient material on the basis of which it can claim 45 as the multiplier It is the company which is claiming that a certain multiplier be used for calculating rehabilitation reserve and it was its duty to produce good and sufficient evidence as to the correct multiplier if it wants that multiplier to be used We cannot also forget that in its written statement the company only claimed a rise of 300 per cent to 400 per cent on prewar price In the circumstances the tribunal was not unjustified in not giving the multiplier of 45 We also feel that in these circumstances we shall not be justified in giving the company a multiplier higher than 4 for that was the maximum claim it had put forward in its written statement We should however like to make it clear that though we are using the multiplier 4 for the block as at April 1 1939 this should not be taken to be a precedent for future years even for this company and it will be open to either party to adduce proper evidence to show what the exact multiplier should be for this block whether more than 4 or less Then we come to the block from April 1 1939 to March 31 1947 The Tribunal gave the multiplier 3 for this block also But that was because it gave the same multiplier for the entire block as at 1947 including the prewar block As however we are giving a multiplier of 4 for the prewar block the multiplier 3 for the block April 1 1939 to March 31 1947 can only be justified if the company has proved that was the rise in the prices after 1939 So far as that is concerned the company did not produce any evidence before the Industrial Tribunal It seems however that certain documents were produced before the Appellate Tribunal on June 12 1956 when the appeals were ready for argument The order sheet of June 12 1956 shows that the 1041 Appellate Tribunal allowed four statements regarding certain machines given by different firms to be admitted into evidence Learned counsel for the workmen object to our looking into these statements on the ground that they never knew that any such statements had been filed at the last moment before the Appellate Tribunal and nobody seems to have relied on these statements before the Appellate Tribunal and the judgment also makes no mention of them There seems to be a good deal of force in these contentions However looking at these statements which have been taken on record we find that they relate to ten items Four of them are of the years 1945 48 and the increase of price varies from 60 per cent to 75 per cent Two are of 1950 and the increase varies from 15 per cent to 50 per cent three are of 1951 and the increase varies from 995 per cent to 116 per cent and one is of 1954 and the increase is 60 per cent The increased price is as of 1956 Even taking these documents into account we feel that the company cannot ask for a multiplier higher than 2 for the block between 1939 1947 But even this will not be taken as a precedent for future and it will be open to either party to give better evidence in order to vary this multiplier one way or the other As for the block after 1947 it appears that the company added machinery to the tune of 87 lacs between April 1 1949 and March 31 1952 while the prices quoted for the years 1950 and 1951 in these documents were only of machines worth 5 lacs We do not know whether this machinery is of the same kind as that mentioned in these documents They cannot therefore be a guide for arriving at any multiplier higher than one for this period relating to this block of 87 lacs Here again we should like to make it clear that if in future years better evidence is produced the question of giving a multiplier higher than I for this block can be considered This disposes of the multipliers on the blocks of machines divided into three periods We now come to the divisor Both the Tribunals have accepted 10 131 1042 as the divisor on the evidence of Mr Taylor We must say that it looks odd to us that there should be the same divisor for pre 1939 machinery and post 1939 but pre 1947 machinery and post 1947 but pre1952 machinery It stands to reason that newer the machinery the larger must be the divisor for the newer machinery would have a longer useful life However as both the Tribunals have accepted to as the divisor for the entire machinery in this case we shall also have to accept it but we should like to make it clear that this should also not be taken as a precedent for future years and it will be open to either party to show that the divisor should be different whether more or less than 10 for various blocks of machinery relating to the three periods Let us now work out the figures on the basis of the above considerations We have taken the basic figures as supplied to us by the learned counsel for the company REHABILITATIONCOST In lacsIn lacs of Rsof Rs a Plant machinery as15343 x4 61372 at 1 4 1939 Machinery added between2241 x2 4482 1 4 1939 and 31 3 1947 Additions between 8727 x 1 8727 1 4 1947 and 31 3 1952 Total74581 Less 5 breakdown value 1315 Balance73266 Less depreciation upto 31 3 195117603 Balance55663 Less Reserves General Reserve2549 Plant Replacement67989347 Balance46316 Dividing by 104631 1043 b Buildings Value of building 4285 x 259641 as at 31 3 47 Additions between 21192119 1 4 47 and 31 3 52 Total 11760 Less 5 breakdown 320 Balance 11440 Less depreciation upto 4721 31 3 1951 Balance 6719 Dividing by 27 248 Rehabilitation for a Plant Machinery 4631 bBuilding 248 Total 4879 Less depreciation for 1951 52 1650 Balance 3229 Rehabilitation Amount for 1951 523229 Rehabilitation amount for 1951 52 thus comes to 3229 lacs In the charts supplied by the company the net profits after deducting prior charges other than rehabilitation cost were worked out air 3609 lacs We find however that there is one mistake in this calculation inasmuch as 763 lacs have been included in working capital though this was merely a book entry and there was no cash corresponding to it 4 per cent interest was allowed on working capital and this would mean that the net profits should increase by 305 lacs as that interest was allowed extra in the company s chart before the Appellate Tribunal Thus the amount of net profits available before the allowance of rehabilitation charges comes to 3914 lacs 3609 305 Deducting 3229 lacs we arrive at the available surplus of profits amounting to 685 lacs 3914 3229 which is to be distributed equitably between the three sharers mentioned in the 1044 very decision of the Labour Appellate Tribunal which evolved the formula The total cost of one month s bonus on basic wages allowed by the Appellate Tribunal is about 3 lacs Taking all the circumstances of this case into consideration we do not think that any case has been made out for interference with this order of the Appellate Tribunal We may point out that we have not taken into account bamboo mills and grass block for reasons given by the Appellate Tribunal which commend themselves to us This brings us to the appeal by the workmen Only three points have been urged before us out of the many taken in the grounds of appeal and we shall deal only with these three They are i The minimum basic wage should have been raised from Rs 30 to Rs 35 iiClerical staff as well as Buidl and temporary workers should have been included in the attendance bonus scheme and iii Profit bonus should have been allowed at two months basic wages for 1951 52 instead of one month section Re Both the Tribunals have rejected the claim for raising the basic wage on the principle of Industrycum Region Rate of Basic Wages The workmen relied on the wages paid in the Bengal Paper Mills Ltd at Raniganj which is also a paper making concern The minimum basic wage there is Rs 38 3 dearness allowance Rs 35 and the incentive wage is said to work out to Rs 7 5 6 per mensem making the total Rs 80 8 6 In the present company minimum basic wave is Rs 30 dearness allowance is Rs 35 house allowance is Rs 2 attendance bonus works out to Rs 8 and production bonus is about Rs 3 making a total of Rs 78 It will thus be seen that the difference is not great Further if the production bonus and incentive wage are not taken into account the present company pays Rs 75 per mensem while the Raniganj company pays Rs 73 3 In the circumstances we see no reason for interfering with the concurrent order of the two Tribunals 1045 Re The Tribunals rejected the claim for extending the attendance bonus scheme to clerical staff budli workers and temporary workers They were of the view that these workmen stand on a different footing For the clerical staff the reason given was that they enjoyed the advantage of the incremental scales which were till then denied to other categories of mill hands for whose benefit the attendance bonus scheme was introduced As for the budli and temporary workers the Tribunals said that the scheme could not be applied to them on account of uncertainty of the tenure of their service So far as the budli and temporary workers are concerned the reason given by the Tribunals for treating them differently appears to us to justify their being excluded As to clerical staff it appears from the correspondence which ensued between the union and the company on the introduction of attendance bonus scheme that the scheme was introduced primarily in connection with the installation of a time keeping office The clerks are obviously in a different category from the workmen engaged in actual production In the circumstances apart from the considerations which were considered by the two Tribunals there is in our opinion justification for treating clerks in a different way from other workmen The company also told the union that so far as they knew no scheme of attendance bonus had ever been applied to clerks probably because absenteeism among clerks is not so great as among other workmen We see no reason therefore to disturb the concurrent finding of the two Tribunals in this matter iii We have already worked out above the available surplus of profits from which profit bonus can be given The amount of available surplus comes to 685 lacs and one month s basic wages which have been allowed as profit bonus come to about 3 lacs The percentage therefore is already sufficiently high and if profit bonus is allowed at the rate of two months basic wages it will come to about 6 lacs and 1046 would be more or less equal to the entire available surplus It is well settled that the available surplus has to be divided in a fair manner between the industry the shareholders and the workmen We cannot forget that the workmen have also got production bonus for this Year In the circumstances there is no scope for grant of any further profit bonus beyond that allowed by the Appellate Tribunal We therefore partly allow the appeals of the company and vary the production bonus rate in the Manner indicated above We dismiss the appeals of the company with respect to profit bonus We also dismiss the appeal of the workmen In view of the fact that the parties have partly succeeded and partly failed we order them to bear their own costs of this court in all the appeals Appeals Nos 450 and 451 allowed in part Appeal No 514 dismissed

The Income tax Officer found that the assessee an unregis tered firm had made a profit in the assessment year 1940 41 He treated it as registered under section 235b of the Act assessed the partners and carried the profit to their individual returns making no demand on the firm For the next two assessment years however the firm was assessed as unregistered firm For all the three assessment years the Income tax Officer treated the firm as resident and ordinarily resident The firm appealed against all these assessments The appeals were all consolidated and heard together by the Appellate Assistant Commissioner He found that the firm was non resident the computation of income made by the Income tax Officer was erroneous that in the assessment year 1940 41 there was a loss and during the subsequent years the firm had made profits He therefore directed the Income tax Officer to modify the assessments accordingly Thereupon the Income tax Officer gave relief to the partners for the year 1940 41 and directed certain refunds to be made to them The firm was not satisfied and moved both the Income tax Officer and the Appellate Assistant Commissioner 987 found to have incurred a loss in the first of the three assessment years it could not for that year be treated as a registered firm and was entitled to carry forward the loss to the subsequent years They declined to interfere on the ground that the direction of the Income tax Officer under section 235b not being appealable had become final and the time within which the original order of the Income tax Officer could be rectified had also run out The firm went up to the Commissioner and the Central Board of Revenue but to no effect Thereafter it moved the High Court under article 226 of the Constitution The single Judge who heard the matter declined to interfere The Division Bench on appeal agreed with the single judge The firm appealed to this Court The question for decision was whether after the finding of profit made by the Income tax Officer had been turned to one of loss by the Appellate Assistant Commissioner on appeal the original decision of the Income tax Officer to treat the firm as a registered one under section 235b could remain intact Held that since the Income tax Officer could treat an un registered firm as a registered one under section 235b of the Indian Income tax Act only if there was a profit the reversal of the finding of profit made by him by the Appellate Assistant Commissioner must automatically take away the jurisdiction of the Income tax Officer to act under that section and his order made thereunder must fall through It made no difference in the instant case whether the Appellate Assistant Commissioner s order was one under cl a Of section 313 or under cl b of that section for the effect of the order in law in either case would be the same namely the annulment of the assessment resulting in the restoration of the case back to its original position It was not correct to suggest that under proviso d to section 242 Of the Act the losses of an unregistered firm could be carried to the partners account as if the firm was registered That proviso was not intended to enable the Income tax Officer to forego the obligation laid on him by cl b Of section 235 ie to find out the interest of the Revenue and thus to render the words during any year in proviso redundant The effect of the provisions of section 235b and the proviso d to section 242 which must be read together was that the proviso was to be invoked subject to the conditions under section 235b to obtain more revenue for the State by applying section 235a Although the Appellate Assistant Commissioner could not have interfered with the order made by the Income tax Officer under section 235b of the Act in an appeal against that order the position must be different when the assessment itself was subject to appeal under section 31 Of the Act and the Appellate Assistant Commissioner under section 314 authorised the Income tax Officer to modify the assessment in the light of his direction It would therefore be the duty of the Income tax Officer to consider de 988 novo whether in the altered circumstances the provisions of section 235b of the Act could at all be applied Commissioner of Income tax vs Tribune Trust Lahore Commissioner of Income tax vs McMillan Co and Commissioner of Income tax vs Amritlal Bhogilal CO considered

IMINAL Appeal No 95 of 1957 Appeal by special leave from the judgment and order dated December 16 1955 of the Allahabad High Court in Criminal Revision No 1403 of 1953 arising out of the Judgment and order dated August 6 1953 of the Court of the Additional Sessions Judge at Meerut in Criminal Appeal No 225 of 1953 H J Umrigar and K L Mehta for the appellant G C Mathur C P Lal and G N Dikshit for the respondent April 23 The Judgment of the Court was delivered by IMAM J The appellant was convicted under section 52 of the Prevention of Corruption Act and under section 161 of the Indian Penal Code and sentenced to one year s rigorous imprisonment on each count The sentences were made to run concurrently On the facts found by the courts below the appellant accepted Rs 20 as illegal gratification from one Malekchand who had applied for allotment of a house The appellant was employed at that time as a clerk in the office of the District Relief and Rehabilitation Office Meerut The aforesaid sum of money was accepted by the appellant as bribe with a view to getting a house allotted to Malekchand There can be 98 778 no question that on the facts found the appellant was guilty both under section 52 of the Prevention of Corruption Act and under section 161 of the Indian Penal Code The first point taken was that the investigation had taken place by a police officer below the rank of Deputy Superintendent of Police Consequently the investigation had taken place in contravention of the provisions of the Prevention of Corruption Act The conviction of the appellant was therefore vitiated This point was taken before the Additional Sessions Judge who had heard the appeal of the appellant against his conviction The Additional Sessions Judge referred to a decision of the Calcutta High Court which supported the submission made on behalf of the appellant He also referred to a decision of the Allahabad High Court to the contrary effect He followed as he was bound to follow the decision of the Allahabad High Court The decision of this Court in the case of H N Rishbud and Inder Singh vs The State of Delhi 1 does not support the submission made by Mr Umrigar on behalf of the appellant He however referred to a passage in the aforesaid cited decision at page 1164 to the effect that where a breach of a mandatory provision is brought to the knowledge of the court at a sufficiently early stage the court while not declining cognizance would have to take the necessary steps to get the illegality cured and the defect rectified by ordering such investigation as the circumstances of the case may call for It has not been shown to our satisfaction that the attention of the trial court was drawn at an early stage to any breach of the provisions of the Prevention of Corruption Act There had been an enquiry before commitment to the Sessions It is clear that during these proceedings before commitment no objection was raised that the investigation had taken place by a police officer below the rank of Deputy Superintendent of Police in contravention of the provisions of the Prevention of Corruption Act The decision of this Court was given on December 14 1954 and the High Court judgment in the present case was delivered on 1 1164 779 December 16 1955 No point was taken before the High Court to the effect that the investigation had been made by an officer below the rank of Deputy Superintendent of Police in contravention of the provisions of the Prevention of Corruption Act Such an objection should have been taken if the appellant was prepared to establish before the High Court that the objection had been taken at a sufficiently early stage and that in view of the decision of this Court in the case cited the trial court ought not have proceeded with the trial unless the defect had been removed The decision of this Court in the case cited is clear however that generally a conviction is not vitiated because there had not been strict compliance with the provisions of the Prevention of Corruption Act in the matter of investigation by a police officer As to whether the objection was taken at a sufficiently early stage is a question of fact and ought to have been raised in the High Court as the decision of this Court in the case cited had been delivered something like a year before As this point in this form was not raised before the High Court we cannot allow it to be raised at this stage It was next contended that the Assistant Sessions Judge who tried the case had no jurisdiction to try the case as it was triable by a Special Judge only It is clear however that the case had been committed to the Court of Session before the Criminal Law Amendment Act 1952 came into force Under section 10 of this Act all cases pending before the Court of a Magistrate were transferred to the Court of a Special Judge Section 10 did not purport to transfer cases pending in the Court of Session at the commencement of the Act to the Court of the Special Judge In the case of Asgarali Nazarali Singaporewalla vs The State1 this Court observed The cases which were pending before the courts of sessions did not require to be so transferred because they would be tried by the procedure obtaining in the courts of sessions and nothing further required to be done It seems clear to us therefore that the Assistant Sessions Judge had jurisdiction to try the case as the same had been 11957 SCR 678 686 780 pending in the court of Session when the Act came into force The third contention raised was that the courts below had not correctly appreciated the nature extent and the quantum of proof required for raising the presumption under section 4 of the Prevention of Corruption Act The High Court s judgment does not show that that Court in any way raised any presumption under section 4 against the appellant The following passage from the High Court s judgment would make this clear It was next contended that the evidence on the record does not satisfactorily prove that the sum of Rs20 was received by the applicant as illegal gratification The finding on this point is a finding of fact I have gone through the judgment of both the courts below and I see no satisfactory reason to disagree with the concurrent finding of both the courts on this point There is ample evidence on behalf of the prosecution to the conclusion that the sum of Rs 20 was paid by Malekchand to the applicant on his demand in order to secure the allotment of a house There does not appear any satisfactory reason why Malekchand should have paid Rs 20 to the applicant to procure wheat for him There is therefore no question of any presumption being raised against the appellant On the contrary his defence that he had taken the sum of Rs 20 from Malekchand to purchase wheat for him was disbelieved and Malekchand s evidence that he had taken this money in order to secure an allotment of a house for Malekchand was accepted There appears to be no substance in the point raised It was next urged that the matter of sentence may be considered The incident took place in 1951 and the appellant has been on bail and it would not be desirable to send him back to jail The sentence of one year s imprisonment for corruption by a public servant cannot however be considered as unduly severe The appeal is accordingly dismissed Appeal dismissed

These appeals arose out of suits for ejectment instituted in the Revenue Court by the respondent Zamindar against the appellants under section 180 of the U P Tenancy Act 1939 U P I7 Of 1939 His case was that the lands in suit were his sir lands and the appellants trespassed on the same on the basis of a wrong order of the Criminal Court The case of the appellants was that they were admitted as hereditary tenants by the respondents There was a previous proceeding under section I45 of the Code of Criminal Procedure between the parties and the Magistrate found possession with the appellants and directed that they should remain in possession till evicted by due process of law The Revenue Court which tried the suits found that the lands were sir lands of the respondent and the appellants were not hereditary tenants and did not take possession with the consent of the respondent The Additional Commissioner on appeal and the Board of Revenue on second appeal agreed with these findings of the Revenue Court and dismissed the appeals The Board negatived the plea of the appellants that the suits were not triable by the Revenue Court Section 180 of the U P Tenancy Act 1939 provides that a person taking or retaining possession of land without the consent of the person entitled to admit him into occupation and otherwise than in accordance with the provisions of law for the time being in force will be liable to enactment thereunder In view of the finding of the courts below that the appellants had not taken possession with the consent of the respondent the question was whether they did so by virtue Of section I45 of the Code of Criminal Procedure Held that the provisions of section I45 of the Code of Criminal Procedure authorised the Magistrate only to declare the actual possession of a party on a specified date and not to give possession or permit any party to take possession He had no power under that section to decide questions of title or right to possession which a civil court alone could decide The words taking and retaining were used by section 180 of the Act in an independent and exclusive sense The former referred to taking of possession illegally and the latter to taking of possession legally but subsequent retaining of it illegally Consequently the appellants whose possession had been found 799 to be illegal from the very inception could not be said to retain possession legally so as to be outside the scope of the section It was also clear that possession in accordance with law such as was contemplated by section 180 of the Act meant possession with lawful title The provisional Order of the Magistrate with regard to possession irrespective of lawful rights of the parties could not therefore enable the appellants to resist the suit under section 180 of the Act Dinomoni Chowdhrani vs Barojo Mohini Chowdhyani 1901 LR 29 IA 24 referred to

Appeal No 227 of 1958 Appeal by special leave from the judgment and order dated January 31 1956 of the Labour Appellate Tribunal of India Calcutta in Appeals Nos 36 and 38 of 1953 MC Setalvad Attorney General for India and Naunit Lal for the appellant P K Chatterjee for tile respondents 1959 April 23 The Judgment of the Court was delivered by 763 GAJENDRAGADKAR J This appeal by special leave arises out of an industrial dispute between the Patna Electric Supply Co Ltd hereafter called the appellant and its workmen represented by the Patna Electric Supply Workers Union hereafter called the respondent The appellant is a public company incorporated under the Indian Companies Act and has its registered office at Patna It is an industrial establishment engaged solely in public utility service namely the supply of electricity for the requirements of the public and is a licensee under the provisions of the Electric Supply Act 1948 54 of 1948 On March 29 1952 the Government of Bihar by a notification issued under section 7 read with section 101 of the 14 of 1947 hereafter called the Act referred twelve items of dispute for adjudication to the Industrial Tribunal consisting of Mr H K Chaudhuri as the sole member Out of the said items the present appeal is concerned with only one and it relates to the housing facilities to the workmen and principle of allotment of quarters to them The respondent had put forward a demand that the appellant should provide houses to its employees and should undertake the construction of quarters immediately in that belie The respondent s case was that the appellant was bound to provide quarters to its employees and let out the same to them according to the Bihar Government scheme The appellant denied its liability to make any housing provision for its employees and that gave rise to the industrial dispute The appellant urged before the tribunal that the housing facilities and allotment of quarters to workmen was the primary responsibility of the State and not of the employer and it alleged that in any event it was financially not possible for the appellant to undertake the task The appellant had also contended that it had to function within the limits prescribed by the Electricity Supply Act 1948 and that the relevant provisions of the said Act would not permit the appellant to undertake any expenditure to meet the respondent s demand On March 9 1953 the tribunal upheld the respondent s claim and by its award it directed the appellant 764 to start construction of at least 15 quarters according to the specifications laid down in the Government scheme within one year from the date of the publication of the award This part of the award was challenged by the appellant before the Labour Appellate Tribunal but the appellate tribunal was not impressed by the appellant s pleas and so it dismissed the appeal on January 31 1956 It agreed with the tribunal in holding that the scheme sanctioned by the Bihar Government was binding on the appellant and it saw no substance in the appellant s contention that expenditure involved in the construction of the quarters would be inadmissible under the Electricity Act The appellant then applied for and obtained special leave from this Court on September 17 1956 That is how this appeal has come to this Court and the only question which it raises for our decision is whether the direction issued by the award calling upon the appellant to start the construction of at least 15 quarters is justified or not It is true that the appellant has provided housing facilities for some members of its staff It appears that 17 employees out of 183 in the Power Station 146 out of 329 in the Mains Department and 1 out of 58 in the General Department have been provided by the appellant with free quarters whereas one employee in the Mains Department is granted house allowance at 12 12 in lieu of a house But this arrangement is a matter of the appellant s choice and volition and it cannot be made an obligation and thus virtually a term of employment that is the appellant s case On the other hand the respondent s contention is that the Bihar Government scheme of industrial housing has now been finalised and it imposes upon the appellant an obligation to provide housing facilities for all its employees It is not seriously disputed by the respondent that the industrial adjudication has so far consistently held that providing housing facilities for industrial labour is the primary responsibility of the State but the argument is that the scheme formulated by the Industrial Housing Sub Committee in 765 Bihar has materially altered the position so far as the State of Bihar is concerned It is this argument which has been accepted by the tribunals below They have held that the scheme sanctioned by the Bihar Government on the recommendation of the Industrial Housing Sub Committee though recommendatory in character imposes a moral obligation on the employer to provide housing for his employees and in industrial adjudication this moral obligation can be enforced against it It is this conclusion which must first be examined It appears that in March 1938 the Government of Bihar had set up a Committee known as the Bihar Labour Enquiry Committee under the Chairmanship of Dr Rajendra Prasad for the purpose of enquiring into the conditions of industrial labour in the State and for making such recommendations as might appear practicable with the object of improving the level of wages and conditions of work of industrial workers This Committee submitted its report to Government in April 1940 It had suggested that housing on an adequate scale should be made a statutory obligation of the employer but the extent to which the industry could be required to fulfil such an obligation should be determined by the State Government after careful investigation into its financial condition No action was however taken on this recommendation by the State Government Subsequently the Bihar Government appointed the Industrial Housing Sub Committee on the recommendation of the Bihar Central Standing Labour Advisory Board and this Sub Committee submitted its report on December 16 1948 recommending the setting up of an industrial housing board for formulating certain schemes for housing industrial workers The matter was then considered by the Bihar Central Standing Labour Advisory Board on February 11 1950 and the Board asked the Industrial Housing Sub Committee to re examine the question further and make specific recommendations Accordingly the Sub Committee reconsidered the matter and made its final recommendations on August 17 1950 These recommendations were considered by the Bihar Central 766 Standing Labour Advisory Board in September 1950 and they were adopted by it with slight modifications This scheme was finally sanctioned by the State Government Under this scheme the responsibility for housing industrial labour is placed on the shoulders of the employers To begin with the scheme was intended to be applicable only to factories registered under It provides for financial assistance by State Government to the employer on terms and conditions specified in it It appears that under para 4 of the scheme the State Government may give loan to the employer to the extent of 50 of the capital required for industrial housing and that the loan would carry interest at 3 per annum The remaining 50 of the capital is to be provided for by the employer The amount granted as a loan together with interest thereon has to be repaid by the employer in 25 annual instalments of equal amount on the dates fixed for such repayment There is also a default clause which enables the State Government to recover the amount due from the properties mortgaged to the State Government for the loan or from other assets of the borrower The scheme prescribes the terms on which the quarters when built should be let out to the employees and it lays down the standard size and other specifications of the quarters The respondent s contention is that since this scheme has been sanctioned by the State Government it imposes on the employers in the State of Bihar a moral obligation to implement it and industrial adjudication can give effect to the scheme by issuing appropriate directions by their awards this contention has been accepted by the tribunals below We do not think that the scheme in question can justify the direction issued by the award under appeal It is clear that though the original Bihar Labour Enquiry Committee had recommended to the State Government that housing on an adequate scale should be made a statutory obligation of the employer the State Government has so far taken no action on this recommendation It is common ground that the State 767 Legislature has passed no legislation imposing statutory obligation on the employer to provide for housing on an adequate scale to his employees The scheme in question on which the respondent relies has no statutory force It merely approves of the recommendations made by the Bihar Central Standing Labour Advisory Board and the only liability which the State Government has purported to undertake by sanctioning the scheme is to agree to afford partial Gaj financial assistance to the employers on the terms and conditions specified in it In other words if any industrial employer wants to provide housing facilities for his employees he may be able to ask for financial assistance from the State Government and the State Government may afford such assistance under the scheme but that is a very different matter It may be conceded that in a large majority of cases industrial labour is very badly in need of housing accommodation and it would therefore be desirable that such facilities should be afforded to labour either by the State or if possible by the employer or by both of them acting together in co operation but we do not see how the present scheme which no doubt is laudable in its object can afford any valid basis for issuing directions against the appellant calling upon it to construct quarters for its workmen as the award purports to do It appears that both the tribunals assumed that the scheme in question had been adopted with the consent of the appellant and as such the appellant was bound by it This assumption is clearly unjustified No partner of the appellant was a member of the Committee and Mr Chandra the appellant s Labour Adviser was not its member in 1950 but became one in 1952 Mr Chandra is a Labour Adviser of other companies as well and so it would be difficult to accept the argument that even after he became a member in 1952 he could represent the appellant in the legal sense so as to bind it by his consent but apart from this aspect of the matter even Mr Chandra was not a member in 1950 when the scheme was adopted It is true that some representatives of industrial employers were nominated by the State Government as members 768 of the Committee but that would not justify the assumption that the scheme adopted by the Committee and sanctioned by the Government is binding on the appellant It is significant that even the scheme lays down that providing housing accommodation to the lowest paid workers is mainly the responsibility of the employers and that the State Government could only help the employers by giving them aid in the form of loan and in the matter of acquisition of land The scheme is thus merely recommendatory and the use of the word mainly shows that it is vague and cannot be and was not expected to be enforced as it stands It is clear that tribunals cannot call upon the Government to advance a loan to the employers whenever they pass awards calling upon the employers to start the construction of quarters for their employees so that if Government takes time to sanction the required loan or owing to its own difficulties it is unable to sanction it the employer would be exposed to the risk of the penalties arising out of his failure to comply with the award and that only serves to emphasise that the problem must be tackled by the employers and the State in co operation with each other and cannot at present at least be treated as a subject matter of an award We are therefore satisfied that the scheme in question which is the sole basis for the award cannot have the effect of introducing a term of employment between the appellant and its workmen in regard to housing facilities We may incidentally point out that if the present award is upheld it would give rise to similar demands from employees in other allied or similar industries in Bihar and if such demands are upheld it would inevitably impose a very large burden on the employers and that may materially affect the industrial progress of the State of Bihar It is necessary to emphasise that in considering the claims of workmen sympathetically on the ground of social and economic justice industrial adjudication has to bear in mind the interests of national economy and progress which are relevant and material We must therefore hold that the award under appeal cannot be sustained on the 769 basis of the scheme sanctioned by the Bihar Government It has however been urged before us on behalf of the respondent that apart from the scheme the industrial tribunal has jurisdiction to make an award calling upon the appellant to provide housing accommodation for its employees The argument is that unlike commercial arbitration industrial arbitration may and often does involve the making of a new contract or the imposition of new obligations on the employer in the interests of social justice and having regard to the fact that the employees are very badly in need of housing accommodation it was open to the tribunal in the present case to have directed the appellant to make a beginning in that direction by providing housing accommodation to some of its employees In support of this argument the respondent has relied upon the oft quoted observation of Ludwig Teller that Industrial arbitration may involve the extension of an existing agreement or the making of a new one or in general the creation of new obligations or modification of old ones while commercial arbitration generally concerns itself with interpretation of existing obligations and disputes relating to existing agreements 1 There is no doubt that in appropriate cases industrial adjudication may impose new obligations on the employer in the interest of social justice and with the object of securing peace and harmony between the employer and his workmen and fall co operation between them This view about the jurisdiction and power of the industrial tribunals has been consistently recognised in this country since the decision of the Federal Court in Western India Automobile Association vs The Industrial Tribunal Bombay 2 In that case the employer had challenged the jurisdiction of the industrial tribunal to direct the reinstatement of his employees and it was urged that such a direction was contrary to the known principles which govern the 1 Ludwig Teller s Labour Disputes Collective Bargaining Vol 2 AIR 1949 FC III 120 97 770 relationship between master and servant and was outside the jurisdiction of the tribunal This contention was negatived by the Federal Court and it was observed that industrial adjudication does not mean adjudication according to the strict law of master and servant The award of the tribunal observed Mahajan J in delivering the judgment of the Court may contain provisions for the settlement of a dispute which no Court could order if it was bound by ordinary law but tile tribunal is not fettered in any way by these limitations The same view has been more emphatically expressed by Mukherjea J in The Bharat Bank Ltd Delhi vs The Employees of the Bharat Bank Ltd Delhi 1 In settling the disputes between the employers and the workmen observed the learned Judge the function of the tribunal is not confined to administration of justice in accordance with law It can confer rights and privileges on either party which it considers reasonable and proper though they may not be within the terms of any existing agreement It has not merely to interpret or to give effect to the contractual rights and obligations of the parties It can create new rights and obligations between them which it considers essential for keeping industrial peace In Rohtas Industries Ltd vs Brijnandan Pandey Mr Justice section K Das has expressed the same conclusion when he observed that a court of law proceeds on the footing that no power exists in the courts to make contracts for people and the parties must make their own contracts The courts reach their limit of power when they enforce contracts which the parties have made An Industrial Tribunal is not so fettered and may create new obligations or modify contracts in the interests of industrial peace to protect legitimate trade union activities and to prevent unfair practice or victimisation Thus there can be no doubt that an industrial tribunal has jurisdiction to make a proper and a reasonable order in any industrial dispute and in that sense the respondent may be right when it contends that it was within the competence of the tribunals below to entertain its 1 5I3 2 810 771 grievance about housing accommodation and to give it appropriate relief in that behalf But assuming that the tribunal had jurisdiction to entertain the dispute the question still remains whether apart from the agreement on which the tribunals have based their decision the award under appeal can be justified on general grounds In our opinion under the present conditions the answer to this question has to be in favour of the appellant and against the respondent Industrial tribunals have consistently taken the view that housing accommodation of industrial labour is the primary responsibility of the State and there has also been no difference of opinion on the point that in the present economic condition of our industries it would be inexpedient to impose on the employers the obligation to provide housing accommodation for their employees Besides a scheme of wages properly fixed necessarily takes into account house rent amongst other relevant facts and under a proper scheme of dearness allowance adjustments can be made when necessary from time to time so as to take into account an appreciable rise in the rents which industrial labour may have to pay That is why usually tribunals do not entertain employees claim for housing and do not even allow a separate demand for house allowance as such This position is not disputed before us by the respondent We may however refer to a few typical decisions of the Industrial Tribunals on this point In Eastern Plywood Manufacturing Co Ltd And Their Workers 1 the Industrial Tribunal rejected the workmen s claim for housing accommodation or in the alternative for house rent allowance of Rs 10 per month on the ground that the obligation for housing labour in an urban area is not really on the employer and that the tribunal had already considered in the issues on basic pay and dearness allowance as to how much the company should be directed to pay in emoluments to its workmen The tribunal thought that it would not be reasonable to saddle the company with any further financial commitments in the shape of house rent allowance 1 772 In Mahomad Rai Akbarali Khan vs The Associated Cement Companies Ltd 1 the Labour Appellate Tribunal has considered this problem It was urged by the employees before the appellate tribunal that the employers should either provide quarters or pay house rent allowance whereas the company contended that it was not the function of the management to provide accommodation for its employees The appellate tribunal however took the view that the employers contention should be accepted subject to considerable qualifications in certain cases and it proceeded to consider the special features of the problem presented by the employers factory at Sevalia Sevalia was a village until the employer went there to start its factory which needed the services of a large contingent of workers When an industrial concern like this observed the appellate tribunal bursts upon a rural area there is a very considerable impact on its economy The inhabitants nearby join the factory as well as those living further away there is also an influx of persons from outside in short it means that accommodation becomes scarce and expensive and if a workman has to go further afield for his accommodation he is put to considerable physical fatigue and inconvenience In such circumstances it has not been the policy of the tribunals to ignore a claim for house rent allowance After making these observations the appellate tribunal proceeded to readjust the dearness allowance payable to the employees after taking into account the increased house rent which they had to pay for their housing accommodation in Sevalia and having thus readjusted the dearness allowance the appellate tribunal held that no separate order as to house rent allowance was necessary It appears that in that case the industrial tribunal had taken the view that the problem was not likely to be solved by granting house rent allowance to the employees and that the only practical course therefore was that the company should either help the workers in building their houses or that the company itself should construct quarters That is why it bad rejected the 1 773 employees demand for house rent allowance but had recommended to the concern to undertake building operations The Labour Appellate Tribunal reversed this conclusion and took a more practical and a wiser course by readjusting the dearness allowance so as to grant adequate relief to the employees in that behalf It would thus be seen that even where the employer bad started its factory at a small village like Sevalia the appellate tribunal did not accept the employees demand for housing accommodation and did not also think it proper to ask the employer to pay to its em ployees any separate special house rent allowance In Samastipur Central Sugar Co Ltd And Their Workmen 1 the Labour Appellate Tribunal bad occasion to consider this question once again In dealing with the merits of the problem it accepted the decision of the Appellate Tribunal in Mahomad Rai Akbarali Khan vs The Associated Cement Co Ltd and observed that where the basic wage and dear ness allowance are consolidated house rent at the normal time and the subsequent rise must be presumed to have been taken into account when the total consolidated amount was fixed The same view was taken by the Labour Appellate Tribunal in Messrs National Carbon Co India Ltd vs National Carbon Co Mazdoor Union Calcutta 3 In that case the tribunal had directed the employer to pay his workmen house rent allowance because it had taken the view that in making the said order it was granting a relief lesser than granting free quarters which the employees had claimed and that the lesser was involved in the greater relief and could be granted by it On the evidence adduced in the said pro ceedings the Labour Appellate Tribunal did not agree with this view It held that provision for free quarters by constructing houses cannot permit of comparison with payment of house rent allowance in money month after month to determine which is greater and which is smaller than the relief of pro free quarters On this view the Labour 1 1955 II LLJ 727 730 2 8 774 Appellate Tribunal came to the conclusion that the tribunal had no jurisdiction to award house rent allowance when the dispute referred to it for adjudication was about free quarters It is thus clear that industrial tribunals have consistently refused to entertain a claim for housing accommodation or for the grant of a special and separate housing allowance against their employers That is why in making the award under appeal the tribunals below were at pains to emphasise the fact that the scheme sanctioned by the Bihar Government made the position substantially different so far as Bihar was concerned The problem of housing industrial labour has been the subject matter of some legislative enactments As regards the workers employed in Plantations the 69 of 1951 provides that it shall be the duty of every employer to construct and maintain for every worker and his family residing in the plantation necessary housing accommodation subject to the other provisions of the Act Housing Boards have also been established in different States to tackle the larger problem of housing in general The Bombay Housing Board Act 1948 Bom 69 of 1948 the Mysore Labour Housing Act 1949 Mys 28 of 1949 the Madhya Pradesh Housing Board Act 1950 Madhya Pradesh 43 of 1950 the Hyderabad Labour Housing Act 1952 Hyd 36 of 1952 the Saurashtra Housing Act 1954 Saurashtra 32 of 1954 and the U P Industrial Housing Act 1955 U P 32 of 1955 are attempts made by the respective States to meet their responsibility in the matter of providing housing accommodation to its citizens in general and to industrial labour in particular This problem appears to have been considered by the Planning Commission in its report on the Second Five Year Plan Chapter 26 of the report deals with the genera problem of housing and ch 27 deals With labour policy and programmes The discussion of the problem in these two chapters shows that housing shortage can be conquered only by sustained and well 775 planned efforts made by the States and the industry together It is a very big problem and involves the expenditure of a huge amount Efforts are being made by the Central Government to invite the co operation of industrial employers to tackle this problem with the progressively increasing financial and other assistance offered by the State Governments But it is obvious that this problem cannot at present be tackled in isolation by industrial tribunals in dealing with housing demands made by employees in individual cases In the present economic condition of our industries it would be inexpedient to impose this addi tional burden on the employers Such an imposition may retard the progress of our industrial development and production and thereby prejudicially affect the national economy Besides such an imposition on the employers would ultimately be passed by them to the consumers and that may result in an increase in prices which is not desirable from a national point of view It is true that the concept of social justice is not static and may expand with the growth and prosperity of our industries and a rise in our production and national income but so far as the present state of our national economy and the general financial condition of our industry are concerned it would be undesirable to think of introducing such an obligation on the employers today That is why we think the industrial tribunals have very wisely refused to entertain pleas for housing accommodation made by workmen from time to time against their employers In the present case it is clear that the question about the financial ability of the appellant to meet the additional burden imposed by the award has not been considered at all In fact the Tribunals below seem to have taken the view that since the appellant is bound by the scheme it is immaterial if not irrelevant to enquire whether the appellant would be able to meet the expenses involved in the construction of quarters as directed by the award It is obvious that such a view proceeds on purely theoretical considerations which have no relation to existing facts in regard to the financial position of the industry or the state of 776 national economy In fairness to the Tribunals we ought to add that if the tribunals had not taken an erroneous view about the effect of the scheme sanctioned by the Bihar Government they would not have granted the demand made by the respondent for housing accommodation Since we hold that on the merits the award cannot be sustained we do not think it is necessary to consider whether the expenditure involved in the construction of quarters would be admissible under the relevant provisions of the Electricity Act The result is the appeal succeeds and the award under appeal is set aside In the circumstances of this case we think it would be fair that the parties should bear their own costs Appeal allowed

In 1949 the appellant framed a scheme called Tonnage Pro duction Bonus Scheme whereunder the workmen were to get 13 days basic wages by way of bonus on a production Of 30000 tons and thereafter an additional one day s basic wage for every 46o tons produced upto a maximum Of 36000 The scheme was accepted by the workmen In 1953 the workmen raised industrial disputes claiming profit bonus for the years 1950 51 and 1951 52 in addition to the production bonus and asked for revision of the production bonus scheme The Industrial Tribunal to which the disputes were referred rejected both the claims On appeal the Appellate Tribunal awarded profit bonus equal to one month s basic wage for 1951 52 but dismissed the claim for 1950 51 as having been made too late It revised the production bonus scheme by providing for i day s basic wage for each increase Of 460 tons over 30000 tons uPtO 36000 tons and for 2 days basic wage for each increase Of 46o tons in excess Of 36000 tons The appellant contended i that the Tribunal had no jurisdiction to vary the production bonus scheme ii that such a scheme could only be varied by agreement iii that no proper grounds had been made out for varying the scheme iv that profit bonus could not be awarded in addition to production bonus v that the production bonus in this case was really profit bonus and vi that there was no available surplus out of which profit bonus could be paid Held that the Tribunal had jurisdiction to revise the pro duction bonus scheme Payment of production bonus was payment of further emoluments depending not upon extra profits but upon extra production as an incentive to the workmen to put in more than the standard performance Though it was discretionary with the appellants to introduce the scheme once the scheme was introduced and put into operation it became a term of employment of the workmen and any dispute with respect to such term of employment was an industrial dispute which could properly be referred to a Tribunal The power of the Tribunal in considering the scheme 1013 was not confined to the question of mala fides etc of the employer s action but it had power to vary the terms of the scheme if circumstances justified it There was no justification for interfering with the scheme upto a production Of 36000 tons in view of the agreement between the parties But the scheme did not provide for production above 36000 tons and as such there was no agreement with respect to this and as the production had gone up beyond 36000 tons it was necessary to provide for production bonus beyond this quantity There were two reasons for increase in the rates of payment of production bonus viz i the intensification of the efforts of the workmen in increasing production and ii the progressive going down of the labour cost of production per ton as production increased The rates had to be increased progressively with production Consequently for each 46o tons increase in production the proper rates for payment of production bonus would be 1 14 1 34 and 2 days basic wages respectively or production between 36000 and 42000 tons 42000 and 48000 tons 48000 and 54000 tons and 54000 and 60000 tons The Tonnage Production Bonus Scheme introduced by the appellant was in fact also a production bonus scheme and not a profit bonus scheme The fact that one of the terms of the scheme empowered the directors to cancel or reduce the payment of production bonus in case the gross profit was not sufficient to meet fixed dividends interest depreciation charges taxation and 10 dividend to ordinary shareholders did not make it a profit bonus scheme as the circumstances mentioned are not the same that have to be taken into account in arriving at the available surplus according to the Full Bench formula Nor was the position altered by the clause in the scheme which empowered the appellant to cancel or modify the scheme in case Government enforced by legislation any scheme for bonus or profit sharing as this did not mean that the scheme itself was for profit sharing or profit bonus The other clauses of the scheme clearly indicated that it was for production bonus If there was an available surplus of profits according to the Full Bench Formula the workmen were entitled to get profit bonus in addition to the production bonus Mathuradas Kanji vs Labour Appellate Tribunal AIR distinguished Held further that there was available surplus of profits and the profit bonus equal to one month s basic wages was properly awarded by the Appellate Tribunal for 1951 52 The claim for deduction for rehabilitation was made on a wrong basis by the appellant In order to arrive at a realistic figure for rehabilitation the total block should be divided into three heads i landiibuildings railway sidings and things of that nature which had a much longer life and where no imports were needed and iiimachinery In the case of land no replacement was necessary and no provision need be made for rehabilitation In the 1014 case of buildings etc the multiplier would be smaller while the divisor would be larger Machinery bad again to be sub divided according to when it was purchased so as to arrive at correct multipliers and divisors As machinery purchased before the last war stood on one footing there would be a pre 1939 block The second block may be of machinery purchased during the war and the third of that purchased after the war The last two were not rigid divisions In the circumstances of the present case the proper multipliers for these three bocks would be 4 2 and 1 respectively As both Tribunals had accepted 10 as the divisor that may be accepted as the divisor for the three blocks Calculating on that basis the rehabilitation costs did not wipe out the entire gross profits as claimed by the appellants and there was an available surplus out of which profit bonus could be paid The clerical staff budli workers and temporary workers were not entitled to claim attendance bonus as they were differ ent from other workmen

Civil Appeals Nos 14 and 15 of 1955 Appeals by special leave from the decision dated September 30 1953 of the Labour Appellate Tribunal of India Lucknow in Civil Appeals Nos 111 198 of 1953 and III 321 of 1953 section section Dhawan G C Mathur and C P Lal for the appellants and respondent No 2 Unions in both the Appeals H N Sanyal Additional Solicitor General of India and section P Varma for the respondent No I in C A No 14 of 1955 N C Chatterjee and Radhey Lal Aggarwala for the respondent No 1 in C A 15 of 55 November 20 The following Judgment of the Court was delivered by IMAM J These two appeals by special leave have been heard together as they arise out of a single judgment of the Labour Appellate Tribunal of India Lucknow dated September 30 1953 passed in seven appeals before it As the question for consideration in the appeals before this Court is the same this judgment will govern both the appeals before us Civil Appeal Nos 14 and 15 of 1955 arise out of Appeal Nos 111 198 of 1953 and 111 321 of 1953 respectively before the Labour Appellate Tribunal The question for consideration before the Labour Appellate Tribunal was whether the awards from which the seven appeals had been filed before that Tribunal were valid in law and made with jurisdiction It is this very question which arises in the appeals before us Before dealing with the question raised in these appeals it is necessary to state certain facts On March 15 1951 the Governor of Uttar Pradesh made a General Order consisting of numerous clauses under 974 powers conferred on him by cls b c d and g of section 3 and section 8 of the Uttar Pradesh Act XXVIII of 1947 hereinafter referred to as the Act in supersession of the general Order No 781 LXVIII dated March 10 1948 The Order of March 15 1951 was numbered 615 LL XVIII 7 LL of 1951 hereinafter referred to as Order No 615 Under cl 16 of Order No 615 the decision of the Tribunal or Adjudicator was to be pronounced within 40 days excluding holidays but not annual vacations observed by courts subordinate to the High Court from the date of reference made to it by the State Government concerning any industrial dispute The proviso to it authorised the State Government to extend the period for the submission of the award from time to time On February 18 1953 this clause was amended and the time of 40 days was altered to 180 days On December 17 1952 the judgment of this Court in the case of Strawboard Manufacturing Co Ltd vs Gutta Mill Workers Union 1 was pronounced In consequence of this decision the Act was amended by the Uttar Pradesh Industrial Disputes Amendment Ordinance 1953 Ordinance No 1 of 1953 hereinafter referred to as the Ordinance promulgated by the Governor of Uttar Pradesh The Ordinance came into force on May 22 1953 By the provisions of section 2 of the Ordinance section 6 A was introduced into the Act Section 2 of the Ordinance states After section 6 of the U P hereinafter referred to as the Principal Act the following shall and be deemed always to have been added as section 6 A 6 A Enlargement of time for submission of awards Where any period is specified in any order made under or in pursuance of this Act referring any industrial dispute for adjudication within which the award shall be made declared or submitted it shall be competent for the State Government from time to time to enlarge such period even though the period originally fixed or enlarged may have expired 11953 section C R 439 975 Section 3 of the Ordinance states Removal of doubts and validation For the removal of doubts it is hereby declared that 1any order of enlargement referred to in section 6A made prior to the commencement of this Ordinance under the Principal Act or any order passed thereunder which would have been validly and properly made under the Principal Act if section 6 A had been part of the Act shall be deemed to be and to have been validly and properly made thereunder 2no award whether delivered before or after the commencement of this Ordinance in any industrial dispute referred prior to the said commencement for adjudication under the Principal Act shall be invalid oil the ground merely that the period originally specified or any enlargement thereof had already expired at the date of the mkaing declaring or submitting of the award and any action or proceeding taken direction issued or jurisdiction exercised in pursuance of or upon such award be good and valid in law as if section 6 A had been in force at all material dates 3every proceeding pending at the commencement of this Ordinance before any court or tribunal against an award shall be decided as if the provisions of section 6 A bad been in force at all material dates The following chart will show the date of reference the date on which the period of 40 days expired the dates and the periods of enlargement the date of submission of the award and the date of filing of the appeal in the seven appeals before the Labour Appollate Tribunal 124 976 Date on which 40 Appeal No Date of days available for Date Period reference the initial sub of enlargement mission of the if any award expired 111 18653 13 2 1953 3 4 1953 Nil 6 4 1953 5 5 1953 111 18753 28 1 1953 18 3 1953 Nil 13 4 1953 5 5 1953 111 32153 28 1 1953 18 3 1953 Nil 26 6 1953 18 7 1953 111 18353 28 1 1953 18 3 1953 Nil 13 4 1953 4 5 1953 111 32353 9 2 1953 29 3 1953 Nil 22 6 1953 20 7 1953 111 20953 15 1 1953 5 3 1953 13 3 1953 9 4 1953 8 5 1953 up to 31 3 1953 17 4 1953 111 19853 19 8 1952 10 10 1953 i 4 11 1952 13 5 1953 up to 11 11 1952 ii 26 12 1952 up to 31 12 1952 iii 13 1 1953 up to 31 1 1953 iv 11 2 1953 up to 10 3 1953 Date of submission of the award Date of filing of the appeal 125 977 The Labour Appellate Tribunal found that the award in appeal No 111 198 of 1953 was made not only on the expiry of the period of enlargement but also long after the expiry of 180 days from the date of reference In the case of the other appeals the awards were made on the expiry of 40 days but within 180 days of the reference Appeals Nos 111 321 and 323 of 1953 were filed after the commencement of the Ordinance and the others before its commencement In the case of the Swadeshi Cotton Mills Co Ltd Civil Appeal No 14 of 1955 the Governor by an order dated August 19 1952 referred the dispute between the said Mills and its workmen to the Additional Regional Conciliation Officer Kanpur for adjudication on the issue stated therein in accordance with the provisions of Order No 615 In the case of Kamlapat Motilal Sugar Mills Civil Appeal No 15 of 1955 the Governor by his order dated January 28 1953 referred the dispute between the said Mills and its workmen on the issue mentioned therein to the Regional Conciliation Officer Lucknow for adjudication in accordance with the provisions of Order No 615 In both these orders of reference no date was specified within which the Regional Conciliation Officers of Kanpur and Lucknow were to submit their awards All that was stated in these orders was that they shall adjudicate the dispute in accordance with the provisions of Order No 615 It is only by reference to cl 16 of Order No 615 that it is possible to say that the decisions of these Conciliation Officers were to be pronounced within the time specified in the Orders of reference and that would be 40 days from the date of reference In the case of the Swadeshi Cotton Mills there were several periods of enlargement of time but in the case of the Kamlapat Motilal Sugar Mills there was no enlargement of time as will appear from the above mentioned chart Under section 3 of the Act the State Government for the purposes mentioned therein could by general or special order make provisions for appointing Industrial Courts and for referring any industrial dispute for conciliation or adjudication in the manner provided 978 in the order Order No 615 was a general order made by virtue of these provisions Clause 10 of that Order authorized the State Government to refer any dispute to the Industrial Tribunal or if the State Government considering the nature of the dispute or the convenience of the party so decided to any other person specified in that behalf for adjudication Clause 16 specified the time within which the decision of the Tribunal or the Adjudicator had to be pronounced provided the State Government could extend the period from time to time Section 61 of the Act specifically stated that when an authority to which an industrial dispute had been referred for award or adjudication had completed its enquiry it should within such time as may be specified submit its award to the State Government It would appear therefore that the Act required the submission of the award to be made within a specified time which time in the absence of a special order of reference of an industrial dispute for conciliation or adjudication under section 3 of the Act would be determined by the provisions of a general order made by the Government in that behalf An order of reference of an industrial dispute for adjudication without specifying the time within which the award had to be submitted would be an invalid order of reference In fact the orders of reference in the cases under appeal specified no time within which the award had to be submitted All that they directed was that the dispute shall be adjudicated in accordance with the provisions of Order No 615 If these orders of reference are read along with cl 16 of Order No 615 then it must be deemed that they specified the time within which the award had to be submitted as 40 days from the dates of reference The proviso to cl 16 of Order No 615 empowering the State Government to extend the period from time to time within which the award had to be submitted was found to be an invalid provision having regard to section 61 of the Act by this Court in the case of Strawboard Manufacturing Co Ltd vs Gutta Mill Workers Union 1 If the matter had stood there I 979 only the awards having been submitted beyond forty days from the dates of reference would be invalid as the periods of extension granted from time to time by the State Government for their submission could not be taken into consideration The Act however was amended by the Ordinance and section 6 A was added to the Act and according to the provisions of section 2 of the Ordinance section 6 A of the Act must be deemed to have formed a part of the Act at the time of its enactment Section 61 and section 6 A of the Act must therefore be read together Section 61 of the Act specifically stated that the award must be submitted within a specified date in an industrial dispute referred for adjudication after the completion of the enquiry Under section 6 A however the State Government was empowered from time to time to enlarge the period even though the period originally fixed or enlarged might have expired The orders of reference in these appeals as stated above specified 40 days within which the awards had to be submitted The State Government could however enlarge the periods within which the awards had to be submitted under section 6 A by issuing other orders in the case of each reference extending the time within which the awards had to be submitted Admittedly no such order was in fact passed in the case which is the subject of Civil Appeal No 15 of 1955 and in the case which is the subject of Civil Appeal No 14 of 1955 although orders extending the time for the submission of the award were made and the last order extended the time to March 10 1953 yet the award was submitted on May 13 1953 The awards in these cases were therefore made in the one case beyond the time specified in the order of reference and in the other beyond the extended period within which the award had to be submitted It was urged on behalf of the appellant the State of Uttar Pradesh that as cl 16 of Order No 615 had been amended whereby 180 instead of 40 days had been provided as the period within which an award had to be submitted the orders of reference in the cases before as must be construed as specifying 980 180 days within which the awards had to be submitted In other words cl 16 although amended on February 18 1953 was retrospective in operation Order No 615 is a general order under which conciliation boards and industrial tribunals may be set up to deal with industrial disputes It is true that el 16 enjoins that the decisions by the tribunal or the adjudicator must be pronounced within a specified number of days but this is a general direction An order of reference is a special order It could have stated the manner in which the industrial dispute was to be adjudicated and it could also have specified the time within which the decision had to be pronounced As the orders of reference in the cases before us merely stated that they were to be decided in accordance with the provisions of Order No 615 the disputes had to be adjudicated in the manner so provided and the orders of reference must accordingly be read as having specified 40 days as the time within which the awards had to be submitted Subsequent amendment of cl 16 whereby 180 days instead of 40 days was provided as the time within which the award had to be submitted could not affect an order of reference previously made according to which the award had to be submimitted within 40 days We cannot agree with the submission made on behalf of the appellant that cl 16 as amended must be given retrospective effect and the orders of reference previously issued must be regarded as specifying the time of 180 days for the submission of the awards Section 61 of the Act is to the effect that the authority to which an industrial dispute has been referred for adjudication must submit its award within such time as may be specified This section read with section 6 A of the Act on a proper interpretation of their provisions makes it clear that the time within which the award shall be submitted is the period specified in the order of reference Mere amendment of cl 16 would not therefore affect the period already specified in the order of reference It seems to us therefore that the amendment to el 16 did not materially affect the position and the awards in the cases before us had to be submitted within 981 40 days from the dates of the orders of reference or within the enlarged time for the submission of the awards What is the effect of section 3 of the Ordinance is a matter which now remains to be considered This section purported to remove doubts and to validate orders of extension of time for the submission of an award It also purported to validate certain awards There is no difficulty in construing cl 1 of this section It validates all orders of extension made prior to the commencement of the Ordinance as if section 6 A of the Act had been a part of the Act always In other words orders of extension of time made under the general order promulgated under section 3 of the Act would be regarded as made under section 6 A Clause 3 of section 3 of the Ordinance also does not present any difficulty in construing its provisions It directs that every proceeding pending before any Court or Tribunal at the commencement of the Ordinance against an award shall be decided as if section 6 A of the Act had been in force at all material dates Clauses 1 and 3 of this section merely re emphasise the provisions of section 6 A of the Act which in our opinion are clear enough even in the absence of the aforesaid clauses It is cl 2 of section 3 of the Ordinance which requires careful examination Learned Counsel for the appellants contended that el 2 was sufficiently wide in its terms to include all awards and not merely awards which bad become final as held by the Labour Appellate Tribunal The words at the end of the clause as if section 6 A had been in force at all material dates were redundant and they should be ignored Indeed according to him there was no need for the existence of el 3 in view of the provisions of cl Clause 2 validated all awards whether made before or after the commencement of the Ordinance even if the period specified within which they were to be submitted or any enlargement thereof had already expired in so far as they could not be questioned merely on that ground alone and this would cover even a proceeding pending in any Court or Tribunal at the commencement of the Ordinance against an award 982 Mr N C Chatterjee appearing for respondent No 1 in Civil Appeal No 15 of 1955 contended that the Labour Appellate Tribunal took the correct view that cl 2 of section 3 of the Ordinance covered cases where the awards had become final He further developed his argument in support of the decision of that Tribunal on the following lines Such clarification as was sought to be made by section 3 of the Ordinance must be construed in relation to section 6 A of the Act and not independently of it If an award were made outside the ambit of section 6 A then the whole of section 3 of the Ordinance could not apply to such a case Section 31 of the Ordinance validated all orders of enlargement of time which were made prior to the commencement of the Ordinance Such orders should be deemed to have been validly made as if section 6 A had been a part of the Act Section 32 of the Ordinance was enacted to prevent the validity of an award being questioned when it had been submitted after the specified period for its submission or any enlargement thereof The words as if section 6 A had been in force at all material dates merely connote that there must be an order of enlargement made by the Government in the exercise of its powers under section 6 A of the Act Section 32 of the Ordinance had no application to a case where an award was made independently of the exercise of the powers of the Government under section 6 A Section 32 and 3 of the Ordinance were subservient to section 6 A of the Act The Tribunal apparently took the view that there was repugnance between sub sections 2 and 3 of section 3 of the Ordinance and so it made an attempt to avert that repugnance by putting an artificial restriction on the scope of sub section 2 of section 3 In holding that section 32 applied only to awards that have become final the Tribunal overlooked the fact that this sub section referred to awards which may be made even after the commencement of the Ordinance and it is not easy to appreciate how finality could be said to attach to these awards on the date when the Ordinance was promulgated The Tribunal also felt impressed by the argument that if section 6 A applied to appeals or 983 proceedings against awards pending at the date of the commencement of the Ordinance there was no reason why the same provision should not apply to appeals or proceedings which may be taken against the awards after the commencement of the Ordinance In giving expression to this view however the Tribunal clearly overlooked the fact that section 3 3 is deliberately confined to proceedings against an award pending at the commencement of the Ordinance and no others There can be little doubt in our opinion that the main purpose of the Ordinance was to validate orders of extension of time within which an award had to be submitted as well as to prevent its validity being questioned merely on the ground that it had been submitted beyond the specified time or any enlargement thereof Apart from an order of extension of time the Ordinance purported to deal with at least three situations so far as the submission of an award was concerned One was where an award was submitted before the commencement of the Ordinance and against which no proceeding was pending before any Court or Tribunal at the commencement of the Ordinance another was where an award was submitted after the Ordinance came into force These cases were dealt with by cl 2 of section 3 of the Ordinance The third was the case where an award was submitted before the commencement of the Ordinance against which a proceeding was pending before a Court or a Tribunal before the Ordinance came into force Section 33 of the Ordinance was so drafted that it should not interfere with judicial proceedings already pending against an award It merely directed that such a proceeding must be decided as if section 6 A had been a part of the Act from the date of its enactment Where however no judicial proceedings against an award were pending it was the intention of the Ordinance that the award shall not be questioned merely on the ground that it was submitted after the specified period for its submission or any enlargement thereof Although section 32 of the Ordinance is not happily worded and appears to have been the result of hasty legislation we think that upon a reasonable construction of 125 984 its provisions its meaning is clear and there is no real conflict between its provisions and the provisions of cl 3 of the section The words as if section 6 A had been in force at all material dates have to be given some meaning and they cannot be regarded as redundant as suggested on behalf of the appellants Grammatically they should be regarded as referring to any action or proceeding taken direction issued or jurisdiction exercised in pursuance of or upon an award Section 6 A of the Act however has nothing to do With this and these words car not apply to that part of the clause These words also cannot refer to a case where the award has been made beyond the specified period and in which there has been no order of enlargement of time as section 6 A of the Act does not apply to such a lase The words in question therefor can only apply to that part of the clause which refers to an enlargement of time for the submission of the award which is the only purpose of section 6 A of the Act In our opinion if section 32 of the Ordinance is read in this way an intelligible meaning is given to it which is consistent with section 6 A of the Act and not in conflict with section 33 of the Ordinance The awards referred to in section 32 are awards against which no judicial proceeding was pending at the commencement of the Ordinance In our opinion the provisions of section 32 and 3 are not in conflict with each other We cannot accept the view of the Labour Appellate Tribunal that section 32 refers only to awards that had become final Having construed the provisions of section 3 of the Ordinance it is now necessary to deal specifically with the appeals before us Appeal No III 19853 of the Labour Appellate Tribunal out of which Civil Appeal No 14 of 1955 arises was filed before the commencement of the Ordinance and by virtue of section 33 of the Ordinance the appeal had to be decided as if the provisions of section 6 A had been in force at all material dates To such an appeal the provisions of cl 2 of section 3 of the Ordinance would not apply This appeal would therefore be governed by cl As in this case the award had been submitted on May 13 1953 985 and the last date of enlargement gave time for the submission of the award up to March 10 1953 the award was submitted beyond time and therefore was invalid as having been made without jurisdiction In Civil Appeal No 15 of 1955 arising out of Appeal No 111 321 of 1953 of the Labour Appellate Tribunal the appeal was filed before that Tribunal after the commencement of the Ordinance The award was submitted long after the period namely 40 days within which it had to be submitted and there were no orders of enlargement of time Section 32 of the Ordinance and not section 33 would therefore apply to this appeal The award in this case consequently has been validated by virtue of the provisions of section 32 of the Ordinance and its validity cannot be questioned merely on the ground that it was submitted after the period within which it should have been submitted In the result Civil Appeal No 14 of 1955 is dismissed with costs and Civil Appeal No 15 of 1955 is allowed with costs and the decision of the Labour Appellate Tribunal in Appeal No 111 32153 before it is set aside Appeal No 14 of 1955 dismissed Appeal No 15 of 1955 allowed

The appellant was committed to the Court of Session for trial of offences under section 52 Prevention of Corruption Act 1947 and section 161 Indian Penal Code Shortly thereafter the Criminal Law Amendment Act 1952 came into force An Assistant Sessions judge tried the appellant and convicted him of the offences charged The appellant contended that the trial was vitiated as the investigation had been made by a police officer below the rank of Deputy Superintendent of Police and that the Assistant Sessions judge had no jurisdiction to try the case as it was triable by a Special Judge Held that the Assistant Sessions judge had jurisdiction to 777 try the case Section 10 of the Criminal Law Amendment Act 1952 transferred only cases pending before Magistrates to Special judges but did not transfer cases which had been committed to Court of Session before the Act came into force Asgarali Nazarali Singaporewalla vs The State 1957 SCR 678 relied on Held further that the conviction was not vitiated by the investigation having been made by an officer below the rank of a Deputy Superintendent of Police If the matter had been urged before the Courts at an early stage it would have had to take steps to get the illegality cured by ordering fresh investigations But the appellant could not be permitted to raise the questions whether the objection regarding investigation had been taken at the earliest stage as the question had not been raised in the Courts below HN Rishbud vs The State of Delhi relied on

Appeal No396 of 1957 Appeal from the Judgment and Order dated the 21st February 1956 of the Bombay High Court in Income tax Reference No 32 of 1954 R J Kolah J B Dadachanji and section N Andley for the appellants K N Rajagopal Sastri and D Gupta for the respondent May 5 The Judgment of the Court was delivered by DAS C J This is an appeal brought on a certificate granted on September 19 1956 by the High Court of Bombay under section 66A2 of the Indian Income Tax Act hereinafter referred to as the said Act against its order dated February 21 1956 in Income tax Reference No 32 of 1954 answering in the negative two questions of law referred to it under section 661 of the said Act at the instance of the appellants The appellants are the trustees of a charity fund known as The Charity Fund Founded by Sir Sassoon David Baronet of Bombay The said Sir Sassoon David Bart and four other persons who were holding certain securities of the value of Rs 2425000 for the purpose of charity and had been applying the same for and towards charitable purposes executed on June 8 1922 a Deed of Declaration of Trust declaring that the said trust fund would be held by them on trusts more specifically therein mentioned Clause 13 of the said deed on the true construction of which depends the answer to the referred questions runs as follows 13 The Trust Fund shall be held by the Trustees upon the Trusts to apply the net income thereof 926 after providing for all necessary expenses in relation to the management of the Trust Funds for all or any of the following purposes that is to say a the relief and benefit of the poor and indigent members of Jewish or any other community of Bombay or other parts of India or of the world either by making payments to them in cash or providing them with food and clothes andor lodging or residential quarters or in giving education including scholarships to or setting them up in life or in such other manner as to the said Trustees may seem proper or b the institution maintenance and support of hospitals and schools colleges or other educational institutions or c the relief of any distress caused by the elements of nature such as famine pestilence fire tempest flood earthquake or any other such calamity or d the care and protection of animals useful to mankind or e the advancement of religion or f other purposes beneficial to the community not falling under any of the foregoing purposes Provided always that in applying the income as aforesaid the Trustees shall give preference to the poor and indigent relations or members of the family of the said Sir Sassoon David Bart including therein distant and collateral relations provided further that in the application of the income of the said Charitable Trust Fund the said Trustees for the time being shall observe the following proportions viz that not less than half the income of the said funds shall at all times be applied for the benefit of the members of the Jewish Community of Bombay only including the relations of Sir Sassoon David Bart as aforesaid and Jewish objects and particularly in giving donations to the members of the Jewish Community of Bombay on the anniversary of the death of the said Sir Sassoon David Bart and his wife Lady Hannah David which falls on the Twenty second day of June and the remaining income for the benefit of all persons and objects including Jewish persons and objects and in 927 such proportions as the said Trustees may think proper Provided further that if the income of the Trust Funds for any year shall not be wholly applied during that year on the Trusts aforesaid such surplus income may be carried forward to the subsequent year or years and be applied as the income arising during that year or years Provided also that during the life time of Sir Sassoon David Bart in the application of the said income the Trustees shall have regard to the wishes of the said Sir Sassoon David Bart who shall also be entitled to direct if he so desires that the income of the time being of the Trust Funds or any part thereof may be applied to such charitable object or objects as the said Sir Sassoon David Bart shall direct and in such case the Trustees shall so apply the income This Deed of Declaration of Trust was on June 4 1953 registered under the Bombay Public Trusts Act 1950 The Trust fund had been invested by the trustees in inter alia 3 12 Government Securities In the year 1930 a certificate was issued by the Income tax Officer A Ward Bombay whereby the Reserve Bank of India was authorised not to deduct at source the tax on the interest on the said securities so held by the trustees It was mentioned in the said certificate that it was to enure till its cancellation In 1946 the 3 12 Government Securities were redeemed by the Government of India and were converted into 3 Con version Loan 1946 Accordingly in February 1948 the said certificate of exemption was cancelled as the securities covered thereby had been redeemed by the Government The trustees thereupon asked for a fresh certificate of exemption from the Income tax Officer Bombay Refund Circle in respect of the 3 Conversion Loan 1946 But the said Income tax Officer refused to issue such certificate on the ground that the income from the trust fund in question was not exempt from taxation under section 43i of the said Act which at the material time was as follows 41 928 2 3 Any income profits or gains falling with in the following classes shall not be included in total income of the person receiving them i Any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes and in the case of property so held in part only for such purposes the income applied or finally set apart for application thereto Upon the fact of the withholding of the certificate by the Income tax Officer Refund Circle being intimated to the Income tax Officer A V Ward Bombay the latter Officer started proceedings against the appellants under section 34 of the said Act in respect of the assessment years 1944 45 to 1947 48 He also started regular proceedings for the assessment year 1948 49 and the succeeding years up to 1952 53 In the assessment proceedings for those nine years the Income tax Officer took the view that the income from the trust fund was not exempt from taxation under section 43i and accordingly he assessed the appellants for the first four assessment years 1944 45 to 1947 48 on the ground that the income for those years had escaped assessment He also assessed the appellants to tax for the subsequent five years 194849 to 1952 53 On appeal the Appellate Assistant Commissioner confirmed the said assessments On further appeal by the appellants the Income tax Appellate Tribunal set aside the assessments for the first four years 1944 45 to 1947 48 holding that section 34 had been wrongly invoked for it was only a case of difference of opinion of one Income tax Officer from his predecessor on the same set of facts The department did not take any further steps in the matter and accepted that view of the Tribunal as regards the assessments of those years and we are not in this appeal concerned with them As regards the assessments for the five years 1948 49 to 1952 53 the Tribunal upheld the decision of the Appellate Assistant 929 Commissioner who had confirmed the assessments made by the Income tax Officer On application being made by the appellants under section 661 of the said Act the Tribunal drew up a statement of case and referred two questions of law arising out of its order to the High Court for its opinion The said questions are as follows 1 Whether the Trust property is held wholly for religious or charitable purposes within the meaning of section 43i of the Indian Income tax Act 2 If the answer to question 1 is in the negative whether the trust property is held in part only for religious or charitable purposes The said reference came up for hearing before the said High Court and both the referred questions were answered in the negative The High Court however gave the appellants a certificate of fitness for appeal to this Court and the present appeal has been filed on the strength of such certificate A perusal of cl 13 of the deed shows that the trust fund is declared to be held by the trustees upon trusts to apply the net income thereof for all or any of the six purposes enumerated therein It was conceded before the High Court and it has not been disputed before us that if there was nothing else in this clause then each of these six purposes would have to be upheld as a charitable purpose involving an element of public utility and consequently within the protection of section 43i The fact that the trustees could expend the net income on any of the six purposes to the exclusion of the other five purposes would not it is also conceded have made the slightest difference in the matter of such exemption from income tax For instance if the trustees spent the net income solely and wholly for the purposes mentioned under sub cl a to the exclusion of those mentioned in sub cls b to fsuch income would still be exempt from taxation under section 43i The High Court however took the view that cl 13 should be read as a whole along with the provisos and that so read the trust is primarily for the benefit of the relations or members of the family 117 930 of Sir Sassoon David Bart It is pointed out that in applying the net income for the purposes mentioned in sub cl a the trustees are bound under the first proviso to give preference to the poor and indigent relations or members of the family of the said Sir Sassoon David Bart including therein distant and collateral relations The second proviso it is urged makes it further clear that in the application of the income for the said purpose the trustees are enjoined to apply not less than half the income for the benefit of the members of the Jewish community of Bombay only including the relations of Sir Sassoon David Bart as aforesaid and the Jewish objects Emphasis is laid on the words not less than half as indicating that it is permissible for the trustees to spend more than half and indeed the whole of the net income for the benefit of the said relations or members of the family of the said Sassoon David Bart It is also pointed out that although the remaining income if any has to be spent for the benefit of all persons and objects including Jewish persons and objects the trustees could if they so wished spend the same also for the relations or members of the family of Sir Sassoon David Bart as Jewish persons The argument which found favour with the High Court is that the provisos impose a mandatory obligation on the trustees i to give preference to the poor and indigent relations or members of the family of Sir Sassoon David Bart and ii to spend not less than half the income which may extend to the entire income for the benefit of the relations or members of the family of Sir Sassoon David Bart The High Court points out that in view of the language of el 13 of the deed read as a whole it is open to the trustees without being guilty of any breach of trust to spend the entire net income of the trust fund for the purpose of giving relief to the poor and indigent relations or members of the family of the said Sir Sassoon David Bart including therein the distant and collateral relations and such being the position the High Court came to the conclusion that it could not be said that the property was held wholly or partly for religious or 931 charitable purposes involving an element of public utility The High Court accordingly held that the income from the trust fund was not exempt from taxation under section 43i and answered both the questions in the negative The problem before us is whether the High Court was right in so answering the questions In coming to the decision that it did the High Court relied on its own earlier decision in the case of Trustees of Gordhandas Govindram Family Charitable Trust vs Commissioner of Income tax Central Bombay 1 The facts in that case however were somewhat different from the facts now before us In that case the trust was significantly enough described as Gordhandas Govindram Family Charitable Trust Clause 2 of that trust deed provided for the application of tile net income in giving help or relief to such poor Vaishyas and other Hindoos as the trustees might consider deserving of help in the manner and to the extent specified in the said trust deed and subject to the conditions and directions stated in the next following clauses Sub clause a of cl 3 provided that Vaishya Hindoos who were members of Seksaria family should be preferred to poor Vaishyas not belonging to the said family Maintenance had to be provided under sub cl b for the poor male descendants of the settlor and under sub cl c for the poor female descendants of the settlor Marriage expenses were provided under sub el d for the poor male descendants and under sub cl e for the poor female descendants of the settlers There were other subclauses providing for payment of money to the poor male or female descendants of the other members of the Seksaria family In the present judgment now under appeal the High Court recognises that the particular trust they were dealing with in the earlier case was a fairly blatant illustration of a settlor trying to benefit his own family and his own relations and states that in the earlier case it had pointed out that the benefit to the public was too remote and too illusory and accordingly held that was 1 932 not a trust which had for its object a general public utility Such however cannot be said of the provisions of the present Deed of Declaration of Trust Under el 13 the trustees are at liberty to hold the trust fund and to apply the net income thereof for all or any of the six purposes mentioned therein The relations or members of the family of the said Sir Sassoon David Bart including therein distant and collateral relations do not figure as direct recipients of any benefit under sub cls b to f and therefore in so far as those purposes are concerned the trust certainly involves an element of public utility We are not unminaful of the fact that it is open to the trustees to spend the net income entirely for the purpose referred to in sub cl a to the exclusion of the other clauses But the very fact that the relations or members of the family do not come in directly under any of those latter sub clauses cannot be ignored for they certainly have some bearing on the question as to who or what were the primary objects of the trust as a whole In the next place the purpose of sub cl a is the relief and benefit of the poor and indigent members of Jewish or any other community of Bombay or other parts of India or of the world It is conceded by learned counsel that this sub clause clearly expresses a general charitable intention involving an element of public utility It follows therefore that sub cla constitutes a valid public charitable trust having as its beneficiaries the several classes of persons referred to therein This is the first position We then pass on to the provisos The first proviso opens with the words in applying the income as aforesaid This takes us back to sub cl The meaning of the proviso obviously is that in applying the income for the purpose of sub el a the trustees shall give preference to the poor and indigent relations or members of the family of Sir Sassoon David Bart The proviso does not operate independently but comes into play only in applying the income as aforesaid The provision for giving preference involves the idea of selection of some persons out of a bigger class envisaged in subel The poor and indigent relations or members of 933 the family can claim to participate in the benefits under the trust only if they come within one of the several classes enumerated in sub el To take an extreme example If a poor and indigent relation of Sir Sassoon David Bart abjures the faith held by the Jewish community and does not adopt any other faith and thus ceases to be a member of the Jewish community but does not become a member of any other community he will certainly not be entitled to the benefits of sub el a although he is a poor and indigent relation or member of the family of Sir Sassoon David Bart within the meaning of the first proviso In other words sub cl a prescribes the primary class of beneficiaries out of which the actual beneficiaries are to be selected by the application of the provisions of the provisos that is to say by giving preference to the relations or members of the family of the said Sir Sassoon David Bart The case of In re Koettgan s Will Trusts 1 appears to us on the facts to be more in point than the case of Gordhandas Govindram Family Charity Trust case 2 relied on by the High Court In the last mentioned English case the testatrix bequeathed her residuary estate upon trust for the promotion and furtherance of commercial educa tion The persons eligible as beneficiaries under the fund were stated to be persons of either sex who are British born subjects and who are desirous of educating themselves or obtaining tuition for a higher commercial career but whose means are insufficient or will not allow of their obtaining such education or tuition at their own expense The testatrix further directed that in selecting the beneficiaries it is my wish that the trustees shall give preference to any employees of John Batt Co London Ltd or any members of the families of such employees failing a sufficient number of beneficiaries under such description then the persons eligible shall be any persons of British birth as the trustees may select provided that the total income to be available for benefiting the pre ferred beneficiaries shall not in anyone year be more than 75 of the total available income for that 1 257 2 934 year It was held on a construction of the will that the gift to the primary class from which the trustees could select the beneficiaries contained the necessary element of benefit to the public and that it was when that class was ascertained that the validity of the trust had to be determined so that the subsequent direction to prefer as to the 75 of the income a limited class did not affect the validity of the trust which was accordingly a valid and effective charitable trust Referring to the first part of the will Upjohn J at p 257 said If the will concluded there the trust would clearly be a valid charitable trust having regard to the admission that a gift for commercial education is for the advancement of education Then after stating that the next task was to make a selection from that primary class of eligible persons the learned Judge continued It is only when one comes to make a selection from that primary class that the employees of John Batt Co and the members of their families come into consideration and the question is does that direction as to selection invalidate the primary trust In my judgment it does not do so Further down he said In my judgment it is at the stage when the primary class of eligible persons is ascertained that the question of the public nature of the trust arises and falls to be decided and it seems to me that the will satisfies that requirement and that the trust is of a sufficiently public nature The learned Judge then concluded If when selecting from that primary class the trustees are directed to give a preference to the employees of the company and members of their families that cannot affect the validity of the primary trust it being quite uncertain whether such persons will exhaust in any year 75 On the true construction of this will that is not as to 75 primarily a trust for persons connected with John Batt Co and the class of persons to benefit is not confined to them and in my judgment the trust contained in clauses 7 935 and 8 of the will of the testatrix is a valid charitable trust It is true that this is a judgment of a Single Judge but it does not appear to have been departed from or over ruled in any subsequent case and appears to us to be based on sound principle Applying this test there can be no question indeed it has been conceded that the earlier part of el 13 omitting the provisos constitutes a valid public charitable trust The circumstance that in selecting the beneficiaries under subel a preference has to be given under the provisos to the relations or members of the family of Sir Sasoon David Bart cannot affect that public charitable trust In our judgment the facts of this case come nearer to the facts of the English case referred to above than to the facts of the earlier decision of the Bombay High Court in Gordhandas Govindram Family Charity Trust case 1 As we have already stated the relations of members of the family are clearly not the primary object contemplated by sub cls b to f The first part of sub cl a omitting the provisos is not said to be too wide or vague and unenforceable The provision for giving preference to the poor and indigent relations or the members of the family of Sir Sassoon David Bart cannot affect the public charitable trust constituted under sub cl In our opinion the income from the trust properties comes within the scope of section 43i and is therefore entitled to exemption Therefore the negative answer given by the High Court to question No I cannot be supported and that question should be answered in the affirmative In this view of the matter question No 2 does not arise and needs no answer The result is that this appeal must be allowed and the question No I must be answered in the affirmative The appellants will have the costs of the reference in the High Court and of this appeal in this Court Appeal allowed

One of the items in dispute referred to the Industrial Tribunal for adjudication which was the subject matter of this appeal related to the demand of the Workers Union that the appellant company must provide quarters to its employees in terms of the Bihar Government Scheme and undertake immediate construction for that purpose The case of the Company was that the State and not the employer was primarily responsible for providing quarters to the employees and in any event it was not financially possible for the appellant to undertake the task The Tribunal upheld the Union s claim and directed the company to start construction of at least 15 quarters as specified by the Government scheme within a year The Labour Appellate Tri bunal on appeal held that the Government scheme was binding on the company and upheld the award The scheme on which the award was based was one prepared by the Industrial Housing sub Committee appointed by the Government of Bihar and sanctioned by the Government as recommended by the Bihar Central Standing Labour Advisory Board It imposed on the employers the responsibility for housing industrial labour and provided for financial assistance to the employers by the State Government to the extent Of 50 of the capital required by way of loan repayable in 25 annual instalments recoverable on default from the properties mortgaged for the loan or the assets of the debtor The scheme prescribed the terms on which the quarters were to be let out to the employees and specified their size It was contended on behalf of the appellant that the scheme was not obligatory and could not impose a term of employment for the workmen For the Union it was argued that the scheme had materially altered the rule followed by indus trial adjudication in such cases so far as the State of Bihar was concerned and had imposed a moral obligation on the appellant Neither the Industrial Tribunal nor the Labour Appellate Tribunal in appeal took the financial position of the company into consideration where they held that the Scheme did impose a 96 762 moral obligation on the appellant to provide quarters for its employees which was enforceable in industrial adjudication Held that the scheme sanctioned by the Bihar Government was merely of a recommendatory nature and since it had no statutory force it could not provide a basis for the direction made by the award Its language showed that it was vague and not intended to be acted upon and so it could not have the effect of introducing a term of employment as between the employer and the workmen Although there could be no doubt that Industrial Tribunals had generally the power and jurisdiction apart from any scheme or agreement between the parties in appropriate cases to impose new obligations on the employers in the interest of social justice and for securing peace and co operation between the employer and the workmen the award in appeal could not be justified on the merits under the prevailing condition of the industrial evolution in the country Western India Automobile Association vs The Industrial Tribunal Bombay AIR 1949 FC III The Bharat Bank Ltd Delhi vs The Employees of the Bharat Bank Ltd Delhi and Rohtas Industries Ltd vs Brijnandan Pandey referred to It was the duty of Industrial Tribunals to take into consi deration the interests of national economy and progress and they were entirely right in taking the view which they had consistently done that it would be inexpedient in the present financial condition of the industries in the country to impose the additional burden of providing housing facilities on them which should be the primary responsibility of the State Eastern Plywood Manufacturing Co Ltd vs Their Workers Mohomad Rai Akbarali Khan vs The Associated Cement Companies Ltd SamastipuR Central Sugar Co Ltd vs Their Workmen and Ms National Carbon Co India Ltd vs National Carbon Co Mazdoor Union Calcutta 1956 LAC 660 approved

Appeals Nos 746 and 747 of 1957 Appeals by special leave from the judgments and orders dated June 3 1955 and May 21 1956 of the Labour Appellate Tribunal of India Calcutta in Appeal No Cal 36652 and Misc Case No 145 of 1955 respectively arising out of an Award dated September 22 1952 of the Industrial Tribunal Bihar and published in the Bihar State Government Gazette on October 21 1952 M C Setalvad Attorney General for India and R C Prasad for the appellant The respondent did not appear April 29 The Judgment of the Court was delivered by WANCHOO J These are two appeals by the management by special leave in an industrial matter arising out of two applications under section 33 of the Industrial Disputes Act hereinafter called the Act The facts of the case are briefly these The appellant Messrs Sasa Musa Sugar Works Private Ltd is a sugar factory in District Saran Bihar The factory was established in 1932 In June 1942 a trade union was formed in this factory In July 1943 trouble arose between the workmen and the management resulting in the discharge of three office bearers of the union including one Shams ud din who was then the 838 joint secretary That matter as referred to adjudication and the discharged workmen were ordered to be reinstated in the beginning of 1944 In December 1944 there was trouble again and a large number of workmen were dismissed including Shams ud din who had by now become the president of the union This dispute was again referred to an Industrial Tribunal which again ordered reinstatement of the dismissed workmen in August 1947 There was peace for some time after this But in June 1951 the management again discharged seventeen workmen including Shams ud din who was at that time secretary of the union The trouble continued up to December 1951 when an agreement was arrived at between the union and the management as a result of which twelve of the workmen were reinstated but five including Shams ud din were not and their cases were to be referred to adjudication It appears however that another reference between the management and its workmen was already pending since September 8 1951 before an Industrial Tribunal when this agreement was arrived at Thereafter the work in the factory proceeded smoothly for some time But on January 1 1952 a notice was issued by the union to the management enlisting as many as 40 demands and it was threatened that if the demands were not met within seven days the union would have to advise the work men to adopt go slow and call upon them to offer passive resistance with effect from January 9 1952 and take all legitimate means to see that the decision of go slow was carried out till the demands of the union were fulfilled This notice was received by the management on January 4 which immediately contacted the officers of the Labour Department as well as the Sub Divisional Magistrate at Gopalganj On January 8 the Deputy Labour Commissioner wrote to the union that as the conciliation officer was busy in the general elections the status quo should be maintained till the elections were over so that the matter might be looked into by the conciliation officer The union however gave no heed to this advice and go slow began from January 9 and 839 was continued till January 12 1952 Then the Labour Commissioner himself came to the factory on January 12 and advised Shams ud din who was the s moving spirit behind all this to call off the go slow as it was proposed to start conciliation proceedings at Patna on January 17 1952 Conciliation proceedings then began on January 17 and an agreement was arrived at as to some of the demands on January 23 and it was decided that further conciliation proceedings would be held in February But in spite of this agreement go slow was again resorted to from January 24 to January 31 In the meantime the Labour Officer had arrived at the factory on January 28 1952 and further talks took place The workmen however did not pay heed to the advice of the Labour Officer He therefore reported on January 31 to the Labour Commissioner that go slow was still continuing The Labour Commissioner then ordered the Labour Officer to tell the workmen that no further conciliation proceedings would take place until the goslow was called of The Labour Officer then informed the management that it could take disciplinary action against the workmen concerned with the permission of the Industrial Tribunal Consequently the management suspended thirty three workmen by a notice given on the night of January 31 as from February 1 It was said in the notice that these thirty three workmen had been found taking a leading part in the unjustified go slow which was in contravention of the Act and they were therefore suspended from service until further orders This notice had some good effect and work improved for four days but from February 5 goslow was started again Consequently the management suspended seven more workmen from February 6 and eight more from February 7 by giving notice to them in the same terms in which the notice had been given to the thirty three workmen on January 31 As adjudication proceedings were pending since September 1951 between the management and its workmen the former applied on February 6 1952 under section 33 of the Act for permission to dismiss the thirty three workmen and on February 11 1952 for permission to 840 dismiss the remaining fifteen workmen who had been suspended later The forty eight workmen in their turn applied on March 29 1952 under section 33 A of the Act to the Industrial Tribunal and their case was that they had been suspended as a measure of punishment and that as this was done without the sanction of the Industrial Tribunal the management had committed a breach of section 33 The three applications were tried together by the Industrial Tribunal and the contentions raised before it were these 1 The management s applications under section 33 had not been preceded by any enquiry into the misconduct of the workmen and were therefore liable to be rejected 2 The order of suspension in this case amounted to punishment and therefore section 33 had been contraven ed and 3 There was an unjustified go slow by the workmen in January and February 1952 On the first point the Industrial Tribunal found that Do enquiry had been held by the management before the two applications under section 33 were made but it held that all the evidence which could have been taken in the enquiry by the management had been led before it and it was in full possession of the facts and no question of any prejudice to the workmen arose as it would be open to it on a review of the entire evidence before it to decide whether the applica tions for permission to dismiss should be granted or not On the second point it held that the order of suspension was not as a measure of punisment in the circumstances of this case and that it was an order pending enquiry by the management and proceedings under section 33 before the tribunal and that as there were no Standing Orders as to suspension in this factory the management s liability to pay the workmen their wages during the period of suspension remained On the third point the Industrial Tribunal after an elaborate discussion of the evidence came to the conclusion that there was a deliberate go slow resorted to by the workmen in January and February 1952 and 841 that it was unjustified as it took place while conciliation proceedings were pending Having given these findings the Industrial Tribunal had then to decide what orders it should pass on the applications under section 33 and section 33 A It held that there was no evidence to show that of the forty eight workmen concerned sixteen workmen named by it had taken part in the go slow or instigated it It therefore refused the application under section 33 with respect to these sixteen workmen As to the remaining thirtytwo workmen it held that as some Standing Orders which were under contemplation at the time provided either dismissal or suspension for seven days in case of misconduct it was proper to grant leave to the management to suspend the workmen for seven days in view of some opinion expressed by a Go Slow Committee appointed some time before by the Bihar Central Standing Labour Advisory Board In effect therefore it rejected the prayer of the management for dismissal with respect to these thirty two workmen also Finally it rejected the application under section 33 A This award led to two appeals before the Labour Appellate Tribunal one was by the management against the entire award so far as it related to its applications under section 33 and the other by the workmen against the dismissal of their application under section 33 A and against the award relating to the applications of the management under section 33 When the matter came up for hearing before the Appellate Tribunal the workmen withdrew their appeal with respect to their application under section 33 A and it was consequently dismissed The result of the dismissal of the appeal of the workmen was that the finding of the Industrial Tribunal that the suspension was not a punishment and was only pending enquiry by the management and the proceedings before the tribunal stood confirmed As to the appeal by the management with respect to the applications under section 33 it was contended on its behalf before the Appellate Tribunal that the Industrial Tribunal had gone wrong on two substantial questions of law namely 1 the Industrial Tribunal could either grant or 106 842 refuse permission to dismiss on an application for such permission under section 33 and it could not substitute its own judgment about the quantum of punishment and 2 it was wrong in rejecting the applications against sixteen workmen on the ground that there was no evidence The Appellate Tribunal was of the opinion that the contention of the management on both these points was correct and that the appeal involved substantial questions of law It also found that the Industrial Tribunal s finding that the workmen had resorted to go slow was not perverse and could be the only finding on the evidence It then went on to say that go slow was insidious in nature and could not be countenanced and that it was serious misconduct normal punishment for which was dismissal It also held that the Industrial Tribunal was not right in relying upon the recommendations of the Go Slow Committee and the contemplated Standing Orders which were not till then in force Having said all this we should have expect ed that the Appellate Tribunal would set aside the order of the Industrial Tribunal and grant permission to the management to dismiss the workmen for what was serious misconduct of an insidious nature which could not be countenanced But it went on to say that it was well settled that where an employer could not punish a workman without obtaining permission from the tribunal under section 33 an application for permission would be mala fide if it was made after any punishment had already been meted out to the workman It held that in the present case the suspension of the workmen by the management was substantive punishment because the notice did not in so many words state that it was pending enquiry and therefore the applications for permission having been made after punishment had been meted out were mala fide In coming to this conclusion the Appellate Tribunal seems to have forgotten that it had already dismissed the appeal of the workmen from the order of the Industrial Tribunal on their application under section 33 A which in effect amounted to confirming the order of the Industrial Tribunal that the suspension was not a punishment but was rightly made pending enquiry by 843 the management and proceedings before the tribunal The Appellate Tribunal supported its decision on this question of punishment by stating that the mala fides of the management were clear from the fact that though the suspensions had been made between January 31 and February 7 1952 the application was filed by the management on March 29 1952 after the application by the workmen under section 33 A had been filed This observation was clearly wrong for the applications under section 33 were filed on February 6 and 11 by the management and it was the application of the workmen under section 33 A which was filed on March 29 Having thus inverted the order in which the applications were made to the Industrial Tribunal the Appel late Tribunal held that the applications of the management under section 33 were Dot bona fide It then dismissed the appeal of the management thus upholding the order of the Industrial Tribunal so far as the suspension of thirty two workmen for seven days was con cerned on the ground that the workmen had withdrawn their appeal though in the earlier part of the judgment all that was said was that the workmen had withdrawn their appeal against the order under section 33 A As the Appellate Tribunal had obviously made a mistake and inverted the order in which the applications under sections 33 and 33 A had been made a review application was filed by the management It however held that though the dates had been wrongly mentioned by accident it saw no reason to review its order That is how the management filed two special leave petitions in this Court We are of opinion that on the findings of the Industrial Tribunal on the three points formulated by it which have not been upset by the Appellate Tribunal the only order possible on the applications of the management under section 33 was to permit it to dismiss the forty eight workmen provided there was evidence against them all It was not open to the Industrial Tribunal when it was asked to give permission to dismiss to substitute some other kind of punishment and give permission for that The Industrial Tribunal was satisfied that there was misconduct and that finding has been upheld by the Appellate Tribunal As such 844 if there was evidence that these forty eight workmen were guilty of misconduct the Industrial Tribunal was bound to accord permission asked for We cannot agree with the Appellate Tribunal that the suspension in this case was substantive punishment and was not an interim order pending enquiry and proceedings before the Industrial Tribunal under section 33 We have already pointed out that the Labour Officer told the management on January 31 1952 that it was free to take disciplinary action with the permission of the Industrial Tribunal It was thereafter that thirtythree workmen were suspended on January 31 and the notice clearly said that the suspension was pending further orders thus intimating to the workmen that the order of suspension was an interim measure This notice of January 31 was followed by an application on February 6 to the Industrial Tribunal for permission to dismiss the thirty three workmen involved in it and this also clearly shows that the suspension was pending enquiry if any by the management and proceedings before the Industrial Tribunal Similarly the suspension notices of February 5 and 6 relating to fifteen workmen said that they were suspended till further orders and were followed on February II by an application under section 33 to the Industrial Tribunal for permission to dismiss them In the circumstances it is quite clear that suspension in this case was not a punishment but was an interim measure pending enquiry and proceedings before the tribunal We have already pointed out that this was the finding of the Industrial Tribunal on the basis of which the application under section 33 A was dismissed and this finding stood confirmed when the workmen withdrew their appeal with respect to their application under section 33 A The Appellate Tribunal therefore was clearly in error in holding that the suspension was punishment The only question that remains is about the sixteen workmen about whom the Industrial Tribunal held that there was no evidence to connect them with the go slow The Appellate Tribunal s view in this matter was that the contention of the management that the Industrial Tribunal was wrong in holding that there was no evidence against these sixteen workmen was 845 correct It has been shown to us that evidence against these sixteen workmen is of exactly the same witnesses and of the same kind as the evidence against the remaining thirty two The finding therefore of the Industrial Tribunal that there was no evidence against the sixteen workmen is patently perverse for there was the same evidence against them as against the remaining thirty two It follows therefore that all the forty eight workmen two of whom are since said to have died are exactly in the same position As held by the Appellate Tribunal go slow is serious misconduct which is insidious in its nature and cannot be countenanced In these circumstances as these fortyeight workmen were taking part in the go slow and were thus guilty of serious misconduct the management was entitled to get permission to dismiss them But as the management held no enquiry after suspending the workmen and proceedings under section 33 were practically converted into the enquiry which normally the management should have held before applying to the Industrial Tribunal the management is bound to pay the wages of the workmen till a case for dismissal was made out in the proceedings under section 33 see the decision of this Court in the Management of Ranipur Col liery vs Bhuban Singh 1 As already pointed out this is the view taken by the Industrial Tribunal while dealing with the application under section 33 A which stood confirmed by the dismissal of the appeal by the workmen in that behalf The management will therefore have to pay the wages during the period of suspension till the award of the Industrial Tribunal We therefore allow the appeals and set aside the orders of the two Tribunals so far as the applications under section 33 are concerned and grant the appellant the permission sought for by it in these applications subject to the workmen being paid all their wages during the period of suspension up to the date of the award of the Industrial Tribunal i e 22 9 1952 As the workmen did not appear to contest these appeals we pass no order as to costs Appeals allowed 1 1959 Suppl 2 SCR 719

Clause 16 of the General Order No 65 made by the Governor on March I5 195 under the Uttar Pradesh 947 provided that the decision of the Tribunal or 972 Adjudicator shall be pronounced within 4o days from the date of reference By orders dated August 19 1952 and January 20 1953 the Governor referred two industrial disputes for adjudication The references did not specify the time within which the awards were to be submitted but stated that the disputes were to be adjudicated in accordance with the provisions of Order No 615 In the first reference the period for making the award was extendad from time to time up to March 10 1953 but in the second reference the time was not extended On February 18 1953 before the awards were made cl 16 of Order No 615 was amended and the time Of 4o days was altered to 18o days The award in the first case was made on April 17 1953 beyond 180 days of the reference and in the second case on June 26 953 beyond 40 lays of the reference but within 180 days thereof On May 22 1953 the Uttar Pradesh Industrial Disputes Amendment Ordinance 1951 came into force which conferred with retrospective effect power on the State Government to enlarge from time to time the period for making an award and which also validated certain awards not made within the time originally fixed for making them The Labour Appellate Tribunal held that the two awards were not valid in law as they had not been made within time It was contended by the appellant that as cl 16 of the Order No 6I5 had been amended the orders of reference must be construed as specifying 180 days within which the awards were to be submitted and that in any case the awards were validated by section 3 of the Ordinance Held that the award in the first case was submitted beyond time and was invalid and could not be validated by section 3 Of the Ordinance but that the award in the second case though submitted beyond time was validated by section 32 of the Ordinance The Act required the awards to be submitted within a speci fied time and although the orders of reference specified no time it was stated therein that the references were to be decided in accordance with the provisions of Order No 615 and as such the orders must be read as specifying 4o days as the time within which the awards had to be submitted The subsequent amendment of cl 16 whereby 180 days were substituted for 4o days could not affect an order of reference previously made as cl 16 as amended could not be held to have retrospective operation On a true construction Of section 3 Of the Ordinance cl 1 must be held to validate all orders of extension of time for submission of awards made prior to the commencement of the Ordinance cl 3 applies to proceedings pending at the commencement of the Ordinance and makes section 6 A of the Act introduced by the Ordinance applicable to such proceedings and cl 2 validatesawards against which no judicial proceedings were pending at the commencement of the Ordinance and not only awards which had become final Consequently the award in the first case against which an appeal had been filed before the commencement of the 973 Ordinance and to which cl 3 Of section 3 of the Ordinance applied was bad as it was made beyond the last date of the enlargement of time But the award in the second case against which the appeal was filed after the commencement of the Ordinance was validated by el 2 Of section 3 of the Ordinance

Criminal Appeal No 50 of 1951 Appeal by SpeciaI Leave from the Judgment and Order dated the 26th September 1950 of the High Court of Judicature of Nagpur Herneon Acting CJ and Hidayat Ullah J in Criminal Appeal No 251 of 1950 arising out of Judg ment dated the 2nd August 1950 of the Court of Sessions Judge Jabalpur in Sessions Trial No 32 of 1950 568 SP Sinha and MY Sharif Nuruddin Ahmad and Shaukat Hussain with them for the appellant Gopal Singh for the respondent March 20 The Judgment of the court was delivered by BOSE J The main question in this case is whether there is a right of private defence Most of the facts are not in dispute A communal riot broke out at Katni on the 5th of March 1950 between some Sindhi refugees resident in the town and the local Muslims The trouble started in the locality known as Zanda Bazar or Zanda Chowk Police Constable Bharat Singh PW 17 who made the First Information Re port said that most of the shopkeepers in Zanda Bazar are Sindhis He stated that when he was to1d that trouble had broken out there he proceeded to the spot and found that the goods in the Muslim shops in that locality were scattered It is also in evidence that some Muslims lost their lives From this place he went on to Subash Chowk the locality in which the appellant s shop is situate It lies to the West of Zanda Bazar He states that when he got there he found a crowd there but not a mob He admitted that he had said in the First Information Report that a gun was fired a minute after he had reached the spot and he said that what he had stated in the First Information Report was true It is not disputed that this shot was fired by the appellant as also a second shot and that that caused the death of one man a Sindhi and injured three others also Sindhis The map exhibit D 4 shows that the shops of the appellant and his brother Zahid Khan run into each other and form two sides of a rectangle the appellant s house facing north and the brother s house facing east Each shop opens out on to a road 569 It is proved that when the rioting broke out in the Zanda Chowk the alarm spread to the appellant s locality and the people there including the appellant started closing their shops The appellant s version is that the mob approached his locality and broke into the portion of the building facing east in which his brother s shop is situate and looted it The High Court holds that this is proved and holds further that this preceded the firing by the appellant There is a hole in the wall between the two portions of the building in which these two shops are situate and the High Court holds that Zahid s family got into the appel lant s portion of the building through this hole and took refuge there The High Court also holds that the appel lant s mother then told the appellant that the crowd had burst into his appellant s shop and was looting it The learned Judges state that what he said was not quite true because all that the crowd did was to beat the door of the appellant s shop with lathis as they were passing but had not broken into the shop But they accept the fact that the crowd was beating the doors of the appellant s shop with their lathis In our opinion the facts found by the High Court are sufficient to afford a right of private defence Under section 97 of the indian Penal Code the right extends not only to the defence of one s own body against any offence affecting the human body but also to defending the body of any other person The right also embraces the protection of property whether one s own or another person s against certain specified offences namely theft robbery mischief and criminal trespass The limitations on this right and its scope are set out in the sections which follow For one thing the right does not arise if there is time to have recourse to the protection of the public authorities and for another it does not extend to the infliction of more harm than is necessary for the purpose of defence Another limitation is that when death is 570 caused the person exercising the right must be under reason able apprehension of death or grievous hurt to himself or to those whom he is protecting and in the case of property the danger to it must be of the kinds specified in section 103 The scope of the right is further explained in sec tions 102 and 105 of the Indian Penal Code Neither the learned High Court Judges nor the Sessions Judge has analysed these provisions Both Courts appear to be under the impression that actual looting of the appel lant s shop was necessary before the right could arise In that they are wrong Under section 102 the right of private defence of the body commences As soon as a reasonable apprehension of the danger to the body arises from an attempt or threat to commit the offence though the offence may not have been committed Examining the provisions we have set out above it is evident that the appellant had no time to have recourse to the authorities The mob or crowd had already broken into one part of the building and was actually beating on the doors of the other part It is also evident that the appel lant had reasonable grounds for apprehending that either death or grievous hurt would be caused either to himself or his family learned Sessions Judge has eloquently drawn attention to the lamentable consequences of communal frenzy in India and in Katni in particular and he refers to the indiscriminate looting of Muslim shops in that town So also the High Court holds that Looking to the circumstances which had existed in the country before and the fact that the trouble was between the refugees and the local Muslims it cannot be said that there would be no danger to the life of the appellant or at least of grievous hurt if the mob had entered his shop and he prevented it The apprehension would undoubtedly be reason able And we know that Muslim shops had already been broken into and looted and Muslims killed in the 571 rioting at Zanda Chowk which preceded this in our opinion the High Court was wrong in thinking that the appellant had to wait until the mob actually broke into his shop and entered it They have emphasised this in another part of their judgment also where they say that the shot was fired when there was no looting at the shop and thus no right of private defence It was enough that the mob had actually broken into another part of the house and looted it that the woman and children of his family fled to the appellant for protection in terror of their lives and that the mob was actually beating at his own doors with their lathis and that Muslim shops had already been looted and Muslims killed in the adjoining locality It was impossible for him to know whether his shop would or would not suffer the same fate if he waited and on the findings it was reasonable for him to apprehend death or grievous hurt to himself and his family once they broke in for he would then have had the right to protest and indeed would have been bound to do what he could to protect his family The threat to break in was implicit in the conduct of the mob and with it the threat to kill or cause grievous hurt to the inmates indeed the High Court Judges themselves hold that his own shop was menaced The circumstances in which he was placed were amply sufficient to give him a right of private defence of the body even to the extent of causing death These things cannot be weighed in too fine a set of scales or as some learned Judges have expressed it in golden scales We have next to see whether the appellant used more force than was necessary and here also we cannot use golden scales He was entitled to cause death and he did not kill more than one man He fired only two shots and as the learned High Court Judges observe he obviously aimed low The High Court holds the mob had moved up to his locality When he fired the shots so the looting and the beating 572 on the doors were not the isolated acts of a few scattered individuals It was the mob that was doing it and in the High Court s words The very fact that in the town of Katni two shots should have struck four Sindhis and none else shows that the rival community was on the move in that area In our opinion the appellant did not use more force than was necessary Indeed the firing far from acting as a deterrent spurred them on and they ransacked and looted the place We have confined our attention to the right of private defence of the person though in this case the question about the defence of property happens to be bound up with it The appeal is allowed The convictions and sentences are set aside and the appellant will be released

The appellants were the trustees of a charity fund known as The Charity Fund founded by Sir Sassoon David Baronet of Bombay Clause 13 Of the deed of trust after declaring that the trustees should apply the net income for all or any of the following purposes namely a the relief and benefit of the poor and indigent members of Jewish or any other community of Bombay or other parts of India or of the world either by making payments to them in cash or providing them with food and 924 clothes andor lodging or residential quarters or in giving education including scholarships to or setting them up in life or in such other manner as to the said Trustees may seem proper or b the institution maintenance and support of hospitals and schools colleges or other educational institutions or c the relief of any distress caused by the elements of nature such as famine pestilence fire tempest flood earthquake or any other such calamity or d the care and protection of animals useful to mankind or e the advancement of religion or f other purposes beneficial to the community not falling under any of the foregoing purposes I added by way of provisos i that in applying the net income for the purposes mentioned in sub cl a the trustees must give preference to the poor and indigent relations or members of the family of Sir Sassoon David including distant and collateral relatives 2 that for the said purpose the trustees must apply not less than half of the income for the benefit of the members of the Jewish community of Bombay only including the said relatives of Sir Sassoon David and Jewish objects The question for determination was whether the income from the trust fund was exempt from taxation under section 43i Of the Indian Income tax Act The High Court came to the conclusion that the trust fund could nut be said to be held wholly or partly for religious or charitable purposes involving an element of public utility and answered the question in the negative Held that there could be no doubt that each one of the pri mary purposes mentioned in the deed of trust including the one mentioned in sub cl a properly construed involved an element of public utility and thus they constituted a valid charitable trust Although it was open to the trustees to spend the entire income for the purpose mentioned in sub cl a that could not detract from the validity of the trust since the relations or family members of the founder did not come in directly under any of the other purposes and could do so only under sub cl a as preferential beneficiaries to be selected from out of the class of primary beneficiaries prescribed by it in terms of the provisos The test of the validity of such a public charitable deed of trust should be whether or not at the primary stage of eligibility it could be said to possess that character In re Koettgan s Will Trusts applied Trustees of Gordhandas Govindram Family Charitable Trust vs Commissioner of Income tax Central Bombay 195221 ITR231 distinguished and held inapplicable The circumstance that in selecting the actual beneficiaries 925 from the primary class of beneficiaries under sub cl a the trustees had to give preference under the provisos to the relations or members of the family of Sir Sassoon David could not therefore affect the public charitable trust constituted under sub cl a and the income from the trust properties was entitled to exemption under section 43i Of the Indian Income tax Act

Appeal No 205 of 1958 Appeal by special leave from the judgment and order dated October 23 1956 of the Industrial Tribunal Assam in Reference No 16 of 1956 MC Setalvad Attorney General for India section N Mukherjee and B N Ghosh for the appellant CB Agarwala and K P Gupta for the respondents May 6 The Judgment of the Court was delivered by WANCHOO J This is an appeal by special leave in an industrial matter The appellant is the Phulbari Tea Estate hereinafter called the company The case relates to the dismissal of one workman namely B N Das hereinafter called Das which had been taken up by the Assam Chah Karmchari Sangh which is a registered trade union A reference Was made by the Government of Assam on March 8 1956 to the Industrial Tribunal on the question whether the dismissal of Das was justified and if not whether he was entitled to reinstatement with or without compensation or any other relief in lieu thereof Das was dismissed by the company on March 12 1955 The charge against him was that on the night of February 67 1955 he along with one Samson also an employee of the company committed theft of two wheels complete with tyres and tubes from the company s lorry 5 34 which amounted to gross misconduct under the Standing Orders The case was reported to the police and Das as well as Samson were arrested Das remained in jail up to February 25 1955 when he was released on bail He reported for duty on February 28 but the manager suspended him for ten days from March 1 Thereafter he was served with a charge sheet on March 10 1955 asking him to show cause why he should not be dismissed for gross misconduct as mentioned above He gave a reply on March 11 that as the case was sub judice in the criminal court the question of dismissal did not arise at that stage and the allegations against him would have to be proved in the court On March 12 the manager held an enquiry which was followed by dismissal on that very day We shall mention later in detail what happened at the enquiry as that is the main point which requires consideration in this appeal To continue the narrative however the police submitted a final report and the magistrate discharged Das on March 23 1955 Thereafter his case was taken up by the union and eventually reference was made to the Tribunal on March 8 1956 The Tribunal came to the conclusion that the dismissal of Das was not justified on the ground of proper procedure not having been followed and also for want of legal evidence It went on to say that normally Das would have been entitled to reinstatement but in the peculiar circumstances of this case it was of opinion that he should be granted the alternative relief for compensation Consequently it ordered that Das would be entitled to his pay and allowances from February 28 to March 11 1955 and full pay and allowances from March 12 till the date of payment It also ordered that he would be entitled to fifteen day s pay for every completed year of service along with all benefits that accrued to him till the date of final payment This award was given on October 23 1956 and was in due course published and came into force Thereupon there was an application to this Court for special leave to appeal which was granted and that is how the matter has come up before us 35 Two points have been urged before us on behalf of the company namely 1the Tribunal was not a competent tribunal under section 7 of the No XIV of 1947 hereinafter called the Act as it then stood and 2the award of the Tribunal is not sustainable in law as it shows as if the Tribunal was sitting in appeal on the enquiry held by the company and this it was not entitled to do Reference in this case was made on March 8 1956 before the amending Act No XXXVI of 1956 came into force At the relevant time therefore section 7 of the Act which provided the qualifications of a tribunal required that where it was one member tribunal he a should be or should have been a Judge of a High Court or b should be or should have been a district judge or c should be qualified for appointment as a Judge of a High Court The contention is that Shri Hazarika who was the tribunal in this case was not qualified under this provision This contention was not raised before the Tribunal and therefore the facts necessary to establish whether Shri Hazarika was qualified to be appointed as a tribunal or not were not gone into Shri Hazarika was an Additional District Sessions Judge Lower Assam Division at the time the reference was made Assuming that he was not qualified under clause a above he might well have been qualified under clause b if he had been a District Judge elsewhere before he became an Ad ditional District Judge in this particular division Further even if he had never been a District Judge he might be qualified for appointment as Judge of a High Court These matters needed investigation and were not investigated because this question was not raised before the Tribunal In the circumstance we are not prepared to allow the company to raise this question before us for the first time and so we reject the contention under this head The Tribunal gave two reasons for holding that the dismissal was unjustified namely 1 that 36 proper procedure had not been followed and 2 that legal evidence was wanting So far as the second reason is concerned there is force in the criticism on behalf of the company that the Tribunal had proceeded as if it was sitting in appeal on the enquiry held by the company But considering that the Tribunal Was also of opinion that proper procedure had not been followed we have still to see whether that finding of the Tribunal justifies the conclusion at which it arrived We may in this connection set out in detail what happened at the enquiry on March 12 as appears from the testimony of the manager and the documents produced by him before the Tribunal They show that when the enquiry was held on March 12 certain persons whose statements had been recorded by the manager in the absence of Das during the course of what may be called investigation by the company were present The first ques tion that Das was asked on that day was whether he had anything to say in connection with the disappearance of two lorry wheels and tyres from the garage He replied that he had nothing to say adding that he knew nothing about the theft He was then told that the people who had given evidence against him were present and he should ask them what they had to say He replied that he would put no questions to them Then the witnesses present were asked whether the evidence they had given before the manager was correct or not and if that was not correct they were at liberty to amend it They all replied that the evidence they had given before the manager was correct This was all that had happened at the enquiry on March 12 and thereafter the order of dismissal was passed by the manager The manager s testimony shows that the witnesses who were present at the enquiry were not examined in the presence of Das It also does not show that copies of the statements made by the witnesses were supplied to Das before he was asked to question them Further his evidence does not show that the statements which had been recorded were read over to Das at the enquiry before he was asked to question the witnesses It is 37 true that the statements which were recorded were produced on behalf of the company before the Tribunal but the witnesses were not produced so that they might be cross examined even at that stage on behalf of Das The question is whether in these circumstances it can be said that an enquiry as required by principles of natural justice was made in this case We may in this connection refer to Union of India vs T R Varma 1 That was a case relating to the dismissal of a public servant and the question was whether the enquiry held under article 311 of the Constitution of India was in accordance with the principles of natural justice This Court speaking through Venkatarama Ayyar J observed as follows in that connection at p 507 Stating it broadly and without intending it to be exhaustive it may be observed that rules of natural justice require that a party should have the opportunity of adducing all relevant evidence on which he relies that the evidence of the opponent should be taken in his presence and that he should be given the opportunity of cross examining the witnesses examined by that party and that no materials should be relied on against him without his being given an opportunity of explaining them It will be immediately clear that these principles were not followed in the enquiry which took place on March 12 inasmuch as the witnesses on which the company relied were not examined in the presence of Das It is true that the principles laid down in that case are not meant to be exhaustive In another case New Prakash Transport Co Ltd vs New Suwarna Transport Co Ltd 2 this Court held that rules of natural justice vary with the varying constitutions of statutory bodies and the rules prescribed by the legislature under which they have to act and the question whether in a particular case they have been contravened must be judged not by any preconceived notion of what they may be but in the light of the provisions of the relevant Act In that case it 1 1958 SCR 499 2 38 was held that the reading out of the contents of the police report by the Chairman at the hearing of the appeal was enough compliance with the rules of natural justice as there was nothing in the rules requiring a copy of it to be furnished to any of the parties That was however a case in which the police officer making the report was not required to be crossexamined on the other hand the party concerned was informed about the material sought to be used against him and was given an opportunity to explain it The narration of facts as to what happened on March 12 which we have given above shows that even this was not done in this case for there is no evidence that copies of the statements of witnesses who had given evidence against Das were supplied to him or even that the statements made by the witnesses to the manager were read out in extensor to Das before he was asked to question them In these circumstances one of the basic principles of natural justice in an enquiry of this nature was not observed and there fore the finding of the Tribunal that proper procedure had not been followed is justified and is not open to challenge The defect in the conduct of the enquiry could have been cured if the company had produced the witnesses before the Tribunal and given an opportunity to Das to cross examine them there In Messrs Sasa Musa Sugar Works Private Ltd vs Shobrati Khan 1 we had occasion to point out that even where the employer did not hold ail enquiry before applying under section 33 of the Act for permission to dismiss an employee he could make good the defect by producing all relevant evidence which would have been examined at the enquiry before the tribunal in which case the tribunal would consider the evidence and decide whether permission should be granted or not The same principle would apply in case of adjudication under section 15 of the Act and if there was defect in the enquiry by the employer he could make good that defect by producing necessary evidence before the tribunal But even that was not done in this case for all that the company did 1 C As 746 747 Of 1957 decided on 29 4 1059 39 before the Tribunal was to produce the statements recorded by the manager during what we have called investigation This left the matters where they were and Das had never an opportunity of questioning the witnesses after knowing in full what they had stated against him In these circumstances we are of opinion that the finding of the Tribunal that the enquiry in this case was not proper is correct and must stand We therefore dismiss the appeal We should however like to make it clear that the order of the Tribunal fixing grant of compensation till the date of payment must be taken to be limited to the sum of Rs 11125 which has been deposited in this Court in pursuance of this Court s order of April 22 1957 and Das will not be entitled to anything more as further stay of payment was pursuant to the order of this Court In the circumstances we are of opinion that the parties should bear their own costs of this Court Appeal dismissed

Pending an adjudication proceeding between the workmen and the Mills the management of the appellant Mills served notices on thirty three of its workmen and thereafter suspended them for taking a leading part in a protracted go slow in contravention of the Industrial Disputes Act For similar reasons a few days later it again served similar notices on fifteen others and suspended them Thereafter the management made two applications under section 33 Of the Industrial Disputes Act for permission to dismiss the said workmen The forty eight workmen in their turn applied under section 33A of the Act alleging breach of section 33 by the management in suspending them by way of punishment The Industrial Tribunal found that the suspension was not by way of punishment and that there was a deliberate resort to go slow by the workmen which was unjustified it refused the permission with respect to sixteen of the workmen on the ground of want of evidence but granted leave to the management to suspend the rest for seven days thus disallowing the prayer for dismissal It also rejected the workmen s application under section 33A of the Act Appeals were filed by both the parties and when they came up for hearing the Appellate Tribunal allowed the workmen to withdraw their appeal so far as it related to their application under section 33A of the Act with the result that the finding of the Tribunal that the suspension was not a punishment but only pending enquiry by the management and proceedings before the Tribunal stood confirmed While agreeing with all other findings of the Tribunal the Appellate Tribunal took the view that the suspension ordered by the management was substantive punishment since the notices did not state that it was pending enquiry and the subsequent application for permisson to dismiss the workmen was therefore mala fide and dismissed the appeal of the management Held that the material findings arrived at by the Industrial Tribunal not having been upset by the Appellate Tribunal the only possible order on the applications of the management under section 33 of the Act was to permit it to dismiss the workmen provided there was evidence against them all It was not open to the Industrial Tribunal to substitute some other form of punisliment and give permission therefor 837 The Appellate Tribunal was clearly in error in holding that suspension in the instant case was not an interim order pending enquiry and proceedings before the Tribunal under section 33 but substantive punishment contrary to the finding of the Industrial Tribunal which stood confirmed by its own order permitting the withdrawal of the appeal against it by the workmen The finding of the Industrial Tribunal that there was no evidence against sixteen workmen was on the face of it perverse since the evidence against them was the same as against the thirty two others As go slow was serious misconduct insidious in nature and could not be countenanced and since the workmen were found guilty of such misconduct the management must be granted the permission to dismiss them

Appeals Nos 473 474 of 1957 Appeals by special leave from the judgment and order dated the 27th July 1955 of the Labour Appellate Tribunal of India at Calcutta in Appeal No Cal 257 of 1954 MC Setalvad Attorney General for India Ms J B Dadachanji section N Andley and Rameshwar Nath Advocate of Ms Rajinder Narain Co with him for the appellants SK Mukherjee and P K Ghosh for the respondents 26 1959 May 6 WANCHOO J These are two connected appeals by special leave against the decision of the Labour Appellate Tribunal in an industrial matter Appeal No 473 is by Messrs Ispahani Ltd hereinafter called the company and appeal No 474 is by the employees of the company represented by Ispahani Employees Union hereinafter called the workmen They will be disposed of by one judgment There was a dispute between the company and its workmen on a number of matters which was referred by the Government of West Bengal to the adjudication of the Second Industrial Tribunal by an order of December 17 1953 There were a number of matters which had to be adjudicated upon but of these only two now survive namely 1whether the workmen are entitled to puja bonus for 1953 and 2whether the workmen are entitled to receive from the company any benefits for the period of service rendered by them under Messrs M M Ispahani Ltd A few facts may be set out here to give the background of this dispute Originally there was another company called Messrs M M Ispahani Ltd which was carrying on business in Calcutta since December 1934 before the partition of India Shortly before the partition took place Messrs M M Ispahani Ltd transferred their registered head office from Calcutta to Chittagong now in Pakistan That company thus became a Pakistani company after August 1947 It however continued to own properties in India and carried on some business in Calcutta on a small scale The company was incorporated on September 15 1947 and took over the good will and trading rights of Messrs M M Ispahani Ltd and also purchased the stock in trade properties and assets of that company Most of the shares of the company were however held by Messrs M M Ispahani Ltd and the business of the company was of the same nature and was carried on in the same premises with the same telegraphic address 27 and with the same workmen on the same remuneration Further the company continued to pay puja bonus at the rate of one month s wages from 1948 up to 1952 As no bonus was paid in 1953 a dispute arose between the company and the workmen which was referred for adjudication along with other matters The Industrial Tribunal held that it had not been established that puja bonus had been paid at the uniform rate of one month s wages for a sufficiently long time and for unbroken period and therefore rejected the claim for puja bouns for 1953 On the other question relating to whether the workmen were entitled to receive from the company any benefits for the period of service rendered by them under Messrs M M Ispahani Ltd it held that the workmen were entitled to take into account the service rendered by them under Messrs M M Ispahani Ltd in the matter of benefits due under the law during their service under the company This award led to two appeals one by the company on the question of benefits arising from the service rendered under Messrs M M Ispahani Ltd and the other by the workmen with respect to puja bonus for the year 1953 The Labour Appellate Tribunal allowed both the appeals It held on the question of bonus that it had been proved that puja bonus had become a term of employment and the workmen were therefore entitled to bonus at the rate of one month s wages for the year 1953 As to the benefits arising out of the service rendered by the workmen under Messrs M M Ispahani Ltd it held that there was termination of employment of the workmen when Messrs M M Ispahani migrated to Pakistan and the employment of the workmen by the company was fresh employment and they therefore were not entitled to any benefits arising out of their employment under Messrs M M Ispahani Ltd Both the company and workmen applied for special leave to appeal to this Court against the decision of the Appellate Tribunal insofar as it was against them The applications were granted and that is how the matter has come up before us 28 We shall first take up the appeal of the company relating to puja bonus for the year 1953 Two points have been urged in this behalf namely 1the Appellate Tribunal had no jurisdiction to interfere with the finding of the Industrial Tribunal as it was a finding of fact and 2even if the Appellate Tribunal had jurisdiction its decision is incorrect in law Puja is a special festival in Bengal and it has become usual with many firms there to give bonus before puja to their workmen This matter came up before the Appellate Tribunal in Mahalaxmi Cotton Mills Ltd Calcutta vs Mahalaxmi Cotton Mills Workers Union1 In that case puja bonus was claimed as a matter of right payable by the employer at a special season of the year namely at the time of the annual Durga Puja This right was not based on the general principle that labour and capital should share the surplus profits available after meeting prior charges It was held in that case that this right rested on an agreement between the employer and the employees and that the agreement might be either express or implied Where the agreement was not express circumstances might lead the tribunal to an inference of implied agreement The following circumstances were laid down in that case as material for inferring an implied agreement 1 The payment must be unbroken 2 It must be for a sufficiently long period and 3 The circumstances in which payment was made should be such as to exclude that it was paid out of bounty The Appellate Tribunal further pointed out that it was not possible to lay down in terms what should be the length of period to justify the inference of implied agreement and that would depend upon the circumstances of each case It also pointed out that the fact of payment in a year of loss would be an important factor in excluding the hypothesis that the payment was out of bounty and in coming to the conclusion that it was as a matter of obligation based 11952 L A C 370 29 on implied Agreement As to the quantum of bonus it was laid down that even if payment was not at a uniform rate throughout the period the implied agreement to pay something could be inferred and it would be for the tribunal to decide what was the reasonable amount to be paid as puja bonus The tests laid down in that case have since been followed in a number of cases by the Industrial Tribunals and the Labour Appellate Tribunal We do not think it necessary to refer to all those cases It may now be taken as well settled that puja bonus in Bengal stands on a different footing from the profit bonus based on the Full Bench formula evolved in The Millowners Association Bombay vs The Rashtriya Mill Mazdoor Sangh Bombay 1 The claim for puja bonus in Bengal is based on either of two grounds It may either be a matter of implied agreement between employers and employees creating a term of employment for payment of puja bonus or secondly even though no implied agreement can be inferred it may be payable as a customary bonus In the present case we are concerned with the first category namely that based on an implied agreement creating a term of employment between the employer and the employees and so we shall confine ourselves to that category It was this kind of bonus which was considered by the Appellate Tribunal in Mahalaxmi Cotton Mills cause 2 We are of opinion that the tests laid down in that case for inferring that there was an implied agreement for grant of such a bonus are correct and it is necessary that they should all be satisfied before bonus of this type can be granted This brings us to the two questions raised on behalf of the company as set out above The first question namely that the Appellate Tribunal had no jurisdiction to interfere with the finding of the Industrial Tribunal that begin a question of fact can be easily disposed of We are of opinion that the decision whether there is an implied term of employment is a mixed question of fact and law and not a pure question of fact This is similar to the decision for example on a question whether a custom has been 1 2 1952 LAC370 30 established or whether adverse possession has been proved or whether a Hindu family has ceased to be joint as a matter of law accepting the facts proved The Appellate Tribunal will therefore have jurisdiction to consider whether on the facts proved before the Industrial Tribunal an inference in law can be drawn that an implied term of employment for grant of puja bonus has been established The Appellate Tribunal therefore had jurisdiction to consider this matter The next question is whether in law the decision of the Appellate Tribunal drawing the inference of an implied term of employment in this case is correct The undisputed facts here are these The workmen when they were in the employ of Messrs MM Ispahani Ltd always used to get puja bonus at the rate of one month s wages This was asserted by the workmen in their written statement and the company did not deny it in its reply All that it said was that the practice or custom prevalent at the time of Messrs MM Ispahani Ltd and the payment of bonus by that company were immaterial and did not bind the company This averment impliedly admitted that Messrs M M Ispahani Ltd used to pay puja bonus as alleged by the respondents The company practically took over the business from Messrs MM Ispahani Ltd and it was found that it had been paying bonus ever since it came into existence from 1948 right up to 1952 without any break at the rate of one month s wages and that this bonus was paid even in the years in which the company suffered loss In the circumstances it was established in this case that 1 the payment was unbroken and 2 it was not paid out of bounty due to profits having arisen for it was paid in some years of loss also The only other question that remains is whether it had been paid for a sufficiently long period in order to justify the inference that it was an implied term of employment The length of the period depends on the circumstances of each case and what may be a short period not justifying an inference of an implied term of employment in one case may be long enough in another In the present case since the appellant has paid the bonus 31 continuously since its birth we agree with the Appellate Tribunal that the circumstances justify the inference of an implied term of employment for payment of puja bonus at the rate of one month s wages every year The appeal of the company must therefore fail Turning now to the appeal of the workmen on the question of benefits we are of opinion that the decision of the Appellate Tribunal on this question also is correct It is true that the company practically took over the business of Messrs M M Ispahani Ltd But as pointed out by the Appellate Tribunal when Messrs M M Ispahani Ltd transferred their headoffice from Calcutta to Chittagong the question arose of retrenching those employees who were not willing to go to Chittagong in view of the expected partition of India In these circumstances the company when it came into existence in September 1947 agreed to employ those employees of Messrs M M Ispahani Ltd whose services were likely to be terminated These employees apparently agreed to the termination of their services with Messrs M M Ispahani Ltd and therefore obtained settlement of their claims for provident fund and also received all arrears of salary from them They were thereafter appointed after withdrawal of their provident fund by the company There was no express or implied undertaking given by the company regarding continuity of service and the employees joined the provident fund of the company afresh In the circumstances the decision of the Appellate Tribunal on this question is correct and the appeal of the workmen must also fail We therefore dismiss both the appeals and in consequence order the parties to bear their own costs of this Court Appeals dismissed

A communal riot broke out in a town between some Sindhi refugees and the local Muslims The trouble started in a locality where most of the shopkeepers were Sindhis The goods in the Muslim shops there were scattered and some Muslims lost their lives Alarm spread to another locality where the shops of appellant and his brother both Muslims were situated and the people there including the appellant started closing their shops The family of the appellant s brother had taken shelter in the appellant s portion of the building through a hole in the wall between the two portions of the building in which the two shops were situated A mob collected there and approached the appellant s locality and looted his brother s shop and began to beat the doors of his shop with lathis The appellant fired two shots from his gun which caused the death of one Sindhi and injured three other Sindhis The question for determination was whether the appellant acted in his right of private defence Held that the facts of the case afforded a right of private defence to the appellant under the provisions of the Indian Penal Code The circumstances in which he was placed were amply sufficient to give him a right of private defence of the body even to the extent of causing death as the appellant had no time to have recourse to the authorities and has reasonable grounds for apprehending that either death or grievous hurt would be caused either to himself or to his family These things could not be weighed in too fine a set of scales or in golden scales

Appeal No 447 of 1957 Appeal by special leave from the judgment and order dated the 1st August 1956 of the Labour Appellate Tribunal of India Culcutta in Appeal No Cal 107 of 1956 D N Mukherjee for the appellants Y Kumar for the respondent May 6 The Judgment of the Court was delivered by SINHA J This appeal by special leave is directed against the order of the Labour Appellate Tribunal dated August 1 1956 dismissing in limine the appeal 15 against the Award of the Third Industrial Tribunal dated March 8 1956 The Great Indian Motor Works Ltd now in liquidation hereinafter referred to as the Company represented by one of the Managing Directors K D Nundy is the first appellant The said K D Nundy in his capacity as the creditor of the Company andor as the auction purchaser of the Company is the second appellant One hundred and forty two employees of the Company represented by the Bus Workers Union are collectively the first respondent The second and third respondents C D Nundy and D L Dutt are the Official Liquidators of the Company appointed by the High Court as such The relevant facts are these The Company was incorporated and registered under the Indian Companies Act 1913 in 1926 as a private limited company with its registered office at Calcutta Its business was mainly that of carrying on public transport on Route No 14 in the City of Calcutta as also of dealers in and repairers of motor vehicles It had an authorized capital of six lacs of rupees divided into 600 shares of Rs 1000 each out of which shares worth Rs 400000 only had been subscribed and paid up The registered share holders of the Company were Kristo Das Nundy the second appellant having 246 shares Chandy Das Nundy respondent No 2 having 142 shares and Kumar Kartick Charan Mullick holding 12 shares each of the face value of Rs 1000 On account of financial difficulties and disputes between its share holders an application for compulsory winding up of the Company was made by the said respondent No 2 on the Original Side in the High Court at Calcutta On July 23 1951 an order for winding up the Company was made and the Official Receiver was appointed the Official Liquidator of the Company An appeal against the order aforesaid was dismissed on December 5 1951 and the order for winding up the Company stood confirmed By an order dated December 11 1951 the Official Receiver was discharged and the respondents 2 and 3 aforesaid were appointed Joint official liquidators in his place with 16 power to sell the business of the Company as a going concern In April 1953 the list of the creditors of the Company was settled by the Court and the second appellant aforesaid was included in the list as a creditor for the largest amount namely Rs 235818 It may be added that the discharged employees of the Company were not included in the list of creditors thus settled by the Court After several infructuous attempts for selling the property by auction on May 4 1954 the Court ordered the sale of the Company s business free from all encumbrances out goings and liabilities to the highest bidder subject to confirmation by the Court The second appellant bid for the purchase of the business with the leave of the Court and he was declared the highest bidder and purchaser of the business for Rs 142500 at the sale held on June 12 The said sale was confirmed by the Calcutta High Court on July 5 1954 On July 23 1954 the Official Liquidators issued a notice terminating the services of all the employees of the Company with effect from July 24 1954 except one Assistant and one clerk whose services were retained until the winding up proceedings were completed On July 24 the Official Liquidators put the appellant No 2 the auction purchaser in possession of the business of the Company which is now being carried on by the second appellant as the sole proprietor AS a result of the termination of the services of the one hundred and forty two employees of the Company as aforesaid an industrial dispute was raised at the instance of the said employees whose list is attached to the order of Reference dated August 26 1954 which is in these terms Whereas an Industrial dispute exists between 1 Messrs Great Indian Motor Works Ltd 33 Rowland Road Calcutta represented by their Managing Directors Sri C D Nundy and Sri K D Nundy 2 Official Liquidators of the Company Sri D L Dutta and Sri C D Nundy 33 Rowland Road Calcutta and 3 Sri K D Nundy Auction Purchaser of the Company 33 Rowland Road Calcutta and their 142 employees given in the enclosed list represented by 17 the Bus Workers Union 249 Bowbazar Street Calcutta regarding the matters specified in the schedule And whereas it is expedient that the said dispute should be referred to an Industrial Tribunal constituted under section 7 of the Industrial Disputes Act 1947 XIV of 1947 Now therefore in exercise of the powers conferred by section 10 of the said Act the Governor is pleased hereby to refer the said dispute to the Third Industrial Tribunal constituted under Notification No 592 DisD12L 512 dated the 23rd February 1953 for adjudication The said Third Industrial Tribunal shall meet at such places and on such dates as it may direct SCHEDULE 1Whether the notice dated 23rd July 1954 of termination of services of 142 employees with effect from 24 7 54 issued by the Joint Official Liquidatorswas justified 2Whether the refusal of the auction purchaser to continue the employment of the 142 employees was justified 3 What reliefs are the employees entitled to By order of the Governor The employees of the Company had moved the High Court for directions to the Liquidators for the payment of their dues from the Company The Court by its order dated September 8 1954 directed the Liquidators to pay within a week the arrears of salary of all the workmen and also within a week from receiving sale proceeds of the auction sale aforesaid to pay the workers in lieu of notice one week s wages to weekly paid workmen two weeks wages to fortnightly paid workmen and one month s wages to monthly paid workmen The Directors were to hold the balance of the sale proceeds till further orders of the Court It will be noticed from the order of reference quoted above that besides the Official Liquidators the second appellant was also impleaded as a party to the Reference in his capacity as the auction purchaser of the Company In his written statement before the Third 18 Industrial Tribunal of West Bengal which was in seizin of the case the auction purchaser now the second appellant after reciting the facts and circumstances leading up to his auction purchase as aforesaid contended that as an auction purchaser he was not in any event liable for any compensation or dues as claimed by the workmen that he was not bound to reinstate the old employees of the Company that having purchased the business free from any encum brances he was not liable for the dues of the workmen as claimed that be had unnecessarily been made a party and dragged here before the Tribunal He added that he admitted that he was one of the Managing Directors of the Company before its liquidation but with the order for liquidation he ceased to function as such After hearing the parties the Tribunal made its Award dated March 8 1955 The Tribunal awarded inter alia compensation under section 25Fb of the and directed the Company to pay compensation within two months from the date the award became enforceable to such of the workmen as had been found entitled to the same It may be noted here that the proceedings before the Industrial Tribunal had commenced without the necessary sanction of the High Court in the liquidation proceedings but during the pendency of the proceedings the High Court by its order dated December 20 1955 granted leave to the workmen to proceed with and continue the proceedings against the Official Liquidators of the Company The Industrial Tribunal therefore further directed that so far as the Liquidators were concerned the compensation awarded to the workmen shall be recoverable only out of the assets in their hands according to law So far as the auction purchaser was concerned the award proceeded to make further directions in these terms The auction purchaser it has already been noted purchased the different sections of the business with the name The Great Indian Motor Works free from encumbrances and all outgoings and liabilities Vide Exts D and E and the said purchase was 19 confirmed on 5th July 1954 After the sale was confirmed and before possession was taken by the auction purchaser the Liquidators terminated the employment of all the employees save and except the Accountant and one Clerk by a notice dated 23rd July 1954 with effect from 24th July 1954 After such termination of employment the auction purchaser obtained possession on 24th July 1954 At that time no relationship of employer and employees subsisted In the circumstances the dispute with the auctionpurchaser cannot be considered to be industrial dis pute as no relationship of employer and employee existed between the auction purchaser and the old staff who had been discharged earlier Hence I agree with the learned Advocate of the auction purchaser that the reference so far as the auction purchaser is concerned is incompetent Apart from that when the auction purchaser purchased the business free from encumbrances and all outgoings and liabilities and when there is nothing to show that the auction purchaser undertook at any time to maintain the old staff in his service it cannot be said that his refusal to continue the employment of 142 employees was unjustified Only when one purchases with all assets and liabilities as a going concern he is bound to continue the old employees in service and not otherwise I award accordingly Against the said Award which in terms was made only against the Liquidators and not against the auction purchaser aforesaid only one of the two Liquidators namely Debendra Lall Dutt made ail application to the High Court for necessary directions regarding preferring an appeal The other Liquidator Chandy Das Nundy opposed the said application for leave to appeal The High Court thereupon made an order on April 30 1956 refusing leave to the Liquidators to prefer an appeal from the said Award It was in those circumstances that the appellants namely Messrs Great Indian Motor Works Ltd represented by the Managing Director KD Nundy as the first appellant and KD Nundy in his capacity as creditor andor contributory of the said Great Indian Motor 20 Works Ltd under liquidation andor as auctionpurchaser of the Company as appellant No 2 filed an appeal before the Labour Appellate Tribunal of India on May 3 1956 impleading the one hundred and forty two employees through the Bus Workers Union as the principal respondents CD Nundy and D L Dutt the Official Liquidators of the Company as proforma respondents As a counter blast the aforesaid workmen of the Company filed their appeal on May 17 1956 impleading the Company represented by their Managing Directors C D Nundy and K D Nundy as the first respondent the Official Liquidators of the Company DL Dutt and CD Nundy as respondents second party KD Nundy the auction purchaser as respondent third party and the workmen not represented by the Bus Workers Union as respondents fourth party It is not necessary to set out the grounds of appeal in either of the two appeals in view of our decision on the preliminary question of the maintainability of the appeal in this Court as will presently appear The Labour Appellate Tribunal disposed of the two appeals by its order dated August 1 1956 The appellants appeal was dismissed as incompetent in view of the provisions of section 179 of Indian Companies Act 1913 reenacted as section 457 of the The dismissal of the appeal on the ground of the appeal not being competent was based on the order of the Calcutta High Court dated April 301956 aforesaid refusing leave to the Liquidators to prefer an appeal It is noteworthy that the appeal before the Appellate Tribunal was not by the Liquidators but by KD Nundy as Managing Director of the Company as also by him in his capacity as the creditor or contributory or as the auction purchaser of the Company This aspect of the case has not been dealt with by the Tribunal which held that the appeal was not maintainable as it was not authorised by the High Court The employees appeal also was dismissed as it was not pressed in view of the fact that the appeal by the Company stood dismissed as unauthorized It was against the aforesaid order of the Appellate 21 Tribunal dismissing the appeal in limine that the appellants aforesaid moved this Court and obtained special leave to appeal and the main ground of attack naturally was that the Labour Appellate Tribunal was in error in dismissing the appeal as unauthorised or as not maintainable It is manifest that we are called upon in the first instance to decide whether the Labour Appellate Tribunal had rightly dismissed the appeal in limine on the ground that the Liquidators had failed to obtain the necessary sanction of the Calcutta High Court to prefer an appeal from the Award of the Industrial Tribunal If that order of the Appellate Tribunal is correct and if we find that the appellants could not have any locus standi to prefer an appeal of their own as distinct from that on behalf of the Company no other question would arise for determination in this case If on the other hand we come to the conclusion that order was erroneous at least in respect of the appellants appeal then the appeal will have to be remanded to be re heard by the Appellate Tribunal It has been urged on behalf of the appellants that in view of the provisions of section 12 read with section 3 of the Industrial Disputes Appellate Tribunal Act 48 of 1950 which was repealed by Act 36 of 1956 which governed the making of appeals before the Appellate Tribunal the appeal to that Tribunal was competent and should have been beard and determined on merits The provisions of sections 3 and 12 which we have to construe in this case are in these terms 3 The provisions of this Act and of the rules and orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any such law 12 An appeal under this Act against any award or decision of an industrial tribunal may be presented to the Appellate Tribunal by iany party which is aggrieved by the award or decision or 22 iithe appropriate Government or the Central Government where it is not the appropriate Government whether or not such Government is a party to the dispute We have first to determine whether there is anything in the Indian with particular reference to section 179 of the Indian Companies Act 1913 reenacted as section 457 of the that is inconsistent with the provisions of the Industrial Disputes Appellate Tribunal Act 1950 which hereinafter will be referred to as the Act If there is anything in those provisions of the inconsistent with the provisions of the Act the latter shall prevail Hence we have to construe the provisions of section 12 which specifically deals with appeals That section permits an appeal to be presented to the Appellate Tribunal by any party which is aggrieved by the award omitting the words not necessary for our present purpose It is the usual statutory provision for an appeal which otherwise would not lie It does not say either in express terms or by necessary implication that those specific provisions of the are abrogated or modified It does not do away with the necessity of the requisite sanction of the Court so far as a Liquidator is concerned Under the provisions of the Indian the affairs of the company under liquidation are placed in charge of the Official Liquidator and under section 457 it is only the Liquidator who is authorized with the sanction of the Court to institute any suit or other legal proceedings in the name and on behalf of the company Thus there is no inconsistency between the aforesaid provisions of the Act and the which only laid down a condition precedent to the filing of an appeal if it has to be by a Liquidator of a company in the process of winding up It concerns a very special case and has no bearing on the general right of appeal As in the instant case the Court refused the necessary sanction to the Liquidators to prefer the appeal no appeal could have been filed on behalf of the Company Hence in so far as the appeal purported to be on behalf of the Company through the Managing 23 Director aforesaid it was wholly incompetent But the appeal was not only by the Company as such but also by the said KD Nundy as the creditor or contributory or auction purchaser of the Company So far as this part of the appeal is concerned it is clear that only a party to the Reference aggrieved by the Award could be a party to the appeal KD Nundy was not a party in his capacity as creditor or as contributory He was impleaded as already indicated as a party to the Reference in his capacity as the auction purchaser of the business of the Company So far as that capacity is concerned it is clear from the order of the Tribunal that no award was made against him as such He could not therefore be said to be a party aggrieved by the award having been exonerated from its terms The Tribunal put this on three main grounds 1 that the auction purchaser had purchased the business of the Company free from all encumbrances out goings and liabilities 2 that the employment of the workmen had been terminated by the Liquidators before possession of the business was delivered to the auctionpurchaser and 3 that there was no relationship of employer and employees between the auction purchaser and the workmen whose services were so terminated The Tribunal in that view of the matter declared the Reference to be incompetent in so far as the auction purchaser was concerned This order the Tribunal passed at the instance of the auctionpurchaser himself The auction purchaser therefore succeeded in obtaining the order which the Tribunal passed holding that the Reference so far as he was concerned was incompetent In view of these facts it must be held that so far as the auction purchaser is concerned he was not aggrieved by the Award made by the Industrial Tribunal That being so the provisions of section 12 of the Act are not attracted to the appeal purported to have been filed by the auction purchaser It is a little difficult to appreciate why the auctionpurchaser having succeeded in obtaining the order set out above in his favour changed his mind and preferred an appeal which in the events that had happened was not maintainable 24 In our opinion therefore the Labour Appellate Tribunal was not in error in dismissing the appeal by the Company and by the auction purchaser as incompetent It follows therefore that we are not concerned with the merits of the appeal In view of the fact that we have not expressed any opinion on the merits of the controversy raised in the abortive appeal this dismissal shall be without prejudice to the appellants rights if any The appeal is accordingly dismissed but the parties here are directed to bear their own costs in view of the fact that we have not gone into the merits of the controversy Appeal dismissed

Two workmen Das and another were arrested by the police on the complaint of the appellant company for an alleged theft The manager held an enquiry and dismissed Das from service for gross misconduct At the enquiry Das stated that he had nothing to say and knew nothing about the theft Certain persons whose statements had been recorded by the manager at the investigation stage in the absence of Das were present at the said enquiry Das was told to ask those persons what they had to say though he was neither supplied with the copies of the statements made by them nor the statements were read over to him at the time of the enquiry Das replied that he would not put any questions to them Thereupon these witnesses were asked whether the evidence they had given before the manager was correct and if not they were at liberty to amend it to which they replied that the evidence they had given was correct Some time later the Magistrate on the final report of the police discharged Das Thereafter the Union had the matter referred to the Tribunal Before the Tribunal the company produced only the statements of the witnesses but did not produce the witnesses themselves The Tribunal found in favour of the workman The company came up in appeal by special leave to the Supreme Court where for the first time it raised the question of the qualification and competency of the one member Tribunal under section 7 Of the Act Held that the question whether the Tribunal was a competent one under section 7 of the prior to the amending Act 36 of 956 must be raised before the Tribunal itself as it was a matter of investigation and could not be raised for the first time before the Supreme Court Held further that the basic principle of natural justice in an enquiry was that the opponent must be given the opportunity of questioning the witnesses after knowing in full what they had to state against him The witnesses on whom the party relied should generally be examined in the presence of the opponent and he must also be informed about the material sought to be used against him and given an opportunity to explain it 33 Union of India vs T R Varma 1958 SCR 499 followed New Prakash Transport Co Ltd vs New Suwvarna Transport Co Ltd referred to Held further that if there was defect in the conduct of the enquiry by the employer it could be cured if all the relevant evidence including the witnesses who were not examined in the presence of the workman were produced before the Tribunal thereby giving the party an opportunity to cross examine them and leaving it to the Tribunal to consider the evidence and decide the case on merits Sasa Musa Sugar Works P Ltd vs Shobrati Khan CAs 746 747 Of 1957 decided on 29 4 1959 followed

Appeals Nos 756 757 of 1957 Appeal by special leave from the Award dated January 8 1957 of the Industrial Tribunal Bombay in 1 T Ref 109 and 147 of 1956 C K Daphtary Solicitor General of India Y A Palkhivala and section N Andley for the appellant Rajani Patel and Janardan Sharma for the respondents May 6 The Judgment of the Court was delivered by DAS C J These are appeals by special leave filed by Crompton Parkinson Works Private Ltd hereinafter referred to as the company against that part of the award made in References IT Nos 109 and 147 of 1956 by the Industrial Tribunal Bombay on January 8 1957 which concerns the demand of its workmen for bonus for the company s financial year 1954 55 That award was published in the Bombay Government Gazette of January 17 1957 in Part IL at pages 351 364 The material facts and circumstances leading upto the said award as they appear from the evidence placed on record before the Tribunal may shortly be stated as follows The company was incorporated in India in the year 1937 The registered office of the company is at Bombay The authorised capital of the company is Rs 75 lacs divided into 75000 ordinary shares of the value of Rs 100 each Out of the authorised capital shares of the value of Rs 60 lacs have been issued subscribed and fully paid At its inception the company was 100 subsidiary of the well known British company named Crompton Parkinson Ltd hereinafter called the Parent company In 1937 938 the company commenced its business which was and is to manufacture electrical equipment such as transformers motors fans starters and switch gears and to sell the same in the market All the goods which the company manufactures are manufactured wholly in accordance with patterns designs specifications and technical processes developed by and belonging to the Parent company which the latter makes available to the company The company s products are sold under the trade names and marks belonging to the Parent company namely Crompton Parkinson Crompton Parkinson and C P Between 1937 and 1947 the company s business is said to have been in a stage of development and progress and it is admitted that the Parent company made no charge for the several services and facilities given by it to the company In the year 1947 after the company s business had been established on a firm footing an agreement was concluded between the two companies in order to provide on a long term basis for the continuance of the technical assistance and service and other facilities afforded by the Parent company on which the company was wholly dependent That agreement which is said to be of a type commonly executed between the manufacturing and industrial concerns in India and their respective associates parents or affiliates abroad and generally known as Technical Aid Agreements is said to have received the approval of the Government of India to promote the industrial development of the country That agreement was actually executed on August 12 1947 and provided that for a period of 20 years the Parent company would render to the company various facilities and services including amongst others the following 1 the use of the latest designs manufacturing information and production methods discovered and developed by Crompton Parkinson Ltd ii the fullest information and advice as to the most suitable machine tools and production machinery and equipment and as to the correct operation and use thereof iii the supply at cost of machinery equipment 939 raw materials and manufacturing parts Under this facility the appellants obtain the benefit of bulk purchase terms under which Crompton Parkinson Ltd purchase their raw materials iv the benefit of the knowledge and experience of Crompton Parkinson Ltd s executive in all matters relating to technical mechanical and financial management v the service of the Crompton Parkinson Ltd s experts and technical personnel vi facilities for training of selected employees of the petitioners in Crompton Parkinson Ltd s Works and vii licence to use on the appellants products the world famous trademarks Crompton Parkinson Crompton Parkinson and C P belonging to Crompton Parkinson Limited In lieu of all royalties licence fees and other con siderations usually allowed for services and facilities of this kind the company agreed to pay to the Parent company service fee calculated at the rate of 5 of the net value of the sales made by the company from year to year For the year 1954 55 the company had actually paid the amount of service fee and the same after deducting the Indian income tax had been remitted to the Parent company Shortly after the execution of the aforesaid agreement 26 of shares of the company were acquired by Messrs Greaves Cotton Co Ltd which is an Indian Company and the company ceased to be a 100 subsidiary of the Parent company It is said that when negotiations for the aforesaid agreement were going on negotiations were also in progress for the transfer of shares to the Indian company and that the latter was apprised of the terms of the proposed agreement and approved of the terms of payment of 5 of the net value of sales On August 25 1955 the General Engineering Employees Union representing the workmen who are respondents Nos 1 and 2 submitted certain demands to the company No agreement having been arrived at the matter was referred to the Conciliation Officer As 940 no settlement was arrived at as a result of the conciliation proceedings the Conciliation Officer submitted his report to the Government of Bombay under sub section 4 of section 12 of the The Government of Bombay after considering the said report and in exercise of the powers conferred on it by sub section 5 of section 12 of the made an order on August 6 1956 referring the disputes between the company and its workmen other than those of the Watch and Ward staff over their demands mentioned in the schedule to that order for adjudication to the Tribunal from whose award the present appeals have been filed This reference was marked as IT No 109 of 1956 By another order made on October 10 1956 the Government of Bombay referred the disputes between the company and its workmen belonging to the Watch and Ward staff over the latter s demands mentioned in the schedule to that order for adjudication to the same Tribunal That reference was marked as IT No 147 of 1956 On September 10 1956 a statement of claim was filed by the Genera Secretary General Engineering Employees Union on behalf of the workmen other than those of the Watch and Ward staff in Reference IT No 109 of 1956 claiming inter alia that all workmen should be given bonus either i equivalent to 331 of their earnings during 1954 55 or ii a prorate bonus equivalent to their six months basic wages basic wage being calculated at the daily rate of pay which the workmen drew on June 30 1955 and bonus being given without attaching any conditions In the statement of claim the Union contended i that during the year 1954 55 the company had made huge profits ii that the company s business had expanded by leaps and bounds and production had mounted up very much and the company had made huge profits and iii that the wages paid to its employees fell terribly short of the living wage standard and extremely out of any reasonable proportion to the tremendously high salaries paid to the company s officers The Union requested the Tribunal to take into consideration the company s practice inter alia of writing off 941 of very substantial amounts as service fees to the Parent company The company filed its written statement in reply to the statement of claim filed by the Union in Reference No IT 109 of 1956 While agreeing that it had made reasonable progress the company did not admit that the progress had been as rapid or phenomenal as the Union had suggested The company stated that it had been able to accumulate only small reserves that in spite of its increased turnover its profit for the year in question was quite low on account of stiff competition that the wages paid to the workmen compared favorably with those paid by similar concerns that they paid to the Parent company a service fee as con sideration for the use of their patterns valuable designs technical aid benefit of research and ancillary services and facilities For the purposes of the reference the company filed a copy of its audited balance sheet and profit and loss account for the year 1954 55 as a confidential exhibit In the said profit and loss account service fee of 5 so paid for the year was shown as an item of expenditure The Union on behalf of the workmen belonging to the Watch and Ward staff filed a statement of claim in Reference IT No 147 of 1956 regarding certain special claims of those workmen to which the company replied by its written statement It is not necessary to refer to that statement of claim by the Union or the company s written statement for they are not relevant to the question of bonus In the course of hearing of the References which were taken up together the workmen through their counsel submitted to the Tribunal amongst other things that the payment of the said service fee by the company was not justified and that the same should be disallowed as an item of expenditure for the purpose of calculating bonus payable to the workmen for the year 1954 55 The Tribunal thereupon called upon the company to bring on record by an affidavit all relevant facts and circumstances relating to the payment of service fee The company submitted that it was not open to the workmen to question an item of 942 expenditure actually incurred and paid in the course of business or to request that such an item already debited to the accounts which had duly been audited and passed should be disallowed The company submitted that in any event the said payment was fully justified and reasonable However in compliance with the Tribunal s directions the company on December 18 1956 filed an affidavit affirmed on December 14 1956 by Shri V V Dhume the Secretary to the company setting forth the relevant facts and circumstances relating to the payment of the said service fee At the further direction of the Tribunal a copy of the agreement dated August 12 1947 was also filed by the company Shri V V Dhume was examined before the Tribunal and his oral testimony was also recorded The material provisions of the said agreement have already been summarised above From the affidavit and the oral evidence of Shri V V Dhume referred to above it is clear that all the goods which the company manufactures are manufactured wholly in accordance with the patterns designs specifications and technical processes developed by and belonging to the Parent company which it makes available to the company and that the company s products are sold exclusively under the trade names and marks belonging to the Parent company There can be and is no dispute that the company has thus at its disposal the benefit of the Parent company s accumulated knowledge and experience technical data and goodwill and the reputation attaching to its products It is clear upon the evidence on record that the manufacture of specialised electrical goods and equipment of the types produced by the company is a highly specialised business of a very competitive nature requiring the use of the most up to date technique In order to keep abreast with the latest development in the field of manufac ture of this kind of equipment the company will ordinarily have to maintain its own research laboratories and specialised staff to develop new methods and innovations and processes The company however does not maintain a separate research establishment Of its own but obtains the benefit of the Parent 943 company s invaluable services under the said agreement According to Shri V V Dhume the service fee paid by the company to the Parent company constitutes in a substantial measure a mere reimbursement of expenses incurred by the latter in the maintenance and operation of its research department and rendering of facilities to the company Shri V V Dhume further stated that had the company to maintain its own research department to provide such service and facilities the annual expense of the company would have far exceeded the service fee actually paid by it to the Parent company It also appears from the affidavit of Shri V V Dhume that the independent shareholders of the company who had acquired 26 shares of the company about the time when the Technical Aid Agreement was executed had willingly accepted that agreement Apart from the fact that the agreement had received the approval of the Government of India in the Ministry of Finance as well as in the Ministry of Commerce and Industry the income tax authorities have from year to year allowed the full amount of the service fee paid by the company to the Parent company as an expenditure incurred wholly and exclusively for the purposes of the company s business Likewise every payment and remittance made by the company representing the service fee to the Parent company has been sanctioned by the Reserve Bank of India ever since 1947 The payment of the service fee no doubt represents a binding contractual obligation on the company which can be legally enforced against it and a breach thereof on the part of the company may well lead to the cancellation thereof by the Parent company as a result whereof the company will be deprived of the services and facilities obtained by it under the agreement and may even be prevented from carrying on its business There was no serious cross examination of Shri V V Dhume regarding these matters by counsel appearing for the workmen and no substantive evidence on these questions was led by the workmen The Tribunal made its award in both the References on January 8 1957 As regards the service fee 944 the Tribunal held i that the amount of service fee paid by the company to the Parent company was excessive and beyond the requirements of commercial necessity and was allowable as an expense only as to one quarter thereof and ii that in any event even if the commercial necessity of the payment could not be challenged a large part of the payment was in the nature of capital expenditure and that only the balance being in fact a quarter thereof was allowable as revenue expense for the purpose of determining the surplus available for the payment of bonus to the workmen Thus as regards the service fee the Tribunal in its award proceeded to prune it down In the actual calculations made by the Tribunal for determining the available surplus according to the bonus formula appearing in what has been marked as confidential exhibit T 1 the Tribunal has allowed only Rs 2 lacs out of the total of Rs 767 lacs actually paid as service fee and added back Rs 567 lacs to the profits It will also be noticed from that confidential exhibit T 1 that the Tribunal has deducted as a first charge 4 12 months basic wages as bonus before depreciation as well as tax on no better ground than that in the view taken by it income tax should not be deducted as a prior charge on the gross profits in preference to bonus In so doing the Tribunal has not quite clearly followed but has made variations in that formula The bonus formula enjoins the Tribunals to arrive at the available surplus after providing for certain prior charges mentioned therein and then to determine after taking into consideration all material circumstances how that available surplus should be distributed between the three interests namely the industry the shareholders and the workmen To deduct bonus as a prior charge even before the recognised items of prior charges appears to us to put the cart before the horse Such a process is certainly not giving effect to the bonus formula but amounts to ad hoc determination which may vary according to the length of the proverbial foot of the Lord Chancellor and is bound to lead to chaos and industrial unrest The bonus formula was evolved by 945 the Labour Appellate Tribunal as far back as 1950 and it has been generally approved by this Court in more decisions than one and what is more it has worked fairly satisfactorily In our judgment in the appeals of Associated Cement Companies Ltd vs Its Workmen 1 we have deprecated such departure from the bonus formula by individual Tribunals for clearly such departure is not conducive to the harmonious and peaceful relations between the workmen and their employers The only other question which calls for our decision is the correctness of the Tribunal s award as to the service fees The conclusion of the Tribunal on that point is founded on the ground that the test of commercial necessity applied by the income tax authorities for determining whether the expenditure was allowable under section 102xv of the Indian Income tax Act should also be applied by the Tribunal The Tribunal evidently overlooked the fact that the income tax authorities are entitled to apply the test of commercial necessity by reason of the express provisions of section 102xv which authorise them to arrive at the taxable income profits and gains after making allowance for expenditures laid out and expended wholly and exclusively for the purpose of the business There is no such provision in the In tile absence of cogent and compelling evidence leading to the definite conclusion and finding that a purported expenditure was sham or had been made with the express object of minimising the profits with a view to deprive the workmen of their bonus it is no part of the duty of an Industrial Tribunal to substitute its own judgment as to what was or was not commercially justified in the place of the judgment exercised by the company and its Directors in whom in law the management of the company is confided The Tribunal has completely overlooked the fact that the company s accounts bad been duly audited by its auditors who were duly appointed by the company and that the said auditors had duly certified 1 1950SCR 925 119 946 in the manner provided for by the Indian Companies Act that the said accounts had been drawn up in conformity with the law and exhibited a true and correct view of the state of the company s affairs The Tribunal has paid no attention to the fact appearing in the evidence on record before him that the income tax department had allowed such service fee as legitimate revenue expense and the entire amount of the service fee was allowed as a deduction by income tax authorities every year as a revenue expenditure wholly and exclusively incurred as a matter of commercial necessity of the company s business Nor does the Tribunal appear to have adverted to the fact that the remittances to the Parent company were allowed by the Reserve Bank which always exercises close scrutiny on every payment made to non residents with a view to prohibit payments which are not justified Nor has the Tribunal taken note of the fact that the Ministry of Finance and the Ministry of Commerce and Industry have approved of the payment of the service fee as provided in the agreement A conclusion drawn by the Tribunal without adverting to the evidence before it amounts to an error of law and cannot possibly be sustained Further the Tribunal appears to have been led away by three facts namely i that the company did not pay any service fee during the period 1937 47 ii that the agreement was executed on August 12 1947 that is to say three days before the attainment of our independence and iii that at the date of the agreement the company was a 100 subsidiary of the Parent company As regards the first reason the explanation may well be that during the period 1937 to 1947 the growth was still in a stage of development and growth In any casethe fact that no fees had been charged during a particular period when the company was 100 subsidiary of the Parent company cannot reasonably be taken as a reason for not allowing them in future It will be recalled that negotiations were going on for the acquisition of a considerable block of shares by an Indian company simultane ously with the negotiations for the execution of the 947 agreement and that in fact 26 of the shares were acquired by Messrs Greaves Cotton Co Ltd Further such service fee has been paid year after year from 1947 right up to the bonus year in question The second reason is equally unsustainable The fact that a great constitutional change was envisaged may well and properly have been the reason for placing the legal relationship between the company and the Parent company on a firmer and permanent legal footing The Tribunal seems to have overlooked the fact stated by Shri V V Dhume that the payment of the service fee for the services of this nature is quite a common feature in India The reasonableness and legality of the payment of such fee is also supported by the fact that the income tax authorities and the Reserve Bank of India have not taken any exception to such payment The last reason adopted by the Tribunal clearly overlooks the fact that shortly after the execution of the agreement about 26 of shares in the company were acquired by an Indian company and year after year ever since then these independent shareholders of the Indian company had willingly accepted the service agreement Finally the award does not disclose any basis on which the Tribunal has purported to prune it down to one quarter of the amount actually paid by the company After a careful consideration of the evidence on record we have come to the conclusion that this part of the award concerning disallowance of the major portion of the service fees cannot be supported or upheld The Tribunal in the award itself has pointed out as already stated that in case the whole of this service fee is to be allowed as we think it should be then on that basis the available surplus would permit the payment of bonus of one month s basic wages to the workmen The company has no objection to payment of bonus to the workmen amounting to one month s basic wages subject to the conditions laid down in the award in this behalf and indeed it has done so since the date of the award The result therefore is that we allow these appeals to the extent that the award of the Tribunal be varied and modified by 948 allowing only one month s basic wages to its workmen who are respondents to these appeals instead of 2 12 months basic wages as provided in the award subject of course to the conditions laid down in the award Be it noted here that the company has paid this bonus to the respondents and nothing remains due and payable for bonus for 1954 55 Considering all circumstances of these appeals we direct each party to bear its own costs of these appeals Appeal allowed in part

The workmen were originally employed by Ms MM Ispahani Ltd which shortly before the partition of India transferred its registered office from Calcutta to Chittagong The appellant company was incorporated on September 5 1947 and took over the good will and trading rights of Ms M M Ispahani Ltd and also purchased its stock in trade properties and assets Most of the shares of the appellant were held by Ms M M Ispahani Ltd and the business of the appellant was of the same nature carried on in the same premises with the same workmen on the same remuneration On the transfer of Ms M M Ispahani Ltd to Chittagong the question arose of retrenching those workmen who were not willing to go to Chittagong and when the appellant company came into existence it agreed to employ those workmen The workmen apparently agreed to the termination of their services with Ms M M Ispahani Ltd and after receiving their provident funds and arrears of salaries they were appointed by the appellant Ms M M Ispahani Ltd used to pay puja bonus to the workmen at the rate of one month s wages and the appellant also paid the same from 1948 up to 1952 even in the years in which the appellant suffered losses As the appellant did not pay puja bonus for 1953 a dispute arose and was referred for 25 adjudication The workmen also claimed benefits from the appellant for the period of service rendered by them under Ms M M Ispahani Ltd Held that the workmen were entitled to the puja bonus equal to one month s wages as it was an implied term of the employment of the workmen Puja was a special festival in Bengal and it had become usual with many firms there to give bonus before Puja to their workmen A claim for puja bonus was based either on implied agreement or on customary payment An implied agreement could be inferred if the following circumstances were established i that the payment was unbroken ii that the payment had been made for a sufficiently long period and iii that it was not paid out of bounty The payment need not necessarily be at a uniform rate throughout and it was for the Tribunal to decide the quantum in a particular year taking into account the various payments made in previous years In the present case the payment was unbroken and was not made out of bounty as it was made even in years of loss The sufficiency of the length of the period depended on the circumstances of each case and in the present case the appellant had paid the bonus since its birth Mahalaxmi Cotton Mills Ltd Calcutta vs Mahalaxmi Cotton Mills Workers Union approved Held further that the workmen were not entitled to any benefits arising out of their employment with Ms M M Ispahani Ltd The workmen had agreed to the termination of their service with that company and there was no express or implied undertaking given by the appellant regarding continuity of service when employing the workmen

Appeal No 54 of 1958 Appeal by special leave from the Award dated January 14 1957 of the Industrial Tribunal at Bombay in Reference I T No 75 of 1956 M C Setalvad Attorney Generalfor India and I N Shroff for the appellants N V Phadke T section Venkataraman K R Sharma and K R Chaudhury for respondent No I and the Intervener May 5 The Judgment of the Court was delivered by 950 BHAGWATI J This appeal with special leave challenges the award made by the Industrial Tribunal Bombay in Reference IT No 75 of 1956 between the appellant and the respondents whereby the Industrial Tribunal awarded to the respondents 4 12 months basic wages as bonus for the year 1954 55 year ending June 30 1955 The appellant is a subsidiary of the Premier Construction Co Ltd and manufactures Hume Pipes It has factories in different parts of India Pakistan and Ceylon The respondents are the workers employed in the appellant s factory at Antop Hill Wadala Bombay In October 1955 respondent I who are workmen represented by the Engineering Mazdoor Sabha made a demand for the payment of six months wages as bonus for the year 1954 55 The matter was also referred to the Conciliation Officer requesting him to initiate Conciliation Proceedings The Conciliation Proceedings went on before the Conciliation Officer upto March 23 1956 on which date both the parties arrived at and executed an Agreement to refer the matter to an Industrial Tribunal for adjudication Accordingly on April 30 1956 both the parties drew up and signed a joint application for referring the dispute for adjudication to a Tribunal and the Government of Bombay thereupon in exercise of the powers conferred by sub section 2 of section 10 of the by its order dated June 11 1956 referred the following dispute to the Tribunal DEMAND Every Workman daily rated should be paid bonus for the year 1954 55 year ending 30th June 1955 equivalent to six months wages without it attaching any condition thereto Respondent No I filed their statement of claim before the Tribunal on June 29 1956 They alleged that the profits of the appellant during the year 195455 were higher than those during the year 1953 54 for which year the appellant had paid four months basic wages as bonus They also alleged that the wages paid to them by the appellant fell short of the living wage and therefore the appellant should pay the in six months basic wages as bonus for the relative year 951 The appellant filed its written statement in answer on August 14 1956 The appellant submitted that after providing for the prior charges according to the formula laid down by the Labour Appellate Tribunal the profits made during the year under consideration did riot leave any surplus and tile respondents were not entitled to any bonus It denied that it bad made huge profits during the year in question and submitted that the profits made were not even sufficient to provide for the prior charges etc The Tribunal after hearing the parties came to the conclusion that even if payment of a bonus equal to 4 12 months basic wages were made a fair surplus would be left in the hands of the appellant to the tune of Rs 330 lacs and therefore awarded the same subject to the following conditions a Any employee who has been dismissed for misconduct resulting in financial loss to the company shall not be entitled to bonus to the extent of the loss caused b Persons who are eligible for bonus but who are no longer in the service of the company on the date of the payment shall be paid the same provided that they make a written application for the same within three months of publication of this award Such bonus shall be paid within one month of receipt of application provided that no claim can be enforced before six weeks from the date this award becomes enforceable Being aggrieved by the said award of the Tribunal the appellant applied for and obtained from this Court special leave to appeal against the same under article 136 of the Constitution and hence this appeal The formula evolved by the Full Bench of the Labour Appellate Tribunal in Millowners Association Bombay vs Rashtreeya Mill Mazdoor Sangh Bombay1 is based on this idea that as both labour and capital contribute to the earnings of the industrial concerti it is fair that labour should derive some benefit if there is a surplus after meeting prior or necessary charges The following were prescribed as the first charges on 1 952 gross profits viz 1 Provision for depreciation 2 reserves for rehabilitation 3 a return at 6on the paid up capital 4 a return on the working capital at a lesser rate than the return on paid up capital and 5 an estimated amount in respect of the payment of income tax The surplus that remained after making the aforesaid deductions would be available for distribution among the three sharers viz the shareholders the industry and the workmen See Muir Mills Co Ltd vs Suti Mills Mazdoor Union Kanpur 1 and Sree Meenakshi Mills Ltd vs Their Workmen 2 This Full Bench Formula has been working all throughout the country since its enunciation as aforesaid and has been found to be in the main fairly satisfactory It is conducive to the benefit of both labour and capital and even though certain variations have been attempted to be made therein from time to time the main features thereof have not been substantially departed from We feel that a formula which has been thus adopted all throughout the country and has so far worked fairly satisfactorily should be adhered to though there is scope for certain flexibility in the working thereof in accordance with the exigencies of the situation In the working of the said formula however regard must be had both to the interests of capital and labour In any given industry there are three interests involved viz the shareholders the Company and the workmen and all these interests have got to get their proper share in the surplus profits ascertained after due provision is made for these prior charges The shareholders may look to larger dividends commensurate with the prosperity of the industrial concern the company would apart from rehabilitation and replacement of buildings plant and machinery look forward to expansion and satisfaction of other needs of the industry and the workmen would certainly be entitled to ask for a share in the surplus profits with a view to bridge the gap between the wages earned by them and the living wages All these interests 1 19551 1s CR 991 998 2 884 953 have therefore got to be duly and properly provided for having regard to the principles of social justice and once surplus profits available for distribution amongst these respective interests are determined after making due provision for the prior charges as aforesaid the Industrial Tribunal adjudicating upon the dispute would have a free hand in the distribution of the same having regard of course to the considerations mentioned hereinabove But so far as the determination of the surplus profits is concerned the formula must be adhered to in its essential particulars as otherwise there would be no stability nor uniformity of practice in regard to the same It maybe noted however that in regard to the depreciation which is a prior charge on the gross profits earned by a concern there is always a difference in the method of approach which is adopted by the income tax authorities and by the industrial tribunals It was pointed out by us in Sree Meenakshi Mills Ltd vs Their Workmen 1 that the whole of the depreciation admissible under the Income tax Act was not allowable in determining the available surplus The initial depreciation and the additional depreciation were abnormal additions to the income tax depreciation and it would not be fair to the workmen if these depreciations were rated as prior charges before the available surplus was ascertained Considerations on which the grant of initial and additional depreciations might be justified under the Income tax Act were different from considerations of social justice and fair apportionment on which the Full Bench Formula in regard to the payment of bonus to workmen was based This was the reason why we held in that case that only normal depreciation including multiple shift depreciation but not initial or additional depreciation should rank as prior charge We approved of the decision of the Labour Appellate Tribunal in U P Electric Supply Co Ltd vs Their Workmen 2 in arriving at the above conclusion and disallowed the claim of the company there to deduct the initial or additional depreciation as prior charge in bonus calculations 1 120 2 954 When this decision was reached we had not before us the decision of the Labour Appellate Tribunal in Surat Electricity Company s Staff Union vs The Surat Electricity Co Ltd 1 where a Bench of the Labour Appellate Tribunal had negatived the contention that if only the normal depreciation allowed by the Income tax law were allowed a company would be able to recoup the original cost of the assets and observed that For the purpose of bonus formula the initial and additional depreciation which are disallowed by that formula must be ignored in fixing the written down value and in determining the period over which the normal depreciation will be allowed The result will be a notional amount of normal depreciation but as we have said repeatedly the bonus formula is a notional formula We have already expressed in the judgment delivered by us in Associated Cement Co Ltd vs Its Workmen 1 that for the purpose of the bonus formula the notional normal depreciation should be deducted from the gross profits calculated on the basis adopted in Surat Electric Supply Co Staff Union vs Surat Electricity Co Ltd 1 and not merely the normal depreciation including multiple shift depreciation allowed by the income tax authorities as stated in U P Electric Supply Co Ltd vs Their Workmen 3 It is well settled that the actual income tax payable by the company on the basis of the full statutory depreciation allowed by the income tax authorities for the relevant accounting year should be taken into account as a prior charge irrespective of any set off allowed by the Income tax authorities for prior charges or any other considerations such as building up of income tax reserves for payment of enhanced liabilities of income tax accruing in future It is also well settled that the calculations of the surplus available for distribution should be made having regard to the working of the industrial concern in the relevant 1 2 3 955 accounting year without taking into consideration the credits or debits which are referable to the working of the previous years eg the refund of excess profits tax paid in the past or loss of previous years carried forward but written off in the accounting year as also any provision that may have to be made to meet future liabilities eg redemption of debenture stock or provision for Provident Fund and Gratuity and other benefits etc which however necessary they may be cannot be included in the category of prior charges If regard be had to the principles enunciated above it is clear that the items of Rs 114 lacs representing the Lahore factory balance written off Rs 034 lacs being patents written off and Rs 009 lacs shown as loss on sale of Tardeo property cannot be allowed as proper deductions from the gross profits for the purposes of bonus calculations The first two items represented debits in connection with the working of previous years Loss of the Lahore factory had been incurred during the three previous accounting years and had been carried forward from year to year and the only thing which was done during the year under consideration was that it was then written off as irre coverable The patents also had been worked off in previous years and the amounts spent in the purchase thereof were therefore to be written off but had reference to the working of the company during the previous years The last item of Rs 009 lacs was trivial and was therefore not pressed with the result that all these three items were rightly added back in the calculations of the gross profits of the appellant and the figure of gross profits taken at Rs 3621 lacs was correctly arrived at by the Tribunal The depreciation allowed by the Tribunal was Rs 982 lacs which was the full statutory depreciation allowed by the Income tax authorities That should not have been done and the only depreciation allowed should have been the notional normal depreciation which was agreed between the parties before us at Rs 623 lacs Working the figure of income tax deducted by the 956 appellant on the basis adopted in Shree Meenakshi Mills Ltd vs Their Workmen 1 the income tax on the gross profits of Rs 3621 lacs less the statutory depreciation allowed by the income tax authorities viz Rs 982 lacs would be equivalent to 7 annas in the rupee on Rs 2639 lacs ie Rs 1155 lacs thus leaving a balance of Rs 1682 lacs from which the other prior charges would have to be deducted in order to ascertain the distributable surplus 6 return on the ordinary share capital and 5 return on the preference share capital would come to Rs 430 lacs The appellant however claimed that even on the preference shares 6 return should be allowed and not 5 even though preference shareholders were not entitled to anything beyond 5 under the terms of issue The appellant obviously relied upon the wording of the formula return at 6 on the paid up capital and contended that the preference shares also being paid up capital it would be entitled to a return of 6 on the preference shares for the purposes of the bonus formula even though in fact it would have to pay only 5 return on the same We cannot accept this contention Even though the bonus formula is a notional one we cannot ignore the fact that in no event would the appellant be bound to pay to the preference shareholders anything beyond 5 by way of return The Full Bench Formula cannot be so literally construed There is bound to be some flexibility therein the 6 which is prescribed there as the return on paid up capital is not inexorable and the Tribunals could if the circumstances warrant vary the rate of interest either by increasing or decreasing the same On the facts of this case however there is no warrant for allowing anything beyond 5 return on preference share capital and the amount of Rs 430 lacs should therefore be deducted as another prior charge from the grsos profits of the appellant 4 return on reserves used as working capital was calculated merely at a figure of Rs 029 lacs worked out on a total figure of Rs 742139 The Tribunal 1 957 did not take into consideration another sum of Rs 4181196 which represented the depreciation fund which according to the appellant had been used as working capital during the year If that had been allowed a further sum of Rs 167 lacs should have been added to Rs 029 lacs and the total amount of 4 return on reserves used as working capital would have amounted to Rs 196 lacs Two arguments were advanced against this contention of the appellant One was that there was nothing like a depreciation fund that it merely represented a credit item introduced in the balance sheet as against the value of the fixed capital at its original cost and would have disappeared as such if the proper accounting basis had been adopted viz the fixed block bad been showed at its depreciated value after deducting the amount of depreciation from the original cost Such book entries it was contended did not convert that credit item into a depreciation fund available to the company and there was therefore no basis for the contention that such a depreciation fund ever existed and could be used as working capital in the business The other was that there was nothing on the record to show that such a depreciation fund if any had been in fact used as working capital in the business during that year The answer furnished by the appellant in regard to both these contentions was that on a true reading of the balance sheet Rs 4181196 were reserves used as working capital vide calculations in Exhibit C 12 Provision for depreciation was Rs 11029954 and the paid up capital was Rs 8000000 thus totaling to Rs 19029954 The total capital block as shown in page 5 of the balance sheet for the year ending June 30 1955 was Rs 14848758 and the working capital therefore was Rs 4181196 This was apart from Rs 742139 which was the total of the three items at page 4 of the balance sheet Rs 98405 capital reserves Rs 473734 other reserves and Rs 170000 provision for doubtful debts as also the investments cash and bank balance This being the true position it follows on the facts of the present case that this 958 amount was available for use as working capital and the balance sheet showed that it was in fact so used Moreover DO objection was urged in this behalf nor was any finding to the contrary recorded by the Tribunal We are therefore of the opinion that the reasoning adopted by the Tribunal was not correct and the appellant was entitled to 4 return on the reserves used as working capital including the sum of Rs 4181196 The appellant was thus entitled to Rs 196 lacs as the 4 return on reserves used as working capital and not merely Rs 029 lacs as allowed by the Tribunal The provision for rehabilitation bad been claimed by the appellant at Rs 110 lacs on the basis of 10 of the net profits relying upon para 20 of the Report of the Committee on Profit Sharing in which the Committee had proposed that 10 of the net profits should compulsorily be set aside for reserves to meet emergencies as well as for rehabilitation modernization and reasonable expansion No evidence was at all led by the appellant before the Tribunal showing the cost of the machinery as purchased the age of the machinery the estimate for replacement etc in order to substantiate this claim for rehabilitation and the appellant was content merely to rely upon this recommendation of the Committee on Profit sharing This was rightly considered by the Tribunal as insufficient to support the appellant s claim though it allowed for rehabilitation in addition to the statutory depreciation the amount for which the appellant had actually made provision viz the sum by which the depreciation written off for the year exceeded the statutory depreciation i e Rs 1000000 minus Rs 982799Rs 17201 The amount was really small and did not affect the bonus to be awarded The Tribunal in fact allowed the same though it appears that in the absence of evidence of the nature above referred to even that sum of Rs 017 lacs ought not to have been allowed In this state of affairs it is really impossible for us to allow the appellant s claim for rehabilitation in anything beyond the sum of Rs 017 lacs actually 959 allowed by the Tribunal and the claim of the appellant for any further provision for rehabilitation must be disallowed for the purpose of the bonus calculations for the year under consideration It will however be open to the appellant to claim higher rehabilitation for subsequent years if it can substantiate its claim by adducing proper evidence In addition to these various sums allowed to the appellant by way of prior charges against the gross profits earned during the accounting year the Tribunal also allowed to the appellant Rs 250 lacs by way of provision for debenture redemption fund The claim of the appellant was for a sum of Rs 350 lacs for the same and it arose under the following circumstances The appellant had issued debentures of the value of Rs 30 lacs in the year 1942 43 and they were redeemable in the year 1962 63 No annual provision had been made from profits for redemption of the same inasmuch as until the year 1949 the appellant was not working at a profit Such provision was made only thereafter For the year 1950 51 the appellant made a provision for Rs 75000 for debenture redemption fund for 195152 Rs 150000 for 1952 53 Rs 150000 for 1953 54 Rs 75000 and further provision had to be made for redemption of debentures in a sum of Rs 2450000 In so far as 7 more years were left before the due date for redemption the appellant claimed Rs 350000 as the annual sum to be set apart though as a matter of fact in the balance sheet only a provision of Rs 250000 had been made by it for debenture redemption reserve The Tribunal pointed out that when the appellant had in its accounts appropriated Rs 250000 for the debenture redemption fund the claim to have Rs 350000 for the purposes of bonus formula was clearly untenable It however was of the opinion that a reasonable provision for redemption fund should be allowed as a prior charge and actually allowed the sum of Rs 250000 which had been actually provided for the purpose in the balance sheet negativing the contention of the respondents that no provision should be allowed for debenture redemption fund in the bonus formula 960 We are of the opinion that the Tribunal was not justified in allowing the sum of Rs 250000 for debenture redemption fund as a prior charge in the bonus calculations The Full Bench Formula does not envisage any such prior charge It is no doubt true that capital is shy and it would not be practicable for the industrial concern to raise large amounts by way of fresh debentures when they become due It is also true that the debentures do not stand on a par with other debts of a concern because the debentureholders would in a conceivable situation be able to enforce their security by bringing the industry to a stand still by taking over charge of the whole concern It would therefore appear that the redemption of these debentures would be one of the primary obligations of the industrial concern and due provision has of necessity to be made for redemption thereof on due date This however does not mean that in the calculations of the distributable surplus the provision for such redemption should be given the status of a prior charge though of course that would be a relevant con sideration while distributing the available surplus between the various interests entitled thereto We are therefore of opinion that the Tribunal was wrong in allowing Rs 250000 as a prior charge in the bonus calculations This disposes of all the contentions which have been urged on behalf of both the parties and calculating the figure on that basis we arrive atthe following Rs in lacs Gross Profit as per Tribudal s calculations 3621 Less Notional Normal Depreciation 623 2998 Less Tax 7 as in a rupee 1155 1843 Less 6 return on ordinary share capital and 5 on preference share capital 430 1413 961 Less 4 Return on reserves used as working capital 742139 29 4181196 167 4923335 196 1217 LessProvision for Rehabilitation 017 Available Surplus 1200 This would bring the available surplusfor distribution to a sum of Rs 12 lacs and this would be distributable amongst the shareholders the company and the workmen concerned It is not feasible to lay down any rigid formula as to what the proportion of such distribution amongst these various interests should be The shareholders as well as the company would both be naturally interested inter alia in providing the debenture redemption reserves as also meeting the needs of the industry for further expansion The workmen would no doubt be interested in trying to bridge the gap between their actual wage and the living wage to the extent feasible This surplus of Rs 12 lacs would have to be distributed amongst them having regard to the facts and circumstances of the case of course bearing in mind the various considerations indicated above Before we arrive at the figure of the actual bonus which it will be appropriate in the circumstances of this case to allow to the workmen we may advert to one argument which was pressed before us on their behalf and that was that the bonus calculations should not be made on the basis of the All India figures which were adopted by the Tribunal but on the basis of the actual amounts which the appellant had paid and would have to pay to the workmen concerned It was pointed out that the respondents here were only the workmen in the Wadala Factory of the appellant The appellant had however paid to the various workmen elsewhere as and by way of bonus sums varying between 4 and 29 of the basic wages for the year in question The sum of Rs 123138 only had been 121 962 paid in full and final settlement to the workmen in some of the factories and the bonus calculations on an All India basis would thus work to the advantage of the appellant in so far as they would result in saving to the appellant of the difference between the amounts to which those workmen would be entitled on the basis of the All India figures adopted by the Tribunal and the amounts actually paid to them as a result of agreements conciliation or adjudication It was therefore contended that the calculations should be made after taking into account the savings thus effected by the appellant and only a sum of Rs 123138 which was the actual sum paid to those workmen should be taken into account and no more We are afraid we cannot accept this contention If this contention was accepted the respondents before us would have an advantage over those workmen with whom settlements have been made and would get larger amounts by way of bonus merely by reason of the fact that the appellant had managed to settle the claims of those workmen at lesser figures If this contention of the respondents was pushed to its logical extent it would also mean that in the event of the non fulfilment of the conditions imposed by the Tribunal in the award of bonus herein bringing in savings in the hands of the appellant the respondents would be entitled to take advantage of those savings also and should be awarded larger amounts by way of bonus which would really be the result of the claimants entitled to the same not receiving it under certain circumstances an event which would be purely an extraneous one and unconnected with the contribution of the respondents towards the gross profits earned by the appellant The Tribunal was therefore right in calculating the bonus on an All India basis By our order dated April 12 1957 the appellant was ordered to pay to the respondents within a fortnight from the date thereof bonus for the year 1954 55 equivalent to two months basic wages that amount has already been paid and works out at Rs 339 lacs on an All India basis The only question which therefore survives is what further bonus if any would the respondents be entitled 963 to from the distributable surplus of Rs 12 lacs The sum of Rs 350 lacs required for building up the debenture redemption reserve is an all engrossing need of the appellant and that is a factor which must of necessity be taken into consideration while arriving at the ultimate figure particularly because such redemption of the debentures would enure not only for the benefit of the Company and its shareholders but also of the workmen employed therein Having regard to all the circumstances of the case we feel that an award of four months basic wages as aggregate bonus for the year 1954 55 which by the way was the bonus awarded for the previous year 1953 54 also would give a fair share to the labour in the distributable surplus leaving to the shareholders and the company a balance of Rs 522 lacs to be utilised by them not only towards building up of the debenture redemption reserve but also for building up other reserves which would be utilised for various other purposes indicated above The appellant would no doubt get also the refund of the income tax on the bonus payments made by it This rebate would also go towards the fulfilment of the very same objectives which would ultimately enure both for the benefit of the capital as well as labour We have therefore come to the conclusion that the appellant should pay to the respondents in addition to the two months basic wages already paid to them in pursuance of this Court s order dated April 12 1957 an additional sum equivalent to two months basic wages by way of bonus for the year 1954 55 subject to the same conditions as were laid down in the award of the Tribunal above referred to all the dates mentioned therein being calculated from the date of this judgment We accordingly allow the appeal modify the award of the Industrial Tribunal to the extent mentioned above but in the circumstances of the case we make no order as to costs each party bearing and paying its own costs thereof Appeal allowed

The discharged employees of the Company in liquidation raised an industrial dispute wherein the auction purchaser of the Company was also impleaded as a party The Tribunal inter alia held that no relationship of employer and employee existed between the auction purchaser and the old staff who had been discharged prior to the purchase of the business and the reference so far as the auction purchaser was concerned was incompetent The Tribunal directed the liquidators to pay compensation to the discharged employees The liquidators were refused sanction to appeal from the said award by the High Court whereupon the auction purchaser who was also the managing director of the Company prior to its liquidation preferred an appeal in the name of the Company represented by himself as the managing director and also in his capacity as the auction purchaser of the Company The Appellate Tribunal dismissed the appeal in limine as incompetent in view of the provisions Of section 457 Of the on the ground that the appeal was not maintainable as it was not authorised by the High Court Held that where a party to the Reference in an industrial dispute was exonerated from its terms and no Award was made against him he could not be said to be an aggrieved party thereby attracting the provisions of section 12 of the Industrial Disputes Appellate Tribunal Act 1950 and any appeal by him from the said Award will be incompetent 14 No person other than the Official Liquidator who is place in charge of the affairs of the Company in the process of winding up is authorised with the sanction of the Court to institute any suit prefer an appeal or other legal proceedings in the name and on behalf of the Company Held further that there is no inconsistency between section 457 of the and section 12 Of the Industrial Disputes Appellate Tribunal Act 1950 But in construing the provisions Of section 12 Of the Industrial Disputes Appellate Tribunal Act 1950 if there was anything in the with particular reference to section 457 which was inconsistent with the provisions of Industrial Disputes Appellate Tribunal Act 1950 the latter Act shall prevail Section 457 of the concerns a very special case it only lays down a condition precedent to the filing of a case if it has to be by the liquidator of a company in the process of winding up Section 12 of the Industrial Disputes Appellate Tribunal Act 1950 is the usual statutory provision which permits an appeal to be presented to the Appellate Tribunal which otherwise would not lie by any party who is aggrieved by an award it does not either in express terms or by necessary implication override abrogate or modify the provisions Of section 457 Of the nor does it do away with the necessity for the requisite sanction of the court which is a condition precedent so far as the liquidator is concerned to institute any suit or proceedings in the name or on behalf of the company in liquidation In the instant case the appeal purported to be filed on behalf of the Company in liquidation through its managing director was wholly incompetent and the second appellant the auctionpurchaser could not be said to the aggrieved party enabling him to invokes 12 of the Act

Appeals Nos 459 and 460 of 1957 Appeals by special leave from the judgment and order dated the 30th November 1956 of the Industrial Tribunal Bombay in Reference 1 T Nos 10 and 13 of 1956 RH Kolah Dadachanji and section N Andley for the appellant 930 CL Dudhia and I N Shroff for the respondents in C A No 459 of 1957 AS R Chari and 1 N Shroff for the respondents in C A No 460 of 1957 May 5 The Judgment of the Court was delivered by GAJENDRAGADKAR J These two appeals arise out of a demand for bonus made against the appellants by their workmen for the year 1953 54 The Associated Cement Companies Ltd Bombay the Cement Marketing Company of India Ltd Bombay and the Concrete Association of India Bombay were faced with a demand of their workmen employed in their offices at Bombay for bonus equivalent to seven months basic wages with dearness allowance The industrial dispute arising out of this demand was referred by the Government of Bombay for adjudication before the Industrial Tribunal Bombay under section 10 of the Industrial Disputes Act and it was numbered I T No 10 of 1956 The Associated Cement Companies Ltd Dwarka Cement Works Dwarka was similarly faced with a demand of its workmen for bonus equivalent to 50 of total earnings or six months total earnings This dispute was referred to the same tribunal and was numbered 1 T No 13 of 1956 By consent of parties both the references were heard together and evidence was recorded and documents tendered in the first reference By its award delivered on November 30 1956 the tribunal directed the companies to pay their workmen drawing a basic pay or wages up to Rs 500 per month bonus equivalent to 13 of their basic wages or pay less bonus already paid for the year 1953 54 subject to the conditions specified in the award It is against this award that the respective companies have preferred the two appeals by special leave In this judgment the said companies will hereafter be described as the appellant and their workmen as respondents The A C C is the principal company concerned in the dispute The Cement Marketing Company of 931 India Ltd hereafter called the C M I has been separately registered under the Indian Companies Act as a Joint Stock Company but it is a hundred per cent subsidiary of the A C C The C M I are the Sales Managers of the A C C while the Concrete Association of India hereafter called the C A I is merely a department of the C M 1 As a result of the agreement which came into operation from August 1 1953 all financial transactions of the C M 1 in relation to sales now find a place in the accounts of the A C C Similarly all of its fixed assets have been taken over and appear in the balance sheets of the A C C All the three concerns have a common staff in Bombay The A C C had already paid to its employees bonus equivalent to three months basic wages for the year 1953 54 and so had the C M I to its workmen It appears that the C M I including the C A I undertakes to pay to its employees the same amount of bonus as has been paid or awarded to the employees of the A C C There is no dispute that the A C C is the biggest amongst the companies in India which manufacture cement It owns 15 cement factories at different places in India and 2 in Pakistan Out of the total quantity of cement despatched by all the cement factories in India in 1953 54 the A C C despatched 5546 The A C C came into existence in 1936 as a result of the merger of four important groups of companies engaged in the manufacture of cement These were F E Dinshaw Tatas Killick Nixon and Khatau groups It appears that 11 companies in all merged with the A C C Before the tribunal the case for the respondents was that the appellant held a position of monopoly in the cement industry and was easily in a position to pay the bonus claimed by them Their allegation was that the appellant had inflated the capital invested by the merging companies while taking them over in 1936 it had set up new factories out of the profits earned by it without raising fresh capital and thereby had used profits for the purpose of expansion In the year 195354 the appellant had capitalised the full amount 932 standing to the credit of the premium on shares account and had transferred a part of the reserves for taxation to the capital account thus increasing the aggregate capital The emoluments of the workers were inadequate and so they were entitled to the bonus claimed by them in order to fill up the gap between the actual wage paid to them and the living wage due to them The respondents also contended that the claim made by the appellant for rehabilitation and replacement in the dispute for the year 195152 included not only the amount required for rehabilitation and replacement but also expansion and so according to them the appellant was not entitled to any amount for rehabilitation purposes in the year in dispute They also alleged that the appellant was not entitled to claim interest at more than 4 on paid up capital and 2 on working capital Thus the respondents urged that if all the relevant facts are taken into account it would be found that the claim for bonus made by them in the two respective references was just and proper In support of their case the respondents filed several statements which they claimed had been prepared in accordance with the Full Bench formula and they also cross examined Mr Tongaonkar who gave evidence on behalf of the appellant This claim was resisted by the appellant It was urged on its behalf that the points raised by the respondents in the present references bad been heard and finally decided in the previous adjudication Ref I T No 115 of 1953 which dealt with their claim for bonus for the preceding year and it was alleged that the respondents were barred from raising the same questions over again in the present adjudication The cement machinery though heavy is subject to rigours of extremely tough and heavy duties and the machinery has to run ceaselessly day and night throughout the year The appellant contended that having regard to the special features of the cement industry the machinery had to be kept on the highest standards of maintenance and needed frequent replacement and rehabilitation A cement factory is a very expensive industrial proposition The appellant denied that 933 it was in a monopolistic position and pleaded that its object was to deliver cement as cheaply as possible to the consumers The respondents allegation that there was puffing up of block capital at the time of the merger in 1936 was denied by the appellant and it was not admitted that ever since its inception it had steadily made huge profits The appellant also denied the allegation of the respondents that the profits coming out of the business had been used in expanding its factories It had used all available resources including premium on issue of shares and depreciation fund for replacement rehabilitation and modernisation It was not true that the appellant had built huge reserves and that the wages paid by the appellant to its employees were inadequate on the contrary they compared very favourably with those in other comparable industries The appellant denied the statement of the respondents that no plant reinstatement reserve over and above the deprecia tion allowance was necessary in the current year and it urged that the calculations made by the respondents alleged to be in terms of the Labour Appellate Tribunal formula were inaccurate In its turn the appellant claimed more than 6 interest on paid up capital and more than 4 interest on working capital The appellant also emphasised that it had already paid to the respondents bonus for three months though the strict working out of the formula would show that there was no available surplus for the relevant year and so the respondents would not be entitled to any bonus at all In support of its case the appellant examined Mr G R Tongaonkar its controller of planning and development and produced a statement exhibit C 2 showing the original cost of the blocks to be replaced and the approximate replacement cost It also produced amongst other documents a statement exhibit C 10 showing the cost of the assets of the merging companies on July 31 1936 as taken over by the appellant and the statement exhibit C 29 showing the capital expenditure from 1936 37 to 1953 54 on expansion modernisation rehabilitation replacement sundry capital jobs etc 934 In addition a statement was filed by the appellant exhibit C 23 showing that the calculations made under the Full Bench formula would show a substantial deficit and that would support its case that there was no available surplus for the relevant year from which any bonus could be claimed by the respondents exhibit C 2 is a statement prepared by Mr Tongaonkar showing the original cost of the block to be replaced and the approximate replacement cost This statement has been prepared on the basis that the approximate cost to the merging companies of their assets as on 31 7 1936 was 573 crores It is admitted that this statement has lumped together all the properties of the appellant including plant and machinery as well as buildings roads bridges and railway sidings and has classified them into four categories The statement contains 9 columns The first column gives the year or years of purchase of machinery This could classifies the four categories of the blocks according to their respective years of purchase The first category consists of blocks purchased up to 1939 the second purchased between 1940 44 the third purchased between 1945 47 and the last purchased between 1949 54 Column 2 gives the original cost of the said categories as on 31 7 1954 Column 3 gives particulars of such portions of the blocks as have been discarded scrapped or sold In this column the years in which the blocks were discarded scrapped or sold are indicated and their original cost is me 935 figures mentioned in col 5 for 1939 and 1940 44 blocks have been arrived at by reducing the corresponding figures given in col 4 by 20 Column 6 gives the approximate present life of the machinery and plant mentioned in col 4 col 7 sets out the breakdown value of the machinery referred to in col 4 whilst col 8 gives the approximate cost of rehabilitation of machinery as shown in col 5 less breakdown value as shown in col 7 The last column works out the annual requirements of the appellant in respect of the rehabilatation of the four categories of blocks The figures in this column are arrived at by dividing the amounts mentioned in col 8 by the respective divisors mentioned in col 6 The total annual requirement of the appellant in respect of rehabilitation is shown as of the order of Rs 32961752 exhibit C 23 is a statement prepared by Mr Tongaonkar to show the deficiency in profits in relation to payment of additional bonus claimed by the respondents for the accounting year 1953 54 This statement has been prepared alternatively on the basis of statutory depreciation allowable by income tax authorities and also on the basis of straight computation at ordinary rates The first method results in a deficit of Its 10720 lakhs while the second in a deficit of 9786 lakhs In working out the provision for rehabilitation this statement first takes the replacement cost of block up to 1939 as per exhibit C 2 to be Rs 160119 lakhs From this amount the available reserves as on 1 8 1953 which are of tile order of Rs 311 lakhs are deducted leaving a balance of Rs 129019 lakhs Then the replacement costs of the three remaining categories of blocks are taken into account and all the said amounts are divided by the appropriate divisors mentioned in col 6 of exhibit C 2 The result is the sum of Rs 28448 lakhs and that is claimed by the appellant as the provision for rehabilitation under the formula In his evidence Mr Tongaonkar has given reasons in support of the respective multipliers and divisors adopted by him in making his calculations in exhibit C 2 119 119 936 He has also given several details on all the relevant and material points in support of the appellant s case Naturally the respondents have cross examined him at length One of the questions in controversy between the parties in the present appeals centres round the appreciation of Mr Tongaonkar s evidence and the value to be attached to the statements prepared by him On the contentions raised by the parties before it the tribunal framed ten issues for determination and it has made its findings on them in the light of the evidence adduced before it It has held that the appellant had not inflated the capital invested by the merging companies while taking them over in 1936 It has allowed 6 interest on the entire paid up capital of Rs 126759 lakhs and 4 interest on the working capital In regard to the claim for depreciation the tribunal has held that it was normal depreciation calculated according to the straight line method which should be allowed On the question of income tax the tribunal has allowed the same at 834 pies in a rupee as claimed by the appellant on its net profits It has however rejected the appellant s case that the income from investments in shares and securities received by it should be excluded for the purpose of bonus while it has allowed the sum of Rs 10 lakhs provided by the appellant as annual contribution to the reserve for gratuity as also the expenditure on the cost of dismantling buildings prospecting expenses etc It did not accept the respondents case that the bonus paid by the appellant to its officers should be reduced or wholly disallowed for the purpose of calculations under the formula and on the question as to whether overtime payment should be included in the payment of bonus it has upheld the respondents contention and allowed the inclusion of the said payment Having disposed of these minor issues the tribunal examined at length the claim made by the appellant in regard to the provision for rehabilitation replacement and modernisation Indeed this was the most controversial and the most important issue raised 937 before it The tribunal examined the evidence of Mr Tongaonkar as well as exhibit C 2 and other documents produced by him and came to the conclusion that exhibit C 2 presents an incorrect and exaggerated picture of the ACC s requirements of rehabilitation and replacement and so it cannot be relied upon According to the tribunal the multiplier 428 adopted by Mr Tongaonkar was itself an inflationary figure and it thought that the consequence of applying it not to the original price but to its increased price paid by the ACC would be to obtain an inflationary result It appears that the tribunal wag inclined to hold that 27 was a fair multiplier representing the price increase over the pre war base The tribunal was also not satisfied with Mr Tongaonkar s evidence in regard to the life of plant and machinery and so it held that the period of life given in col 6 of exhibit C 2 cannot be accepted as correct While dealing with the question about the rise in prices the tribunal has held that it was usual to take the average level of prices prevailing in a period of about five years in preference to the prices prevailing in a particular year as was done by Mr Tongaonkar The tribunal subjected Mr Tongaonkar s evidence on the question of replacement rehabilitation and modernisation to a close examination and held that the method adopted by Mr Tongaonkar in distinguishing between modernisation and expansion was of a purely subjective estimate which does not bear the scrutiny of an objective test On the whole the tribunal was not prepared to accept Mr Tongaonkar s evidence at its face value and it was not prepared to treat exhibit C 2 and consequently exhibit C 23 as reliable It is relevant to point out at this stage that the tribunal has not made any finding about the life of the machinery nor has it recorded any conclusion as to a proper divisor In fact it has completely left out of consideration Exs C 2 and C 23 while determining the amount which should be allowed for the appellant s claim for rehabilitation for the relevant year The tribunal then examined the principle underlying the Full Bench formula and held that it was not 938 intended to be worked out as a rigid mathematical formula We must make it says the tribunal as flexible as possible so as to do justice to everybody concerned in the earning of profits The general question which it has considered in this connection is how far and to what extent profits of a concern should contribute to the satisfaction of the claims of industry for replacement rehabilitation and modernisation It was impressed by the argument that where the requirements under these items are so huge as to be out of tune with the profits it would be open to an industrial adjudicator to allow only a reasonable provision to be made out of the profits for the said items and leave the industry concerned to tap other resources to make up the balance In support of this conclusion it has referred to the observations made by FRM de Paula in his Principles of Auditing the report of the Taxation Enquiry Commission and of the working party for the Cotton Textile Industry It has also relied on a part of the speech delivered by Mr J RD Tata in addressing the annual general meeting of the shareholders of the Tata Iron and Steel Company in August 1950 In this connection the tribunal has expressed its apprehension that if all the money required for a continuous process of modernisation and expansion is to come out of the profits made by the concern labour will rarely see a day when they will enjoy bonus granted to them out of profits though it has hastened to add that it was far from its mind that a progressive concern like the ACC should not keep pace with time and modernise its machinery but it only wished that it should give a fair deal to the workers in the distribution of the profits Having hold that if the claims for rehabilitation turn out to be huge and out of tune with the profits made by the industry it would be open to the tribunal to grant the claim of the industry in that behalf only to the extent that it deems to be reasonable and fair it proceeded to consider how far and to what extent the appellant s claim should be allowed in the present proceedings It is necessary to mention that in dealing with this 939 question the tribunal was considerably influenced by the past conduct of the appellant It thought that for rehabilitation the appellant had claimed no more than Rs 192 or 193 lakhs in the previous adjudication proceedings where the dispute for bonus had reference to the year 1951 52 If the claim then made by the appellant was no more than Rs 192 or 193 lakhs the present claim for Rs 284 lakhs the tribunal thought was obviously inflated and unreal Similarly the tribunal emphasised the fact that the programme earlier submitted by the appellant to the Tariff Commission was in turn more modest than the claim made in the said adjudication proceedings It appears that in the said programme the appellant had made out a case for the estimated expenditure of Rs 1836 crores to be spread over a period of ten years from 1 8 1952 to 31 7 1962 and that works out approximately at the figure of Rs 184 lakhs per year It was on these facts that the tribunal held that if the ACC estimated its annual requirements of rehabilitation replacement and modernisation at Rs 192 lakhs per year during the period of ten years commencing from 1 8 1952 1 do not think that it should be allowed to depart from it now In substance according to the tribunal the present claim for rehabilitation was very much inflated it had no relation to realities and so the appellant should not be allowed to make such a claim That is why it did not think it necessary to record any finding as to the proper divisor and to determine in the light of Mr Tongaonkar s evidence what approximately would be a fair or reasonable amount for rehabilitation under the formula It is thus clear that in making its final calculations the tribunal has assumed that the claim made by the appellant for rehabilitation replacement and modernisation must be taken to be no more than Rs 192 or 193 lakhs and on that assumption it has considered to what extent the claim should be allowed Ultimately the tribunal came to the conclusion that in the circumstances of the case it would be fair to allow the appellant about Rs 165 to 170 lakhs as annual provision for the said items In support of this conclusion 940 the tribunal has relied on the fact that for the two years 1952 53 and 1953 54 the appellant had spent about Rs 33976 lakhs for the purpose of rehabilitation replacement land modernisation and that works at the average of Rs 170 lakhs per year The tribunal has then taken into account the fact that the appellant had a plant reinstatement reserve of Rs 235 lakhs and a general reserve of Rs 76 lakhs in the beginning of the year 1953 54 If these amounts which would be available for rehabilitation are spread over the ten year period of the tentative programme planned by the appellant the annual figure would come to Rs 31 lakhs and this amount would have to be deducted from Rs 165 lakhs which the tribunal was inclined to grant in respect of the relevant item That is how the tribunal has made the appropriate calculations under the formula and has shown that even after the payment of one month s additional bonus as directed by it the appellant would still be left with a surplus of Rs 2348 lakhs That in brief is the nature and effect of the findings made by the tribunal Before dealing with the merits of the points raised in these appeals it would be convenient to refer to the genesis and the terms of the formula which has been evolved by the Full Bench of the Labour Appellate Tribunal in the case of The Mill Owners Association Bombay vs The Rashtriya Mill Mazdoor Sangh Bombay 1 in 1950 It appears that from 1940 A D onwards the claims for bonus made by the employees against their employers in different industries were dealt with on an ad hoe basis from case to case Sometimes the employers voluntarily paid bonus to their workmen and where disputes arose they were decided by the tribunals in the light of the circumstances of each case without relying on any broad consideration of policy or without attempting to lay down any general principles In 1948 a bonus dispute arose between the Mill Owners Association Bombay and its employees and it was referred for adjudication to the Industrial Court In considering this dispute the Industrial Court went 11950 LLJ 1247 941 elaborately into the matter laid down certain principles and awarded to the workmen bonus equivalent in amount to 38 of the total basic earnings of each workman subject to certain conditions In the subsequent year a similar dispute arose between the same parties and it was again referred to the Industrial Court for adjudication The Court made its award on July 7 1950 directing 55 mills of the Association to pay to their workmen whether permanent or temporary 16 of the basic earnings of each of them as bonus This award was challenged by the Association before the Labour Appellate Tribunal It was urged on behalf of the Association that the wage structure in the textile industry had been settled by standardisation and so bonus must be regarded as a gratuitous payment and it was argued that at any rate grant of bonus cannot be made for the purpose of making up the deficiency between the actual and living wages These contentions were rejected by the Labour Appellate Tribunal and the question about the grant of bonus was considered on general principles on the basis of which a formula often described as the First Full Bench Formula was ultimately evolved As both capital and labour contribute to the earnings of the industrial concern observed the appellate tribunal it is fair that labour should derive some benefit if there is a surplus after meeting prior or necessary charges The appellate tribunal was also of the view that where the goal of living wages had been attained bonus like profit sharing would represent more as the cash incentive to better efficiency and production but where the industry had not the capacity to pay a living wage bonus must be looked upon as the temporary satisfaction wholly or in part of the needs of the employee In other words according to this decision the award of bonus is based on a two fold consideration It is made in recognition of the fact that labour has made some contribution to the profit earned by the industry and so it is entitled to claim a share in it and it is also intended to help labour to bridge or narrow down the gap as far as may be reasonably possible between the living wage to which labour is entitled and the actual wage received by it 942 Dealing with the problem from this point of view the appellate tribunal conceded that investment necessarily implies the legitimate expectation of the investor to secure recurring returns on the money invested by him in the industrial undertaking and so it held that it was essential that the plant and machinery should be kept continuously in good working order for the purpose of ensuring that return Such maintenance of the plant and machinery would necessarily be to the advantage of labour because the better the machinery the larger the earnings and the brighter the chance of securing a good bonus On this consideration it was held that the amount of money that would be necessary for rehabilitation replacement and modernisation of the machinery would be a prior charge on the gross profits of the year Since the depreciation allowed by the income tax authorities is only a percentage on the written down value the depreciation fund set apart on that basis would not be sufficient for the purposes of rehabilitation and an extra amount would have to be annually set apart nationally under the heading of reserves to make up the deficit This position was apparently not disputed by the employees The claim made by the industry that a fair return on the paid up capital must be secured and that ordinarily it should be paid at the rate of 6 per annum was also not disputed The employees however challenged the claim of the industry that reserves employed as working capital should carry any interest but their objection was overruled and it was held that working capital also would be entitled to interest though at a much lower rate than that on the paid up capital Then the question of taxes was considered and it was agreed that a provision had to be made for taxes which would be payable on the amount determined after deducting depreciation from the gross profits less any bonus which may be awarded In the result the appellate tribunal laid down the manner and method in which the available surplus should be determined The notional accounting for this purpose starts with the figure of the gross profits which are 943 arrived at after payment of wages and dearness allowance to the employees and other relevant items of expenditure Then a deduction for depreciation is made and on the notional balance thus derived a provision for taxes payable is allowed Then follow the provisions for reserves for rehabilitation return on paid up capital and return on reserves employed as working capital That gives the amount of surplus if any Whenever the working of this formula leaves an amount of available surplus labour was held entitled to claim a reasonable share in this amount by way of bonus for the current year This formula is based on considerations of social justice and is intended to satisfy the legitimate claims of both capital and labour in respect of the profits made by the industry in a particular year It takes the particular year as a unit and makes all its notional calculations on the basis of the gross profits usually taken from the profit and loss account in this particular case the available surplus determined by the application of the formula was found to be 261 crores and out of this surplus 030 crores were awarded as bonus to clerks and other staff and 186 crores was awarded as bonus to the employees leaving a net notional balance of 045 crores This Court had occasion to consider the said formula in Muir Mills Co Ltd vs Suti Mills Mazdoor Union Kanpur 1 The judgment in that case indicates that without committing itself to the acceptance of the formula in its entirety this Court in general accepted as sound the view that since labour and capital both contribute to the earnings of the industrial concern it is fair that labour should derive some benefit if there is a surplus after meeting the four prior or necessary charges specified in the formula It is relevant to add that in dealing with the concept of bonus this Court ruled that bonus is neither a gratuitous payment made by the employer to his workmen nor can it be regarded as a deferred wage According to this decision where wages fall short of the living 1 120 944 standard and the industry makes profit part of which is due to the contribution of labour a claim for bonus can be legitimately made However neither the propriety nor the order of priority as between the four prior charges and their relative importance nor their content was examined by this Court in that case and though the formula has subsequently been generally accepted by this Court in several reported decisions Baroda Borough Municipality vs Its Workmen 1 Sree Meenakshi Mills Ltd vs Their Workmen 2 and The State of Mysore vs The Workers of Kolar Gold Mines 3 the question about the adequacy propriety or validity of its provisions has not been examined nor has the general problem as to whether the formula needs any variation change or addition been argued and considered It is for the first time since 1950 that in the present appeals we are called upon to examine the formula carefully and express our decision on the merits of its specific provisions As we have already indicated in dealing with the present dispute the tribunal has held that in working out the formula it could relax its provisions even though the proposed relaxation may mean a material variation of the formula itself On behalf of the appellant Mr Kolah has taken strong exception to this approach He has argued that in the last eight years and more on the whole the formula has worked fairly well in the interest of both capital and labour and so the tribunal was not justified in departing from it in the present case This argument undoubtedly raises a question of considerable importance Before examining this argument however it is necessary to consider one preliminary point Was the tribunal justified in holding that the appellant could not be allowed to add to its previous claim for rehabilitation The decision of the tribunal on this point seems to indicate that the tribunal thought that the appellant was estopped from making any such claim and the correctness of this conclusion is challenged by the appellant 11957 SCR 33 39 2 884 3 945 It is true that in the report submitted by the appellant before the Tariff Commission in April 1953 it had set out the details of its ten year programme which included besides replacement rehabilitation modernisation and expansion mechanisation of quarries as well as construction and improvement of houses for its labour staff The report of the Tariff Commission p 30 shows that the cost of the programme was estimated at Rs 1836 crores excluding the cost of a new plant at Sindri or about Rs 184 lakhs per annum Subsequently in January 1954 when Mr Tongaonkar gave evidence in the previous adjudication proceedings he produced a statement exhibit U 8 according to which the appellant s annual requirements for rehabilitation would be of the order of Rs 192 or 193 lakhs whereas in the present proceedings the said claim is made at Rs 284 lakhs A bare statement of these facts prima facie suggests that the appellant s present claim for rehabilitation has been growing from stage to stage and in its present form it is very much inflated and that is what the tribunal has also assumed In our opinion this assumption is not wholly correct Mr Tongaonkar s evidence shows that in the report of the jobs submitted to the Tariff Commission the appellant had not included all relevant items of rehabilitation replacement and modernisation The report merely gave a list of the jobs which the appellant had proposed to undertake during the ten year period ending July 31 1962 It was in no sense an exhaustive statement about the appellant s requirements in regard to the rehabilitation of all its blocks In fact having regard to the nature and scope of the enquiry before the Tariff Commission the report made by the appellant had to be restricted to the urgent jobs which it wanted to undertake during the execu tion of its ten year programme and so it would not be reasonable to hold that the figure of annual rehabilitation expenses which can be deduced from the said report has any relation to the claim for rehabilitation made by the appellant in terms of the working of the formula Then again the appellant s claim for rehabilitation 946 in the earlier proceedings has also been satisfactorily explained by Mr Tongaonkar The respondents have placed considerable reliance on the statement filed by Mr Tongaonkar in the said proceedings exhibit U 8 This document has been produced by the respondents in support of their contention that it purports to make a claim for Rs 192 lakhs per year for rehabilitation That no doubt is true but in terms the document purports to show the estimated expenditure required during the ten year period there specified and as Mr Tongaonkar has stated it does not include a full statement of the claim in regard to the rehabilitation of all the blocks belonging to the appellant In considering the respondents argument on this point it is necessary to bear in mind that in the earlier proceedings the appellant had filed a separate statement showing the amount to which it was entitled by way of rehabilitation under the formula this statement was exhibit C 3 and it has been produced in the present case and exhibited as U 5 It appears that in the earlier proceedings the tribunal did not attach any importance to the said document and virtually ignored it because like the present tribunal it held that it does not appear to be necessary to plan further ahead than ten years and it is desirable to base calculations of rehabilitation on realities 1 Even so the Labour Appellate Tribunal found that the appellant s contention that its workmen were not entitled to any additional bonus was not well founded even if its claim for rehabilitation was confined to Rs 192 or Rs 193 lakhs Besides Mr Tongaonkar has stated on oath that exhibit U 8 was not among the documents originally submitted by the appellant to the tribunal in 1954 it was in fact prepared and submitted at a later stage at the instance of the tribunal itself It is therefore clear that exhibit U 8 was not intended to and did not supply the basis of the appellant s claim in the earlier proceedings in accordance with the formula A study of the items contained in exhibit U 8 also supports the same conclusion Mr Tongaonkar has 1 592 947 stated that the total amount of the estimated expenditure shown in this document included only a small portion of the expenditure required for rehabilitation of the post 1944 block It is true that Mr Tongaonkar s statement that in the said total amount nearly Rs 50 lakhs represent the amount for replacement or rehabilitation of post 1944 block is inaccurate The Chaibasa Cement Factory and the Sevalia Cement Factory for the rehabilitation of which Rs 6498 and 8515 lakhs have been claimed in exhibit U 8 are undoubtedly parts of the post 1944 block and the amounts claimed for them are very much more than Rs 50 lakhs It is nevertheless clear that the items in exhibit U 8 do not include a claim for rehabilitation for all the blocks of the appellant and it is not surprising either because a claim for the rehabilitation of all the blocks had been separately made by the appellant in the earlier proceedings under exhibit C 3 Thus there can be no doubt that neither the report submitted by the appellant before the Tariff Commission nor the estimate given by exhibit U 8 was prepared under the formula and so any disparity in the amounts claimed in the two earlier documents cannot be seriously pressed into service against the appellant when it seeks to make a claim for rehabilitation strictly in accordance with the formula We must therefore hold that the tribunal was in error in coming to the conclusion that by reason of its previous conduct the appellant could not be allowed to place its claim for rehabilitation at a figure higher than Rs 192 lakhs in the relevant year In this connection it would be pertinent to remember that in dealing with the employer s claim for rehabilitation the tribunal is called upon to assess respective values of the relevant factors on hypothetical and empirical considerations and so it may generally not be useful or wise to take recourse to strict legalistic principles like estoppel in deciding this question and indeed all material questions in industrial adjudications Does the formula need to be revised and should it be revised and reconstructed That is the question 948 which we must now consider It appears that some tribunals have taken the view that the rigid working of the formula may defeat its object of recognising the social justice of labour s claim for bonus and so they have made suitable adjustments in its operation It is this approach which has raised the larger issue of principle in the group of appeals which have been placed for disposal before the Constitution Bench So we must examine this question in its broad aspects and if we decide not to change the formula we must state what in our opinion is the content of the different items mentioned in the formula and how they should be calculated and mutually adjusted Let us first set out the case as it has been made for changing the formula It is urged that though the formula purports to recognise the principle of social justice on which labour s claim for bonus is based it does not accord to the said claim the high priority it deserves Social justice has been given a place of pride in the preamble to the Constitution and it has been enshrined in the Directive Principles under articles 38 and 43 Since 1950 ideas about social and economic justice have made an appreciable progress and they require the readjustment of priorities prescribed by the formula in favour of the claim for bonus It is also contended that experience in industrial adjudication during the last eight years and more shows that employers are becoming increasingly more rehabilitation conscious and their appetite for the provision of rehabilitation is fast growing from year to year In the present case for instance though the appellant occupies a dominant position in its line of trade and though it makes large profits it has made such a tall claim for rehabilitation that if the said claim is allowed the working of the formula leaves no available surplus from which bonus can be granted to labour The appellant has no doubt paid bonus for three months and it is unlikely that the appellant would depart from its practice of paying the said bonus even in future but that does not affect the 949 position that in the light of the appellant s claim for rehabilitation the working of the formula would not justify the grant of any bonus to labour This shows that the notional claim for rehabilitation which an employer can make under the formula tends to be completely divorced from the reality or actuality of the need of rehabilitation and that needs to be corrected Besides it is said that the theory that the trading profits of the industry must provide for the whole of the rehabilitation expenses is not universall accepted by enlightened and progressive businessmen and economists In this connection reliance is placed on the observations of F R M de Paula in his Principles of Auditing that the object of depreciation is the replacement of original investment capital and that an increase in replacement cost is an important matter and means that additional capital is required in order to maintain the original earning capacity It is also pointed out that the Institute of Chartered Accountants in England and Wales in its recommendations made in 1949 under the heading Rising price levels in relation to accounts has pointed out that the gap between historical and replacement costs might be too big to be bridged by a provision made for replacement spread over a period of years either by way of supplementing the depreciation charges or by setting up in lieu of depreciation a provision for renewals based on estimated replacement costs It is therefore suggested that in revising the formula the claims for rehabilitation should be fixed at a reasonable amount and industry should be required to find the balance from other sources and if necessary from its share in the available surplus In this connection it is pointed out that when the Labour Appellate Tribunal evolved the formula it was dealing directly with the needs of the textile industry and there was no dispute that the plant and machinery of the textile industry had become old and obsolescent and needed immediate replacement rehabilitation and modernisation It is doubtful whether in giving priority to the claim for rehabilitation in the 950 context of the needs of the textile industry with which the appellate tribunal was concerned it really intended that rehabilitation should be claimed by every industry on theoretical considerations whether or not the said claim was justified by its actual or practical need for rehabilitation In substance the argument is that the Full Bench of the Labour Appellate Tribunal evolved its formula in order that labour may get a reasonable share in the available surplus and may thereby receive assistance in filling up the gap between its actual wage and the living wage which it looks forward to receive in due course and if it is found that in working out the items which are treated as prior charges in a majority of cases the formula leaves no available surplus then its main object is frustrated and that is the justification for revising it and readjusting its priorities In support of this view reliance has also been placed on the recommendations of the Committee on Profit sharing This Committee had been appointed in 1948 to advise the Government of India on the principles to be followed for the determination of a fair wages to labour b fair return to capital employed in the industry e reasonable reserves for the maintenance and expansion of the undertaking and d labour s share of the surplus profits calculated on a sliding scale normally varying with production after provision has been made for b and c above The Committee viewed its problem from three im portant angles viz profit sharing as an incentive to production profit sharing as a method of securing industrial peace and profit sharing as a step in the participation of labour in management The Committee recognised that putting back profits into the industry is one of the most useful forms of capital investment and this should be encouraged and it recommended that a figure of 20 for reserves should be generally aimed at though it considered that as a first charge 10 of the net profits should be compulsorily set aside for reserves leaving it to the good sense of the management to allocate the balance or more out of their own share of surplus profits In regard 951 to the labour s share in the surplus profits the Committee stated that having due regard to the conditions prevailing in the industry selected for an experiment in profit sharing it had come to the conclusion that labour s share should be 50 of the surplus profits of the undertakings It is a matter of common knowledge that so far Government have not thought it desirable expedient or possible to legislate in this matter in the light of the recommendations made by this Committee but it is suggested that these recommendations afford a rational basis for reconstructing the formula It may be conceded that there is some force in some of the arguments urged in support of the plea that the formula should be revised and its priorities should be readjusted and redefined but on the other hand we cannot ignore the fact that on the whole the formula has worked satisfactorily in a large number of industries all over the country Except for a few cases particularly in Bombay where some of the tribunals have taken the view that in its rigid form the formula has become unworkable from the point of view of labour in a majority of cases industrial disputes arising between employers and their workmen in regard to bonus have been settled by tribunals on the basis of this formula and it would not be unreasonable or inaccurate to say that by and large labour s claim for bonus has been fairly and satisfactorily dealt with The main source of contest in the working of the formula centres round the industry s claim for rehabilitation but as we shall presently point out if this claim is carefully scrutinised and examined in the light of evidence which the employer has to produce in support of his claim even the settlement of this item would as it is intended to invest the tribunal with sufficient discretion to make the working of the formula elastic enough to meet its two fold object of doing justice both to industry and labour It is true that in the working of the formula employers sometimes make an attempt to add items to the list of prior claims In The State of Mysore vs The 121 952 workers of Kolar Gold Mines 1 it was urged before this Court by the industry that it was a wasting industry and as such it needed special consideration The contention was that for the prosperity and longevity of the industry a special provision for the prospecting of new ore has to be made and that should be added as an additional item in the list of prior charges This argument was however rejected and it was held that the special features of the industry would be taken into account in determining the amount which could be reasonably claimed under rehabilitation This decision shows the reluctance of this court to vary or add to the formula which oil the whole has so far worked fairly satisfactorily The theory that the whole of the rehabilitation charges need not come out of the trading profits of the industry does not appear to be generally accepted As has been observed by Paula himself In the past the accepted principle has been that the main object of providing for the depreciation of wasting assets is to recoup the original capital invested in the purchase of such assets As part of the capital of the concern has been invested in the purchase of these assets therefore when their working life comes to an end the earning capacity of these assets ceases Thus they will become valueless for the purposes of the business and the original capital sunk in their acquisition less any scrap value will have been lost Hence in order to keep the original capital of a business intact if any part thereof is invested in the purchase of wasting assets revenue must be held back by means of depreciation charges to profit and loss account in order to replace the capital that is being lost by reason of the fact that it is represented by assets that are being consumed or exhausted in the course of trading or seeking to earn income It is also stated by the same author that in all cases where One of the direct causes of earning revenue is gradually to consume fixed assets of wasting nature the depreciation of such assets should be provided for out of revenue 3 It is true 1 2 FRM de Paula s Principles of Auditing 1957 P 136 3 Ibid p 138 953 that the author recognises that owing to the very considerable increase in the price level since the termination of the 1939 45 war industry is finding its original money capital insufficient for its needs Thus the cost of replacement of fixed assets has greatly increased and in addition further working capital is required to finance a given volume of production Many economists industrialists and accountants contend that provision should be made in arriving at profits for this increased capital requirement Having noticed this view the author adds that at the time of writing this matter is still being debated and final decisions have not yet been reached and he concludes that until a final solution of this complex problem is reached it would be inadvisable for the auditor to act on any principle other than that recommended by the Institute 1 and that principle appears to be that depreciation should be provided for out of revenue Besides it must be borne in mind that in adjusting the claims of industry and labour to share in the profits on a notional basis it would be difficult to repel the claim of the industry that a provision should be made for the rehabilitation of its plant and machinery from the trading profits On principle the guaranteed continuance of the industry is as much for the benefit of the employer as for that of labour and so reasonable provision made in that behalf must be regarded as justified The recommendations made by the Committee on Profit sharing cannot be of much assistance because they raise questions of policy and principle which Legislature can more appropriately consider If the Legislature feels that the claims for social and economic justice made by labour should be redefined on a clearer basis it can step in and legislate in that behalf It may also be possible to have the question comprehensively considered by a high powered commission which may be asked to examine the pros and cons of the problem in all its aspects by taking evidence from all industries and all bodies of workmen The plea for the revision of the formula raises an issue 1FRM de Paula s Principles of Auditing 1957 P 80 954 which affects all industries and before any change is made in it all industries and their workmen would have to be heard and their pleas carefully considered It is obvious that while dealing with the present group of appeals it would be difficult unreasonable and inexpedient to attempt such a task That is why we think that labour s claim for bonus should be decided by tribunals on the basis of the formula without attempting to revise it Whilst we are not prepared to accede to the argument that the formula should be revised we wish to emphasise that the formula is elastic enough to meet reasonably the claims of the industry and labour for fairplay and justice In its broad features it recognises the claims of the industry and tabulates them under different items as prior charges and then provides for the distribution of available surplus between the labour the industry and the shareholders The items specified in the formula have to be worked out notion ally on theoretical grounds in determining the content of each one of the items it is therefore essential to scrutinise and weigh carefully all the relevant and material facts If the content of each item is determined objectively in the light of all relevant and material facts the tribunals would generally find it possible to make reasonable adjustments between the rival claims and provide for a fair distribution of the available surplus In this sense it is necessary to treat the formula as elastic and not rigid in working out detailed calculations under it We have no doubt that if the industry and labour genuinely desire to settle the disputes as to bonus without the intervention of the conciliator or the adjudicator the formula would help them to arrive at a reasonable settlement If the employer does not make an unduly inflated claim under the items which safeguard industry s interests and if workmen do not make an exaggerated demand for bonus it would normally not be beyond the co operative effort of the parties to arrive at a reasonable figure which should be paid to labour by way of bonus from year to year It is unnecessary to emphasise that industrial disputes 955 settled amicably are in the interest of both capital and labour Amicable settlements of such disputes lead to peace harmony and co operation between capital and labour and that invariably helps more production which is a matter of great national importance at present But unfortunately in many cases both the industry and labour do not appear to be too keen on settling these disputes amicably with the result that claims for bonus give rise to disputes year after year and inevitably the machinery under the Industrial Disputes Act is set in motion Conciliation efforts are made but they do not succeed then reference is made under section 10 of the Act and the dispute is taken before the tribunal since both the parties are not in a mood to co operate with each other over statements are made on both sides allegations are met by counter allegations and they are sought to be supported by evidence In such a case the tribunals must examine the rival contentions and scrutinise the evidence adduced by the parties objectively and in a judicial manner If proper evidence is led and it is judicially weighed the tribunal would be able to work the formula in a reasonable manner and arrive at a result which would be substantially in conformity with the object underlying the formula It is obvious that in making the relevant calculations under the items of prior charges specified in the formula the tribunals should have a clear idea as to the content of each one of the said prior charges and so it is necessary to examine carefully this aspect of the matter We have already noticed that the formula for awarding bonus to workmen is based on two considerations first that labour is entitled to claim a share in the trading profits of the industry because it has partially contributed to the same and second that labour is entitled to claim that the gap between its actual wage and the living wage should within reasonable limits be filled up The concept of labour s contribution to the profits of the industry has reference to the contribution made by the employer and the workmen taken together as a class and so it would 956 not be relevant to inquire which sectionof labour has contributed to what share of the profits The board idea underlying this concept is that the capital invested by the employer and labour contributed by workmen jointly produce the profits of an industry This does not necessarily mean that in theindustry in question labour must actually manufacture or produce goods though in the case of manufacture andproduction of goods contribution of labour is patent and obvious In the Burma Shell Oil Storage and Distributing Co of India Pd vs Their Workmen1 the Labour Appellate Tribunal rejected the employers claim that since workmen employed by them did not manufacture or produce any goods but merely assisted them in the distribution Of oil they were not entitled to claim any bonus under the formula It is wrong to say observed the labour Appellate Tribunal that because the employees of these oil companies merely market the oil they have not earned the right to any bonus It was also Pointed out that the workmen had to perform duties of various intensity for marketing an article of public utility and in that sense they contribute to production according to the concept of economists So were the clerks held entitled to bonus fortheir duties in the general business of the concern though they had nothing to do with the physical act of marketing the commodity it was also emphasised that the other object of granting the bonus was to help the workmen to fill up the gap between their actual wages and the living wage Thus in dealing with the claim for bonus made by workmen the two fold basis of the formula must always be kept in mind The working of the formula begins with the figure of gross profits taken from the profit and loss account which are arrived at afterpayment of wages and dearness allowance to the employees and other items of expenditure As a general rule the amount of gross profits thus ascertained is accepted without submitting the statement of the profit and loss account to a close scrutiny If however it appears that 11953 957 entries have been made on the debit side deliberately and mala fide to reduce the amount of gross profits it would be open to the tribunal to examine the question and if it is satisfied that the impugned entries have been made mala fide it may disallow them This principle has been recognised by the Labour Appellate Tribunal when it observed for instance in Ms J K Cotton Manufacturers Ltd Kanpur vs Their Workmen 1 that if managing agents deliberately divert profits to the selling agents with a view to deprive labour of their bonus and pay commission to the selling agents at high rates then certainly the matter must be taken into consideration in the determination of available surplus balance It would likewise be open to the parties to claim the exclusion of items either on the credit or on the debit side on the ground that the impugned items are wholly extraneous and entirely unrelated to the trading profits of the year In considering such a plea the tribunal must resist the temptation of dissecting the balance sheet too minutely or of attempting to reconstruct it in any manner It is only glaring cases where the impugned item may be plently and obviously extraneous that a plea for its exclusion should be entertained Where the employer makes profits in the course of carrying on his trade or business it would be unreasonable to inquire whether each one of the items of the said profit is related to the contribution made by labour In such matters the tribunal must take an overall practical and commonsense view Thus it ma be stated that as a rule the gross profits appearing at the foot of the statement of the profit and loss account should be taken a the basic figure while working out the formula In working out the formula the other important fact which should not be ignored is that the formula proceed s to deal with the labour s claim for bonus on the basis that the relevant year for which bonus is claimed is a self sufficient unit and the appropriate accounts have to be made on the notional basis in respect of the said It is substantially because 11954 LAC 716 745 Also vide 421 958 of this basic assumption that if an employer receives during the bonus year a refund with respect to the excess profits tax paid by him in a previous year the amount of refund is not included on the credit side In Model Mills etc Textile Mills Nagpur vs The Rashtriya Mill Mazdoor Sangh 1 the Labour Appellate Tribunal observed that according to the formula the income tax is to be deducted as a prior charge on trading results of the year just as much as the bonus is to be ascertained upon the trading results of the year The concession made by the income tax authorities in making a refund of the excess profits tax already paid by the employer is intended to aid a concern on account of past losses and so it has nothing to do with the formula The same principle governs cases where owing to a loss incurred in the previous year or years the employer is entitled to claim allowance for adjustment under section 24 2 of the Income tax Act during the bonus year and so it is held that the allowance for adjustment which the employer claims cannot be taken into account in determining the amount of income tax payable on the profits of the bonus year under the formula In Bennett Coleman and co Ltd vs Their Workmen 2 the Labour Appellate Tribunal rejected the contention raised by labour that since under section 24 2 the employer would not be liable to pay tax during the bonus year no provision for payment of tax should be made in working out the formula The Labour Appellate Tribunal pointed out that the fact that the employer was not required to pay tax during the bonus year was the result of the adjustment of the previous year s unabsorbed depreciation and losses against current year s profit and that had no relevance in determining the available surplus from the trading profits of the bonus year The same view has been taken in several other decisions to which the Labour Appellate Tribunal has referred In our opinion once it is realised that in working out the formula the bonus year is taken as a unit self sufficient by itself the decisions of the Labour Appellate Tribunal in regard 1 1955 I J 534 540 2 1955 I J 60 959 to the refund of excess profits tax and the adjustment of the previous year s depreciation and losses against the bonus year s profits must be treated as logical and sound Having ascertained the amount of gross profits the first item of deduction relates to depreciation The propriety of this deduction was not questioned before the Labour Appellate Tribunal which evolved the formula but the content of the item of depreciation became a matter of controversy subsequent to 1950 After 1948 section 10 2 vi of the Income tax Act has provided for initial and additional depreciation besides the statutory depreciation which was already admissible In other words depreciation allowed under the Income tax Act now consists of what may be called the statutory normal depreciation calculated under r 8 as well as initial depreciation and additional depreciation The allowance of these depreciations is an exception to the general rule that the income has to be taxed without reference to the diminution in the value of the capital Under the amended provision of section 10 2 vi of the Income tax Act the employers began to claim that from the gross profits all the depreciations admissible under the Income tax Act should be debited and this claim was upheld by some tribunals and rejected by others This conflict of decisions led to confusion and so a Full Bench of the Labour Appellate Tribunal was constituted to decide this and other points in the case of the U P Electric Supply Co Ltd etc Electricity Supply Undertakings vs Their Workmen1 The Full Bench held that the depreciation which should be deducted from the gross profits in working the formula is annual depreciation allowable under the provisions of the Income tax Act including the multiple shift depreciation it also held that the initial depreciation and additional depreciation which were also allowed under the Income tax Act are abnormal additions to the income tax depreciation designed to meet particular contingencies and for a limited period 1 1955 II J 431 122 960 and so it would not be fair to the workmen that these two depreciations should be rated as prior charges before the available surplus is ascertained Apparently some doubt arose as to what exactly was allowed to be deducted under this Full Bench decision and two of the members of the Full Bench took occasion to clarify the position in Surat Electricity Co s Staff Union vs Surat Electricity Co Ltd 1 This decision shows that what the Full Bench intended to treat as depreciation for the purpose of the formula was a notional amount of normal depreciation in order to avoid any future doubt or confusion the judgment in the case has set out the manner in which this notional normal depreciation has to be worked out Since this decision was pronounced it is the notional normal depreciation that is deducted from the gross profits in working the formula It seems to us that the view taken by the Full Bench is wholly consistent with the basic idea of social justice on which the original formula is founded The relevant provisions of the Income tax Act allowing further depreciation are based on considerations which have no relevance to the original formula indeed as the Full Bench has pointed out if the said two items of depreciations are allowed to be deducted from the gross profits it would in a majority of cases defeat the object of the formula itself We would accordingly hold that the depreciation which has to be deducted from the gross profits should be the notional normal depreciation as explained in the case of Surat Electric Co Ltd 1 The balance obtained after deducting depreciation from the gross profits is then taken as the amount on which calculations have to be made about the income tax payable for the bonus year This item gives rise to a controversy between the parties It is urged for the employers that in determining the amount payable by way of income tax on this balance the tribunal should not take into consideration allowances which are made under the relevant provisions of the Income tax Act There is no doubt that in taxing the employer for the bonus year the Income tax Act would 11957 II L L J 648 961 make allowance not only for the normal depreciation but also for the initial and additional depreciations but the argument is that the income tax should be determined nationally without reference to the said allowances In support of this argument it is further urged that though the employer may obtain credit for the two further depreciations for some years later on the said allowances will not be made and his liability to pay tax would be correspondingly increased It is but fair so the argument runs that the employer should be allowed to create a fund of income tax reserve from which he would be able to bear his tax liability in future as and when it is bound to increase On the other hand it is contended on behalf of workmen that while determining the amount of tax payable for the bonus year the tribunal cannot ignore the concession given to the employer by the Income tax Act by making the allowance of two further depreciations What the employer claims is not the amount of tax payable during the bonus year but much more in addition in order to build up a reserve and this notion of building up a tax reserve for meeting future though certain increased tax liability is foreign to the basic idea of the formula For making calculations under the formula the bonus year is taken as a unit and all items specified in the formula should be worked out on that basis That is why the refund of the excess profits tax received in the bonus year is excluded from consideration and the right of the employer to adjust his previous year s losses and depreciation against the trading profits of the bonus year is likewise ignored So too the fact that the employer may have to pay increased taxes in future years must be treated as irrelevant That in brief is the case for workmen In our opinion having regard to the basis of the formula and the manner in which the other items of the formula are required to be worked out it would not be reasonable to allow the employer to claim under the item of income tax an additional amount is respect of the two further depreciations which are expressly allowed to him under section 102vi of the Income tax 962 Act It is clear that the amount determined under this item would not represent the actual tax which the income tax department will recover from the employer In that sense it would always be a notional amount but in calculating even this notional amount it would be unfair and unjust to ignore the concessions allowed to the employer by section 102vi The creation of a fund of income tax reserve may conceivably lead to unnecessary complications Besides if on principle the further depreciations allowed by the Income tax Act are treated as inadmissible under the formula and so are excluded from consideration it would be substantially inconsistent with the object of such exclusion to allow the employer to claim tax in respect of the said amounts of the two depreciations It is clear that even if the amount of income tax is determined after taking into account the concession given to the employer by section 102vi it would work no hardship to the employer for the simple reason that in future years when these concessions cease to be operative and his liability to pay the tax correspondingly increases he would be entitled to claim the amount of income tax which would then be payable by him This method of calculating income tax is thus fair to both the parties and it has besides the merit of being consistent with the basic character of the formula It would be relevant in this connection to remember that though in most of the industries workmen continue to be employed from year to year nationally and on principle the claim for bonus for a particular year is made on behalf of workmen employed during the said year and in that sense the relevant calculations have to be made with the bonus year as a unit That is why considerations of future tax liability of the employer are foreign to the calculation under the formula We would therefore bold that in calculating the amount of tax payable for the bonus year the tribunals should not take into account the concessions given by the Income tax Act to the employers under the two more depreciations allowed under section 102vi of the Income tax Act This point has been considered by this Court in 963 Sree Meenakshi Mills Ltd vs Their Workmen 1 where has upheld the view taken by the Full Bench the Labour Appellate Tribunal in the case of the U Electric Co Ltd etc Electricity Supply Undertakings 2 and has directed that in determining amount of income tax payable during the bonus yea the further depreciations permissible under the income tax Act should be taken into account We would only like to add that in that case this Court had occasion to say what exactly the normal depreciation meant but it is clear that the normal depreciation mentioned in the judgment was not intended to mean anything other than the notional normal depreciation as explained by the Labour Appellate Tribunal in the case of the Surat Electric Co Ltd 3 The amount income tax thus determined has then to be deduct as a prior charge The next step in the working of the formula related to the deduction of an appropriate amount in respect of the return on paid up capital as well as working capital We have already noticed that the formula provides generally for the payment of interest at 69 per annum on the paid up capital and at 2 on worldling capital Subsequent decisions show that the tribunals do not regard the said rates as inflexible and they have suitably modified them in the light of the relevant circumstances in each case We think that this is a correct approach and that it is necessary to fix the rates of interest on the two items of paid up capital and working capital according to the circumstances of each case In this connection it may be added that ordinarily industrial tribunals awards interest at the rate of 6 per annum on paid up capital In Workmen of Assam Co Ltd vs Assam Co Ltd this Court held that interest allowed by the tribunal a 7 on paid up capital and confirmed by the Labour Appellate Tribunal was justified because an industry connected with agriculture like the tea industry is exposed to greater risks than any other industry such 1 3 2 1955 II LLJ 431 4 964 weather pests in the plants and gradual deterioration of the soil On the other hand in Ruston and ornsby India Ltd vs Their Workmen 1 the Labour appellate Tribunal allowed only 4 return on the art of paid up capital represented by bonus shares for the year in which such shares were issued and served that for subsequent years no distinction between it and other paid up capital represented by paid up shares should be made Similarly in regard reserves or depreciation used as working capital interest has been allowed either at 4 or at 3 or Ten at 2 according to the relevant circumstances in the Mill Owners Association Bombay vs The Rashtriya Mill Mazdoor Sangh 2 the Labour Appellate Tribunal has observed that as we have said before there is no fixed rule as to the rates of such return on capital and each case must depend on its individual acts We have in appropriate cases given as high as but in case of the mills the Full Bench has considered that the equivalent of 2 would be reasonable nd we propose to retain it at that level for the present In Tea and Coffee Workers Union vs Brooke Bond India Private Ltd 3 the Industrial Tribunal as considered the previous decisions on the question of the return on working capital and held that in the case before it it would be an adequate return on the working capital if 3 interest is allowed because there were no special reasons existing for allowing a higher ate In dealing with this aspect of the matter it is relevant to point out that no distinction has been made y tribunals between reserves used as working capital and depreciation fund similarly used In the Mill Owners Association Bombay vs The Rashtriya Mill Mazdoor Sangh 2 page 523 when labour objected to the depreciation fund earning any return even if it was utilised in or about the business of the year the labour Appellate Tribunal overruled the objection and observed that no essential difference could be made between the depreciation fund and any other 1 2 522 31958 965 fund belonging to the company which could be invested so as to earn a return It is thus clear that what is material is not the origin of the fund It is the fact that the fund in the hands of the concern has been used as working capital that justifies the claim for art adequate return on it We think it is commonsense that if the concern utilises liquid funds available in its hands for the purpose of meeting its working expenses rather than borrow the necessary amounts it is entitled to claim some reasonable return on the funds thus used It is of course necessary that the employer must show that the amount under the depreciation fund was in fact available and that it has actually been used as working capital during the relevant year What return should be allowed on such funds must inevitably be a question of fact to be decided by the tribunal in its discretion in each case in the light of the relevant circumstances It would thus be noticed that in working out these two items under the formula there is no fixed or rigid rule about the rate of interest which can be claimed and awarded It is also clear that if any fund is used by the employer for the purpose of expanding his business he is not entitled to claim any return on such fund under those items In the case of the U P Electric Supply Co Ltd etc Electricity Supply Undertakings 1 the Full Bench of the Labour Appellate Tribunal held that considering all the factors presented to them they did not think that a case had been made out for giving a special prior charge in the shape of return on the reserves utilised for expansion When the amounts awardable to the employer under these two items are determined they have to be treated as prior charges in the calculation of available surplus under the formula The original formula referred to replacement rehabilitation and modernisation of the plant and machinery Soon after the formula was evolved a dispute arose as to whether the industry was entitled to claim rehabilitation for its buildings as well and it was held that a claim for rehabilitation for buildings had to 1 1955 II LLJ 431 966 be treated as a prior charge just like the claim for the rehabilitation of plant and machinery 1 This position is not disputed before us and we think rightly That takes us to the item of rehabilitation and it is this item which poses a very difficult problem We have already noticed that the object of providing depreciation of wasting assets in commercial accounting is to recoup the original capital invested in the purchase of such assets but the amount of depreciation which is allowed under the formula can hardly cover the probable cost of replacement That is why the formula has recognised the industry s claim for rehabilitation in addition to the admissible depreciation Since the Second World War prices of industrial plant and machinery have registered a continuous upward rise and its inevitable consequence has been a proportionate rise in the claim for rehabilitation In considering the claim for rehabilitation it is first necessary to divide the blocks into plant and machinery on the one hand and other assets like buildings roads railway sidings etc on the other Then the cost of these separate blocks has to be ascertained and their probable future life has to be estimated Once this estimate is made it becomes possible to anticipate approximately the year when the plant or machinery would need replacement and it is the probable price of such replacement on a future date that ultimately decides the amount to which the employer is entitled by way of replacement cost This problem can be considered item wise where the industry does not own too many factories and item wise study of the plant and machinery is reasonably possible but if the industry owns several factories and the number of plants and machines is very large it would be difficult to make a study of the replacement costs item wise and in such a case the study has to be blockwise In either case what the tribunal has to estimate is the probable cost of replacement of plant and machinery at the time when such replacement would become due It would be clear that the decision of this question would inevitably depend upon several uncertain 11 522 967 factors The estimate about the probable life of the plant and machinery is itself to some extent a matter of guess work and any anticipation however intelligently made about the probable trend of prices during the intervening period would be nothing but a guess That is how in the determination of this problem several imponderables face the tribunals One of the points which raises a controversy in this connection is What level of prices should the tribunal consider in making its calculations about the probable cost of replacement Would it be the price level prevailing during the bonus year or that prevailing at the time when the tribunal holds its enquiry Prima facie it may appear that it is the price level prevailing in the bonus year that should be treated as relevant but if the relevance of the evidence about the price level is limited only to the bonus year it may hinder rather than help the process of a satisfactory determination of the probable cost of replacement What the tribunal has to do in determining such cost is to project the price level into the future and this can be more satisfactorily done if the price level which has to be projected into the future is determined not only in the light of the prices prevailing during the bonus year but also in the light of subsequent price levels It seems to us that in order to enable the tribunal to make an estimate in this matter as near actualities or realities as possible it is necessary that the tribunal should be given full discretion to admit all relevant evidence about the trend in price levels The price level during the bonus year would no doubt be admissible but that alone should not be taken as the basis for decision That is the view which the tribunals have taken in a majority of cases in dealing with the question of rehabilitation and we do not think that there is any justification for disturbing the usual practice in that behalf The problem of determining the probable cost of replacement itself is very difficult but the difficulty is immeasurably increased when it is remembered that the claim for rehabilitation covers not only cases of 123 968 replacement pure and simple but of rehabilitation and modernisation In the context rehabilitation is distin guished from ordinary repairs which go into the working expenses of the industry It is also distinguished from replacement It is quite conceivable that certain parts of machines which constitute a block may need rehabilitation though the block itself can carry on for a number of years and this process of rehabilitation is in a sense a continual process Unlike replacement its date cannot always be fixed or anticipated So with modernisation and all these three items are included in the claim for rehabilitation That is why we think it is necessary that the tribunals should exercise their discretion in admitting all relevant evidence which would enable them to determine this vexed question satisfactorily At this stage it is relevant to remember that the claim under this item is confined to rehabilitation replacement and modernisation It is common ground that expansion of the plant and machinery is not included in this item but in several cases it is not easy to distinguish between modernisation of the plant and machinery and its expansion It is urged that an expert can if he so chooses make an attempt to include expansion within what he may describe as modernisation by clever use of technical words and details and that it is precisely this aspect of the matter which has to be carefully examined by the tribunal The industry sometimes claims that a plant may become obsolescent because it has become out of date and has to be substituted by a new modern plant Is the introduction of the new modern plant in such circumstances an item of expansion or mere modern isation It is difficult to lay down any general tests which would govern the decision of this question If it appears fairly on the evidence that the introduction of the modern plant or machine is in substance an item of expansion of the industry expenses incurred in that behalf have to be excluded On the other hand if the employer had to introduce the new plant essentially because the use of the old plant though capable of giving service was uneconomic and other 969 wise wholly inexpedient it may be a case of modernisation Similarly if by the introduction of a modern plant or machine the production capacity of the industry has appreciably increased it would be relevant for the tribunal to consider in an appropriate case whether it would be possible to apportion expenses on the basis that it is a case of partial modernisation and partial expansion If however the increased production is not of a significant order it may be regarded as incidental to replacement or modernisation and the question of apportionment may not arise We have set out these considerations in order to emphasise the fact that in dealing with the problem of rehabilitation the tribunal must carefully examine the evidence and consider the employer s claim in all its aspects before determining the amount which should be allowed by way of rehabilitation as a prior charge in the relevant year The decision on the question of the probable cost of rehabilitation is always reached by adopting a suitable multiplier This multiplier is based on the ratio between the cost price of the plant and machinery and the probable price which may have to be paid for its rehabilitation replacement or modernisation Since there has been a continuous rise in the prices of industrial plant and machinery the older the plant which needs rehabilitation the higher is the multiplier That is why there is always a competition between industry and workmen on this point Industry is sometimes tempted to keep its old pre 1939 block alive with a view to claim a higher multiplier which gives it a larger amount of rehabilitation expenditure whereas workmen urge that the old pre 1939 block has been nominally kept alive as a device and so press for a lower multiplier which would reduce the claim for rehabilitation Once a proper multiplier is adopted in respect of each one of the blocks the first step in determining the probable cost of rehabilitation can be easily taken It then becomes a matter of mere arithmetical calculation At this stage the divisor steps in The total amount required for rehabilitation which is determined by the 970 application of a suitable multiplier in respect of each block has to be divided by a suitable divisor in respect of each block in order to ascertain the annual requirement of the employer in that behalf year by year In the case of the divisor the employer seeks for a lower divisor whereas workmen claim a higher divisor and this contest has to be decided by the tribunal by reaching a fair conclusion on the evidence before it about the probable future life of the block in question It would thus be noticed that the adoption of a suitable multiplier and divisor plays a very important part in the decision of the vexed question about the employer s rehabilitation claim Before actually awarding an appropriate amount in respect of rehabilitation for the bonus year certain deductions have to be made The first deduction is made on account of the breakdown value of the plant and machinery which is usually calculated at the rate of 5 of the cost price of the block in question Then the depreciation and general liquid reserves available to the employer are deducted The reserves which have already been reasonably earmarked for specific purposes of the industry are however not taken into account in this connection Last of all the rehabilitation amount which may have been allowed to the employer in previous years would also have to be deducted if it appears that the amount was available at the time when it was awarded in the past and that it had not been used for rehabilitation purposes in the meanwhile These are the broad features of the steps which have to be taken in deciding the employer s claim for rehabilitation under the working of the formula It would thus be clear that the decision of this major item in the working of the formula presents many difficulties and in the last analysis its decision depends upon several hypothetical and empirical considerations It is therefore not surprising that in the case of Metal Box Co of India Ltd vs Its Workmen 1 the Labour Appellate Tribunal has observed that It is unfortunately too true that all 1 321 971 our calculations as to rehabilitation may be disproved by subsequent events it is impossible to say what the trend of world prices would be in the next fifteen years or which circumstances will intervene before that period to upset such calculations one way or the other and no calculations of this kind are capable of mathematical accuracy We have to take a commonsense view of these matters and make an allowance for rehabilitation to the best of our ability and in accordance with our formula It has also been observed by the Labour Appellate Tribunal that if an appropriate multiplier and divisor are determined they are generally used because the tribunals take the view that the reconsideration of the said multiplier and divisor should not be hastily undertaken and could be justified only on the basis of a substantial change of a stable character extending or likely to extend over a sufficient number of years so as to make a definite and appreciable difference in the cost of replacement Vide The Mill Owners Association Bombay vs The Rashtriya Mill Mazdoor Sangh 1 In dealing with the employer s claim for rehabilitation tribunals have always placed the onus of proof on the employer He has to prove the price of the plant and machinery its age the period during which it requires replacement the cost of replacement the amount standing in the depreciation and reserve fund and to what extent the funds at his disposal would meet the cost of replacement If the employer fails to lead satisfactory evidence on these points tribunals have on occasions totally rejected his claim for rehabilitation Vide Ganesh Flour Mills Co Ltd Kanpur vs Ganesh Flour Mills Staff Union Kanpur 2 Bombay Gas Co Ltd vs Their Workmen 3 Dharangadhra Chemical Works Ltd vs Its Workmen 4 If the tribunals are satisfied that the employer is deliberately and without a sufficient cause not taking any steps to rehabilitate replace or modernise his machinery even though an appropriate allowance is made in that behalf from year to year they may take into 11952 31955 2 4 972 account this conduct in determining the extent of such allowance in the bonus year in question Similarly if it appears that the employer has deliberately or mala fide refrained from rehabilitating or replacing his old machinery with a view to claim a higher multiplier in calculating the rehabilitating amount the tribunals may take his conduct into account in determining the actual allowance of rehabilitation to him The main difficulty in deciding questions about reha bilitation arises from the fact that satisfactory evidence is not always placed before the tribunals and it is urged that the evidence given by the employers experts is interested and the workmen with their limited resources are not able to test the said evidence by adequate or effective cross examination In such a case the tribunal may if it so desires and if it is possible secure the assistance of assessors vide section 38 of the Industrial Disputes Act It is therefore necessary that the tribunal should require the employer to give clear and satisfactory evidence about all the relevant facts on which it can make the requisite estimate The questions which the tribunal has to consider under this item are essentially questions of fact and its final decision on them is bound to be hypothetical since it would be based on a fair evaluation of several circumstances which are by no means certain and which cannot be predicated with any amount of precision or even definiteness That is why it is of the utmost importance that all relevant and material evidence should be adduced by the employer and it should be properly tested by cross examination When that is done the tribunal must do its best to consider the said evidence objectively and reach its final decision in a judicial manner Once the amount of rehabilitation is thus determined the available surplus for the bonus year is ascertained and the final stage is reached when the tribunal has to give directions for the distribution of the said available surplus It is not seriously disputed that three parties are entitled to claim a share in this available surplus labour claims bonus from it the industry claims a share for the purpose of its expansion 973 and other needs and share holders claim a share by way of additional return on the capital invested by them In the case of the Mill Owners Association Bombay 1 where the formula was evolved out of the available surplus of Rs 261 crores 216 crores was distributed by way of bonus leaving a balance of 045 crores with the industry In the Trichinopoly Mills Ltd vs National Cotton Mills Workers Union 2 the available surplus was found to be Rs 34660 and out of it Rs 30000 was ordered to be distributed as bonus to the workmen These two and other similar in stances however cannot be pressed into service for the purpose of evolving any general rule as to the ratio or proportion in which the available surplus should be distributed The ratio of distribution would obviously depend upon several facts What are the wages paid to the workmen and what is the extent of the gap between the same and a living wage Has the employer set apart any gratuity fund If yes what is the amount that should be allowed for the bonus year What is the extent of the available surplus What are the dividends actually paid by the employer and what are the probabilities of the industry entering upon an immediate programme of expansion What dividends are usually paid by comparable concerns What is the general financial position of the employer Has the employer to meet any urgent liability such as redemption of debenture bonds These and similar considerations will naturally determine the actual mode of distribution of the available surplus In this connection labour s claim to fill up the gap between the wage actually paid to it and the living wage has an important bearing on the decision of this point Industry s claim for paying additional return on capital and for making additional provision for expansion would also have to be considered The fact that the employer would be entitled to a rebate of income tax on the amount of bonus paid to his workmen has to be taken into account and in many cases it plays a significant part in the final distribution Therefore in our opinion once the 1 2 974 available surplus is determined the tribunal should in the light of all relevant circumstances proceed to make an award directing the payment of a fair and just amount to labour by way of bonus If the formula is thus worked reasonably it would in a large majority of cases succeed in achieving its principal object of doing justice both to labour and industry Before we part with the question of working the formula it is necessary to observe that the practice adopted by some tribunals in giving the amount of bonus a priority in the calculations is not justified Logically it is only after all the prior charges have been determined and deducted from the gross profits that available surplus can be ascertained and it is only after the available surplus is ascertained that the question of awarding bonus can be considered Some tribunals seem to work out nationally the amount of bonus which they think can be awarded and place that amount higher up in the process of making calculations before the income tax payable is determined The inevitable consequence of this procedure is to make the amount of tax proportionately less We wish to make it clear that this procedure should not be followed As we have already pointed out in directing the distribution of the available surplus the tribunal has to take into account the rebate of income tax to which the employer is entitled on the amount of bonus paid to his workmen but that on principle is different from placing the amount of bonus immediately after depreciation in the working of the formula It has been urged before us by the respondents that the amount of rehabilitation as well as the amount of depreciation should be deducted from the gross profits before income tax payable is ascertained In this connection reliance is placed on the fact that in its judgment which evolved the formula the Labour Appellate Tribunal has at one place described rehabilitation as the first charge in priorities Having regard to the context in which the said statement is made it is clear that all that the Labour Appellate Tribunal wanted to emphasise was that the textile industry 975 with which it was directly concerned in the said case needed rehabilitation very urgently The final calculations made in the judgment give a clear indication as to how the formula has to be worked out We are therefore satisfied that rehabilitation cannot be given the high priority claimed for it by the respondents We must now consider whether the tribunal was right in directing that overtime payment should be included in the calculation of the bonus which it has directed the appellant to pay Mr Kolah contends that the direction to include overtime wages is contrary to the usual practice followed by industrial tribunals and it is also unsound on principle This dispute arises between the employer and the workmen in this acute form because the total amount of bonus is not determined logically after ascertaining the available surplus If the said amount is logically determined as indicated by us then the question as to whether overtime wages should be included or not would really be a matter of dispute between workmen inter se because once the amount of bonus is determined how it should be distributed between workmen inter se would cease to be a matter of direct concern to the employer Therefore we think that there would be no occasion for such a dispute between the employer and his workmen if the tribunals follow the logical method of determining the amount of bonus in the manner indicated by us On principle we do not think it would be fair to the workmen as a whole that overtime should be included in calculating the bonus which each workman should receive Workmen who do overtime get additional payment for such overwork If in addition to such payment they are allowed to include the said payment in their wages in calculating bonus to which they are entitled obviously the gap between their actual wage and the living wage would be filled up to a larger extent than in the case of other workmen who do not receive such additional overtime payment Besides if the payment of bonus proceeds on the broad consideration that it is due to the workmen for their contribution to the profits it would be unreasonable to make 124 976 a distinction between workmen and workmen on the ground that some have contributed more to the profit than others and that is exactly what would follow if overtime workers are allowed to claim a larger amount of bonus than their other colleagues That is why we think that the tribunal was not justified in directing that the calculations of bonus should be made on the basis that overtime payments constituted a part of the basic wages of the employees The next point to consider relates to the return on paid up capital to which the appellant is entitled The tribunal has awarded to the appellant return at the rate of 6 on paid up capital and at 4 on the working capital The appellant claims a return at a higher rate on paid up capital whereas the respondents contend that the return should be paid on the paid up capital at a lower rate In support of its claim for a higher return the appellant has relied on the fact that it has consistently paid dividends at a reasonably low rate and it did not seek to make undue profits even during the years of war In this connection Mr Kolah has invited our attention to a statement exhibit C 1 showing the percentage of dividend to paid up capital and invested capital for the eighteen financial years 1936 37 to 1953 54 and he has asked us to contrast the low rates of dividend evidenced by it with dividends paid by other companies as shown by another document exhibit C 12 He has also asked us to take into account the highest and the lowest quotation for the company s shares in the Bombay Stock Exchange during the period 1949 55 On the other hand Mr Dudhia has urged that during the relevant year the appellant has capitalised Rs 3585 lakhs from the reserve fund and 17545 lakhs from Premium on Shares Account by issuing one bonus share for every five shares held by the shareholders and he argues that the tribunal was in error in allowing 6 on the paidup capital during the bonus year Incidentally Mr Dudhia also relied though halfheartedly on the finding of the tribunal that the appellant had paid an inflated price for the pre 1939 block It is true that in one place the tribunal has made an observation to 977 this effect but it is clear that the said observation is inconsistent with its definite finding recorded earlier in the course of its judgment that it was not prepared to hold that the A C C had inflated the capital invested by the merging companies by taking them over in 1936 Therefore this part of Mr Dudhia s argument is invalid In our opinion the question as to what return should be allowed to paid up capital in a given case must be left to be determined by the tribunal in its discretion having regard to all the relevant facts and if the tribunal has in its discretion awarded 6 interest on the paid up capital we see no reason to interfere with its decisions It is clear that no question of principle or law is involved in the matter There is one more point which we must consider before we proceed to deal with the facts in the present case This point relates to the employer s claim to treat the amount in the gratuity fund as a prior charge and this claim has been allowed by the tribunal It appears that in MS Metro Motors vs Their Workmen 1 the Labour Appellate Tribunal observed that it was desirable in all cases to create a separate reserve fund for the payment of gratuity and it directed that the modest fund claimed by the employer for the year in question was a proper deduction from its profits The question which we have to decide is whether the allowance on this account should be treated as a prior charge in making the calculations under the formula There can be no doubt that in a sense the gratuity fund is created for the benefit of workmen and there should be no difficulty in recognising the appellant s claim for the deduction of an appropriate amount on this account but we think on principle it is desirable that no addition should be made to the list of prior charges recognised by the formula Even so when the available surplus is determined the tribunal ought to take into account the employer s claim on account of the gratuity fund created for the benefit of his workmen and the amount which the tribunal may regard as a reasonable 11952 II LLJ 205 978 allowance in that behalf should be definitely borne in mind in finally deciding the amount which should be paid to the workmen by way of bonus This method will meet the employer s claim adequately without making any addition to the list of priorities specified in the formula Mr Dudhia contended that the tribunal should not have allowed Rs 10 lakhs under this item but we do not think there is any substance in this contention Incidentally Mr Dudhia has pointed out that in dealing with the appellant s claim for a return on working capital the tribunal has made a mistake by including a further sum of 066 lakhs as return on investments Mr Kolah has conceded that this is a mistake and so the return on the working capital would stand at 2610 lakhs only It is now necessary to consider the evidence of Mr Tongaonkar and decide the most controversial point of fact in dispute between the parties about the appellant s requirements for rehabilitation Mr Tongaonkar holds the Degree of Bachelor of Science of the London University and he is also a Member of the Institution of Electrical Engineers London He joined the appellant in November 1934 but before that he had nearly three years practical experience in England in various engineering firms and on his return to India he had joined the Dinshaw group of cement factories He continued to work with the said group until its merger with the appellant in 1936 when he was appointed by the appellant Mr Tongaonkar is in charge of the department which deals with the construction of new cement factories modernisation and extension of the existing cement factories design and manufacture of cement machinery for A C C and major engineering problems of the ACC Since April 1956 he has been appointed the Controller of Planning and Development of the A C C He visits the A C C factories very frequently and claims to be acquainted with the condition of the plant and machinery at all the A C C factories There is no doubt that Mr Tongaonkar is qualified to give evidence on the technical points which are relevant in 979 dealing with the question of rehabilitation Even so in appreciating his evidence it would not be unreasonable to bear in mind the fact that he is an officer employed by the appellant and as such he is likely to be interested in supporting the claim for rehabilitation which the appellant has decided to make According to Mr Tongaonkar the average future life of the plant and machinery existing in 1939 would be approximately seven years from 1 8 1954 Similarly the approximate future life of the three other categories of blocks would be 13 15 and 20 years respectively He has stated that in calculating the life of machinery it is necessary to take into consideration first the mechanical condition of the machinery second whether it is efficient or has been rendered obsolete because new machinery of modern design with a considerably better efficiency has come into the market In other words the probable useful life of the machinery may be prematurely determined by the emergence of more efficient machinery In support of this statement he has given some instances where the appellant s plant or machinery had to be changed mainly for the reason that a new corresponding plant or machinery was more efficient and gave more satisfactory results However stated generallyin the opinion of the witness the average life of a cement plant taken as a whole would be 25 years if it is properly main tained Mr Tongaonkar then gave evidence about the rise in prices of plant and machinery and he produced exhibit C 36 which is a statement showing the progressive increase in prices from pre war days up to 1955 56 of major items of machinery gear boxes motors and power plant used in cement factories He has stated that the said statement had been prepared on the basis of actual quotations which he had in his possession His evidence shows that between 1951 54 there has been a rise of 11 whereas between 1954 56 there has been a rise of 7 in the prices of the relevant items of machinery He then sought to corroborate his evidence on this point by the expenditure actually incurred by the appellant while putting into commission 980 a new cement factory at Sindri in about 1955 The calculations made by him in this behalf show that the cost of construction of a new factory is approximately 43 times the cost of construction of similar factory in 1939 In regard to the life of buildings Mr Tongaonkar stated that first class buildings lived approximately for 40 years provided they are properly maintained and provided they are not in earthquake zone but he added that for the main unit of the cement plant it is usual to take the life of buildings at 25 years He also stated that in many cases the existing buildings have got to be either demolished or considerably modified when the main machinery whose life is 25 years has to be replaced by modern machinery which is of a different design and which would require buildings and foundations of different size and type Thus for this special circumstance also he was not prepared to give the buildings of the appellant an average life longer than 25 years In regard to the increase in the cost of constructing buildings he produced two statements C 6 and C 14 exhibit C 6 shows the increase in prices of building materials since 1938 1954 whereas exhibit C 14 shows the continually increasing amount of expenditure incurred by the appellant for construction of labour quarters etc It is on this evidence that Mr Tongaonkar has adopted the respective multipliers and divisors in arriving at the figure of the amount required for rehabilitation As we have already pointed out for the pre 1939 block he has taken 428 as the multiplier whereas for the block purchased between 1940 44 he has taken 28 as the multiplier He has explained that the multiplier of 428 is really made up of two multipliers Certain portion of the plant and equipment which is obtained from abroad is estimated at 60 of the total cost and the expenditure on the remaining items is estimated at 40 of the total cost The multipliers of these two groups are estimated at 48 and 35 respectively and by calculations it has been noticed that the average ratio comes to 428 This is the 981 genesis of and the justification for the adoption of 428 as the multiplier He has also added that the proportion of 60 and 40 which he had mentioned was based on his experience of building a number of cement factories and of carrying out extension and modernisation of existing cement factories The multiplier was based said the witness on the state of comparative quotations of plant and machinery received in 1939 and quotations received of similar machinery recently It would thus be clear that in devising the multiplier and divisor Mr Tongaonkar has drawn very largely on his experience and has drawn inferences which he thought were reasonable Besides in making the relevant calculations he has not dealt with the plant and machinery and the buildings and other assets separately but has lumped them together under the respective blocks The approximate cost of the merging companies of their assets as on July 31 1936 was 573 crores of rupees exhibit C 3 which is a certificate issued by the Chartered Accountants shows that according to the blocks the original cost of the block of fixed assets excluding goodwill and purchase of rights and land as at 31st July 1954 of the appellant under the groups of years of acquisition amounted to Rs 194138 100 Similarly exhibit C 28 which is also a certificate issued by the Chartered Accountants shows that the original cost of such portion of fixed assets excluding goodwill and purchase of rights and lands as have been discarded scrapped or sold as on July 31 1954 of the appellant companies under the groups of years of acquisition noted in the certificate amounted to Rs 17091 296 The figures supplied by these two certificates are mentioned in cols 2 and 3 respectively in exhibit C 2 Under the method adopted by Mr Tongaonkar the cost of discards is shown in the respective years when the portions of blocks were discarded and the amounts spent on rehabilitation from year to year have gone with the blocks of the said respective years shown in col 2 The amount of rehabilitation has thus been calculated by the adoption of the multiplier and divisor selected by Mr Tongaonkar The question 982 which calls for our decision is whether the multipliers and divisors adopted by Mr Tongaonkar can be said to be appropriate As we have already mentioned it is the multipliers and divisors that play a decisive part in the determination of the employer s claim for rehabilitation in all bonus proceedings Mr Tongaonkar s evidence has been severely criticised by the respondents and in fact the tribunal does not appear to have been favourably impressed by it Before dealing with the criticism made against his evidence it would be pertinent to observe that the witness has given exhaustive details on the points put to him in examination in chief and his evidence read as a whole does make an imposing reading But sometimes the wealth of details given by experts is Apt to complicate the narrow points of dispute between the parties and to create doubt and confusion the large number of technical details expressed in technical language may in some cases tend to cloud rather than clarify the points which the tribunal has to consider We feel inclined to hold that is what has happened to some extent in the present case But that by itself cannot obviously be said to introduce any infirmity in the evidence given by the expert or affect its credibility It only means the tribunal has to analyse his statements examine them carefully in the light of his cross examination and decide how far it would be justified in acting on them It has been urged before us by the respondents that the claim made by Mr Tongaonkar in regard to the rehabilitation of the pre 1939 block should be rejected The contention is that this block must have been completely replaced before 1953 and no claim for its rehabilitation can be entertained This argument was based substantially on the assumption that a part of Rs 99742 lakhs must have been utilised for the purpose of replacing the said block Mr Tongaonkar has stated that prior to 1 8 1954 the total amount spent on modernisation replacement and rehabilitation and other sundry jobs but excluding expansion was approximately Rs 997crores and in support of this statement he produced exhibit C 29 983 which shows the said expenditure year by year According to this statement 78 lakhs had been spent on the construction of Rohri Works and Kistna Works and Rs 622 13 lakhs had been spent on the expansion during the post war period This gives the figure of Rs 70013 lakhs Deducting this amount from the total expenditure of Rs 1697 55 lakhs the balance of Rs 99742 lakhs is shown as expenditure on modernisation rehabilitation replacement and other sundry capital jobs It is in respect of this amount of Rs 99742 lakhs that Mr Tongaonkar was severely cross examined In cross examination he stated that he was not in a position to say whether out of the total expenditure of Rs 99742 lakhs shown in exhibit C 29 a major portion had been spent on rehabilitation and replacement of the pre 1939 block and 1940 44 block He admitted that the figures in exhibit C 29 had been prepared by the Accounts Department from the Financial Books so far as year to year total expenditure was concerned and he also stated that it was not possible for him to give details about the said expenditure These answers indicated that the amount of Rs 99742 lakhs had been ascertained mechanically by deducting from the total expenditure of Rs 169755 lakhs incurred on all jobs up to 31 7 1954 the estimated expenditure of Rs 70013 lakhs which was treated as expenditure for expansion during the said period It is on these statements that the respondents placed reliance in support of their argument that the amount of Rs 99742 lakhs must have been utilised for completely replacing the pre 1939 block Thus presented the argument no doubt appeared very plausible and so we asked Mr Kolah to give us a satisfactory explanation about the items of this expenditure Accordingly Mr Kolah has filed a statement exhibit I which gives a rough classification of the total capital expenditure of about Rs 997 lakhs incurred up to 31 7 1954 on modernisation replacement rehabilitation and other sundry and miscellaneous jobs The several items of this expenditure are broadly indicated under eight heads the last of which covering an 125 984 amount of Rs 160 lakhs has in its turn been split up into five separate items by the statement 1a There was some dispute before us about the admissibility of some of the said items under cl 5 of this document 1a But Mr Kolah contends and it is not disputed by the respondents either that even if the whole of the disputed item 5 is excluded the remaining items on exhibit 1 give a fairly satisfactory explanation about the work of rehabilitation replacement and modernisation on which the bulk of Rs 99742 lakhs must have been spent In view of this statement we must hold that the assumption made by the respondents that the said amount of Rs 99742 lakhs must have been utilised for replacing the pre 1939 block is not well founded It is then contended that there is no justification for keeping the pre 1939 block still alive in view of the estimate made by Mr Tongaonkar about the life of the cement plant and machinery The suggestion is that the oldest block is deliberately kept alive in order to enable the appellant to claim a higher multiplier in calculating the rehabilitation amount It cannot be said that there is no force at all in this criticism In fact Mr Tongaonkar himself has admitted that a given portion of this block could have been discarded earlier but he added that a part of it had been rehabilitated as a temporary measure in order to carry on That is why that particular portion of the block had not been discarded so far According to him the pre 1939 block contains a portion whose useful life is already over but the appellant would have to carry on with it until finances could be found for modernisation or reconstruction or entire replacement of the said block In our opinion this explanation cannot be said to be wholly satisfactory If the useful life of the whole block had really expired the appellant would have easily found it possible to replace the said block in due time having regard to its general financial position The next criticism made against Mr Tongaonkar s evidence is that admittedly he has not calculated the average life of the said block He stated that he had assessed the pre 1939 block by his personal visits to 985 the factory by observing to what extent it had been rehabilitated as a temporary measure and by considering what its present condition was It is possible that with his knowledge and experience Mr Tongaonkar may be able to form a proper assessment about the life of the machinery in the manner deposed to by him But unfortunately effective cross examination on this point has been stifled to some extent because we find that on some material points questions put to the witness were objected to by Mr Kolah and the objection was upheld by the tribunal The witness was asked whether he could tell the tribunal with his wide experience how many years on the average 1939 block had spent prior to 1939 This question was clearly relevant and from the respondents point of view it was important If the witness was able to predicate about the future useful life of the machinery from his examination of the plant it was suggested to him that it should be possible for him to give an estimate about the life already spent by it by the same process The object of this question obviously was to show that the machinery in question had lived much longer than its estimated life as deposed to by the witness This question having been disallowed any further cross examination to test the claim of the witness that from the inspection and examination of the machinery he can predicate the period of its future useful life became impossible The witness was further asked to state whether it would be correct to assume that the said pre 1939 block had on an average spent more than 15 years of its life This question also was disallowed and the respondents naturally make a serious grievance that they were not given an opportunity to show that Mr Tongaonkar s estimate about the life of the plant and machinery was a gross under statement The respondents have then objected to the inclusion of several items in the approximate cost of rehabilitation mentioned in col 8 of exhibit C 2 The new additional packing machine in regard to the factory at Banmore as well as the crane storage are it is urged not items of rehabilitation but of expansion Similar 986 criticism is made in regard to the dust collector plants coal handling plants items in regard to the fluidification system diesel engine shunting locomotive and similar other items The respondents grievance is that by including these items which are really matters of expansion the amount of approximate cost of rehabilitation has been unduly increased We are unable to say if the grievance is justified In regard to the multiplier adopted by Mr Tongaonkar the criticism is that it is based on hypothetical considerations determined by him in a subjective manner It is also pointed out that the failure of the witness to take out the present day replacement cost of individual items of the pre 1939 block has introduced an additional element of uncertainty in the final calculations made by him in regard to the multiplier No doubt the witness has stated that he has used the multiplier of 48 on a comparative study of the quotations received between 1939 and the present day but dealing with the machinery blockwise is not a very satisfactory way of determining such a multiplier In support of this argument reference is made to the statements made by the witness to the cost of 180 ton per day kiln if manufactured by the appellant would be lower than that of a 300 ton a day kiln The witness then added that the appellant does not manufacture a 180 ton a day kiln and if such a kiln is imported from abroad its cost would be somewhat higher than that of a 300 ton a day kiln manufactured by the appellant under present day conditions He was then asked whether he had got a quotation of a 180 ton a day kiln and he admitted that he had none and that he had estimated it approximately at Rs 11 12 lakhs The respondents urged that this estimate about the cost of an imported 180 ton a day kiln is purely notional and is not based on any material at all This part of the criticism is justified The next argument urged against the statements prepared by Mr Tongaonkar is that he appears to have taken into account the prices prevailing in 1956 and has completely ignored the prices as they obtained in the previous years We have already observed that 987 in deciding the amount of rehabilitation by the adoption of an appropriate multiplier the tribunal should take into account all relevant facts and these would not be confined to the price level prevailing in any one particular year When deciding the hypothetical question as to what would be the price in future when the plant and machinery would have to be replaced or rehabilitated the tribunal has to take an overall picture of prices into account and the argument is that concentration on the price level of 1956 alone has introduced an infirmity in the calculations made by the witness There is another infirmity in these calculations which has been criticised by the respondents Mr Tongaonkar has lumped together the plant and machinery as well as buildings and other properties belonging to the appellant in col 2 of exhibit C 2 The more scientific and satisfactory method of dealing with the question of rehabilitation is to treat the plant and machinery separately from the buildings and other assets that need rehabilitation In fact we asked Mr Kolah to give us a statement showing the cost of the plant and machinery and the buildings and other assets separately in order to enable us to have a clearer picture about the extent of the rehabilitation needs of the appellant He has accordingly filed a statement exhibit F a There is yet another point on which Mr Tongaonkar s evidence has been criticised by the respondents It is argued that this evidence shows that under his concept of modernisation several items of expansion can be included Mr Tongaonkar has stated that by modernisation he meant a composite scheme comprising replacement of the part of the old machinery by new machinery installation of additional machinery because the layout of the composite modernisation scheme is different from the previous layout and rehabilitation of the remaining machinery as a short term measure By rehabilitation he ment alterations to a machine or machinery installation for improving its mechanical performance its technical efficiency or to extend its life by a further span This would also 988 include what he compendiously describes as the removal of weak links According to him expansion can be divided into two groups viz Group No 1 construction of the completely new factory solely for obtaining additional production and Group No 2 would cover the specific additional machines which are installed not for modernisation purposes as such but with the primary object of obtaining additional production He concedes that in the modernisation of an existing factory expansion is only a part of the scheme This means that in the modernisation scheme there would be an element of expansion It would thus be clear that the very broad and wide description of modernisation given by the witness would justifiably give rise to an apprehension in the minds of workmen that under the heading of modern isation items of expansion pure and simple are likely to creep in That is why evidence given by experts in such proceedings needs to be scrutinised carefully with a view to exclude items of expansion properly so called from the relevant calculations Mr Tongaonkar has stated that when plant or machinery is rehabilitated or replaced it may lead to increase in production But such an in Crease is purely incidental But what would be the position where for instance a 180 ton a day kiln is substituted by a 300 ton a day kiln by way of rehabilitation or replacement The employer is entitled to say that the first category of kilns is not available in the market or that the later category of kilns is more profitable Ind economically more useful That being so if the first kiln is discarded and is substituted by the latter that is an item of rehabilitation or replacement and not of expansion On the other hand by the substitution of the latter kiln there would be such an appreciable increase in production that the workmen may be entitled to contend that some apportionment should be made and the rehabilitation part of the machinery should be separated from the expansion part which has crept into the transaction We confess that it would be very difficult to undertake the task of making any such apportionment 989 Even so tribunals may have to consider the workmen s plea if they are satisfied that the steps taken by the employer by way of rehabilitation have led to a very large increase in production In this connection the respondents have relied on exhibit H 0 C 2 which according to them shows considerable increase in production and that it is urged is the result of expansion and not of rehabilitation Mr Tongaonkar has suggested in his evidence that it is the intention of the employer that decides the character of the transaction If the employer wants to instal new machinery solely with the object of expanding his business that is expansion but if he purchases new machinery for business reasons and not for the purposes of expansion it would be rehabilitation notwithstanding the fact that the new machinery gives rise to increased production This approach in our opinion gives undue importance to the intention of the employer and we think that on a proper occasion the question may have to be considered by the application of some objective tests In this connection it would be relevant to bear in mind the fact that the steps taken by the appellant for rehabilitating replacing or modernising its machinery are a part of its plan of expanding its business so as to meet the growing demand for cement in our country In deciding the question as to whether the claim as disclosed by the statements prepared by Mr Tongaonkar is inflated or not the respondents have asked us to consider the estimate made by the appellant s Chairman in that behalf In his speech delivered on January 24 1951 at the Fourteenth Annual General Meeting of the appellant company the Chairman stated that most of the company s pre war plant would be due for replacement in the course of the next ten years and he added that at the present price levels replacement will cost on an average 2 12 times the original cost This will involve an expenditure of about Rs 8 crores over and above the provision already made for depreciation The contention is that considered in the light of this estimate the present claim for rehabilitation is very much inflated 990 When Mr Tongaonkar was asked about this estimate he stated that the Chairman had not consulted him while drafting the annual report or while drafting the portion of the speech in regard to rehabilitation and he also added that he did not agree with the figures given by the Chairman regarding the replacement cost of plant and machinery in his report dated January 24 1951 This explanation may not be very satisfactory But we cannot ignore the fact that when the Chairman made his statement he did not purport to calculate the claim for rehabilitation in terms of the formula and so it would not be fair to test the evidence of the witness in the light of the estimate given by the Chairman in his speech We have so far considered the broad arguments urged against Mr Tongaonkar s evidence Unfortunately the tribunal has contented itself merely with the observation that the multiplier of 27 would be adequate and it has given no finding as to the suitable divisor That is why we must now proceed to adopt a suitable multiplier and divisor for deciding the question of rehabilitation We have already stated our conclusions in regard to some of the infirmities in the evidence of Mr Tongaonkar and the statements prepared by him He has lumped together all assets of the appellant that need rehabilitation He has taken into account the prices prevailing only in 1956 and in the selection of an average multiplier he has probably been slightly generous to the appellant His estimate about the life of the plant and machinery has not been allowed to be sufficiently tested in crossexamination and on the whole it appears to err a little too much on the side of a conservative estimate and if that is so his divisor may need revision it is also probable that in the items included by him under rehabilitation may have been included some which are more of the character of expansion than rehabilitation replacement or modernisation Besides it is not unlikely that the steps taken by the appellant ostensibly for rehabilitation replacement and modernisation of the machinery have appreciably increased its production and that may partly be due to the fact that the 991 general plan of expansion adopted by the appellant has been in operation for some time past It is in the light of these facts that we have to examine the appellant s claim for rehabilitation In doing so we have taken exhibit C 2 exhibit C 23 and exhibit F a as a basis for our calculations It is somewhat unfortunate that in making its claim for rehabilitation Mr Tongaonkar did not make calculations separately in respect of plant and machinery as distinct from buildings roads bridges and railway sidings It is true that at our instance a statement exhibit F a has been filed before us but if such a statement had been filed before the tribunal the respondents would have had a better opportunity of testing the accuracy of the calculations made in it and the basis on which the respective multipliers and divisors are sought to be deduced from it We would therefore like to make it clear that the calculations which we now propose to make in regard to the item of rehabilitation should not be taken to be binding on the parties in subsequent years If in the light of our decision on the principal points raised before us in the present appeals the parties decide to settle their disputes about bonus for subsequent years there would be no occasion for the tribunal to deal with them on the merits If however these disputes have to be settled by the tribunal it would be open to the parties to lead evidence in support of their respective contentions The tribunal also would be at liberty to consider the matter afresh and come to its own conclusion on the merits Let us now proceed to make the relevant calculations The first step to take is to correct the figures in exhibit C 2 by excluding the cost of buildings roads bridges and railway sidings from the total cost mentioned in it against the several blocks This cost has been supplied to us by the appellant in exhibit F a This is how the corrections work out In our calculations all figures are expressed in lakhs 126 992 Chart I Period Original cost Less cost of Balance of block buildings etc 1 2 3 4 Up to 1939 48689 13298 35391 1940 44 5991 2238 3753 1945 47 20893 6815 14078 1948 54 114481 33347 81134 In exhibit F a the appellant has shown the respective average ratios in col 5 in regard to items of property mentioned in col 2 We think in making our calculations it would on the whole be fair to adopt 35 as a suitable multiplier up to 1939 2 from 194047 and 1 from 1948 54 as in C 2 for replacement by part ACC machinery We have not disturbed the divisors taken by C 2 though we feel inclined to hold that Mr Tongaonkar has underestimated the probable life of machinery The amount of yearly requirement for rehabilitation for the total block minus buildings etc would then work out at Rs 22939 This does not take into account the available reserves that aspect is considered later on Chart II Period Original cost of Multiplier Total Less Balance Life Yearly break of require down as machi ment in exhibit C 2 nery in Yrs 1 2 3 4 5 6 7 8 approx UP to 1939 35391 x35 123868 65921172767 16754 1940 44 3753 x2 7506 466 704013541 1945 47 14078 x2 28156 1119 27037151802 1948 54 81134 x1 81134 4284 76850203842 Total 22939 Then we would deal with the buildings roads bridges and railway sidings These may be given an average life of 30 years for all blocks in order to compensate for cases where they have to be demolished on account of modernisation According to the previous statements of the appellant the life of factory buildings was about 35 years and residential 993 areas 50 years Even so we propose to take the average life of 30 years in making our calculations in respect of these blocks The multipliers may be taken as 225 for pre 1939 blocks 15 for 1940 47 blocks 1 for 1948 54 blocks The Bombay block has been taken as in exhibit C 2 Chart III Period Cost Multi Total Less Balancelife Yearly plier break down require valued at 5 ment of cost 1 2 3 4 5 6 7 8 UP to 1939 13298 X 225 29920 665 29255 20 14463 1940 44 2238 x 15 3357 112 3245 25 129 1945 47 6815 x 15 10222 340 9882 25 395 1948 54 33347 x 1 33347 1667 31680 30 1056 Bombay office 4083 5028 73 4955 69 71 block Total 3114 Thus the total yearly requirement for rehabilitation of this block would come to 3114 lakhs The appellant s claim for rehabilitation can now be calculated on the basis of exhibit C 23 as corrected in the light of the three charts prepared by us As the calculations in the chart show we would hold that the appellant is entitled to an allowance of 21610 lakhs for rehabilitation in the relevant year Chart IV Replacement of pre 1939 block Cost of machinery Chart II 117276 Deduct reserves 31100 Balance 86176 divided by 7 12311 Add for buildings Chart III 1463 Total 13774 Replacement cost of 1940 44 block Including buildings etc 541 plus 129 670 do for 1945 47 1802 plus 395 2197 do for 1948 54 3842 plus 1056 4898 do for Bombay Office 71 total 21610 994 Having decided that the total claim for rehabilitation admissible to the appellant is 21610 lakhs for the relevant year we must now proceed to determine whether on the working of the formula any surplus profit is available We have made the following calculations in the light of the principles laid down by us in this judgment Chart V Total profit excluding Bhupendra factory 42871 Less notional normal depreciation p 428 Pt 1 10022 Less income tax payable 7 as in the Rupee as per Note A below 11516 Less 6 on paid up capital 7606 Less 4 on working capital 2610 Total 31754 31754 Balance 11117 Less provision for rehabilitation 11588 Balance 471 This is how we have calculated theincome tax payable for the relevant year Note A Gross profits 42871 Less statutory depreciation 16549 Balance 26322 Income tax 7 as in the Rupee 11516 Provision for rehabilitation vide Chart V Total from Chart IV 21610 Less notional normal depreciation 10022 Balance 11588 995 We ought to add that in our calculations we have not taken into account the Bhupendra Factory because the relevant material for working out the figures in regard to this factory is not adequate or satisfactory However from such material as is available it appears that if the profits made by the said factory are included in the calculations and rehabilitation required by it is worked out it would not materially affect the figure of rehabilitation amount determined by us The result is that there is no available surplus from which the respondents can claim any bonus for the relevant year It is true that the appellant has already paid the respondents 2065 lakhs as bonus for the relevant year and it is likely that it may continue to do so in future but that is a matter which is not governed by the formula In view of the fact that the working of the formula leaves no available surplus the appeal must be allowed and the award made by the tribunal set aside Since the appellant had come to this Court for the decision of the larger and more important question about the revision of the formula we would direct that there should be no order as to costs Appeal allowed

Initially the appellant was a 100 subsidiary of the British company Crompton Parkinson Ltd In 1947 an agreement called Technical Aid Agreement was concluded between the two companies under which the appellant agreed to pay to the parent company 5 Of the net value of its sales every year as service fee for the use of their patterns valuable designs technical aid benefit of research and ancillary services and facilities As the appellant obtained the benefit of the parent company s technical knowledge and research it did not maintain a separate research establishment on which it would otherwise have had to spend far more than the service fee it paid The agreement had received the approval of the Government the income tax authorities had every year allowed the service fee as legitimate expenditure and the remittances to the parent company had been sanctioned by the Reserve Bank of India In the claim for bonus by the workmen the Tribunal in calculating the gross profits pruned down the allowable expenditure on account of the service fee to one fourth on the grounds that the amount of service fee paid was excessive and beyond the requirements of commercial necessity and that a large part of the payment was in the nature of capital expenditure In calculating the available surplus the Tribunal deducted as a first charge 4 12 months basic wages as bonus before deducting depreciation and income tax contrary to the terms of the Full Bench formula Held that the entire amount of service fee paid ought to have been allowed as proper expenditure Unless it was definitely found that a purported expenditure was sham or had been made with the express object of minimising the profits with a view to deprive the workmen of their bonus the Tribunal could not substitute its own judgment as to what was or was not commercially justified in place of that of the appellant and its directors The service fee was a genuine expenditure and represented a binding contractual obligation which could legally be enforced against the appellant and a breach thereof may have had serious consequences affecting its business Held further that the Tribunal acted wrongly in deducting 937 bonus as a prior charge even before the recognised items of prior charges Such departures from the Full Bench Formula by Tribunals were to be deprecated Associated Cement Companies Ltd vs Its Workmen CA Nos 459 and 460 of 1957 decided on 5 5 59 followed

iminal Appeal No 67 of 1958 Appeal by special leave from the judgment and order dated September 11 1957 of the Allahabad High Court in Criminal Appeal No 1388 of 1956 and Referred Trial No 133 of 1956 arising out of the judgment and order dated September 8 1956 of the Court of the Additional Sessions Judge at Etawah in Sessions Trial Nos 83 and 109 of 1955 Jai Gopal Sethi and R L Kohli for the appellants section P Sinha GC Mathur and G N Dikshit for the respondent May 5 The judgment of B P Sinha J L Kapur A K Sarkar and K Subba Rao JJ was delivered by K Subba Rao J and the judgment of Jafer Imam and M Hidayatullah JJ was delivered by M Hidayatullah J SUBBA RAO J This appeal by special leave raises the question of construction of section 162 Code of Criminal Procedure On June 161954 one Ram Sanehi Mallah of Nayapura gave a dinner at his home and a large number of his friends attended it After the dinner at about 9 p m a music performance was given in front of the house of Ram Sanehi s neighbour Ram Sarup About 35 or 40 guests assembled in front of Ram Sarup s platform to hear the music The prosecution case is that a large number of persons armed with fire arms suddenly appeared near a well situated on the southern side of the house of Ram Sarup and 878 opened fire which resulted in the death of Natthi Bharat Singh and Saktu and injuries to six persons namely Hazari Bankey Khem Singh Bal Kishan Mizaji Lal and Nathu The topography of the locality where the incident took place is given in the two site plans exhibit P 57 and exhibit P 128 It appears from the plans that the house of Ram Sarup faces west and directly in front of the main door of his house is a platform to the southwest of the platform about 25 paces away is a well with a platform of 3 feet in height and about 13 feet in width around it and to the west of the platform in front of Ram Sarup s house the audience were seated The prosecution version of the sequence of events that took place on that fatal night is as follows After the dinner there was a music performance in front of the platform of Ram Sarup s house and a number of persons assembled there to hear the music Saktu played on the Majeera while Nathu was singing it was a full moon night and there were also a gas lamp and several lanterns Bankey and Asa Ram placed their guns on a cot close to the platform and Bharat Singh was sitting on that cot While Bankey was among the audience Asa Ram was still taking his dinner inside the house At about 9 p m the accused along with 15 or 20 persons arrived from an eastern lane stood behind the well shouted that no one should run away and advanced northward from the well firing shots Natthi and Saktu were hit and both of them died on the spot Bharat Singh who was also hit ran northward and was pursued by some of the culprits and was shot dead in front of Bankey s house shown in the plan Bankey who was also shot at and injured took up Asa Ram s gun and went up to the roof of Ram Sarup s house wherefrom he fired shots at the dacoits who were retreating Asa Ram who was luckily inside the house taking his dinner ran up to the roof of Ram Sarup s house and saw the occurrence from over the parapet The culprits turned over the dead bodies of Saktu Natthi and Bharat Singh and on seeing Bharat Singh s face they exclaimed that Asa Ram was killed Thereafter they 879 proceeded northward passed through the corner of Ram Sarup s house and disappeared in the direction of the Chambal They also carried away Bankey s gun which was on the cot The motive for the offence is stated thus The culprits were members of a notorious gang called the Man Singh s gang who it is alleged were responsible for many murders and dacoities in and about the aforesaid locality That gang was in league with another gang known as Charna s gang operating in the same region Asa Ram and Bankey had acted as informers against Charna s gang and this information led to the killing of Charna Man Singh s gang wanted to take vengeance on the said two persons and having got the information that the said two persons would be at the music party on that fateful night they organized the raid with a view to do away with Asa Ram and Bankey Out of the nine accused committed to the Sessions the learned Sessions Judge acquitted seven convicted Tahsildar Singh and Shyama Mallah under 14 charges and awarded them various sentences including the sentence of death Before the learned Sessions Judge Tahsildar Singh took a palpably false plea that be was not Tahsildar Singh but was Bhanwar Singh and much of the time of the learned Sessions Judge was taken to examine the case of the prosecution that the accused was really Tahsildar Singh son of Man Singh The other accused Shyama Mallah though made a statement before the Sub Divisional Magistrate admitting some facts which were only exculpatory in nature denied the commission of the offence before the committing Magistrate and before the learned Sessions Judge As many as eight eyewitnesses described the events in detail and clearly stated that both the accused took part in the incident When one of the witnesses Bankey P W 30 was in the witness box the learned Counsel for the accused put to him the following two questions in cross examination 1 Did you state to the investigating officer that the gang rolled the dead bodies of Natthi Saktu and 880 Bharat Singh and scrutinized them and did you tell him that the face of Asa Ram resembled that of the deceased Bharat Singh 2 Did you state to the investigating officer about the presence of the gas lantern In regard to the first question the learned Sessions Judge made the following note The cross examining Counsel was asked to show the law which entitles him to put this question He is unable to show any law 1 therefore do not permit the question to be put unless I am satisfied In respect of the second question the following note is made He is also unable to show any law entitling him to put this question I will permit him to put it if he satisfies me about it It appears from the deposition that no other question on the basis of the statement made before the police was put to this witness After his evidence was closed the learned Judge delivered a considered order giving his reasons for disallowing the said two questions The relevant part of the order reads Therefore if there is no contradiction between his evidence in Court and his recorded statement in the diary the latter cannot be used at all If a witness deposes in Court that a certain fact existed but had stated under section 161 Cr P C either that that fact had not existed or that the reverse and irreconcilable fact had existed it is a case of conflict between the deposition in the Court and the statement under section 161 Cr P C and the latter can be used to contradict the former But if he had not stated under section 161 anything about the fact there is no conflict and the statement cannot be used to contradict him In some cases an omission in the statement under section 161 may amount to contradiction of the deposition in Court they are the cases where what is actually stated is irreconcilable with what is omitted and impliedly negatives its existence It is enough to notice at this stage that the learned Sessions Judge did not by the said order rule that No 881 omission in the statement made under section 161 of the Code of Criminal Procedure can be put to a witness but stated that only an omission which is irreconcilable with what is stated in evidence can be put to a witness The said two omissions were not put to any of the other witnesses except to one to whom only one of the said omissions was put No other omissions were put in the cross examination either to P W 30 or to any other witness The learned Sessions Judge on a consideration of the voluminous evidence in the case held that the guilt was brought home to the said two accused and convicted them as aforesaid Tahsildar Singh and Shyama Mallah preferred two separate appeals to the High Court against their convictions and sentences The two appeals were heard along with the reference made by the learned Sessions Judge under section 374 of the Code of Criminal Procedure for the confirmation of the sentence of death awarded to the appellants The learned Judges of the High Court after reviewing the entire evidence over again accepted the findings of the learned Sessions Judge and con firmed the convictions and sentences passed on the appellants Before the High Court a petition was filed by the appellants alleging that the learned Sessions Judge did not allow the Counsel for defence to put omissions amounting to material contradictions to the eye witnesses and therefore the said eye witnesses should be summoned so that the said questions might be put to them That petition was filed on May 1 1957 and on July 30 1957 after the argument in the appeals was closed the petition was dismissed Presumably no attempt was made to press this application either before the appeals were taken up for argument or during the course of the argument but the question raised in the petition was considered by the earned Judges of the High Court in their judgment The judgment discloses that the learned Counsel appearing for the appellants argued before the High Court that the learned Sessions Judge wrongly disallowed the aforesaid two questions and the learned Judges conceding that those two questions should have been allowed held that the accused 882 were not prejudiced by the said fact They justified their conclusion by the following reasons We did so because among other reasons we decided to ignore these two circumstances and to base our findings on matters of greater certainty namely the fact of the miscreants firing while advancing passing in front of Ram Swarup s platform and taking away Bankey s gun from the cot movements which brought them close to the eye witnesses and thereby gave the witnesses an unmistakable opportunity of seeing their faces in the light of the lanterns and the full moon These factors made recognition by witnesses independent of any gas lantern or any scrutiny of the dead bodies so that these matters ceased to be of any real consequence and therefore made the summoning of the eye witnesses before us quite unnecessary In the result they dismissed the appeals The present appeal is by special leave filed against the judgment of the High Court Learned Counsel for the appellants raised before us the following points 1 a Section 162 of the Code of Criminal Procedure by its own operation attracts the provisions of section 145 of the Evidence Act and under the latter section the whole vista of cross examination on the basis of the previous statement in writing made by the witnesses before the police is open to the accused to illustrate the contention a witness can be asked whether he made a particular statement before the police officers if he says yes the said assertion can be contradicted by putting to him an earlier statement which does not contain such a statement 1 b The word contradiction is of such wide connotation that it takes in all material omissions and a Court can decide whether there is one such omission as to amount to contradiction only after the question is put answered and the relevant statement or part of it is marked and therefore no attempt should be made to evolve a workable principle but the question must be left at large to be decided by the Judge concerned on the facts of each case 2 The High Court erred in holding that only two questions were intended to be put in cross examination to the prosecution 883 witnesses whereas the Advocate for the accused in tended to put to the witnesses many other omissions to establish that there was development in the prosecution case from time to time but refrained from doing so in obedience to the considered order made by the learned Sessions Judge 3 Even if only two questions were illegally disallowed as it was not possible to predicate the possible effect of the cross examination of the witnesses on the basis of their answers to the said questions on their reliability it should be held that the accused had no opportunity to have an effective cross examination of the witnesses and there fore they had no fair trial 4 The learned Judges committed an illegality in testing the credibility of the witnesses other than the witness who gave the first information report by the contents of the said report The arguments of the learned Counsel for the respondent in respect of each of the said contentions will be considered in their appropriate places We shall proceed to consider the contentions of the learned Counsel for the appellants in the order in which they were addressed Re 1 a Diverse and conflicting views were expressed by Courts on the interpretation of section 162 of the Code of Criminal Procedure A historic retrospect of the section will be useful to appreciate its content The earliest Code is that of 1872 and the latest amendment is that of 1955 Formerly Criminal Procedure Code for Courts in the Presidency towns and those in the mofussil were not the same Criminal Procedure Code 1882 10 of 1882 consolidated the earlier Acts and prescribed a uniform law to all Courts in India It was superseded by Act 5 of 1898 and substantial changes were made by Act 18 of 1923 Since then the Code stands amended from time to time by many other Acts The latest amendments were made by Act 26 of 1955 which received the assent of the President on August 10 1955 and by notification issued by the Central Government its provisions came into force on and from January 1 1956 We are not concerned in this case with the Amending Act of 1955 but only with the Act as it stood before the amendment of 1955 884 In Act 10 of 1872 the section corresponding to the present section 162 was section 119 which read An officer in charge of a Police station or other Police officer making an investigation may examine orally any person supposed to be acquainted with the facts and circumstances of the case and may reduce into writing any statement made by the person so examined Such person shall be bound to answer all questions relating to such case put him by such officer other than questions criminating himself No statement so reduced into writing shall be signed by the person making it nor shall it be treated as part of the record or used as evidence This section enables a police officer to elicit information from persons supposed to be acquainted with facts and permits him to reduce into writing the answers given by such persons but excludes the said statement from being treated as part of the record or used as evidence Act 10 of 1882 divided the aforesaid section 119 into two sections and numbered them as sections 161 and 162 which read section 161 Any Police officer making an investigation under this chapter may examine orally any person supposed to be acquainted with the facts and circumstances of the case and may reduce into writing any statement made by the person so examined Such person shall be bound to answer truly all questions relating to such case put to him by such officer other than questions the answers to which would have a tendency to expose him to a criminal charge or to a penalty or forfeiture section 162 No statement other than a dying declaration made by any person to a Police officer in the course of an investigation under this chapter shall if reduced to writing be signed by the person making it or be used as evidence against the accused Nothing in this section shall be deemed to affect the provisions of section 27 of the The first two paragraphs of section 119 of Act 10 of 1872 with slight modifications not relevant for the present 885 purpose constituted the corresponding paragraphs of section 161 of Act 10 of 1882 and the third paragraph of section 119 of the former Act with some changes was made section 162 of the latter Act There was not much difference between the third paragraph of section 119 of the Act of 1872 and section 162 of the Act of 1882 except that in the latter Act it was made clear that the prohibition did not apply to a dying declaration or affect the provisions of section 27 of the The Code of 1898 did not make any change in section 161 nor did it introduce any substantial change in the body of section 162 except taking away the exception in regard to the dying declaration from it and putting it in the second clause of that section But section 162 was amended by Act 5 of 1898 and the amended section read 1 No statement made by any person to a police officer in the course of an investigation under this Chapter shall if taken down in writing be signed by the person making it nor shall such writing be used as evidence Provided that when any witness is called for the prosecution whose statement has been taken down in writing as aforesaid the Court shall on the request of the accused refer to such writing and may then if the Court thinks it expedient in the interests of justice direct that the accused be furnished with a copy thereof and such statement may be used to impeach the credit of such witness in manner provided by the 2 Nothing in this section shall be deemed to apply to any statement falling within the provisions of section 32 clause 1 of the For the first time the proviso to section 162 introduced new elements namely i The right of the accused to request the Court to refer to the statement of a witness reduced to writing ii a duty cast on the Court to refer to such writing iii discretion conferred on the Court in the interests of justice to direct that the accused be furnished with a copy of the statement and iv demarcating the field within which such 886 statements can be used namely to impeach the credit of the witness in the manner provided by the From the standpoint of the accused this was an improvement on the corresponding sections of the earlier Codes for whereas the earlier Codes enacted a complete bar against the use of such statements in evidence this Code enabled the accused subject to the limitations mentioned therein to make use of then to impeach the credit of a witness in the manner provided by the On the basis of the terms of section 162 of Act 5 of 1896 two rival contentions were raised before the Courts It was argued for the prosecution that on the strength of section 157 of the Evidence Act the right of the prosecution to prove any oral statement to contradict the testimony of any witness under that section was not taken away by section 162 of the Code of Criminal Procedure which only provided that the writing shall not be used as evidence On the other hand it was contended on behalf of the accused that when the statement of a witness was admittedly reduced into writing it would be unreasonable to allow any oral evidence of the statement to be given when the writing containing the statement could not be proved The judgment of Hosain J in the case of Rustam vs King Emperor 1 and the decisions in Fanindra Nath Banerjee vs Emperor 2 King Emperor vs Nilakanta 3 and Muthukumaraswami Pillai vs King Emperor 4 represent one side of the question and the judgment of Knox J in Rustam vs King Emperor 1 and the observations of Beaman J in Emperor vs Narayan 5 represent the other side A division Bench of the Bombay High Court in Emperor vs Hanmaraddi Bin Ramaraddi 6 after noticing the aforesaid decisions on the question ruled that the police officer could be allowed to depose to what the witness had stated to him in the investigation for the purpose of corroborating what the witness had said at the trial In that context Shah J observed at p 66 1 3 5 1907 32 Bo 111 2 4 6 1915 39 Bo 58 8S7 The point is not free from difficulty which is sufficiently reflected in the diversity of judicial opinions bearing on the question Presumably in view of the aforesaid conflict to make the legislative intention clear the section was amended by Act 18 of 1923 Section 162 as amended by the aforesaid Act reads 1 No statement made by any person to a police officer in the course of an investigation under this Chapter shall if reduced into writing be signed by the person making it nor shall any such statement or any record thereof whether in a police diary or otherwise or any part of such statement or record be used for any purpose save as hereinafter provided at any inquiry or trial in respect of any offence under investigation at the time when such statement was made Provided that when any witness is called for the prosecution in such inquiry or trial whose statement has been reduced into writing as aforesaid the Court shall on the request of the accused refer to such writing and direct that the accused be furnished with a copy thereof in order that any part of such statement if duly proved may be used to contradict such witness in the manner provided by section 145 of the When any part of such statement is so used any part thereof may also be used in the reexamination of such witness but for the purpose only of explaining any matter referred to in his cross examination Provided further that if the Court is of opinion that any part of any such statement is not relevant to the subject matter of the inquiry or trial or that its disclosure to the accused is not essential in the interests of justice and is inexpedient in the public interests it shall record such opinion but not the reasons therefore and shall exclude such part from the copy of the statement furnished to the accused Sub section 1 of the substituted section attempted to steer clear of the aforesaid conflicts and avoid other difficulties by the following ways a Prohibited the use of the statement both oral and that reduced into 888 writing from being used for any purpose at any inquiry or trial in respect of any offence under investigation b while the earlier section enabled the accused to make use of it to impeach the credit of a witness in the manner provided by the the new section enabled him only to use it to contradict the witness in the manner provided by section 145 of the said Act c the said statement could also be used for the purpose of only explaining any matter referred to in his cross examination and d while under the old section a discretion was vested in the Court in the matter of furnishing the accused with a copy of an earlier statement of a prosecution witness under the amended section subject to the second proviso a duty was cast upon the Court if a request was made to it by the accused to direct that the accused be furnished with a copy thereof The effect of the amendment was that the loopholes which enabled the use of the statement made before the police in a trial were plugged and the only exception made was to enable the accused to use the statement of a witness reduced into writing for a limited purpose namely in the manner provided by section 145 of the and the prosecution only for explaining the matter referred to in his cross examination The scope of the limited use also was clarified Under the old section the statement was permitted to be used to impeach the credit of a witness in the manner provided by the under the said Act the credit of a witness could be impeached either under section 145 or under section 1553 While the former section enables a witness to be cross examined as to a previous statement made by him in writing without such writing being shown to him the latter section permits the discrediting of the witness by proof of his previous statement by independent evidence If a statement in writing could be used to discredit a witness in the manner provided by those two sections the purpose of the Legislature would be defeated Presumably in realisation of this unexpected consequence the Legislature in the amendment made it clear that the said statement can only be used to contradict a 889 witness in the manner provided by section 145 of the Evidence Act By Act 2 of 1945 the following sub section 3 was added to section 161 The police officer may reduce into writing any statement made to him in the course of an examination under this section and if he does so he shall make a separate record of the statement of each such person whose statement he records This subsection restored the practice obtaining before the year 1923 with a view to discourage the practice adopted by some of the police officers of taking a condensed version of the statements of all the witnesses or a precise of what each witness said It is not necessary to notice in detail the changes made in section 162 by Act 26 of 1955 except to point out that under the amendment the prosecution is also allowed to use the statement to contradict a witness with the permission of the Court and that in view of the shortened committal procedure prescribed copies of the statements of the prosecution witnesses made before the police during investigation are made available by the police to the accused before the commencement of the inquiry or trial The consideration of the provisions of the latest amending Act need not detain us for the present case falls to be decided tinder the Act as it stood before that amendment It is therefore seen that the object of the legislature throughout has been to exclude the statement of a witness made before the police during the investigation from being made use of at the trial for any purpose and the amendments made from time to time were only intended to make clear the said object and to dispel the cloud cast on such intention The Act of 1898 for the first time introduced an exception enabling the said statement reduced to writing to be used for impeaching the credit of the witness in the manner provided by the Evidence Act As the phraseology of the exception lent scope to defeat the purpose of the legislature by the Amendment Act of 1923 the section was redrafted defining the limits of the exception with precision so as to confine it only 112 890 to contradict the witness in the manner provided under section 145 of the Evidence Act If one could guess the intention of the legislature in framing the section in the manner it did in 1923 it would be apparent that it was to protect the accused against the user of the statements of witnesses made before the police during investigation at the trial presumably on the assumption that the said statements were not made under circumstances inspiring confidence Both the section and the proviso intended to serve primarily the same purpose ie the interest of the accused Braund J in Emperor vs Aftab Mohd Khan 1 gave the purpose of section 162 thus at p 299 As it seems to us it is to protect accused persons from being prejudiced by statements made to police officers who by reason of the fact that an investigation is known to be on foot at the time the statement is made may be in a position to influence the maker of it and on the other hand to protect accused persons from the prejudice at the hands of persons who in the knowledge that an investigation has already started are prepared to tell untruths A division Bench of the Nagpur High Court in Baliram Tikaram Marathe vs Emperor 2 expressed a similar idea in regard to the object underlying the sectionat p 5 thus The object of the section is to protect the accused both against over zealous police officers and untruthful witnesses The Judicial Committee in Pakala Narayana Swami vs The King Emperor 3 found another object underlying the section when they said at p 78 If one had to guess at the intention of the Legislature in framing a section in the words used one would suppose that they had in mind to encourage the free disclosure of information or to protect the person making the statement from a supposed unreliability of police testimony as to alleged statements or both Section 162 with its proviso if construed in the 1 AI R 1940 All 291 2 AIR 1945 Nag 1 3 1939 LR 66 I A 66 891 manner which we will indicate at the later stage of the judgment clearly achieves the said objects The learned Counsel s first argument is based upon the words in the manner provided by section 145 of the found in section 162 of the Code of Criminal Procedure Section 145 of the Evidence Act it is said empowers the accused to put all relevant questions to a witness before his attention is called to those parts of the writing with a view to contradict him In support of this contention reliance is placed upon the judgment of this Court in Bhagwan Singh vs The State of Punjab 1 Bose J describes the procedure to be followed to contradict a witness under section 145 of the Evidence Act thus at p 819 Resort to section 145 would only be necessary if the witness denies that he made the former statement In that event it would be necessary to prove that he did and if the former statement was reduced to writing then section 145 requires that his attention must be drawn to those parts which are to be used for contradiction But that position does not arise when the witness admits the former statement In such a case all that is necessary is to look to the former statement of which no further proof is necessary because of the admission that it was made It is unnecessary to refer to other cases wherein a similar procedure is suggested for putting questions under section 145 of the for the said decision of this Court and similar decisions were not considering the procedure in a case where the statement in writing was intended to be used for contradiction under section 162 of the Code of Criminal Procedure Section 145 of the Evidence Act is in two parts the first part enables the accused to cross examine a witness as to previous statement made by him in writing or reduced to writing to without such writing being shown to him the second part deals with a situation where the cross examination assumes the shape of contradiction in other words both parts deal with cross examination the first part with cross examination other than by way of contradiction and the 1 892 second with cross examination by way of contradiction only The procedure prescribed is that if it is intended to contradict a witness by the writing his attention must before the writing can be proved be called to those parts of it which are to be used for the purpose of contradicting him The proviso to section 162 of the Code of Criminal Procedure only enables the accused to make use of such statement to contradict a witness in the manner provided by section 145 of the Evidence Act It would be doing violence to the language of the proviso if the said statement be allowed to be used for the purpose of cross examining a witness within the meaning of the first part of section 145 of the Evidence Act Nor are we impressed by the argument that it would not be possible to invoke the second part of section 145 of the Evidence Act without putting relevant questions under the first part thereof The difficulty is more imaginary than real The second part of section 145 of the Evidence Act clearly indicates the simple procedure to be followed To illustrate A says in the witness box that B stabbed C before the police he bad stated that D stabbed C His attention can be drawn to that part of the statement made before the police which contradicts his statement in the witness box If he admits his previous statement no further proof is necessary if he does not admit the practice generally followed is to admit it subject to proof by the police officer On the other hand the procedure suggested by the learned Counsel may be illustrated thus If the witness is asked did you say before the police officer that you saw a gas light and he answers yes then the statement which does not contain such recital is put to him as contradiction This procedure involves two fallacies one is it enables the accused to elicit by a process of cross examination what the witness stated before the police officer If a police officer did not make a record of a witness s statement his entire statement could not be used for any purpose whereas if a police officer recorded a few sentences by this process of cross examination the witness s oral statement could be brought on record This procedure 893 therefore contravenes the express provision of section 162 of the Code The second fallacy is that by the illustration given by the learned Counsel for the appellants there is no self contradiction of the primary statement made in the witness box for the witness has yet not made on the stand any assertion at all which can serve as the basis The contradiction under the section should be between what a witness asserted in the witness box and what he stated before the police officer and not between what he said he had stated before the police officer and what he actually made before him In such a case the question could not be put at all only questions to contradict can be put and the question here posed does not contradict it leads to an answer which is contradicted by the police statement This argument of the learned Counsel based upon section 145 of the Evidence Act is therefore not of any relevance in considering the express provisions of section 162 of the Code of Criminal Procedure This leads us to the main question in the case ie the interpretation of section 162 of the Code of Criminal Procedure The cardinal rule of construction of the provisions of a section with a proviso is succinctly stated in Maxwell s Interpretation of Statutes 10th Edn at p 162 thus The proper course is to apply the broad general rule of construction which is that a section or enactment must be construed as a whole each portion throwing light if need be on the rest The true principle undoubtedly is that the sound interpretation and meaning of the statute on a view of the enacting clause saving clause and proviso taken and construed together is to prevail Unless the words are clear the Court should not so construe the proviso as to attribute an intention to the legislature to give with one hand and take away with another To put it in other words a sincere attempt should be made to reconcile the enacting clause and the proviso and to avoid repugnancy between the two As the words in the section declare the intention of the legislature we shall now proceed to construe the 894 section giving the words used therein their natural and ordinary sense The object of the main section as the history of its legislation shows and the decided cases indicate is to impose a general bar against the use of statement made before the police and the enacting clause in clear terms says that no statement made by any person to a police officer or any record thereof or any part of such statement or record be used for any purpose The words are clear and unambiguous The proviso engrafts an exception on the general prohibition and that is the said statement in writing may be used to contradict a witness in the manner provided by section 145 of the Evidence Act We have already noticed from the history of the section that the enacting clause was mainly intended to protect the interests of accused At the stage of investigation statements of witnesses are taken in a haphazard manner The police officer in the course of his investigation finds himself more often in the midst of an excited crowd and label of voices raised all round In such an atmosphere unlike that in a Court of Law be is expected to hear the statements of witnesses and record separately the statement of each one of them Generally he records only a summary of the statements which appear to him to be relevant These statements are therefore only a summary of what a witness says and very often perfunctory Indeed in view of the aforesaid facts there is a statutory prohibition against police officers taking the signature of the person making the statement indicating thereby that the statement is not intended to be binding on the witness or an assurance by him that it is a correct statement At the same time it being the earliest record of the statement of a witness soon after the incident any contradiction found therein would be of immense help to an accused to discredit the testimony of a witness making the statement The section was therefore conceived in an attempt to find a happy via media namely while it enacts an absolute bar against the statement made before a police officer being used for any purpose whatsoever it enables the accused to rely 895 upon it for a limited purpose of contradicting a witness in the manner provided by section 145 of the Evidence Act by drawing his attention to parts of the statement intended for contradiction It cannot be used for corroboration of a prosecution or a defence witness or even a Court witness Nor can it be used for contradicting a defence or a Court witness Shortly stated there is a general bar against its use subject to a limited exception in the interest of the accused and the exception cannot obviously be used to cross the bar If the provisions of the section are construed in the aforesaid back ground much of the difficulty raised disappears Looking at the express words used in tile section two sets of words stand out prominently which afford the key to the intention of the legislature They are statement in writing and to contradict Statement in its dictionary meaning is the act of stating or reciting Prima facie a statement cannot take in an omission A statement cannot include that which is not stated But very often to make a statement sensible or self consistent it becomes necessary to imply words which are not actually in the statement Though something is not expressly stated it is necessarily implied from what is directly or expressly stated To illustrate A made a statement previously that he saw B stabbing C to death but before the Court he deposed that he saw B and D stabbing C to death the Court can imply the word only after B in the statement before the police Sometimes a positive statement may have a negative aspect and a negative one a positive aspect Take an extreme example if a witness states that a man is dark it also means that he is not fair Though the statement made describes positively the colour of a skin it is implicit in that statement itself that it is not of any other colour Further there are occasions when we come across two statements made by the same person at different times and both of them cannot stand or co exist There is an inherent repugnancy between the two and therefore if one is true the other must be false On one occasion a person says 896 that when he entered the room he saw A shooting B dead with a gun on another occasion the same person says that when he entered the room he saw C stabbing B dead both the statements obviously cannot stand together for if the first statement is true the second is false and vice versa The doctrine of recital by necessary implication the concept of the negative or the positive aspect of the same recital and the principle of inherent repugnancy may in one sense rest on omissions but by construction the said omissions must be deemed to be part of the statement in writing Such omissions are not really omissions strictly so called and the statement must be deemed to contain them by implication A statement therefore in our view not only includes what is expressly stated therein but also what is necessarily implied therefrom Contradict according to the Oxford Dictionary means to affirm to the contrary Section 145 of the Evidence Act indicates the manner in which contradiction is brought out The cross examining Counsel shall put the part or parts of the statement which affirms the contrary to what is stated in evidence This indicates that there is something in writing which can be set against another statement made in evidence If the statement before the police officer in the sense we have indicated and the statement in the evidence before the Court are so inconsistent or irreconcilable with each other that both of them cannot co exist it may be said that one contradicts the other It is broadly contended that a statement includes all omissions which are material and are such as a witness is expected to say in the normal course This contention ignores the intention of the legislature expressed in section 162 of the Code and the nature of the non evidentiary value of such a statement except for the limited purpose of contradiction Unrecorded statement is completely excluded But recorded one is used for a specified purpose The record of a statement however perfunctory is assumed to give a sufficient guarantee to the correctness of the statement made but if words not recorded are brought in by some fiction the object of the section would be 897 defeated By that process if a part of a statement is recorded what was not stated could go in on the sly in the name of contradiction whereas if the entire statement was not recorded it would be excluded By doing so we would be circumventing the section by ignoring the only safeguard imposed by the legislature viz that the statement should have been recorded We have already pointed out that under the amending Act of 1955 the prosecution is also allowed to use the statement to contradict a witness with the permission of the Court If construction of the section as suggested by the learned Counsel for the appellants be accepted the prosecution would be able to bring out in the cross examination facts stated by a witness before a police officer but not recorded and facts omitted to be stated by him before the said officer This result is not decisive on the question of construction but indicates the unexpected repercussions of the argument advanced to the prejudice of the accused As section 162 of the Code of Criminal Procedure enables the prosecution in the reexamination to rely upon any part of the statement used by the defence to contradict a witness it is contended that the construction of the section accepted by us would lead to an anomaly namely that the accused cannot ask the witness a Single question which does not amount to contradiction whereas the prosecution taking advantage of a single contradiction relied upon by the accused can reexamine the witness in regard to any matter referred to in his cross examination whether it amounts to a contradiction or not I do not think there is any anomaly in the situation Section 145 of the Evidence Act deals with cross examination in respect of a previous statement made by the witness One of the modes of cross examination is by contradicting the witness by referring him to those parts of the writing which are inconsistent with his present evidence Section 162 while confining the right to the accused to cross examine the witness in the said manner enables the prosecution to reexamine the witness to explain 113 898 the matters referred to in the cross examination This enables the prosecution to explain the alleged contradiction by pointing out that if a part of the statement used to contradict be read in the context of any other part it would give a different meaning and if so read it would explain away the alleged contradiction We think that the word cross examination in the last line of the first proviso to section 162 of the Code of Criminal Procedure cannot be understood to mean the entire gamut of cross examination without reference to the limited scope of the proviso but should be confined only to the cross examination by contradiction allowed by the said proviso The conflict of judicial opinion on this question is reflected in the decisions of different High Courts in this country One of the views is tersely put by Burn J in In re Ponnusami Chetty 1 at p 476 Whether it is considered as a question of logic or language omission and contradiction can never be identical If a proposition is stated any contradictory proposition must be a statement of some kind whether positive or negative To contradict means to speak against or in one word to gainsay It is absurd to say that you can contradict by keeping silence Silence may be full of significance but it is not diction and therefore it cannot be contradiction Considering the provisions of section 145 of the Evidence Act the learned Judge observed thus at p 477 It would be in my opinion sheer misuse of words to say that you are contradicting a witness by the writing when what you really want to do is to contradict him by pointing out omissions from the writing I find myself in complete agreement with the learned Sessions Judge of Ferozepore who observed that a witness cannot be confronted with the unwritten record of an unmade statement The learned Judge gives an illustration of a case of apparent omission which really is a contradiction ie a case where a witness stated under section 162 of the Code that he saw three persons beating a man and later 1 Mad 475 899 stated in Court that four persons were beating the same man This illustration indicates the trend of the Judge s mind that he was prepared to treat an omission of that kind as part of the statement by necessary implication A Division Bench of the Madras High Court followed this judgment in In re Guruva Vannan 1 In that judgment Mockett J made the following observation at p 901 I respectfully agree with the judgment of Burn J in Ponnuswamy Chetty vs Emperor 2 in which the learned Judge held that a statement under section 162 of the Code of Criminal Procedure cannot be filed in order to show that a witness is making statements in the witness box which he did not make to the police and that bare omission cannot be a contradiction The learned judge points out that whilst a bare omission can never be a contradiction a so called omission in a statement may sometimes amount to a contradic tion for example when to the police three persons are stated to have been the criminals and later at the trial four are mentioned The Allahabad High Court in Ram Bali vs State expressed the principle with its underlying reasons thus at p 294 Witness after witness was cross examined about certain statements made by him in the deposition but not to be found in his statement under section 162 Criminal P C A statement recorded by the police under section 162 can be used for one purpose and one purpose only and that of contradicting the witness Therefore if there is no contradiction between his evidence in Court and his recorded statement in the diary the latter cannot be used at all If a witness deposes in Court that a certain fact existed but had stated under section 162 either that fact had not existed or that the reverse and irreconcilable fact had existed it is a case of conflict between the deposition in the Court and the statement under section 162 and the latter can be used to contradict the former But if he had not stated under section 162 anything about the fact there is no conflict and the 1 ILR 2 Mad 3 AIR 1952 All 280 900 statement cannot be used to contradict him In some cases an omission in the statement under section 162 may amount to contradiction of the deposition in Court they are the cases where what is actually stated is irreconcilable with what is omitted and impliedly negatives its existence At a later stage of the judgment the learned Judges laid down the following two tests to ascertain whether a particular omission amounts to contradiction i an omission is not a contradiction unless what is actually stated contradicts what is omitted to be said and ii the test to find out whether an omission is contradiction or not is to see whether one can point to any sentence or assertion which is irreconcilable with the deposition in the Court The said observations are in accord with that of the Madras High Court in In re Guruva Vannan 1 The Patna High Court in Badri Chaudhry vs King Emperor 2 expressed a similar view At p 22 Macpherson J analysing section 162 of the Code of Criminal Procedure after its amendment in 1923 observed The first proviso to section 162 1 makes an exception in favour of the accused but it is an exception most jealously circumscribed under the proviso itself Any part of such statement which has been reduced to writing may in certain limited circumstances be used to contradict the witness who made it The limitations are strict 1 Only the statement of a prosecution witness can be used and 2 only if it has been reduced to writing 3 only a part of the statement recorded can be used 4 such part must be duly proved 5 it must be a contradiction of the evidence of the witness in Court 6 it must be used as provided in section 145 Evidence Act that is it can only be used after the attention of the witness has been drawn to it or to those parts of it which it is intended to use for the purpose of contradiction and there are others Such a statement which does not contradict the testimony of the witness cannot be proved in any circumstances and it is not permissible to use the recorded statement as a whole to show that the witness did not say something to the investigating officer 1 ILR 2 AIR 1926 Pat 20 901 In Sakhawat vs Crown 1 much to the same effect was stated at p 284 The section section 162 provides that such statements can be used only for the purpose of contradiction Contradiction means the setting up of one statement against another and not the setting up of a statement against nothing at all An illustration would make the point clear If a witness in Court says I saw A running away he may be contradicted under section 162 by his statement to the police I did not see A running away But by proving an omission what the learned Counsel contradicts is not the statement I saw A running away but the statement I stated to the police that I saw A running away As section 162 does not allow the witness to depose I stated to the police that I saw A running away it follows that there can be no basis for eliciting the omission Our argument is further fortified by the use of the words any part of such statement may be used to contradict It is not said that whole statement may be used But in order to prove an omission the whole statement has to be so used as has been done in the present case The contrary view is expressed in the following proposition An omission may amount to Contradiction if the matter omitted was one which the witness would have been expected to mention and the Sub Inspector to make note of in the ordinary course Every detail is expected to be noted This proposition if we may say so couched in wide phraseology enables the trial Judge to put into the mouth of a witness things which he did not state at an earlier stage and did not intend to say oil purely hypothetical considerations The same idea in a slightly different language was expressed by Bhargava and Sahai JJ in Rudder vs The State 2 at p 240 There are however certain omissions which amount to contradictions and have been treated as such by this Court as well as other Courts in this country Those are omissions relating to facts which 1 ILR 2 AIR 1957 All 902 are expected to be included in the statement before the police by a person who is giving a narrative of what he saw on the ground that they relate to important features of the incident about which the deposition is made A similar view was expressed in Mohinder Singh vs Emperor 1 Yusuf Mia vs Emperor 2 and State of M P vs Banshilal Behari 3 Reliance is placed by the learned Counsel for the appellants on a statement of law found in Wigmore on Evidence Vol III 3rd Edn at p 725 In discussing under the head what amounts to a Self contradiction the learned author tersely describes a self contradiction in the following terms it is not a mere difference of statement that suffices nor yet is an absolute oppositeness essential it is an inconsistency that is required The learned author further states at p 733 A failure to assert a fact when it would have been natural to assert it amounts in effect to an assertion of the non existence of the fact The said statement is no doubt instructive but it cannot be pressed into service to interpret the provisions of section 162 of the Code of Criminal Procedure In America there is no provision similar to section 162 of the Code It is not therefore permissible or even possible to interpret the provisions of a particular Act having regard to stray observations in a text book made in a different context It is not necessary to multiply cases The two conflicting views may be briefly stated thus i omissions unless by necessary implication be deemed to be part of the statement cannot be used to contradict the statement made in the witness box and ii they must be in regard to important features of the incident which are expected to be included in the statement made before the police The first proposition not only carries out the intention of the legislature but is also in accord with the plain meaning of the words used in the section The second proposition not only stretches 1 AIR 1932 Lah 2 AIR 1938 Pat 3 AIR 1936 MP 13 903 the meaning of the word statement to a breaking point but also introduces an uncertain element namely ascertainment of what a particular witness would have stated in the circumstances of a particular case and what the police officer should have recorded When the section says that the statement is to be used to contradict the subsequent version in the witness box the proposition brings in by construction what he would have stated to the police within the meaning of the word statement Such a construction is not permissible From the foregoing discussion the following propositions emerge 1 A statement in writing made by a witness before a police officer in the course of investigation can be used only to contradict his statement in the witness box and for no other purpose 2 statements not reduced to writing by the police officer cannot be used for contradiction 3 though a particular statement is not expressly recorded a statement that can be deemed to be part of that expressly recorded can be used for contradiction not because it is an omission strictly so called but because it is deemed to form part of the recorded statement 4 such a fiction is permissible by construction only in the following three cases i when a recital is necessarily implied from the recital or recitals found in the statement illustration in the recorded statement before the police the witness states that he saw A stabbing B at a particular point of time but in the witness box he says that he saw A and C stabbing B at the same point of time in the statement before the police the word only can be implied ie the witness saw A only stabbing B ii a negative aspect of a positive recital in a statement illustration in the recorded statement before the police the witness says that a dark man stabbed B but in the witness box he says that a fair man stabbed B the earlier statement must be deemed to contain the recital not only that the culprit was a dark complexioned man but also that be was not of fair complexion and iii when the statement before the police and that before the Court cannot stand together illustration the witness says in the recorded 904 statement before the police that A after stabbing B ran away by a northern lane but in the Court he says that immediatly after stabbing he ran away towards the southern lane as he could not have run away immediately after the stabbing ie at the same point of time towards the northern lane as well as towards the southern lane if one statement is true the other must necessarily be false The aforesaid examples are not intended to be exhaustive but only illustrative The same instance may fall under one or more heads It is for the trial Judge to decide in each case after comparing the part or parts of the statement recorded by the police with that made in the witness box to give a ruling having regard to the aforesaid principles whether the recital intended to be used for contradiction satisfies the requirements of law The next point is what are the omissions in the statement before the police which the learned Sessions Judge did not allow the accused to put to the witnesses for contradicting their present version The learned Counsel for the appellants contends that the accused intended to put to the witnesses the following omissions but they did not do so as the learned Sessions Judge disallowed the two questions put to P W 30 and made a considered order giving his reasons for doing so and that the learned Counsel thought it proper not to put the same questions or other questions in regard to omissions to P W 30 or to the other witnesses that followed him The said omissions are 1 The warning by the members of the gang on their arrival to the audience at the music party not to stir from their places 2 the presence of a gas lantern3 the chase of Bharat Singh by the assailants 4 the scrutiny of the dead bodies by the gang and 5 the return of the gang in front of the house of Bankey The learned Counsel for the respondent contests this fact and argues that only two omissions namely the presence of a gas lantern and the scrutiny of the dead bodies by the gang were put in the cross examination of P W 30 and no other omissions were put to him or any other witness and that indeed the order 905 of the learned Sessions Judge did not preclude him from putting all the omissions to the witnesses and taking the decision of the Judge on the question of their admissibility He further contends that even before the learned Judges of the High Court the Advocate for the appellants only made a grievance of hi not having been allowed to put the aforesaid two omissions and did not argue that he intended to rely upon other omissions but did not do so as he thought that the learned Sessions Judge would disallow them pursuant to his previous order Before the High Court an application was filed for summoning eight eye witnesses on the ground that the learned Sessions Judge did not allow the Counsel for defence to put the omissions amounting to material contradiction to them but no mention was made in that application of the number of omissions which the accused intended to put to the eye witnesses if they were summoned That application was filed on May 1 1957 but no attempt was made to get a decision on that application before the arguments were heard Presumably the Court as well as the parties thought that the application could more conveniently be disposed of after hearing the arguments On July 30 1957 1 after the appellants were fully heard that application was dismissed and the detailed reasons for dismissing it were given in the judgment which was delivered on September 11 1957 The judgment of the learned Judges of the High Court clearly indicates that what was argued before them was that two omissions sought to be put to P W 30 were disallowed and therefore the accused did not put the said omissions to the other witnesses It was not contended on behalf of the accused that other omissions were intended to be used for contradiction but were not put to the witnesses as the Advocate thought that in view of the order of the learned Sessions Judge they would not be allowed automatically The learned Judges held that the said two omissions amounted to material contradiction and that the learned Sessions Judge was wrong in disallowing them but they ignored those 114 906 two circumstances and based their findings on matters of greater certainty If really the Judges had made a mistake in appreciating the arguments of the learned Counsel for the appellants in the context of omissions one would expect the accused to mention the said fact prominently in their application for special leave Even if they omitted to mention that fact in the application for special leave they could have filed an affidavit sworn to by the Advocate who appeared for them before the learned Judges of the High Court mentioning the fact that in spite of the argument specifically directed to the other omissions the learned Judges by mistake or over sight failed to notice that argument The learned Counsel who argued before us did not argue before the High Court and therefore obviously he is not in a position to assert that the Judges committed a mistake in omitting to consider the argument advanced before them But he made strenuous attempts before us to persuade us to hold that there must have been a mistake He would say that the learned Counsel had in fact relied upon all the aforesaid omissions in support of his contention that there was development of the case of the prosecution from time to time and therefore he must have also relied upon the said omissions in the context of the statements made under section 162 of the Code of Criminal Procedure on the other hand the fact that the learned Judges considered all the alleged omissions in connection with the said contention and only considered two omissions in regard to the contention based on section 162 of the Code is indicative of the fact that the learned Counsel for reasons best known to him did not think fit to rely upon all the alleged omissions The deposition of PW 30 also shows that only two omissions in the statement before the police viz the existence of a gas lantern and the scrutiny of the dead bodies by the gang were put to him in cross examination and the learned Sessions Judge disallowed those questions on the ground that the learned Counsel was not able to how any law entitling him to put the said questions Though the witness was exa mined at some length no other alleged omissions in 907 the statement before the police were sought to be put to him It would be seen from the short order made by the learned Sessions Judge at the time each one of the two questions were put that the learned Sessions Judge did not give a general ruling that no omissions in a statement before the police could be put to a witness The rulings were given having regard to the nature of the omissions relied upon But after the entire evidence of P W 30 was closed the learned Sessions Judge gave a considered order Even in that order he did not rule out all omissions as inadmissible but clearly expressed the view that if what was stated in the witness box was irreconcilable with what was omitted to be stated in the statement it could go in as material contradiction Even after this order it was open to the appellants to bring out all such omissions but no attempt was made by them to do go These circumstances also support the impression of the learned Judges of the High Court that what was argued before them was only in respect of the two specified omissions put to P W 30 in his cross examination We therefore hold that only two omissions relating to the existence of the gas lantern and the scrutiny of the faces of the deceased by the appellants were put to P W 30 and were intended to be put to the other witnesses but were not so done on the basis of the ruling given by the Court Would those two omissions satisfy the test laid down by us The witness stated in the Court that there was a gas lamp and that some of the miscreants scrutinised the faces of the dead bodies In their statements before the police they did not mention the said two facts and some of the witnesses stated that there were lanterns Taking the gas lamp first the scene of occurrence was not a small room but one spread over from the well to Bankey s house From that omission in the statement it cannot necessarily be implied that there was no gas lamp in any part of the locality wherein the incident took place nor can it be said that as the witnesses stated that there were lanterns they must be deemed to have stated that there was no gas lamp for the word lantern is 908 comprehensive enough to take in a gas lantern It is also not possible to state that the statements made before the police and those made before the Court cannot co exist for there is no repugnancy between the two as even on the assumption that lantern excludes a gas lantern both can exist in the scene of occurrence The same can be said also about the scrutiny of the faces of the dead bodies In the statements before the police the movements of the appel lants were given It was stated that they shot at the people and decamped with the gun of Bharat Singh The present evidence that in the course of their pursuit they looked at the faces of two of the dead bodies does not in any way contradict the previous versions for the said incident would fit in with the facts contained in the earlier statements The appellants could have shot at the audience pursued them taken the gun of Bharat Singh and on their way scrutinised the dead bodies The alleged omission does not satisfy any of the principles stated by us In this view it is unnecessary to express our opinion on the question whether if the said two omissions amounted to contradiction within the meaning of section 162 of the Code of Criminal Procedure the appellants were in any way prejudiced in the matter of their trial The last contention of the learned Counsel for the appellants is that the learned Judges of the High Court acted illegally in testing the veracity of the witnesses with reference to the contents of the first information report A perusal of the judgment of the High Court shows that the Advocate for the appellants contended before them inter alia that the witnesses should not be believed as their present version was inconsistent with the first information report The learned Judges assumed that the said process was permissible and even on that assumption they rejected the plea of the learned Counsel for the appellants that there was improvement in the prosecution case The learned Judges were really meeting the argument of the learned Counsel for the appellants It is idle to suggest that they erred in law in relying upon the first infor 909 mation report to discredit the witnesses for the simple reason that they accepted the evidence in spite of some omissions in the first information report In the result we confirm the judgment of the High Court and dismiss the appeal HIDAYATULLAH J The judgment which I am delivering has been prepared by my learned brother Imam J and myself We agree that the appeal be dismissed but would express in our own words the grounds upon which it should be dismissed The main contention advanced on behalf of the appellants was as follows There was no fair trial of the appellants as they had been deprived of the right of cross examination of the prosecution witnesses with reference to their statements made to the police during the police investigation The trial Judge had disallowed two questions in this respect and the lawyer for the appellants regarded the decision of the learned Judge as one which prevented him from putting further questions with respect to other matters concerning the police statements of the witnesses The order of the learned Judge had to be respected The order of the learned Judge was illegal as on a proper interpretation of the provisions of section 162 of the Code of Criminal Procedure the appellants were entitled not only to put the two questions which were ruled out but also questions with respect to other matters arising out of the police statements of the witnesses The purpose of cross examination is to test the reliability of the witnesses both as to what they had to say about the occurrence itself and concerning their identification of those who had participated in it There were several matters with respect to which if questions had been allowed to be put an effective cross examination might have resulted and enabled the appellants to persuade the trial Judge to hold that the witnesses were entirely unreliable In a case of this kind in which the appellants were involved there were only two principal questions which were of vital importance 1 how far the witnesses had improved their 910 story in their evidence in Court from what they had said to the police concerning the occurrence and 2 the existence of opportunity and sufficient light to enable proper identification It may be assumed although it has been a matter of controversy that the order of the trial Judge disallowing the two questions which were put was understood by the lawyer for the defence to mean that all similar questions in the nature of omissions in the police statements with respect to matters stated in Court would be disallowed and therefore no attempt was made to put further questions to the witnesses in this respect Unfortunately the lawyer for the defence had not in this particular case laid any adequate foundation upon which the two questions which were ruled out could have been properly put From that point of view the order of the trial Judge in disallowing those questions was not improper It could not therefore be said that the trial Judge had done anything which could be rightly characterised as infringement of the provisions of section 162 of the Code of Criminal Procedure or of the or even of the rules of natural justice Johari Chowkidar had reported the occurrence to the police station which was a brief statement Certain matters were however definitely mentioned the names of the persons recognised in the occurrence the number of persons killed and injured the taking away of a gun which was with Bharat Singh Bankey Kumhar firing his gun at the culprits in such a manner that some of them must have been injured and the existence of light from the moon and lantern The principal comment had been that in this report there was no mention of the culprits having advanced from the well towards the open place where villagers had gathered to hear the music On the contrary the first information report indicated that the firing was done from the parapet of the well It is clear however from Johari s statement that the culprits had taken away the gun which was with Bharat Singh This could only have been done if the culprits had 911 advanced from the well to the place where the villagers had assembled It was then commented that in the first information report the culprits were said to have come from the southern lane while in Court the evidence was that they had come to the well from the eastern lane The discrepancy is a minor one Joliari must have been concerned with reporting the first firing from the well and he might have mistaken the actual direction from which the culprits had approached the well Johari s statement made no mention of the culprits uttering any warning that no one was to run away as they advanced from the well whereas in Court the witnesses spoke to that effect This was a detail which Johari might not have considered to be of sufficient importance as he was anxious to make a bare statement in order to get the police to proceed to the place of occurrence as quickly as possible Johari s statement also makes no mention of the culprits examining the bodies of the dead and examining their faces and exclaiming that Asa Ram one of the men whom they wished to kill had been killed Here again this was a matter of detail which Johari might not have considered necessary to mention The first information report made no mention of the existence of gas light It did however mention the existence of light of lantern and existence of moonlight The existence of light from lantern and the full moon obviously was sufficient to recognise known persons It is in evidence that the appellants were known for several years to the witnesses who had identified them as participants in the occurrence It could not be said with absolute certainty that the mention of the existence of light of lantern excluded the existence of gas light The statement of Johari gives clear indication that the culprits did not remain all the time at the well because they must have advanced to take away the gun which was with Bharat Singh The culprits must have stayed at the place of occurrence for some time to enable Bankey Kumhar to fire his gun at them and to convey to Johari s mind the certainty that some of the culprits must have been injured Reference is made only to 912 some of the details and not to all the discrepancies pointed out in order to determine whether the alleged improvement in the story of the witnesses in Court from what they are alleged to have stated to the police was with reference to vital matters which went to the root of the prosecution case It is apparent from what has been stated above that even if the defence had been allowed to put questions concerning these alleged omissions in the statements of the witnesses to the police it could not have made their evidence in Court unreliable with respect to any material particular concerning the occurrence or the identification of the accused From the above it seems to us that there is no merit in the appeal As however considerable argument has been made concerning the right of cross examination and as to how the provisions of section 162 of the Code of Criminal Procedure should be construed it becomes necessary to consider the submissions of the learned counsel for the appellants The provisions of the Code of Criminal Procedure of 1861 and 1872 have been referred to by our learned brother Subba Rao J Section 162 of the Code of 1872 made it clear that except for a dying declaration and matters coming within the provisions of section 27 of the of 1872 no statement of any person made to a police officer in the course of in vestigation if reduced into writing could be used as evidence against the accused There was no restric tion as to the extent of the right of an accused to cross examine a prosecution witness concerning his statement to the police Section 162 of the Code of 1898 prohibited the use of a statement reduced into writing as evidence except any statement falling within the provisions of section 32 of the The proviso to this section however expressly stated that in spite of the prohibition in the main provision the accused could use such a state ment to impeach the credit of the witnesses in the manner provided in the of 1872 It will be seen therefore that until 1898 there was no restriction imposed upon the accused as to the extent 913 of his right of cross examination As section 162 of the Code of 1898 entirely prohibited the use of the statement reduced into writing as evidence the proviso to it safeguarded the right of the accused to impeach the credit of such witness in the manner provided in the Under the a witness s credit can be impeached under sections 145 and 155 of that Act The manner in which the provisions of these sections could be utilized to impeach the credit of a witness covers a wide field If however it was intended to contradict a witness concerning his previous statement reduced into writing then the provisions of section 145 require that those parts of the writing by which it was sought to contradict the witness must be shown to him There can be no doubt that the provisions of the Code from 1861 to 1898 in no way curbed the right of cross examination on behalf of the accused The provisions were intended to protect the accused in that no statement of a witness to the police reduced into writing could be used as evidence against him but the right to cross examine the witness to the fullest extent in accordance with the provisions of the in order to show that he was unreliable remained unaffected The real question for consideration is whether the amendment of the Code in 1923 brought about such a radical change in the provisions of section 162 of the Code as to suggest that the Legislature had taken a retrograde step and had intended to deprive the accused of the right of cross examination of prosecution witnesses concerning their police statements except in one restricted particular namely to make use of the statements reduced into writing to contradict the witnesses in the manner provided by section 145 of the The provisions of section 162 of the Code of 1898 were amended in 1923 in the hope that the amendment would resolve the various doubts which had sprung up as the result of divergent judicial opinions as to the meaning of these Provisions The provisions of section 162 of the Code of 1898 had been variously construed 115 914 and the amendment in 1923 has not improved matters The amended section still remains difficult to construe We shall endeavour now to construe it Under section 161 of the Code the police officer may examine orally any person supposed to be acquainted with the facts and circumstances of the case He may also reduce into writing any statement made to him in the course of such examination and if he does so he must make a separate record of the statement of each such person The legislature has however put restrictions upon the use of such statements at the inquiry or trial of the offence The first restriction is that no statement made by any person to a police officer if reduced into writing be signed by the person making it The intention behind the provision is easy to understand The legislature probably thought that the making of statements by witnesses might be thwarted if the witnesses were led to believe that because they had signed the statements they were bound by them and that whether the statements were true or not they must continue to stand by them The legislature next provides that a statement however recorded or any part of it shall not be used for any purpose save as provided in the sections at the inquiry or trial in respect of any offence under investigation at the time such statement is wade The object here is not easily discernible but perhaps is to discourage over zealous police officers who might otherwise exert themselves to improve the statements made before them The Privy Council considered the intention to be If one had to guess at the intention of the legislature in framing a section in the words used one would suppose that they had in mind to encourage the free disclosure of the information or to protect the person making the statement from a supposed unreliability of police testimony as to alleged statements or both It is possible that the legislature had also in mind that the use of statements made under the influence of the investigating agency might unless restricted to a use for the benefit of the accused result in considerable 915 prejudice to him But whatever the intention which led to the imposition of the restrictions it is manifest that the statements however recorded cannot be used except to the extent allowed by the section The prohibition contained in the words any purpose is otherwise absolute Then follow two provisos The first gives the right to the accused to make use of the statements for contradicting a witness for the prosecution in the manner provided by section 145 of the It also gives a right to the prosecution to use the statement for purposes of reexamination of the same witness but only to explain any matter referred to in the cross examination of the witness The first proviso when analysed gives the following ingredients i A prosecution witness Is called for the prosecution ii whose statement has previously been reduced to writing iii The accused makes a request iv The accused is furnished with a copy of the previous statement v In order that any part of such statement if duly proved may be used to contradict such witness in the manner provided by section 145 of the If the a accused exercises the right in v above in any instance then the prosecution has the right to use the statement in the reexamination of the witness but only to explain any matters referred to by him in cross examination Section 145 of the reads Cross examination as to previous statements in writing A witness may be cross examined as to previous statements made by him in writing or reduced into writing and relevant to matters in question without such writing being shown to him or being proved but if it is intended to contradict him by the writing his attention must before the writing can be proved be called to those parts of it which are to be used for the purpose of contradicting him 916 The section analysed gives the following result 1 Witnesses can be cross examined as to previous statements in writing or reduced into writing 2 These writings need not be shown to the witnesses or proved beforehand 3 But if the intention is to contradict them by the writings a their attention must be drawn to those parts which are to be used for contradiction b This should be done before proving the writings Our learned brother Subba Rao J restricts the use by the accused of the previous statements to the mechanism of contradiction as detailed in 3 above but says that the accused has no right to proceed under 1 and 2 He deduces this from the words of section 162 of the Code of Criminal Procedure where it is provided in order that any part of such statement if duly proved may be used to contradict such witness in the manner provided by section 145 of the The fact that the accused can use the previous statement for the purpose of contradicting shows that the previous statement cannot be used for corroborating the witness Also there must be some basis for contradicting This may arise because of there being a contrary statement irreconcilable statement or even material omissions The accused can establish a contradiction by cross examining the witness but only so as to bring out a contradiction and no more We regret we cannot agree and we say this with pro found respect that the accused is not entitled to cross examine but only to contradict In our opinion the reference to section 145 of the brings in the whole of the manner and machinery of section 145 and not merely the second part In this process of course the accused cannot go beyond section 162 or ignore what the section prohibits but cross examination to establish a contradiction between one statement and another is certainly permissible This question loses much of its importance when 917 there are patent contradictions and they can be put to the witness without any cross examination as in the two statements a I saw A hit B b I did not see A hit B But there are complex situations where the contradiction is most vital and relevant but is not so patent There are cases of omissions on a relevant and material point Let us illustrate our meaning by giving two imaginary statements a When I arrived at the scene I saw that X was running away chased by A and B who caught him b When I arrived at the scene I saw X take out a dagger from his pocket stab D in his chest and then take to his heels He was chased by A and B who caught him There is an omission of two facts in the first statement viz a X took out a dagger from his pocket and b he stabbed D in the chest These two statements or their omission involve a contradiction as to the stage of the occurrence when the observation of the witness began What section 145 of the provides is that a witness may be contradicted by a statement reduced into writing and that is also the use to which the earlier statement can be put under section 162 of the Code of Criminal Procedure When some omissions occur there is contradiction in one sense but not necessarily on a relevant matter The statements of witnesses may and do comprise numerous facts and circumstances and it happens that when they are asked to narrate their version over again they omit some and add others What use can be made of such omissions or additions is for the accused to decide but it cannot be doubted that some of the omissions or additions may have a vital bearing upon the truth of the story given We do not think that by enacting section 162 in the words used the legislature intended a prohibition of cross examination to establish which of the two versions is an authentic one of the events as seen by the witness The use of the words reexamination and cross examination in the same 918 proviso shows that cross examination is contemplated or in other words that the manner of contradiction under section 145 of the comprises both cross examination and contradiction Indeed the second part is only the final stage of the contra dictionwhich includes the earlier stages Reexamination is only permissible where there is cross examination It must not be overlooked that the cross examination must be directed to bringing out a contradiction between the statements and must not subserve any other purpose If the cross examination does anything else it will be barred under section 162 which permits the use of the earlier statement for contradicting a witness and nothing else Taking the example given above we do not see why cross examination may not be like this Q I put it to you that when you arrived on the scene X was already running away and you did not actually see him stab D as you have deposed to day A No I saw both the events If that is so why is your statement to the police silent as to stabbing A I stated both the facts to the police The witness can then be contradicted with his previous statement We need hardly point out that in the illustration given by us the evidence of the witness in Court is direct evidence as opposed to testimony to a fact suggesting guilt The statement before the police only be called circumstantial evidence of complicity and not direct evidence in the strict sense Of course if the questions framed were Q What did you state to the police or Q Did you state to the police that D stabbed X They may be ruled out as infringing section 162 of the Code of Criminal Procedure because they do not set tip a contradiction but attempt to get a fresh version from the witnesses with a view to contradicting him How the cross examination can be made must obviously vary from case to case counsel to counsel and statement to statement No single rule can be laid down and the propriety of the question in the light of 919 the two sections can be found only when the facts and questions are before the Court But we are of opinion that relevant and material omissions amount to vital contradictions which can be established by cross examination and confronting the witness with his previous statement The word contradict has various Meanings and in the Oxford English Dictionary it is stated as To be contrary to in effect character etc to be directly opposed to go counter to go against as also to affirm the contrary of to declare untrue or erroneous to deny categorically and the word contradiction to mean A state or condition of opposition in things compared variance inconsistency contrariety In Shorter Oxford English Dictionary contradict is said to mean To speak against to oppose in speech to forbid to oppose to affirm the contrary of to declare untrue or erroneous to deny to be contrary to go counter to and go against and contradiction to mean A state of opposition in things compared variance inconsistency The meaning given to the words contradict and contradiction in these Dictionaries must at least include the case of an omission in a previous statement which by implication amounts to contradiction and therefore such an omission is a matter which is covered by the first proviso to section 162 and questions in cross examination can be put with respect to it in over to contradict the witness It is difficult to say as an inflexible rule that any other kind of omission cannot be put to a witness in order to contradict him when the proper foundation had been laid for putting such questions The words to contradict him appearing in section 145 of the Evidence Act must carry the same meaning as the words to contradict such witness in section 162 of the Code In a civil suit where the provisions of section 162 of the Code of Criminal Procedure have no application would it be correct to say that only questions concerning omissions of the kind suggested by our learned brother could be put and none other We cannot see why a question of the nature of cross examination regarding an omission with respect to a 920 matter which the witness omitted to make in his previous statement and which if made would have been recorded cannot be put The facts and circumstances of each case will determine whether any other kind of omission than that referred to by our learned brother could be put to a witness in order to contradict him It would be for the Judge to decide in each case whether in the circumstances before him the question could be put The purpose of cross examination is to test the veracity of the statement made by a witness in his examination in chief as also to impeach his credit Not only is it the right of the accused to shake the credit of a witness but it is also the duty of the Court trying an accused to satisfy itself that the witnesses are reliable It would be dangerous to lay down any hard and fast rule We pause to look at the matter from another angle We shall assume that the interpretation which the State claims should be put upon section 1621 is correct and compare the respective rights of the accused and the prosecution According to this interpretation the accused has no right of cross examination in respect of the contradiction This means that no question can be put about the previous statement but only the part in which there is a contradiction can be brought to the witness s notice and his explanation if any obtained In other words there is only contradiction and no more But when the accused has used the statement to contradict the witness it may be only on one point what are the rights of the prosecution The prosecution can use any part of the statement in the reexamination not only to explain the I contradiction but also to explain any matter referred to in the cross examination of the witness If I contradiction does not include the right of cross examination the right of the prosecution must necessarily extend to reexamination in respect of any other matter needing explanation in the cross examination at large Thus the accused cannot ask a single question of the nature of cross examination but because he sets up a I contradiction in the narrow sense the prosecution can range all over the previous 921 statement and afford the witness a chance of explaining any matter in his cross examination by re examining him which right includes the possibility of asking leading questions with the permission of the Court Thus the accused makes a I contradiction at his own peril By making a single I contradiction the accused places the entire statement in the hands of the prosecution to explain away everything with its assistance One wonders if the legislature intended such a result for it is too great a price for the accused to pay for too small a right Fortunately that is not the meaning of section 162 of the Code of Criminal Procedure and it is not necessary to read the word cross examination in the proviso in a sense other than what it has The right of both the accused and the prosecution is limited to contradictions It involves cross examination by the accused as to that contradiction within section 145 of the and reexamination in relation to the matters I referred to in the cross examination of the witness The prosecution cannot range at will to explain away every dis crepancy but only such as the accused under his right has brought to light In our opinion reading the section in this way gives effect to every part and does not lead to the startling and if we may say so the absurd results which we have endeavoured to set out above The question may be asked how is there to be a cross examination about a previous statement It is difficult to illustrate one s meaning by entering into such an exposition Any one interested to see the technique is invited to read Mrs Maybrick s trial in the Notable English Trials 1912 at pages 77 79 the trial of William Palmer pages 3536 50 51 Examples will be found in every leading trial The question is did the legislature intend giving this right In our opinion the legislature did and for the very obvious reason that it gave the prosecution also a chance to re examine the witness to explain I any matter referred to in the cross examination of the witness 116 922 We respectfully do not agree that the section should be construed in the way our learned brother has construed it Though we agree as to the result our opinion cannot be left unexpressed If the section is construed too narrowly the right it confers will cease to be of any real protection to the accused and the danger of its becoming an impediment to effective cross examination on behalf of the accused is apparent This brings us to the consideration of the questions which were asked and disallowed These were put during the cross examination of Bankey P W 30 They are Q Did you state to the investigating officer that the gang rolled the dead bodies of Nathi Saktu and Bharat Singh and scrutinized them and did you tell him that the face of Asa Ram resembled that of the deceased Bharat Singh Q Did you state to the investigating officer about the presence of the gas lantern These questions were defective to start with They did riot set up a contradiction but attempted to obtain from the witness a version of what he stated to the police which is then contradicted What is needed is to take the statement of the police as it is and establish a contradiction between that statement and the evidence in Court To do otherwise is to transgress the bounds set by section 162 which by its absolute prohibition limits even cross examination to contradictions and no more The cross examination cannot even indirectly subserve any other purpose In the questions with which we illustrated our meaning the witness was not asked what he stated to the police but was told what he had stated to the police and asked to explain the omission It is to be borne in mind that the statement made to the police is I duly proved either earlier or even later to establish what the witness had then stated In our opinion the two questions were defective for the reasons given here and were properly ruled out even though all the reasons given by the Court may not stand scrutiny The matter was not followed up 923 with proper questions and it seems that similar questions on these and other points were not put to the witness out of deference as it is now suggested to the ruling of the Court The accused can only blame themselves if they did not The learned Judges of the High Court ruled out from their consideration that these two circumstances made it possible for the witnesses to recognise the accused but hold that there was ample opportunity even otherwise for the witnesses to do so The High Court was justified in so doing and there being ample evidence on which they could come to the conclusion that the witnesses had in fact recognised the accused it must inevitably be regarded as one of fact in regard to which this Court does not interfere Since no other point was argued the appeal must fail and we agree that it be dismissed Appeal dismissed

The appellant manufactured hume pipes and had factories in different parts of India Pakistan and Ceylon For determining the available surplus for the payment of bonus for the year 1954 55 the appellant claimed deductions as prior charges on account of i losses suffered on the Lahore factory written off ii expenditure on patents written off and iii debenture redemption reserve It also claimed 6 return on the preference shares as return on paid up capital The losses on the Lahore factory had been incurred in the previous years which had been carried forward from year to year and had been written off as irrecoverable in the bonus year The amounts spent on the purchase of the patents which had been worked off in the previous years had also been written off in the bonus year The appellant had issued debentures in 1942 43 redeemable in 1962 63 and claimed Rs 350000 as the annual contribution towards the redemption reserve The appellant bad issued preference shares on which the shareholders under the terms of the issue were not entitled to more than 5 but the appellant claimed a return of 6 on these hatres also as return on paid up 949 capital as provided in the Full Bench formula The dispute regarding bonus had been raised by the workmen of the Wadala factory alone the workmen of other factories having settled the matter had been paid the agreed bonus The respondents claimed that the bonus calculations should not be made on the basis of All India figures but on the basis of the actual amounts paid or payable by the appellant under the settlements Held that the losses on the Lahore factory and the patents written off could not be allowed as prior charges as they were merely debits in connection with the working of previous years Nor could the amount on account of the debenture redemption reserve be allowed as a prior charge as no such charge was envisaged by the Full Bench formula of the Labour Appellate Tribunal but this amount could be taken into consideration when distributing the available surplus among the various interests entitled thereto In determining the available surplus the Full Bench formula must be adhered to in its essential particulars as otherwise there would be no stability or uniformity of practice A deduction of more than 5 return on the preference shares could not be allowed as that was the maximum return which the shareholders could get on these shares Even though the Full Bench formula mentioned 6 return on paid up capital it was not to be literally construed and the Tribunal could if the circumstances warranted increase or decrease the rate In calculating the actual amount of bonus to be paid calcu lations had to be made on the basis of All India figures otherwise the respondents would have an advantage over those workmen with whom settlements had been made and would get larger amounts of bonus merely by reason of the fact that the appellant had managed to settle the claims of those workmen at lesser figures

Appeals Nos 317 318 of 1950 Appeals by special leave from the judgment and order dated the 29th June 1955 of the Labour Appellate Tribunal of India at Calcutta in Appeals Nos 61 and 81 of 1954 N C Chatterjee section N Mukherjee and B N Ghose for the appellants in C A No 317 of 56 and respondent No 1 in C A No 318 of 56 A V Viswanatha Sastri A K Dutt and B P Maheshwari for the appellants in C A No 318 of 56 and respondents in C A No 317 of 56 1959 May 8 The Judgment of the Court was delivered by WANCHOO J These are two appeals by special leave against the same decision of the Labour Appellate Tribunal of India in a dispute between Messrs Shalimar Works Ltd Howrah hereinafter called the company and its workmen represented by two unions hereinafter called the workmen Appeal No 317 is by the company while appeal No 318 is by the workmen We shall dispose them of by one judgment There was a dispute between the company and its workmen on a number of matters and it was referred to the Sixth Industrial Tribunal for adjudication by the Government of West Bengal Only two matters now survive out of the many referred to the Tribunal namely 1 profit sharing bonus and 2 reinstatement of 250 old workmen We shall first deal with the question of profit sharing bonus It appears that the company had a profit sharing bonus scheme in force on the following lines It provided that after making certain deductions if the remaining profit was between Rs 150000 and Rs 199999 the workmen would be entitled to quarter of a month s average basic pay as bonus When the 152 remaining profit was between Rs 2 00 lakhs and Rs 249999 the bonus went up to half of a month s average basic pay When the remaining profit was between Rs 250000 and Rs 299999 the bonus was to be three quarters of a month s average basic pay and when the remaining profit was Rs 3 lacs or more the bonus was to equal one month s basic pay No bonus was to be paid if the profit was less than Rs 150000 There were provisions that the full bonus would be paid to a workmen who had attended 275 days in a year inclusive of holidays and leave with pay while those with less attendance were to be paid proportionately with the condition that if the attendance of any workman was less than 100 days he would be entitled to no bonus The workmen wanted this scheme to be revised and the main revision they desired was that the bonus should begin with a profit of Rs 25000 after the usual deductions when it would be one week s wages and should go on increasing till it came to three months wages for profit above Rs 1 lakh and upto Rs 3 lakhs thereafter it should increase further at the rate of 21 days wages for each lakh over 3 lakhs This was opposed by the company though the company agreed to a change in the quantum of bonus when profit after deductions was Rs 3 lakhs or above In the scheme in force the bonus was equal to one month s basic pay when the profit was Rs 3 lakhs or above with no further increase whatsoever be the profits The company agreed to revise this term and suggested that when profit was ibetween Rs 3 lakhs to Rs 4 lakhs bonus should be four weeks wages ii above Rs 4 lakhs upto Rs 5 lakhs bonus should be five weeks wages iiiabove Rs 5 lakhs it should be six weeks wages The Industrial Tribunal did not accept fully the contentions of either party in this connection though it varied the scheme in force in certain particulars After the variation the scheme was as below 153 For remaining profit after the usual deductions ifrom Rs80000 to bonus at the rate of one Rs199999 week s average basic pay ii from Rs2 00 lakhs to bonus at the rate of half Rs 249999 of a month s average basic pay iii from Rs2 50 lakhs to bonus at the rate of three Rs 2 99999 quarters of a month s average basicpay iv from Rs 3 00 lakhs to bonus at the rate of four Rs 4 00 lakhs weeks average basic pay v from above bonus at the rate of six Rs4 00 lakhs up weeks average basic toRs 5 00 lakhs pay and vi from above bonus at the rate of two Rs 5 00 lakhs months average basic pay The Industrial Tribunal also accepted 275 days attendance for earning full bonus and proportionate bonus when the attendance fell below 275 days and the minimum of 100 days attendance for earning any bonus at all It also held that bonus for the years 1951 and 1952 should be paid at the existing rates while revised rates should be applied from the year 1953 onwards Both parties appealed to the Labour Appellate Tribunal against this revision The company contended that no greater revision than what it had agreed to should have been ordered In the workmen s appeal it was contended that the scheme put forward on their behalf should have been accepted They further contended that the condition of minimum attendance for 100 days should not have been laid down and that the bonus for the years 1951 and 1952 should have been awarded at the revised rates The Appellate Tribunal saw no reason to interfere with the award of the Industrial Tribunal in this respect and dismissed the appeals with one modification namely it added that if in any year it was found 154 that the bonus worked out according to the award of the Industrial Tribunal was less than profit bonus calculated according to the Full Bench formula evolved in the Mill Owners Association Bombay vs The Rashtriya Mill Mazdoor Sangh Bombay 1 the workmen would be entitled to bonus under the formula otherwise they would get bonus under the scheme as modified by the Industrial Tribunal In the appeals before us the company has attacked the revision ordered by the Industrial Tribunal which was upheld by the Appellate Tribunal as also the condition added by the latter while the workmen have attacked the scale fixed by the Industrial Tribunal as also the order of payment of bonus for the years 1951 and 1952 according to the scheme in force before the revision by the Industrial Tribunal and the conditions as to attendance Learned counsel for the parties however agreed before us that the revision made by the Industrial Tribunal was acceptable to both the parties and that the condition laid down by the Appellate Tribunal that where the bonus according to the scheme is less than the bonus worked out according to the Full Bench formula that formula should be applied should be deleted In view of this agreed statement we delete the condition laid down by the Appellate Tribunal and order that bonus should be paid in accordance with the scheme as revised by the Industrial Tribunal Learned counsel for the workmen however urged that the condition as to minimum attendance of 100 days for entitlement to any bonus at all and of minimum attendance of 275 days for entitlement to full bonus was arbitrary and should be set aside This condition has been accepted by both the Tribunals and appears reasonable and we see no reason to interfere It was further contended that bonus for the years 1951 and 1952 should have been ordered to be paid according to the revised scheme This contention was also negatived by the two Tribunals and we see no reason to differ from them The two appeals therefore with respect to bonus are dismissed subject to the modification given above 1 155 We now come to the question relating to the term in the reference as to the reinstatement of 250 old workmen it is necessary to state certain facts in this connection It appears that a Major Engineering Tribunal was set up by the Government of West Bengal in October 1947 to decide disputes between major engineering firms and their workmen The company as well as the workmen were parties to the disputes which was pending before that tribunal The issues before that tribunal were of a very comprehensive nature and included all kinds of disputes that could arise between employers and employees While that adjudication was pending the workmen suddenly pressed certain demands upon the company for immediate solution without awaiting the award of the tribunal even though the demands so put forward were under adjudication The company naturally refused to meet the demands when they were under investigation by the tribunal Consequently the workmen who had come to work on March 231948 started a sit down strike after they had entered the company s premises This strike continued from March 23 to 27 and it was on March 27 that the workmen were ejected from the premises by the police according to the case of the company or were induced to leave the premises by the police according to the case of the workmen Anyhow after the workmen left the premises on 27th the company gave notice on that day that the Works would be closed indefinitely Another notice was given by the company on April 6 1948 in which it was notified that all those who had resorted to illegal strike from March 23 1948 would be deemed to have been discharged from that date Thereafter no work was done till May 15 1948 On that date the company gave a notice that if sufficient suitable men applied for employment on or before May 19 the works would be opened on a limited scale from May 20 It seems however that nothing came out of this notice Eventually on July 5 the company gave another notice to the effect that the works would reopen on July 6 1948 and all old employees could apply and if reengaged their past services would 156 be counted and their conditions of service would be as awarded by the Major Engineering Tribunal which it seems had given its award in the meantime It was also said in the notice that upto July 21 the company would only consider engagement of former employees and no fresh labour would be recruited till that date Thereafter the majority of the old workmen applied for being retaken in service and everyone who applied upto July 21 was reengaged Thereafter the company refused to reengage the old employees a few of whom are said to have applied in November and December 1948 August 1951 February 1952 and January 1953 It appears that in November 1949 the Assistant Labour Commissioner was moved by one of the trade unions about non employment of 249 workmen He wrote to the company in that connection and it replied that the workmen had been discharged for having taken part in an illegal strike and it could not see its way to reemploy them For a long time nothing seems to have happened thereafter till we come to October 7 1952 when the first reference was made with respect to the reinstatement of 250 old workmen The original reference was to the tribunal consisting of Shri SK Niyogi That gentleman went on retirement before he could dispose of the reference and consequently another reference was made on November 18 1953 to the present tribunal consisting of Shri ML Chakraborty No list of 250 workmen was sent to the Tribunal about whom it was to consider the question of reinstatement No list of these workmen was filed even before the Industrial Tribunal during the adjudication proceedings It was only after the arguments on behalf of the company were over on December 141953 that a list of names was filed before the Industrial Tribunal This list consisted of 220 persons only though the reference was with respect to 250 As has been pointed out by the Appellate Tribunal it was a carelessly prepared list in which some names were repeated Against some serial numbers there were neither names nor ticket numbers In spite of this the Industrial Tribunal ordered reinstatement without specifying who were to be reinstated it really 157 did not know who were the persons to be reinstated What it did was to order the company in order that identity of the workmen to be reinstated might be established to give a general notice on its notice board notifying the strikers to come and join their duties on a fixed date and to reinstate whichever striker applied within the time allowed This award of the Industrial Tribunal has been rightly criticised by the Appellate Tribunal which has charactrized this reinstatement as vague and highly objectionable The Appellate Tribunal was of the view that no award could be so loosely or vaguely made It further went on to consider whether identity could in any manner be fixed In this connection it relied on the remarks made by the company which had however objected to the production of the list at that late stage on this list under orders of the Indust rial Tribunal From these remarks the Appellate Tribunal came to the conclusion that the identity of 115 workmen had been established It found that 100 out of them had withdrawn their provident fund It therefore held that so far as these 100 were concerned they accepted the order of discharge because of the with drawal of the provident fund and no further relief could be granted to them As for the remaining fifteen workmen it pointed out that they had not withdrawn their provident fund It therefore ordered these fifteen workmen to be reinstated Finally it ordered that no compensation could be allowed to the workmen for the period between their discharge and their reinstatement because of the delay on their part in asking for redress The reason which impelled the Appellate Tribunal to order reinstatement was that the notice of discharge dated April 6 1948 was not served on the workmen individually and though the notice of July 5 1948 inviting the former workmen to come and join the company was given wide publicity it was also not served on the workmen individually According to the Appellate Tribunal the net result was that there was defective communication of notice of discharge to the workmen and the notice offering reinstatement was not also sufficiently published to enable it to hold 158 that the defect was cured As to the sit down strike itself both the Tribunals were of the view that the strike was the result of pre concerted action and there was no justification for it when the matter was pending before a tribunal for adjudication The plea of the workmen that the strike resulted spontaneously because of the insult offered by the manager to a deputation of the workmen on March 23 was disbelieved by both the Tribunals The main contention on behalf of the company in this connection is that when both the Tribunals had found the sit down strike unjustified they should have held that the company was entitled to discharge the workmen in the particular circumstances of this case It is also urged that the discharge took place in April 1948 and the company reopened in July 1948 the reference of the matter more than four years after without the list of the workmen said to have been discharged was not proper On the other hand it has been urged on behalf of the workmen that as a dispute was pending between the company and its workmen the company could not discharge the workmen without obtaining permission of the tribunal under section 33 of the and inasmuch as the notice of discharge of April 6 1948 was given without obtaining the sanction of the tribunal before whom the dispute was then pending it was a breach of section 33 and therefore the order of discharge being in breach of law the workmen were entitled to reinstatement There is no doubt that strictly speaking the order of the company discharging its workmen on April 6 1948 when a dispute was admittedly pending was a breach of section 33 see Punjab National Bank Ltd vs Employees of the Bank1 The remedy for such a breach is provided in section 33 A and it can be availed of by an individual workman If therefore it was felt by the workmen who were discharged on April 6 1948 that there was breach of section 33 by the company they should have applied individually or collectively to the tribunal under section 33 A None of them did this It is true that some kind of letter was written to the Assistant 1 159 Labour Commissioner in November 1949 but that was also very late and nothing seems to have happened thereafter for almost another three years till the first reference was made on October 7 1952 It is true that there is no limitation prescribed for reference of disputes to an industrial tribunal even so it is only reasonable that disputes should be referred as soon as possible after they have arisen and after conciliation proceedings have failed particularly so when disputes relate to discharge of workmen wholesale as in this case The industry has to carry on and if for any reason there has been a wholesale discharge of workmen and closure of the industry followed by its reopening and fresh recruitment of labour it is necessary that a dispute regarding reinstatement of a large number of workmen should be referred for adjudication within a reasonable time We are of opinion that in this particular case the dispute was not referred for adjudication within a reasonable time as it was sent to the Industrial Tribunal more than four years after even reemployment of most of the old workmen We have also pointed out that it was open to the workmen themselves even individually to apply under section 33 A in this case but neither that was done by the workmen nor was the matter referred for adjudication within a reasonable time In these circumstances we are of opinion that the tribunal would be justified in refusing the relief of reinstatement to avoid dislocation of the industry and that is the correct order to make In addition the reference in this case was vague inasmuch as the names of 250 workmen to be reinstated were not sent to the Industrial Tribunal and no list of these men was given to it till practically after the whole proceeding was over Even the list then supplied was so bad that the Industrial Tribunal did not think it worthwhile to act upon it and directed the company to give a notice to the strikers to ask for re employment within a certain time This the company had already done on July 5 1948 That notice had gained con siderable publicity for the majority of the workmen did appear thereafter for re employment by July 21 In the circumstances there was no reason for ordering 160 reinstatement of any one on such a vague reference after such an unreasonable length of time The defect in the order of discharge of April 6 due to permission not having been obtained under section 33 can in the circumstances of this case be ignored on the ground that the workmen who did not rejoin in July 1948 were not interested in reinstatement firstly on account of the circumstances in which that order came to be made after an illegal and unjustified sit down strike secondly because the workmen in their turn did not avail themselves of the remedy under section 33 A which was open to them and thirdly because the reference was made after an unreasonable length of time and in a vague manner We are therefore of opinion that the Appellate Tribunal should not have ordered the reinstatement of even the fifteen workmen in the circumstances as their case was exactly the same as the case of the hundred workmen except in the matter of the withdrawal of the provident fund After the application for special leave was allowed this Court made an order on September 26 1955 that seven days wages every month should be paid by the company to the fifteen workmen who had been ordered to be reinstated Learned counsel for the company informs us that of these fifteen only seven have been turning up to receive this payment while eight men never turned up This shows that these eight are not interested in the reinstatement Of the remaining seven two according to the learned counsel for the company have obtained other jobs while one is said to be a member of Parliament The company was prepared to reinstate out of human considerations the other four though it contends that legally and rightly so it is not bound to reinstate any one of these fifteen workmen These four workmen whom the company is prepared to take back are Nitai Manji Satya Charan Das Mustafa Khan and Akil ud Din The appeal of the company must therefore be allowed with respect to the remaining eleven workmen who have been ordered to be reinstated by the Appellate Tribunal The order of the Appellate Tribunal will stand with respect to the four workmen named above in 161 view of the company s willingness to take them back The appeal of the workmen on the question of reinstatment fails and is hereby dismissed We may however make it clear that payment made pursuant to the order of this Court will not in any event be refundable or adjustable towards the future wages of those workmen who will be reinstated by the company Both the company and the workmen have raised other points in their respective grounds of appeal but as they have not been pressed before us we need not say anything with respect to them In these circumstances we are of opinion that both the parties will bear their own costs of this Court Appeal No 317 allowed Appeal No 318 dismissed

For the year 1953 54 the employers paid bonus to the workmen equal to three months wages but the workmen demanded bonus equivalent to seven months and six months basic wages with dearness allowance The employers contended that after making deductions for the prior charges from the gross profits in accordance with the formula evolved by the Full Bench of the Labour Appellate Tribunal in Mill Owners Association Bombay vs The Rashtriya Mill Mazdoor Sangh there was no available surplus left and consequently the 926 workmen could claim no bonus The workmen countered that the formula required revision as the employers were becoming increasingly more rehabilitation conscious and their appetite for the provision for rehabilitation was fast growing with the result that in most cases after allowing for rehabilitation there was no surplus left for the payment of bonus and the main object of the formula was thus frustrated The workmen further contended that the whole of the rehabilitation expenses should not be provided for out of trading profits and that the claim for rehabilitation should be fixed at a reasonable amount and the industry should be required to find the balance from other sources Held that though there may be some force in the plea made for the revision of the Full Bench formula the problem raised by the said plea is of such a character that it can be appropriately considered only by a high powered commission and not by this Court while hearing the present group of appeals Besides the Full Bench formula had on the whole worked fairly satisfactorily in a large number of industries all over the country and the claim for bonus should be decided by Tribunals on the basis of this formula without attempting to revise it The formula was elastic enough to meet reasonably the claims of the industry and labour for fair play and justice If the content of each item specified in the formula was determined objectively in the light of all relevant and material facts the Tribunals would generally find it possible to make reasonable adjustments between the rival claims and provide for a fair distribution of the available surplus Muir Mills Co Ltd vs Suti Mills Mazdoor Union Kanpur Baroda Borough Municipality vs Its Workmen Sree Meenakshi Mills Ltd vs Their Workmen and The State of Mysore vs The Workers of Kolar Gold Mines referred to The formula was based on two considerations first that labour was entitled to claim a share in the trading profits of the industry because it had partially contributed to the same and second that labour was entitled to claim that the gap between its actual wage and the living wage should within reasonable limits be filled up In dealing with the claims for bonus the two fold basis of the formula must always be kept in mind Further it was not necessary that the workmen must actually manufacture or produce the goods before they become entitled to claim any bonus Burma Shell Oil Storage Distributing Co of India Ltd vs Their Workmen applied The working of the formula begins with the figure of gross profits taken from the profit and loss account which are arrived at after payment of wages and dearness allowance to employees 927 and other items of admissible expenditure It would be open to the Tribunal to examine the accounts and to disallow deliberate and mala fide debit entries made to reduce the amount of gross profits It would likewise be open to the parties to claim the exclusion of items credit or debit on the ground that they were patently and obviously extraneous and entirely unrelated to the trading profits of the year But the Tribunal must resist the temptation of dissecting the balance sheet too minutely or attempting to reconstruct it K Cottton Manufacturers Ltd Kanpur vs Their Workmen applied The formula deals with the claims for bonus on the basis that the relevant year is a self sufficient unit and the appropriate accounts have to be made on the notional basis in respect of the said year Hence the refund of excess profits and the adjustment of the previous year s depreciation and losses cannot be made against the bonus year s profits Model Mills etc Textile Mills Nagpur vs The Rashtriya Mills Mazdoor Sangh Bennett Coleman and Co Ltd vs Their Workmen referred to After ascertaining the amount of gross profits the first item of deduction therefrom relates to depreciation The depreciation which has to be deducted from the gross profits should be the notional normal depreciation as explained in the case of Surat Electricity Co Ltd and should not include the initial and additional depreciation allowable under the Income tax Act UP Electric Supply Co Ltd vs Their Workmen Surat Electricity Co section Staff Union vs Surat Electricity Co Ltd referred to The second item of deduction is on account of income tax On the balance obtained after deducting the depreciation from the gross profits the tribunal has to calculate the amount of income tax payable for the bonus year In making this calculation it would not be reasonable to allow the employer to claim under the item of income tax an additional amount in respect of the two further depreciations which are expressly authorised under section 102vi of the Income tax Act Therefore the two concessions thus given by the Income tax Act should not be taken into account in determining the amount of income tax under the formula Sree Meenakshi Mills Ltd vs Their Workmen 1958 SCR 878 explained and followed The third item of deduction under the formula relates to the return on paid up capital as well as working capital The formula provides generally for the payment of interest at 6 118 928 per annum on the paid up capital and at 2 on working capital These rates are not inflexible and will vary according to the circumstances of each case Workmen of Assam Co Ltd vs Assaam Co Ltd 1959 SCR 327 Rustom and Hoynsby India Ltd vs Their Workmen 1955I LLJ 73 Mill Owners Association Bombay vs The Rashtriya Mill Mazdoor Sangh Tea and Coffee Workers Union vs Brooke Bond India Private Ltd U P Elcctric Supply Co Ltd vs Their Workmen referred to The fourth item of deduction is on account of rehabilitation which includes replacement and modernisation but not expansion Rehabilitation has to be calculated for the plant and machinery as well as the buildings The whole of the rehabilitation charges have to come out of the trading profits as this guarantees the continuance of the industry to the benefit both of the employer and labour The Tribunal has to estimate the probable cost of replacement of plant and machinery at the time when such replacement would become due In determining such cost the Tribunal has to project the price level into the future determined not only in the light of the prices prevailing during the bonus year but also of subsequent price levels The decision on the question of the probable cost of rehabilitation is always reached by adopting a suitable multiplier This multiplier is based on the ratio between the cost price of the plant and machinery and the probable price which may have to be paid for its rehabilitation replacement or modernisation As there has been a continuous rise in the price of industrial plant and machinery the older the plant which needs rehabilitation the higher is the multiplier If the employer has deliberately or mala fide refrained from rehabilitating his old machinery with a view to claim a higher multiplier his conduct may be taken into account in determining the multiplier and the amount of rehabilitation payable to him Once a proper multiplier is adopted the probable cost of rehabilitation can be easily determined by multiplying the original cost by the multiplier At this stage the divisor steps in The total amount required for rehabilitation has to be divided by a suitable divisor in order to ascertain the annual requirement of the employer in that behalf year by year Before awarding an appropriate amount in respect of rehabilitation for the bonus year deductions have to be made first on account of the break down value of the plant and machinery which is usually calculated at the rate Of 5 Of the cost price secondly the depreciation and general liquid resources available to the employer other than those earmarked for specific purposes thirdly all the rehabilitation amounts which may have been allowed to the employers in the previous years but had remained unused in the meanwhile 929 It is only after all the prior charges have thus been deter mined and deducted from the gross profits that the available surplus can be ascertained for payment of bonus The procedure adopted by some Tribunals of nationally working out the amount of bonus and then giving it priority in the calculations before the determination of the income tax payable inevitably lessens the amount of tax proportionately and should be deprecated Rehabilitation cannot be given priority before the income tax payable is ascertained and deducted from the gross profits No addition should be made to the list of prior charges re cognised by the formula even with respect to the employers claim for deductions on account of gratuity fund created for the benefit of the workmen But the Tribunal ought to when the available surplus is determined take into account such a claim and reasonable amount of allowance should be definitely borne in mind in finally fixing the amount of bonus Ms Metro Motors vs Their Workmen referred to When the available surplus has been ascertained three parties are entitled to claim shares therein labour s claim for bonus the industry s claim for the purpose of expansion and other needs and the share holders claim for additional return on the capital invested by them The ratio of distribution would obviously depend on several factors such as the gap between the actual wages and the living wages the setting apart of a gratuity fund by the employer and the amount thereof the extent of the available surplus the dividends actually paid by the employer and those paid by comparable concerns the probabilities of expansion the general financial condition of the employer and his necessity to meet urgent liabilities It would be wrong on principle to take overtime payment into account in calculating the bonus payable to each workman Once the total amount payable as bonus is determined on the principles as indicated the question of overtime payment being taken into account can no longer be a dispute between the employer and his workmen but one between the workmen inter se

Appeals Nos131 to 304 of 1957 Appeals by special leave from the judgments and order dated October 19 1955 and January 31 1956 of the Authority under Bombay in Applications Nos 950 961 963 967 970 989 992 994 1013 1015 1016 1049 1050 and 11510 11511 and 11513 11517 of 1955 respectively MC Setalvad Attorney General for India R Ganapathy Iyer and R H Dhebar for the appellants Purshottam Tricumdas and G N Srivastava for the respondents in all the appeals except C A No 186 of 1957 1959 May 8 The Judgment of the Court was delivered by GAJENDRAGADKAR J This group of 174 appeals by special leave arises from the several applications made against Mr B P Hira Works Manager Central Railway Workshop and Factory Parel Bombay hereafter called the appellant by the employees at the said factory hereafter called the respondents under the IV of 1936 claiming payment of overtime wages since 1948 All these applications were heard by the Payment of Wages Authority Bombay as companion matters and they have been disposed of by a common judgment The main judgment has however been delivered by the said Authority in the application filed by Mr C M Pradhan hereafter called the respondent which gives rise to Civil Appeal No 131 of 1957 before us We would therefore deal with this appeal in particular and our decision in this appeal will govern the rest of the appeals in this group 139 In his application made before the Payment of Wages Authority the respondent alleged that he had been employed in the factory called the Central Railway Workshop and Factory Parel Bombay and that he had not been paid overtime wages due to him from April 1 1949 to September 30 1954 The respondent claimed that the delay made by him in filing the present application should be condoned because jointly with his co workers he had been in correspondence with the railway administration in regard to the said payment of overtime wages since 1948 and that the claim made by him and his colleagues had been finally rejected by the railway administration on August 31 1954 His case was that he had filed the present application soon thereafter and so the delay made by him in making the claim before the Authority should be condoned The Authority heard the parties on the question of delay and held that the delay only in respect of the claim for the period after May 1953 should be condoned In the result the claim for overtime wages for the period prior to May 19 1953 was rejected on the preliminary ground of delay whereas the claim for the period subsequent to the said date was considered on the merits The respondent s case was that he was entitled to the overtime wages for work on such Sundays when he was not given a holiday within three days prior to or three days subsequent to the Sundays on which he worked The appellant conceded that the respondent had not been given a holiday within the three days prior to or the three days subsequent to the Sundays on which he had worked as required by section 52 of the Indian The respondent alleged that he was a worker within the meaning of section 2 sub section 1 of the said LXIII of 1948 and as such he was entitled to overtime wages under s 59 of the said Act Alternatively he urged that even if he was not a worker within the meaning of section 21 of the said Act he would nevertheless be entitled to overtime wages under the said section 59 by reason of section 70 of the Bombay Shops and Establishments Act 1948 Bom 79 of 1948 hereafter called the Act Thus the claim for 140 overtime wages was made by the respondent on two alternative grounds The appellant disputed the validity of this claim It was urged on its behalf that the respondent was not a worker under section 21 of the and that section 70 of the Act did not justfy the claim alternatively made by the respondent for overtime wages The Authority considered the evidence led before it in respect of all the repondents for overtime wages It appears that these respondents are employed by the appellant in the time office of the Parel Workshop and not in the factory itself The duties of these timekeepers are to maintain initial records of attendance of workshop staff to prepare pay sheets for them to maintain their leave accounts to dispose of final settlement cases of the said staff and to maintain records for statistical information The Authority held that the time office where the timekeepers work is an integral part of the factory and so it came to the conclusion that the timekeepers are employed in the factory called the Central Railway Workshop and Factory Parel Bombay The Authority then examined the question as to whether the timekeepers are workers within the meaning of section 21 of the Evidence showed that four timekeepers are required to do the work of progress timekeepers This work consists in preparing the progress time sheets and operation time sheets of machine shop staff working on various jobs dealing with the production of railway spare parts The Authority was disposed to take the view that having regard to the nature of the work assigned to the progress time keepers they must be held to be persons employed in work incidental to or connected with the manufacturing process or the subject of the manufacturing process and as such they are workers within the meaning of section 21 of the In the result the finding made by the Authority was that timekeepers are employees of the workshop but are not workers under the while the progress time keepers can claim the status of workers under the said Act 141 The Authority then considered the respondent s argument that even if he was not a worker under the he was neverthless entitled to claim the benefit of section 59 of the said Act by virtue of section 70 of the Act The Authority accepted this contention and held that even if the respondent was not a worker under the section 70 of the Act entitled him to claim overtime wages under section 59 of the That is why the Authority ordered that the respondents would be entitled for the period 19 5 1953 to 30 9 1954 to overtime wages at double the ordinary rate for the Sundays on which they worked when they were not given a a holiday on one of the three days immediately preceding or after the said Sunday The appellant was accordingly directed to file a statement showing the overtime wages to which the several respondents were entitled and orders were passed on each one of the applications directing the appellant to pay the respective amounts to each one of the respondents It is against these orders that the appellant has filed the present group of appeals by special leave The first point which has been urged before us by the learned Attorney General on behalf of the appellant is that the Authority was in error in holding that the progress timekeepers are workers under section 21 of the A worker under section 21 means a person employed directly or through any agency whether for wages or not in any manufacturing process or in cleaning any part of the machinery or premises used for manufacturing process or in any other kind of work incidental to or connected with the manufacturing process or the subject of the manufacturing process and the manufacturing process under section 2k means any process for inter alia 1 making altering repairing ornamenting finishing packing oiling washing cleaning breaking up demolishing or otherwise treating or adapting any article or substance with a view to its use sale transport delivery or disposal It is clear that the duties of the progress timekeepers do not fall within the first part of a 2k The Authority has however 142 held that the said duties can be treated as incidental to or connected with the manufacturing process or the subject of manufacturing process it is the correctness of this finding that is challenged by the appellant On the other hand Mr Purshottam for the respondents argues that the Authority was in error in holding that the timekeepers are not workers under section 2 1 His contention is that the expression incidental to or connected with the manufacturing process is wide enough to include not only the cases of the progress timekeepers but the cases of all timekeepers as a class It is true that the finding of the Authority in respect of the timekeepers is against the respondents but Mr Purshottam says that he is entitled to support the final order passed by the Authority on the additional ground that the time keepers like the progress timekeepers are workers under section 21 and as such they are entitled to claim overtime wages under section 59 of the The final decision of the Authority is however based on the view that under section 70 of the Act the respondents would be entitled to overtime wages under section 59 of the even if they are not workers under section 21 That being so we think it is necessary first to consider the correctness of this view If the conclusion of the Authority on the scope and effect of the provisions of section 70 of the Act is correct then it would be unnecessary to consider whether the timekeepers and the progress timekeepers are workers under section 21 of the We would therefore deal with that question first It appears that there are three statutes which pro vide for the payment of extra wages for overtime work The proviso to section 71 c of the Indian Railways Act IX of 1890 lays down that the exempted railway servant specified in it shall be paid for overtime at not less than one and a quarter times his ordinary rate of pay This provision has been subsequently amended by Act 59 of 1956 which makes the rate for overtime one and one half times the ordinary rate of pay but it is common ground that we are not 143 concerned with the amended provision in these appeals since the respondents claim is for a period prior to the date of the amendment It is suggested by the appellant that the respondents are railway servants under section 3 7 of the said Act and as such they may be entitled to make a claim for overtime wages under the said proviso but the respondents have not made and do not wish to make a claim under the said provision and so the question as to the application of the said section need not detain us If the construction placed on section 70 of the Act by the Authority is correct the claims of employees who are working in a factory in the State of Bombay would be governed by that provision this position is not seriously disputed before us Section 59 of the also deals with the question of extra wages for overtime It provides for the payment of wages in respect of overtime work at the rate of twice the ordinary rate of wages This benefit is however available only to persons who are workers within the meaning of section 21 of the said Act Since we are dealing with the case on the assumption that the respondents are not workers under s 21 it follows that section 59 by itself would not be applicable to them The Bombay Shops and Establishments Act 1948 is the third statute which makes a provision for the payment of extra wages for overtime work Section 63 of the Act deals with this topic Section 631 provides for the payment of overtime work at the rate of 1 12 times the ordinary rate of wages in the case of employees in any establishment other than a residential hotel restaurant or eating house whereas sub section 2 provides for wages for overtime at the rate of twice the ordinary rate of wages in respect of employees in a residential hotel restaurant or eatinghouse subject to the other conditions specified in the said section It is clear that this section does not apply to the respondents because they are employees in a factory and not in any of the establishments enumerated in its two sub sections 144 The respondents case however is that by virtue of section 70 of the Act the provisions of the Factories Actincluding a 59 are extended to the cases of all employees in factories and so they are entitled to claim wages for overtime under the said section of the This contention has been upheld by the Authority It is not disputed by the appellant that the Bombay Legislature was competent to prescribe for the extension of the provisions of the to employees in the factories within the territory of the State of Bombay and since sanction for this legislation has been duly obtained from the Governor General of India on January 3 19491 no question about any repugnance between the provisions of section 70 and those of the can possibly arise Thus the validity of the said section is not in dispute and so the only point which calls for our decision is one of construction Does section 70 supplement the provisions of the by extending them to all employees in factories like the respondents though they are not workers under section 21 of the said Act Before dealing with this point it is necessary to refer briefly to the broad features of the Act The Act no doubt is a piece of beneficent social legislation intended to serve the cause of labour welfare It has been passed in order to consolidate and amend the law relating to the regulation and conditions of work and employment in shops commercial establishments residential hotels restaurants eating houses theaters other places of public amusements and entertainments and other establishments Section 2 sub sections 3 4 and 27 define respectivly the establishment commercial establishment and shop The definitions of commercial establishment and shop exclude inter alia factory Establishment is defend as meaning a shop commercial establishment residential hotel restaurant eating house theatre or other place of public amusement are entertainment to which the Act applies and includes such other establishment as the State Government may by notification in the official gazette declare 1 Published in the Bombay Government Gazette Part IV dated 11 1 1949 145 to be an establishment for the purposes of this Act It would be noticed that the definition of establishment is very wide and it does not purport to be exhaustive because it expressly empowers the State Government to include within its purview by notification other establishments not specified in it Section 2 sub section 6 defines an employee as meaning a person wholly or principally employed in and in connection with any establishment and includes an apprentice but does not include a member of the employer s family This definition shows that the Act intends to confer the benefit of its provision on all persons who fall within the wide definition of the expression Employee It is necessary at this stage to refer to the definition of factory under the Act Section 29 defines a factory as meaning any premises which is a factory within the meaning of cl m of section 2 of the or which is deemed to be a factory under section 85 of the said Act Now section 2m of the defines a factory as meaning any premises including the precincts thereof i whereon ten or more workers are working or were working on any day of the preceding twelve months and in any part of which a manufacturing process is being carried on with the aid of power or is ordinarily so carried on or ii whereon twenty or more workers are working or were working on any day of the preceding twelve months and in any part of which a manufacturing process is being carried on without the aid of power or is ordinarily so carried on but does not include a mine subject to the operation of the XXXV of 1952 or a railway running shed and section 85 confers authority on the State Government to extend the definition of factory to other places subject to the requirements specified in the said section It is common ground that the place where the respondents are employed is a factory under section 2m of the and so it satisfies the definition of section 29 of the Act 19 146 The scheme of the Act shows that it deals separately with shops and commercial establishments ch 111 residential hotels restaurants and eating houses ch IV and theaters and other places of public amusement ch V Separate provisions are made to regulate these different establishments having regard to the special needs of each one of them There are however general provisions applicable to and regulating all the establishments alike and these are found in chs VI to IX It is significant that with the exception of section 70 no other section of the Act deals with factories We have already noticed that in defining commercial establishment and shop respectively the Act has expressly excluded factories from the said expressions It is true that the definition of establishment does not expressly exclude factory but it is plain that factory is treated by the Act as separate and distinct and there can be no doubt that the provisions in the Act which apply to establishment are not intended to and do not apply to factories In other words though the definition of establishment is wide enough it does not include factory for the purposes of the Act It is conceivable that a kitchen attached to an establishment like a residential hotel may satisfy the definition of factory but it seems to us that such an adjunct of an establishment is prima facie not intended by the Act to be treated apart and separately from the main establishment itself and so it would be taken as a part of the establishment and be governed by the provisions of the Act in relation thereto The factory where the respondents are employed is not connected with much less an inseparable adjunct of any establishment and so this academic aspect of the matter which was incidentally posed before us by the learned Attorney General need not be pursued any further in the present appeal The conclusion of the Authority has been challenged by the appellant on the ground that section 70 on which it is based cannot be invoked by the respondents In support of this argument reliance is placed on section 4 of the Act Section 4 provides that notwithstanding anything contained in the Act its provisions mentioned 147 in the third column of sch 11 shall not apply to the establishments employees and other persons mentioned against them in the second column of the said schedule The proviso to this section authorises the State Government to add to omit or alter any of the entries in the said schedule in the manner indicated by it It is urged that the establishment of any railway administration is mentioned as sr No 5 in sch II and the entry against it in col 3 of the said schedule shows that the provisions of the Act are inapplicable to the said establishments If the establishment in question is exempted from the application of all the provisions of the Act how can section 70 be said to apply to it asks the learned Attorney General It is obvious that section 4 mentions and applies only to establishments and it has no application to factories and we are dealing with employees in a factory Indeed as we have already observed no provision of the Act except section 70 applies to factories and so it would not be legitimate to base any argument on the assumption that section 4 is applicable to the present case Incidentally the learned Attorney General suggested though faintly that the establishments mentioned at sr 1 to 6 in col 2 of sch II are wider than and different from the establishment as defined by section 28 We do not think that this suggestion is well founded There can be no doubt that section 4 grants exemptions to the said establishments from the application of the provisions mentioned in col 3 of sch II and that itself postulates that but for the exemption thus granted the provisions of the Act would have applied to them Indeed the scheme of sch 11 shows that whereas all the provisions of the Act are made inapplicable to the establishments and offices enumerated at sr 1 to 6 including 6a to 6k in regard to the others which are enumerated at sr 7 to 55 it is only some provisions of the Act specified in col 3 that are excluded In other words the remaining sections not so specified would apply to them If that is so they must be and are establishments under section 28 of the Act 148 In this connection it must be borne in mind thats 28 empowers the State Government to include by notification any office or institution within the definition of establishment and so the inclusion of any such office or institution in col 2 of sch 11 would make it an establishment under the Act and as such it would be governed by it subject of course to the corresponding entry in col 3 That is why we think that the suggestion of the learned Attorney General as to the denotation and character of establishments enumerated in sr 1 to 5 in col 2 of sch 11 cannot be accepted All the offices establishments and other institutions mentioned in col 2 of sch II are and must be held to be establishments under section 28 In regard to the argument that the operation of section 4 excludes the application of section 70 we have held that section 4 applies only to establishments and not to factories But even if section 4 is assumed to be applicable to factories we do not think it would materially affect the application of section 70 The plain object underlying section 70 and its context emphatically point out that it is intended to operate independently of the other provisions of the Act and in that sense it stands apart from them It is this aspect of the matter which is clarified by the Legislature by laying down in section 70 that nothing in the Act shall be deemed to apply to any persons employed in the factory That however anticipates the argument on the construction of section 70 Let us thereforecite the said section and construe it Section 70 provides that nothing in this Act shall be deemed to apply to any person employed in or within the precincts of a factory and the provisions of the shall notwithstanding anything in the said Act apply to such person This section consists of two parts The first part makes it clear that no provision in the Act shall be deemed to apply to the persons specified in it The Legislature knew that in fact the Act contained no provision which in terms or expressly applies to any such person but in order to remove any possible doubt it has provided that no provision in the Act shall even by inference or fiction be deemed to apply to them In other words this clause 149 is intended to clarify the position that though factory has been defined by section 29 of the Act no provision of the Act is intended to be applied to a factory or employees in Having clarified this position the second part of the section extends the application of the to the said persons It would have been possible for the Legislature to include in the present statute all the relevant provisions of the and make them applicable to factories as defined by section 29 but apparently the Legislature thought that the same object can be achieved by enacting the second part of section 70 This part provides that the provisions of the shall apply to the persons in question notwithstanding anything contained in the said Act The said Act contains the provision by which workers are defined under section 21 and it necessarily involves the consequence that the relevant provision about the payment of overtime wages applies only to workers as defined and not to employees in factories who are not workers It is in reference to this provision that section 70 has provided that notwithstanding the said provision the relevant provisions of the will apply to persons employed in a factory The non obstante clause in section 70 thus serves the purpose of clarifying the position that the is made applicable to employees in factories and that they are not governed by any of the provisions of the Act This conclusion is obviously consistent with the policy of the Act It has itself made provision for the payment of overtime wages to employees in all establishments by section 63 and it has made applicable inter alia the relevant provisions of the in regard to employees in factories That is the view which the Authority has taken and in our opinion its validity or correctness is not open to doubt In the result the orders passed by the authority are confirmed and the appeals are dismissed with costs in one set Appeals dismissed

A music performance attended by a large number of persons including two police informers Bankey and Asa Ram was going on on a platform in front of the house of one Ram Saroop At that time there was a full moon and the light of a gas lamp and several lanterns The informers had placed their guns on a cot close to the platform and one Bharat Singh was sitting on that cot The accused along with 15 or 20 persons suddenly arrived armed with fire arms to kill the informers and stood behind a well on the southern side from where they shouted that no one should run away and advanced firing shots Two persons were killed on the spot Bharat Singh was hit and he ran northwards pursued by the culprits and was also shot dead The culprits turned over the dead bodies and on seeing Bharat Singh s face they exclaimed that Asa Ram informer had been killed They then passed in front of Ram Saroop s house and disappeared While going they carried away Bankey s gun from the cot The appellants and seven others were sent up for trial for this occurrence At the trial the defence alleged that prosecution had developed its case The police statements of the eye witness did not mention the facts regarding the scrtitiny of the lead bodies and the presence of the gas lantern and the defence counsel put the following two questions with respect to these omissions to the first eye witness produced 1 Did you state to the Investigating Officer that the gang rolled the dead bodies of Nathi Saktu and Bharat Singh and scrutinised them and did you tell him that the face of Asa Ram resembled with that of the deceased Bharat Singh 2 Did you state to the Investigating Officer about the presence of the gas lantern The Sessions judge disallowed the questions and on account of this order similar questions were not put to the other eye witnesses The Sessions judge convicted the appellants under section 302 Indian Penal Code and sentenced them to death The appellants appealed to the High Court and made an application alleging that the Sessions judge had not allowed the defence counsel to put omissions amounting to material contradictions to 876 the eye witnesses and prayed that the eye witnesses be summoned so that the questions disallowed may be put to them Though the High Court held that the omissions amounted to contradictions and that the Sessions judge had wrongly dis allowed cross examination with respect thereto it found that even after ignoring these two circumstances there were other facts which showed that the culprits had come close to the eye witnesses and that they had unmistaken opportunity of identifying the appellants in the light of the full moon and the lanterns The High Court accordingly dismissed the application for summoning the eye witnesses holding that no prejudice had been caused to the appellants by the disallowance of the cross examination in respect of omissions and also dismissed the appeals and confirmed the convictions and sentences of the appellants Held Per SINHA KAPUR SARKAR and SUBBA RAO JJ that the omissions did not amount to contradictions and that the Sessions judge was right in disallowing cross examination in respect thereof A statement to the police could be used under section 162 of the Code only for the purpose of contradicting a statement in the witness box under the second part of section 1 Evidence Act but it could not be used for the purpose of cross examining the witness under the first part of section 145 A statement made to the police but not reduced to writing could not be used for any purpose not even for contradiction It was incorrect to say that all omissions in regard to important features of the incident which were expected to be included in the statement made before the police should be treated as contradictions An omission in the police statement could amount to a statement and be used as a contradiction only when i it was necessarily implied from the recital or recitals found in the statement ii it was negative aspect of a positive recited in the statement or iii when the statement before the police and that before the Court could not stand together It was for the the trial judge to decide in each case after comparing the part or parts of the statement recorded by the police with that made in the witness box whether the recital intended to be used for contradiction was one of the nature indicated above In Ye Ponnusami Chetty Mad 475 In Ye Guruva Vannan ILR Ram Bali vs State AIR 1952 All 289 Badri Chaudhry vs State AIR 1926 Pat 20 Sakhawat vs Crown ILR referred to Rudder vs The State AIR 1957 All 239 Mohinder Singh vs Emperor AIR 1932 Lah 103 Yusuf Mia vs Emperor AIR 1938 Pat 579 State of M P vs Banshilal Behari AIR 1958 MP 13 disapproved Held Per IMAM and HIDAYATULLAH JJ that the questions that were put by the defence counsel were properly ruled out by the Sessions judge as they did not set up contradictions but attempted to obtain from the witnesses versions of what they 877 had stated to the police which were then to be contradicted The reference to section I45 Evidence Act in section 162 of the Code of Criminal Procedure brings in the whole of the manner and machinery Of section I45 and not merely the second part An accused is entitled to cross examine the witness under the first part of section 145 with respect to the police statement Relevant and material omissions amount to vital contradictions which can be established by crossexamination and confronting the witness with his previous statement to the police In the circumstances of the present case even if the defence had been allowed to put questions concerning the omissions it would not have affected the credibility of the witnesses and no prejudice was caused to appellants by the disallowance of the questions

Appeal No 326 of 1957 Appeal by special leave from the judgment and order dated February 16 1955 of the Orissa High Court in N J C No 117 of 1951 C K Daphtary Solicitor General of India K N Rajagopal Sastri R H Dhebar and D Gupta for the appellants Rameshwar Nath section N Andley and J B Dadachanji for the respondent May 5 The Judgment of the Court was delivered by KAPUR J This appeal pursuant to special leave is brought by the Commissioner of lncome tax against the judgment of the High Court of Orissa holding that the amounts received by the assessees respondents were not received in what was British India and 870 therefore not liable to income tax The respondents at all material times were non residents carrying on business at Secunderabad which was then in the territories of the Nizam of Hyderabad They acted as agents for the supply of gas plants manufactured by Messrs T V section Iyengar Sons Madura to the Nizam s Government and also as agents of the Lucas Indian Services Bombay branch for the supply of certain goods to that Government The year of assessment is 1945 46 There does not appear to have been any written agreement between the two manufacturers and the respondents but the goods were to be supplied on a commission basis In pursuance of this agreement the respondents received from Ms TVS lyengar Sons Madura cheques drawn on the Imperial Bank of India Madras amounting to Rs 35202 in respect of all goods supplied from Madura and also from Lucas Indian Services Bombay by cheques drawn on Imperial Bank of India Bombay branch amounting to Rs 5302 in respect of goods supplied by them thus making a total of Rs 40504 These cheques were sent by post and when received by the respondents at Secunderabad were credited in the account books of the respondents and sent to their banker G Raghunathmal for collecting and crediting to the account of the respondents As against these sums so deposited the respondents at once drew cheques and thus operated on these amounts deposited In regard to the commission received from the Bombay firm it was paid into the account on December 22 1944 but was given credit for only on January 2 1945 The Income tax Officer assessed these sums as taxable income holding that the entire amount of Rs 40504 was received in British India and not at Secunderabad An appeal was taken by the respondents to the Appellate Assistant Commissioner who upheld the order holding that income must be held to have accrued arisen or received in British India Against this order the respondents took an appeal to the Income tax Appellate Tribunal and it was held that the amounts were received by the respondents from Madura and Bombay firms as commission but 871 they were received at Secunderabad The appeal was therefore allowed The finding Of the Appellate Tribunal in their own words was The contention of the Appellants is that the cheques being negotiable instruments and the creditor having accepted them and passed through their books II the receipt must be taken to be receipts in Hyderabad We agree with the view submitted by the appellants In Bhashyam s Negotiable Instruments Act 8th Edition Revised page 556 it is stated that it will be open to a creditor to accept a cheque in absolute payment of money due to him in which case it will be equivalent to cash payment That being the position it cannot be said that the income was received in British India At the instance of the Commissioner a reference under section 661 of the Act was made to the High Court of Orissa for their opinion on the following question Whether in the circumstances of the case the sums of Rs 35202 and Rs 5302 received as commission from T V section lyengar Sons Ltd and Lucas Indian Services Ltd respectively were income that accrued arose or were received in British India The High Court found that the statement of case was imperfect and that the real question was different It said The real question in all such cases is not merely whether the cheques were drawn on a bank in British India and sent for collection to that bank The question is whether when the cheques were received by the assessee having his place of business outside British India those cheques were in fact received as absolute and final payments by way of unconditional discharge or whether they were received as mere conditional payments on realisation The fact that cheques were drawn on a bank in British India or that they were sent for collection through a Secunderabad banker of the assessee though relevant are not conclusive It therefore remitted the case to the Appellate Tribunal for submission of supplementary statement of case It appears that at that stage the controversy was 872 confined to the question whether the cheques having been sent to Secunderabad and having been realised in British India would amount to a final discharge or an unconditional one The Tribunal in its supplementary statement found that the course of conduct followed by the parties showed that the cheques were received from the Bombay and Madura firms in full satisfaction of the commission ascertained from time to time and due on such date It said The facts that such entries were made in the assessee s books that the cheques were put into the bank immediately that the bank at once gave credit to the assessee for these sums after charging discount thereon and immediately allowed the assessee to operate on those sums are significant Therefore the finding of fact by the Tribunal although not specific was that the receipt of the cheque by the respondents operated as full discharge of the debt due on account of commission from these two firms The matter was decided by the High Court against the appellant and in the meanwhile this Court had given a judgment in Commissioner of Income tax vs Ogale Glass Works Ltd 1 Even after considering the decision of that case the High Court was of the opinion that the income of the respondents was not received in British India and answered the question against the Revenue The High Court refused to give leave to appeal to this Court and it was this Court which gave special leave to appeal The question is whether the amounts of commission paid by cheques drawn respectively on banks at Madras and Bombay and respectively posted from Madura and Bombay can in the circumstances of this case be held to have been received in what was British India or at Secunderabad The Appellate Tribunal found that all the cheques whether from Madura or from Bombay were sent by the two respective firms from Madura or Bombay and were received by the respondents at Secunderabad and were treated as payment The question still remains as to the effect of the sending of the cheques from Madura or Bombay by post If there is an express request by the 1 873 creditor that the amount be paid by cheques to be sent by post and they are so sent there is no doubt that the payment will be taken to be at the place where the cheque or cheques are posted The respondents argued that there was an agreement between the Madura and Bombay firms and the respondents that the money would be paid whether in cash or by cheque at Secunderabad and therefore when the cheques were sent by post the post office was the agent of the debtor and not of the respondents There is in support of the respondents an affidavit which was filed in the assessment proceedings and which was relied upon in the High Court According to this affidavit it was verbally agreed that the commission would be paid at Secunderabad in cash or by cheque as the case may be the language used in the affidavit was The above commission was verbally decided to be paid to Messrs Patney Co Ltd Secunderabad the Agent Company in Hyderabad State at Secunderabad in cash or by cheque as the case might be In the case of payment by cheques sent by post the determination of the place of payment would depend upon the agreement between the parties or the course of conduct of the parties If it is shown that the creditor authorised the debtor either expressly or impliedly to send a cheque by post the property in the cheque passes to the creditor as soon as it is posted Therefore the post office is an agent of the person to whom the cheque is posted if there be an express or implied authority to send it by post Commissioner of Income tax vs Ogale Glass Works Ltd 1 In that case there was an express request of the assessee to remit the amount of the bills outstanding against the debtor that is Government of India by means of cheques But it was observed by this Court that according to the course of business usage in general which has to be considered as a part of the surrounding circumstances the parties must have intended that the cheques should be sent by post which is the usual and normal mode of transmission and therefore the posting of cheques in Delhi amounted to payment in 1 110 874 Delhi to the post office which was constituted the agent of the assessee But it was argued for the respondents that in the absence of such a request the post office could not be constituted as the agent of the creditor and relied on a passage in Ogale s case 1 at p 204 where it was observed Of course if there be no such request express or implied then the delivery of the letter or the cheque to the post office is delivery to the agent of the sender himself It was further contended that in this case there was an express agreement that the payment was to be made at Secunderabad and therefore the matter does not fall within the rule in Ogale Glass Works case 1 and the following principle laid down in judgment by Das J as he then was is inapplicable Applying the above principles to the facts found by the Tribunal the position appears to be this The engagement of the Government was to make payment by cheques The cheques were drawn in Delhi and received by the assessee in Aundh by post According to the course of business usage to which as part of the surrounding circumstances attention has to be paid under the authorities cited above the parties must have intended that the cheques should be sent by post which is the usual and normal agency for transmission of such articles and according to the Tribunal s finding they were in fact received by the assessee by post In our opinion this contention is well founded Whatever may be the position when there is an express or implied request for the cheque for the amount being sent by post or when it can be inferred from the course of conduct of the parties the appellant in this case expressly required the amount of the commission to be paid at Secunderabad and the rule of Ogale Work s case 1 would be inapplicable The High Court judgment in our view was correct and we would therefore dismiss this appeal with costs Appeal dismissed

On March 23 1948 while certain disputes were under adjudication the workmen pressed the same demands upon the company for immediate solution without awaiting the award of the tribunal The company refused to meet the demands and thereupon the workmen went on an illegal sit down strike The company closed the works indefinitely and notified that all those workmen who had resorted to the illegal strike were discharged from that date On July 5 the company notified that the works would open on July 6 and all old employees could apply for reengagement upto July 21 A majority of them applied for being retaken and all those who applied upto July 21 were taken but those who applied after that date were refused On November 18 1953 the Government made a reference in respect of the reinstatement Of 250 old workmen who had not been retaken No list of the 250 workmen was sent to the tribunal nor was such a list filed even during the adjudication proceedings but after the arguments on behalf of the company were over a carelessly prepared list Of 220 persons was filed before the tribunal by the workmen on December 14 1953 The Tribunal ordered reinstatement without specifying who were to be reinstated It directed the company to give a general notice notifying the strikers to come and join their duties on a fixed date and to reinstate those who applied within the time allowed On appeal the Labour Appellate Tribunal upheld the order of reinstatement in respect Of 15 workmen only Held that there was no reason for ordering reinstatement of any of the workmen on such a vague reference made after such an unreasonable delay It was reasonable that disputes should be referred as soon as possible after they had arisen and after conciliation proceedings had failed particularly in cases of wholesale discharge of workmen followed by fresh recruitment of labour Though the workmen were discharged during the pendency of a dispute in violation of section 33 of the the remedy of the workmen was to apply under section 33 A of the Act but that was not done This defect in the discharge of the workmen could be ignored in the circumstances of this case on account of the illegal strike the failure to 151 avail of the remedy under section 33 A and the delay and vagueness of the reference which all show that the workmen were not interested in reinstatement

peals from the judgments and decrees dated the 23rd February 1945 of the High Court of Judicature at Calcutta Akram and Blank JJ in Second Appeals Nos 861 to 885 of 1939 from the judgments and decrees dated the 16th December 1938 of the Court of the District Judge Birbhum in Title Appeals Nos 23 to 47 of 1938 Sitaram Bannerjee Arun Kumar Dutta and Amiya Kumar Mukherjee with him for the appellant in Civil Appeals Nos 68 to 74 of 1951 Urukramdas Chakravarthy section N Mukherjee with him for the respondent No 1 in Civil Appeals Nos 68 to 74 of 1951 Sitaram Bannerjee Arun Kumar Dutta and Amiya Kurnar Mukherjea with him for the appellant in Civil Appeals Nos 75 to 92 of 1951 Panchanan Ghose Chadra Nath Mukherji with him for the respondents Nos 1 to 3 in Civil Appeals No 75 to 92 of 1951 April 2 The Judgment of the Court was delivered by MAHAJAN J These appeals are directed against the judgment and decrees of the High Court of Judicature at Calcutta dated 23rd February 1945 reversing the judgment and decrees passed by the District Judge of Birbhum dated 16th December 1938 The principal questions for determina tion are the same in 102 784 all of them and can be conveniently disposed of by one judgment It is necessary to set out briefly the history of this half a century old litigation I The seven suits out of which arise Appeals Nos 68 to 74 were filed in September 1904 by Maharaja Bahadur Singh in the court of the differ ent Munsifs at Rampurhat against Raja Ranjit Singh Bahadur deceased and others for a declaration of his title to the lands mentioned in the different suits and for mesne profits from the year 1899 till recovery of possession It was alleged that the lands in the several suits were chowkidari chakran lands within the plaintiff s patnidari granted to his predecessors in interest on 14th November 1853 by the ancestors of the defendant that as the lands were in the possession of village watchmen on service tenures they were excluded from assessment of land revenue and no rent was paid on them that in the year 1899 under the provisions of sections 50 and 51 of Bengal Act VI of 1870 Government resumed the lands terminated the service tenures and settled them with the zamindar that in this situation the plaintiff as patnidar became entitled to their actual physi cal possession that the zamindar wrongfully took physical possession of them and denied the right of the plaintiff and hence he was entitled to the reliefs claimed The suits were decreed on 17th August 1905 and 19th August 1905 by the two courts respectively and the decisions were affirmed on appeal by the District Judge On special appeal to the High Court the suits were remanded for trial on the ques tion of limitation and after remand they were dismissed by the trial court and the Court of appeal as barred by limita tion On second appeal it was held that the suits were within limitation and were then decreed for the second time This decision was affirmed on appeal to His Majesty in Council The plaintiff actually obtained possession of the lands involved in these suits in August 1913 An applica tion was made for ascertainment of mesne profits on 785 6th November 1918 This was resisted by the defendant and it was pleaded that the plaintiff was not entitled to inter est on mesne profits that the zamindar was entitled to receive the profits of the disputed lands and that deduc tion should be made out of the amount of the mesne profits on account of munafa and the amount of chowkidari dues as well as cesses due to him or paid by him Five years later on 24th June 1927 another set of objections was filed by the zamindar claiming deduction out of mesne profits by way of equitable set off of the payments made by him subsequent to the date of delivery possession as well as for the amount of munafa that became payable to him after that date After a prolonged enquiry the trial court on 18th December 1937 decreed the plaintiff s claim for mesne profits after allow ing the zamindar the deductions claimed by him up to the date of assessment of mesne profits but disallowed the amount claimed by way of equitable set off for the subse quent period The learned District Judge on appeal reversed this decision and allowed the defendant the amount claimed by him by way of equitable set off subject however to the condition that the dues of the defendant should be deducted from the dues of the plaintiff till the defendant s dues were wiped off The relevant part of his judgment runs thus The broad fact is that they plaintiffs have been in possession of the lands since 1910 and have been in enjoy ment of rent from the tenants from that date and according to law they are not entitled to possess the land uncondi tionally Now that all the facts are before the court and the time has come for final adjustment of accounts between the parties the court should try to do substantial justice between the parties It is not sufficient answer to say that the plea of equitable set off was not raised in the beginning The circumstances in all these cases are pecul iar and it could hardly be expected that such plea would have been taken in the very beginning The course of liti gation in these cases has not run along 786 easy and smooth channels on the contrary its course has been extremely tortuous and disturbed frequently by con flicting decisions No one could have reason ably antici pated in the beginning that the litigation would be pro tracted in this extraordinary way It is the duty of the court to take notice of the subsequent events in order to do justice between the parties As we are dealing with the question of equitable set off no question of time barred debts or unascertained sum can arise The plea of equitable set off in respect of time barred debts can be set up as a shield by way of defence nor can any question of payment of court fees arise There is in my opinion no substantial difference in the character of the respective parties during the entire period and it would be futile to make an attempt at distinction by oversubtle argument where there is really no difference in substance There is considerable force in the argument advanced on the side of the appellant namely the appellant s claim to the equitable set off is really in the nature of cross demand arising out of the same transaction and connected in its nature and circumstances From whatever standpoint the matter may be looked at I am of the opinion that the claim of the appellant for equitable set off for the subsequent period by way of deduction of the chowkidari revenue and cess paid by him as well as on account of munafa should be allowed This amount will also carry interest at 6 per cent per annum up to date The subsequent period means the period since the date of delivery of possession up to 1927 28 Against the judgment and decrees of the District Judge the plaintiff preferred appeals to the High Court at Calcut ta The High Court by the judgment under appeal modified the decrees of the District Judge and disallowed the claim for equitable set off in its entirety for the subsequent period and restored the decree of the trial court The zamindar filed applications for leave to appeal to His Majesty in Council These applications were consolidated with similar applications filed in the second batch of suits A certifi cate 787 was granted for leave to appeal to His Majesty in Council By an order dated 9th June 1947 all the appeals were admitted and it was directed that the proceedings be printed and transmitted to England During the pendency of the proceedings in the High Court Raja Bhupendra Narayan Singh died and the present appellant was impleaded as his heir and representative An application was also made in the High Court for permission to urge additional grounds not already taken After the abolition of the jurisdiction of the Privy Council these appeals were transmitted to this Court An application under Order XIX rule 4 of the Supreme Court Rules was presented at the hearing of the appeals that the appellant be allowed to urge the following additional grounds in support of the appeals viz 1 That the munafa rent should not be calculated on the basis of the principles laid down in Radhacharan vs Maharaja Ranjit Singh1 2 That the said munafa should have been assessed on a fair share of the profits from the land The second batch of appeals Nos 75 to 92 of 1951 arises out of 18 suits instituted in the court of the Munsif of Rampurhat on 22nd December 1909 by Ganpat Singh and Narpat Singh predecessors in interest of respondents 1 to 3 against the predecessor in interest of the appellant late Raja Ranjit Singh Bahadur and also some other persons who were tenants under him for a declaration of the plaintiffs title to the resumed chowkidari chakran lands and for khas possession of the same and for mesne profits The allega tions in these suits were the same as in the first set of suits The defence to the suits was also the same The suits were decreed by the trial Judge on 30th September 1910 in the following terms The plaintiffs title is declared to the lands in suit and they will get khas possession of the same by ejecting the tenant defendants on condition of paying 1 788 to the defendant No 1 an additional rent to be deter mined on the principle that the original patni rent should bear the same ratio to the patni rent now payable by the plaintiffs as the original Hustbood at the time of the creation of the patni should bear to the present increased Hustbood or any other fair and equitable rent which may be determined at the time of assessing the mesne profits The plaintiffs will get Wasilat from defendant No 1 up to the date of delivery of possession of the land in suit to them The amount will be determined in a separate enquiry The District Judge on appeal remanded the cases for determination of the conditions and terms under which the patnidar was to hold the lands under the zamindar and directed ascertainment of profits The plaintiffs ob tained delivery of possession of the lands in the mean while on 23rd November 1910 Against the remand order appeals were preferred to the High Court and the High Court decreed the appeals in these terms We set aside the portion of the decision of the Dis trict Judge which remands the cases to the original court to determine the conditions under which the patnidar is to hold the lands under the zamindar Rest of the remand order will stand That portion of the Munsif s decree which imposes on the appellant as a condition of obtain ing khas possession the payment of additional rent to the zamindar will be set aside Against these decrees appeals were preferred to His Majesty in Council by special leave The Privy Council set aside the decrees of the High Court and observed as follows Their Lordships therefore see no reason for inter fering with the long series of authorities commencing as far back as the year 1900 which have established the right of the zamindar to have an additional rent fixed for such lands nor can their Lordships overlook the fact that in the cases already referred before this Board no exception was taken by the patnidar to the 789 fixing of such rents as a condition of being put into pos session On 8th December 1922 the plaintiffs filed applications in these suits for ascertainment of mesne profits for the years 1906 to 1910 Objections were taken on behalf of the defendant on the 17th April 1923 and it was contended that the plaintiffs may be allowed mesne profits to the extent of the amount that would be found due after deduction of the amount of rent to which the defendant was entitled in re spect of the lands in suit according to the judgment of the munsif On the 28th May 1927 another application was filed by the zamindar claiming deduction by way of equitable set off of the amounts due to him for rent from 1910 onwards and on account of subsequent payment made by him towards revenue and cesses After a prolonged enquiry the munsif ultimately on the 18th December 1937 decreed the plaintiff s claim for mesne profits after allowing deduc tions for the amounts claimed by the defendant up to the date of delivery of possession He held that the appellant was not entitled to get any amount by way of equitable set off in respect of sums of money spent by him in payment of revenue and cesses or for the amount of munafa or profits for the period subsequent to the date of delivery of posses sion The District Judge on appeal by his judgment dated the 16th December 1938 allowed the claim of equitable set off for the period subsequent to delivery of possession and directed that from the plaintiffs dues the dues of the defendant are to be deducted and if after these deduc tions any sum is due to the plaintiffs they will get a decree for that sum If it is found on calculations in some cases that the dues of the defendant exceed the dues of the plaintiffs in such cases the prayer of the plaintiffs for mesne profits must be dismissed Against this decision special appeals were preferred to the High Court and by the judgment under appeal the decision of the trial court was restored Applications were then made for leave to appeal to His Majesty in Council and 790 those were allowed and a certificate was granted for pre ferring those appeals Because of the abolition of the jurisdiction of the Privy Council those appeals are now before us for decision The points for decision in all these appeals are the following 1 Whether the appellant is entitled to deduct by way of equitable set off from the amount of mesne profits the amounts due to him on account of rent revenue and cesses for the period subsequent to the dates of delivery of pos session Whether interest should be allowed on the amount of mesne profits found due and if so at what rate Whether the rent due to the appellant from the patnidar on those funds should be calculated on the basis of annual assets of the land as in Radhacharan vs Maharaja Ranjit Singh 1 or on a fair and equitable basis The claim for set off for the period for which mesne profits were claimed has been allowed and is not in these appeals As regards the amounts due to the appellant by way of rent subsequent to the date of transfer of possession the claim is unconnected with the subjectmatter of the different suits It seems clear that a plea in the nature of equita ble set off is not available when the cross demands do not arise out of the same transaction Mesne profits due to the plaintiff relate to the period during which the appellant was in wrongful possession of the lands and the amounts claimed by the defendant relate tO a period when he was no longer in possession and had ceased to be a trespasser No mesne profits are claimable for that period The right of the appellant to recover additional rents from the plaintiff arises out of a different cause of action and independently of the claim for mesne profits If the patnidar after having entered into possession had defaulted in the payment of the 1 191827 CL J 532 791 additional rents due for any period nothing stood in the way of the appellant from recovering the in by appropriate legal proceedings The prolongation of the enquiry for ascertainment of the mesne profits cannot support a claim for equitable set off for the period subsequent to the delivery of possession to the plaintiff It is obvious that no claim for equitable set off against mesne profits during the pendency of the suits could be made for the sums deduction of which is now sought as the amounts had not then accrued due and his right to them had not yet arisen The learned District Judge was in error in holding that the appellant s claim for equitable set off was in the nature of a cross demand arising out of the same transaction and connected in its nature and circumstances He failed to appreciate that the transaction which led to plaintiff s demand resulted from the defendant s wrongful act as a trespasser while the transaction giving rise to the appellant s demand arises out of the relationship of landlord and tenant and the obligations resulting therefrom A wrongdoer who has wrongfully withheld moneys belonging to another cannot invoke any principles of equity in his favour and seek to deduct therefrom the amounts that during this period have fallen due to him There is nothing improper or unjust in telling the wrongdoer to undo his wrong and not to take advantage of it Such a person cannot be helped on any principles of equity to recover amounts for the recovery of which he could have taken action in due course of law and which for some unexplained reason he failed to take and which claim may have by now become barred by limitation It was contended that it was only after the decree of the Privy Council that the appellant s rights to the addi tional rent was finally established and till then no legal steps could be taken to enforce this demand The contention is without force The appellant s right to additional rent had been established by the decree of the trial court in execution of which possession passed from him to the patni dar The Privy 103 792 Council only affirmed thisdecision The patnidars under the decree were entitled to possession of the lands conditional on payment of the additional rent due for the period they had been out of possession That condition having been fulfilled by adjustment of the appellant s claim against the mesne profits the decree must be held to have been satisfied thus completely settling the cross demands The landlord s demand for subsequent rents has to be enforced in the ordinary way in the civil court if any default has been committed in the payment of these rents This claim cannot for ever remain linked with the demand for mesne profits for any anterior period The result is that the decision of the High Court on this point is maintained On the question of future interest payable on the decretal amount the learned District Judge observed as follows I may state however at this stage that if I were to rule out the fact that I am allowing the claim of the appel lant for equitable set off I would have allowed interest to the plaintiffs at the uniform rate of 4 per cent per annum throughout ie from the beginning of the Washilat period up to date As I am allowing the prayer for equitable set off I am of opinion however that interest at the usual rate at 6 per cent per annum should be granted for the whole of this period The High Court disallowed equitable set off but yet maintained this decision When the claim for equitable set off is being disallowed there is no justification for allowing future interest at the rate of more than four per cent for such a long period particularly in a case where the plaintiff himself has not been prompt in getting the amount of mesne profits ascertained The plaintiff did not even ask for an enquiry into this question for a period of about twelve years Taking into consideration all the circumstances of the case we think that future interest should not have been allowed to the plaintiff in the several suits at a higher rate than four per cent on the amount decreed in the various Suits by way of mesne profits 793 The appellant s last contention that the munafa rent should not be calculated on the principle laid down in Radhacharan vs Maharaja Ranjit Singh 1 but should have been assessed on a fair share of the profits of the land has no substance because the claim was not made in the grounds of appeal to the Privy Council and was not even mentioned in the additional grounds of appeal It was for the first time made before us at the hearing and we see no valid grounds for entertaining it at this late stage Moreover it seems to us that the claim has no substance in the absence of any evidence about the proportion the original patni rent bore to the revenue and cesses For the reasons given above all these appeals fail except to the extent that the decree of the High Court is modified in that the amounts decreed by way of mesne profits in the various suits will bear interest at the rate of four per cent instead of six per cent The parties will bear their own costs in all these appeals Appeals dismissed Agent for the appellant in Civil Appeals No 62 to 74 and 75 to 92 PK Bose Agent for respondent No 1 in Civil Appeals Nos 68 to 74 Ganpat Rai Agent for the respondents Nos 1 to 3 in Civil Appeals Nos 75 to 92 Sukumar Ghose

These appeals by special leave arose from applications made by the respondents who were employed as timekeepers in the time office of the Central Railway Workshop and Factory Parel Bombay claiming payment of overtime wages under the 4 of 1936 The case of the respondents was that they were workers within the meaning of section 21 of the LXIII Of 1948 and as such were entitled to overtime wages under section 59 of the said Act Alternatively they urged that even if they were not workers within the meaning of section 21 of the said Act they would nevertheless be entitled to overtime wages under the section 59 by reason Of section 70 of the Bombay Shops and Establishments Act 1948 Bom 79 of 1948 The validity of the claim on both the grounds was disputed by the appellant The Authority under the found that only four of the respondents who were required to do the work of progress timekeepers could claim the status of workers within the meaning Of section 21 Of the and the rest were merely employees of the workshop but the Authority accepted the alternative case made by the respond ents and directed the appellant to file a statement showing the overtime wages due to each of the respondents and ordered it to pay the same Held that the Authority was right in the view that it took Of section 70 Of the Bombay Shops and Establishments Act 1948 and its decision must be affirmed On a proper construction Of section 70 Of the Act it is clear that the first part of the section excludes a factory and its employees from the operation of the Act but the second part makes the relevant provisions of the applicable to them The non obstante clause in the section shows that the employees in a factory although they might not be workers within the meaning Of section 21 of the are entitled to claim overtime wages as provided for by that Act It is not correct to say that section 4 Of the Bombay Shops and Establishments Act 1948 has the effect of excluding the operation Of section 70 Of the Act Section 4 applies only to establishments and not to factories but even if it applied to factories 18 138 that cannot materially affect the application Of section 70 which is intended to operate not withstanding the other provisions of the Act Consistently with its policy the Act which provides for overtime wages for employees in all establishments provides for overtime wages for employees in factories as well by making the relevant provisions of the applicable to them

minal Appeal No 101 of 1958 Appeal by special leave from the judgment and order dated the 12th September 1956 of the Calcutta High Court in Criminal Appeal No 19 of 1956 arising 127 out of the judgment and order dated the 8th December 1955 of the Sessions Judge Birbhum in Sessions Trial No 1 of November 1955 H J Umrigar and D N Mukherjee for the appellant K B Bagchi P K Ghosh for P K Bose for the respondent May 8 The Judgment of the Court was delivered by IMAM J The appellant was sentenced to imprisonment for life under section 302 by the Sessions Judge of Birbhum who agreed with the majority verdict of the jury that he was guilty He appealed against his conviction to the Calcutta High Court That Court being of the opinion that there was no misdirection in the Sessions Judge s charge to the jury dismissed the appeal Two persons Jagdish Gorain and Sudhir Gorain were also tried along with the appellant but were acquitted by the jury whose verdict the Sessions Judge accepted The appellant appealed to the High Court for a certificate to appeal to this Court which was refused The present appeal is by special leave According to the prosecution Sibapada Hati was married to a girl by the name of Lila About a month previous to the date of occurrence the appellant had made a proposal to her that she should live with him which was rejected The appellant thought that the removal of Sibapada Hati would clear the way and improve his chance of gaining Lila s favour Accordingly he murdered Sibapada Hati on the May 26 1955 In that murder he was assisted by Jagdish Gorain Sudhir Gorain and the approver Sastipada Ghose The conviction of the appellant depended on the evidence of the approver and the circumstantial evidence which corroborated him in connecting or tending or connect the appellant with the murder of the deceased Sibapada Hati Unless there was a misdirection or non direction amounting to a misdirection in the charge to the jury which in fact had occasioned a failure of justice the jury s verdict must prevail and 128 it cannot be interfered with The High Court was of the opinion that there was no misdirection in the Sessions Judge s charge to the jury and we are in agreement with the High Court We have examined the charge to the jury The Sessions Judge in dealing with the evidence of the approver charged the jury as follows Before doing so some established legal principles as regards the approver s evidence and the confessions on which the prosecution has relied in the present case are required to be explained to you The approver is a competent witness against an accused person and although his evidence is strictly admissible and a conviction is not illegal merely because it is based on approver s evidence it is a settled rule of practice not to convict a person on such evidence except under very rare and exceptional circumstances and usually substantial corroboration is required I therefore warn you gentlemen that it is highly dangerous to convict on approver s evidence alone There can no doubt be a legal conviction upon the uncorroborated evidence of an accomplice and as already stated the uncorroborated testimony of an accomplice is strictly admissible and a conviction based on it alone is not illegal yet you should remember gentlemen that experience teaches us that an accomplice being always an infamous person he having thrown to the wolves his associates and friends in order to save his own skin and though criminal has purchased his liberty by betrayal his evidence must be received with very great caution and it is highly dangerous to act upon his evidence unless it is materially corroborated I must also tell you that this rule as to corroboration has become a settled rule of practice of so universal an application that it has now almost the force and reverence of law Corroboration must be as to the crime and the identity of each one of the accused and the corroboration required must be independent evidence that is reliable evidence of another kind 129 Evidence in corroboration must be independent testimony which affects the accused by connecting or tending to connect the accused with the crime In other words it must be evidence which implicates him that is which conforms in some material particulars not only the evidence that the crime has been committed but also that the prisoner accused committed it Corroborative evidence you should bear in mind is evidence which shows or tends to show that the story of the accomplice that the accused committed the crime is true The corroboration need not be direct evidence that the accused committed the crime It would be sufficient if it is merely circumstantial evidence of his connection with the crime The corroboration in material particulars must be such as to connect or identify each of the accused with the offence In the present case a previous statement of an approver viz the confession has been made exhibit before you but that previous statement you are further to bear in mind cannot corroborate his latter statement viz the statements that have been made by him before you in this Court In dealing with the question what amount of corroboration is required you gentlemen must exercise careful discrimination and look at all the surrounding circumstances in order to arrive at a conclusion whether the facts deposed to by the approver Sastipada are borne out by those circum stances Mr Umrigar on behalf of the appellant urged that the aforesaid direction given by Sessions Judge to the jury was not sufficient The jury should have been told 1 in accordance with the decision of this Court in the case of Sarwan Singh vs The State of Punjab 1 that the approver s evidence has to satisfy a double test It must show that he is a reliable witness and that his evidence receives sufficient corroboration 2 that the evidence of an approver must be confirmed not only as to the circumstances of the crime but also as to the identity of the prisoner The corroboration 1 17 130 ought to consist in circumstances that affects the identity of the party accused Reliance was placed on the case of The King vs Baskerville 1 3 that the circumstantial evidence corroborating the approver was not sufficient to connect the appellant with the murder of the deceased and 4 that on similar corroboration of the approver s testimony the accused Jagdish Gorain had been acquitted There was no real distinction between the case of Jagdish Gorain and the appellant It is true that in Sarwan Singh s case this Court had held The appreciation of an approver s evidence has to satisfy a double test It must show that he is a reliable witness and that his evidence receives sufficient corroboration and that is a test which is common to all witnesses If this test is satisfied the second test which still remains to be applied is that the approver s evidence must receive sufficient corroboration This test is special to the cases of weak or tainted evidence like that of the approver These observations were made in the special circumstances of the case which this Court was deciding when dealing with the case of Sarwan Singh This Court went on to observe The argument that the character of the approver s evidence has not been considered by the High Court cannot be characterised as merely academic or theoretical in the present case because as we shall presently point out the evidence of the approver is so thoroughly discrepant that it would be difficult to resist the conclusion that the approver in the present case is a wholly unreliable witness Indeed it may be legitimate to point out that the learned Judges of the High Court have themselves criticised the evidence of the approver in dealing with the prosecution case against Gurdial Singh and have ultimately found that the account given by the approver is unreliable and though there was circumstantial evidence which raised an amount of suspicion against Gurdial Singh that would not be enough to sustain his conviction It seems to us that if it was found that the approver s account against one of the accused persons was wholly discrepant this 1 1916 2 KBD 658 131 finding itself should inevitably have led the court to scrutinise his evidence in respect of the other accused persons with greater caution It is clear therefore that in the special circumstances of the case of Sarwan Singh the approver had been found to be a wholly unreliable witness It is important to observe that this Court stated that the approver s evidence must show that he is a reliable witness and that is the test which is common to all witnesses Nothing has been shown to us in this case as was shown in Sarwan Singh s case that apart from the approver s testimony in the present case being regarded as tainted evidence his evidence as it stood was in any way unreliable Indeed the Sessions Judge went to the length of telling the jury that although an approver s evidence is strictly admissible and a conviction is not illegal merely because it is based on an approver s evidence it was a settled rule of practice not to convict a person on such evidence except under very rare and exceptional circumstances and usually substantial cor roboration was required The jury could not have been more clearly warned about the danger of acting on an approver s evidence In other words the jury were told not to convict the appellant on the approver s evidence unless his evidence had been substantially corroborated Apart from the question of corroboration of the approver s evidence nothing was suggested to us or to the High Court in what respect the approver s evidence was unreliable after testing his evidence in the same way as one would test the evidence of any witness for the prosecution in a criminal case In our opinion the decision in Sarwan Singh s case can be distinguished in the present case Obviously it was never suggested that the approver s evidence in this case was entirely unreliable if his evidence was tested in the same way as the evidence of any prosecution witness in a criminal trial We cannot accept the submission made on behalf of the appellant that the charge to the jury is vitiated because of the decision of this Court in Sarwan Singh s case 132 As to the second submission made by Mr Umrigar it is to be remembered that in Baskerville s case the Court of Criminal Appeal in England after discussing various authorities on the subject came to the following conclusion We hold that evidence in corroboration must be independent testimony which affects the accused by connecting or tending to connect him with the crime In other words it must be evidence which implicates him that is which confirms in some material particular not only the evidence that the crime has been committed but also that the prisoner committed it The test applicable to determine the nature and extent of the corroboration is thus the same whether the case falls within the rule of practice at common law or within that class of offenses for which corroboration is required by statute The language of the statute implicates the accused compendiously incorporates the test applicable at common law in the rule of practice The nature of the corroboration will necessarily vary according to the particular circumstances of the offence charged It would be in high degree dangerous to attempt to formulate the kind of evidence which would be regarded as corroboration except to say that corroborative evidence is evidence which shows or tends to show that the story of the accomplice that the accused committed the crime is true not merely that the crime has been committed but that it was committed by the accused The corroboration need not be direct evidence that the accused committed the crime it is sufficient if it is merely circumstantial evidence of his connection with the crime In the present case the jury had been clearly directed by the Sessions Judge that corroborative evidence must be evidence which implicates the accused ie which confirms in some material particulars not only the evidence that the crime had been committed but also that the appellant had committed it The Sessions Judge told the jury that Corroborative 133 evidence you should bear in mind is evidence which shows or tends to show that the story of the accomplice that the accused committed the crime is true The corroboration need not be direct evidence that the accused committed the crime It is sufficient if it is merely circumstantial evidence of his connection with the crime The corroboration in material particulars must be such as to connect or identify each of the accused with the offence It seems to us that the Sessions Judge directed the jury in accordance with the principle laid down in Baskerville s case and no serious objection can be taken to the manner in which the Sessions Judge directed the jury in this respect The moment there is corroborative evidence which connects or tends to connect an accused with the crime such corroborative evidence relates to the identity of the accused in connection with that crime It is the approver s evidence which is the direct evidence of the crime There should be corroboration in material particulars not only concerning the crime but corroboration of the approver s story by evidence which connects or tends to connect an accused with the crime It is this corroborative evidence which determines the mind of the Court or a jury that the approver s evidence that the accused committed the crime is true As to the 3rd Submission made on behalf of the appellant the following circumstances were established by the evidence which were accepted by the jury 1 There was a motive for the appellant to commit the crime that is to say his immoral proposal to Lila wife of the deceased On the 25th of May 1955 the appellant came to Lila s house and had a talk with the deceased On the 26th of May 1955 in the morning the appellant also came to the house and talked with the deceased Later on that very day a little after sunset the appellant came to the house and asked the deceased to go for a walk with him The deceased did so 4 Thereafter the appellant was seen going with Jagdish Gorain and the deceased by Brojeswari and 134 Lila towards the north of the village after 5 pm while they were bathing in Talbona tank According to the approver at the time that the deceased was stabbed by the appellant he had sustained an injury on the dorsum of his left palm The medical evidence established that the appellant had an almost healed up ulcer I inch in length on the left side of the palm at its posterior surface one inch below the wrist joint and another healed up ulcer 13 inch in length on the left thumb at the posterior surface and that these injuries could be caused by a sharp cutting weapon like a knife As it had become night and the deceased had not returned Lila s mother Brojeswari and her uncle Radharaman Sadhu searched for him They went to the club house where the appellant and his two co accused Jagdish Gorain and Sudhir Gorain and the approver used to associate with each other When enquiries were made from the appellant by Brojeswari he first replied that the deceased had not gone with him and that he did not know anything about his whereabouts When he was remainded that it was he who had taken the deceased for a walk which he was denying the appellant replied that the deceased went with him upto the canal towards north of the village but as he felt a headache he came away and it was not possible for the appellant to give any news about the deceased s whereabouts The above mentioned circumstances either individually or collectively may fall short of proving that the appellant committed the murder of the deceased Indeed the High Court was of the opinion that these circumstances independent of the direct evidence of the approver would not be sufficient to induce any reasonable person to come to the conclusion that the appellant had committed the crime As already stated however the approver s evidence is the direct evidence which establishes that the appellant had murdered the deceased The jury had to decide for themselves whether the above mentioned circumstances were sufficient corroborative evidence to satisfy 135 them that the approver s evidence that the appellant murdered the deceased was true It is however urged by Mr Umrigar that the circumstances mentioned were not circumstances corroborating the evidence of the approver in material particulars which would connect or tend to connect the appellant with the crime In our opinion at least in one circumstance the corroboration is in a very material particular connecting or tending to connect the appellant with the crime The approver s evidence that while the appellant was murdering the deceased he had received an injury on the dorsum of his left palm is corroborated by the medical evidence It was however pointed out that the medical evidence does not show that the injury was on the dorsum of the left palm In our opinion there is no substance in this submission because the first injury is described as one on the left side of the palm at its posterior surface 1 inch below the wrist joint that is to say the dorsum of the left palm The second injury is clearly on the left thumb at its posterior surface which is also consistent with the evidence of the approver that the dorsum of the left palm was injured The jury were entitled to accept this evidence as sufficient corroboration in a material particular connecting the appellant or tending to connect him with the crime In addition the circumstance that it was the appellant who had called for the deceased a little after sunset and had taken him away and thereafter was seen going along towards the north of the village with the deceased and that thereafter the deceased was not seen alive was one upon which the jury could rely in coming to the conclusion that it connected or tended to connect the appellant with the crime The appellant s pretended ignorance of the whereabouts of the deceased that very night and his ultimate admission that he had taken the deceased towards the north of the village was also a circumstance upon which the jury could rely as inconsistent with his innocence In our opinion all the circumstances referred to above were sufficient corroboration of the approver s evidence connecting or tending to connect the appellant with 136 the crime and accordingly the approver s evidence that the appellant did commit the crime was true As to the 4th submission that although there was similar corroboration of the approver s evidence against Jagdish Gorain but he had been acquitted by the jury although no real distinction between his case and the case of the appellant arose is unsound as in our opinion the two cases are not comparable In the first place there was no motive for Jagdish Gorain to commit the murder In the second place the injury which Jagdish received was while he caught the knife in the hand of the appellant saying what have you done The approver s evidence therefore rather tended to show that he tried to prevent the appellant from further stabbing the deceased These circumstances may have induced the jury to make a distinction between the case of Jagdish Gorain and the appellant It was for the jury to say whether they regarded the circumstantial evidence as sufficient to connect or tending to connect Jagdish with the crime It would seem that on the approver s evidence the jury may well have regarded the circumstances as insufficient corroboration to connect or tending to connect Jagdish Gorain with the crime In our opinion it cannot be said with any good reason that there was any defect in the charge to the jury delivered by the Sessions Judge which would justify us in saying that the verdict of the jury was vitiated The appeal is accordingly dismissed Appeal dismissed

The respondents who were non residents carrying on business at Secunderabad within the territories of the Nizam of Hyderabad were acting as agents of two firms in Bombay and Madurai in British India for the supply of certain goods to the Nizam s Government In respect of the Commission due to the respondents by the firms the agreement between the parties was that the amounts were to be paid to the respondents in cash or by cheques at Secunderabad For these amounts cheques drawn by the firms on the Bombay and Madras branches respectively of the Imperial Bank of India were sent by post at Bombay and Madurai to the respondents at Secunderabad and when received they were credited in their books of account the cheques being sent to their banker there for collecting and crediting to their account For the assessment year 1945 1946 the Income tax Officer Berhampur in British India assessed these sums as taxable income holding that the amount was received in British 869 India and not at Secunderabad The Appellate Tribunal found that all the cheques received at Secunderabad by the respondents were treated by them as payment The respondents claimed that in view of the agreement between the parties that the amount of commission should be paid at Secunderabad when the cheques were sent by post the post office was the agent of the debtor and not of the respondents that the amount must be treated as having been received when the post office delivered the cheques to the respondents and that consequently the amount cannot be treated as having been received in British India The Income tax authorities relied on the decision in Commissioner of Income tax vs Ogale Glass Works Ltd 1955 I SCR 185 Held that in the case of payment by cheques sent by post the determination of the place of payment would depend upon the agreement between the parties or the course of conduct of the parties If it is shown that the creditor authorised the debtor either expressly or impliedly to send a cheque by post the property in the cheque passes to the creditor as soon as it is posted But where as in the present case the agreement was that the amount was to be paid at Secunderabad outside British India when the cheques were received by the respondents there the amount must be deemed to have been received at that place and therefore the amount was not liable to be taxed in British India Commissioner of Tncome tax vs Ogale Glass Works Ltd distinguished

Civil Appeal No 655 of 1957 Appeal by special leave from the judgment and decree dated April 22 1954 of the Orissa High Court in Second Appeal No 174 of 1948 arising out of the judgement and decree dated January 12 1948 of the District Judge Cuttack in Munsif Appeal No 309 of 1946 against the judgment and decree of the second 272 Munsif Cuttack dated August 31 1946 in Title Suit No 120 of 1943 A V Viswanatha Sastri and B P Maheshwari for the appellant section P Sinha and R Patnaik for respondents Nos 2 3 and 4 1959 May 12 The Judgment of the Court was delivered by SINHA J This appeal by special leave is directed against the judgment and decree dated April 27 1954 of the Orissa High Court passed on second appeal reversing the concurrent decisions of the courts below dismissing the plaintiffs suit instituted under the provisions of r 63 of 0 21 of the Code of Civil Procedure hereinafter referred to as I the Code The suit had been instituted by the respondents for a declaration that the deed of trust dated December 15 1926 in favour of the first defendant Pares Nath Thakur installed in the Digamber Jain Temple in the town of Cuttack in Orissa was sham and fraudulent and had not been meant to be acted upon and that the properties covered by the said deed of trust belonged to the defendants 2 to 4 and were liable to be sold in execution of the decree obtained by the plaintiffs against the defendants second party defendants 2 to 4 The deity the first defendant was sued under the guardianship of the trustees The facts of this case leading upto this appeal in so far as they are necessary for the determination of this appeal are as follows The plaintiffs are the assignees of the mortgagee s interest in respect of a simple mortgage bond dated April 14 1927 executed by the predecessors in interest of the defendants second party aforesaid The mortgagees instituted a suit in the court of the Subordinate Judge at Cuttack to enforce the mortgage They obtained a preliminary decree on June 11 1935 which was made final on October 13 1936 In due course the mortgaged properties were sold and purchased by the decree holders but as the decrement dues were not satisfied by the sale 273 of the mortgage properties a money decree was obtained against the defendants 2 to 4 for Rs 11000 odd on April 29 1940 The disputed properties covered by the deed of trust aforesaid had been attached before judgment on September 23 1934 When the decree holder proceeded against the properties covered by the deed of trust the defendant first party through the trustees preferred a claim to the properties under r 63 of 0 21 of the Code claiming the properties as belonging to the deity and not to the judgment debtors The executing court after holding an inquiry under the Code passed an order in favour of the claimant Hence the plaintiffs instituted the suit under the provisions of r 63 of 0 21 of the Code alleging that the trust deed aforesaid by virtue of which the claim had been allowed by the court as aforesaid was a sham and fraudulent transaction which did not convey any title to the property covered by the deed of trust and the subject matter of the suit The two courts of fact agreed in holding that there was an idol in fact and that the deed of dedication was effective to transfer title from the donors to the donee and that the donors who were the predecessors in title of the defendants second party had completely divested themselves of any interest in the properties which were the subjectmatter of the deed of trust It was also found that the disputed properties did not belong to the family of the mortgagors and that the deed of trust had been executed only with a view to putting the title to the property beyond all doubt or dispute The plaintiffs being unsuccessful in the first two courts preferred a second appeal to the High Court of Judicature at Cuttack The appeal was heard by a Division Bench consisting of Panigrahi C J and Narasimham J The judgment of the Court was delivered by the learned Chief Justice who set aside the decisions of the courts below and allowed the appeal with costs throughout As the defendant first party failed to obtain from the High Court the necessary leave to appeal to this Court it moved this Court for special leave which was granted Hence this appeal 274 It is manifest that the question to be determined by the High Court on the second appeal was essentially one of fact That the High Court was cognizant of this aspect of the case appears from the following observation with which the decision of the High Court begins In second appeal the substantial point urged before us is whether the evidence both oral and documentary would warrant an inference that the properties had in fact been dedicated to the deity It is well settled by a long series of decisions of the Judicial Committee of the Privy Council and of this Court that a High Court on second appeal cannot go into questions of fact however erroneous the findings of fact recorded by the courts of fact may be It is not necessary to cite those decisions Indeed the learned counsel for the plaintiff respondents did not and could not contend that the High Court was competent to go behind the findings of fact concurrently recorded by the two courts of fact The High Court then set out to examine the evidence both oral and documentary and after an elaborate examination of the large volume of evidence adduced by the parties recorded the finding that defendant No 1 has failed to prove his title and that the plaintiffs are entitled to have the suit properties sold with a view to satisfy the decree obtained by them against the judgment debtors In our opinion the High Court has completely misdirected itself both in law and on facts as will presently appear even assuming that it was open to it to go behind findings of fact In the first place the High Court has misplaced the onus of proof as will appear from the conclusion just quoted above The onus of proof loses much of its importance where both the parties have adduced their evidence But the High Court seems to have laid some emphasis on onus of proof with a view to examining for itself whether that onus had been discharged by the contesting defandant the deity This becomes clear from the following observation of the High Court 276 Judged by these principles Ext F the deed of trust by itself creates no endowment and it is necessary for the defendants to show by evidence aliunde that there had been an existing endowment in favour of this particular idol to which the description Devottar can be applied Further down the High Court observed as follows after referring to what it characterised as innumerable decisions r Applying the above principles to the facts of this case we find that no evidence has been given with regard to the formal dedication of the properties to the deity except what is recited in exhibit F This recital is insufficient to support a finding that there had been a real dedication of these properties With due respect to the High Court it must be remarked that it appears to have lost sight of the wellestablished rule applicable to suits of the kind it was dealing with that the burden of proof is heavy on a plaintiff who sues for a declaration of a document solemnly executed and registered as a fictitious transaction The burden becomes doubly heavy when the plaintiff seeks to set aside the order of the civil court passed in execution proceedings upholding the claim of a third party to a property sought to be proceeded against in execution The plaintiff who seeks to get rid of the effect of the adverse order against him has to show affirmatively that the order passed on due inquiry by the executing court was erroneous Hence in this case apart from the fact that the respondents were the plaintiffs there was an initial heavy burden on them not only to show that the order of the civil court in the claim case was erroneous but also that the deed of trust relied upon by the contesting defendant was fictitious The two courts of fact had discussed all the relevant evidence in great detail and had agreed in finding that the plaintiffs had failed to prove their case The question which the courts below decided and which was the only question in controversy before the High Court was whether the trust deed was a fictitious transaction Such a question is essentially one of fact See the 276 latest decision of this Court in the case of Meenakshi Hills Madurai vs The Commissioner of Income tax Madras 1 where it has been laid down inter alia that a finding of fact even when it is an inference from other facts found on evidence is not a question of law except in certain specified cases The case before us certainly is not one of those specified cases These observations are sufficient completely to displace the decision of the High Court but we shall examine the reasons of the High Court for setting aside the concurrent findings of fact of the courts below to see whether the High Court was right in its conclusions assuming all the time that the High Court was competent to go into those questions of fact The High court was considerably influenced by certain recitals in the deed as will appear from the following observations Above all there is a further significant recital which appears to have escaped the notice of both the courts below and that is that the trustees can dispose of the properties if ever they think it necessary and may also appoint a Pujari for conducting the daily worship of the deity In making these observations the High Court has completely missed the real significance of the following paragraph towards the end of the deed Be it stated that if it will be required at any time you the trustees according to your unanimous opinion will sell the property situated at Mouzas Baramunda Siripur and Nuapalli etc in Killa Khurda and Zilla Dandimal out of the immovable properties described in schedule kha of this deed and will appoint any servant etc for the purpose of worship It will be noticed from the above quoted provision in the deed that the trustees were specifically empowered by the deed to alienate certain specific properties which according to the evidence were very inconveniently situated The properties in dispute in this case are not in that category The properties are land and house in the town of Cuttack were the deity is located Hence in the first instance the specific power of 1 277 alienation granted to the trustees did not apply to the properties in dispute Secondly such a provision in a deed of trust is not wholly out of place which could lend itself to the inference that the document was not intended to be acted upon The High Court then examined in detail the evidence of D W 3 who on its own findings is a respectable person About this witness the High Court observed Undoubtedly the testimony of this witness is entitled to great respect and the courts below have accepted it as reliable While dealing with the evidence of this witness the High Court proceeded to make the further remarks We are here concerned with the determination of the sole question as to whether there has in fact been a dedication in favour of the deity No witness has been called to prove the gift of any single item of the properties in suit Even the evidence relating to the installation of the idol is extremely obscure there again the High Court appears to have overlooked the evidence of D W 1 Kunjabahari Lal who has stated as follows The disputed shop house belongs to the Thakur In 1870 or 1872 one person probably of the name of Maniklal gifted the disputed shop house to the Thakur While dealing with the question whether the deed of trust had been given effect to the High Court made the following significant observations There is no evidence of the appropriation of the rents and profits of the properties upto the year 1938 and even the accounts which are alleged to have been maintained have not been produced The High Court here again appears to have overlooked some material evidence bearing on this aspect of the matter Particularly significant is the evidence of one Dhaneswar Lal who was examined by the executing court in the claim case aforesaid on behalf of the claimant The following statement in his evidence which was marked as ext Mat the trial because the witness was dead is pertinent 278 I look after the Thakur s affair I am a Panchayat member of the Thakur I also perform its Puja and get a pay of Rs 12 for it Since 1934 I work as Thakur s Pujhari and look after the Thakur s land since 1936 I regularly maintain accounts These accounts have been filed in the 2nd Munsif s Court in connection with Suit No 94 of 1941 The disputed property relates to lots I and 2 of the trust deed Plot 216 is Thakur s temple It is a twostoreyed building The witness had been cross examined by the plaintiffs who were opposing the claim and in his cross examination it was brought out that the accounts which the witness stated had been filed in the 2nd Munsif s Court also included expenditure made in the temple In this connection it is noteworthy that the plaintiffs had not called upon the contesting defendant to produce those account books in respect of the properties in dispute If that party had been called upon to produce those documents and it had failed to produce them an adverse inference might have been permissible to a court of fact But apparently the High Court was inclined on the second appeal to draw such an adverse inference even though no foundation had been laid at the trial for justifying such an inference To the same effect are the following observations of the High Court On the other hand the other facts and circumstances of the case raise a strong presumption that there had in fact been no such endowment It is clear therefore that the decision of the High Court on the second appeal reversing the concurrent findings of fact of the two courts below is based upon inferences drawn from evidence oral and documentary after misplacing the onus of proof This the High Court was not entitled to do Besides as we have already indicated even on the merits the findings of the High Court are open to serious criticism and must be held to be unsound For the reasons aforesaid it is clear that the judgment of the High Court cannot be supported The appeal is accordingly allowed with costs throughout and the suit will stand dismissed Appeal allowed

Where a patnidar has obtained a decree against his zemindar for possession of resumed chaukidari chakran lands with mesne profits from the date on which the zemindar wrongfully took 783 possession of them the zemindar is not entitled to deduct by way of equitable set off from the amount of mesne profits payable by him under the decree the amounts due to him on account of rent revenue and cesses for a period subsequent to the date of delivery of possession of the lands inasmuch as the two cross demands do not arise out of the same trans action The transaction which led to the plaintiff s demand for mesne profits resulted from the defendant s wrongful act as trespasser while the transaction which gave rise to the zemindar s demand arose out of the relationship of landlord and tenant and the obligations resulting therefrom

Appeal No 161 of 1959 Appeal by special leave from the judgment and order dated the 31st January 1956 of the Labour Appellate Tribunal at Calcutta in Appeal No Cal 301 108 of 1954 arising out of the Award dated the 20th October 1954 of the Second Industrial Tribunal West Bengal B Sen and section N Mukherjee for the appellants D N Mukherjee for the respondents May 7 The Judgment of the Court was delivered by WANCHOO J This is an appeal by special leave in an industrial matter The appellant is the Graham Trading Co India Ltd hereinafter called the company There was a dispute between the company and its workmen about bonus which was referred by the Government of West Bengal by its order of December 17 1953 to the Second Industrial Tribunal Though the order of reference did not specify the year for which the bonus was in dispute it is common ground between the parties that the dispute was for bonus for the year 1953 The case of the workmen who are respondents before us was that the company had been paying one month s bonus invariably from 1940 to 1950 In 1951 one month s bonus was paid in October and half a month s further bonus was paid in December In 1952 one month s bonus was paid The demand that the workmen made in their letter of August 27 1953 was for three month s bonus The company replied that payments in past years had been entirely ex gratia and as there was loss in 1953 it was not possible to make any ex gratia payment that year The workmen then contended in their letter of September 21 1953 that the sole object of bonus which had been granted upto that year was to meet puja expenses and that the payment of this bonus had become customary and a term of employment The matter could not be settled between the parties and that is how the dispute was referred for adjudication The company s case was that payment of bonus had all along been ex gratia depending upon profits except in a few years But in those years it was also made clear that the payment was ex gratia and without creating any precedent for future Therefore there was neither a term of employment nor any custom 109 which put any obligation on the company to pay any bonus in a year of loss The question was considered by the Industrial Tribunal from three aspects Firstly it considered whether any bonus was payable for this year as profit bonus on the basis of the Full Bench formula evolved in The Mill Owners Association Bombay vs The Rashtriya Mill Mazdoor Sangh Bombay 1 and it came to the conclusion that there was no available surplus of profit to justify such bonus It then considered the remaining two aspects namely whether puja bonus could be awarded either as an implied term of employment according to the decision in Mahalakshmi Cotton Mills Ltd Calcutta vs Mahalakshmi Cotton Mills Workers Union 2 or on the basis of custom It seems to have mixed up the discussion on these aspects and having come to the conclusion that puja bonus could not be awarded in this case on the basis of an implied term of employment it proceeded to dismiss the claim on the basis of custom also The workmen then went up in appeal to the Labour Appellate Tribunal which allowed the appeal The decision of the Appellate Tribunal has also mixed the two aspects of puja bonus namely whether it is based on an implied term of employment or on custom but it came to the conclusion that there was sufficient evidence to establish custom and therefore ordered payment of one month s basic wages as puja bonus It was also inclined to the view that the company s accounts showing loss were not reliable and there might even be a case for profit bonus but eventually it granted one month s basic wages as customary puja bonus Thereupon the company filed an application for special leave to appeal to this Court which was allowed and that is how the matter has come up before us Puja is a special festival of particular importance in Bengal and it has become usual with many firms there to pay their employees bonus to meet special puja expenses Disputes have arisen with respect to this bonus which were adjudicated upon by various tribunals As 1 2 110 for back as 1949 in a dispute between The Bengal Chamber of Commerce Calcutta and Its Employees 1 the Industrial Tribunal which adjudicated upon the dispute observed that Durga Puja was a national festival in Bengal and it was customary to make presents to near and dear ones and to relatives at that time As it was difficult for poorly paid employees to make savings out of the monthly income for this purpose it therefore had become traditional and customary in Bengal for employers to make a monetary grant at the time of the pujas The Bengal Chamber of Commerce had not been slow in appreciating this and had been granting bonus equivalent to one month s pay and the tribunal had been assured that there was no intention to discontinue it Later the matter was considered in Mahalaxmi Cotton Mills case 2 where certain tests were laid down which would justify the inference that there was an implied term of employment for payment of bonus at the time of the annual Durga Puja That case however was concerned with puja bonus as an implied term of employment and not as a matter of tradition or custom in Bengal It is however clear that puja bonus which is usually paid in Bengal is of two kinds namely 1 where it is paid as an implied term of employment as explained in Mahalaxmi Cotton Mills case 2 and 2 where it is paid as a customary and traditional payment as stated in the Industrial Tribunal s award referred to above We have considered the tests to be applied where it is a case of payment on an implied term of employment in Messrs Ispahani Ltd vs Ispahani Employees Union 3 and we need not repeat what we have said there In the present case it has been pointed out by the company that payments which had been made in the past years from 1940 to 1952 could not be considered as based on an implied term of employment in the circumstances of this cash This contention in our opinion is correct An implied term of employment cannot be inferred in this case for right from 1 Publication of Government of West Bengal I Awards made by the Tribunals for the quarter ending March 2 3 196011 SCR 24 111 1948 to 1952 the company whenever it paid this bonus made it clear that it was an ex gratia payment and would not constitute any precedent for future years In the face of such notice year by year it would not be possible to imply a term of employment on the basis of an implied agreement for agreement postulates a meeting of minds regarding the subjectmatter of an agreement and here one party was always making it clear that the payment was ex gratia and that it would not form a precedent for future years In dealing with the question of an implied term of the condition of service it would be difficult to ignore the statement expressly made by the employer while making the payment from year to year The question however whether the payment in this case was customary and traditional still remains to be considered In dealing with puja bonus based on an implied term of employment it was pointed out by us in Messrs Ispahani Ltd vs Ispahani Employees Union 1 that a term may be implied even though the payment may not have been at a uniform rate throughout and the Industrial Tribunal would be justified in deciding what should be the quantum of payment in a particular year taking into account the varying payments made in previous years But when the question of customary and traditional bonus arises for adjudication the considerations may be somewhat different In such a case the Tribunal will have to consider i whether the payment has been over an unbroken series of years ii whether it has been for a sufficiently long period though the length of the period might depend on the circumstances of each case even so the period may normally have to be longer to justify an inference of traditional and customary puja bonus than may be the case with puja bonus based on an implied term of employment iii the circumstance that the payment depended upon the earning of profits would have to be excluded and therefore it must be shown that payment was made in years of loss In dealing with the question of custom the fact that the payment was called ex gratia by the employer when it 1 19601 SCR 24 112 was made would however make no difference in this regard because the proof of custom depends upon the effect of the relevant factors enumerated by us and it would not be materially affected by unilateral declarations of one party when the said declarations are inconsistent with the course of conduct adopted by it and iv the payment must have been at a uniform rate throughout to justify an inference that the payment at such and such rate had become customary and traditional in the particular concern It will be seen that these tests are in substance more stringent than the tests applied for proof of puja bonus as an implied term of employment Let us now see whether these tests are satisfied in the present case The practice in the present case began in 1940 and was unbroken upto 1950 In between there was an adjudication in 1948 to which the company was a party At that time it was said on behalf of the company before the industrial tribunal that some bonus was being paid and that there was no intention to discontinue It and consequently the tribunal did not adjudicate upon the matter which shows that the company recognised the traditional and customary nature of the payment and it assured the tribunal that there was no intention then to discontinue the payment The payment was continued from 1949 to 1951 In 1952 there was some dispute and originally the company paid one month s wages as advance of pay and not as bonus Some of the workmen however accepted the payment while others did not because they were not satisfied with the amount being paid as advance of pay The chairman of the board of directors of the company visited Calcutta in 1952 and then on the representation of the workmen the advance was converted into one month s bonus and even those workmen who had not accepted the advance were allowed to draw the bonus It cannot therefore be said that there was any break in the payment of bonus from 1940 to 1952 for if the chairman had not converted what was advance of pay into bonus in December 1952 the workmen might have raised the dispute even in that year and then 113 there would have been no break up to 1951 So there has been unbroken payment and the period has been sufficiently long to justify an inference of customary and traditional bonus It was pointed out that in four years during this period the payment was made in November and December and not about the time of the pujas and therefore it could not be said that this was traditional and customary puja bonus The delay in payment is not in our opinion material in this case for one of the directors of the company who appeared as a witness stated as to this one month s bonus that it was paid by the company to help its staff during pujas The condition that the payment should have been made in years of loss also to exclude the hypothesis that it was paid only because profits had been made has also been satisfied for the evidence is that payments were made in at least two years of loss Lastly the condition that payment should have been at a uniform rate has also been satisfied because one month s basic wage is the quantum of bonus from 1940 right up to 1952 without any change It is true that in December 1951 further bonus for half a month was paid but that year was a year of profit in which cloth bonus for half a month was specially paid Thus the rate so far as the puja bonus is concerned has always remained uniform at one month s basic wage It is true that the workmen pitched their demand too high for three month s bonus in 1953 But that doe not in our opinion detract from the inference to be drawn from the facts proved in this case All the conditions therefore of a customary and traditional bonus are satisfied in this case and there is no reason to interfere with the order of the Appellate Tribunal though we should like to make it clear that we do not agree with the observations of the Appellate Tribunal in connection with the profit bonus aspect of the matter The appeal therefore fails and is hereby dismissed As this question has arisen for the first time in this Court as a distinct issue and was not clearly considered before by the Appellate Tribunal we order the parties to bear their own costs

The appellant was tried on a charge of murder by the Sessions judge with the aid of a jury The evidence against him consisted of the testimony of an approver and the proof of corroborative circumstances tending to connect him with the crime The jury found the appellant guilty and the Sessions judge accepting the verdict sentenced him to imprisonment for life An appeal to the High Court was dismissed as that Court found no misdirections in the charge to the jury The appellant contended that there was misdirection in the charge to the jury in that the jury was not told as laid down in Sarwan Singh vs The State of Punjab that the approver s evidence had to satisfy a double test ie he must be a reliable witness and his evidence must receive sufficient corroboration and in that the corroborating evidence was not sufficient to connect the appellant with the crime Held that there were no misdirections in the charge The observations in Sarwan Singh s case that it must be shown that the approver was a reliable witness were made in the special circumstances of that case where the approver had definitely been found to be so thoroughly discrepant as to be wholly unreliable In the present case there was nothing to show that the evidence of the approver was in any way unreliable Saywan Singh vs The State of Punjab dis tinguished The Sessions judge had correctly directed the jury that the corroboration of the evidence of the approver in material particulars must relate not only to the commission of the crime but also to the evidence connecting or tending to connect the accused with the crime The circumstances proved in the case corroborated the approver s evidence connecting the appellant with the crime Once there was evidence of such circumstances it was for the jury to decide whether they were sufficient corroboration of the approver s evidence that the appellant murdered the deceased

Appeals Nos 413 and 414 of 1958 Appeals from the order dated April 27 1955 of the Punjab High Court in Civil Revisions Nos 81 D of 1953 and 96 D of 1953 respectively 1959 April 21 22 23 24 C K Daphtary Solicitor General for India Ram Behari Lal D K Kapur and Sardar Bahadur for the appellants The question in the present appeals turn around section 96 of the The purpose of sub section 2 of section 96 is to state those grounds based on the policy of insurance on which the insurer may rely for his defence Sub section 3 makes certain conditions of the policy of no effect as against the 3rd party Both Sub sections 2 and 3 are concerned only with the conditions of the policy They should not be interpreted so as to oust other defences the insurer may wish to take eg that there was no accident or that the plaintiff was negligent or that there was contributory negligence etc When a person is joined as a party he has the right to take all defences permissible in law Subba Rao J Did the insurer have a right to be joined as a party apart from the statute Could he be joined under Order 1 Rule 10 of the Code of Civil Procedure 169 I am not basing my case on Order 1 Rule to of the Code of Civil Procedure Apart from the statute the insurer would not be liable to the third party but only to the assured Das J Is it not correct that the statute gives the insurer a right to be joined as a party which he did not have previously If so the right cannot be extended beyond what the statute gives It is true that the statute gives a right to the insurer to become a party to the action by the injured person which he did not have previously but the real question before the court is whether sub section 2 limits the right to defend on the grounds stated in that sub section In my submission subS 2 exhausts only the defences based on the conditions of the policy which the insurer may wish to take If it was intended that these were to be the only defences open to the insurer the word only should have been used instead of the words any of before the words the following grounds What the legislature meant was that the insurer could defend the action also on the grounds stated in sub section 2 in addition to other grounds If the court finds the section is clear no words can be added However I submit the section is ambiguous It can mean either that the insurer can take other defences or that he is limited to the matters stated in sub section The Court should interpret the section to give effect to the interests of justice The insurer is made liable to satisfy the judgmental It would be an extreme hardship if he were not allowed to defend the action on merits Apart from the situations coming within sub section 2 the insurer would be condemned unheard The legislature could not have intended such a result Even the cases which hold that the defences of the insurer are limited to those stated in subS 2 recognise that this causes hardship ILR ILR and ILR In those cases the hardship was sought to be overcome by allowing the insurer to defending the name of the insured I do not say that this latter procedure is correct but it shows that there is hardship Sarkar J How can that be done How can the insurer be allowed to defend in the name of the insured How is the record to be kept There is no provision under which it can be done not even under section 1 5 1 of the Code of Civil Procedure Probably not But that question does not arise for deter mination in this appeal The hardship recognised by the Bombay cases can be avoided if the interpretation of sub section 2 suggested by me is accepted 22 170 Das J How is that interpretation possible in the face of sub section 6 Sub sectioii 6 only prohibits the insurer from avoiding liability in a manner other than that stated in sub section The manner of avoiding liability stated in sub section 2 is that the insurer should apply to be made a party Consequently the insurer can avoid liability only by being joined as a party The word manner in the context of sub section 6 refers only to the procedure the insurer may follow not to the grounds the insurer may wish to take Hence the insurer can avoid liability only by being joined as a party but can take any defences he chooses including those stated in sub section Otherwise the third party and the assured may collude and a judgment may be passed which the insurer would be bound to satisfy without having had an opportunity of defending himself Or the case may go by default against the assured or may be compromised The real party affected is the insurer and yet he is given no right to be heard except on the limited grounds stated in sub section The assured is only a nominal party and is not likely to be interested in contesting the case as the decree has to be satisfied by the insurer The legislature could not have intended such a result It is contrary to natural justice that a party likely to be affected by the proceedings should not be heard on the merits T P section Chawla with him Dipak Datta Choudhry for the respondent Chapter VIII of the is based on various English Statutes See Report of Motor Vehicles Insurance Committee 1936 37 known as the Roughton Committee For a proper appreciation of section 96 it is necessary to consider the historical development of the law relating to compulsory third party insurance in England Before 1930 there was no system of compulsory insurance in respect of third party risks in England In the event of an accident the injured third party had a right to sue the motorist and recover damages But if the motorist was a man of straw the injured party was in practice unable to obtain compensation This was the situation the various Road Traffic Acts were designed to avoid Even in those cases in which the motorist had taken out an insurance policy difficulties arose in the way of the injured third party recovering compensation The injured third party had no direct right of action against the insurer In the event of the insolvency of the assured the injured third party would rank a an ordinary creditor and would not receive complete satisfaction for his decree The Third Parties Rights 171 Against Insurers Act 1930 created a system of statutory subrogation in such cases Halsbury 3rd Edn Vol 22 PP 339 372 The provisions of this Act have been sub stantially reproduced in section 97 of the As a result the third party can sue the insurer directly in cases Next the Road Traffic Act 1930 introduced a scheme of compulsory insurance Section 351 made third party insur ance Compulsory Section 941 of the is worded in the Same Way Similarly section 36 Of the English Act is substantially reproduced in section 95 of the Section 38 of the Act of 1930 made certain conditions of the policy ineffective so far as third parties were concerned The object was that claims of injured third parties should not fail because the assured had not complied with or committed a breach of certain conditions in the policy Shawcross on Motor Insurance 2nd Edn pp 219 277 But the Act of 1930 did not go far enough In 1934 another Road Traffic Act was passed the object of which was to compel Insurers to satisfy judgments obtained against the insured Shawcross ibid P 271 This Act contemplated three separate actions between the various parties The first action was by the injured third party against the assured By section 101 of that Act which is reproduced in section 961 the insurer was obliged to satisfy the decree against the assured If the insurer failed to do so the third party had a right of action against the insurer based on the judgment Obtained against the assured Shawcross p 296 Halsburry 3rd Edn Vol This was the second action It is doubtful if even the defence of collusion would be open to the insurer in the second action Sliawcross P 296 Then section 102 of the Road Traffic Act of 1934 is substantially reproduced in section 962a By this provision in certain events the insurers liability ceases To appreciate section 962b it is necessary to keep in mind section 38 of the Road Traffic Act of 193o and section 12 of the Road Traffic Act of 1934 Both these letter sections made certain conditions of the policy ineffective against third parties Whilst drafting the the legislature reversed the manner of statement In section 962b the legislature has stated affirmatively what are the conditions on which the insurer can rely as against a third party This was done to avoid doubt and uncertainly Then section 103 of the Road Traffic Act 1934 gave the insurer a right to obtain a declaration that he was not liable on the policy due to non disclosure or misrepresentation as to 172 a material fact In this action a notice had to be sent to the third party injured who was given a right to join as a party and oppose the action This was the third action The same result is achieved by section 962C What section 96 does is to roll up into one these three actions which occurred in English Law This saves time and money and enables the three parties involved to have their respective rights and liabilities settled in one action But section 96 does not give any party greater rights than it would have had in English Law At common law the insurer had no right to intervene in the action by the injured party against the insured and oppose the claim on merits eg that there was no accident or negligence or that there was contributory negligence etc The insurer could avoid liability only by showing that he was not liable for some reason connected with the policy This is the right which sub section 2 preserves It does not give additional rights to the insurer over what he would have had at common law or in accordance with the English Statutes On the interpretation suggested by the Solicitor General the insurer would get a right he never had before This is contrary to the object of Chapter VIII which is to protect the injured third party and not the insurer The insurer is neither a necessary nor a proper party under Order 1 Rule 10 Code of Civil Procedure in the action by the injured third party against the assured Subba Rao J You need not deal with Order 1 Rule 10 Code of Civil Procedure as the Solicitor General has not relied on it There is no ambiguity in section 962 The sub section clearly specifies the defences open to the insurer and it is not permissible to add to those defences This is put beyond doubt by sub section It prevents the insurer from avoiding liability in a manner other than that stated in sub section The manner provided by sub section 2 is by joining as a party and defending on the grounds stated There fore manner refers to both the procedure and the grounds To hold otherwise is to make sub section 2 unnecessary If the Legislature intended that the insurer should be able to defend on grounds other than those stated in sub section 2 all it needed to say was that the insurer would be entitled to join as a party As sub section 2 specifies the defenses the intention was clearly to limit the insurer to those defences Subba Rao J Suppose the injured third party and the insured collude or judgment is allowed to go by default could not the insurer have the judgment set aside or bring a suit tohave it set aside 173 In my submission even a suit for this purpose is barred as that would contravene sub section Such a suit would enable the insurer to avoid liability in a manner which sub section 6 does not allow There is no hardship caused by giving full effect to the section as it stands The possibilities of collusion are remote and indeed illusory Shawcross P 296 By section 963 the insurer is given a right to recover from the insured any sums paid by him which he was not bound to pay due to breaches of conditions in the policy but which conditions have been made ineffective as against the third party Sub section 4 of the same section gives the insurer the right to recover from the assured the excess which he is made to pay by virtue of section 95 over his obligations in the policy The judgment is still against the assured who is the party primarily liable It is only made executable against the insurer Apart from this by section 13 of the the legislature gave insurers six years to insert provisions in their policies and take such other steps to protect themselves against the assured committing them to liability as they thought fit Most insurers insert the control of proceedings clause in the policy Halsbury 3rd Edn VOl 22 p 338 Someone had to bear the loss ultimately and the legislature has tried so far as possible to ensure that the loss falls on the person causing the accident But if the insured is impecunious the choice is between allowing the loss to fall on the injured party or the insurer The legislature in its wisdom has provided that in such a situation the loss shall fall on the insurer It is a part of the insurer s business to suffer such losses and when entering the contract of insurance he contemplates that he might be called upon to pay the loss Now the Bombay cases referred to by the Solicitor General are right in so far as they hold that the insurer can defend only on the grounds stated in sub section Those cases are wrong in proceeding on the assumption that there is hardship caused to the insurer by this view They are based on a misunderstanding of the cases of Windsor vs Chalcraft and Jacques vs Harrison and on appeal It was not noticed in the Bombay cases that the provisions of Indian Law equivalent to section 245 of the judicature Act and Order 27 Rule 15 RSC were not as wide as the English provisions Order 9 Rule 7 Code of Civil Procedure allows an ex parte decree to be set aside only at the instance of the defendant whilst there is no such limitation in 0 27 R 15 RSC There is 174 no procedure known to law by which the insurer can be allowed to defend in the name of the insured This cannot be done under section 151 CPC as it would contravene section 966 and allow the insurer to avoid liability in a manner other than the one allowed The Bombay cases have not noticed sub section 6 at all The procedure stated in those cases is untenable Sarkar J Are we called upon to decide that point in this case Apparently there is a revision petition pending in the High Court between the same parties in which that question awaits determination Should we express an opinion on that point The Solicitor General has adopted it as apart of his reasoning He has said that if the insurer can take all the defences in the name of the insured that is an additional reason why sub section 2 should not be interpreted as to limit the defences available to the insurer I wants show that view is wrong The Court disallowed this branch of the argument In the case reported as Windsor vs Chalcraft 1939 1 KB 279 the dissenting judgment of Slesser LJ states the correct position The judgment of Greer LJ show that lie was in considerable doubt as to the correct position in law but felt himself bound by the earlier judgments reported in jacques vs Harrison 12 OBD 165 Mckinnon LJ proceeded on the footing that the assured was only a nominal defendant As already submitted this is not correct Even in English Law the insurer could recover against the assured Halsbury 3rd Edn Vol 379 385 The case of Windsor V Chalcraft was decided in May 1038 The was passed in February 1939 It is legitimate to assume that the persons who drafted the Act were aware of this case I submit that the real purpose of sub section 6 was to give effect to the view of Slesser LJ Das J That is rather far fetched I submit it is not Even in England the view of Slesser T J seems to have been approved Subsequent English cases show that the principle of Windsor vs Chalcraft is not to be extended See Murfin vs Ashbridge 1941 1 All ER231 It was not necessary to expressly over rule the case of Windsor vs Chalcraft as in 1946 the Motor Insurers Bureau was set tip in England as a result of which an insurer is bound to satisfy a judgment obtained by a third party against a motorist even if the motorist was not insured Halsbury 3rd Edn Vol Shawcross ibid Introduction LXXXVII et seq This shows how strong 175 the attempt to protect the third party has been Actually the words of section 962 and 6 are clear to show that the insurer can take only the defences mentioned in sub section 2 But if there be any doubt a consideration of the historical development of the law and the objects to be attained puts it beyond doubt that the legislature intended this result C K Daphtari in reply It is wrong that at common law the insurer could not be brought in as a party At common law the guarantor or indemnifier could be brought in by means of third party procedure see ILR 35 All 168 and Halsbury 3rd Edn Vol and Gray vs Lewis 1058 Apart from the common law the insurer could also be joined as a party under 0 I R 10 Code of Civil Procedure I rely on the case of United Provinces vs Atiqa Begum A person should be joined as a party if his presence is necessary for an effectual and complete adjudication On this principle the insurer ought to be joined as a party and thus can take all defences Chaula in reply The passage cited by the Solicitor General from Halsbury 3rd Edn Vol is actually against him The foot note e shows that at common law the insurer could not be joined as a party to the action by the insured Third party procedure did not exist at Common Law Even under third party procedure in England it is doubtful whether this could be done Shawcross pp 150 151 In any case there is no third party procedure in Punjab The cases 35 All 168 and 1873 LR 8 ch A 1035 are also against him The insurer is neither a necessary nor a proper party as there can be a complete and effectual adjudication without his presence The decree is to be a against the assured not against the insurer May 11 The Judgment of the Court was delivered by SARKAR J These two appeals arise out of two suits and have been heard together The suits had been filed against owners of motor cars for recovery of damages suffered by the plaintiffs as a result of the negligent driving of the cars The owners of the cars were insured against third party risks and the insurers were subsequently added as defendants to the suits 176 under the provisions of sub section 2 of section 96 of the The terms of that subsection will have to be set out later but it may now be stated that it provided that an insurer added as a party to an action under it was entitled to defend on the grounds enumerated in it On being added as defendants the insurers filed written statements taking defences other than those mentioned in that sub section The plaintiffs contended that the written statements should be taken off the records as the insurers could defend the action only on the grounds mentioned in the sub section and on no others A question thereupon arose in the suits as to what defences were available to the insurers In one of the suits it was held that the insurer could take only the defences specified in that sub section and in the other suit the view taken was that the insurers were not confined to those defences Appeals were perferred from these decisions to the High Court of Punjab The High Court held that the insurers could defend the actions only on the grounds mentioned in the subsection and on no others Hence these appeals by the insurers The question is whether the defences available to an insurer added as a party under section 962 are only those mentioned there A few of the provisions of the have now to be referred to Section 94 of the Act makes insurance against third party risk compulsory Section 95 deals with the requirements of the policies of such insurance and the limits of the liability to be covered thereby Sub section 1 of this section provides a policy of insurance must be a policy which a b insures the person or classes of person specified in the policy to the extent specified in subsection 2 against any liability which may be incurred by him or them in respect of the death or bodily injury to any person caused by or arising out of the use of the vehicle in a public place 177 Sub section 2 of section 95 specifies the limits of the liability for which insurance has to be effected and it is enough to say that it provides that in respect of private cars which the vehicles with which these appeals are concerned were the insurance has to be for the entire amount of the liability incurred Then comes section 96 round which the arguments advanced in this case have turned and some of its provisions have to be set out Section 96 1 If after a certificate of insurance has been issued under sub section 4 of section 95 in favour of the person by whom a policy has been effected judgment in respect of any such liability as is required to be covered by a policy under clause b of sub section 1 of section 95 being a liability covered by the terms of the policy is obtained against any person insured by the policy then notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy the insurer shall subject to the provisions of this section pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder as if he were the judgment debtor in respect of the liability together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments 2 No sum shall be payable by an insurer under sub section 1 in respect of any judgment unless before or after the commencement of the proceedings in which the judgment is given the insurer had notice through the Court of the bringing of the proceedings or in respect of any judgment so long as execution is stayed thereon pending an appeal and an insurer to whom notice of the bringing of any such proceeding is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds namely a that the policy was cancelled by mutual consent or by virtue of any provision contained therein before the accident giving rise to the liability and 23 178 that either the certificate of insurance was surrendered to the insurer or that the person to whom the certificate was issued has made an affidavit stating that the certificate has been lost or destroyed or that either before or not later than fourteen days after the happening of the accident the insurer has commenced proceedings for cancellation of the certificate after compliance with the provisions of sec tion 105 or b that there has been a breach of a specified condition of the policy being one of the following conditions namely i a condition excluding the use of the vehicle a for hire or reward where the vehicle is on the date of the contract of insurance a vehicle not covered by a permit to ply for hire on reward or b for organised racing and speed testing or c for a purpose not allowed by the permit under which the vehicle is used where the vehicle is a public service vehicle or a goods vehicle or d without side car being attached where the vehicle in a motor cycle or ii a condition excluding driving by a named person or persons or by any person who is not duly licensed or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification or iii a condition excluding liability for injury caused or contributed to by conditions of war civil war riot or civil commotion or e that the policy is void on the ground that it was obtained by the non disclosure of a material fact or by a representation of fact which was false in some material particular 2A 3 Where a certificate of insurance has been issued under sub section 4 of section 95 to the person by whom a policy has been effected so much of the policy as purports to restrict the insurance of the 179 persons insured thereby by reference to any conditions other than those in clause b of sub section 2 shall as respects such liabilities as are required to be covered by a policy under clause b of sub section 1 of section 95 be of no effect Provided that any sum paid by the insurer in or towards the discharge of any liability or any person which is covered by the policy by virtue only of this sub section shall be recoverable by the insurer from that person 4 If the amount which an insurer becomes liable under this section to pay in respect of a liability incurred by a person insured by a policy exceeds the amount for which the insurer would apart from the provisions of this section be liable under the policy in respect of that liability the insurer shall be entitled to recover the excess from that person 5 6 No insurer to whom the notice referred to in sub section 2 has been given shall be entitled to avoid his liability to any person entitled to the benefit of any such judgment as is referred to in subsection 1 otherwise than in the manner provided for in sub section 2 It may be stated that the policies that were effected in these cases were in terms of the Act and the certificate of insurance mentioned in section 96 had been duly issued It will have been noticed that sub section 1 of section 96 makes an insurer liable on the judgment obtained by the injured person against the assured Sub section 2 provides that no sum shall be payable by the insurer under sub section 1 unless he has been given notice of the proceedings resulting in that judgment and that an insurer who has been given such a notice shall be entitled to be made a party to the action and to defend it on the grounds enumerated The contention of the appellants is that when an insurer becomes a party to an action under sub section 2 he is entitled to defend it on all grounds available at law including the grounds on which the assured himself could have relied for his 180 defence and that the only restriction on the insurer s right of defence is that he cannot rely on the conditions of the policy which sub section 3 makes as of no effect This is the contention which we have to examine in these appeals To start with it is necessary to remember that apart from the statute an insurer has no right to be made a party to the action by the injured person against the insured causing the injury Sub section 2 of section 96 however gives him the right to be made a party to the suit and to defend it The right therefore is created by statute and its content necessarily depends on the provisions of the statute The question then really is what are the defences that sub section 2 makes available to an insurer That clearly is a question of interpretation of the sub section Now the language of sub section 2 seems to us to be perfectly plain and to admit of no doubt or confusion It is that an insurer to whom the requisite notice of the action has been given shall be entitled to be made a party thereto and to defend the action on any of the following grounds namely after which comes an enumeration of the grounds It would follow that an insurer is entitled to defend on any of the grounds enumerated and no others If it were not so then of course no grounds need have been enumerated When the grounds of defence have been specified they cannot be added to To do that would be adding words to the statute Sub section6 also indicates clearly how sub section 2should be read It says that no insurer to whom the notice of the action has been given shall be entitled to avoid his liability under sub section 1 otherwise than in the manner provided for in sub section Now the only manner of avoiding liability provided for in subs 2 is by successfully raising any of the defences therein mentioned It comes then to this that the insurer cannot avoid his liability except by establishing such defences Therefore sub section 6 clearly contemplates that he cannot take any defence not mentioned in subS 2 If he could then he would have been in a position to avoid his liability in a manner other than that 181 provided for in sub section That is prohibited by sub section We therefore think that sub section 2 clearly provides that an insurer made a defendant to the action is not entitled to take any defence which is not specified in it Three reported decisions were cited at the bar and all of them proceeded on the basis that an insurer had no right to defend the action except on the grounds mentioned in sub section These are Sarup Singh vs Nilkant Bhaskar 1 Royal Insurance Co Ltd vs Abdul Mahomed 2 and The Proprietor Andhra Trading Co vs K Muthuswamy 3 It does not appear however to have been seriously contended in any of these cases that the insurer could defend the action on a ground other than one of those mentioned in sub section The learned counsel for the respondents the plaintiffs in the action referred us to the analogous English statute The Road Traffic Act 1934 in support of the view that the insurer is restricted in his defence to the grounds set out in sub section But we do not think it necessary to refer to the English statute for guidance in the interpretation of the section that we have to construe We proceed now to consider the arguments advanced by the learned Solicitor General who appeared for the appellants He contended that there was nothing in sub section 2 to restrict the defence of an insurer to the grounds therein enumerated To support his contention he first referred to sub section 3 of section 96 and said that it indicated that the defences that were being dealt with in sub section 2 were only those based on the conditions of the policy His point was that sub section 2 permitted defences on some of those conditions and sub section 3 made the rest of the conditions of no effect thereby preventing a defence being based on any of them He said that these two sub sections read together show that sub section 2 was not intended to deal with any defence other than those arising out of the conditions of the policy and as to other defences therefore sub section 2 contained no prohibition He further 1 ILR 2 ILR 3 AIR 1956 Mad 182 said that as under sub section 2 an insurer was entitled to be made a defendant to the action it followed that he had the right to take all legal defences excepting those expressly prohibited We think that this contention is without foundation Sub section 2 in fact deals with defences other than those based on the conditions of a policy Thus cl a of that sub section permits an insurer to defend an action on the ground that the policy has been duly cancelled provided the conditions set out in that clause have been satisfied Clause c gives him the right to defend the action on the ground that the policy is void as having been obtained by non disclosure of a material fact or a material false representation of fact Therefore it cannot be said that in enacting sub s2 the legislature was contemplating only those defences which were based on the conditions of the policy It also seems to us that even if sub s2 and sub s3 were confined only to defences based on the conditions of the policy that would not have led to the conclusion that the legislature thought that other defences not based on such conditions would be open to an insurer If that was what the legislature intended then there was nothing to prevent it from expressing its intention What the legislature has done is to enumerate in sub section 2 the defences available to an insurer and to provide by sub section 6 that he cannot avoid his liability excepting by means of such defences In order that sub section 2 may be interpreted in the way the learned Solicitor General suggests we have to add words to it The learned Solicitor General concedes this and says that the only word that has to be added is the word also after the word grounds But even this the rules of interpretation do not permit us to do unless the section as it stands is meaningless or of doubtful meaning neither of which we think it is The addition suggested will in our view make the language used unhappy and further effect a complete change in the meaning of the words used in the sub section As to sub section 6 the learned Solicitor General contended that the proper reading of it was that an 183 insurer could not avoid his liability except by way of a defence upon being made a party to the action under sub section He contended that the word it manner in sub section 6 did not refer to the defences specified in subs 2 but only meant by way of defending the suit the right to do which is given by sub section We think that this is a very forced construction of sub section 6 and we are unable to adopt it The only manner of avoiding liability provided for in sub section 2 is through the defences therein mentioned Therefore when sub section 6 talks of avoiding liability in the manner provided in sub section 2 it necessarily refers to these defences If the contention of the learned Solicitor General was right sub section 6 would have provided that the insurer would not be entitled to avoid his liability except by defending the action on being made a party thereto There is another ground on which the learned Solicitor General supported the contention that all defences are open to an insurer excepting those taken away by sub section He said that before the Act came into force an injured person had no right of recourse to the insurer and that it was section 961 that made the judgment obtained by the injured person against the assured binding on the insurer and gave him a right against the insurer He then said that being so it is only fair that a person sought to be made bound by a judgment should be entitled to resist his liability under it by all defences which he can in law advance against the passing of it Again we find the contention wholly unacceptable The Statute has no doubt created a liability in the insurer to the injured person but the statute has also expressly confined the right to avoid that liability to certain grounds specified in it It is not for us to add to those grounds and therefore to the statute for reasons of hardship We are furthermore not convinced that the statute causes any hardship First the insurer has the right provided he has reserved it by the policy to defend the action in the name of the assured and if he does so all defences open to the assured can then be urged by him and there is no 184 other defence that he claims to be entitled to urge He can thus avoid all hardship if any by providing for a right to defend the action in the name of the assured and this he has full liberty to do Secondly if he has been made to pay something which on the contract of the policy he was not bound to pay he can under the proviso to sub section 3 and under sub section 4 recover it from the assured It was said that the assured might be a man of straw and the insurer might not be able to recover anything from him But the answer to that is that it is the insurer s bad luck In such circumstances the injured person also would not have been able to recover the damages suffered by him from the assured the person causing the injuries The loss had to fall on some one and the statute has thought fit that it shall be borne by the insurer That also seems to us to be equitable for the loss falls on the insurer in the course of his carrying on his business a business out of which he makes profit and he could so arrange his business that in the net result he would never suffer a loss On the other hand if the loss fell on the injured person it would be due to no fault of his it would have been a loss suffered by him arising out of an incident in the happening of which he had no hand at all We therefore feel that the plain words of sub s2 should prevail and that no ground exists to lead us to adopt the extraordinary course of adding anything to it We think that the High Court was right in the view that it took In the result these appeals are dismissed with costs Appeals dismissed

The respondents as plaintiffs brought the suit out of which the present appeal arises under the provisions of 0 21 r 63 Of the Code of Civil Procedure for a declaration that the deed of trust executed in favour of the appellant deity was a sham and fictitious document and the properties covered by it were liable to sold in execution of their decree The courts below dismissed the suit but the High Court by misplacing the onus on the deity to prove its title set aside the concurrent findings of the Courts below and decreed the respondents suit Held that the question whether a trust deed was a fictitious document or not was essentially a question of fact Meenakshi Mills Madurai vs The Commissioner of Income tax Madras referred to It was well settled by a long series of decisions of the Privy Council and of this Court that the High Court could not in a second appeal interfere with findings of fact arrived at by the Courts below however erroneous they might be Even assuming that it was open to the High Court to go behind the findings of fact it was clear that it had completely misdirected itself on the question of onus In a suit such as the present where the plaintiff sought for a declaration that a document solemnly executed and registered was a fictitious one the burden lay heavily on him to prove that it was so and that burden became still more heavy where he sought a declaration that an order passed by the court upholding a claim of a third party under 0 21 r 60 of the Code was erroneous

iminal Appeal No 12 of 1957 Appeal from the judgment and order dated September 5 1956 of the Calcutta High Court in Government Appeal No 7 of 1954 arising out of the judgment and order dated April 3 1954 of the Court of 1st Class Magistrate at Alipore Ishwar Lal C Dalal and 1 N Shroff for the appellant H J Umrigar and R H Dhebar for the respondent May 7 This is an appeal on a certificate granted by the Calcutta High Court Two points have been urged before the Bench of the High Court which granted the certificate The first was that the search conducted by the Customs officials which had resulted in the detection of the currency notes on the person of the appellant had not been a legal search and consequently no proceedings could be based on the purported detection made This point was rejected by the Bench The second point urged on behalf of the appellant was that on September 16 1952 when the 95 Magistrate issued the warrant of arrest against the appellant he could not have done so without having previously taken cognizance of the offence Since however the authorization required under section 233 of the Foreign Exchange Regulation Act VII of 1947 was not obtained till January 27 1953 the cognizance taken by the Magistrate on September 16 1952 was without jurisdiction If the initiation of the proceedings was without jurisdiction the conviction could not stand The High Court thought that the contention of the appellant raised a question of law and granted the requisite certificate for appeal to this Court The prosecution case was that on September 7 1952 the appellant went to Dum Dum Aerodrome with a view to boarding a plane for Hong Kong The plane was due to leave the airport at 8 30 am The appellant had to go through the customs formalities before he could board the plane On an enquiry by the Customs Officers as to whether he had any other articles besides what he had declared in the declara tion form the appellant answered in the negative His baggage was then examined but no objectionable article was detected therein The Customs Officers however noticed a pouch of somewhat unusual size which aroused their suspicion Thereafter the appellant was subjected to personal search When they were about to search his person he let drop his trousers The appellant was requested to lift up the trousers and wear them again which he did On the search of the trousers a sum of Rs 25000 in Indian currency notes was discovered in two secret pockets They were concealed from below the surface and opened from the inside On September 11 1952 the Reserve Bank of India authorized Inspector section B Mitra of the Special Police Establishment Calcutta to make a representation to the Additional District Magistrate 24 Parganas hereinafter referred to as the Additional District Magistrate for permission to proceed against the appellant as required under section 193 of the Foreign Exchange Regulation Act 1947 Mitra thereupon applied to the Additional District Magistrate on September 16 1952 for a search warrant 96 to be issued which was allowed Mitra on the same date also applied to the same Magistrate that a warrant of arrest might be issued against the appellant This was also allowed and a warrant of arrest was issued by the Additional District Magistrate and appellant was thereafter arrested and released on bail with a direction to appear before the Additional District Magistrate on September 19 On September 19 he was released on bail by the Additional District Magistrate in the sum of Rs 50000 with 10 sureties of Rs 5000 each On November 19 the appellant asked for exemption from attending the court on the succes sive dates fixed for the case but the application was refused On January 27 1953 the Reserve Bank of India authorized Mitra to file a complaint against the appellant On February 21953 a complaint was filed against the appellant charging him with an offence under section 82 of the Foreign Exchange Regulation Act read with section 19 of the Sea Customs Act and notification No FERA 10555 RB dated February 27 1951 Thereafter the appellant was tried by another Magistrate Mr Sinha who acquitted him under section 258 of the Code of Criminal Procedure The currency notes which had been seized by the Customs Officials were directed to be relassed Against the appellant s acquittal the State of West Bengal preferred an appeal to the High Court The High Court allowed the appeal and convicted the appellant of the offence with which he had been charged He was sentenced to pay a fine of Rs 1000 in default to suffer rigorous imprisonment for three months The order of the Magistrate directing the release of the currency notes was set aside The main submission made on behalf of the appellant before us has been that the Additional District Magistrate having taken cognizance of the offence on September 16 1952 and as the provisions of section 233 of the Foreign Exchange Regulation Act had not been complied with the entire proceedings before him and the Magistrate who tried the case were without jurisdiction The subsequent authorization by the Reserve Bank on January 27 1953 and the filing of 97 the complaint on February 21953 could not make legal proceedings which had already commenced without jurisdiction It was also urged that the facts found did not attract the provisions of section 19 of the Sea Customs Act 8 of 1878 as it could not be said that at the moment the appellant was searched by the Customs Officials he was taking out of India across any customs frontier as defined by the Central Government the currency notes in question It was also urged that explanation offered by the appellant was accepted by the trying Magistrate and the High Court ought not to have set aside the acquittal of the appellant there being no good ground why his explanation should not have been accepted The version of the appellant as to how the sum of Rs 25000 in currency notes was with him was that he was not searched at all at the Customs barrier had taken out the currency notes in question from his trouser pocket and handed over the same to the Customs Officers stating the circumstances under which he was carrying the same on his person and asked for a receipt The Customs Officers instead of giving him a receipt falsely charged him with smuggling the currency notes out of India without any permit According to the appellant he had applied to the Reserve Bank of India at Calcutta for a permit and had sent an application for that purpose to one Joshi in Calcutta He failed to receive the permit upto the last moment His intention was to hand over the money to the Customs Officers for safe custody In other words the appellant s version in substance was that as he had failed to get the permit upto the last moment he voluntarily handed over the currency notes in question to the Customs Officers at the customs barrier for safe keeping He had at no time any intention to carry out of India the said currency notes without a permit This version of the appellant was accepted by the trying Magistrate who acquitted him The High Court however did not accept his version It was urged that the appeal is before us on a certificate and as the High Court had come to a different 13 98 finding on a question of fact to what the trying Magistrate had found it was open to the appellant to urge that he was entitled to question the findings of the High Court It is true that the High Court has taken a different view to that taken by the trying Magistrate and has rejected the appellant s case that he had voluntarily handed over the currency notes in question to the Customs Officers in the circumstances mentioned by him and that he had no intention to take that money out of India without a permit Nonetheless the finding of the High Court is on a question of fact We can see no particular reason in this case to go be hind the findings of fact arrived at by the High Court The High Court gave very good reasons for accepting the evidence of the prosecution witnesses as to the circumstances in which the currency notes in question were recovered from the appellant when his person was searched An important circumstance which might have supported the appellant s case namely whether he had applied to the Reserve Bank of India for a permit to take out of India currency notes to the extent of Rs 25000 was considered by the High Court It found on the evidence of the Superintendent of the Reserve Bank that the Reserve Bank received no application from the appellant before September 7 1952 nor had the Reserve Bank granted the permission to the appellant to take any currency notes out of India It was on September 16 that the Reserve Bank had received an application of the appellant forwarded by one GC Joshi by his letter dated September 15 1952 The application of the appellant bore the date September 2 1952 The High Court thought that there were grounds for suspecting that this application was antedated The High Court came to the conclusion that there was no evidence to show that any such application was written or submitted on September 2 1952 It does seem extraordinary that if the appellant had sent the application to Joshi on September 2 1952 that Joshi should not have sent on that application to the Reserve Bank till September 15 1952 It is to be remembered that the incident had already taken place on September 7 1952 and in that 99 connection on September 15 and 16 1952 Inspector Mitra of the Special Police Establishment Calcutta had applied for a search warrant and a warrant of arrest respectively against the appellant On arrest under the terms of that warrant he was released on bail by the police with a direction to appear before the court on September 19 The appellant had therefore ample opportunity to concoct an application for a permit after September 7 and to antedate it getting Joshi on September 15 1952 to forward the same to the Reserve Bank It is inconceivable that a person who was leaving for Hong Kong and wished to carry such a large sum of money as Rs 25000 in currency notes would have applied on September 2 when he was actually to fly on September 7 1952 Further it would not be unreasonable to suppose that the appellant would have so timed his arrival at Calcutta as would have enabled him to make the necessary enquiries from Joshi or the Reserve Bank whether the permit asked for had been granted It is impossible to believe that he had arrived at Calcutta and had gone direct to the Dum Dum Aero drome without making any enquiry from Joshi at least whether the permit asked for had been granted Normally one would expect the appellant to reach Calcutta in sufficient time to make the necessary enquiries and in the absence of a permit having been granted to have left the currency notes for safe custody with Joshi or some other trusted person It is an entirely unacceptable story which the appellant put forward that he waited upto the last moment at the aerodrome for the necessary permit and not having got it requested the Customs Officers to keep the currency notes for safe custody It is significant that the appellant did not examine Joshi as a witness in support of his case It is not unlikely that if he had done so some inconvenient results would have followed in consequence of close questioning of Joshi regarding the entire transaction We have therefore no reason to think that the High Court had erred in suspecting that the application to the Reserve Bank was antedated On this finding it is apparent that the very foundation of the defence of the appellant is false That the appellant did not hand 100 over the currency notes of Rs 25000 at the customs barrier but was searched when the customs formalities were gone through is not only deposed to by a number of Witnesses holding responsible positions but is deposed to by PW 4 Panna Lal Dey Money Exchanger of Dum Dum Airport Panna Lal Dey s evidence was accepted by the High Court and after having examined his evidence we are satisfied that there is no reason to distrust his testimony Reference has been made to some of the evidence on a question of fact in order to satisfy ourselves whether the finding of the High Court was correct We are satisfied that the finding of the High Court is the only view which could reasonably be taken in a case like this It is true that the appellant had not taken the currency notes in question out of India across any customs frontier as defined by the Central Government He had however clearly attempted to take the same out of India In such a case no question of his crossing the customs frontier arises That an attempt to take out the currency notes in question is an offence punishable under the Sea Customs Act is clear from the provisions of section 167 Item 8 The Foreign Exchange Regulation Amendment Act 1952 VIII of 1952 came into force in February 1952 By this Act section 23B was introduced into the Foreign Exchange Regulation Act Section 23B makes punishable an attempt to contravene the provisions of the Foreign Exchange Regulation Act or any rule direction or order made thereunder Furthermore this point was not taken before the Bench which granted the certificate of fitness for appeal to this Court Be that as it may the facts found clearly established that the appellant attempted to take out of India the currency notes in question He had entered the customs enclosure and had signed the declaration form He had been questioned as to whether he had any other article than those mentioned in the declaration form which he wished to declare and he had answered in the negative On his personal search he dropped his trousers on the ground He was asked to pick up his trousers and wear them again On search of the trousers Rs 25000 101 in currency notes were found concealed in the inner pockets The appellant had his ticket to proceed to Hong Kong by a plane which was due to leave Dum Dum Airport at 8 30 am and the customs formalities were done in connection with that flight If the appellant had successfully cleared himself from the customs formalities all that was left for him to do was to board the plane which would take him out of India These circumstances establish beyond all reasonable doubt that the act of the appellant had gone beyond the stage of preparation and was clearly an attempt to carry the sum of Rs 25000 in currency notes out of India without a permit from the Reserve Bank We cannot accept the argument made on his behalf that the act of the appellant on the facts found amounted merely to preparation and not an attempt The main submission on behalf of the appellant was directed towards establishing that the entire proceedings before the Additional District Magistrate and the trying Magistrate were without jurisdiction as cognizance of the offence had been taken on September 16 1952 in contravention of the provisions of section 233 of the Foreign Exchange Regulation Act there being on that date no complaint in writing made by an officer authorised in that behalf by the Central Government or the Reserve Bank of India by a general or a special order It is therefore necessary to see in the circumstances of the present case on what date cognizance of the offence was taken In order to ascertain this certain provisions of the Foreign Exchange Regulation Act and the Code of Criminal Procedure will require con sideration Under section 193 of the Foreign Exchange Regulation Act a District Magistrate or Magistrate of the first class may on a representation in writing made by a person authorized in this behalf by the Central Government or the Reserve Bank and having reasons to believe that there had been contravention of any of the revisions of that Act issue a search warrant Inspector Mitra was so authorized by the Reserve Bank on September 11 1952 and in pursuance of that authorization applied to the Additional District Magistrate for the issue of a search warrant Under 102 this section the search warrant is issued for the purposes of conducting investigation under that Act On September 16 Mitra applied for a warrant of arrest against the appellant This application was obviously made under the Criminal Procedure Code The offence which the appellant is alleged to have committed was a non cognizable offence Under section 1552 of the Code of Criminal Procedure no police officer shall investigate a non cognizable offence without the order of a Magistrate of the first or second class having power to try such a case or commit the same for trial or of a Presidency Magistrate Inspector Mitra s application definitely states that he in asking for permission to investigate a non cognizable offence under section 155 Cr The order of the Additional District Magistrate directing the issue of a search warrant and the word permitted contained therein we consider in the context of the application to mean that he granted the sanction for investigation as asked for Under section 1553 of the Code a police officer being permitted to investigate a non cognizable offence may exercise the same powers in respect of the investigation as an officer incharge of a police station may exercise in a cognizable case except that he has not the power to arrest without a warrant It was necessary therefore for Inspector Mitra to obtain from the Additional District Magistrate a warrant of arrest It is clear therefore that upto September 16 1952 the Additional District Magistrate had not taken cognizance of any offence On September 19 1952 the appellant appeared before the Additional District Magistrate who recorded the following order He is to give bail of Rs 50000 with ten sureties of Rs 5000 each Seen Police report Time allowed till 19th November 1952 for completing investigation On November 19 1952 on perusal of the police report the Magistrate allowed further time for investigation until January 2 1953 and on that date time was further extended to February 2 1953 in the meantime on January 27 1953 Inspector Mitra had been authorized under section 233b of the Foreign Exchange Regulation Act to file a complaint Accordingly a 103 complaint was filed on February 21953 The Additional District Magistrate thereon recorded the following order Seen the complaint filed to day against the accused Narayandas Bhagwandas Madhavdas under section 82 of the Foreign Exchange Regulation Act read with Section 23B thereof read with Section 19 of the Sea Customs Act and Notification No FERA 10551 dated the 27th February 1951 as amended issued by the Reserve Bank of India under Section 82 of the Foreign Exchange Regulation Act Seen the letter of authority To Sri M N Sinha SDM Sadar Magistrate 1st class spl empowered for favour of disposal according to law Accused to appear before him Accordingly on the same date Mr Sinha then recorded the following order Accused present Petition filed for reduction of bail Considering all facts bail granted for Rs 25000 with 5 sureties To 26th March 1952 and 27th March 1952 for evidence It is clear from these orders that on September 19 1952 the Additional District Magistrate had not taken cognizance of the offence because he had allowed the police time till November 19 1952 for completing the investigation By his subsequent orders time for investigation was further extended until February 2 1953 On that date the complaint was filed and the order of the Additional District Magistrate clearly indicated that he took cognizance of the offence and sent the case for trial to Mr Sinha It would also appear from the order of Mr Sinha that if the Ad ditional District Magistrate did not take cognizance he certainly did because he considered whether the bail should be reduced and fixed the 26th and 27th of March for evidence It was however argued that when Mitra applied for a search warrant on September 16 1952 the Additional District Magistrate had recorded an order thereon Permitted Issue search warrant It was on this date that the Additional District Magistrate took cognizance of the offence We cannot agree with this submission because the petition of Inspector Mitra clearly states that As this is non cognizable offence I pray that you will kindly permit 104 me to investigate the case under section 155 Cr P C That is to say that the Additional District Magistrate was not being asked to take cognizance of the offence He was merely requested to grant permission to the police officer to investigate a non cognizable offence The petition requesting the Additional District Magistrate to issue a warrant of arrest and his order directing the issue of such a warrant cannot also be regarded as orders which indicate that the Additional District Magistrate thereby took cognizance of the offence It was clearly stated in the petition that for the purposes of investigation his presence was necessary The step taken by Inspector Mitra was merely a step in the investigation of the case He had not himself the power to make an arrest having regard to the provisions of section 1553 of the Code of Criminal Procedure In order to facilitate his investigation it was necessary for him to arrest the appellant and that he could not do without a warrant of arrest from the Additional District Magistrate As already stated the order of the Additional District Magistrate of September 19 1952 makes it quite clear that he was still regarding the matter as one under investigation It could not be said with any good reason that the Additional District Magistrate had either on September 16 or at any subsequent date upto February 2 1953 applied his mind to the case with a view to issuing a process against the appellant The appellant had appeared before the Magistrate on February 2 1953 and the question of issuing summons to him did not arise The Additional District Magistrate however must be regarded as having taken cognizance on this date because he sent the case to Mr Sinha for trial There was no legal bar to the Additional District Magistrate taking cognizance of the offence on February 2 1953 as on that date Inspector Mitra s complaint was one which he was authorized to make by the Reserve Bank under section 233b of the Foreign Exchange Regulation Act It is thus clear to us that on a proper reading of the various orders made by the Additional District Magistrate no cognizance of the offence was taken until February 2 1953 The argument that he took cogniz ance of the offence on September 16 1952 is without 105 foundation The orders passed by the Additional District Magistrate on September 16 1952 September 19 1952 November 19 1952 and January 2 1953 were orders passed while the investigation by the police into a non cognizable offence was in progress If at the end of the investigation no complaint had been filed against the appellant the police could have under the provisions of section 169 of the Code released him on his executing a bond with or without sureties to appear if and when so required before the Additional District Magistrate empowered to take cognizance of the offence on a police report and to try the accused or commit him for trial The Magistrate would not be required to pass any further orders in the matter If on the other hand after completing the investigation a complaint was filed as in this case it would be the duty of the Additional District Magistrate then to enquire whether the complaint had been filed with the requisite authority of the Reserve Bank as required by section 233b of the Foreign Exchange Regulation Act It is only at this stage that the Additional District Magistrate would be called upon to make up his mind whether he would take cognizance of the offence If the complaint Was filed with the authority of the Reserve Bank as aforesaid there would be no legal bar to the Magistrate taking cognizance On the other hand if there was no proper authorization to file the complaint as required by section 23 the Magistrate concerned would be prohibited from taking cognizance In the present case as the requisite authority had been granted by the Reserve Bank on January 27 1953 to file a complaint the complaint filed on February 2 was one which complied with the provisions of section 23 of the Foreign Exchange Regulation Act and the Additional District Magistrate could take cognizance of the offence which indeed he did on that date The following observation by Das Gupta J in the case of Superintendent and Remembrancer of Legal Affairs West Bengal vs Abani Kumar Banerji 1 was approved by this Court in the case of R R Chari vs The State of Uttar Pradesh 2 1 AIR 1950 Cal 437 14 2 106 What is taking cognizance has not been defined in the Criminal Procedure Code and I have no desire to attempt to define it It seems to me clear however that before it can be said that any magistrate has taken cognizance of any offence under section 1901a Criminal Procedure Code he must not only have applied his mind to the contents of the petition but must have done so for the purpose of proceeding in a particular way as indicated in the subsequent provi sions of this Chapter proceeding under section 200 and thereafter sending it for inquiry and report under section 202 When the magistrate applies his mind not for the purpose of proceeding under the subsequent sections of this Chapter but for taking action of some other kind eg ordering investigation under section 1563 or issuing a search warrant for the purpose of the investigation he cannot be said to have taken cognizance of the offence It is however argued that in Chari s case this Court was dealing with a matter which came under the Prevention of Corruption Act It seems to us however that makes no difference It is the principle which was enunciated by Das Gupta J which was approved As to when cognizance is taken of an offence will depend upon the facts and circumstances of each case and it is impossible to attempt to define what is meant by taking cognizance Issuing of a search warrant for the purpose of an investigation or of a warrant of arrest for that purpose cannot by themselves be regarded as acts by which cognizance was taken of an offence Obviously it is only when a Magistrate applies his mind for the purpose of proceeding under section 200 and subsequent sections of Chapter XVI of the Code of Criminal Procedure or under section 204 of Chapter XVII of the Code that it can be positively stated that he had applied his mind and therefore had taken cognizance In our opinion the proceedings before the Additional District Magistrate and the trying Magistrate were with jurisdiction and the trial of the appellant was legal The appeal is accordingly dismissed

The appellant had been paying puja bonus to its workmen continuously from 1940 to 1952 at the rate of one month s wages From 1948 to 1952 the appellant whenever it paid this bonus made it clear that it was ex gratia payment and would not constitute any precedent in future years The dispute arose regarding the payment of bonus in 1953 The workmen claimed that the sole object of bonus which had been granted to them upto that year was to meet puja expenses and that the payment of this bonus had become customary and a term of employment The appellant contended that payments in the past years had been entirely ex gratia and as there was loss in 1953 no ex gratia payment could be made in that year Held that the workmen were not entitled to puja bonus as an implied term of employment for an implied agreement could not be inferred when the appellant had made it clear that the payments from 1948 to 1952 were ex gratia but they were entitled to puja bonus on the basis that it was a customary and traditional payment In determining whether the payment was customary and traditional the following circumstances have to be established i that the payment has been made over an unbroken series of years ii that it has been for a sufficiently long period the period has to be longer than in the case of an implied term of employment iii that it has been paid even in years of loss and did not depend on the earning of profits and iv that the payment has been made at a uniform rate throughout The fact that the employer made the payment ex gratia made no difference nor did unilateral declarations of one party inconsistent with the course of conduct adopted by it matter

Appeal No 226 of 1958 163 Appeal by special leave from the award dated May 30 1957 of the Labour Court Coimbatore in Industrial Dispute No 89 of 1955 A V Viswanatha Sastri and T V R Tatachari for the appellants M section K Sastri for the respondents May 8 The Judgment of the Court was delivered by GAJENDRAGARKAR J This appeal by special leave arises out of an industrial dispute between the Management of Praga Industries P Ltd hereafter called the appellant and its workmen hereafter called the respondents The dispute which was referred by the Government of Madras for adjudication to tile Industrial Tribunal at Coimbatore covered four items Two of them were settled by compromise between the parties and the remaining two were the subject matter of adjudication They are the question about the quantum of bonus payable to the respondents for the year 1954 and the question of fixing scales of wages with graded annual increments for different categories of respondents The tribunal has ordered the appellant to pay to the respondents by way of bonus three months wages The appellant had already paid one month s bonus and so it had been directed to pay bonus for two months more In regard to the fixation of the wage structure the tribunal has refrained from fixing any wage structure at present and as an interim measure it has ordered the appellant to grant all its workmen all increment at the rate of 4 and to continue to grant such an increment every year until they are classified and their pay scale is introduced to reach a particular maximum It is these two directions in the award which are challenged by the appellant in the present appeal The appellant is a private limited company carrying on the business of manufacturing nut and plastic buttons in Coimbatore as a lessee under Praga Industries Coimbatore which is a partnership firm The appellant took on lease from the said firm land buildings 164 and machinery belonging to it under an indenture of lease executed on January 15 1954 Under this deed a monthly rental of Rs 5000 has to be paid by the appellant for five years the lease includes a clause by which a right of renewal is given to the appellant for a period of three years The appellant s case was that its financial position was not satisfactory that it had to borrow an overdraft from the Indian Bank Limited Coimbatore under an overdraft account which left the appellant a debtor to the said Bank to the extent of Rs 48414 in 1954 The appellant had also not paid the rent due to the lessor for the said year and had in fact ploughed back the said amount of rent of Rs 60000 into the business of the appellant as working capital According to the appellant under the Full Bench formula the respondents claim for additional bonus was not justified On the other hand the respondents urged that the appellant was making large profits and their claim for bonus was fully justified The respondents also alleged that it was high time that a proper wage structure was fixed by the tribunal guaranteeing to the respondents the payment of fair wages with fair annual increments with a view to reach specified maximums On behalf of the appellant Mr Viswanatha Sastri has challenged the propriety of the course adopted by the tribunal in making an interim order about the increments in wages of the appellant s employees The tribunal was asked to fix a wage structure under issue No 3 Instead it has come out with an interim order which is very irregular says Mr Sastri In our opinion this argument is wholly untenable It is clear from the award that the appellant itself suggested to the tribunal that the lease in its favour was due to expire within a year and a half and that the question of classifying the respondents into skilled and unskilled workmen and providing for systematic grades of pay with increments may be conveniently deferred to a future date The respondents agreed to this suggestion and both parties represented to the tribunal that they would be satisfied if a reasonable interim order 165 was made providing for increment in the wages of the respondents That being so it is not open to the appellant now to contend that the tribunal should have fixed a wage structure and not passed an interim order On the merits of the interim order the only objection which has been raised by the appellant before us is in respect of the application of the said order to piece rate workers It appears that on October 25 1955 an agreement had been reached between the appellant and the respondents and by cls 5 and 6 of this agreement it was settled that an annual increment of 4 of the basic pay for all the monthly rated and time rated employees should be given and that the revised wages should come into force from November 1 1955 That being so Mr Sastri has not challenged the interim order passed by the tribunal in respect of the monthlyrated and the daily rated workmen His grievance is that the tribunal was in error in making a similar order in regard to the piece rated workmen It is true that generally annual increments in the wages of piece rated workers are not provided These workers are paid by the work which they do though the rates fixed for such payment relay be legitimately increased in proper cases usually a wage structure with annual increments is not provided for such piecerated workers It is on this aspect of the matter that Mr Sastri has laid considerable emphasis On the other hand Mr Joseph Nejedly who gave evidence for the appellant frankly admitted that piece rate wages had been fixed in 1947 and though there were some changes in them they were insignificant He also conceded that since 1947 the cost of living had gone up in Coimbatore These statements make it clear that a case for revising the rates of wages payable to piecerated workers has been made out Asmuch as in the case of monthly rated or daily rated workmen Therefore we think that the appellant cannot successfully challenge the direction issued by the tribunal in regard to the increment of 4 in the case of rates of wages fixed for piece rated workers We would however like to modify the interim order in regard to piece rated 166 workers by directing that though their rates of wages should be increased at the rate of 4 they should not have the benefit of the annual increment at the said rate until all the workers are classified and their pay scales are introduced In other words we confirm this part of the award with the only modification that future annual Increment at the rate of 4 should not be granted to the piece rated workers The next contention raised by Mr Sastri is in regard to the order made by the award directing the appellant to pay two months additional bonus to the respondents It is now well settled that the claim for bonus must be decided by the application of the Full Bench formula In the application of the formula there are only two items which have given rise to a controversy in the present proceedings The appellant claimed that he should be allowed 4 interest on Rs 60000 either on the basis that this interest would be payable to the lessor since default had been committed in the payment of rent due to him or on the basis that the said amount had been utilised as working capital and so should carry 4 interest In our opinion the latter claim is well founded and must be upheld There is no doubt that the monthly rent of Rs 5000 payable to the lessor though shown as a liability in the profit and loss account has in fact not been paid to the lessor and it is also clear that the whole of this amount has in fact been used as working capital by the appellant Therefore its claim to have interest at 40 on this amount cannot be resisted by the respondents The tribunal was inclined to dissect this claim month by month and to consider the question of return on the amount month by month We do not think that it is necessary to adopt such a course in the present case The other clam made by the appellant is in respect of improvement and modernisation of its machinery The appellant claimed Rs 20000 under this head This claim has been rejected by the tribunal and we think rightly As we have already observed the appellant has taken the land machinery and buildings for its business as a lessee from the Praga Industries Coimbatore and so the appellant cannot claim to 167 rehabilitate any of the said machinery and plant If the appellant has purchased new machinery in 1954 the amount of rehabilitation which the appellant can claim in respect of the said machinery for 1954 is covered by the depreciation allowed to the appellant This position is not disputed by Mr Sastri Therefore we are satisfied that the appellant is not entitled to claim Rs 20000 as a prior charge for rehabilitation If the Full Bench formula is worked out in the light of these findings there can be no doubt that the tribunal was justified in directing the appellant to pay additional bonus for two months It is common ground that taking the net profit at Rs 42726 if the depreciation and the bonus paid for 1953 are added back the figure of gross profit would be Rs 69546 From this figure if the notional normal depreciation income tax return at 6 on paid up capital and return at 4 on working capital of Rs 60000 are deducted it still leaves a balance of over Rs 26000 The three months bonus including one month s bonus already paid by the appellant awarded by the tribunal is in the neighborhood of Rs 22000 but in respect of this bonus the appellant would be entitled to a rebate of income tax to the extent of Rs 12300 That being so it cannot be said that the order passed by the tribunal involves an unfair distribution of the available surplus In the result the appeal substantially fails and the award passed by the tribunal is confirmed with the modification as to the future annual increments in regard to piece rated workers In the circumstances of this case we direct that the parties should bear their own costs Appeal substantially dismissed award partially modified

A suit claiming damages for negligent driving was filed aginst the owner of a motor car who was insured against third party risks The insurer was subsequently added as defendant to the suit under section 962 of the it contended that the defence available to it was not restricted to the grounds enumerated in section 962 Of the Act but that it was entitled to take all defences including those on which the assured himself could have relied for his defence subject only to the restriction that it could not in view of section 963 Of the Act rely on the conditions of the policy as a defence Held that an insurer made a defendant to the action under section 962 of the Act was not entitled to defend it on a ground not specified in that section

Civil Appeal Nos 681 and 682 of 1957 Appeals by special leave from the order dated August 2 1954 of the Income tax Appellate Tribunal of India Bombay Bench A in Income tax Appeals Nos 3756 of 1948 49 and 2161 of 1950 51 R J Kolah and I N Shroff for the appellants H N Sanyal Additional Solicitor General of India KN Rajagopal Sastri and D Gupta for the respondent 238 1959 May 12 The Judgment of the Court was delivered by BHAGWATI J These two appeals with special leave under article 136 of the Constitution are directed against the order of the Income tax Appellate Tribunal of India Bombay Bench A hereinafter referred to as the Tribunal dated August 3 1954 in Income tax Appeals Nos 3756 of 1948 49 and 2161 of 1950 51 whereby the Tribunal held that the amounts of cheques of Rs198643 and Rs 496365 for the assessment years 1943 44 and 1944 45 were received by the appellant from the Government in the taxable territories and were as such liable to tax under section 41a of the Indian Income Tax Act XI of 1922 hereinafter referred to as the Act At all material times the appellant was a public joint stock company incorporated under the then Baroda State Companies Act and having its registered office at Baroda The appellant was the owner of a textile mill and carried on business in manufacturing and selling textiles at Baroda In the accounting years 1942 and 1943 tenders were invited by the Government of India for some of the articles manufactured by the appellant and the appellant submitted its tenders to the Government of India which accepted the tenders and placed orders for supply of goods manufactured by the appellant These orders were accepted by the appellant at Baroda and the deliveries of the goods manufactured by the appellant and sold by it to the Government of India were pursuant to the said orders to be and were in fact effected F 0 B Baroda In fact so far as the manufacture and sale of the goods supplied to the Government of India were concerned as also the deliveries thereof everything took place at Baroda outside the then British India According to the conditions of the contracts governing the supplies made by the appellant to the Government the system of payment was that unless otherwise agreed upon between the parties payment for delivery of the goods would be made on submission of the bills in the prescribed form in accordance with 239 the instructions given in the acceptance of the tender by a cheque on a Government Treasury or a Branch of the Reserve Bank of India or the Imperial Bank of India transacting Government business The appellant after effecting deliveries of the goods submitted bills in the prescribed printed form which contained the sentence that Government should pay the amount due to the appellant by cheque but the appellant did not request or write to the Government in what way the payment by cheque was to be made by Government to the appellant After submission of the bills the appellant received at Baroda in payment of its bills cheques through post from the Government drawn on a Government Treasury or on a branch of the Reserve Bank of India or the Imperial Bank of India transacting Government business The said cheques were received at Baroda by the appellant from the Government along with a memo stating The undersigned has the honour to forward herewith cheque No dated in payment of the bills noted below then followed a tabular statement setting out the number amount and date of the bills On the top of the memo there was a direction that it be immediately returned to the Controller of Supplies Accounts with the acknowledgment form on the reverse duly signed and stamped The acknowledgment form was expressed as follows The undersigned has the honour to acknowledge cheque No dated for Rs in payment of the bills noted in the first column on the reverse The payments made by cheques were accepted by the appellant unconditionally and in full satisfaction of its claim for goods supplied to the Government On receipt _of such cheques the appellant endorsed the same and sent them either to Bombay or Ahmedabad in the Banking account of the appellant at such places By his orders dated September 20 1945 and March 16 1943 for the assessment years 1942 43 account year being calendar year 1941 and 1943 44 account year being calendar year 1942 the Income tax Officer 240 held that the sums of Rs 198643 and Rs 496365 being the amounts of the cheques received by the appellant for the goods supplied to the Government of India amounted to receipt of income profits and gains in British India during the said accounting years inasmuch as the said cheques were drawn on banks in British India and were liable to tax On appeal to the Appellate Assistant Commissioner from the said orders of the Income tax Officer the Appellate Assistant Commissioner confirmed the orders of the Income tax Officer and dismissed the appeals From the said decision of the Appellate Assistant Commissioner the Appellant appealed to the Income tax Appellate Tribunal who after two remand orders on various points in the case which have no relevance to the question involved in these appeals finally by its order dated August 3 1954 held that even though the appellant did not write to the Government saying that the cheques be sent by post there was an implied request to the Government to send the cheques by post observing that where a person in Baroda writes to another in Delhi to send the money due to him by a cheque there is an implied request to send the cheque by post The appellant could not have intended that the cheques would be sent otherwise than by post and it was not the case of the appellant that the cheques received from the Government were delivered by hand on behalf of the Government to the Appellant at Baroda and following the decision of this Court in Commissioner of Income tax Bombay South vs Messrs Ogale Glass Works Ltd the Tribunal held that the amounts of the cheques referred to above were received by the appellant in the taxable territories and as such the appellant was liable to tax under section 41a of the Act On December 20 1954 the appellant applied for special leave to appeal against the said order of the Tribunal under article 136 of the Constitution which leave was granted by this Court by its order dated April 15 1955 By a further order dated September 19 1955 both the appeals were consolidated for the purposes of printing of the record and for filing of the 11955 1 SCR 185 241 petitions of appeal and the statements of case therein These appeals have now come up for hearing and final disposal before us On the facts narrated above it is clear that the mode of payment agreed upon between the appellant and the Government of India as specified in Cl 21 in the printed form of tender was that the payments for the delivery of the goods were to be by cheques drawn on a Government Treasury or on a branch of the Reserve Bank of India or the Imperial Bank of India transacting Government business The appellant used to submit the bills in the prescribed printed form which mentioned that the Government should pay the amounts due to the appellant by cheque In payment of these bills the appellant used to receive at Baroda cheques drawn by the Government as aforesaid along with a memo of acknowledgment which stated that the cheques mentioned therein were forwarded in payment of the bills noted in the tabular statement setting out the amount number and date of the bills The acknowledgmet it form on the reverse was thereafter duly signed and stamped by the appellant acknowledging the receipt of the cheques in payment of the said bills and was despatched by the appellant to the Government These payments by cheques were accepted by the appellant unconditionally and in full satisfaction of its claims for the goods supplied to the Government The case of the Revenue in the first instance was that even though these cheques were received by the appellant in Baroda they were sent by the appellant after duly endorsing the same either to Bombay or Ahmedabad in the banking accounts of the appellant at such places and these cheques were cashed and the proceeds thereof were received by the appellant in either Bombay or Ahmedabad and accordingly the income profits and gains were received by the appellant within the taxable territories This contention was really of no avail to the Revenue because on the particular facts of the present case it was common ground that the payments made by cheques were accepted by the appellant unconditionally and in full satisfaction of its claims for goods supplied to the 31 242 Government and therefore if the cheques be held to have been received by the appellant in Baroda the income profits and gains were also received in Baroda which was outside the taxable territories Even if the receipts of the cheques at Baroda be treated as a conditional payment of the appellant s claims for the goods supplied to the Government the position was no better for the simple reason that the cheques not having been dishonoured but having been duly cashed the payments related back to the dates of the receipts of the cheques and in law the dates of payments were the dates of the delivery of the cheques which was certainly in Baroda out side the taxable territories In either event it could not be urged by the Revenue that the income profits and gains were received by the appellant at any place other than Baroda Vide the Commissioner of Income tax Bombay South vs Messrs Ogale Glass Works Ltd 1 ibid at 196 The position which was however taken up by the Revenue subsequently was that the cheques were posted by the Government in Delhi at the implied request of the appellant and therefore the payments must be held to have been received by the appellant at Delhi the Post Office being thus constituted the agent of the appellant for the purposes of receiving the same Learned Counsel for the appellant contested this position by urging that the only thing mentioned by the appellant was that the payment for the goods supplied by the appellant to the Government was to be by cheques and there was no request either express or implied emanating from the appellant for the despatch of these cheques by post with the result that if the Government chose to send these cheques by post from Delhi it was not in pursuance of any request express or implied made by the appellant in that behalf but it was so done by the Cxovernment on its own initiative thus constituting the Post Office the agent of the Government and there was no receipt of the monies by the appellant until the cheques reached their destination at Baroda The case of the Commissioner of Income tax Bombay South vs Messrs Ogale Glass Works Ltd 1 which was relied upon by Revenue was sought 11955 1 SCR 18_ 243 to be distinguished on the ground that in that case the assessee had written on the bill form the words Kindly remit the amount by a cheque in our favour on any bank in Bombay which was an express request conveyed to the Government by the assessee to send the cheque by post thus constituting the Post Office the agent of the assessee No such words having been used by the appellant in this case the only consequence of the provision contained in the bill form that the payment be made by cheque was that the Government was authorised or entitled to make the payment by cheque but how to reach those cheques to the appellant was left to the sweet will and discretion of the Government and if the Government chose to send those cheques by post there was no request express or implied emanating from the appellant to send the cheques by post so as to constitute the Post Office the agent of the appellant for the purposes of receiving the same It is true that in the Commissioner of Income tax Bombay South vs Messrs Ogale Glass Works Ltd 1 the words kindly remit the amount by a cheque in our favour on any bank in Bombay were specifically used by the assessee and these words were construed to be an express request by the assessee to the Government to send the cheques by post The various authorities which were discussed viz Thairlwall vs The Great Northern Railway Co Badische Anilin Und Soda Fabrik vs The Basle Chemical Works Bind Schedler 3 Comber vs Layland and MitchellHenry vs Norwich Union Life Insurance Society 5 were also cases where the expressions used were construed as words of express request constituting the Post Office the agent of the party receiving the money or the goods and went to support the case made by the Revenue that the post office was constituted the agent of the assessee for the purposes of receiving the cheques when they were posted by the Government in Delhi Where however no such express words were used and the matter rested merely in the stipulation that the payment would be made by cheques would the mere 1 1955 1 S CR 185 3 2 4 519I8 2 KB 67 244 posting of the cheques in Delhi be enough to constitute the Post Office the agent of the appellant so that the income profits and gains may be said to have been received by the appellant within the taxable territories If there was nothing more the position in law is that the Post Office would not become the agent of the addressee and the mere posting of the cheque would not operate as delivery of the cheque to the addressee so as to pass the title in the cheque to the addressee Vide Thorappa vs Umedmalji 1 and the case of Exparte Cote In re Daveza 2 Where however on the facts and circumstances of the case an implied request by the creditor to send the cheque by post can be spelt out the Post Office would be constituted the agent of the addressee for the purposes of receiving such payment The authority in support of this proposition is to be found in Norman vs Ricketts3 In that case Madame Phillippe one of the plaintiffs carried on business as a milliner in Bondstreet and one of her customers was the defendant Mrs Ricketts Between March 1884 and March 1885 goods were supplied by Madame Phillippe to Mrs Ricketts to the amount of pound 142 Mrs Ricketts lived in Suffolk and at the end of March 1885 Madame Phillippe wrote to her in Suffolk saying the favour of a cheque within a week will oblige Mrs Ricketts accordingly on April 6 sent Madame Phillippe a cheque for the amount by post The cheque was an open cheque payable to the order of Madame Phillippe The cheque was stolen in the transit and Madame Phillippe never received it but it was paid by Mrs Ricketts bankers to the thief Madame Phillippe then commenced this action to recover the amount and Mr Baron Huddleston who tried the case without a jury held 1885 2 TLR 607 that the sending of the cheque was payment and gave judgment for the defendant The plaintiffs appealed and the appeal was dismissed by the Court of Appeal consisting of Lord Esher M R Lindley and Lopes L JJ The Master of the Rolls said that if a debtor had to pay his creditor 1 2 3 245 money as a general rule the debtor must come and pay his creditor But if the creditor asked him to pay in a particular way the debtor might do so If asked to pay through the post the putting the letter in the post with the money was a sufficient The only question here was whether the plaintiffs asked the defendant in effect to send the money through the post An express request to send through the post was not necessary If what the plaintiffs said amounted to a request to send the cheque by the post then there was payment To answer that question the existing circumstances must be looked at A milliner in London wrote to a lady in Suffolk asking for a cheque bid that letter reasonably lead the lady to suppose and did she suppose that she might send the cheque by post She could not suppose that she was to send a messenger with it or come up to London herself The only reasonable and proper meaning to be attached to it whatever Madame Phillippe might have intended was that she was to send the cheque by post She therefore reasonably believed that she was invited to send her cheque by post and she did what she was asked to do Consequently what she did amounted to payment to the appellant The Lords Justices concurred with this judgment Resting itself upon the observations in this case this Court observed in Commissioner of Income tax Bombay South vs Messrs Ogale Glass Works Ltd 1 at p 295 According to the course of business usage in general to which as part of the surrounding circumstances attention has to be paid under the authorities cited above the parties must have intended that the cheques should be sent by post which is the usual and normal agency for transmission of such articles and according to the Tribunal s findings they were in fact received by the assessee by post Learned Counsel for the appellant particularly drew our attention to the case of Pennington vs Crossley and sons Limited a decision of the Court of Appeal consisting of Lord Esher MR AL Smith and Rigby L JJ where Norman vs Ricketts 3 was distinguished In that case the plaintiff sold on December 10 1 2 189713TLR 5i3 31886 246 1896 the goods in question to the defendants and on the same date an invoice was sent to the defendants under which the defendants were entitled to discount if the payment was made within 14 days Upon December 24 the defendants posted a cross cheque made payable to the plaintiff or his order and with the cheque was sent a form of receipt for signature by the plaintiff The envelope containing the cheque was properly addressed to the plaintiff but was not registered There was no express request to send the cheque by post The cheque was never received by the plaintiff but was cashed by a stranger on the strength of a forged endorsement of the plaintiff s name thereupon On an action to recover the price of the goods sold and delivered the defendants contended that the posting of the cheque amounting in law to payment and gave evidence that for about 20 years before this transaction payments for goods in question as between the plaintiff and the defendants were always made by cheque sent by post in the form of receipt given above The learned Judge held that the course of business showed that the parties had agreed that the payment should be made by cheque and that the posting of the cheque amounted to payment and accordingly gave judgment for the defendants The Court of Appeal reversed this decision The Master of the Rolls in his judgment distinguished the case of Norman vs Ricketts 1 stating that in that case there was what amounted to a request to send a cheque by post and the Court held that the posting of the cheque was payment There was no such request here The course of business between the plaintiff and the defendants was not taken to mean that there was a request to the defendants to send the cheque by post and that the plaintiffs would run the risk of the cheques miscarrying in the transit The defendants sent to the plaintiff cheques by post on the various sales together with a form of receipt to be signed by him independently of any arrangement There was nothing in the circumstances to warrant the conclusion that putting the cheque in the post was to be taken as the delivery of the cheque to the plaintiff the only facts 1 247 being that the defendants always sent cheques by post and that when the plaintiff received them he sent back the receipt duly signed This case does not militate against the ratio of the decision in Norman vs Ricketts 1 but really confirms the same If on the facts and circumstances of that case the Court of Appeal had been able to find any request express or implied to send the cheques by post the decision would certainly have been confirmed but in so far as there was nothing in the circumstances of the case from which such an inference could be raised the Court of Appeal observed It would be most monstrous to infer from those circumstances a request to send a cheque by post and that the plaintiff would consider that he had received it as soon as it was posted The other Lord Justices delivered judgment to the same effect and the appeal was allowed The above ratio is really determinative of the question before us The stipulation in the contract between the appellant and the Government was that the payment would be made by cheques The Government of India was located in Delhi and the cheques would be necessarily drawn by it from Delhi Could it be imagined that in the normal course of affairs the cheques thus drawn in Delhi would be sent by a messenger to Baroda so that they may be delivered to the appellant in Baroda Or that the officer concerned would come to Baroda himself and hand the same over to the appellant in Baroda The only reasonable and proper way of dealing with the situation was that the payment would be made by cheques which the Government would send to the appellant at Baroda by post According to the course of business usage in general which appears to have been followed in this case the parties must have intended that the cheques should be sent by post which is the usual and normal agency for transmission of such articles If that were so there was imported by necessary implication an implied request by the appellant to send the cheques by post from Delhi thus constituting the Post Office its agent for the purposes of receiving those payments 1 248 Learned Counsel for the appellant further drew our attention to certain provisions of the Post Office Act 1898 and the postal regulations framed thereunder and tried to argue that the Post Office was really the agent of the Government and the Government could recall the cheques at any time before they actually reached the appellant at Baroda All these provisions were discussed by this Court in the Commissioner of Income tax Bombay South vs Messrs Ogale Glass Works Ltd 1 and it was held that these provisions did not help the assessee The position as it obtains was thus summarised at p 204 there can be no doubt that as between the sender and the addressee it is the request of the addressee that the cheque be sent by post that makes the post office the agent of the addressee After such request the addressee cannot be heard to to say that the post office was not his agent and therefore the loss of the cheque in transit must fall on the sender on the specious plea that the sender having the very limited right to reclaim the cheque under the Post Office Act 1898 the post office was his agent when in fact there was no such reclamation Of course if there be no such request express or implied then the delivery of the letter or the cheque to the post office is delivery to the agent of the sender himself In our opinion the principle which has been enunciated by us in the Commissioner of Income tax Bombay South vs Messrs Ogale Glass Works Ltd 1 is applicable to the facts of the present case even though the words to remit the amount by cheque have not been specifically used herein Non user of those words does not make any difference to the position and it is not possible to distinguish the present case from that case merely on this ground We are therefore of opinion that the Income tax Appellate Tribunal was right in the conclusion to which it came and these appeals must accordingly be dismissed with costs one set between the two appeals Appeals dismissed 11955 11 SCR 185

On September 7 1952 the appellant went to Dum Dum Aerodrome to board a plane for Hong Kong On his search by the customs authorities a sum of RS 25000 was recovered from him which he had not declared in his declaration form and for which he had no permit from the Reserve Bank of India for taking out of India On September II 1952 the Reserve Bank authorised Inspector Mitra to move the Additional District Magistrate 24 Parganas under section 193 Of the Foreign Exchange Regulation Act for permission to proceed against the appellant On September 16 1952 Mitra applied to the Magistrate for a search warrant and for a warrant of arrest and both warrants were issued The appellant was arrested and released on bail with a direction to appear before the Magistrate on September 19 On September 19 the Magistrate granted bail to the appellant but refused him exemption from personal attendance before the Court and granted time till November 19 1952 for completing the investigation This time was extended upto January 2 1953 and then upto February 2 1953 In the meantime on January 27 1953 Mitra was authorised under section 233b Of the Act to file a complaint against the appellant The complaint was filed on February 2 1953 before the Additional District Magistrate who transferred the case to a Magistrate I Class for trial On the same day the Magistrate I Class recorded the presence of the appellant allowed his application for reduction of security and fixed March 26 and 27 1953 for evidence Upon conclusion of the trial the Magistrate acquitted the appellant but on appeal the Calcutta High Court convicted him The appellant contended that the entire trial was without jurisdiction as the Magistrate had taken cognizance of the offence on September 16 1952 without there being a complaint in writing by a person authorised as required by section 233 of the Act Held that cognizance of the offence was taken by the Additional District Magistrate on February 2 1953 after the complaint had been filed and the trial was valid As to when cognizance is taken of an offence will depend upon the facts and circumstances of each case Mere issuing of a search warrant or warrant of arrest for the purposes of investigation did not by 94 themselves amount to taking of cognizance Cognizance was taken when a Magistrate applied his mind for the purpose of proceeding under section 200 and subsequent sections of Ch XVI of the Code of Criminal Procedure or under section 204 Of Ch XVII of the Code In the present case cognizance was taken when on February 2 1053 the Additional District Magistrate applied his mind to the case with a view to issuing a process and sent the case for trial to another magistrate Superintendent and Remembrancer of Legal Affairs West Bengal vs Abani Kumar Banerji and R R Chari vs The State of Uttar Pradesh applied The facts found clearly established that the appellant attempted to take out of India the currency notes in question and such attempt was also an offence The High Court had rightly rejected his explanation that he had applied to the Reserve Bank for a permit to take the currency notes out of India and that as the permit had not been received he had handed over the notes to the customs authorities for safe custody

Appeal No 395 of 1957 Appeal by special leave from the judgment and order dated December 21 1955 of the Calcutta High Court in Income tax Reference No 15 of 1954 A C Sampath Iyengar Dipak Dutta Choudhury and B N Ghosh for the appellant MC Setalvad Attorney General for India R Ganapathy Iyer B H Dhebar and D Gupta for the respondent May 5 The Judgment of the Court was delivered by HIDAYATULLAH J The Indian Molasses Co Private Ltd Calcutta hereinafter called the assesses Company have brought this appeal with the special leave of this Court granted on November 9 1956 against the judgment of the High Court of Calcutta dated December 21 1955 in Income tax Reference 966 No 15 of 1954 The question of law referred to the High Court was Whether on the facts and in the circumstances of the case and on a true construction of the Trust Deed dated 16th September 1948 and the Policy dated the 13th January 1949 the payments made by the assessee Company and referred to in paragraph 4 above constitute expenditure within the meaning of that word in section 102xvof the Indian Income tax Act 1922 in respect of which a claim for deduc tion can be madesubject to the other conditions mentioned in that clause being satisfied The question was answered in the negative The facts of the case are as follows One John Bruce Richard Harvey was the Managing Director of the assessee Company in 1948 He had by then served the Company for 13 years and was due to retire at the age of 55 years on September 20 1955 There was it appears an agreement by which the Company was under an obligation to provide a pension to Harvey after his retirement On September 16 1948 the Company executed a Trust Deed in favour of three trustees to whom the Company paid a sum of pound 8208 19 0 Rs 109643 and further undertook to pay annually Rs 4364 pound 326 14 sh for six consecutive years and the trustees agreed to execute a declaration of trust The trustees undertook to hold the said sums upon trust to spend the same in taking out a deferred Annuity Policy with the Norwich Union Life Insurance Society in the name of the trustees but on the life of Harvey under which pound 720 per annum were payable to Harvey for life from the date of his superannuation It was also provided in the deed that notwithstanding the main clause the trustees would if so desired by the assessee Company take out instead a deferred longest life policy with the said Insurance Company in their names but in favour of Harvey and Mrs Harvey for an annuity of pound 558 1 0 per annum payable during their joint lives from the date of Harvey s superannuation and during the lifetime of the survivor provided further that if Harvey died before he attained the age of 55 years the 967 annuity payable to Mrs Harvey would be pound 611 12 0 during her life It was further provided that should Harvey die before attaining the age of 55 years the trustees would stand possessed of the capital value of the Deferred Annuity Policy upon trust to purchase therewith an annuity for Mrs Harvey with the above 2 Insurance Company or another Insurance Company of repute The other conditions of the deed of trust need Dot be considered because they do not bear upon the controversy In furtherance of these presents the trustees took out a policy on January 12 1949 In addition to conditions usual in such policies it provided for the following benefits Amount per annum of deferred Annuity pound 563 5 8 p a if both Mr and Mrs Harvey be living on September 201955 pound 720 0 0 p a if MrsHarvey should die before September 20 1955 leaving Harvey surviving her pound 645 0 0 p a if Harvey should die before September 20 1955 leaving Mrs Harvey surviving him There was a specialprovision which must be reproduced Provided the contract is in force and unreduced the Grantees i e the trustees shall be entitled to surrender the Annuity on the Option Anniversary ie Sept 20 1955 for the Capital sum of pound 10169 subject to written notice of the intention to surrender being received by the Directors of the Society within the thirty days preceding the Option Anniversary Two other clauses of the second schedule of the Policy may also be quoted III If both the Nominees shall die whilst the Contract remains in force and unredressed and before the Option Anniversary the said funds and Property of the Society shall be liable to make repayment to 968 the Grantees of a sum equal to a return of all the premiums which shall have been paid under this Contract without interest after proof thereof and subject as hereinbefore provided IV The Grantees shall before the Option Anniversary and after it has acquired a Surrender Value be entitled to surrender the Contract for a Cash Payment equal to a return of all the premiums at the yearly rate which have been paid less the first year s premium or five per cent of the Capital Sum specified in the Special Provision of the First Schedule whichever shall be the lesser sum provided that if the Deferred Annuity has been reduced an equivalent reduction in the guaranteed Surrender Value as calculated above will be made The assessee Company paid the initial sum and the yearly premia for some years before Harvey died In the assessment years 1949 50 1950 51 1651 52 and 1952 53 it claimed a deduction of these sums from its profits or gains under section 102xv of the Indian Income tax Act hereinafter called the Act which provides Such profits or gains shall be computed after making the following allowances namely any expenditure not being in the nature of capital expenditure or personal expenses of the assessee paid out or expended wholly and exclusively for the purposes of such business profession or vocation This claim was disallowed by the Department and the Appellate Tribunal The Tribunal held that it was not necessary to decide if the expenditure was wholly or exclusively for the purposes of the Company s business and if so whether it was of a capital nature because in the Tribunal s opinion there was no expenditure at all The reason why the Tribunal held this way may be stated in its own words Clauses 1 and II do not contain any provision having a material bearing upon Clause 111 Therefore if it happens that both Mr and Mrs Harvey die before 20th September 1955 all the payments till made through the Trustees to the Insurance Society will come back to the Trustees and as there is not the 969 slightest trace of any indication anywhere that the Trustees should have any beneficient interest in these moneys there would be a resultant trust in favour of the Company in respect of the moneys thus far paid out In other words what has been done amounts to a provision for a contingency which may never arise Such a provision can hardly be treated as payment to an employee whether of remuneration or pension or gratuity and cannot be a proper deduction against the incoming of the business of the Company for the purpose of computing its taxable profits In short there has been no expenditure by the Company yet there has been only an allocation of a part of its funds for an expenditure which may or may not have to be incurred in future The Tribunal however referred the above stated question for the opinion of the High Court The High Court noticed the limited scope of the question and pointed out that the Tribunal had stated at the end of the Statement of the Case In the event of the High Court holding that there was an expenditure in this case it would still be necessary for the Tribunal whether the money was laid out or expended wholly and exclusively for the purposes of the assesses business and if so whether the expenditure was in the nature of capital or revenue expenditure The learned Chief Justice of the Calcutta High Court Sarkar J concurring felt the difficulty of the ques tion He analysed the ingredients of cl xv and pointed out that the question referred to but one such ingredient The Divisional Bench however did not call for an additional statement of fact or ask that the rest of the matter be referred so that the whole of the question involved might get disposed of It observed This Court has always construed questions referred to it with a certain degree of strictness and has not allowed any point to be canvassed before it which had not been raised before the Appellate Tribanal and which was not covered by the Tribunal s 122 970 appellate order I am therefore of opinion that the question should be taken as covering only the ground upon which the Tribunal held the payments to be not allowable as deductions as not embracing any other ground We must express our regret that the case took the course it did The order of assessment was passed as far back as 1952 and seven years have now passed during which only one question out of three is before the Courts for decision Section 102xv was analysed by the learned Chief Justice in these words It will be noticed that three ingredients of the clause lie on the surface of its language In order that a deduction may be claimed under its provisions it must be proved first that there was an expenditure secondly that the expenditure was not in the nature of a capital expenditure I am leaving aside the personal expenses and thirdly that it was laid out or expended wholly and exclusively for the purposes of the assessee s business I am leaving out profession or vocation We must not be understood as finding fault with the Divisional Bench It decided the question as framed It is the Tribunal which referred the question in this form keeping to itself the right to decide about the other ingredients of the clause later Whether the question can be answered in the bland form it is posed is a matter to which we will have to address ourselves presently But it appears to us that this is a very unsatisfactory way to go about the business Perhaps the Tribunal decided this case in this way and referred the question it did because it felt that if this Court in Allahabad Bank Ltd vs Com missioner of Income tax West Bengal 1 was able to decide whether a particular outlay was expenditure without reference to the other ingredients of cl xv the same could be done in this case also That case however was very different in its facts There certain contributions on trust for payment of pensions to employees were held not to be I expenditure because on the original trust failing the money was 1 971 deemed to be held by the trustees on a resulting trust for the benefit of the maker If the same can be said in this case namely that the money continued to belong to the assessee Company in the account years its payment to the trustees or the Insurance Company notwithstanding there may be a possibility of answering the question as was done in the decision of this Court cited earlier But if such a clear cut proposition cannot be laid down then obviously there is considerable difficulty in deciding what is I expenditure within the clause without reference to the rest of its provisions Of course to find the meaning of the word I expenditure a dictionary is ill that is needed but to go further and to decide whether the outlay in this case was I expenditure the context in which the word is used in the clause cannot successfully be left out Mr Sampath Iyengar for the assessee Company complained before us of the narrowness of the question though before the High Court be was opposed to any extension of the ambit of the question The following passage from the judgment of the Chief Justice shows the respective attitudes of the Department and the assessee Company before the Bench Mr Meyer contended that language entitled him to argue not only that there had been no expenditure in fact at all but also that even assuming that there bad been an expenditure in the sense of a physical spending still the expenditure was not such as could be claimed as an allowance under the clause against the profits of the relevant accounting year in view of the fact that it was in any event an expenditure made to meet a contingent liability Mr section Iyengar who appeared on behalf of the assessee objected to the scope of the question being so enlarged and he referred to the appellate order of the Tribunal which had proceeded on a single ground The learned Attorney General who appeared for the Department at once conceded the difficulty of answering the question but contended that the question in its present form could be answered though he agreed that if it could not the Court would be free to say so 972 We cannot help saying that though the Tribunal may be at liberty to decide a case as appears best to it there is considerable hardship to the tax payers if questions of law are decided piecemeal and repeated references to the High Court are necessary The jurisdiction of the High Court is advisory and consultative and questions of interpretation of the law in this attenuated form can well be avoided This will tend to cut down the duration of litigation In deciding that the payment of the lump sum and premia was not expenditure different views were expressed as the case progressed The Income tax Officer held that in the absence of a written agreement covering the conditions of service remuneration etc the arrangement could only be taken as a provision for a gratuity more so as there was a provision in the deed of trust for payment of an annuity to Mrs Harvey in the event of Harvey s demise According to him there were so many alternative arrangements for the disbursement of the money laid out that it was impossible to say what shape the annuity would ultimately take and till certain events happened the I expenditure was not effective Following therefore the case in Atherton vs British Insulated and Helsby Cables Ltd 1 and distinguishing Hancock vs General Reversionary and Investment Co Ltd 2 the claim for deduction was rejected by the Income tax Officer The Appellate Assistant Commissioner considered that in the absence of an agreement the payment must be regarded as an ex gratia payment of a capital nature so Iona as the trust intervened The Appellate Assistant Commissioner also commented upon the existence of a provision for Mrs Harvey s pension which could not be a part of the agreement He was thus of the opinion that the case fell within the rule laid down in Atherton s case 1 This opinion of the Tribunal which has already been reproduced earlier was shortly that there was no expenditure yet and this was only an allocation of funds for an I expenditure which might or might not be incurred in the future The High Court analysed the terms of the deed of 1 2 973 trust and pointed out that there were two contingencies in which money was likely to revert to the assessee Company The first contingency was if both Harvey and Mrs Harvey died before September 20 1955 The second contingency was due to an omission in el III to provide for a pension to Harvey if Mrs Harvey died before the above date In that event the trust would have failed unless a policy was taken out under 61 The High Court held that if any of these two circumstances happened then there would have been a resulting trust in favour of the assessee Company and it would have been entitled to get back all the money laid out by it We must say here that the High Court was in error as to the second of the two contingencies because the policy which was taken out provided for all the three alternatives and pension was payable to both or either survivor though in different sums Even in the trust deed the three alternative pensions were provided as follows pound 720 if the annuity was payable to Harvey alone or pound 558 1 0 during the joint lives of both or survivor or pound 611 12 0 to Mrs Harvey if Harvey died before September 20 1955 The special provision in the policy however covered the first contingency of both the prospective annuitants dying before September 20 1955 and if that happened the assessee Company would have if it chose to surrender the policy got back the sum of pound 10169 subject to a written notice of the intention to surrender being received by the Insurance Company within thirty days preceding September 20 1955 The High Court then observed in addition that there was no instant necessity for the expenditure nor was the money laid out for a business purpose of an instant character nor did it bring in a present asset which would always remain an asset in that form the money having gone for ever The High Court pointed out that there was always a possibility of a resulting trust in favour of the Company and the money could not therefore be held to have been ex pended The conclusion of the High Court therefore was that the assessee Company must be held to have 974 set apart I tentatively a sum of money in order that it might be available for the payment of a I gratuity to Harvey and Mrs Harvey but there being I no provision for the application of the money in the event of those contingencies not occurring and no annuity being payable to any one there was no I expenditure in any real and practical sense of the term The arguments in this appeal have ranged as they did before the High Court over a very wide field No useful purpose will be served in following them through all their convolutions The main points urged on behalf of the assessee Company are that payment of pension is an expenditure of a revenue character and so also the payment of a lump sum to get rid of a recurring liability to pay such pension This is illustrated from some English cases and reference is made also to Ch IX B of the Act It is also submitted that in so far as payment by the assessee Company was concerned it was in point of fact made and this was I expenditure within the dictionary meaning of the word The argument of the Department is that by I expenditures meant a laying out of money for an accrued liability and not for a contingent liability which contingency may or may not take place that the present arrangement was only a setting apart of money for a Contingent liability and till the liability became real there was no expenditure The assessee Company however contends that expenditure on insurance is not contingent because though the contingency relates to life and depends on it the probabilities are great being estimated on actuarial calculations and the expenditure is real Both sides rely on a large number of English decisions We shall now consider the arguments in detail and refer to those authorities which are relevant In dealing with cases expounding the English In come tax law it must always be borne in mind that the scheme of legislation there is not the same as in our country No doubt a certain amount of assistance can with caution be taken from them but the problems under our Income tax laws must be resolved in the ultimate analysis with reference to our laws 975 It has been ruled under the English statute that sums paid to an employee as pension or gratuity are deductible as money laid out and expended for the purpose of trade profession or vocation See Smith vs Incorporated Council of Law Reporting for England and Wales 1 It has also been ruled that a single payment to avoid the recurring liability of an employee s pension is also a proper deduction The leading case on the subject is Hancock vs General Reversionary and Investment Co Ltd 1 In that case the taxpayer was under a liability to pay a pension to a retired actuary and pension had in fact been paid for some years Subsequently the tax payer purchased an annuity for the employee which he accepted in place of his pension The sum paid in purchasing the annuity was allowed as a deduction in computing the tax payer s profits it being held that it was money wholly and exclusively laid out or expended for the purposes of the trade profession or vocation On the other hand a sum which a company put into a fund for the relief of invalidity etc was held not to be an admissible deduction and the case last cited was distinguished See Rowntree Co Ltd vs Curtis 3 Pollock M R drew pointed attention to the words of Lush J in the earlier case where lie observed at p 698 It seems tome as impossible to hold that the fact that a lump sum was paid instead of a recurring series of annual payments alters the character of the expenditure as it would be to hold that if an employer made a voluntary arrangement with his servant to pay the servant a year s salary in advance instead of paying each year s salary as it fell due he would be making a capital outlay and added that Lush J had described the actuarial payment made in Hancock s case 2 as a pension in another form which could not be said of the invalidity claims for which were wholly uncertain Warrington L J pointed out that the test to apply was first 1 2 3 976 whether there was an expenditure which he held there was and next whether it could be said to be wholly and exclusively for the purposes of the trade which in his opinion could not be said of the expenditure in that case The words of the learned Lord Justice on the first proposition have a bearing upon the present case and may be reproduced hereat p 703 I am inclined to agree with Mr Latter in his contention that the money has actually been expended There is nothing like a resulting trust in favour of the company although there is that provision which I have already called attention to in the trust deed that one of the things which might be done would be to abrogate altogether the trust or the provisions of the deed and to substitute other rules and provisions But it seems to me that cannot be said to be a resulting trust in favour of the company having regard to the other objects which are pointed out as those to which the scheme was directed Similarly a sum of money paid to the trustees to form a nucleus of a pension fund for the benefit of some of its employees by a company was also not held to be an admissible deduction in Atherton s case 1 Viscount Cave L C recalled the test laid down in a rough way by Lord Dunedin in Vallambrosa Rubber Co vs Farmer 2 at p 192 that capital expenditure is a thing that is going to be spent once and for all and income expenditure is a thing which is going to recur every year but added that it was not and was not meant to be a decisive test The Lord Chancellor observed however that when an expenditure is made not only once and for all but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade I think that there is very good reason in the absence of special circumstances leading to an opposite conclusion for treating such an expenditure as properly attributable not to revenue but to capital 1 2 977 Again in Morgan Crucible Co Ltd vs The Commissioners of Inland Revenue 1 the payment to an insurance company to take out a policy was held not to be an admissible deduction There the company operated a scheme for payment of pensions to retired or incapacitated employees reserving to itself the uncontrolled discretion to vary or cease payment of pensions When pensions were paid they were deducted but when the company took out a policy without informing their employees for payment to itself of annuities equal to the pensions it was held that by this the company had acquired an asset and this was in the nature of a capital asset Rowlatt J in distinguishing Hancock s case 2 observed that unlike that case the liability to pay pensions was not got rid of and that the company had acquired an asset The learned Judge continued at p 317 It is true they have got an asset which would give them in all probability nothing on balance because they use it to pay these pensions but they have got an asset they had not any pension fund to pay these pensions with and now they have got an insurance company which will in the future not extinguish the liability but countervail it and they have got the command of this policy to the extent that they are entitled to get their capital money say capital money without prejudice back from the insurance company on surrendering the policies From these cases there are deducible certain principles of a fundamental character The first is that capital expenditure cannot be attributed to revenue and vice versa Secondly it is equally clear that a payment in a lump sum does not necessarily make the payment a capital one It may still possess revenue character in the same way as a series of payments Thirdly if there is a lump sum payment but there is no possibility of a recurrence it is probably of a capital nature though this is by no means a decisive test Fourthly if the payment of a lump sum closes the 1 317 2 123 978 liability to make repeated and periodic payments in the future it may generally be regarded as a payment of a revenue character Anglo Persian Oil Co Ltd vs Dale 1 and lastly if the ownership of the money whether in point of fact or by a resulting trust be still in the tax payer then there is acquisition of a capital asset and not an expenditure of a revenue character Side by side with these principles there are others which are also fundamental The Income tax law does not allow as expenses all the deductions a prudent trader would make in computing his profits The money may be expended on grounds of commercial expediency but not of necessity The test of necessity is whether the intention was to earn trading receipts or to avoid future recurring payments of a revenue character Expenditure in this sense is equal to disbursement which to use a homely phrase means something which comes out of the trader s pocket Thus in finding out what profits there be the normal accountancy Practice may be to allow as expense any sum in respect of liabilities which have accrued over the accounting period and to deduct such sums from profits But the Income tax laws do not take every such allowance as legitimate for purposes of tax A distinction is made between an actual liability in praesenti and a liability de futuro which for the time being is only contingent The former is deductible but not the latter The case which illustrates this distinction is Peter Merchant Ltd vs Stedeford 2 No doubt that case was decided under the system of Income tax laws prevalent in England but the distinction is real What a prudent trader sets apart to meet a liability not actually present but only contingent cannot bear the character of expense till the liability becomes real We may here refer to two other cases In Alexander Howard Co Ltd vs Bentley 3 a business of blouse and gown manufacture was carried on by one A C Howard His three brothers were employed by him as salaried managers In 1933 A C Howard remarried 1 2 3 979 and under pressure from his brothers a company was formed and the directors were authorised to enter into an agreement to purchase the business A C Howard was the governing director of the company and his three brothers permanent directors The company also entered into a service agreement with them and article 107 thereof provided After the death of the said Alexander Charles Howard and during such time as his legal personal representatives shall hold at least Ten Thousand Shares in the Company any widow surviving him shall receive out of the profits of the Company an annuity of One Thousand Pounds per annum during her life This service agreement was executed on January 3 1934 In 1943 by a deed of release A C Howard released to the company all right to a claim in respect of the annuity in consideration of the payment to him of a sum of pound 4500 This amount was based upon the findings of an actuary The taxpayer submitted that the sum paid in redemption of the annuity was a proper charge against revenue and was deductible The Commissioners held against the company on two main grounds They held that in order to decide whether the sum paid to obtain release of the annuity was properly allowable as a deduction they had to decide first whether the annuity itself would have been properly chargeable to revenue Anglo Persian Oil Co Ltd vs Dale 1 and Bean vs Doncaster Amalgamated Collieries Ltd 2 per Lord Simon at pp 311 312 and they held next that the redemption of the annuity freed the company from a contingent liability and the company had thus secured only an enduring advantage Singleton J before whom the case came in appeal affirmed the decision He pointed out that this was not a case of a company providing an annuity or pension for an employee for to quote him the wife of Mr Alexander Charles Howard had nothing whatever to do with the Company If therefore 1 2 980 the original annuity was not chargeable to revenue the sum of pound 4500 paid to avoid it could not also be The other case is Southern Railway of Peru Ltd vs Owen 1 In that case the English company was bound to provide compensation to all its employees on the termination of their services Legislation to this effect was deemed to be a part of the contract of service Such right arose on dismissal or on termination of the employment by the employer after proper notice The compensation was an amount equal to one month s salary for every year of service There were however certain exceptions under which the compensation was not payable The company sought to deduct an amount equal to the burden cast on it each year but the claim was refused It was held by majority that though the company was entitled to charge against one year s receipts the cost of making provision for the retirement payments which would ultimately be payable as it had the benefit of the employees services during that year provided the present value of the future payments could be fairly estimated since the factor of discount was ignored in making the deduction the claim could not be entertained These two cases illustrate the propositions that the recurring liability of a pension which is compressed into a lump payment should itself be a legal obligation and that if contingent the present value of the future payments should be fairly estimable If the pension itself be not payable as an obligation and if there be a possibility that no such payment may be necessary in the future the whole of the amount cannot be deducted but only the present value of the future liability if it can be estimated It is significant that the case in Sun Insurance Office vs Clark 2 was applied to the last corollary So far we have dealt with the principles which underlie leading cases decided in England some of which were in the forefront of the arguments We have already stated that the English decisions should be read with considerable caution Under the English Income tax Act the law is stated in a negative I 2 981 form Section 137 of 15 16 Geo 6 I Eliz 2 c 10 which prescribes the general rules regarding deductions is expressed in the negative and r a which was applicable to the cited cases reads as follows Subject to the provisions of this Act in computing the profits or gains to be charged under Case I The Case 11 of schedule D no sum shall be deducted in respect of a any disbursements or expenses not being money wholly and exclusively laid out or expended for the purposes of the trade profession or vocation In these several cases emphasis was sometimes laid on the words wholly and exclusively sometimes on laid out or expended and sometimes on for the purposes of the trade It was the nature of the liability or the time of payment or the value of the payment or all of them which determined whether the amount should be deducted or not Clause xv of section 102 of the Act with which we are concerned reads as follows 10 Business 1 The tax shall be payable by an assessee under the head I Profits and gains of business profession or vocation in respect of the profits or gains of any business profession or vocation carried on by him 2 Such profits or gains shall be computed after making the following allowances namely xv any expenditure not being an allowance of the nature described in any of the clauses i to xiv inclusive and not being in the nature of capital expenditure or personal expenses of the assessee laid out or expended wholly and exclusively for the purpose of such business profession or vocation This section though it enacts affirmatively what is stated in the negative form in the English statute is substantially in pari materia with the English enactment and would have justified our considering the English authorities as aids to the interpretation thereof But there is no case directly on what is I expenditure and if the authorities under the English statute 982 were to be of real assistance the whole of the matter should have been before us The question however limits the approach to whether the payments made towards the policy were expenditure within clxv I Expenditure is equal to I expense and expense is money laid out by calculation and intention though in many uses of the word this element may not be present as when we speak of a joke at another s expense But the idea of I spending in the sense of I paying out or away money is the primary meaning and it is with that meaning that we are concerned I Expenditure is thus what is paid out or away and is some thing which is gone irretrievably To be an allowance within cl xv the money paid out or away must be a paid out wholly and exclusively for the purpose of the business and further b must not be i capital expenditure ii personal expense or iii an allowance of the character described in cls i to xiv But whatever the character of the expenditure it must be a paying out or away and we are not concerned with the other qualifying aspects of such expenditure stated in the clause either affirmatively or negatively So the question is whether in a business sense the amount was spent that is to say paid out or away To discuss this we must go to the terms of the policy No doubt under the general terms of the policy an annuity was to be provided for the Harveys We are not concerned with Mrs Harvey because she had no claim to the annuity or pension any more than Mrs Howard bad in Alexander Howard Co Ltd vs Bentley 1 already discussed by us elsewhere That consideration involves a finding on whether an annuity to Mrs Harvey was an expense made wholly and exclusively for the purpose of the business and that is not a matter open to us by the limited question posed In any event the provision for a pension or annuity to Mrs Harvey cannot rank higher than an annuity to Harvey and the matter can be considered on the limited aspect that a pension or annuity to Harvey was also contemplated 1 983 In the years of account the assessee Company did hand out to the trustees the sums of money for which deduction is claimed But was the money spent in so far as the assessee Company was concerned Harvey was then alive and it was not known if any pension to him would be payable at all Harvey might not have the lived to be 55 years He might even have abandoned c his service or might have been dismissed Till September 20 1955 the assessee Company had dominion through the grantees over the premia paid at least in two circumstances They are to be found in the special provision and the third clause of the second schedule of the policy These provisions have been quoted already but may again be reproduced Special provision Provided the contract is in force and unseduced the Grantees shall be entitled to surrender the Annuity on the Option Anniversary for the Capital sum of pound 10169 subject to written notice of the intention to surrender being received by the Directors of the Society within the thirty days preceding the Option Anniversary Cl III If both the Nominees shall die whilst the Contract remains in force and unreduced and before the Option Anniversary the said funds and Property of the Society shall be liable to make repayment to the Grantees of a sum equal to a return of all the premiums which shall have been paid under this Contract without interest after proof thereof and subject as hereinbefore provided To be a payment which is made irrevocably there should be no possibility of the money forming once again a part of the funds of the assessee Company If this condition be not fulfilled and there is a possibility of there being a resulting trust in favour of the Company then the money has not been spent i e paid out or away but the amount must be treated as set apart to meet a contingency There is a distinction between a contingent liability and a payment depending upon a contingency The question is whether in the years of account one can describe the assessee Company s liability as contingent or merely depending 984 upon a contingency In our opinion the liability was contingent and not merely depending upon a contingency That such a distinction is real was laid down in the speech of Lord Oaksey in Southern Railway of Peru Ltd vs Owen 1 and was recognised generally in the speeches of the other Law Lords Now the question is what is the effect of the I payment of premia in the present case Learned counsel for the assessee Company referred us to the provisions of Chapter IX B of the Act particularly sections 58R 58S and 58V thereof We regret we are not able to see bow these provisions help in the matter We are not concerned with the provisions of this Chapter because the allowance does not fall within any of the provisions and we have only to decide the question whether the amounts paid to purchase the policy involved an expenditure in the accounting years Next learned counsel relied upon Joseph vs Law Integrity Insurance Company Limited 2 Prudential Insurance Company vs Inland Revenue Commissioners 3 and In re National Standard Life Assurance Corporation 4 to show that there was no contingent liability but a liability depending on a contingency namely the duration of life the probabilities of which were estimated on actuarial calculations No doubt these cases deal with insurance of human life but the observations therein are not material here In the first of these cases it was held that the kind of policies which were issued were policies of insurance on human lives and that the company was carrying on the business of life insurance contrary to its memorandum of association and the policies were ultra vires the company The policies were also illegal within section I of the Assurance Companies Act 1909 In this context the definition that I a policy of life insurance means I any instrument by which the payment of monies by or out of the funds of an assurance company on the 1 3 2 4 430 985 happening of any contingency depending on the duration of human life is assured or secured was referred to The policies issued by the company though ostensibly called I investment policies were held to be really life insurance policies The next case arose under section 98 of the Stamp Act 1891 It was held that a contract by which in consideration of the payment by a person of a weekly premium a sum certain was payable to him on his attaining the age of 65 or in the event of his dying earlier A smaller sum was to be paid to his executors was a policy of insurance upon a contingency depending upon a life within the meaning of the section In the last case the question arose under section 30 of the Assurance Companies Act 1909 and it was decided that a certificate holder held a policy on human life because money was payable not only at the expiration of a certain number of years but all premiums were repayable in the event of death to the legal representative These cases may help to determine the nature of the contract with the insurance company but cannot help in the solving of the question whether the payments to the insurance company were expenditure That insurance of human lives involves a contingency relating to the duration of human life is a very different proposition from the question whether the payment in the present case to the trustees was towards a contingent liability or towards a liability depending on a contingency In our opinion the payment was not merely contingent but the liability itself was also contingent Expenditure which is deductible for income tax purposes is one which is towards a liability actually existing at the time but the putting aside of money which may become expenditure on the happening of an event is not expenditure In the present case nothing more was done in the account years The money was placed in the hands of trustees andor the insurance company to purchase annuities of different kinds if required but to be returned if the annuities were not bought and 124 986 the setting apart of the money was not a paying out or away of these sums irretrievably In our opinion the question was correctly answered by the Calcutta High Court We therefore dismiss the appeal with costs Appeal dismissed

The appellant was the lessee under Praga Industries and took on lease buildings and machinery for five years with option of renewal The subject matter of dispute for adjudication was with regard to the questions about 1 the quantum of bonus payable to the workmen for the year 1954 and 2 fixation of scale of wages with graded annual increments for different categories of workmen In view of the fact that the lease in its favour was due to expire shortly the appellant had suggested to the Tribunal that the question of classifying the workmen into skilled and unskilled workmen and providing for systematic grades of pay with increments may conveniently be deferred to a future date the 21 162 respondents agreed to this proposal and so both the parties represented to the Tribunal that they would be satisfied if an interim order was made providing for the increment in the wages of the workmen Accordingly the Tribunal refrained from fixing any wage structure and as an interim measure ordered increment of wages at 4 per cent and directed the appellant to grant such an increment every year until the workmen were classified and their pay scales were introduced to reach a particular maximum The above increment applied to the monthly time and piece rated workmen The appellant challenged the propriety of the course adopted by the Tribunal and contended that the Tribunal was asked to fix a wage structure but instead it had passed merely an interim order which was irregular The appellant also contended that the claim for the additional bonus for the year 1954 by the workmen was not justified as the financial position of the appellant was not satisfactory and it was in debts and had not even paid rent due to the lessor and in fact had ploughed back the amount of rent due into the business as working capital The appellant also resisted the direction for payment of bonus on the ground that the award involved an unfair distribution of the available surplus and claimed rehabilitation charges for the leased property and machinery and interest on the amount of unpaid rent Held that where the parties themselves represented to the Tribunal that the question of classifying respondents into skilled and unskilled workmen and providing for systematic grades of pay with increments may be conveniently deferred to a future date and they would be satisfied with a reasonable interim order providing for increment in the wages of the workmen it was not open to the parties to challenge the award based on such representation at a later stage That although generally a wage structure with annual increments was not provided for piece rate workers who are paid for the work they do the rate of wages fixed for such workers could legitimately be revised on a proper case being made out in that behalf Held further that where an amount earmarked as due for payment for some other purpose was utilised as working capital it should carry interest even though shown as liability in the profit and loss account and the same should be taken into consideration for arriving at the surplus available for the purposes of bonus That no prior charges for rehabilitation could be allowed where land machinery and building for business were taken on lease Where new machinery was purchased the amount of rehabilitation was covered by the depreciation allowed

Civil Appeal No 50 of 1957 Appeal by special leave from the judgment and order dated September 23 1955 of the Bombay High Court in Income tax Reference No 19 of 1955 R J Kolah and I N Shroff for the appellant H N Sanyal Additional Solicitor General of India K N Rajagopala Sastri and D Gupta for the respondent May 12 The Judgment of the Court was delivered by BHAGWATIJ This appeal with special leave arises out of a judgment and order of the High Court of Judicature at Bombay dated September 23 1955 delivered in Income Tax Reference No 19 of 1955 made by the Income tax Appellate Tribunal hereinafter referred to as the Tribunal to the Pligh Court under section 661 of the Indian Income tax Act XI of 1922 hereinafter referred to as the Act whereby the High Court directed the Tribunal to submit a supplementary statement of case on the points mentioned therein The appellant is a limited liability company manufacturing textile goods at Bhavnagar which was an Indian State during the assessment years 1943 44 and 1944 45 For the said assessment years the appellant was held to be a non resident its years of account 251 being calendar years 1942 and 1943 For the assessment years 1943 44 and 1944 45 account years 1942 and 1943 the Income tax Officer computed the British Indian Income of the appellant on a proportionate basis under section 41a of the Act In the account year 1942 its total sales amounted to Rs 6614852 out of which sale proceeds amounting to Rs 3592157 as detailed below were held by the Income tax Officer to have been received in British India Cheques on the Imperial Bank issued by the Supply Department of the Government of India Rs 258987 Sale proceeds received through Tri kainlal Mahasukhram Rs 2024190 Other cheques received at Bhavnagar but drawn on Banks in British India Rs 1308980 Rs 3592157 The Income tax Officer computed the income of the appellant at Rs 2711136 on a proportionate basis ie proportionate to the sales in and outside British India He held that the income amounting to Rs 1472267 was received in British India under section 41a of the Act There was no dispute in regard to the sale proceeds received through Trikainlal Mahasukhram In respect of the assessment year 1944 45 corresponding to the account year 1943 the Income tax Officer held that the sale proceeds amounting to Rs 1672693 received by the appellant by cheques from the Supply Department of the Government of India on British India Banks were taxable under section 41a of the Act The figure of Rs 1672693 according to the appellant was a mistake for Rs 1297631 The appellant had contended that the amounts had been received at Bhavanagar by cheques drawn on banks in British India The Revenue had not disputed the fact that the cheques had been actually received at Bhavnagarbut had contended that payments by cheques though such cheques were received at Bhavnagar 252 were received in British India at the time and the place where the cheques were ultimately cashed and honoured by the banks on which the cheques were drawn and that until such encashment of the cheques the monies could not be said to have been received by the appellant The Appellant preferred appeals to the Appellate Assistant Commissioner Ahmedabad Range against this order of the Income tax Officer for the said two assessment years The Appellate Assistant Commissioner by his two separate orders confirmed the orders of the Income tax officer and held that the cheques were not legal tender and were not monies or monies worth as such and that the receipt of cheques at Bhavnagar was not receipt of money The receipt of money according to the Appellate Assistant Commissioner took place on actual payments by the drawee Banks and he therefore held that the said amounts were taxable under section 41a of the Act A further appeal was taken by the appellant to the Tribunal against the said orders of the Appellate Assistant Commissioner and the Tribunal by its consolidated order for both the years dated July 17 1952 held that the cheques for the said amounts of Rs 258987 and Rs 1308987 in respect of the assessment year 1943 44 were received at Bhavnagar and that the sale proceeds were also received in Bhavnagar The Tribunal stated inter alia as follows There is no evidence that the cheques from Government were received in Bhavnagar It is not the Department s case that the assessee company has a registered office elsewhere The presumption is that the letters containing the cheques were addressed to the assessee company at Bhawagar We therefore hold that the cheques were received from Government at Bhavnagar and that the money was also received in Bhavnagar In doing so the Tribunal followed the Judgment of the Bombay High Court in the case of Kirloskar Brothers Ltd vs Commissioner of Income tax Bombay 1 In view of the fact however that an appeal had been filed 1 253 in this Court against that decision of the Bombay High Court the Tribunal further stated We might point out that in case the Supreme Court does not uphold the Bombay High Court decision in Kirloskar case an enquiry will have to be made as to whether the assessee company s banks at Ahmedabad acted as the assessee company s agents for collecting the money due on the cheques In respect of the assessment year 1944 45 the Tribunal after directing the Income tax Officer to verify the correctness of the figure of the amounts received by the appellant by cheques from the Government i e whether it was Rs 1297631 as contended for by the appellant or Rs 1672693 as held by the Income tax Officer or any other figure held that the cheques representing the said amount were received at Bhavnagar and the monies or sale proceeds were also received in Bhavnagar The Tribunal also held that another amount of Rs 553447 in respect of the said latter year being the aggregate amount of the cheques received at Bhavnagar from other merchants was also received in Bhavnagar It may be pointed out that neither did the Incometax Officer when the proceedings were before him or when the proceedings were before the Appellate Assistant Commissioner nor did the Revenue when the proceedings were before the Tribunal at any stage contend that the cheques aggregating to the said amounts in the said two years were not received at Bhavnagar because of the alleged posting of the cheques in British India andor by reason of the allega tion that the cheques were sent by post andor that the post office was the agent of the appellant and that too in spite of the decision in the case of Kirloskar Bros Ltd which decision had already been pronounced by then and where the said question had been debated and argued by the Revenue The only ground urged by the Revenue at all material stages was that because the amounts which were received from the merchants or the Government were received by cheques drawn on Banks in British India which were ultimately encashed in British India the monies could not be 254 said to have been received in Bhavnagar though the cheques were in fact received at Bhavnagar Being aggrieved by the said decision of the Tribunal the respondent Commissioner of Income tax filed two applications under section 661 of the Act requesting the Tribunal to draw up a statement of the case and refer the question of law arising out of the order of the Tribunal to the High Court In the said applications the facts which were admitted andor found by the Tribunal and which were necessary for drawing up a statement of the case were stated as under Regarding items of Rs 258987 and Rs 1297631 received from the Government of India in the accounting years relevant to the assessment for 1943 44 and 1944 45 respectively the amounts were received by cheques drawn on the Imperial Bank of India No evidence was produced by the assessee at any stage even before the Appellate Tribunal that the cheques were received at Bhavnagar nor was any evidence produced to show that these cheques were received as unconditional discharge of debtor s liability These cheques were collected by the Company s bankers in British India The Income tax Officer therefore held that the amount was received in British India The Appellate Assistant Commissioner confirmed the Income tax Officer s action The Tribunal however relied upon the Bombay High Court decision in Kirloskar Brothers case and held that the amount was received in Bhavnagar As regards items of Rs 1308980 and Rs 553447 received in the accounting years relevant to the assessments for 1943 44 and 1944 45 respectively the relevant facts are that the company received these cheques and sent them to their bankers in Ahmedabad for collection The Tribunal held that the sale proceeds were received at Bhav nagar on the basis of the Bombay High Court s decision in the Kirloskar Brothers case without enquiring as to whether the cheques were received by the company in unconditional discharge of the drawer s liability 255 On these facts the respondent submitted that the following questions of law arose out of the order of the Tribunal 1 Was there any evidence on the record to justify the Tribunal s finding that the mere receipt by the assessee of cheques of Rs 258987 and Rs 1308980 in Bhavnagar amounted to receipt of the above amounts in Bhavnagar even though the said cheques had actually been cashed in British India and the proceeds thereof were credited to the assessee s accounts with certain Banks in British India ii Whether in the circumstances of this case the income profits and gains in respect of the sales amountingto Rs 1567967 made to the Government of India and other customers were received in British India within the meaning of section 41a of the Indian Income tax Act A similar statement of facts which were admitted andor found by the Tribunal was also made in regard to the assessment year 1944 45 and similar questions of law were asked to be referred as in the case of the assessment year 1943 44 except in regard to the change in the figures necessitated by the differences in the amounts received These reference applications being Reference Applications Nos 615 and 616 of 1952 53 were kept pending until the decision of this Court in the case of Commissioner of Income tax vs Kirloskar Bros 1 This Court decided that appeal and the companion appeal The Commissioner of Income tax Bombay South vs Messrs Ogale Glass Works Ltd 2 on April 17 1954 and the said Reference Applications were thereafter heard and decided by the Tribunal on November 3 1954 It is worthy of note that the decision of this Court in the said two cases proceeded on the basis that on the particular facts of those appeals the Post Office had acted as the agent of the assessee and that though the cheques were in fact received by post by the assessees outside British India nevertheless by reason 1 195425 ITR 547 2 256 of the fact that the assessees in the said two appeals had expressly requested the Government to remit the amounts by cheques the assessees had constituted the Post Office their agent to receive on their respective behaves the said cheques which were posted by the Government at Delhi having addressed them to the assessees outside British India In spite of the said decisions the Revenue did not urge before the Tribunal that the said aspect of the matter should in the present case also be referred to the High Court for its decision and the Reference applications were heard on the materials which were on the record before the Tribunal when it made its orders dated July 17 1952 The said order of the Tribunal was based on the facts admitted andor found by the Tribunal as stated in the Reference Applications made by the Revenue as aforesaid and this aspect of the case viz whether any portion of these cheques were received by post and if so whether there was any request by the appellant express or implied that the amounts of those cheques should be remitted to Bhavnagar by post had certainly not been canvassed before any of the income tax authorities or before the Tribunal and did not find its place in the order of the Tribunal and any question of law appertaining thereto could not be said to arise out of the said order of the Tribunal On the materials as they stood on the record then the Tribunal drew up on November 5 1952 a statement of case in which all the facts and events above referred to were set out Besides the same the Tribunal also referred in para 8 thereof to two letters on the record which showed that the cheques from the Supply Department were received by post It also annexed a sample agreement form on record between the appellant and its customers other than the Government and annexed thereto the copies of the Appellate Assistant Commissioner s orders for the assessment years 1943 44 and 1944 45 The two letters showing that the cheques from the Supply Department were received by post were evidently put in with a view to show that the order of the Tribunal dated July 17 257 1952 was correct in making the presumption that the letters containing the cheques were addressed to the appellant at Bhavnagar and in holding that the cheques were received from the Government at Bhavnagar There was no other reason so far as the record then stood to make any reference to the said two letters Out of the facts stated above the Tribunal raised the following question of law Whether the receipt of the cheques in Bhavnagar amounted to receipt of sale proceeds in Bhavnagar The said Reference was heard by the High Court on September 23 1955 and judgment was delivered the same day whereby the High Court held that it was not possible to answer the question in the absence of materials as to whether the cheques which were received in Bhavnagar were posted by the Government at the request of the appellant and the High Court observed The question that has been submitted to us by the Tribunal is whether the receipt of the cheques in Bhavnagar amounted to receipt of sale proceeds in Bhavnagar This question over looks the important aspect which was dealt with both by us in Kirloskar s case and also by the Supreme Court Assuming that the cheques were received in Bhavnagar the question still remains as to whether if the cheques were received by post the post office was constituted the agent of the asseessee or not The mere receipt of cheques by post in Bhavnagar is not conclusive of the question raised by the Tribunal Unless we are in a position to say whether the cheques were sent to Bhavnagar by post without there being a request express or implied by the assessee the mere receipt of the cheques in Bhavnagar would not constitute receipt of sale proceeds in Bhavnagar When we look at the statement of the case there is no reference at all to this aspect of the case The High Court further observed that the burden would be upon the Revenue to establish that the cheques which were received by post were so received at the request express or implied of the appellant and 258 that therefore the Post Office was the agent of the appellant But it observed in this context But we cannot shut out the necessary inquiry which even from our own point of view is necessary to be made in order that we should satisfactorily answer the question raised in the Reference It must not be forgotten that under sec 664 of the Income tax Act we have a right independently of the conduct of the parties to direct the Tribunal to state further facts so that we may properly exercise our advisory jurisdiction In the result the High Court directed that a supplementary statement of case should be submitted by the Tribunal on the following points On the finding of the Tribunal that all the cheques were received in Bhavnagar the Tribunal to find what portion of these cheques were received by post whether there was any request by the assessee express or implied that the amounts which are the subject matter of these cheques should be remitted to Bhavnagar by post Mr Johi concedes that to the extent that the cheques were not received by post but by hand the receipt will be for the purpose of tax in Bhavnagar The appellant filed a petition in the High Court on November 22 1955 for the grant of a certificate under section 66A2 of the Act to appeal to this Court from the said judgment and order of the High Court This application was dismissed by the High Court by its order dated December 8 1955 with the result that the appellant presented on December 22 1955 a petition in this Court for special leave to appeal from the said judgment of the High Court dated September 23 1955 This Court by its order dated March 12 1956 granted special leave to appeal such leave being limited to the question whether the High Court had jurisdiction under section 664 of the Act to call for a supplemental statement of case This is how the appeal has come up for hearing and final disposal before us We have narrated the facts and events leading up to this appeal in such detail in order that we may 259 have the proper perspective and the background against which the High Court directed the Tribunal to submit a supplementary statement of case on the points mentioned therein The appeal raises an important question as to the nature scope and extent of the jurisdiction vested in the High Court under section 664 of the Act and we shall now address ourselves to that question The relevant provision of sec 66 of the Act may now be referred to 66 1 Within sixty days of the date upon which he is served with notice of an order under sub section 4 of section 33 the assessee or the Commissioner may by application in the prescribed form accompanied where application is made by the assessee by a fee of one hundred rupees require the Appellate Tribunal to refer to the High Court any question of law arising out of such order and the Appellate Tribunal shall within ninety days of the receipt of such application draw up a statement of the case and refer it to the High Court Provided that if in the exercise of its powers under sub section 2 the Appellate Tribunal refuses to state a case which it has been required by the assessee to state the assessee may within thirty days from the date on which he receives notice of the refusal to state the case withdraw his application and if he does so the fee paid shall be refunded 2 If on any application being made under sub section 1 the Appellate Tribunal refuses to state the case on the ground that no question of law arises the assessee or the Commissioner as the case may be may within six months from the date on which he is served with notice of the refusal apply to the High Court and the High Court may if it is not satisfied of the correctness of the decision of the Appellate Tribunal require the Appellate Tribunal to state the case and to refer it and on receipt of any such requisition the Appellate Tribunal shall state the case and refer it accordingly 260 4 If the High Court is not satisfied that the statements in a case referred under this section are sufficient to enable it to determine the question raised thereby the Court may refer the case back to the Appellate Tribunal to make such additions thereto or alterations therein as the Court may direct in that behalf It is clear on a plain reading of the terms of section 661 that the only question of law which the assesssee or the Commissioner can require the Tribunal to refer to the High Court is any question of law arising out of the order of the Tribunal so that if the question of law which the assessee or the Commissioner requires the Tribunal to so refer to the High Court does not arise out of its order the Tribunal is not bound to refer the same What has therefore to be looked at in the first instance is whether the question of law thus required to be referred arises out of the order of the Tribunal The Tribunal no doubt has got before it he facts which are admitted andor found by the Tribunal and which are necessary for drawing up a statement of the case and it is the facts admitted andor found by it that would form the basis on which the statement of case would be drawn and references of the question of law made by the Tribunal to the High Court If such facts were not there whether in the order of the Tribunal or in the record before it there would certainly not be any foundation for the raising of any question of law either in the abstract or otherwise and it is only a question of law which would arise out of such facts which are admitted andor found by the Tribunal that would be the substratum of the reference to the High Court The facts admitted aDdor found by the Tribunal would really be the foundation or the basis on which such questions of law could be raised and neither party would be entitled to require the Tribunal to refer to the High Court any question of law which could not thus arise out of the order of the Tribunal Section 662 which gives the power to the High Court to require the Tribunal to state the case and refer the question of law to it also proceeds on the same basis and even 261 where the High Court exercises the power under section 662 it can only require the Tribunal to state the case on any question of law arising out of such order The scope and subject matter of the reference under section 662 therefore is co extensive with that of the reference under section 661 of the Act and the High Court has no power or jurisdiction under section 662 to travel beyond the ambit of section 661 Section 662 comes into play only when the Tribunal refuses to state the case on the ground that no question of law arises and if the High Court is not satisfied of the correctness of the decision of the Tribunal it has got the power and jurisdiction to require the Tribunal to state the case and refer the same to it On the conditions of section 661 and section 662 being thus complied with the statement of case has to be drawn up by the Tribunal and the question of law arising out of its order referred to the High Court for its opinion This statement of case which is based as stated above on the facts which are admitted andor found by the Tribunal may not contain sufficient material to enable the High Court to determine the question raised thereby and in that case the High Court under section 664 is vested with the jurisdiction to refer the case back to the Tribunal to make such additions thereto or alterations therein as the Court may direct in that behalf only for the purpose of determining the question referred to it If the question actually referred does not bring out clearly the real issue between the parties the High Court may reframe the question so that the matter actually agitated before the Tribunal may be raised before the High Court But section 664 does not enable the High Court to raise a new question of law which does not arise out of the Tribunal s order and direct the Tribunal to investigate new or further facts necessary to determine this new question which had not been referred to it under section 661 or section 662 and direct the Tribunal to submit a supplementary statement of case This power and jurisdiction which is vested in the High Court is to be exercised within the four corners of section 66 If under section 661 and section 662 the statement of case has to be 262 drawn up on the basis of the facts which are admitted andor found by the Tribunal and this is the requirement also of para 3 of the prescribed form the scope of such statement of case cannot in our opinion be in any manner enlarged by the power which is given to the High Court under section 664 to make such additions thereto or alterations therein in the statement of case as the Court may direct in that behalf The jurisdiction of the High Court under section 66 is a consultative or advisory jurisdiction In order to satisfactorily discharge that advisory jurisdiction the High Court must have before it all the facts which are admitted andor found by the Tribunal properly set out in the Statements in the case It is only in those cases where the statement of case referred to the High Court under section 661 and section 662 are not sufficient to enable the High Court to determine the question raised thereby that the High Court is empowered to refer the case back to the Tribunal so that the Tribunal within the four corners of section 661 and section 662 may make such additions to those statements or alterations therein as may be directed by the Court Even though the terms of section 664 are wide enough to comprise such additions thereto or alterations therein as the Court may direct in that behalf the scope of such directions has got to be read in the context of and in conjunction with the provisions of section 661 and section 662 and under the guise of that direction the High Court cannot refer the case back to the Tribunal to find new facts or embark upon a new line of enquiry which would enable either the assessee or the Commissioner to make out a case which had never been made during the course of the proceedings before the Income tax authorities or the Tribunal so far Such additions thereto or alterations therein as the Court may direct in that behalf are additions of facts to the statement of case or alterations therein which though they were part of the record before the Income tax authorities or the Tribunal were not incorporated in the statement of case drawn up by the Tribunal either because such facts or statements though contained in the record were not found by the Tribunal or were omitted to be incorporated in the statement of case drawn up by it 263 That this is the scope nature and extent of the jurisdiction of the High Court under section 664 of the Act is amply borne out by the authorities In Craddock H M Inspector of Taxes vs Zevo Finance Co Ltd Lord Greene M R observed at p 277 The Crown therefore failed before the Commissioners to establish the only measure of value for which it was contending It was however suggested that this difficulty could be avoided by sending the matter back to the Commissioners so as to give the Crown an opportunity of setting up a different measure of value supported by different evidence Even assuming that this was the only difficulty in the way of the Crown s argument it would not in my opinion have been proper to take this course The Crown failed in its contention on a matter of fact and it must abide by the result it would be contrary to all principle to give it another chance to establish by fresh and different evidence a quite different contention which if it was desired to rely upon it ought to have been advanced in the first instance Our task is to deal with the case on the basis of the facts as found by the Commissioners upon the submissions made to them and on this basis the value of the investments has not been established I In Commissioner of Income tax West Bengal vs State Bank of India 2 Chakravartti CJ who delivered the judgment of the High Court at Calcutta said at p 551 We intimated to Mr Meyer as soon as he formulated his points that he could not be allowed to take the first of them since it did not appear to have been taken on behalf of the Department at any stage of the proceedings and certainly not before the Tribunal It could not therefore be said to arise out of the Tribunal s order The practice followed in this Court in references under section 661 of the Act has always been to limit the party at whose instance a reference has been made to the points raised and canvassed before the Tribunal Questions 1 277 2 551 264 are often framed in a general form such as whether the assessment for a particular year made in a certain manner was valid in view of the provisions of a certain section of the Act A question framed in that form might be said to comprise all possible contentions to which the terms of the relevant section might give rise but this Court has always refused to treat matters arising out of questions so framed as entirely at large It has adopted and acted on that view for the reason that this Court is only an advisory body and the advice which it can be properly asked to give is only advice on matters which had been in contention before the Tribunal and which had been decided in one way or another such advice being sought in order that the parties interested might know whether the decision on those conten tions had been in accordance with law In hearing a reference under section 661 this Court does not sit in appeal from the assessment and it is not called upon to give its advice on matters which the Tribunal was not asked to decide and which the Tribunal neither decided nor included in the statement of case for the opinion of this Court The Bombay High Court also expressed the same opinion in the case of Industrial Development and Investments Co Ltd vs Commissioner of Excess Profits Tax Bombay 1 Chagla CJ who delivered the judgment of the Court pointed out to the Tribunal what the correct procedure was with regard to the submission of a statement of the case and observed It is true that very often the Tribunal may not refer to all the evidence and all the facts in its appellate order We quite appreciate the difficulty of the Tribunal as it has to deal with a large number of cases and it may be that in many cases the decision may seem obvious to the Tribunal and it might dispose of an appeal by a very short order If a statement of the case is subsequently called for naturally the Tribunal would want to elaborate it decision by pointing out various materials and pieces of evidence to which it had not referred in 695 265 the appellate order But all that can be referred to in the Statement of the case are materials and evidence which were before the Tribunal when it heard the appeal A statement of the case is not intended for the purpose of buttressing up the order of the Appellate Tribunal or further fortifying it by requisitioning to its aid materials and evidence which were not before the Tribunal but which it discovers by investigation after the order was passed in appeal Much more so would be the case where no such material and evidence were at all in existence when the High Court in exercise of its jurisdiction under section 664 of the Act referred the case back to the Tribunal and asked it to make such additions thereto or alterations therein as the Court may direct in order to enable it to determine the question raised thereby Adopting such a procedure would involve in effect raising fresh issues and taking fresh evidence in order that fresh facts may be found which facts certainly were not there at the time when the matter was heard before the Income tax authorities or before the Tribunal in the first instance Two more decisions may be referred to in this context One is a decision of the Bombay High Court in Vadital Ichhachand vs Commissioner of Income tax Bombay North Kutch and Saurashtra Ahmedabad 1 where Tendolkar J dealt with an argument advanced by Counsel that the Court should send the matter back to the Tribunal for determining the quantum of penalty and observed Then Mr Palkhivala says that we should therefore send this matter back to the Tribunal for determining that question We do not find any power in this Court under the provisions of section 66 of the Income tax Act to remand a matter back to the Tribunal for determining what might have been left undetermined by them because they took a particular view of the law We have merely the jurisdiction to answer the question of law referred to us and we are not concerned with any questions which are pure questions of fact or its determination by the Tribunal 34 1 573 266 The other is the decision of this Court in Commissioner of Income tax vs Bhurangya Coal Co 1 where Venkatarama Aiyar J dealt with a similar argument which was addressed before this Court at p 805 The matter then came before the High Court of Patna on a reference under section 661 of the Income tax Act at the instance of the appellant There the contention was raised that the differentiation between movable and immovables on which the judgment of the Tribunal rested had not been made at any time in the prior stages of the proceedings and that was a matter on which further evidence would have to be taken to ascertain the intention of the parties and that therefore the matter should be remanded for further enquiry to the Appellate Tribunal The learned Judges refused to accede to this contention for the reason that no such appli cation was made before the Tribunal and that it was a point which ought not to be allowed to be taken for the first time in the High Court On behalf of the appellant it is stated that the question as to what are immovables and what are movables arises only on the judgment of the Tribunal and that therefore an opportunity ought to be given for an investigation of this aspect of the question We are not impressed by this argument Surely before the Tribmnal there must have been a discussion as to the position with reference to the movables as distinct from the immovables under the transaction and if the appellant considered that in view of that distinction further enquiry was called for it was incumbent upon it to apply to the Tribunal itself to order it and not having done so it had no right to call upon the High Court to remand the matter for that purpose In our opinion the High Court was justified in declining to entertain this point If there is no power in the High Court to remand the case to the Tribunal for fresh findings of facts on further enquiry in the manner stated above much less would the High Court have the power while exercising its jurisdiction under section 664 of the Act to 1 805 267 refer the case back to the Tribunal to make such additions thereto or alterations therein as the Court may direct as would require the Tribunal to embark upon a fresh line of enquiry which had never been canvassed at any time before the Income tax authorities or the Tribunal in the first instance and record fresh findings on evidence adduced by the parties in that behalf Our attention was drawn on behalf of the Revenue to the observations of Fazl Ali J as he then was in the Commissioner of Income tax Bihar Orissa vs Visweshwar Singh where the learned Judge dealt with the procedure adopted by the Commissioner of Income tax in sending up the reference in question The High Court sent the matter back to the Commissioner in order that he may re state the statement of case When the matter went back to the Commis sioner he sent up a restatement of the case but unfortunately without hearing the assessee The High Court sent the re stated case back to the Commissioner once again in order that the case might be re stated with such further finding of fact as the Commissioner may consider necessary after hearing the assessee The matter then went back to another Commissioner who instead of re stating the case as he was ordered by the High Court to do sent up a letter to the High Court stating that he had not heard the party in regard to the opinion of the Commissioner and that in any event he should not consider that he had power within section 664 to vary an opinion given under section 662 if no new facts were admitted The learned Judge pointed out that the Commissioner was in duty bound to carry out the order of the High Court and he should have re heard the parties admitted such further evidence as he considered relevant on the point at issue and re stated the case with his opinion thereon It is not clear however from the record as to whether the re hearing of the parties and the recording of such further finding as was considered relevant on the point at issue embraced a fresh line of enquiry which had not been entertained at any earlier stage of the proceedings or was merely 1 554 268 by way of elucidation of the very same points at issue which had been canvassed earlier but had not been thrashed out completely and properly reflected in the finding of the Tribunal These observations in our opinion do not make any difference to the position that we have adopted herein viz it is not open to the High Court in the exercise of its jurisdiction under section 664 of the Act to raise a new question and to require the Tribunal to entertain a fresh line of enquiry hear the parties in regard to the same and record fresh finding of fact which would enable either the assessee or the Commissioner to advance a case which had never been made by it before the Income tax authorities or the Tribunal and which therefore could not be said to arise out of the order of the Tribunal The decision of the Privy Council in Sir Sunder Singh Majithia vs Commissioner of Income tax C P and U P 1 was also referred to by the Revenue in this context In that case the question of law which was formulated was in the following terms In all the circumstances of the case having regard to the personal law governing the assessee and the requirements of the Transfer of Property Act IV of 1882 and the Stamp Act II of 1899 has the deed of partnership dated February 12 1933 brought into existence a genuine firm entitled to registration under the provisions of section 26 A of the Act The High Court while answering this question did not advert to the relevant aspect of the question and this result was brought about because the Commissioner had taken pains to state some matters very fully but he had not found the material facts as he should have done The various essential facts were not found and stated by the Commissioner and the Privy Council observed that the referred question could not be answered until the High Court had exercised its powers under sub section 4 of section 66 of the Act and left it to the discretion of the High Court to specify the particular additions and alterations which the Commissioner should be directed to make Here also 1 461 269 the nature scope and extent of the jurisdiction of the High Court under section 664 of the Act was not specific ally discussed and the only order which was passed was that the case be remanded to the High Court for disposal after taking such action under sub section 4 of section 66 of the Act as the High Court might think fit in the light of the judgment The same observations which we have made earlier while discussing the case of Commissioner of Incometax vs Visweshwar Singh 1 would apply to this case also and the observations of the Privy Council really do not militate against the position as we have laid down above On the facts of the present case before us it is abundantly clear that the only question which was canvassed before the Income tax authorities and the Tribunal before it made its order dated July 17 1952 was whether the cheques which were received at Bhavnagar having been cashed in British India the monies in respect of the same should be said to have been received in British India and the Tribunal had held following the case of Kirloskar Brothers Case that the cheques were received from the Government at Bhavnagar and the receipt of money in respect of these cheques from Banks in British India related back to the receipt of the cheque at Bhavnagar and therefore was also received in Bhavnagar At no time was the question as regards the posting of the cheques in British India Delhi at the request express or implied of the appellant and the consequent receipt of the sale proceeds in British India ever mooted before the Income tax authorities or the Tribunal before the Tribunal made its order on July 17 1952 or even in the reference applications filed on September 15 1952 nor was the said question mooted before the Tribunal when it heard the reference and drew up the statement of case on November 5 1954 even though this Court had pronounced its decision in Kirloskar Brothers Case 1 and the Commissioner of Income tax Bombay South vs Messrs Ogale Glass Works Ltd 2 on April 19 1954 The facts admitted andor 1 554 2 3 270 found by the Tribunal as stated in the said applications for reference took count of the position as it had been adopted by the Revenue in all these proceedings and it could not by any stretch of imagination be urged that the question now sought to be mooted was ever in the minds of the Revenue The question of law which was referred by the Tribunal to the High Court for its decision was Whether the receipt of the cheques at Bhavnagar amounted to receipts of sale proceeds in Bhavnagar and it was only based on the facts admitted andor found by the Tribunal which had relevance only to that question and not to the question which was sought to be mooted by the High Court in its judgment under appeal If the latter question was allowed to be entertained the question would have to be recast as under Whether the posting of the cheques in British India at the request express or implied of the appellant amounted to receipt of sale proceeds in British India a question quite distinct and separate from the question of law which was actually referred by the Tribunal to the High Court in the statement of the case drawn on November 5 1954 We are therefore of opinion that the High Court was in error in not deciding the reference before it and answering the question on the facts disclosed in the statement of case We are also of opinion that in the circumstances of this case the High Court had no jurisdiction under section 664 to direct the Tribunal to submit a supplementary statement of case on the points mentioned in its judgment The result therefore is that the appeal will be allowed and the matter remanded to the High Court to arrive at its decision on the question of law referred to it in the statement of case already submitted to it by the Tribunal The respondent will pay the appellant s costs throughout Appeal allowed

The appellant company carrying on business in manufacturing and selling textiles at Baroda received in the assessment years 1942 43 and 1943 44 payments in cheques from the Government of India for the supply of such goods on bills submitted as agreed upon in prescribed printed forms which provided that the Government should pay the amount due to the appellant by cheque The appellant however did not request or write to the Government indicating in what way the payment by cheque was 237 to be made The Government sent the cheques from Delhi by post to the appellant at Baroda and it received and accepted them in Baroda in full and unconditional satisfaction of its claim and cashed them through its bank accounts in Bombay and Ahmedabad The question was whether the amounts of the cheques were income profits and gains received by the appellant in the taxable territories and were as such liable to tax under section 41a of the Indian Income tax Act The Income tax Officer held that the amounts were received in British India as the cheques were drawn on banks in British India and the Appellate Assistant Commissioner on appeal affirmed his order The Income tax Appellate Tribunal on appeal held that even though the appellant did not ask the Government to send the cheques by post there was an implied request to do so and following the decision of this Court in Commissioner of Income tax Bombay South vs Messrs Ogale Glass Works Ltd 1955 I SCR 185 held that the amounts of the cheques were received in the taxable territories and as such the appellant was liable to tax under section 41a of the Act Hence these appeals by special leave The question for decision was whether in the facts and circumstances of the case the stipulation that payments should be made by cheques implied a request by the appellant to the Government to send the cheques by post so as to constitute the Post Office its agent for receiving such payments Held that regard being had to the general course of business usage which was followed in this case there could be no doubt that the parties intended that the cheques should be sent by post which was the normal agency for transmission of such articles and consequently there was an implied request by the appellant to the Government to send the cheques by post so as to constitute the Post Office its agent for the purpose of receiving those payments Commissioner of Income tax Bombay South vs Messrs Ogale Glass Works Ltd 1955 I SCR 185 and Norman vs Rickets applied Pennington vs Crossley and Sons Limited 1879 13 TLR 513 considered Thorappa vs Umedmalji and Exparte Cote In ye Deveza distinguished

Civil Appeals Nos 56 to 62 of 1957 Appeals by special leave from the judgment and order dated April 28 1954 of the Labour Appellate Tribunal of India Special Bench Banks Bombayin Appeals Nos 122 129 130 142 144 145 152 153 154 155 162 169 217 218 of 1953 N A Palkhiwala J B Dadachanji and section N Andley for the appellants in C As Nos 56 60 of 1957 M C Setalvad Attorney General for India J B Dadachanji and section N Andley for the appellants in C As 57 58 59 61 of 1957 6 202 M C Setalvad Attorney General for India and Naunit Lal for the appellant Punjab National Bank in C A No 62 of 1957 N V Phadke T section Venkataraman K R Sharma and K R Choudhury for respondent No 1 in C A No 56 of 1957 N C Chatterjee Sadhan Chandra Gupta Janardan Sharma M K Ramamurthi and M R K Pillai for respondents in C As Nos 57 to 61 of 1957 Represented by All India Bank Employees Association B P Maheshwari for respondent No 3 Association of the Punjab National Bank Employees in C A No 62 of 1957 BP Maheshwari for Surat Bank Employees Union B C Ghose and I section Sawhney for All India Central Bank Employees Association May 12 The Judgment of the Court was delivered by section K DAS J These are seven appeals on behalf of different Banks working in this country some incorporated in India and some outside India It is necessary that we should very briefly state the background of the industrial dispute which has given rise to these appeals It is now well known that there was a sharp rise in the prices of commodities during and after World War No 11 This rise in prices very seriously affected salaried employees belonging to the middle class including such employees in the banking industry In or about the year 1946 trade unions of bank em ployees presented demands for higher salaries and allowances and better conditions of service In some cases notices of threatened strike were also served on the employers The unrest became particularly acute in the provinces of Bombay the United Provinces and Bengal as they were then known The local Governments of those provinces referred these industrial disputes for adjudication this resulted in some regional awards which came to be known in Bombay as the Divatia Award in the United I Provinces as the B B Singh 203 Award and in Bengal as the Gupta Chakravarty and Sen Awards Notwithstanding these awards the general unrest amongst Bank employees continued and there was a clamor for control of the banking industry by the Central Government On April 30 1949 was passed the Industrial Disputes Banking and Insurance Companies Ordinance Ordinance VI of 1949 under the provisions of which all banking companies having branches or other establishments in more than one province came under the jurisdiction of the Central Government for the purposes of the XIV of 1947 By a notification dated June 13 1949 the Central Government constituted an ad hoc Tribunal consisting of Shri K C Sen a retired Judge of the Bombay High Court as Chairman with two other persons as members to adjudicate upon an industrial dispute between several banking companies and their workmen On the same day the industrial dispute was referred to the Tribunal by a separate order The dispute covered several items and some more were added from time to time For the sake of convenience we shall hereafter refer to this Tribunal as the Sen Tribunal and its award as the Sen Award After a very exhaustive enquiry the Sen Tribunal made its award which was published on August 12 1950 Some of the leading Banks being dissatisfied with the award applied to Supreme Court and obtained special leave to appeal against the said award as it had been specially exempted from the jurisdiction of the Labour Appellate Tribunal constituted under the Industrial Disputes Appellate Tribunal Act 1950 XLVIII of 1950 This Court ultimately held that the award of the Sen Tribunal was void in to for want of jurisdiction but did not go into the merits of the award With regard to any of the matters dealt with therein The consequence of this decision was that the dispute in the banking industry remained unresolved Soon after there were some strikes consequent on certain action taken by some of the Banks The result was that the Central Government had to take steps afresh to settle this long standing dispute Attempts were at first made through the machinery of 204 conciliation to settle the dispute but these attempts failed On June 26 1951 was enacted the XL of 1951 which had the effect of temporarily freezing some of the gains of labour under the Sen Award In July 1951 the Central Government made a fresh reference to an Industrial Tribunal consisting of Shri H V Divatia a retired Judge as Chairman and two other members but the Chairman and the members resigned within a short time On January 5 1952 two notifications were made By one notification a new Tribunal was constituted to be called the All India Industrial Tribunal Bank Disputes The Chairman of this Tribunal was Shri Panchapagesa Sastry another retired Judge The other two members were Shri M L Tannan and Shri V L D Souza Hereafter we shall refer to this Tribunal as the Sastry Tribunal By another notification of the same date the Central Government referred the matters specified in such II of the notification which were the matters in dispute between the employers and workmen of the banking companies specified in sch 1 to the Tribunal for adjudication We need not set out here the matters specified in sch 11 but shall presently refer to those items only with which we are concerned in these appeals The Sastry Tribunal made its award which was published on April 20 1953 This award came up for consideration of a Special Bench of the Labour Appellate Tribunal on appeals preferred by the employees of banks all over India and of the Banks themselves The decision of the Labour Appellate Tribunal was given on April 28 1954 Some of the Banks moved this Court for special leave to appeal from the decision dated April 28 1954 of the Labour Appellate Tribunal and such leave was granted on October 41954 The same order which granted special leave also directed that the appeals be consolidated These seven appeals on behalf of different Banks against their workmen have been filed in pursuance of the aforesaid leave granted by this Court In Civil Appeal No 56 of 1957 in which the Imperial Bank now substituted as the State Bank of India is 205 the appellant a preliminary objection has been taken on behalf of the respondent workmen of the Bank to the effect that the appeal is incompetent We shall presently consider this preliminary objection but before we do so it will be convenient to indicate the principal questions which arise for consideration in these seven appeals These questions have been formulated under four heads 1 what is the scope of item 5 of schedule II of the notification dated January 5 1952 the item being expressed in the following words Bonus including the qualifications for eligibility and method of payment 2 does section 10 of the Banking Companies Act 1949 prior to its amendment by Act 95 of 1956 prohibit the grant of bonus to Bank employees 3 whether an industrial tribunal is entitled in law to compel Banks to disclose secret reserves and other necessary provisions made by them for the purpose of adjudication 4 whether the Full Bench formula laid down by the Labour Appellate Tribunal in Mill Owners Association Bombay vs Rashtriya Mill Mazdoor Sangh Bombay 1 for the payment of bonus to employees in the textile industry is applicable to Banks Of the aforesaid four questions the first two directly fall for decision in the appeals before us For reasons which we shall presently give we consider that questions 3 and 4 do not call for any decision at the present stage We shall now state how the Sastry Tribunal and the Labour Appellate Tribunal dealt with the first two questions We have stated that item 5 of sch II of the notification dated January 5 1952 referred to the claim of bonus by Bank employees We have also quoted earlier the words in which item 5 was expressed The Banks contended before the Sastry Tribunal that the dispute referred to in item 5 did not contemplate the determination of the quantum of bonus payable by 1 206 any of the Banks for any particular year but the item merely referred to the question of bonus in general with special reference to qualifications for eligibility and method of payment This contention of the Banks was upheld by the Sastry Tribunal which said The primary duty is on the Government to be satisfied subjectively whether a reference should be made or not In the circumstances aforesaid we hesitate to hold that we are concerned with the question of quantum of benefits for particular banks and for particular years in the past in the light of profits of such banks durina those periods We ruled out a request that evidence should be taken for determination of the question It may yet be open to the concerned parties where there is a real grievance to approach the Government to get a suitable reference for the future as well as for the account years 1949 1950 and 1951 What the Sastry Tribunal did was to consider the question whether there could be a bonus scheme for future years and whether it should be made to apply retrospectively to all Banks and for all years and as to the guiding principles for the ascertainment of bonus the Sastry Tribunal suggested certain lines of approach and recommended them for the earnest consideration of both the parties The Labour Appellate Tribunal however came to a different conclusion with regard to the scope of item 5 and held that it embraced the claims to bonus for the relevant years Accordingly it said It follows therefore that the claims to bonus made for the relevent years have not yet been adjudicated upon and that the terms of the reference have not been exhausted The ad hoe Tribunal to which this reference was made is no longer in existence and some other Tribunal will have to decide what bonus if any is payable by the Banks to its employees for the relevant years The correctness of this part of the judgment of the Labour Appellate Tribunal has been seriously contested before us on behalf of the appellants and this is the first question which we have to decide 207 On the second question namely as to the interpretation of section 10 of the Banking Companies Act 1949 prior to its amendment in 1950 there was again a difference between the Sastry Tribunal and the Labour Appellate Tribunal The Chairman of the Sastry Tribunal was of the view that section 10 of the Banking Companies Act 1949 did not stand in the way of a grant of bonus to Bank employees but the other members of the Sastry Tribunal apparently felt that the matter was not free from doubt and the Tribunal as a whole recommended to Government that the alleged legal difficulty by reason of section 10 of the Banking Companies Act 1949 should be removed by suitable legislation Perhaps it was as a result of this recommendation that section 10 of the Banking Companies Act 1949 was amended in 1956 The Labour Appellate Tribunal however by a majority of 2 to I came to the conclusion that section 10 was no bar to a claim for bonus by Bank employees One member of the Appellate Tribunal Shri DE Reuben recorded a note of dissent in which he held that by reason of section 10 of the Banking Companies Act 1949 as it stood at the relevant time the Industrial Courts could not grant bonus to the workmen of a Bank On behalf of the appellants it has been contended that the view of the majority of the Labour Appellate Tribunal with regard to section 10 of the Banking Companies Act 1949 is not correct This is the second question for our decision As we are not deciding the other two questions no useful purpose will be served by setting out the findings of the Tribunals below with regard to them We now proceed to consider the preliminary objection taken on behalf of the respondent workmen in Civil Appeal No 56 of 1957 Some more facts must be stated with reference to this preliminary objection After the decision of the Labour Appellate Tribunal and before it could be implemented several Banks appealed to Government to set aside the decision of the Labour Appellate Tribunal as they felt that the total burden imposed by it was entirely beyond their capacity to bear Therefore the Reserve Bank of India under directions of the Central Government 208 carried out a rapid survey of the possible effect of the decision of the Labour Appellate Tribunal on the working of a few typical banks which were parties to the dispute On a study of the evidence so collected the Central Government concluded that it was inexpedient on public grounds to give effect to parts of the decision Consequently the Labour Appellate Tribunal s decision was modified by them by an order dated August 24 1954 This decision was debated in Parliament and ultimately Government announced their decision to appoint a Commission known as Bank Award Commission to help them assess more fully the effect of the award The Commission submitted its report on July 25 1955 and with regard to the claim for bonus it said In regard to the claim for bonus no general principles can be invoked and the case of each individual bank would have to be considered on its merits Since this dispute has not been resolved so far it is likely that it may have to be dealt with in the near future The claim for bonus is not within the terms of my reference and I do not wish to trespass in the area of this dispute I am however referring incidentally to this aspect of the matter because the fixation of a wage structure is likely to have an effect on employees claim for bonus see paragraph 51 at page 34 of the Commission s report Thereafter the XLI of 1955 was passed to provide for the modification of the decision of the Labour Appellate Tribunal in accordance with the recommendations of the Commission This Act in so far as it is relevant for our purpose said in section 3 thereof that the decision of the Labour Appellate Tribunal shall have effect as if the modifications recommended in Ch XI of the report of the Commission dated July 25 1955 had actually been made therein and the appel late decision as so modified shall be the decision of the Appellate Tribunal within the meaning of the Industrial Disputes Appellate Tribunal Act 1950 and the award shall have effect accordingly It is clear that the Commission did not make any recommendation in 209 respect of the bonus claim and the does not affect the present appeals that Act merely gave effect to the modifications recommended by the Commission but did not give the decision of the Labour Appellate Tribunal any higher sanctity as a statutory enactment Now the preliminary objection taken on behalf of the respondent workmen is that the decision of the Labour Appellate Tribunal merely says that the claims to bonus for the relevant years have not been adjudicated and therefore the terms of the reference have not been fully worked out it is contended that this means that some other Tribunal ill have to decide what bonus if any is payable by the Banks to their employees and no sucr Tribunal having been so long appointed there is at the present stage no enforceable award within the meaning of the and the appeal accordingly is premature and incompetent We are unable to accept this contention as correct On behalf of the appellant Banks it has been submitted that the Labour Appellate Tribunal misconceived the scope of item 5 of sch 11 of the relevant notification and on that misconception it came to the conclusion that the terms of reference had not been exhausted a conclusion the correctness of which the appellants are entitled to challenge by way of appeal or else they will be bound by the decision that the reference is still pending and can be worked out by another Tribunal This submission we think is correct In the an award means an interim or final determination by an Industrial Tribunal of any industrial dispute or of any question relating thereto The dispute between the parties in the present case related to bonus on behalf of the banks it was contended a that item 5 of sch 11 did not include claims of bonus for particular years in respect of particular banks but related to a general scheme of bonus including qualifications for eligibility and method of payment and b that even a general scheme cf bonus could not be made by reason of the provisions of section 10 of the Banking 27 210 Companies Act 1949 on behalf of the Bank employees it was contended that a item 5 included claims for bonus for particular years in respect of particular banks and b section 10 of the Banking Companies Act 1949 did not stand in the way of such claims These rival contentions led to an industrial dispute which the Labour Appellate Tribunal determined by its decision dated April 28 1954 We do not see why that decision is not an award within the meaning of the In our opinion in no sense can the appeals be said to be premature or incompetent It is worthy of note that these appeals have been filed in pursuance of special leave granted by this Court tinder article 136 of the Constitution That Article enables this Court to grant in its discretion special leave to appeal from any judgment decree determination sentence or order in any cause or matter passed or made by any court or tribunal in the territory of India The powers of this Court under the said Article are wide and are subject to such considerations only as this Court has laid down for itself for the exercise of its discretion The argument before us is not that these appeals do not come within those considerations and special leave should not have been granted but the argument is that they are incompetent for other reasons Even those reasons we think are not sound Learned counsel for the respondent workmen has cited before us some decisions one Australian In re the Judiciary Acts etc 1 and another American David Muskrat vs United States 2 in support of his contention We consider however that the point is so clear and beyond doubt that it is unnecessary to embark on an examination of decisions which relate to entirely different facts There is in our opinion no substance in the preliminary objection which must be overruled Now we proceed to consider the true scope of item 5 of sch 11 of the notification dated January 5 1952 Schedule 11 of the notification dated June 13 1949 by which a reference was made to the Sen Tribunal contained an identical item which was item 6 That 1 2 211 item was expressed exactly in the samewords as item 5 of sch 11 of the notification underour consideration The Sen Tribunal dealt with thescope of that item and said that a large number ofdemands had been made by the unions for bonus for particular years in respect of particular banks The Sen Tribunal then said We have been unable to deal with such individual demands except such matters as were pending in the different States at the time of our appointment and have been specifically referred to us under the provisions of section 5 of Ordinance VI of 1949 or Act LIV of 1949 Apart from the great deal of time that we should have to spend on such questions had we to hear and dispose of every application for a particular year in respect of a particular bank we believe that the kind of disputes regarding bonus that have been referred to us are disputes of a general nature eg questions regarding qualifications for eligibility and method of payment Thus it is clear that the Sen Tribunal also understood the item as a reference of a dispute of a general nature which did not include demands for bonus for particular years in respect of particular banks The Central Government which made the reference to the Sastry Tribunal by the notification dated January 5 1952 had before it the interpretation which the Sen Tribunal had made in respect of the self same item Having that interpretation before it the Central Government used identical language to express the dispute which it referred to the Sastry Tribunal in item 5 of sch This in our opinion clearly shows that item 5 of sch 11 of the notification relating to the Sastry Tribunal has the same meaning as item 6 of sch 11 of the notification relating to the Sen Tribunal as interpreted by that Tribunal The various items in sch 11 of the relevant notification are not items in legislative lists but are items in an administrative order and it would not be right to apply the same canon of interpretation to the items in an administrative order as is applied to items in a legislative list It is worthy of note that some of the items in 212 the Sen reference were modified when the subsequent reference was made to Sastry Tribunal Item 38 of the Sen reference read as follows In what manner and to what extent do the decisions of the Tribunal require modification in the case of employees of banks in liquidation or moratorium This item was dealt with by the Sen Tribunal at pp 157 to 160 of its award and it pointed out certain defects in the wording of the item When a similar item was referred to the Sastry Tribunal necessary changes were made in the wording of the item to remove the defects pointed out by the Sen Tribunal see item 11 of sch 11 of the notification relating to the Sastry Tribunal Another example of a similar character is item 5 of sch 11 of the Sen reference an item which related to other allowances payable to bank employees including conveyance allowance for clerks for journeys to and from the clearing house A point taken before the Sen Tribunal was that by conveyance allowance was meant an allowance for journeys to and from the place of work The Sen Tribunal confined conveyance allowance to expenditure incurred for going out on the Bank s work while the Bank employee was on duty The scope of the reference was made clearer by changing the phraseology of the item when the subsequent reference to the Sastry Tribunal was made see in this connection the phraseology of item 28 of sch 11 of the notification relating to the Sastry Tribunal It would thus appear that we have two kinds of examples 1 in some cases the phraseology of the items is changed when the subsequent reference is made taking into consideration the criticisms made by the Seti Tribunal and 2 there are other cases where no change in phraseology is made even though the Sen Tribunal has understood a particular item in a particular sense Judged in the light of these examples it seen is to us that the true scope of item 5 of ch 11 is what the Sastry Tribunal understood it to be namely whether bonus was payable to Bank employees and if so what were the qualifications for eligibility and method of 213 payment The reference in item 5 of schedule 11 did not include within itself claims of bonus for particular years in respect of particular banks The Sastry Tribunal further pointed out that there were specific references with regard to the claims for bonus in respect of some Banks Those reference did not however come within item 5 of sch If they did it was completely unnecessary to make separate and specific references with regard to such claims Item 5 was not the only item which raised a general question There were many other items of a similar nature such as items 3 6 9 etc The Labour Appellate Tribunul itself realised the difficulty of deciding under item 5 of sch 11 the particular claims for bonus for particular years The Sastry Tribunal pointed out that there were 129 banks before it and no evidence was given to substantiate the claims for bonus for particular years in respect of particular banks The Sastry Tribunal said We cannot assume that for all these 129 banks before us and for all these years there were live disputes about this matter which the Government had considered fit and proper to be referred to us after applying their minds to the problem whether such a reference should be made to an industrial tribunal There is also this additional circumstance that there had been two special and specific references by the Govern cut in relation to the payment of bonus by the central bank of India the Allahabad Bank and the Unitted commercial Bank for the years 1951 and 1951 Moreover even apart from the general character of the various heads of of disputes in the reference to us individual cases pertaining only to Some banks Wherever the Government wanted to make such a reference have been particularised and set out eg absorption of Bharat Bank employees itein 31 in schedule It of the notification It may be mentioned that the claim before us in connection with the bonus payable Iv the Imperial Bank of India for the years 1948 lb49 1950 and 1951 would involve a payment of very nearly a crore of rupees over and above the 214 payments already made for these years It is not possible for us to affirm what the attitude of the Government would have been on the question of referring a dispute of this character to us under section 10 of the Faced with the difficulty referred to by the Sastry Tribunal the Labour Appellate Tribunal also said that it could not deal with individual claims for bonus in the present proceedings The Labour Appellate Tribunal said that it would be acting in vacuo if it attempted to decide individual claims for bonus without having before it specific cases of bonus particularly when there were no materials on the record on which the Tribunal could make a decision as to the quantum of bonus payable by a particular bank for a particular year This difficulty instead of leading the Labour Appellate Tribunal to give a proper interpretation to the true scope of item 5 of sch 11 led it to the conclusion that item 5 of sch 11 embraced within itself individual claims for bonus for particular years and those claims must be dealt with by another tribunal on the footing that the reference had not been completely worked out We consider this to be a complete non sequitur Item 5 of sch IL must be interpreted as an item in an order of reference in the context in which the item has been used the words in which it has been expressed and against the background in which the dispute has arisen The practical difficulty which may arise in deciding individual claims for bonus in respect of particular banks is merely a circumstance to be taken into consideration It cannot be decisive on the question of determinination the true scope and effect of item 5 of sch On a consideration of all relevant circumstances and having regard to the context and the words in which item 5 of sch 11 has been expressed we are of the view that the Labour Appellate Tribunal was wrong in its conclusion that the reference had not been worked out and that individual claims for bonus in respect of particular banks must be determined by another tribunal on the basis of the reference made in 1952 215 We now proceed to a consideration of the more important question as to the effect of section 10 of the Banking Companies Act 1949 We have stated earlier that section 10 of the Banking Companies Act 1949 hereinafter called the Banking Act was amended in 1956 We shall first read the unamended section the provisions whereof were in force at the time relevant to these appeals We shall later read also the amended section in connection with an arguement presented on behalf of the Bank employees that the XCV of 1956 was not remedial in nature but was declaratory of the law as it always was Section 10 of the Banking Act prior to its amendment in 1956 was in these terms section 10 1 No banking Companya shall employ or be managed by a managing agent or b shall employ any person iwho is or at any time has been adjudicated insolvent or has suspended payment or has compounded with his creditors or who is or has been convicted by a criminal court of an offence involving moral turpitude or iiwhose remuneration or part of whose remuneration takes the form of commission or of a share in the profits of the company or iiiwhose remuneration is according to the normal standards prevailing in banking business on a scale disproportionate to the resources of the Company or c shall be managed by any person 1who is a director of any other company not being a subsidiary company of the banking company or iiwho is engaged in any other business or vocation or iiiwho has a contract with the company for its management for a period exceeding five years at any one time 216 Provided that the said period of five years shall in relation to contracts subsisting on the 1st day of July 1944 be computed from that date Provided further that any contract with the company for its management may be renewed or extended for a further period not exceeding five years at a time if and so often as the directors so decide 2If any question arises in any particular case whether the remuneration is according to the normal standards prevailing in banking business on a sctle disproportionate to the resources of the company for the purpose of sub clause iii of clause b of subsection 1 the decision of the Reserve Bank thereon shall be final for all purposes Before we proceed to a consideration of the construction of the section a little history may not be out of place The Companies Amendment Act 1936 introduced a new Ptrt XA in the Indian Companies Act 1913 VIl of 1913 Part XA contained certain special provisions applicable to banking companies only The section with which we are concerned was section 277HH and that section was introduced by an amending Act of 1944 It was the precursor of section 10 of the Banking Act and it may perhaps be advisable to read section 277HH in so far as it is relevant for our purpose 277HH No banking company shall after the expiry of two years from the commencement of the Indian Companies Amendment Act 1944 employ or be managed by a managing agent or any person whose remuneration or part of whose remuneration takes the form of commission or a share in the profits of the company or any person having a contract with the company for its management for a period exceeding five years at any one time Provided that the period of five years shall for the purposes of this section be computed from the date on which this section comes into force 217 Provided further that any such contract may be be renewed or extended for a further period not exceeding five years at a time if and so often as the directors think fit Obviously the most undesirable feature in the structure and management of banking companies which the section tried to remedy was the appointment of managing directors or managers on long term contracts on payment of remuneration by commission or a share in the profits However the section was not confined to a managing agent or manager only though by a reference to the statement of objects and reasons in relation to the amendment of 1944 it was suggested on behalf of the respondents that the section was so confined The statement of objects and reasons is not admissible however for construing the section far less can it control the actual words used The section in express terms said that no banking company shall employ any person whose remuneration or part of whose remuneration takes the form of a share in the profits of the company Then in 1949 came the Banking Act As its long title and preamble indicate it is an Act to consolidate and amend the law relating to banking companies It repealed the whole of Part XA of the Indian Companies Act 1913 including section 277HH referred to above but section 2 said section 2 The provisions of this Act shall be in addition to and riot save as hereinafter expressly provided in derogation of the Indian Companies Act 1913 and any other law for the time being in force The Indian Companies Act 1913 itself stood repealed by the Indian I of 1956 We now come back to section 10 the proper interpretation of which is the immediate problem before us Shorn of all such details as are unnecessary for our purpose the section says that no banking company shall employ any person whose remuneration or part of whose remuneration takes the form of a share in the profits of the company The section opens with a negative 218 and says that no banking company shall employ any person the expression any person is followed by the adjectival clause descriptive of the person who shall not be employed The adjectival clause says that the person who shall not be employed is one whose remuneration or part of whose remuneration takes the form of a share in the profits of the company Two questions at once confront us 1 is I bonus remuneration and 2 is it a share in the profits of the company The argument on behalf of the appellant Banks is that I bonus as awarded by Industrial Courts is remuneration within the meaning of section 10 and it is also a share in profits therefore the express provisions of section 10 read with section 2 of the Banking Act override the provisions of the so far as banking companies are concerned and prohibit the award of bonus to employees of Banks On behalf of the Bank employees the argument is that bonus as awarded by Industrial Courts is not remuneration within the meaning of section 10 of the Banking Act nor is it a share in profits in its true nature The argument on both sides hinges on the two key expressions I remuneration and share in profits The meaning of these expressions we shall consider in some detail But it is convenient at this stage to get rid of some minor points Section 10 in its operative part says that no banking company shall employ any person etc The amendment of 1956 says that I no banking company shall employ or continue the employment of any person The question has been mooted before us if the expression shall employ means and includes prior to the amendment of 1956 shall continue the employment of We think it does otherwise the very purpose of the section is defeated Take for example the case of an insolvent The section says that no banking com pany shall employ any person who is or at any time has been adjudicated insolvent Suppose that at the time the bank employs a person he has not incurred any of the disqualifications mentioned in section 10 but subsequently there is an order of adjudication against him and he is adjudicated an insolvent The section 219 obviously means that such a person can no longer be employed by the bank If subsequent disqualification is not within the mischief of the section then the very purpose of the section which must be the safety and well being of the bank will be rendered nugatory We must therefore hold that the expression shall employ a person in section 10 means and includes shall have in employment and in this respect the amendment of 1956 merely makes clear what was already meant by the section We may also dispose of here an argument based on section 2 When an industrial dispute as to bonus between an employer and his workmen is referred to a tribunal for adjudication the tribunal has the power to resolve the dispute by an award Such an award may grant bonus to workmen if certain conditions are fulfilled The argument before us is that the provisions of the Banking Act are not to be interpreted in derogation of the provisions of the but in addition thereto This argument however ignores an essential qualification embodied in section 2 namely the qualification in the clause save as hereinafter ex pressly provided If section 10 expressly provides that no banking company shall employ a person whose remuneration or part of whose remuneration takes the form of a share in profits and I bonus is both remuneration and a share in profits then section 2 can be of no assistance to the respondents The express provisions of section 10 must then override any other law for the time being in force so far as banking companies are concerned This brings us back to the two key expressions remuneration and share in profits We take the expression remuneration first The dictionary meaning of the word is reward recompense pay for service rendered see the Concise Oxford Dictionary and that is the ordinary meaning of the word The word was judicially noticed in a very early decision R vs Postmaster General 1 and on appeal 2 Blackburn J said I think the word remuneration means a quid pro quo If a man gives his services whatever consideration lie gets for giving his services seems to 1 2 220 me a remuneration for them Consequently I think if a person was in receipt of a payment or in receipt of a percentage or any kind of payment which would not be an actual money payment the amount he would receive annually in respect of this would be remuneration The word was again noticed in several English decisions in connection with section 13 of the Workmen s Compensation Act 1906 which enacted that a workman did not include a person employed otherwise than by way of manual labour whose remuneration exceeded pound 50 and in Skiles vs Blue Anchon Line Ltd it was observed that remuneration was not the same thing as salary or cash payment by the employer but involved the same considerations as earnings This was a case in which the purser of a ship received in addition to his regular wages at the end of each voyage at a fixed rate per month a bonus or extra wages he also made a profit by the sale on board ship of whisky in nips The majority of Judges held that both the bonus and the profit on the whisky ought to be taken into account in estimating the purser s remuneration In an earlier decision Penn vs Spiers and Pond Limited 2 the gratuities and tips which the deceased workmen employed as a waiter on a restaurant car received from passengers using the restaurant car were held to be I earnings in the employment of the same employer The decision in Penn vs Spiers and Pond Limited supra 2 was approved by the House of Lords in Great Western Railway vs Helps a In his speech Lord Dunedin repelled the argument addressed for the appellants of that case that the meaning of the expression earnings should be limited to what the workman gets from direct contract from his employer by saying that the simple answer to the argument was that the statute did not say so it used the general term I earnings in our case the general term remuneration instead of the term wages or the expression what he gets from his employer It is we think unnecessary to multiply decisions In a recent Australian decision Conally vs Victorian Railways 1 1911 1 KB 36o 2 31918 AC 141 221 Commissioners 1 the matter has been tersely put as follows It the word remuneration should be given its natural meaning unless there is reason to do otherwise This is a salutary rule of construction and should we think be adopted in the present case Is there anything in the Banking Act to give the word remuneration a restricted meaning Three meanings have been canvassed before us The widest meaning for which the learned Attorney General appearing for some of the banks has contended is the natural meaning of the word remuneration in the sense of any recompense for services rendered whether the payment is voluntary or under a legal obligation The second meaning which is intermediate between the widest and the narrowest is that it means what is payable under any legal obligation whether under a contract statute or an award The narrowest meaning for which Shri NC Chatterjee learned counsel for the respondent workmen has canvassed is that remuneration in section 10 of the Banking Act means contractual wages viz what is payable under the terms of the contract of employment only He has put his argument in the following way section 10 when it says that I no banking company shall employ a person etc refers to the contractual relationship of employer and employee created by an act of parties and its purpose is to put a ban on one kind of employment of a person who is to be paid a particular remuneration under the terms of his employment It is stated that the prohibition is against any remuneration in the nature of profit sharing being fixed under a contract of service between the bank and its employees and it is contended that the legislature made the prohibition dependent on the terms of employment It is submitted that the adjudication of an industrial tribunal in awarding bonus does not create any obligation by act of parties and even if it imports some kind of implied term it is de hors the contract of employment and is the result of a judicial verdict under the industrial law The argument is attractive but does not in our opinion stand the test of close scrutiny Lot us look a 1 also 1957 Australian Law Reports 1097 222 little more closely to section 10 of the Banking Act It says inter alia that no banking company shall employ or be managed by a managing agent or shall employ a person who is or has been convicted by a criminal court of an offence involving moral turpitude etc see el b1 It is obvious that when the section says shall employ it means shall have in the employment of It is not suggested that the disqualifications mentioned in cl b 1 refer only to the contract of employment If that were so the section would hardly serve the purpose for which it must have been meant We may take another example which brings out the meaning of the section even more clearly Let us suppose that the Bank employs a manager on a contract of service which makes no mention of bonus or commission On the argument of learned counsel for the respondents section 10 does not stand in the way of the bank to pay voluntarily and ex gratia any amount to the manager by way of commission or bonus as long as the contract of service does not contain any term as to such payment This in our opinion makes nonsense of the section Learned counsel for the respondents had himself suggested in the course of his arguments that having regard to the legislative history of the enactment the section was intended to prevent banks from having managers by whatever name they might be called who were paid by commission or a share in the profits and yet the Bank can make such payment if it adopts the subterfuge of not saying anything about such payment in the contract of service There are in our view clear indications in the section itself that the word remuneration has been used in the widest sense Firstly cl b iii also uses the word remuneration It says whose remuneration is according to normal standards prevailing in banking business on a scale disproportionate to the resources of the company Sub section 2 unamended states inter alia that if any question arises in any particular case whether the remuneration is according to the normal standards prevailing in banking business on a scale disproportionate to the resources of the company etc the decision of the Reserve Bank 223 shall be final It is clear that in cl b iii of sub section 1 and also in sub section 2 the wordremuneration has been used in the widest sense We may invite attention in this connection to r 5 of the Banking Companies Rules 1949 which are statutory rules which requires a banking company to send periodically to the principal office of the Reserve Bank a statement in Form I showing the remuneration paid during the previous calendar year to officers of the company etc Form I has a footnote which says Remuneration includes salary house allowance dearness allowance bonus fees and allowances to directors etc We do not say that a statutory rule can enlarge the meaning of section 10 if a rule goes beyond what the section contemplates the rule must yield to the statute We have however pointed out earlier that section 10 itself uses the word remuneration in the widest sense and r 5 and Form I are to that extent in consonance with the section Shri Phadke appearing for some of the respondents has urged a somewhat different contention He has argued that assuming that the word remuneration has been used in the widest sense in section 10 and therefore includes bonus r 5 and Form 1 show that payment of bonus is permissible this is intelligible only on the footing that the provisions of section 10 are restricted in their application to such employees of a banking company as are employed in a managerial or admini strative capacity they do not apply to workmen as defined in the We find it difficult to accept this argument The section says that no banking company shall employ any person and we do not see how the expression any person can be restricted to those on the managerial or administrative staff only We cannot arbitrarily cut down the amplitude of an expression used by the legislature It is necessary to refer here to the decision in Wrottesley vs Regent Street Florida Restaurant 1 on which learned counsel for the respondent workmen has placed great reliance It is necessary to refer to the 1 224 facts of the case which are stated in the headnote The waiters employed at an unlicensed restaurant by an oral agreement amongst themselves and between them and their employers paid into a pool all the tips received by them during the course of their employment The tips were placed in a locked box and the contents were distributed weekly in shares calculated in accordance with the agreement The total weekly sum received by each waiter including the share of the tips exceeded but the weekly wage paid by the employers was itself less than the minimum wage prescribed by the Wages Regulations Unlicensed Place of Refreshment Order 1949 The proprietors of the restaurant were prosecuted for failing to pay the minimum wage It was held that the sums paid from the pool were riot remuneration and the earlier decisions relating to the calculation of the earnings of a waiter in connection with the Workmen s Compensation Acts were distinguished Lord Goddard CJ thus explained the distinction The amount of a man s earnings in an employment and the amount of remuneration which his employer pays to him are not necessarily the same thing The section creating the offence and under which the proceedings are taken is section 9 sub section 2 of the Catering Wages Act 1943 That section provides that if an employer fails to pay to a worker to whom a wages regulation order applies remuneration not less than the statutory minimum remuneration clear of all deductions he shall be guilty of an offence Section 10 contains somewhat elaborate provisions for the computation of remuneration Not only the short title but the structure of the Act setting up a wages commission permitting the establishment of wages boards and providing for wage regulation orders clearly indicates that it is with wages that the Act is intended to deal The use of the word remuneration in both section 9 and section 10 and indeed in other sections is probably because there are certain deductions from wages which are authorized by section 10 so that remuneration is an apt word to indicate the net payment 225 What we have to decide is whether when a waiter receives a payment from the tronc in the manner found in the case that sum can be regarded as remuneration paid to him by or as remuneration obtained by him in cash from his employer In our opinion when a customer gives a tip to a waiter the money becomes the property of the latter We think that the decision itself shows that the word remuneration must be given its meaning with reference to the context in which the word occurs in the statute In the context of the Catering Wages Act 1943 it meant the net payment after certain deductions from wages paid by the employer and in the Workmen s Compensation Acts it meant the amount of a man s earnings in an employment We have pointed out that in the Banking Act with which we are con cerned the word I remuneration has been used in the widest sense In that sense it undoubtedly includes bonus We proceed now to a consideration of the second key expression for our purpose viz takes the form of a share in the profits of the company The conception of industrial bonus that is profit bonus claimed by employees and granted amicably through conciliation or as a result of an industrial award has had a chequered development In some of the earlier Bombay decisions of Industrial Adjudicators it was held that the grant of bonus was entirely a matter of grace and not of right some decisions characterized bonus as a gift a sort of bakshis or pourboire see D G Damle s Labour Adjudications in India p 408 By 1948 however the conception had crystallised and it was judicially recognised that the claim of profit bonus could not any longer be regarded as an ex gratia payment In Millowner s Association Bombay vs Rashtriya Mill Mazdoor Sangh Bombay 1 the Full Bench of the Labour Appellate Tribunal evolved the formula for determining the quantum of bonus and the general principles governing the claim of bonus were also laid down These are 1 as both capital 1 29 226 and labour contribute to the earnings of the industrial concern it is fair that labour should derive some benefit if there is a surplus after meeting prior or necessary charges 2 the claim of bonus would only arise if there should be a residue after making provision for a prior charges and b a fair return on paid up capital and on reserves employed as working capital and 3 bonus is a temporary satisfaction wholly or in part of the needs of the employee where the capacity of the industry varies or is expected to vary from year to year so that the industry cannot afford to pay living wages The Labour Appellate Tribunal recognised that where the goal of living wages had been attained bonus like profit sharing in the technical narrow sense would represent more the cash incentive to greater efficiency and production The conception of the living wage itself is a growing conception and the goal has been reached in very few industries if any in this country The general principles laid down by the aforesaid Full Bench decision of the Labour Appellate Tribunal were generally approved by this Court in Muir Mills Co Ltd vs Suti Mills Mazdoor Union Kanpur 1 and have been fully considered again and approved in Civil Appeals Nos 459 and 460 of 1957 Associated Cements in which judgment was delivered on May 5 1959 We have to consider the expression I takes the form of a share in the profits of the company in the context of the meaning of the word bonus as explained above It is necessary to state that we are not considering here the question of production bonus or Puja bonus which may not necessarily come out of profits and these stand on a different footing There can be now no doubt however that profit bonus in the industrial sense in which we now understand it is a share in the profits of the company it is labour s share of the contribution which it has made in the earning of the profits The two grounds on which it has been contended that bonus is not a share in the profits are 1 that it is not a fixed or certain percentage of the available surplus of profits and 2 it partakes of the 1 227 nature of a contingent supplementary wage These two grounds weighed considerably with the majority of members of the Labour Appellate Tribunal who expressed the view that section 10 of the Banking Act did not stand in the way of granting bonus to bank employees because bonus according to them was not a share in the profits of the company We do not think that either of these two grounds is valid The first ground arises out of a confusion between the expression takes the form of a share in profits and the expression profit sharing used in a narrow technical sense It is undoubtedly true that the bonus formula does not lay down any fixed percentage which should go to labour out of the available surplus The share of labour will depend on a number of circumstances but once the amount which should go to labour has been determined it is easy enough to calculate what proportion it bears to the whole amount of available surplus of profits There is thus no difficulty in identifying bonus as a share in the profits of the company It is true that the International Congress on Profit sharing held in Paris in 1889 adopted the definition of profit sharing in the technical narrow sense That definition said that profit sharing was an agreement formal or informal freely entered into by which the employees receive a share fixed in advance of the profits see Encyclopaedia of the Social Sciences Seligman and Johnson Vol XII p487 But that is not the sense in which bonus has been understood in our industrial law and it is worthy of note that section 10 of the Banking Act does not use the technical expression profit sharing but the more general expression I takes the form of a share in the profits etc We are unable to hold that this general expression has a technical meaning in the sense that the share in profits must be fixed in advance as in technical profit sharing such a meaning would without sufficient reason exclude from its purview schemes under which the workers are granted regularly a share in the net profits of industry but in which the share to be distributed among the workers is not fixed in advance but is decided from time to time on ad hoc 228 basis by an independent authority such as an industrial court or tribunal The second ground also appears to us to be equally untenable Bonus in the industrial sense as understood in our country does come out of the available surplus of profits and when paid it fills the gap wholly or in part between the living wage and the actual wage It is an addition to the wage in that sense whether it be called Contingent and supplementary None the less it is labour s share in the profits and as it is a remuneration which takes the form of a share in profits it come s within the mischief of section 10 of the Banking Act It may be asked why should the legislature seek to deprive bank employees who are not on the managerial or administrative staff of their industrial claim to bonus when they contribute to the prosperity of the banks This really is a question of policy on which we are not permitted to speculate On the one side there is the necessity for safeguarding the integrity and stability of the banking industry and on the other side there is the claim of employees for a share in the profits Which claim has a greater urgency at a particular time is really a matter for the legislature to say We may refer here by way of contrast to section 31A of the That section is in terms similar to section 10 of the Banking Act but has some marked differences Firstly it specifically mentions bonus along with a share in profits in cls b and c of sub section 1 secondly it has a proviso which says inter alia that nothing in subS 1 shall prohibit the payment of bonus in any year on a uniform basis to all salaried employees I etc or such bonus which in the opinion of the Central Government is reasonable having regard to the circumstances of the case This merely shows that it is for the legislature to decide how to adjust the claim of employees with the safety and security of the business in which the employees are in employment The learned Attorney General has relied on a number of decisions in support of his contention that bonus comes within the expression takes the form of a share in profits In re Young Ex Parte Jones 1 it was held 1 18962QB484 229 that a contract that a person shall receive a fixed sum out of the profits of a business was equivalent to a contract that he shall receive a share of the profits within the meaning of sub section 3d of section 2 of the Partnership Act 1890 A similar question arose in Admiral Fishing Company vs Robinson 1 in connection with section 7 sub section 2 of the Workmen s Compensation Act 1906 which said This Act shall not apply to such members of the crew as are remunerated by shares in the profits or gross earnings of the working of such vessel The claimant who was the engineer of a fishing smack was entitled to one share of the net profits of the working of the vessel on the particular voyage The question was was he remunerated by shares in the profits The answer given was that he clearly was so remunerated In Costello vs Owners of Ship Pigeon 2 the claimant was employed as a boatswain on a steam fishing trawler and was remunerated by wages maintenance and poundage dependent on the profits of the fishing expedition The House of Lords decided by a majority that the claimant was remunerated by a share in profits within the meaning of section 7 sub section 2 of the Workmen s Compensation Act 1906 Shri N C Chatterjee has invited our attention to Newstead vs Owners of Steam Trawler Labrador 3 That was a case of a claim for compensation by the widow of a member of the crew of a fishing vessel which was lost with all hands The claim was resisted by the owners on the ground that the deceased was remunerated by a share in the profits or gross earnings of the vessel within section 7 sub section 2 of the Workmen s Compensation Act 1906 and therefore that the Act did not apply to him He was employed as chief engineer on board a steam trawler at a fixed weekly wage of pound 2 It was the custom of the owners when the gross earnings of the boat exceeded pound 100 for any one trip each trip being usually of about a week s duration to allow a sum of pound 2 by way of bonus of which pound I went to the captain and 2s to each of the remaining eight members of the crew If the gross earnings of the 1 2 3 230 boat exceeded pound 125 the bonus was proportionately increased and so on but it was not further increased if the gross earnings realised more than pound 175 The decision proceeded on the footing that the bonus in that case was not a share in profits but an additional sum for wages determined by the amount of the gross earnings Lord Cozens Hardy M R expounded the ratio of the decision in the following words The question is whether having regard to the circumstances that can be said in the present case It seems that by the custom of this firm and by the understanding and arrangement between the parties if the vessel made pound 100 the skipper was entitled to pound 1 and in that particular case each member of the crew was entitled to half a crown If the vessel made more the skipper and crew were entitled to larger sums Now what was the effect of that The bonus was not as it seems to me any part of the profits nor was it a share in the gross earnings of the vessel There was an obligation on the part of the owners of the trawler to pay the half a crown to take that as one instance in a certain event which event was to be determined by the gross earnings of the vessel I see no ground for holding that it was in any sense of the word a share of the gross earnings of the working of the vessel any more than the actual wages which were payable to the seamen could be treated as being a share of the gross earnings of the vessel although the bonus as well as the wages would figure in the ship s accounts as against the receipts on the other side It seems clear to us that the ratio of the decision does not apply here The bonus we are dealing with here is not additional wage determined by the amount of profits it is really part of the availiable surplus of profits distributed to labour for its contribution to the earnings It does not arise out of any contract to pay though the claim is recognised as one based on social justice Shri Phadke has relied on the decision In re The Spanish Prospecting Company Limited That 1 231 decision proceeded on the meaning of the word profits of which a classic definition was given by Fletcher MOUITON L J In view of the decisions of this Court referred to earlier it is now beyond dispute that bonus in the industrial Sense comes out of profits If it does we do not see how it can be held that it is not a share in profits Shri Phadke suggested that the concept of a share in profits pre supposes the idea of either a definite amount or a definite proportion determined in advance This submission we have dealt with at an earlier stage and no useful purpose will be served by repeating what we have said already We must now notice two other arguments advanced on behalf of the respondent workmen These arguments are based on the amendments made in 1956 Section 10 as amended by the XCV of 1956 reads in so far as it is relevent for our purpose section 10 No Banking Company ashall employ or be managed by a managing agent or b shall employ or continue the employment of any person i who is or at any time has been adjudicated insolvent or has suspended payment or has compounded with his creditors or who is or has been convicted by a criminal Court of an offence Involving iiwhose remuneration or part of whose remuneration takes the form of commission or of a share in the profits of the company Provided that nothing contained in this clause shall apply to the payment of any bonus by any banking company in pursuance of a settlement or award arrived at or made under any law relating to industrial disputes or in accordance with any scheme framed by such banking company or in accordance with the usual practice prevailing in banking business or iiiwhose remuneration is in the opinion of the Reserve Bank excessive or c 232 Explanation For the purpose of sub clause iii of clause b the expression remuneration in relation to a person employed or continued in employment shall include salary fees and perquisites but shall not include any allowances or other amounts paid to him for the purpose of reimbursing him in respect of the expenses actually incurred by him in the performance of his duties 2 3If any question arises in any particular case wither the remuneration is excessive within the meaning of sub clause iii of clause b of subsection 1 the decision of the Reserve Bank thereon shall be final for all purposes It will be noticed that the amended section has a proviso which makes it clear that nothing in the relevent clause in subs section 1 shall apply to the payment of any bonus by any banking company in pursuance of a settlement or award arrived at or made under any law relating to industrial disputes or in accordance with any scheme framed by such banking company or in accordance with the usual practice prevailing in banking business It is clear that the amended section does not stand in the way of the grant of industrial bonus It was however not in force at the time relevent in these appeals and there is nothing in the which would make it retrospective in operation Shri N C Chatterjee has however contended that the amending Act is declaratory of the law as it always was and Shri Phadke has contended that the amending Act is parliamentary exposition of the true meaning of section 10 of the Banking Act We are unable to accept any of these two contentions The amending Act states in its long title that it is an Act to amend the Banking Companies Act 1949 Section 2 states For section 10 of the Banking Companies Act 1949 the following section shall be substituted There is nothing in the amending Act to indicate that it was enacted to remove any doubt explain any former statute or correct any omission or error What is a declaratory Act The 233 following observations in Craies on Statute Law Fifth edition pp 56 57 are apposite For modern purposes a declaratory Act may be defined as an Act to remove doubts existing as to the common law or the meaning or effect of any statute Such Acts are usually held to be retrospective The usual reason for passing a declaratory Act is to set aside what Parliament deems to have been a judicial error whether in the statement of the common law or in the interpretation of statutes Usually if not invariably such an Act contains a preamble and also the word declared as well as the word enacted A remedial Act on the contrary is not necessarily retrospective it may be either enlarging or restraining and it takes effect prospectively unless it has retrospective affect by express terms or necessary intendment We are of the view that the amending Act of 1956 is not a declaratory Act and except in the small matter of the expression shall continue to employ in sub section 1 it does not purport to explain any former law or declare what the law has always been It is an ordinary remedial piece of legislation which came into effect from January 14 1957 For the period relating to the appeals before us the amended section was not in force This brings us to ail end of the two questions 1 and 2 which directly fall for decision in these seven appeals Contrary to the findings of the Labour Appellate Tribunal we have come to the conclusion that 1 the scope of item 5 of sch II of the relevant notification is not what the Labour Appellate Tribunal thought it to be and the reference of 1952 is not pending for determining the quantum of bonus for the relevant years in respect of particular banks and 2 in any event section 10 of the Banking Act prior to the amendment of 1956 prohibited the grant of industrial bonus to bank employees inasmuch as such bonus is remuneration which takes the form of a share in the profits of the banking company We do not think that the other two questions 3 and 4 require any decision at this stage It is to be remembered that we are exercising our appellate 234 jurisdiction in these seven appeals and not our advisory jurisdiction These seven appeals stand completely disposed of on the findings which we have given on the two questions already discussed On our findings the dispute as to bonus referred to the Industrial Tribunal in 1952 has come to an end The reference is no longer pending and in the view which we have expressed as respects the interpretation of unamended section 10 of the Banking Act no claim for bonus can be adjudicated on for the past relevant years It is therefore not necessary for us to decide hypothetical questions which may arise in any future reference that may be made under the amended section In the exercise of its appellate powers this Court does not give speculative opinions on hypothetical questions It would be contrary to principle inconvenient and inexpedient that opinion should be given on such questions If and when they arise they must arise in concrete cases and to use the words of the Earl of Halsbury L C in Attorney General of Ontario vs Hamilton Street Railway 1 It would be extremely unwise for any judicial Tribunal to attempt beforehand to exhaust all possible cases and facts which might occur to qualify cut down and override the operation of the particular words when the concrete case is not before it It is also to be remembered that no evidence was allowed to be given either by the banks or the bank employees as to the claims for bonus for particular years in respect of particular banks The dispute was treated rightly in our opinion as a dispute relating to the general question of bonus That general question is now disposed of on the findings which we have already given We are aware that if and when a future reference as to an industrial dispute relating to bonus is made by the appropriate Government and the amended section falls for consideration questions 3 and 4 may fall for decision It would be time enough to decide those questions when they actually arise in concrete cases and we consider that it is not only unwise but inexpedient that we should forestall questions which may arise in future cases and decide 1 1903 AC524 529 235 them more or less in vacuo and in the absence of necessary materials for the decision of those questions These are our reasons for holding that questions 3 and 4 should not now be decided It is necessary to state however that any observations which the Tribunals below may have made with regard to questions 3 and 4 would be in the nature of obiter dicta and it would be open to both parties to canvass those questions if and when they arise in any concrete case in future Therefore we have not considered it necessary to state in detail the contentions raised before us on behalf of the parties concerned with regard to questions 3 and 4 A few words regarding Civil Appeal No 62 of 1957 before we conclude Besides the question of bonus two other questions were raised in this appeal 1 whether the Labour Appellate Tribunal had jurisdiction to order cancellation and refund of cash deposits and 2 whether the Tribunals below were wrong in holding that the taking of cash deposits etc should be restricted to workmen of three categories only When it was pointed out that the cash deposits had already been refunded in accordance with the decision of the Labour Appellate Tribunal the learned Attorney General who appeared for the appellant in Civil Appeal No 62 of 1957 The Punjab National Bank Limited did not press those points Therefore in Civil Appeal No 62 of 1957 also the only surviving question is the question of bonus on which we have already given our decision Shri Sadhan Chandra Gupta appeared on behalf of the respondents in Civil Appeal No 62 of 1957 and made his submissions on the question of bonus He has taken a stand on section 2 of the Banking Act and has contended that even if bonus is remuneration which takes the form of a share in profits section 2 saves the power of industrial tribunals to award such bonus under the and such award if made will impose an obligation on banks to pay the bonus awarded and would not make them liable to penalty under section 46 of the Banking Act We have dealt with this argument at an earlier stage and have pointed out that section 2 is a saving provision with regard 236 to any other law for the time being in force provided there is no express provision to the contrary in the Banking Act If as we hold unamended section 10 of the Banking Act expressly prohibits the employment of any person by a bank whose remuneration takes the form of a share in the profits of the company then section 2 of the Banking Act is of no help and cannot permit something which is expressly prohibited by section 10 For the reasons given above we allow these seven appeals to the extent already indicated namely 1 the reference of 1952 is not now pending for determining the question of bonus for the relevant years in respect of particular banks and 2 section 10 of the Banking Act prior to the amendment of 1956 prohibits the grant of industrial bonus to bank employees when such bonus is remuneration which takes the form of a share in the profits of the banking company In the circumstances of these cases and in view of the long drawn out nature of the dispute we make no direction as to costs Appeals allowed in part

With a view to provide a pension to H who was the managing director of the appellant company after his retirement at the age Of 55 years on September 20 1955 the company executed a trust deed on September 16 1948 in favour of three trustees to whom the company paid a sum of Rs 109643 and further undertook to pay annually Rs 4364 for six consecutive years The trustees undertook to hold the said sums upon trust to spend the same in taking out a Deferred Annuity Policy with an Insurance Society in the name of the trustees but on the life of H under which a certain sum of money was payable annually to H for life from the date of his superannuation It was also provided in the deed that notwithstanding the main clause the trustees would if so desired by the company take out instead a different kind of policy for the benefit of both H and his wife with a further provision for His wife should H die before he attained the age Of 55 On January 12 1949 the trustees took out a policy wherein the amount of Deferred Annuity to be paid per annum was fixed according as whether both H and his wife were living on September 20 1955 or one of them died earlier The policy also contained inter alia two clauses i Provided the contract is in force and unseduced the Grantees i e the trustees shall be entitled to surrender the Annuity on the Option Anniversary ie Sept 20 1955 for the Capital sum of pound 10169 subject to written notice of the intention to surrender being received by the Directors of the Society within the thirty days preceding the Option Anniversary 2 If both the Nominees shall die whilst the Contract remains in force and unreduced and before the Option Anniversary the said funds and Property of the Society shall be liable to make repayment to the Grantees of a sum equal to a return of all the premiums which shall have been paid under this Contract without interest after proof thereof and subject as hereinbefore provided The appellant company paid the initial sum and the yearly premia for some years before H died For the assessment years 194950 195051 1951 52 and 1952 53 the appellant claimed a deduction of these sums from its profits or gains under section 102XV 965 of the Indian Income tax Act 1922 but the Income tax authorities disallowed the claim on the ground that the sums claimed did not amount to expenditure within the meaning of the section The appellant s contention was that payment of pension was an expenditure of a revenue character and so also the payment of a lump sum to get rid of a recurring liability to pay such pension and that expenditure on insurance was not contingent because though the contingency related to life and depended on it the probabilities were estimated on actuarial calculations and that the expenditure was therefore real Held that expenditure which is deductible for the purposes of income tax under section 102xv of the Indian Income tax Act 1922 is one which must be towards a liability actually existing at the time but the putting aside of money which may become expenditure on the happening of an event is not expenditure In the present case on the terms of the deed of trust money was placed in the hands of trustees for the purchase of annuities of different kinds if required but to be returned if the annuities were not bought and the clauses in the policy taken out by the trustees showed that till September 20 1955 the appellant had dominion through the trustees over the premia paid The payment to the trustees was therefore towards a liability depending on a contingency Consequently the amount claimed was not liable to be deducted as an expenditure under section IO2XV Of the Act Cases on English Income tax law reviewed

Civil Appeal No 57 of 1951 Appeal from a judgment dated 18th May 1948 of the High Court of East Punjab at Simla Khosla and Teja Singh JJ in Letters Patent Appeal No 189 of 1946 arising out of the judgment dated 11 th February 1946 of the Senior Subordinate Judge Ambala The facts are set out in the judgment Gopinath Kunzru BC Misra with him for the appel lants Rang Behari Lal NC Sen with him for the respond ents March 7 The judgment of the Court was delivered by MUKHERJEA J This appeal is on behalf of the judgment debtor in a proceeding for execution of a money decree and it is directed against the judgment of a Letters Patent Bench of the Punjab High Court dated 18th of May 1949 by which the learned Judges 546 affirmed in appeal a decision of a single Judge of that court dated 29th October 1946 The original order against which the appeal was taken to the High Court was made by the Senior Subordinate Judge Ambala in Execution Case No 18 of 1945 dismissing the objections preferred by the appel lants under section 47 of the Civil Procedure Code To appreciate the contentions that have been raised in this appeal it would be necessary to give a short narrative of the material events in their chronological order On September 30 1925 Baldev Das the father of the appel lants who was at that time the manager of a joint Hindu family consisting of himself and his sons executed a mortgage bond in favour of Mst Naraini the original re spondent No 1 and another person named Talok Chand by which certain movable properties belonging to the joint family were hypothecated to secure a loan of Rs 16000 On April 16 1928 the appellants along with a minor brother of theirs named Sumer Chand filed a suit being Suit No 23 of 1928 in the Court of the Subordinate Judge of Shahjahanpur against their father Baldev Das for partition of the joint family properties The suit culminated in a final decree for partition on 20th July 1928 and the joint family properties were divided by metes and bounds and separate possession was taken by the father and the sons On 29th September 1934 Mst Naraini filed a suit in the Court of the Senior Subordinate Judge Ambala against Baldev Das for recovery of a sum of Rs 12500 only on the basis of the mortgage bond referred to above It was stated in the plaint that the money was borrowed by the defendant as manager of a joint Hindu family and the plaintiff prayed for a decree against the mortgaged property as well as against the joint family On 18th December 1934 the appellants made an application before the Subordinate Judge under Order I Rule 10 and Order XXXIV Rule 1 Civil Procedure Code praying that they might be added as parties defendants to the suit and the points in issue arising therein might be decided in their presence It was asserted in the 547 petition that Baldev Das was not the manager of a joint family and that the family properties had been partitioned by a decree of the court as a result of which the proper ties alleged to be the subject matter of the mortgage were allotted to the share of the petitioners In reply to this petition the plaintiff s counsel stated in court on 7th February 1935 that his client would give up the claim for a mortgage decree against the properties in suit and would be satisfied only with a money decree against Baldev Das personally The plaint was amended accordingly deleting all reference to the joint family and abandoning the claim against the mortgaged property Upon this the appellants withdrew their application for being made parties to the suit and reserved their right to take proper legal action if and when necessary On April 17 1935 Baldev Das died and on 2nd September following the appellants as well as their mother who figures as respondent No 5 in this appeal were brought on the record as legal representatives of Baldev Das On October 9 1935 the appellants filed a written statement in which a number of pleas were taken in answer to the plaintiff s claim and it was asserted in paragraph 10 of the written statement that Baldev Das dealt Badri or specu lative transactions and if any money was due to the plain tiff at all in connection with such transactions the debt was illegal and immoral and not binding on the family property On the same day the court recorded an order to the effect that as the plaintiff had given up her claim for a mortgage decree the legal representatives of the deceased could not be allowed to raise pleas relating to the validity or otherwise of the mortgage On 20th November 1935 the parties arrived at a compromise and on the basis of the same a simple money decree was passed in favour of the plaintiff for the full amount claimed in the suit together with half costs amounting to Rs 425 annas odd against the estates of Baldev Das in the hands of his legal representa tives After certain attempts at execution of this decree which did not prove successful 548 the present application for execution was flied by the decree holder on March 13 1945 in the court of the Senior Subordinate Judge Ambala and in accordance with the prayer contained therein the court directed the attachment of certain immovable properties consisting of a number of shops in possession of the appellants and situated at a place called Abdullaput On April 23 1945 the appellants filed objections under section 47 Civil Procedure Code and they opposed the attachment of the properties substantially on the ground that those properties did not belong to Baldev Das but were the separate and exclusive properties of the objectors which they obtained on partition with their father long before the decree was passed It was asserted that these properties could not be made liable for the satisfac tion of the decretal dues which had to be realised under the terms of the decree itself from the estate left by Baldev Das After hearing the parties and the evidence adduced by them the Subordinate Judge came to the conclusion that there was in fact a partition between Baldev Das and his sons in the year 1928 and as a result of the same the properties which were attached at the instance of the decree holder were allotted to the share of the sons The decree sought to be executed was obtained after the partition but it was in respect of a debt which was contracted by the father prior to it It was held in these circumstances that the separate share of the sons which they obtained on partition was liable under the Hindu law for the pre partition debt of their father if it was not immoral and under section 53 of the Civil Procedure Code the decreeholder was entitled to execute the decree against such properties As no point was raised by the objectors in their petition alleging that the debt covered by the decree was tainted with immorality the objections under section 47 Civil Procedure Code were dismissed The objectors thereupon took an appeal to the High Court of East Punjab which was heard by Rahman J sitting singly The learned judge dismissed the appeal and affirmed the decision of the Subordinate 549 Judge A further appeal taken to a Division Bench under the Letters Patent was also dismissed and it is the propriety of the judgment of the Letters Patent Bench that has been challenged before us in this appeal Mr Kunzru appearing for the appellants put forward a three fold contention in support of the appeal He contended in the first place that under the terms of the compromise decree the decreeholder could proceed only against the properties of Baldev Das in the hands of his legal represen tatives and no property belonging to the appellants could be made liable for the satisfaction of the decree The second contention put forward is that as the decree in the present case was obtained after partition of the joint family property between the father and his sons the separate property of the sons obtained on partition was not liable under Hindu law for the debt of the father It is urged last of all that in any event if there was any pious obligation on the part of the sons to pay the father s debt incurred before partition such obligation could be enforced against the sons only in a properly constituted suit and not by way of execution of a decree obtained in a suit which was brought against the father alone during his lifetime and to which the sons were made parties only as legal representa tives after the father s death As regards the first point the determination of the question raised by Mr Kunzru depends upon the construction to be put upon the terms of the compromise decree The operative portion of the decree as drawn up by the court stands as follows It is ordered that the parties having compromised a decree in accordance with the terms of the compromise be and the same is hereby passed in favour of the plaintiff against the estate of Baldev Das deceased in possession of his legal representatives It is also ordered that the defendants do also pay Rs 425 7 0 half costs of the suit 71 550 There was no petition of compromise filed by the parties and made part of the decree but there are on the record two statements one made by Pannalal the appellant No 1 on behalf of himself and his mother and the other by Lala Haraprasad the special agent of the plaintiff setting out terms of the compromise The terms are worded much in the same manner as in the decree itself and are to the effect that a decree for the amount in suit together with half costs would be awarded against the property of Baldev Das deceased It is argued by Mr Kunzru that the expression estate of Baldev Das deceased occurring in the decree must mean and refer to the property belonging to Baldev Das at the date of his death and could not include any property which the sons obtained on partition with their father during the father s lifetime and in respect of which the latter possessed no interest at the time of his death Stress is laid by the learned counsel in this connection on the fact that when the appellants were brought on the record as legal representatives of their deceased father in the mortgage suit they specifically asserted in their written statement that there was a partition between them and their father long before the date of the suit as a result of which the hypothecated properties were allotted to them Upon that the plaintiff definitely abandoned her claim to a mortgage decree or to any relief against the joint family and agreed finally to have a money decree executable against the personal assets of Baldev Das in the hands of his heirs In these circumstances it is urged that if it was the intention of the parties that the decreeholder would be entitled to proceed against the separate property of the sons nothing could have been easier than to insert a provi sion to that effect in the compromise decree There is undoubtedly apparent force in this contention but there is another aspect of the question which requires consideration The terms of the decree that was passed in this suit though based on the consent of the parties are precisely the same as are contemplated by section 52 1 of the Civil procedure Code It was a decree for money 551 passed against the legal representatives of a deceased debtor and it provided expressly that the decretal amount was to be realised out of the estate of the deceased in the hands of the legal representatives It is argued on behalf of the respondent and we think rightly that as the decree fulfils the conditions of section 52 1 of the Civil Proce dure Code it would attract all the incidents which attach by law to a decree of that character Consequently the decreeholder would be entitled to call in aid the provision of section 53 of the Code and if any property in the hands of the sons other than what they received by inheritance from their father is liable under the Hindu law to pay the father s debts such property could be reached by the de creeholder in execution of the decree by virtue of the provision of section 53 of the Civil Procedure Code Wheth er the property which the sons obtained on partition during the lifetime of the father is liable for a debt covered by a decree passed after partition and whether section 53 has at all any application to a case of this character are ques tions which we have to determine in connection with the second and the third points raised by appellants Section 53 Civil Procedure Code it is admitted being only a rule of procedure cannot create or take away any substantive right It is only when the liability of the sons to pay the debts of their father in certain circumstances exists under the Hindu law is the operation of the section attracted and not otherwise The only other question that can possibly arise by reason of the decree being a compromise decree is whether the parties themselves have by agreement excluded the operation of section 53 Civil Procedure Code It is certainly possible for the parties to agree among themselves that the decree should be executed only against a particular property and no other but when any statutory right is sought to be contracted out it is necessary that express words of exclusion must be usedl Exclusion cannot be in ferred merely from the fact that the compromise made no reference to such right As nothing was said in the compro mise decree in the present case about the 552 right of the decreeholder to avail herself of other provi sions of the Code which might be available to her in law we cannot say that the plaintiff has by agreement expressly given up those rights The first point therefore by itself is of no assistance to the appellants We now come to the other two points raised by Mr Kunzru and as they are inter connected they can conveniently be taken up together These points involve consideration of the somewhat vexed question relating to the liability of a son under the Hindu law other than that of the Daybhag school to pay the debts of his father provided they are not tainted with immorality In the opinion of the Hindu Smriti writers debt is not merely a legal obligation but non payment of debt is a sin the consequences of which follow the debtor even after his death A text 1 which is attributed to Brihaspathi lays down He who having received a sum lent or the like does not repay it to the owner will be born hereafter in the credi tor s house a slave a servant a woman or a quadruped There are other texts which say that a person m debt goes to hell Hindu law givers therefore imposed a pious duty on the descendants of a man including his son grandson and great grandson to pay off the debts of their ancestor and relieve him of the after death torments consequent on non payment In the original texts a difference has been made in regard to the obligation resting upon sons grand sons and great grandsons in this respect The son is bound to discharge the ancestral debt as if it was his own to gether with interest and irrespective of any assets that he might have received The liability of the grandson is much the same except that he has not to pay any interest but in regard to the great grandson the liability arises only if he received assets from his ancestor It is now settled by judicial decisions that there is no difference as between son grandson and great grandson so far as the obligation to pay the debts of the ancestor is concerned but none of them has any personal 1 Vide Colebrooke s Digest I 228 553 liability in the matter irrespective of receiving any assets 1 The position therefore is that the son is not person ally liable for the debt of his father even if the debt was not incurred for an immoral purpose and the obligation is limited to the assets received by him in his share of the joint family property or to his interest in such property and it does not attach to his self acquisitions The duty being religious or moral it ceases to exist if the debt is tainted with immorality or vice According to the text writers this obligation arises normally on the death of the father but even during the father s lifetime the son is obliged to pay his father s debts in certain exceptional circumstances eg when the father is afflicted with disease or has become insane or too old or has been away from his country for a long time or has suffered civil death by becoming an anchorite 2 It can now be taken to be fairly well settled that the pious liability of the son to pay the debts of his father exists whether the father 1s alive or dead 3 Thus it is open to the father during his lifetime to effect a transfer of any joint family property including the interests of his sons m the same to pay off an antecedent debt not incurred for family necessity or bene fit provided it is not tainted with immorality It is equally open to the creditor to obtain a decree against the father and in execution of the same put up to sale not merely the father s but also the son s interest in the joint estate The creditor can make the sons parties to such suit and obtain an adjudication from the court that the debt was a proper debt payable by the sons But even if the sons are not made parties they cannot resist the sale unless they succeed in establishing that the debts were contracted for immoral purposes These propositions can be said to be well recognised and reasonably beyond the region of controversy4 All of them however 1 Vide Masitullah vs Damodar Prasad 53 IA 204 2 Vide Mayne s Hindu Law 11th edition p 408 3 Vide Brij Narain vs Mangla Prasad 51 IA 129 4 Vide Girdharee Lall vs Kantoo Lall 1 IA 321 Maddan Thakoor vs Kantoo Lall 1 IA 333 Suraj Bunsi vs Sheo Prasad 6 IA88 Brij Narain vs Mangla Prosad 51 IA 129 554 have reference to the period when the estate remains joint and there is existence of coparcenership between the father and the son There is no question that so long as the family remains undivided the father is entitled to alienate for satisfying his own personal debts not tainted with immorality the whole of the ancestral estate A creditor is also entitled to proceed against the entire estate for recovery of a debt taken by the father The position is somewhat altered when there is a disruption of the joint family by a partition between the father and the sons The question then arises whether the sons remain liable for the debt of the father even after the family is divided and can the creditor proceed against the shares that the sons obtain on partition for realization of his dues either by way of a suit or in execution of a decree obtained against the father alone It must be admitted that the law on the subject as developed by judicial decisions has not been always consist ent or uniform and the pronouncements of some of the Judges betray a lack of agreement in their approach to the various questions involved in working out the law As regards debts contracted by the father after parti tion there is no dispute that the sons are not liable for such debts The share which the father receives on partition and which after his death comes to his sons may certainly at the hands of the latter be available to the creditors of the father but the shares allotted on partition to the sons can never be made liable for the post partition debts of the father 1 The question that is material for our present purpose is whether the sons can be made liable for an unsecured debt of the father incurred before partition in respect to which the creditor filed his suit and obtained decree after the partition took place On this point admit tedly there is divergence of judicial opinion though the majority of decided cases are in favour of the view that the separated share of a son remains liable even after partition for the pre partition debts of the father which 1 Vide Mayne s Hindu Law 11th Edition 430 555 are not illegal or immoral 1 The reasons given in support of this view by different Judges are not the same and on the other side there are pronouncements of certain learned Judges though few in number expressing the view that once a partition takes place the obligation of the sons to discharge the debts of their father comes to an end2 The minority view proceeds upon the footing that the pious obligation of the son is only to his father and corre sponding to this obligation of the son the father has a right to alienate the entire joint property including the son s interest therein for satisfaction of an antecedent debt not contracted for immoral purposes What the creditor can do is to avail himself of this right of the father and work it out either by suit or execution proceedings in other words the remedy of a father s simple contract credi tor during the father s lifetime rests entirely on the right of the father himself to alienate the entire family property for satisfaction of his personal debts The father loses this right as soon as partition takes place and after that the creditor cannot occupy a better position or be allowed to assert rights which the father himself could not possess The reasoning in support of the other view which has been accepted in the majority of the decided cases is thus expressed by Waller J in his judgment in the Madras Full Bench case3 On principle I can see no reason why a partition should exempt a son s share from liability for a pre parti tion debt for which it was liable before partition The creditor advances money to the father on the credit of the joint family property Why should he be deprived of all but a fraction of his security by a transaction to which he was not a party and of which he 1 Vide Subramanya vs Sabapathi Anna bat vs Shivappa Jawahar Singh vs parduman 14 Lab 399 Atul Krishna vs Lala Nandanji 14 Pat 732 FB Bankey Lal vs Durga All 868 FB Raghunandan vs Matiram 6 Luck 497 FB 2 Vide Krishnaswami vs Ramaswami VP Venkanna vs VS Deekshatulu Vide also the dissentient judgment of Ayyangar J in Subramanya vs Sabapa thi 3Vide Subramanya vs Sabapathi at 369 FB 556 was not aware and what becomes of the son s pious obliga tion It was binding as regards the particular debt before partition does it cease to apply to that debt simply be cause there has been a partition The first part of the observation of the learned Judge does not impress us very much An unsecured creditor who has lent money to the father does not acquire any lien or charge over the family property and no question of his security being diminished at all arises In spite of his having borrowed money the father remains entitled to alien ate the property and a mere expectation of the creditor however reasonable it may be cannot be guaranteed by law so long as he does not take steps necessary in law to give him adequate protection The extent of the pious obligation referred to in the latter part of the observation of the learned Judge certainly requires careful consideration We do not think that it is quite correct to say that the credi tor s claim is based entirely upon the father s power of dealing with the son s interest in the joint estate The father s right of alienating the family property for payment of his just debts may be one of the consequences of the pious obligation which the Hindu law imposes upon the sons or one of the means of enforcing it but it is certainly not the measure of the entire obligation As we have said already according to the strict Hindu theory the obliga tion of the sons to pay the father s debts normally arises when the father is dead disabled or unheard of for a long time No question of alienation of the family property by the father arises in these events although it is precisely under these circumstances that the son is obliged to dis charge the debts of his father As was said by Sulaiman ACJ in the case of Bankey Lal vs Durga Prasad1 The Hindu law texts based the liability on the pious obligation itself and not on the father s power to sell the son s share It is thus necessary to see what exactly is the extent of the obligation which is recognised by the Hindu 1 9931 53 All 868 at 876 FB 557 texts writers in regard to the payment by the son c the pre partition debts of his father Almost all the relevant texts on this point are to be found collected in the judg ments of Sulaiman ACJ and Mukherji J in the Allahabad Full Bench case referred to above A text of Narada recites1 What is left after the discharge of the father obliga tion and after the payment of the father s debts shall be divided by the brothers so that the father may not remain a debtor Katyan also says2 The sons shall pay off the debts and the gift prom ised by the father and divide the remaining among them selves There is a further passage in Manu3 After due division of the paternal estate if any debt or estate of the father be found out let the brother equally divide the same among themselves According to Yagnavalka4 The sons should divide the wealth and the debts equal lyl It is true that the partition contemplated in these passages is one after the death of the father but when ever the partition might take place the view of the Hindu law givers undoubtedly is that the binding debts on the family property would have to be satisfied or provided for before the coparceners can divide the property In Sat Narain vs Das 5 the Judicial Committee pointed out that when the family estate is divided it is necessary to take account of both the assets and the debts for which the undivided estate is liable It was argued in that case on behalf of the appellants that the pious obligation of the sons was an obligation not to object to the alienation of the joint estate by the 1 Narada 13 32 2Hindu Law in its Sources by Dr Ganga Nath Jha Vol I p quotation No 211 3Chap vs 218 4 JCGhosh s Hindu Law Vol H page 342 5 1936 63 IA 384 72 558 father for his antecedent debt unless they were immoral or illegal but these debts were not a liability on the joint estate for which provision was required to be made before partition This contention did not find favour with the Judicial Committee and in their opinion as they expressed in the judgment the right thing to do was to make provision for discharge of such liability when there was partition of the joint estate If there is no such provision the debts are to be paid severally by all the sons according to their shares of inheritance as enjoined by Vishnu1 In our opinion this is the proper view to take regarding the liability of the sons under Hindu law for the pre partition debts of the father The sons are liable to pay these debts even after partition unless there was an arrangement for payment of these debts at the time when the partition took place This is substantially the view taken by the Allahabad High Court in the Full Bench case referred to above and it seems to us to be perfectly in accord with the princi ples of equity and justice The question now comes as to what is meant by an ar rangement for payment of debts The expressions bona fide and mala fide partition seem to have been frequently used in this connection in various decided cases The use of such expressions far from being useful does not unoften lead to error and confusion If by mala fide partition is meant a partition the object of which is to delay and defeat the creditors who have claims upon the joint family property obviously this would be a fraudulent transaction not binding in law and it would be open to the creditors to avoid it by appropriate means So also a mere colourable partition not meant to operate between the parties can be ignored and the creditor can enforce his remedies as if the parties still continued to be joint But a partition need not be mala fide in the sense that the dominant intention of the parties was to defeat the claims of the creditors if it makes no ar rangement or provision for the payment of the just debts payable 1 Vishnu Chap 6 verse 36 559 out of the joint family property the liability of the sons for payment of the pre partition debts of the father will still remain We desire only to point out that an arrange ment for payment of debts does not necessarily imply that a separate fund should be set apart for payment of these debts before the net assets are divided or that some additional property must be given to the father over and above his legitimate share sufficient to meet the demands of his creditors Whether there is a proper arrangement for payment of the debts or not would have to be decided on the facts and circumstances of each individual case We can conceive of cases where the property allotted to the father in his own legitimate share was considered more than enough for his own necessities and he undertook to pay off all his personal debts and release the sons from their obligation in respect thereof That may also be considered to be a proper ar rangement for payment of the creditor in the circumstances of a particular case After all the primary liability to pay his debts is upon the father himself and the sons should not be made liable if the property in the hands of the father is more than adequate for the purpose If the arrangement made at the time of partition is reasonable and proper an unse cured creditor cannot have any reason to complain The fact that he is no party to such arrangement is in our opinion immaterial Of course if the transaction is fraudulent or is not meant to be operative it could be ignored or set aside but otherwise it is the duty of unsecured creditor to be on his guard lest any family property over which he has no charge or lien is diminished for purposes of realization of his dues Thus in our opinion a son is liable even after partition for the pre partition debts of his father which are not immoral or illegal and for the payment of which no arrangement was made at the date of the partition The question now is how is this liability to be enforced by the creditor either during the lifetime of the lather or after his death It has been held 560 in a large number of cases1 all of which recognise the liability of the son to pay the pre partition debts of the father that a decree against the father alone obtained after partition in respect of such debt cannot be executed against the property that is allotted to the son on partition They concur in holding that a separate and independent suit must be instituted against the sons before their shares can be reached The principles underlying these decisions seems to us to be quite sound After a partition takes place the father can no longer represent the family and a decree obtained against him alone cannot be binding on the sepa rated sons In the second place the power exercisable by the father of selling the interests of the sons for satis faction of his personal debts comes to an end with parti tion As the separated share of the sons cannot be said to belong to the father nor has he any disposing power over it or its profits which he can exercise for his benefit the provision of section 60 of the Civil Procedure Code would operate as a bar to the attachment and sale of any such property in execution of a decree against the father The position has been correctly stated by the Nagpur High Court2 in the following passages To say a son is under a pious obligation to pay cer tain debts is one thing to say his property can be taken in execution is another In our view property can only be attached and sold in execution if it falls within the kind of property that can be attached and sold What that is is found by looking at section 60 When one looks at section 60 one finds that the property in question should either belong to the judgment debtor or he should have a disposing power over it After partition the share that goes to the son does not belong to the father and the father has no dispos ing power over it Therefore such property does not fall within section It by no means follows that a son cannot 1 Vide Kameswaramma vs Venkatasubba 20 Subramanya vs Sabapathi Thirumala Muthu vs Subramania AIR 1937 Mad 458 Surajmal vs Motiram Atul Krishna vs Lala Nandanji 14 Pat 732 Govin dram vs Nathulal ILR 2 Jainarayan v Sonaji AIR 1938 Nag 24 at 29 561 be made liable He could be made liable for his father s debts if he had become a surety he can be made liable under the pious obligation rule In neither of the cases put could his liability take the form of having his property seized in execution and sold without any prior proceedings brought against him leaving him to raise the question whether his liability as surety or under the pious obliga tion rule precluded him from claiming in execution It is not disputed that the provision of section 53 of the Civil Procedure Code cannot be extended to a case when the lather is still alive We now come to the last and the most controversial point in the case namely whether a decree passed against the separated sons as legal representatives of a deceased debtor in respect of a debt incurred before partition can be exe cuted against the shares obtained by such sons at the parti tion As has been said already the shares of the separated sons in the family property may be made liable for pre partition debts provided they are not tainted with immoral ity and no arrangement for payment of such debts was made at the time the partition The question however is whether this can be done in execution proceedings or a separate suit has to be brought for this purpose Mr Kunzru argues that what could not be done during the lifetime of the lather in execution of a decree against him cannot possibly be done alter his death simply because the lather died during the pendency of the suit and the sons were made parties defend ants not in their own right but as representatives of their deceased lather It is pointed out that the appellants in the present case were not allowed to raise any plea which could not have been raised by their father and they never had any opportunity to show that they were under Hindu law not liable for these debts It is undoubtedly true that no liability can be enforced against the sons unless they are given an opportunity to show that they are not liable for debts under Hindu law but this opportunity can certainly be given to 562 them in execution proceedings as well A decree against a father alone during his lifetime cannot possibly be executed against his sons as his legal representatives As we have said already the decree against the father after the parti tion could not be taken to be a decree against the sons and no attachment and sale of the sons separated shares would be permissible under section 60 Civil Procedure Code The position however would be materially different if the sons are made parties to the suit as legal representatives of their father and a decree is passed against them limited to the assets of the deceased defendant in their hands A proceeding for execution of such a decree would attract the operation of section 47 of the Civil Procedure Code under which all questions relating to execution discharge and satisfaction of the decree between the parties to the suit in which the decree was passed or their representatives would have to be decided in execution proceedings and not by a separate suit Section 52 1 Civil Procedure Code provides that when a decree is against the legal representa tives of a dead person and is one for recovery of money out of the properties of the deceased it may be executed by attachment and sale of any such property Then comes sec tion 53 which lays down that for purposes of section 50 and section 52 property in the hands of a son or other descend ants which is liable under Hindu law for payment of the debt of a deceased ancestor in respect of which a decree has been passed shall be deemed to be property of the deceased which has come to the hands of the son or other descendant as his legal representative It is to be noted that before the Civil Procedure Code of 1908 came into force there was a conflict of opinion as to whether the liability of a Hindu son to pay his father s debts could or could not be enforced in execution proceedings Under the Hindu law an undivided son or other descendant who succeeds to the joint property on the death of his father or other ancestor does so by right of survivorship and not as heir In the old Code the term legal representative was not defined and 563 the question arose as to whether the son could be regarded as the legal representative of his father in regard to properties which he got by survivorship on the father s death and whether a decree against the father could be enforced in execution against the son or a separate suit would have to be instituted for that purpose It was held by the Madras and the Allahabad High Courts that the liabil ity could not be enforced in execution proceedings whereas the Calcutta and the Bombay High Courts held otherwise Section 53 in a sense gives legislative sanction to the view taken by the Calcutta and the Bombay High Courts One reason for introducing this section may have been or undoubtedly was to enable the decreeholder to proceed in execution against the property that vested in the son by survivorship after the death of the father against whom the decree was obtained but the section has been worded in such a compre hensive manner that it is wide enough to include all cases where a son is in possession of ancestral property which is liable under the Hindu law to pay the debts of his father and either the decree has been made against the son as legal representative of the father or the original decree being against the father it is put into execution against the son as his legal representative under section 50 of the Civil Procedure Code In both these sets of circumstances the son is deemed by a fiction of law to be the legal representative of the deceased debtor in respect of the property which is in his hands and which is liable under the Hindu law to pay the debts of the father although as a matter of fact he obtained the property not as a legal representative of the father at all As we said have already section 53 of the Civil Procedure Code being a rule of procedure does not and cannot alter any principle of substantive law and it does not enlarge or curtail in any manner the obligation which exists under Hindu law regarding the liability of the son to pay his father s debts It however lays down the procedure to be followed in cases coming under this SectiOn and if the son is bound under Hindu law to 564 pay the father s debts from any ancestral property in his hands and the section is not limited to property obtained by survivorship a1one the remedy of the decreeholder against such property lies in the execution proceedings and not by way of a separate suit the son would certainty be at liberty to show that the property in his hands is for cer tain reasons not liable to pay the debts of his father and all these questions would have to be decided by the execut ing court under section 47 Civil Procedure Code This seems to us to be the true scope and the meaning of section 53 Civil Procedure Code In our opinion the correct view on this point was taken by Wort J in his dissenting judgment in the Full Bench case of Atul Krishna vs Lala Nandanji 1 decided by the Patna High Court The majority decision in that case upon which stress is laid by Mr Kunzru overlooks the point that section 47 Civil Procedure Code could have no application when the decree against the father is sought to be executed against the sons during his lifetime and consequently the liability of the latter must have to be established in an independent proceeding In cases coming under sections 50 and 52 of the Civil Procedure Code on the other hand the decree would be capable of being executed against the sons as legal representatives of their father and it would only be a matter of procedure whether or not these questions should be allowed to be raised by the sons in execution proceedings under section 47 Civil Procedure Code It remains only to consider what order should be passed in this case having regard to the principles of law dis cussed above The High Court in our opinion was quite right in holding that the question of liability of the property obtained by the appellants in their share on parti tion with their father for the decretal dues is to be determined in the execution proceeding itself and not by a separate suit It is not disputed before us that the debt which is covered by the decree in the present case is a pre partition debt The sons 1 1935 14 Pat 565 therefore would be liable to pay the decretal amount provided the debt was not immoral or illegal and no arrange ment was made for payment of this debt at the time when the partition took place Neither of these questions has been investigated by the courts below As regards the immorality of the debts it is observed by the High Court that the point was not specifically taken in the objections of the appellants under section 47 Civil Procedure Code The validity of the partition again was challenged in a way by the decreeholder in his reply to the objections of the appellants but the courts below did not advert to the real point that requires consideration in such cases The parti tion was not held to be invalid as being a fraud on the debtor but the question was not adverted to or considered whether it made any proper arrangement for payment of the just debts of the father In our opinion the case should be reheard by the trial judge and both the points referred to above should be properly investigated The appellants did raise a point regarding their non liability for the decretal debt in the suit itself when they were brought on the record as legal representatives after the death of their father The court however did not allow them to raise or substantiate this plea inasmuch as they were held incompe tent to put forward any defence which the father himself could not have taken Having regard to the conflicting judicial decisions on the subject the appellants cannot properly be blamed for not raising this point again in the execution proceedings We think that they should now be given an opportunity to do so The result is that we set aside the judgments of the courts below and direct that the case should be heard de novo by the Subordinate Judge and that the appellants should be given an opportunity to put in a fresh petition of objection under section 47 of the Civil Procedure Code raising such points as they are competent to raise The decreeholder would have the right to reply to the same The court shall after hearing such evidence as the parties might choose to adduce decide 73 566 first of all whether the property attached is the ancestral property of the appellants and is liable to pay the just debts of their father It will consider in this connection whether the debts are illegal or immoral and as such not payable by the sons If this question is answered in favour of the appellants obviously the execution petition will have to be dismissed If on the other hand it is found that the sons are liable for this debt the other question for consideration would be whether there was any proper arrange ment made at the time of the partition for payment of the debts of the father The court below will decide these ques tions in the light of the principles which we have indicated above and will dispose of the case in accordance with law In the event of the appellants being held liable for payment of the decretal debt it would be open to the executing court to make an order that the decreeholder should in the first instance proceed against the separate property of the father which was allotted to him on partition and which after his death devolved upon the sons and only if such property is not sufficient for satisfaction of the decree then the decree could be executed for the balance against the ancestral property in the hands of the appellants There will be no order for costs up to this stage Further costs will follow the result

This appeal by special leave was directed against the order of the High Court asking the Income tax Appellate Tribunal under section 664 Of the Income tax Act to submit a supplementary statement of case on points which were never raised by the parties nor decided by the Income tax Authorities or the Tribunal The only question canvassed before them was whether certain cheques which were received by the assessee at Bhavnagar having been cashed in British India the monies in respect of them could be said to have been received in British India The Tribunal held that the monies related back to the receipt of the cleques and were as such received at Bhavnagar The question was whether the receipt of the cheques at Bhavnagar amounted to receipt of the sale proceeds at Bhavnagar The High Court held that the mere receipt of the cheques by post at Bhavnagar was not conclusive in absence of a further finding as to whether the cheques were sent by post without any request express or implied having been made by the assessee and observed as follows But we cannot shut out the necessary inquiry which even from our own point of view is necessary to be made in order that we should satisfactorily answer the question raised in the Reference It must not be forgotten that under sec 664 of the Income tax Act we have a right independently of the conduct of the parties to direct the Tribunal to state further facts so that we may properly exercise our advisory jurisdiction Held that the High Court had misconceived its powers under section 664 of the Act and its decision must be set aside Section 664 of the Indian Income tax Act which must be read with sections 661 and 662 Of the Act did not empower the High Court to raise a new question of law which did not arise out of the Tribunal s order or direct the Tribunal to investigate new and further facts necessary to determine the new question which had not been referred to it under s 661 or section 662 of the Act and direct the Tribunal to submit supplementary statement of case Such additions and alterations in the statement of case as section 664 of the Act empowered the High Court to direct could 250 relate only to such facts as already formed part of the record but were not included by the Tribunal in the statement of the case Craddock H M Inspector of Taxes vs Zevo Finance Co Ltd Commissioner of Income tax West Bengal vs State Bank of India Industrial Development and Investments Co Ltd vs Commissioner of Excess Profits Tax Bombay 1957 31 ITR 688 Vadilal Ichhachand vs Commissioner of Income tax Bombay North Kutch and Saurashtra Ahmedabad and Commissioner of Income tax vs Bhurangya Coal Co 195S referred to Commissioner of Income tax Bihar Orissa vs Visweshwar Singh and Sir Sunder Singh Majithia vs Commissioner of Income tax C P and U P 1942 10 ITR 457 considered

Civil Appeal No 213 of 1955 Appeal from the judgment and order dated June 26 1953 of the Calcutta High Court in ITR No 34 of 1952 AV Viswanatha Sastri Y C Talukdar and Sukumar Ghose for the appellant KN Rajagopal Sastri and D Gupta for the respondent May 12 The Judgment of the Court was delivered by BHAGWATI J This appeal with a certificate under article 135 of the Constitution read with section 66A2 of the Indian Income tax Act raises the question as to whether the appellant as entitled to a deduction of Rs 24809 in the computation of its profits and gains for the assessment year 1948 49 The appellant deals in land and property and carries on land developing business and in the course of the said business it buys land develops it so as to make it fit for building purposes and sells it at a profit in plots The developments undertaken are in the main 187 that roads are to be laid out a drainage system to be provided and street lights installed and they are to be maintained till the sample are taken over by the Muncipality The whole of the development is not carried out before the land is sold nor the whole of the sale price received in cash at the time of the sales The procedure followed is that when a plot is sold the purchaser pays about 25 of the purchase price in cash and undertakes to pay the balance with interest at a certain rate in ten annual installments which he secures by creating a charge on the land purchased The appellant in its turn undertakes to carry out the developments within six months from the date of the sale but this time is not of the essence of the contract and what the appellant undertakes is to carry out the developments within a reasonable time The tinderbox is incorporated in the deed of sale itself whereas the security is given by the purchaser by means of a separate document In the accounting year relating to the assessment year 1948 49 the appellant sold a number of plots and received a portion of the sale price from the purchasers according to the scheme mentioned above The appellant maintains its accounts in the mercantile method under which money not actually received but only treated as received on the basis that it was due and receivable is entered in the books of account on the credit side Even though the appellant did not receive the whole of the price viz Rs 43692 11 9 it entered in the credit side of its books of account the whole of that sum representing the full sale price of the lands sold during the accounting year though only a sum of Rs 29392 11 9 was actually received in cash from the purchaser and the balance of Its 14300 represented the unpaid balance retained by the purchasers the payment of which was secured by creating charge on the said lands as also the interest received or receivable in the year of account tinder the deeds of charge The whole of this sum of Rs 43692 11 9 was however credited in the books of account by the appellant according to the mercantile system of accounting adopted by it 188 In so far as under the terms of the deeds of sale the appellant had undertaken to carry out the developments within six months from the date of sale it estimated a sum of Rs 24809 as the expenditure for the developments to be carried out in respect of the plots which had been sold during the year and debited the same in its books of account on the ground that the liability for the said sum of Rs 24809 had actually arisen the appellant being bound to provide the facilities it had undertaken to do even though no part of that amount represented any expenditure actually made during that year In the course of its assessment to income tax for the year 1948 49 the appellant claimed a deduction of the said sum of Rs 24809 in the computation of the profits and gains of its business The Income tax Officer disallowed that claim on the ground that the expenses had not been actually incurred in the year of account and also on the ground that the estimate had not been proved to be based on a consideration of the real expenses which the Company would have to incur for the purpose The Appellate Assistant Commissioner on appeal confirmed the disallowance by the ITO on the ground that there was as yet no accrued liability and on the further ground that as the development would be carried out in the future the expenditure estimated at current prices could not be allowed On appeal taken by the appellant before the Income tax Appellate Tribunal the Tribunal held that it was by no means certain what the actual cost would be when the developments were carried out and that although the appellant had undertaken to carry out certain developments it could bring expenses into account only when the expenses were actually incurred The Tribunal accordingly dismissed the appeal The appellant thereafter made an application before the Tribunal requiring it to refer to the High Court under section 661 of the Income tax Act certain questions of law arising out of its order The Tribunal thereupon stated a case and referred the following question to the High Court for its decision 189 Whether on the facts and circumstances stated above the sum of Rs 24809 can legally be allowed as an expense of the year under consideration The statement of case drawn by the Tribunal was severely criticized by the High Court as under Unfortunately the treatment of the question by the authorities below has been of a somewhat summary character presumably because it was raised and argued before them in a superficial form But even if such was the case there is hardly any justification for the Tribunal failing to realise it least what facts were required to be found and stated The statement of case is sketchy and bare and like most of the statements we have to deal with during this session has hardly any appearance of a case seriously stated In spite of the above observations the High Court dealt with the question and after dealing exhaustively with the arguments which were urged be fore it by the learned Counsel for the appellant answered the question in the negative On an application made by the appellant however the High Court granted the requisite certificate under article 135 of the Constitution to appeal to this Court and lience this appeal The question which really arises for our determination in this appeal is whether having regard to the fact that the appellant s method of accounting viz the Mercantile method was accepted by the Income Tax Officer and the receipts appearing in the books of account included the unpaid balance of the sale price of the plots in question the amount of liability undertaken by the appellant to earn those receipts was to be deducted even if there had not been actual disbursement made by it during the accounting year Put in other words the question was whether in view of the fact that the sum of Rs 43692 11 9 had been entered on the credit side in the books of account even though it was not money actually received but only money treated as received on the basis that it was due and receivable the sum of Rs 24809 which had been entered as debit being the liability of the appellant 190 undertaken by it to earn those receipts should be deducted in determining the taxable profits and gains of the appellant The mercantile system of accounting is well known and this method has been explained in a judgment of this Court in Keshav Mills Ltd vs Commissioner of Income tax Bombay 1 That system brings into credit what is due immediately it becomes legally due and before it is actually received and it brings into debit expenditure the amount for which a legal liability has been incurred before it is actually disbursed The main ground on which the claim of the appellant for deducting this sum of Rs 24809 as disallowed by all the authorities below was that the expenditure was not actually incurred in the year of account it was by no means certain what the actual cost would be when the developments are carried out and that there was as yet no accrued liability but only a contingent liability undertaken by the appellant even though the undertaking was incorporated in the deeds of sale themselves The following were the developments undertaken to be carried out by the appellant as appears from the order of the Appellate Assistant Commissioner There was a condition in the Conveyance deeds that the appellant does hereby covenant with the purchaser that the appellant shall complete the construction of roads drains provide suitable pucca surface drains on both sides of the roads and shall also make arrangements for lighting up the said roads and shall maintain the said roads drains lights till the same are taken over by the Municipal Besides provision for roads drains etc the Deed provides for filling up of low lands and there is a clause in the Conveyance Deed which shows that the appellant s shall at his own cost fi11 the low lands and tank with earth and bring the same to road level 1 II9531 SCR 95o 958 191 This undertaking having been incorporated in the deeds of sale themselves there was certainly a liability undertaken by the appellant to carry out these developments within six months from the dates of those deeds Time was of course not of the essence of the contract and the appellant therefore was at liberty to carry out that undertaking within a reasonable time That however did not absolve it in any manner whatever from carrying out the undertaking and the purchasers were in a position to enforce the undertaking by taking appropriate proceedings in that behalf Reliance was placed on behalf of the Revenue on the case of Peter Merchant Ltd vs Stedeford Inspector of Taxes 1 in which a distinction was drawn between an actual ie legal liability which is deductible and a liability which is future or contingent and for which no deduction can be made The facts of that case were that the Company which carried on the business of managing factory canteens had contracted with a factory owner to maintain the crockery cutlery and utensils used in the canteen otherwise known as the light equipment in its original quantity and quality The cost of replacement was admittedly a proper deduction in computing profits as was also any sum paid to a factory owner in settlement of the value of shortages on termination of the contract Owing to war and other circumstances it was impossible or impracticable for the Company to obtain replacements in some cases and the obligations under the contracts with the factory owners in those cases still remained to be performed in the accounts for the year deductions had been made both of the amounts actually expended on replacements and the amounts which the company was liable to expend when the equipment became available The Company claimed to be entitled to deduct in computing its profits amounts representing at current prices the liability to effect replacements as soon as the required equipment became obtainable The former amounts were allowed as deductions and the latter the Court of Appeal reversing the decision 1 192 of the Court below held not to be deductible The basis of the decision was that the real liability under the contract was contingent not actual since the obligations of the company were not such that it might be sued for the cost of replacements at current prices but only for possible damages for breach of contract in the event of the factory owner preferring a claim under the contract and since no legal liability could arise until such a claim was made the liability had to be regarded as contingent and not deductible It is clear from the above that on the facts and circumstances of that case the Court held that it was not an accrued liability but was merely a contingent one and if that was the case only the sums actually expended could be deducted and not those which the company was liable to expend in the future Simon in his Income tax Second Edition Vol II at p 204 under the caption Accrued Liability observes as under after citing the case mentioned above In cases however where an actual liability exists as is the case with accrued expenses a deduction is allowable and this is not affected by the fact that the amount of the liability and the deduction will subsequently have to be varied A liability the amount of which is deductible for income tax purposes is one which is actually existing at the time of making the deduction and is distinct from the type of liability accruing in Peter Merchant8 Ltd vs Stedeford lnspector of Taxes which although allowable on accountancy principles is not deductible for the purpose of income tax Approaching the question before us in the light of the observations made above we have got to determine what was the nature of the liability which was undertaken by the appellant in regard to the development of the lands in question whether it was an accrued liability or was one which was contingent on the happening of a certain event in the future There is no doubt that the undertaking to carry out the developments within six months from the dates of 193 the deeds of sale was incorporated therein and that undertaking was unconditional the appellant binding itself absolutely to carry out the same It was not dependent on any condition being fulfilled or the happening of any event the only condition being that it was to be carried out within six months which in view of the fact that the time was not of the essence of the contract meant a reasonable time Whatever may be considered a reasonable time under the circumstances of the case the setting up of that time limit did not prescribe any condition for the carrying out of that undertaking and the undertaking was absolute interms If that undertaking imported any liability on the appellant the liability had already accrued on the dates of the deeds of sale though that liability was to be discharged at a future date It was thus an accrued liability and the estimated expenditure which would be incurred in discharging the same could very well be deducted from the profits and gains of the business Inasmuch as the liability which had thug accrued during the accounting year was to be discharged at a future date the amount to be expended in the discharge of that liability would have to be estimated in order that under the mercantile system of accounting the amount could be debited before it was actually disbursed The difficulty in the estimation thereof again would not convert an accrued liability into a conditional one because it is always open to the Income tax authorities concerned to arrive at a proper estimate thereof having regard to all the circumstances of the case That it can be so done is illustrated by Gold Coast Selection Trust Ltd v Humphrey Inspector of Taxes 1 where a particular asset which could not be immediately realised in a commercial sense was valued in money for income tax Purposes in the year of its receipt and it was observed by Viscount Simon It seems to me that it is not correct to say that an asset such as this block of shares cannot be valued in money for income tax purposes in the 1 469 25 194 year of its receipt because it cannot in a commercial sense be immediately realized That is no reason for saying that it is incapable of being valued though if its realization cannot take place promptly that may be a reason why the money figure set against it at the earlier date should be reduced in order to allow for an appropriate interval Supposing for example the contract conferring the asset on the taxpayer included a stipulation that the asset should not be realized by the transferee for five years and that if an attempt was made to realise it before that time the property in it should revert to the transferor This might seriously reduce the value of the asset when received but it is no reason for saving that when received it must be regarded as having no value at all The Commissioners as its seems to me in fixing what money equivalent should be taken as representing the asset must fix an appropriate money value as at the end of the period to which the appellant s accounts are made up by taking all the circumstances into consideration As in the case of assets received during the accounting year which could not be immediately realized in a commercial sense so in the case of liabilities which have already accrued during the accounting year though they may not have to be discharged till a later date It will be always open to the Income tax authorities to fix an appropriate money value of that liability as at the end of the accounting period by taking all the circumstances into consideration and the estimate of expenses given by the assessee would be liable to scrutiny at their hands having regard to all the facts and circumstances of the case The High Court was therefore clearly in error when it stated In view of all the circumstances of the case it must in my opinion be held that the amounts of sale price not received in cash were also received and for the purpose of earning the receipts the assessee spent besides giving the lands nothing more than a promise Since the whole amount was actually received in the year of account before and 195 without making the promised expenditure no question of allowing a deduction of any expenditure from such receipts of the year arises If then the estimated expenses which would have to be incurred in duly discharging that liability which was undertaken by the appellant and was incorporated in the deeds of sale could be deducted in accordance with the mercantile system of accounting adopted by the appellant and accepted by the ITO is there anything in the Income tax Act which would prevent this debit being allowed as a deduction in the computation of the profits and gains of the appellant s business The appellant had it appears claimed this deduction as and by way of expenditure wholly laid out for the purposes of its business under section 102xv of the Income tax Act On an interpretation of that provision the High Court was inclined to hold though it did not decide the question that to the extent that a definite liability had accrued about which all preliminary proceedings causing the accrual of the liability in a concluded form had already been gone through although the actual disbursement had not yet taken place section 102xv would cover accrued liabilities though the amount may not actually have been expended on the footing that the liability being certain the amount was as good as spent and on that basis there would be room in the clause for debits which are proper debits under the mercantile system of accounting It however distinguished the present case on the ground that the liability here was a floating liability the measure of which depended upon the will of the appellant and the discharge of which rested only in a promise and that the expenses were entirely at large and the development work itself merely so Apart however from the question whether section 102 xv of the Income tax Act would apply to the facts of the present case the case is in our opinion well within the purview of section 10 1 of the Income tax Act The appellant here is being assessed in respect of the profits and gains of its business and the profits and gains of the business cannot be determined unless and until he expenses or the obligations which have been incurred are set off against the receipt s The expression profits and gains has to be understood in its commercial sense and there can be no computation of such profits and gains until the expenditure which is necessary for the purpose of earning the receipts is deducted therefrom whether the expenditure is actually incurred or the liability in respect thereof has accrued even though it may have to be discharged at some future date As was observed by Lord Herschell in Bussel vs Town and County Bank Ltd The duty is to be charged upon I a sum not less than the full amount of the balance of the profits or gains of the trade manufacture adventure or concern and it appears to me that that language implies that for the purpose of arriving at the balance of profits all that expenditure which is necessary for the purposes of earning the receipts must be deducted otherwise you do not arrive at the balance of profits indeed otherwise you do not ascertain and cannot ascertain whether there is such a thing as profit or not The profit of a trade or business is the surplus by which the receipts from the trade or business exceed the expenditure necessary for the purpose of earning those receipts That seems to me to be the meaning of the word profits in relation to any trade or business Unless and until you have ascertained that there is such a balance nothing exists to which the name profits can properly be applied A similar opinion was expressed in the Gresham Life Assurance Society V Styles 2 When we speak of the profits or gains of a trader we mean that which he had made by his trading Whether there be such a thing as profit or gain can only be ascertained by setting against the receipts the expenditure or obligations to which they have given rise These are no doubt observations from the English cases dealing with English statutes of Income tax but the general principles which can he deduced therefrom 1 424 2 197 are nevertheless applicable here and it was stated by Lord Macmillan in Pondicherry Railway Co Ltd vs Commissioner of Income tax Madras 1 English authorities can only be utilised with caution in the consideration of Indian Income tax cases owing to the difference in the relevant legislation but the principle laid down by Lord Chancellor Halsbury in Gresham Life Assurance Society vs Styles supra is of general application unaffected by the specialities of the English Tax system The thing to be taxed said his Lordship is the amount of profits or gains The word profits I think is to be understood in its natural and proper sense in a sense which no commercial man would misunderstand It may be useful to observe at this stage that prior to the amendment of the Indian Income tax Act in 1939 bad and doubtful debts were not treated as deductible allowance for the purpose of computation of profits or gains of a business The Privy Council in the Income tax Commissioner vs Chitnavis observed Although the Act nowhere in terms authorises the deduction of bad debts of a business such a deduction is necessarily allowable What are chargeable to income tax in respect of a business are the profits and gains of a year and in assessing the amount of the profits and gains of a year account must necessarily be taken of all losses incurred otherwise you would not arrive at the true profits and gains The High Court in disallowing the claim of the appellant in the present case only considered the provisions of section 10 2xv of the Act and came to the conclusion that on a strict interpretation of those provisions the sum of Rs 24809 was not an allowable deduction Its attention was drawn by the learned Counsel for the appellant to the provisions of section 101 of the Act also but it negatived this argument observing that under the Indian Act the profits must be 1 193i L R 58 1 A 239 252 2 1932 L R 59 I A 290 296 198 determined by the method of making the statutory deductions from the receipts and any deduction from the business receipts if it was to be allowed must be brought under one or the other of the deductions mentioned in section 102 and that there was no scope for any preliminary deduction under general principles It was however held by this Court in Badridas Daga vs The Commissioner of Income tax1 It is to be noted that while section 101 imposes a charge on the profits or gains of a trade it does not provide how those profits are to be computed Section 102 enumerates various items which are admissible as deductions but it is well settled that they are not exhaustive of all allowances which could be made in ascertaining profits taxable under section 101 Venkatarama Aiyar J who delivered the Judgment of this Court then proceeded to discuss the cases of Commissioner of Income tax vs Chitnavis2 Gresham Life Assurance Society vs Styles 3 and Pondicherry Railway Co vs Income tax Commissioner4 and observed The result is that when a claim is made for a deduction for which there is no specific provision in section 102 whether it is admissible or not will depend on whether having regard to accepted commercial practice and trading principles it can be said to arise out of the carrying on of the business and to be incidental to it If that is established then the deduction must be allowed provided of course there is no prohibition against it express or implied in the Act Turning now to the facts of the present case we find that the sum of Rs 24809 represented the estimated expenditure which had to be incurred by the appellant in discharging a liability which it had already undertaken under the terms of the deeds of sale of the lands in question and was an accrued liability which according to the mercantile system of accounting the appellant was entitled to debit in its books of account 1 14 2 1932 LR 59 IA 290 296 3 4 1931 LR 58 IA 239 252 199 for the accounting year as against the receipts of Rs 43692 11 9 which represented the sale proceeds of the said lands Even under section 102 of the Income tax Act it might possibly be urged that the word expended was capable of being interpreted as expendable or to be expended at least in a case where a liability to incur the said expenses had been actually incurred by the assessee who adopted the mercantile system of accounting and the debit of Rs 24809 was thus a proper debit in the present case We need not however base our decision on any such consideration We are definitely of opinion that the sum of Rs 24809 represented the estimated amount which would have to be expended by the appellant in the course of carrying on its business and was incidental to the same and having regard to the accepted commercial practice and trading principles was a deduction which if there was no specific provision for it under section 102 of the Act was certainly allowable deduction in arriving at the profits and gains of the business of the appellant under section 101 of the Act there being no prohibition against it express or implied in the Act It is to be noted that the appellant had led evidence before the Income tax authorities in regard to this estimated expenditure of Rs 24809 and no exception was taken to the same in regard to the quantum though the permissibility of such a deduction was questioned by them relying upon the provisions of s102 of the Act It therefore follows that the conclusion reached by the High Court in regard to the disallowance of Rs 24809 was wrong and it should have answered the referred question in the affirmative Before we conclude we are bound to observe that having accepted the receipts of Rs 43692 11 9 in their totality even though a sum of Rs 29392 11 9 only was actually received by the appellant in cash thus making the appellant liable for income tax on a sum of Rs 14300 which had not been received by it during the accounting year it was hardly open to the Revenue to urge that the sum of Rs 24809 should not have been allowed as a permissible deduction before 200 arriving at the profits or gains of the appellant which were liable to tax Consistently enough with this attitude the Revenue ought to have expressed its willingness to treat only a sum of Rs 29392 11 9 as the actual receipt of the appellant during the accounting year and made up the computation of the profits and gains of the appellant s business on that basis The Revenue however did nothing of the sort and insisted upon having its pound of flesh asking us to delete the whole of the item of Rs 24809 from the debit side of the account which it was certainly not entitled to do We accordingly allow the appeal set aside the judgment of the High Court and answer the referred question in the affirmative The respondent will of course pay the appellant s costs throughout Appeal allowed

Section 101b11 of the Banking Companies Act 1949 provided No banking company shall employ any person whose remuneration or part of whose remuneration takes the form of a share in the profits of the company The dispute between the appellant Banks and their employees related inter alia to the question whether the provisions of the Banking Companies Act 1949 prohibit the grant Of bonus to bank employees The Labour Appellate Tribunal took the view that section 10 of the Act did not stand in the way of granting bonus to bank employees because bonus according to it was not a share in the profits of the company On appeal it was contended for the appellant Banks that bonus as awarded by the Industrial Courts is remuneration within the meaning of section 10 201 read with section 2 of the Banking Companies Act 1949 and that it was also a share in profits and therefore the express provisions of section 10 read with section 2 override the provisions of the so far as banking companies are concerned and prohibit the award of bonus to employees of Banks Held 1 that the expression shall employ any person in section 10 of the Banking Companies Act 1949 means and includes shall have in employment any person and that in this respect the amendment of 1956 merely makes clear what was already meant by the section 2 that the word remuneration in section 10 of the Act has been used in the widest sense and includes bonus 3 that bonus in the industrial sense comes out of the available surplus of profits and when paid it fills the gap wholly or in part between the living wage and the actual wage It is labour s share in the profits and as it is a remuneration which takes the form of a share in profits it comes within the mischief of section 10 of the Act 4 The is not a declaratory Act and except in the small matter of the expression shall continue to employ in sub section 1 it does not purport to explain any former law or declare what the law has always been Consequently though section 10 as amended by the Act Of I956 does not stand in the way of the grant of industrial bonus for the period relating to the present appeals the amended section had no retrospective effect Accordingly section 10 of the Banking Act prior to the amend ment of 1956 prohibited the grant of industrial bonus to bank employees inasmuch as such bonus is remuneration which takes the form of a share in the profits of the banking company

Civil Appeals Nos 679 and 680 of 1957 Appeals by special leave from the judgment and decree dated the January 5 1955 of the Patna High Court in MJC Nos 374 375 of 1952 303 R J Kolah and R Patnaik for the appellant A N Kripal and D Gupta for the respondent May 14 The Judgment of the Court was delivered by BHAGWATT J These are two connected appeals with special leave granted by this Court under article 136 of the Constitution and arise out of the appellant s assessment to Income tax for the assessment year 1946 47 and Excess Profits Tax for the chargeable accounting period January 9 1945 to February 2 1946 The appellant is a Hindu undivided family carrying on extensive business in grain as merchants and commission agents It is one of the premier grain merchants and wholesalers of Sahibganj in the District of Santhal Parganas in the State of Bihar It has branches at Nawgachia in the District of Bhagalpur and at Dhulian in the District of Murshidabad in West Bengal The appellant filed its Income tax Return for the assessment year 1946 47 showing a loss of Rs 46415 in the business The Income tax Officer Patna however in the course of the assessment noticed that the appellant had encashed high denomination notes of the value of Rs 29 1000 on January 19 1946 The Income tax Officer asked for an explanation which the appellant gave stating that these notes formed part of its cash balances including cash balance in the Almirah account The cash balances of the appellant on January 12 1946 on which date the High Denomination Bank Notes Demonetisation Ordinance 1946 was promulgated were Rs 29284 3 9 in its Rokar and Rs 281397 10 0 in the Almirah account The Almirah account was an account for moneys withdrawn and kept at home The appellant sought to prove the fact that the high denomination notes eneashed by it formed part of its cash balances from certain entries in its accounts wherein the fact that moneys were received in high denomination notes had been noted Portions of these entries to the effect that moneys had been received in high denomination notes were found 304 by the Income tax Officer to be subsequent interpolations made by the appellant with a view to advance its case that the cash balances contained the high denomination notes encashed by it The Income tax Officer found that the appellant s food grains licence at Nawgachia had been cancelled for the accounting year for its failure to keep proper stock accounts and that the appellant was prosecuted under the Defence of India Rules but had been acquitted having been given the benefit of doubt The Income tax Officer also had regard to the fact that the appellant was a speculator and that as a speculator the appellant could easily have earned amounts far in excess of the value of the high denomination notes encashed He con sidered that even in the disclosed volume of business in the year under consideration in the Head Office and in the branches there was possibility of his earning a considerable sum as against which it showed a net loss of about Rs46000 The Income tax Officer also noticed that notwithstanding the fact that the period was very favourable to food grains dealers the appellant had declared a loss for the assessment year 194445 up to 1946 47 though it had the benefit of a large capital on hand The Income tax Officer further took into consideration the circumstances that Nawgachia and Dhulian were very important business centers and Sahibganj the principal place of business had gained sufficient notoriety for smuggling foodgrains and other commodities to Bengal by country boats Dhulian which was just on the Bengal Bihar border was also reported to be a great receiving centre for such commodities Having regard to all these circumstances the Income tax Officer rejected the appellant s explanation that the high denomination notes formed part of its cash balances and treated the sum of Rs 291000 as the appellant s secreted profits from business and included it in its total income and assessed the appellant for the said assessment year on the income of Rs 139117 Dealing with the Excess Profits Tax assessment he also held that the said income was derived from the business of the appellant and hence it was liable to excess profits tax also 305 The appellant preferred an appeal to the Appellate Assistant Commissioner against both these assessment orders and by his orders dated February 28 1951 the Appellate Assistant Commissioner upheld the orders of the Income tax Officer and dismissed the appeals On further appeals from the said orders of the Appellate Assistant Commissioner to the Income tax Appellate Tribunal the Tribunal by its order dated April 29 1952 dismissed both the appeals as regards the Incometax as well as Excess profits tax Even though before the Income tax Officer and the Appellate Assistant Commissioner the case of the appellant was that the account book which contained the entries in regard to the receipts of moneys in high denomination notes were genuine and correct this position was abandoned by the appellant before the Tribunal Before the Tribunal the appellant stated that the said entries were made in sheer nervousness after coming into force of the High Denomination Bank Notes Demonetization Ordinance 1946 on January 12 1946 as the appellant did not know that it had specific proof in its possession of having the high denomination notes as part of its cash balances The Tribunal held that there was no other reason to suspect the genuineness of the account books in which these interpolations were made If the entire account books were fabricated to serve its purpose there would be no need for the appellant to make interpolations between the lines already written in a different ink and in such an obvious manner as to catch one s eye on the most cursory perusal The Tribunal however examined the cash book and taking into consideration all the circumstances which had been adverted to by the Income tax Officer held that the appellant might be expected to have possessed as part of its business cash balance of at least Rs 150000 in the shape of high denomination notes on January 12 1946 when the Ordinance above mentioned was promulgated A copy of the statement of large amounts received by the appellant from a single constituent had been filed by the appellant which showed that sums aggregating to Rs 504713 had been received by the appellant in large amounts 39 306 exceeding Rs 1000 between February 6 1945 and January 11 1946 As to large payments made by the appellant no statement was filed but the Tribunal examined the accounts with a view to ascertain the payments which could have been made in high denomination notes The Tribunal came to the conclusion that the nature of the source from which the appellant derived the remaining 141 high denomination notes of Rs 1000 each remained unexplained to its satisfaction It accordingly ordered that the addition made by the authorities be reduced from Rs 291000 to Rs 141000 The Income tax Officer was also directed to make the necessary consequential adjustment in the Income tax assessment based upon the result of the connected Excess Profits Tax appeal In regard to the Excess Profits Tax appeal the Tribunal after taking into account the preceding and succeeding assessments and the nature of the appellant s business and the opportunities that it had to make substantial business profits outside the books held that the add back of Rs 141000 must be made to the business profits disclosed by the appellant Consequential relief was accordingly given in the Excess Profits Tax appeal also The appellant thereafter applied to the Tribunal for stating a case and raising and referring to the High Court the following questions of law arising from the said order of the Tribunal both as regards the Incometax and the excess profits tax assessments 1 Whether there is any material to justify the conclusion that Rs 141000 is secreted profit for the purpose of assessment this amount being a part of section 291000 and which was the amount represented by high denomination notes encashed by the Petitioner 2 Whether there is any material for a finding that the sum of Rs 141000 is the secreted value of the high denomination notes was business income liable to excess profits tax By its order dated August 15 1952 the Tribunal dismissed these applications stating that the finding of the taxing authorities was a pure finding of fact based 307 on evidence before them and that no question of law arose out of the said order of the Tribunal The appellant thereupon made applications to the High Court under section 662 for directing the Tribunal to state a case and raise and refer the said questions of law to the High Court for its decision By its order dated January 21 1953 the High Court directed the Tribunal to state a case and raise and refer the following question of law to the High Court I for its decision in both the applications Whether there is any material to support the finding of the Appellate Tribunal that a sum of Rs 141000 is secreted profit liable to be taxed in the hands of the assessee under the Indian Incometax Act and under the Excess Profits Tax Act The tribunal accordingly stated a case and raised and referred the aforesaid question of law to the High Court The said Reference was heard by the High Court and judgment was delivered on January 5 1955 whereby the High Court answered the referred question in the affirmative The High Court was of the opinion that the onus of proving the source of the said amount was on the appellant which the appellant did not discharge and that there was evidence before the Tribunal to come to the conclusion it did The finding arrived at by the Tribunal was therefore a pure finding of fact and it could not be urged that it was based on no evidence The High Court further held that as the appellant itself claimed that the said amount of Rs 291000 formed part of the cash balance of its business the said profits were profits of the business and as such liable to excess profits tax The appellant then applied to the High Court for a certificate under section 66A 2 of the Income tax Act for leave to appeal to this Court These applications were rejected by the High Court on August 25 1955 observing that it had answered the question of law not on the academic principles of onus but on the material from which it was open to the Income tax authorities to arrive at the conclusion at which they arrived 308 The appellant thereupon on October 22 1955 applied to this Court for special leave to appeal which was granted by this Court on November 28 1955 in both the appeals arising out of the assessment for Income tax as well as the excess profits tax Both the appeals arising out of these orders being Civil Appeals Nos 679 and 680 of 1957 are now before us The main question to determine in these two appeals is whether there was any material to support the finding of the Tribunal that the sum of Rs 141000 represented the secreted profits of the appellant s business and as such liable to be taxed in the hands of the appellant under the Indian Income tax Act and the Excess Profits Tax Act The contention of the Revenue all throughout has been that it is a finding of fact reached by the authorities competent in that behalf and this Court should not interfere with such findings of fact The contention of the appellant on the other hand has been that even though it may be a finding of fact to be reached by the authorities concerned on the materials on the record before them such finding is vitiated by reason of the authorities indulging in conjectures suspicions and surmises and basing the same on no material whatever which goes to support the same It is also contended that the finding reached by them is a perverse one which a reasonable body of men could not have arrived at on the material on the record The limits of our jurisdiction to interfere with finding of fact reached by the courts or tribunals of facts have been laid down by us in various decisions of this Court In Dhirajlal Girdharilal vs Commissioner of Income tax Bombay 1 we observed that when a Court of fact arrives at its decision by considering material which is irrelevant to the enquiry or acts on material partly relevant and partly irrelevant where it is impossible to say to what extent the mind of the Court was affected by the irrelevant material used by it in arriving at its decision a question of law arises Whether the finding of the Court of fact is not vitiated by reason of its having 1 309 relied upon conjectures surmises and suspicions not supported by any evidence on record or partly upon evidence and partly upon inadmissible material We also observed in Dhakeswari Cotton Mills Ltd vs Commissioner of Income tax West Benyal 1 that an assessment so made without disclosing to the assessee the information supplied by the departmental representative and without giving any opportunity to the assessee to rebut the information so supplied and declining to take into consideration all materials which the assessee wanted to produce in support of the case constituted a violation of the fundamental rules of justice and called for interference on our part In Messrs Metha Parikh and Co vs The Commissioner of Income tax Bombay this Court observed that the conclusions based on facts proved or admitted may be conclusions of fact but whether a particular inference can legitimately be drawn from such conclusions may be a question of law Where however the fact finding authority has acted without any evidence or upon a view of the facts which could not reasonably be entertained or the facts found were such that no person acting judicially and properly instructed as to the relevant law could have found the Court is entitled to interfere In our decision in Meenakshi Mills Madurai vs Commissioner of Income tax Madras 3 after discussing the various authorities on the subject we laid down that 3 A finding on a question of fact is open to attack under section 661 as erroneous in law when there is no evidence to support it or if it is perverse The latest pronouncement of this Court in Omar Salay Mohamed Sait vs The Commissioner of Income tax Madras 4 summarises the position thus We are aware that the Income tax Appellate Tribunal is a fact finding Tribunal and if it arrives at its own conclusions of fact after due consideration of the evidence before it this Court will not 1 1955 I SCR 941 3 19561 SCR 69i 2 4 CA No 15 Of 1958 decided on March 5 1959 310 interfere It is necessary however that every fact for and against the assessee must have been considered with due care and the Tribunal must have given its finding in a manner which would clearly indicate what were the questions which arose for determination what was the evidence pro and contra in regard to each one of them and what were the findings reached on the evidence before it The conclusions reached by the Tribunal should not be coloured by any irrelevant considerations or matters of prejudice and if there are any circumstances which required to be explained by the assessee the assessee should be given an opportunity of doing so On no account whatever should the Tribunal base its findings on suspicions conjectures or surmises nor should it act on no evidence at all or on improper rejection of material and relevant evidence or partly on evidence and partly on suspicions conjectures and surmises and if it does anything of the sort its findings even though on questions of fact will be liable to be set aside by this Court It is in the light of these observations that we have to determine the question arising before us in the present appeals It is clear on the record that the appellant maintained its books of account according to the mercantile system and there were maintained in its cash books two accounts one showing the cash balances from day to day and other known as Almirah account wherein Were kept large balances which were not required for the day to day working of the business Even though the appellant kept large amounts in bank deposits and securities monies were required at short notice at different branches of the appellant There were also collections made from various Beoparies or merchants and monies were also required for doing the grain purchase work on behalf of the Government These monies were credited in the Almirah account which showed heavy cash balances from time to time In the books of account for previous years it was the practice of the appellant to give details of the notes of high denominations giving the distinctive numbers of these notes received or paid 311 or at least other description eg So many notes of Rs 1000 each In the assessment year however this practice does not appear to have been followed but entries continued to be made of monies thus received from the banks different branches Beoparees etc without any such details being filled therein A statment of these cash balances viz the balance in the Rokar and the balance in the Almirah from September 1 1945 to January 31 1946 was filed before the Income tax authorities and this statement showed that apart from the balance in the Rokar the balance in the Almirah rose from Rs 136397 10 0 on September 1 1945 to Rs 197397 10 0 on September 30 1945 to Rs 223397 10 0 on October 13 1945 to Rs 265397 10 0 on November 27 1945 to Rs 291397 10 0 on December 29 1945 and remained at Rs 281397 10 0 on January 10 1946 The balance in the Rokar fluctuated considerably but on the relevant date January 10 1946 it stood at Rs 26092 10 9It was Rs 24976 13 3 on January II 1946 and Rs 29284 3 9 on January 12 1946 when the High Denomination Bank Notes Demonetization Ordinance 1946 was promulgated These entries showed that there was with the appellant on on January 12 1946 an aggregate sum of Rs 310681 13 9 and it was highly probable that the High Denomination notes of Rs 291000 were included in this sum of Rs 310681 13 9 The books of account of the appellant were not challenged in any other manner except in regard to the interpolations relating to the number of high denomination notes of Rs 1000 each obviously made by the appellant in the accounts for the assessment year in question in the manner aforesaid and even in regard to these interpolations the explanation given by the appellant in regard to the same was accepted by the Tribunal Even though the Income tax Officer made capital out of the interpolations and subsequent insertions in the books of account and styled the evidence furnished by them as created or manipulated evidence thus discounting the story of the appellant in regard to the source of these high denomination notes the Tribunal 312 was definitely of opinion that there was no other reason to suspect the genuineness of the account books in which these interpolations were found As a matter of fact the Tribunal accepted these books of account as genuine and worked up its theory on the basis of the entries which obtained in these books of account The Tribunal had before it the statement of large amounts received by the appellant from the banks different branches of the appellant and its Beoparees or merchants which showed that between February 6 1945 and January 11 1946 amounts exceeding Rs 1000 aggegrating to Rs 504713 had been received by the appellant Even though large amounts may have been paid out by the appellant in this manner between the said dates the entries of the balance in Rokar and the balance in Almirah showed that on January 12 1946 the balance in Rokar was Rs 26234 3 9 and the balance in Almirah was Rs 281397 10 0 the total cash balance thus aggregating to Rs 310681 13 9 Nobody had any inkling of the promulgation of the High Denomination Bank Notes Demonetization Ordinance 1946 on January 12 1946 and if in the normal course of affairs and situated as the appellant was the appellant kept these large cash balances in High Denomination Notes of Rs 1000 each there was nothing surprising or improbable in it If the appellant had to disburse such large sums of monies at short notices at the different branches of the appellant and also to its Beoparees apart from financing the Government for grain purchase work which it used to carry on it would be convenient for it to handle these large sums of monies in high denomination notes of Rs 1000 each and the most natural thing for it to do was to keep these cash balances in as many high denomination notes as possible The Tribunal in fact took count of this position and after giving due weight to all the circumstances arrived at the conclusion that the appellant might be expected to have possessed as part of its business cash balance at least Rs 150000 in the shape of high denomination notes on January 12 1946 when the Ordinance above mentioned was promulgated This conclusion 313 of the Tribunal could only be arrived at on the basis that the entries in the books of account in regard to the balance in Rokar and the balance in Almirah were correct and represented the true state of affairs in spite of the interpolations and subsequent insertions which had been made to bolster up the true case If these were the materials on record which would lead to the inference that the appellant might be expected to have possessed as part of its cash balance at least Rs 150000 in the shape of high denomination notes on January 12 1946 when the Ordinance was promulgated was there any material on record which would legitimately lead the Tribunal to come to the conclusion that the nature of the source from which the appellant derived the remaining 141 high denomination notes of Rs 1000 each remained unexplained to its satisfaction If the entries in the books of account in regard to the balance in Rokar and the balance in Almirah were held to be genuine logically enough there was no escape from the conclusion that the appellant had offered reasonable explanation as to the source of the 291 high denomination notes of Rs 1000 each which it encashed on January 19 1946 It was not open to the Tribunal to accept the genuineness of these books of account and accept the ex planation of the appellant in part as to Rs 150000 and reject the same in regard to the sum of Rs 141000 0 0 Consistently enough the Tribunal ought to have accepted the explanation of the appellant in regard to the whole of the sum of Rs 291000 and held that the appellant had satisfactorily explained the encashment of the 291 high denomination notes of Rs 1000 each on January 19 1946 The Tribunal however appears to have been influenced by the suspicions conjectures and surmises which were freely indulged in by the Income tax Officer and the Appellate Assistant Commissioner and arrived at its own conclusion as it were by a rule of thumb holding without any proper materials before it that the appellant might be expected to have possessed as part of its business cash balance at least Rs 150000 in the shape of high denomination notes on January 40 314 12 1946 a mere conjecture or surmise for which there was no basis in the materials on record before it The Income tax Officer had indented in support of his conclusion the surrounding circumstances viz that the appellant was one of the premier Arhatdars and grain merchants of Sahibgan1 with branches doing similar business at Nawgachia and Dhullian and all these places were very important business centres and Sahibganj the principal place of business had gained sufficient notoriety for smuggling foodgrains and other commodities to BenLal by country boats and Dhulian which was just on the Bihar Bengal border was reported to be a great receiving centre for such commodities that the foodgrains licence of the appellant at Nawgachia was also cancelled during the accounting year for not keeping proper stock accounts and the appellant was prosecuted under the Defence of India Rules but was given the benefit of doubt and was acquitted that the accounting year and the year preceding it as also the year succeeding it were very favourable for the foodgrain dealers but the appellant though he had large capital in hand declared losses all through from 1944 45 assessment year up to 1946 47 assessment year the loss according to its books in the year under consideration being to the tune of about Rs 46000 that the appellant was in very favourable circumstances in which there was a pos sibility of its earning a considerable amount in the year under consideration that it also indulged in speculation a loss of about Rs 40000 shown in Nawgachia branch in Kalai account in which profit in a single transaction or in a chain of transactions could exceed the amounts involved in the high denomination notes that even in the disclosed volume of business in the year under consideration in the Head Office and in branches there was possibility of its earning a considerable sum as against which showed a net loss of about Rs 45000 and that the appellant had all these probable source or sources from which the appellant could have earned the sum of Rs 291000 which was represented by the high denomination notes of Rs 1000 315 The Appellate Assistant Commissioner also emphasized the said aspect but based his conclusion mainly on the ground that the appellant had failed to prove that the high denomination notes had their origin in capital and not in profit and held that the Income tax Officer was justified in treating the sum of Rs 291000 as secreted profits This was the background against which the Tribunal came to its own conclusion Even though it recognised that it was not improbable that when very large sums say in excess of Rs 10000 at a time were received a fairly good portion thereof consisted of high denomination notes and as high denomination notes were valid tender and nobody could have foreseen that they would be demonetised suddenly in January 1946 there was nothing out of the way in persons dealing with tens of thousands of rupees and whose balances ran to lakhs being in possession of a fair proportion of their balances in the shape of high denomination notes While recognizing this probability of the appellant having been in possession of a fair proportion of its balances in the shape of high denomination notes the Tribunal unconsciously though it was fell into an error when it held that the appellant might be expected to have possessed at least Rs 150000 in the shape of high denomination notes as part of its cash balance thus treating the remaining Rs 141000 in the high denomination notes of Rs 1000 each as outside the purview of these cash balances Unless the Tribunal had at the back its mind the various probabilities which had been referred to by the Income tax Officer as above it could not have come to the conclusion it did that the balance of Rs 141000 comprising of the remaining 141 high denomination notes of Rs 1000 each was not satisfactorily explained by the appellant If the entries in the books of account were genuine and the balance in Rokar and the balance in Almirah on January 12 1946 aggregated to Rs 310681 13 9 and if it was not improbable that a fairly good portion of the very large sums received by the appellant from time to time say in excess of Rs 10000 at a time 316 consisted of high denomination notes there was no basis for the conclusion that the appellant had satisfactorily explained the possession of Rs 150000 in the high denomination notes of Rs 1000 each leaving the possession of the balance of 141 high denomination notes of Rs 1000 each unexplained Either the Tribunal did not apply its mind to the situation or it arrived at the conclusion it did merely by applying the rule of thumb in which event the finding of fact reached by it was such as could not reasonably be entertained or the fact found were such as no person acting judicially and properly instructed as to the relevant law could have found or the Tribunal in arriving at its findings was influenced by irrelevant considerations or indulged in conjectures surmises or suspicions in which event also its finding could not be sustained Adverting to the various probabilities which weighed with the Income tax Officer we may observe that the notoriety for smuggling foodgrains and other commodities to Bengal by country boats acquired by Sahibgunj and the notoriety achieved by Dhulian as a great receiving centre for such commodities were merely a background of suspicion and the appellant could not be tarred with the same brush as every Arhatdar and grain merchant who might have been indulging in smuggling operations without an iota of evidenec in that behalf The cancellation of the foodgrain licence at Nawgachia and the prosecution of the appellant under the Defence of India Rules was also of no consequence inasmuch as the appellant was acquitted of the offence with which it had been charged and its licence also was restored The mere possibility of the appellant earning considerable amounts in the year under consideration was a pure conjecture on the part of the Income tax Officer and the fact that the appellant indulged in speculation in Kalai account could not legitimately lead to the inference that the profit in a single transaction or in a chain of transac tions could exceed the amounts involved in the high denomination notes this also was a pure conjecture or surmise on the part of the Income tax Officer As regards the disclosed volume of business in the year 317 under consideration in the Head Office and in branches the Income tax Officer indulged in speculation when he talked of the possibility of the appellant earning a considerable sum as against which it showed a net loss of about Rs 45000 The Income tax Officer indicated the probable source or sources from which the appellant could have earned a large amount in the sum of Rs 291000 but the conclusion which he arrived at in regard to the appellant having earned this large amount during the year and which according to him represented the secreted profits of the appellant in its business was the result of pure conjectures and surmises on his part and had no foundation in fact and was not proved against the appellant on the record of the proceedings If the conclusion of the Income tax Officer was thus either perverse or vitiated by suspicions conjectures or surmises the finding of the Tribunal was equally perverse or vitiated if the Tribunal took count of all these probabilities and without any rhyme or reason and merely by a rule of thumb as it were came to the conclusion that the possession of 150 high denomination notes of Rs 1000 each was satisfactorily explained by the appellant but not that of the balance of 141 high denomination notes of Rs 1000 each The position as it obtained in this case was closely analogous to that which obtained in Messrs Mehta Parikh Co vs The Commissioner of Income tax Bombay 1 In that case the assessee had to satisfactorily explain the possession of 61 High Denomination Notes of Rs 1000 each and the Tribunal came to the conclusion that the assessee had satisfactorily explained the possession of 31 of these notes and not of the remaining 30 The High Court had treated the finding of the Tribunal as a finding of fact It was held by this Court that the entries in cash book and the statements made in the affidavit in support of the explanation which were binding on the Revenue and could not be questioned clearly showed that it was quite within the range of possibility that the assessee had in their possession the 61 High denomination notes on the relevant date and their explanation in that 1 318 behalf could not be assailed by a purely imaginary Calculation of the nature made by the income tax officer or the Appellate Assistant Commissioner It further held that the Tribunal made a wrong approach and while accepting the assessee s explanation with regard to 31 of the notes it had absolutely no reason to exclude the rest as not covered by it in the absence of any evidence to show that the excluded notes were profits earned by the assessee from undisclosed sources The assessee having given a reasonable explanation the Tribunal could not by applying a rule of thumb discard it so far as the rest were concerned and act on mere surmise In arriving at its decision this Court referred to the case of Chunilal Ticamchand Coal Co Ltd vs Commissioner of Income tax Bihar and Orissa 1 and stated that the case before it should also have been similarly decided by the High Court in favour of the assessee A decision of the Allahabad High Court reported in in Kanpur Steel Co Ltd vs Commissioner of Incometax Uttar Pradesh may also be noted in this context The assessee there encashed 32 currency notes of Rs 1000 each on January 12 1946 when the High Denomination Bank Notes Demonetisation Ordinance 1946 came into force and when the Income tax Officer called upon it to explain how these currency notes came into its possession the assessee claimed that the notes represented part of its cash balance which on that date stood at Rs 34313 The Income tax Officer rejected the explanation and assessed the amount of Rs 32000 represented by these currency notes as suppressed income of the assessee from some undisclosed source The Tribunal took into account the statement of sales relating to a few days preceding the date of encashment and found that the highest amount of any one single transaction was only Rs 399 The Tribunal also referred to another statement of the daily cash balances of the assessee from December 20 1945 to January 12 1946 and noted that the cash balance of the assessee was steadily increasing The Tribunal however estimated that high denomination 1 2 319 currency notes to the value of Rs 7000 only could form part of the cash balance of the assessee It therefore upheld the assessment to the extent of Rs 25000 On a reference to the High Court it was held 1 that the burden of proof lay upon the Department to prove that the sum of Rs 32000 represented suppressed income of the assessee from undisclosed sources and the burden was not on the assessee to prove how it had received these high denomination currency notes for until the Demonetisation Ordinance came into force high denomination currency notes could be used as freely as notes of any lower denomination and no one had any idea that it should be necessary for him to explain the possession of high denomination currency notes the assessee had naturally not kept any statement regarding the receipt of these currency notes and it was for the first time on January 12 1946 when the Ordinance came into force that it became necessary for the assessee to explain its possession of these currency notes and ii that the explanation given by the assessee that the notes formed part of the cash balance of Rs 34000 and odd was fairly satisfactory and was not found by the Tribunal to be false the statement of sales was hardly relevant to the question the Department in relying on the entries relating to the bills of each day committed an error and no inference should have been drawn from them that any one single transaction did not exceed Rs 399 did not preclude the possibility of payment in high denomination notes for such transaction therefore the Tribunal rejected the explanation of the assessee on surmises and there was no material for the Tribunal to hold that the sum of Rs 25000 represented suppressed income of the assessee from undisclosed sources In arriving at the above decision the High Court referred to the cases of Mehta Parikh Co vs Commissioner of Income tax Bombay 1 and Chunilal Ticamchand Coal Co Ltd vs Commissioner of Incometax Bihar and Orissa 2 It is therefore clear that the Tribunal in arriving at the conclusion it did in the present case indulged in 1 1956 SCR 626 2 320 suspicions conjectures and surmises and acted without any evidence or upon a view of the facts which could not reasonably be entertained or the facts found were such that no person acting judicially and properly instructed as to the relevant law could have found or the finding was in other words perverse and this Court is entitled to interfere We are therefore of opinion that the High Court was clearly in error in answering the referred question in the affirmative The proper answer should have been in the negative having regard to all the circumstances of the case which we have adverted to above The appeals will accordingly be allowed the judgment and order passed by the High Court will be set aside and the referred question will be answered in the negative The appellant will be entitled to its costs of the reference in the High Court and of these appeals in this Court as against the respondent Appeals allowed

B acting as manager of a joint Hindu family consisting of himself and his sons executed a mortgage deed in favour of the plaintiff hypothecating certain movables to secure a loan Subsequently the sons obtained a partition decree against their father and the joint family properties were divided by metes and bounds and separate possession was taken by the father and the sons Later on the plaintiff filed a suit against B praying for a decree against the mortgaged property as well as against the joint family The sons applied for being impleaded as defend ants stating that the mortgaged properties were allotted to them by the parti tion decree and B was not the manager of a joint Hindu family In reply the plaintiff gave up the claim for a mortgage decree stating that she would be statisfied with a money decree against B and the plaint was amended according ly B died and his sons were brought on the record as his legal representatives The sons pleaded inter alia that the debt was illegal and immoral as it related to specula tive transactions by the father The parties arrived at a compromise and on the basis thereof a simple money decree was passed in favour of the plaintiff against the estate of B in the hands of his legal representatives The judgment debtors sons disputed their liability on three grounds viz i that under the terms of the compromise decree the decree holder could proceed only against the properties of B in the hands of his legal representatives and no property belonging to the sons could be made liable for the decreeii that as the decree was obtained after partition of the joint family properties between the father and his sons the properties of the sons obtained in partition were not liable under Hindu law for the debt of the father iii that in any event if there was any pious obligation on the part of the sons to pay the father s debt incurred before partition such obligation could be enforced against the sons only in a properly constituted suit and not by way of execu tion of a decree obtained in a suit which was brought against the father alone during his lifetime and to which the sons were made parties as legal representatives after the father s death 545 Held repelling the contentions 1 that as the decree fulfilled the conditions of sec 52 1 of the Civil Procedure Code it attracted all the incidents which attach by law to a decree of that character and therefore the decree holder was entitled to call in aid the provisions of sec 53 of the Code and if any property in the hands of the sons was liable under the Hindu law to pay the father s debt such property would be liable in execution of the decree by virtue of the provision of sec 53 of the Civil Procedure Code 2 that a son is liable even after parti tion for the pre partition debts of his father which are not immoral or illegal and for the payment of which no arrangement was made at the time of the partition 3 that a decree passed against the separated sons as legal repre sentatives of the deceased father in respect of a debt incurred before partition can be executed against the shares obtained by such sons at the partition and this can be done in execution proceedings and it is not necessary to bring a separate suit for the purpose Case was remanded to the execution court to determine the question whether the debt was immoral or illegal and whether any arrangement was made at the time of partition for the payment of the debt Bankey Lal vs Durga Prosad ILR 53 All 868 FB approved The view of the majority in AtuI Krishna vs Lala Nandanji ILR 14 Pat 732 disapproved Case law dis cussed

ON Criminal Appeal No 182 of 1957 Appeal from the judgment and order dated July 4 1957 of the Bombay High Court in Criminal Application for Revision No 278 of 1956 arising out of the judgment and order dated the 3rd January 1956 of the Presidency Magistrate 16 Court Esplanade Bombay in Criminal Case No 1913P of 1955 N Srilvastava and J B Dadachanji for the appellant G C Mathethur and R H Dhebar for the respondent 286 1959 May 14 The Judgment of the Court was delivered by lMAM J The appellant was convicted under r6a of the Indian Passport Rules 1950 hereinafter reffered to as the Rules made under section 3 of the Indian Passport Act 34 of 1920 hereinafter referred to as the Act and was sentenced to pay a fine of Rs 100 The High Court in exercising its revisional jurisdiction upheld a fine of the conviction but reduced the sentence to Rs 25 it granted a certificate to the appellant that the case was a fit one for appeal to this Court it is beyond dispute now that the appellant is a citizen of India Admittedly he entered the territories of India without a passport The sole question for determination is whether his act in so entering the territories of India amounted to an offence punishable under r 6a of the Rules The Act was passed in 1920 and has been the subject of amendment and modification thereafter Its preamble states whereas it is expedient to take power to require passports of persons entering India it is hereby enacted _ as follows Passport has been defined as a passport for the time being in force issued or renewed by the prescribed authority and satisfying the conditions prescribed relating to the class of passport to which it belongs Section 3 states 1 The Central Government may make rules requiring that persons entering India shall be in possession of passports and for all matters ancillary or incidental to that purpose 2 Without prejudice to the generality of the foregoing power such rules may a prohibit the entry into India or any part thereof of any person who has not in his possession a passport issued to him b poresscribe the authorities by whom passports must have been issued or renewed and the conditions with which they must comply for the purposes of this Act and c provide for the exemption either absolutely or on any condition of any person or class of persons from any provision of such rules 287 3 Rules made under this section may provide that any contravention thereof or of any order issued under the authority of any such rule shall be punishable with imprisonment for a term which may extend to three months or with fine or with both 4 All rules made under this section shall be published in the Official Gazette and shall thereupon have effect as if enacted in this Act Rule 3 of the Rules states Save as provided in rule 4 no person proceeding from any place outside India shall enter or attempt to enter India by water land or air unless he is in possession of a valid passport conforming to the conditions prescribed in rule 5 Rule 4 specifies the persons who shall be exempted from the provisions of r 3 Clause b of r 4 exempts members of the Naval Military or Air Forces of India on duty and members of the family of any such person when accompanying such person to India on a Government transport Clause e exempts persons domiciled in India proceeding from any of the French establishments in India other than Pondicherry in Kairakal or from any of the Portuguese establishments in India or Pakistan Clause f exempts persons domiciled in India entering India by land or by air over the Napalese or Tibetan Frontier Clause h exempts bonafide Mohamedan pilgrims returning from Jeddah or Basra and clause 1 exempts other persons or classes of persons specified by general or special orders of the Central Government The date of the appellant s entry into India is not known He was certainly arrested on February 26 1955 and it is his case that he entered India sometime after the decision of this Court in the case of Ebrahim Vazir Mavat vs The State of Bombay The judgment of this Court in that case was delivered on February 15 1954 On that basis the appellant entered India sometime after February 15 1954 and before February 26 1955 It is unnecessary to specify in great detail the 1 I954 SCR 933 288 movements of the appellant between November 19 1948 when he went to Karachi for the first time and his arrest on February 26 1955 as his movements during this period are not relevant in determining whether the appellant has committed an offence punishable under r 6a of the Rules The case must be decided on the footing that sometime before his arrest on February 26 1955 the appellant entered India without a passport Two contentions were raised on behalf of the appellant 1 that r 3 of the Rules and section 3 of the Act were ultra vires the Constitution in so far as they purported to affect the right of an Indian citizen to enter India without a passport and 2 that on a proper interpretation of the provisions of section 3 of the Act and r 3 of the Rules these provisions did not apply to an Indian citizen They applied only to non Indian citizens As to the first contention it was urged that section 3 of the Act and r 3 of the Rules in so far as they purported to relate to an Indian citizen were ultra vires the Constitution as they offended against the provisions of article 191d and e Article 191d confers the fundamental right on all Indian citizens to move freely throughout the territory of India and article 191 e to reside and settle in any part of the territory of India This fundamental right however is subject to reasonable restrictions under clause 5 of article 19 In the case of Ebrahim Vazir Mavat vs The State of Bombay supra1 the majority judgment of this Court held that an Indian citizen visiting Pakistan for any purpose whatsoever and returning to India may be required to produce a permit or a passport as the case may be before he can be allowed to enter India and this requirement may well be regarded as a proper restriction upon entry This Court however held that it was quite a different matter to say that if he enters India without a permit he may on conviction for such offence be ordered to be removed from India It was the order directing his removal from India which was held by this Court to be tantamount to taking away his fundamental right guaranteed under article 191 c 1 289 to reside and settle in any part of the territory of India It is clear therefore that so far as this Court is concerned it has already decided that to require an Indian citizen to produce a passport before he can be allowed to enter India may be regarded as a proper restriction upon entering India This decision is binding on us and we must follow the decision of this Court in the case referred to It was however urged that as a constitutional question has been raised this matter cannot be decided by judges less than five in number Therefore the case should be referred to what is described as the Constitution Bench Article 1453 of the Constitution states that the minimum number of Judges who are to sit for the purpose of deciding any case involving a substantial question of law as to the interpretation of the Constitution or for the purpose of hearing any reference under Article 143 shall be five It is clear that no substantial question of law as to the interpretation of the Constitution arises in the present case as the very question raised has been decided by a Bench of this Court consisting of five Judges As the question raised before us has been already decided by this Court it cannot be said that any substantial question of law arises regarding the interpretation of the Constitution As to the second submission made we have no hesitation in saying that the words used in section 3 of the Act and rr 3 and 4 of the Rules make it quite clear that they apply to every person including an Indian citizen Under section 31 of the Act the word Persons has been stated without any qualification Under section 32a the words employed are any person and in r 3 the words employed are no person Clause b of r 4 obviously applies to Indian citizens but those mentioned in that clause have been specifically exempted from the operation of r 3 Clause h of r 41 can apply to Indian citizens who are by religion Mohomedan They have been exempted Therefore on a reasonable interpretation of section 3 of the Act and rr 3 and 4 of the Rules there can be no manner of doubt that these provisions apply to all persons including Indian citizens 37 290 In our opinion there can be no manner of doubt that the appellant s entry into India without a passport was in contravention of r 3 of the Rules and therefore punishable under r 6a and the appellant was rightly convicted The appeal is accordingly dismissed Appeal dismissed

The appellant company carried on land developing business and sold land after development on a profit The whole of the development was not carried out before the land was sold nor the whole of the sale price received in cash at the time of the sale In the accounting year in question the appellant sold a number of plots and received a portion of the sale price but as it maintained its accounts in the mercantile method it entered the whole price receivable viz Rs 43692 11 9 in credit side though only Rs 29392 11 9 was actually received and debited a sum of Rs 24809 being the estimated expenditure for the developments it had by terms incorporated in the deeds of sale under taken to carry out within six months thereof although no part of it was actually spent during that year The appellant claimed a deduction of the said sum of RS 24809 in computation of the profits and gains of its business during the assessment year The Income tax Officer while accepting the method of accounting adopted by the appellant disallowed the claim on the ground that no expenses had actually been incurred and the estimate was only a probable one The Appellate Assistant Commissioner as well as the Income tax Appellate Tribunal confirmed the disallowance on appeals and the High Court on a reference under section 661 of the Income tax Act held against the appellant The question was whether the deduction claimed was a legally allowable expense of the year in question Held that the liability which was undertaken by the appel lant under the deeds of sale was an accrued liability and not a contingent one Although the time of six months was not of the essence of the contract the undertaking it had given was unconditional and absolute in terms and the liability must be held to have accrued on the execution of the deeds of sale though it was to be discharged at a future date Keshav Mills Ltd vs Commissioner of Income tax Bombay 1953 S CR 950 referred to Peter Meychant Ltd vs Stedeford Inspector of Taxes distinguished 24 186 The difficulty in estimating such a liability for purposes of debit under the mercantile system of accounting could be no ground for treating an accrued liability as a conditional one since it was always open to the Income tax authorities to arrive a proper estimate thereof having regard to all the circumstances of the case Gold Coast Selection Trust Ltd vs Humnphrey Inspector Taxes 19481 AC 459 referred to Regard being had therefore to the accepted commercial practice and trading principles the estimated deduction even if it did not come under any of the specific provisions Of section 102 of the Act was certainly an allowable deduction under section 101 of the Act there being no prohibition either express or implied against it in the Act and consequently the question must be answered in the affirmative Badridas Daga vs The Conimissioncr of Income tax Russel vs Town and Country Bank Ltd Gyesham Life Assurance Society vs Styles Pondichcry Railway co Ltd vs Commissioner of Income tax Madras 1913 LR 58 A 239 and Income tax Commissioner vs Chitnavis 1932 LR 59 IA 290 referred to

Civil Appeal No 403 of 1957 Appeal by special leave from the judgment and order dated August 2 1956 of the Labour Appellate Tribunal of India Calcutta in Appeal No C 52 of 1956 arising out of the Award dated January 7 1956 of the Court of Judge Fifth Industrial Tribunal West Bengal M C Setalvad Attorney General for India and A N Kripal for the appellant CK Daphtary Solicitor General of India D L Sen Gupta and Dipak Datta Choudhri for respondentsNos May 15 The Judgment of the Court was delivered by GAJENDRAGADAR J This appeal by special leave arises from an industrial dispute between Guest Keen Williams Private Ltd hereafter called the appellant and its workmen represented by Guest Keen Williams Staff Association hereafter called the respondent which was referred for adjudication to the Fifth Industrial Tribunal West Bengal Calcutta by the Government of West Bengal on December 29 1954 Three questions were the subject matter of the reference 1 If the system of forced retirement of workmen at the age of 55 as introduced by the management in May 1954 is justified 2 To What relief the workmen are entitled on retirement and 3 If the forced retirement of the workmen named in the attached list is justified To what relief including reinstatement andor compensation are they entitled These three questions were answered substantially in favour of the appellant by the tribunal but on appeal by the respondent the Labour Appellate Tribunal has reversed the findings of the tribunal and has substantially 351 answered the questions in favour of the respondent The correctness of this decision is challenged by the appellant by its present appeal The appellant is a company incorporated with limited liability under the Indian Companies Act It carries on business at 41 Chowringhee Road Calcutta Its business is engineering and manufacturing of engineering products It has a factory at Howrah where about 5000 workmen are employed After the Act 20 of 1946 hereafter called the Act came into force on April 23 1946 the appellant submitted its draft standing orders for certification to the certifying officer On December 19 1953 the certifying officer duly certified the said orders after giving the trade unions of the appellant s workmen an opportunity to be heard and after considering their objections Against the said orders no appeal was preferred by the respondent and so they became final and operative as conditions of service between the parties The standing order in regard to retirement of the appellant s employees provides that workmen shall retire from the service of the company on reaching the age of 55 years but the company may at its sole discretion offer an extension of service beyond this age to anybody In pursuance of this standing order the appellant examined the cases of 56 of its employees who according to their service records appeared to have attained the age of superannuation The objection raised by two workmen about the correctness of the age shown in their service records was examined and ultimately upheld their records were accordingly corrected on the strength of the certificates granted to them by the Civil Surgeon Howrah Seven were allowed extention of service up to March 31 1955 while the remaining 47 who were over the age of 55 were retired with effect from May 31 1954 after giving each one of them a notice in that behalf on May 11 1954 These 47 workmen are shown in the list attached to the reference and it is in respect of them that question No 3 has been referred to the tribunal 352 The said 47 workmen were paid all the emoluments due to them in respect of Provident Fund contributions made by the appellant in respect of them and by themselves they were also paid gratuities at the rate of 15 days pay for each year of their service prior to their becoming the members of the Provident Fund Besides they were given valuable presents by the appellant in appreciation of their services and in a large number of cases the appellant offered employ ment to the sons or other relatives of the said work men Even so the respondent raised a dispute about the compulsory retirement of the said workmen and in fact challenged the validity of the relevant standing order itself It is after this dispute was referred to the tribunal for adjudication that the present proceedings commenced The tribunal held that the system of forced retirement introduced by the appellant under its relevant standing order was perfectly justified It observed that the respondent had given no convincing reason why the age limit of retirement should by fixed not at 55 but at 60 years as alleged by it and it referred to the fact that in the case of a dispute between the appellant and its head office staff the retirement age had been fixed at 55 years by consent in proceedings before the Second Industrial Tribunal on September 24 1953 Reference was also made to the award in the Calcutta Exchange Gazette and Daily Advertiser And One of their employees 1 where the age of superannuation had been similarly fixed at 55 Incidentally the tribunal was impressed by the appellant s argument that the respondent had not preferred an appeal against the relevant standing order though an appeal was competent under the Act Having held that the compulsory retirement at the age of 55 fixed by the standing order was justified the tribunal proceeded to consider the two other questions and issued some directions as to the compensation to be given to the 47 workmen With these directions we are not concerned in this appeal It is however necessary to 1 The Calcutta Gazette Pt 16 9 1954 P 3111 353 refer to the fact that in dealing with issue No 3 the tribunal examined the argument of the respondent that the age of superannuation fixed by the standing order should be made applicable to new entrants and not to the old but it held that there was no substance in the said contention Unemployment among youths observed the tribunal is certainly more reprehensible and unfortunate than unemployment among old men and it thought that to accept the respondent s contention would mean the impairment of the efficiency of the industry to which as a tribunal it can never be a party According to it there was no question of any breach of faith or understanding qua the 47 workmen who had been compulsorily retired It appears from the judgment of the tribunal that these contentions which it has rejected in dealing with issue No 3 were in fact more relevant to issue No 1 which is a general issue The Labour Appellate Tribunal has taken a contrary view on the main question of principle covered by issue No 1 According to the appellate tribunal the fact that the system of forced retirement was based on the relevant standing order does not ipso facto bar adjudication on the question of justness and propriety of the system itself It held that the appellant had admitted that there was no fixed age of retirement obtaining in its concern before the standing orders were certified and that in fact in some cases the appellant had employed persons who had passed the age of superannuation That is why the appellate tribunal came to the conclusion that it would not be unreasonable to assume that all workmen who joined the appellant s service prior to the framing of the standing orders had naturally and legitimately expected that they would be allowed to continue in service as long as they remain physically fit and so it held that the new scheme cannot be justly enforced against the workmen who had been recruited by the appellant before the introduction of the said orders In the result the appellate tribunal answered the first issue by holding that the age of compulsory retirement should be 55 in regard to persons employed by the 45 354 appellant subsequent to the certification of the standing orders but that there should be no age of retirement in regard to the prior employees of the appellant Consistently with this finding the appellate tribunal has directed that the 47 workmen who had been compulsorily retired by the appellant should be reinstated on condition that they refund whatever money they might have received from the appellant in the shape of gratuity or Provident Fund dues It is this decision which has given rise to the present appeal The first point which has been urged before us by the learned Attorney General on behalf of the appellant is that the appeal preferred by the respondent before the Labour Appellate Tribunal was incompetent and should not have been entertained by it Under section 71a of the Industrial Disputes Appellate Tribunal Act 1950 48 of 1950 an appeal lies to the appellate tribunal from any award or decision of an industrial tribunal inter alia if the appeal involves any substantial question of law The argument is that the respondent s appeal did not satisfy this requirement and so the appellate tribunal has exceeded its jurisdiction in entertaining it We are not impressed by this argument It is clear that issue No 1 which was referred to the tribunal is a general issue affecting more than 5000 employees of the appellant and it is an issue the decision of which would necessarily raise questions of industrial policy and principle whether or not the appellant was entitled to introduce an age of superannuation and if it was entitled so to do would the introduction of the system affect the rights of persons who had joined the appellant s service in the legitimate expectation that they would not be subject to any such rule What would be the proper age of superannuation in a concern like the appellant s In our opinion questions like these which necessarily arose in deciding issue No 1 are questions of law and since they affect a large number of the appellant s employees it cannot be said that the respondent s appeal before the Labour Appellate Tribunal did not involve a substantial question of law The challenge to the validity of the decision of 355 the Labour Appellate Tribunal on this preliminary ground must therefore fail It is then urged that the present reference itself is bad and this contention is based on the provisions of section 7 of the Act which makes the standing orders binding between the employer and his employees There is no doubt that under section 7 standing orders would bind all the employees of the employer without any distinction As soon as the standing orders become operative they bind both the employer and all the employees then in his service The learned Attorney General contends that the 47 employees who have been retired on the ground that they had exceeded the age of superannuation were bound by the relevant standing order which fixed the age of superannuation at the age of 55 and until the said standing order is modified according to law it would not be open to them to question the validity of their compulsory retirement In support of this argument he has relied on the decision of the Madras High Court in Mettur Industries Ltd vs Varma Ors In that case Bala krishna Aiyer J has held that where an industrial dispute relates to a particular individual and the question is whether he has been improperly dealt with then that question must be determined within the framework of the existing agreement and the existing rules Employees can raise a dispute and ask that the standing orders be amended but till the standing orders are amended they hold the field and any dispute that may arise in an undecided case must be disposed of in accordance with the standing orders as they happen to be at the relevant time A similar view has been expressed by Bishan Narain J of the Punjab High Court in Bharat Starch and Chemicals Ltd And The Industrial Tribunal Punjab 2 This argument assumes that the present reference has been made primarily if not solely by reference to the cases of the 47 workmen who have been compulsorily retired by the appellant In our opinion such an assumption is clearly not wellfounded The reference shows that the main question which the industrial 1 1958 II LLJ326 2 1958 II LLJ 24 3 356 tribunal has been called upon to decide is the general question affecting the large number of the appellant s employees who had accepted its service before the relevant standing orders were framed In terms it covers all the employees of the appellant and for deciding it the tribunal would have to examine the matter on the merits and consider whether the relevant standing order as it stands is valid or whether it needs any modification The second question also has reference to workmen other than those who have been compulsorily retired and the answer to this question would naturally depend upon the conclusion which the tribunal may reach on the merits of the first issue It is only the third question which has reference to the 47 workmen who have been compulsorily retired and this question is framed on the hypothesis that the forced retirement of the appellant s employees under the system introduced by the relevant standing order is upheld by the tribunal On that hypothesis the third question requires the tribunal to decide whether the 47 workmen are entitled to any compensation andor reinstatment It is thus clear that the reference is primarily concerned with the main industrial dispute raised by the respondent about the propriety and the validity of the system of forced retirement introduced by the appellant and this question had to be decided by the tribunal on the merits Indeed as the judgment of Balakrishna lyerpoints out in the case of Mettur Industries Ltdit is open to the employees to raise a disputeand ask that the standing orders be amended Thatis precisely what the respondent seeks to do by raising the present dispute as disclosed in issue No 1 We must therefore hold that the argument about the invalidity of the reference is unsound It is relevant at this stage to consider the scheme and effect of the relevant provisions of the Act The Act came into force on April 23 1946 and it was intended to require employers in industrial establishments to define with sufficient precision the conditions of employment under them and to make the said 11958 II LLJ 326 357 conditions known to the workmen employed by them The matters which had to be provided in standing orders are enumerated under I 1 items in the Schedule to the Act The expression Standing Orders as used in the Act means rules relating to matters set out in the Schedule When the draft standing orders are submitted to the certifying officer the said officer has to satisfy himself that they make provision for every matter set out in the schedule and that they are otherwise in conformity with the provisions of the Act It is significant that originally under section 4 it was not competent to the certifying officer to adjudicate upon the fairness or reasonableness of the provisions of any standing orders The same disability was imposed I on the appellate authority This section has however been subsequently amended by Act 36 of 1956 and the effect of the amendment is that it has now been made the function of the certifying officer or the appellate authority to adjudicate upon the fairness or the reasonableness of the provisions of the standing orders Prior to this amendment however all that the certifying officer had to do before certifying the said standing orders was to see that all the matters in the schedule are covered and that they are not otherwise inconsistent with the provisions of the Act Under section 7 standing orders when certified come into operation subject to its other provisions section 10 lays down that standing orders finally certified shall not except on agreement between the employer and the workmen be liable to modification until the expiry of six months from the date on which the standing orders or the last modifications thereof came into operation Sub section 2 of section 10 prior to its amendment in 1956 authorised only the employer to apply for the modification of the standing orders Subsequent to the said amendment workmen also have been given the rights to apply for such modification It is thus clear that the scope for the enquire before the certifying officer and the appellate authority under the original Act was extremely limited and the right to claim a modification of the standing orders was not given to the employees prior to the amendment of section 102 Nevertheless the standing 358 orders when they were certified became operative and bound the employer and all his employees There can be no doubt that before the amendment of 1956 if the employees wanted to challenge the reasonableness or fairness of any of the standing orders the only course open to them was to raise an industrial dispute in that matter This position has been substantially altered by the two amendments to which we have just referred but we are concerned in the present appeal with the state of the law as it prevailed prior to the said amendments and so it cannot be denied that the employees had a right to claim a modification of the standing orders on the ground that they were unreasonable or unfair by raising an industrial dispute in that behalf Subsequent to the amendment of the Act the employees can raise the same dispute before the certifying officer or before the appellate tribunal and may in a proper case apply for its modification under section 102 of the Act The position then is that though the relevant standing order about the age of superannuation came into operation under section 7 and was binding thereafter upon the employer and all his employees the right of the respondent to challenge the validity or propriety of the standing order and to claim a suitable modification in it cannot be disputed The standing orders certified under the Act no doubt become part of the terms of employment by operation of section 7 but if an industrial dispute arises in respect of such orders and it is referred to the tribunal by the appropriate government the tribunal has jurisdiction to deal with it on the merits This position is not and cannot be disputed It is however contended that the delay made by the respondent in raising the present dispute shows that the respondent had acquiesced in the relevant standing orders and that in substance is pleaded as a bar to the validity of the present reference We do not think that this contention can be upheld In dealing with industrial disputes the application of technical legal principles should as far as is reasonably possible be avoided Take the present argument of acquiescence which in ordinary civil litigation may 359 justify a plea of estoppel An industrial dispute has to be raised by the union before it can be referred and it is not unlikely that the union may not be presuaded to raise a dispute though the grievance of a particular workman or a number of workmen may otherwise be wellfounded then again even if the union takes up a dispute the State Government may or may not refer it to the industrial tribunal The discretion of the State Government under section 10 of the Industrial Disputes Act is very wide Thus workmen affected by standing orders may not always and in every case succeed in obtaining a reference to the industrial tribunal on the relevant points That is why the tribunals should be slow and circumspect in applying the technical principles of acquiescences and estoppel in the adjudication of industrial disputes If a dispute is raised after a considerable delay which is not reasonably explained the tribunal would undoubtedly take that fact into account in dealing with the merits of the dispute But unless the relevant facts clearly justify such a course it would be inexpedient to throw out the reference on preliminary technical objections of the kind raised by the appellant under the present contention In the present case the relevant rule was certified in December 1953 and came into operation in January 1954 The present dispute was raised by the respondent as soon as the appellant sought to enforce it in May 1954 That is why it is difficult to accept the argument that the respondent has been guilty of latches or acquiescence We would therefore hold that the respondent was entitled to raise the present industrial dispute and that the present reference does not suffer from any infirmity The learned Attorney General has then argued that the Labour Appellate Tribunal has completely misunderstood the scope of the enquiry contemplated by issue No 1 His case is that under issue No No 1 all that the tribunal was called upon to decide in the abstract was the propriety of the standing order fixing the age of superannuation at 55 The tribunal was not required and was not expected to consider the impact of this rule on the workmen employed by the appellant Should any 360 age of superannuation be fixed and if yes what should be the limit in that behalf These are the only questions which called for the decision of the tribunal on issue No 1 In fact the learned Attorney General suggested that in deciding issue No No 1 the tribunal has merely to say yes or No That is the substance of his contention We are satisfied that this contention is misconceived There is no doubt that in dealing with issue No 1 the tribunal had to consider not only the propriety reasonableness and fairness of the rule but it had also to deal with the question as to whether the said rule could and should be made applicable to employees who had already been employed by the appellant in service without any limitation as to the age of retirement In fixing the age of superannuation industrial tribunals have often enough considered this dual aspect of the question and it is the sam dual aspect that was intended to be examined when issue No 1 was framed Indeed both the industrial and the appellate tribunals have considered this twofold aspect of the matter though it may be conceded that the discussion in both the judgments is somewhat confused and mixed up There is however no doubt that the respondent s grievance about the application of the rule to the previous employees of the appellant was specifically urged before the tribunals That takes us to the merits of the dispute It is not denied by the appellant that before the present standing orders were certified the appellant had not introduced any age of superannuation while employing its workmen In its statement before the tribunal the respondent had specifically averred that there was no fixed age or period of service for retirement and that the implied condition of service was that the workman would continue in service so long as he lived if not invalidated earlier for reasons of health and it was also alleged by it that for the first time in its history the appellant suddenly thought of giving effect to the relevant standing orders by compulsorily retiring the 47 workmen in question It may however be added that amongst remedies suggested by the respondent in its written statement it had expressly 361 stated that 60 should be fixed as the age of retirement for persons already in the employment of the appellant with option to further continue subject to physical fitness In support of this plea the respondent had relied upon the statement filed by the appellant giving details of the 47 retired workmen this statement showed that some workmen had been employed for the first time even after they had passed the age of 55 and that a large majority of them had passed the age of 55 much before their actual retirement It is significant that though the respondent had made these specific allegations the appellant did not suggest that there was any age of retirement in force before the framing of the standing orders It is true that the appellant put in a general denial of all the allegations made by the respondent in its statement but such a general denial cannot have much value In paragraph 5 of its statement the appellant has referred to the fact that it is the usual practice to fix the age of retirement at 55 in the public and private sectors of industry and that it is in line with the provisions of the Employees Provident Fund Act It is obvious that though the appellant referred to the usual practice of fixing the age of superannuation in the private and public sectors it made no such averment in regard to any such practice prevailing in the case of its own employees Even in the statement of its case before this court the appellant has said that there was no fixed age of retirement before the standing orders were introduced but it sought to add that ordinarily workmen were made to retire at the age of 55 This latter statement is an allegation of fact made for the first time before this Court There is nothing on the record which would justify or substantiate it Thus the Labour Appellate Tribunal was perfectly right in dealing with the merits of the dispute on the basis that the large number of employees who had been engaged by the appellant prior to the making of the standing orders were not subject to any rule of superannuation It is however contended on behalf of the appellant that both the tribunals have agreed that it is 46 362 reasonable to fix the age of superannuation at 55 and in a sense the appellant is justified in raising this contention The Labour Appellate Tribunal however has held that this age cannot be applied retrospectively so as to affect the prior employees of the appellant and it is only this aspect of the matter which calls for a decision from us The respondent does not deny that the relevant standing order fixing the age of superannuation at 55 will and should bind the future entrants into the service of the appellant The learned Solicitor General however contends that it would be unreasonable and unfair to apply this rule to the workmen who were already in the employment of the appellant In regard to the workmen already in the employment of the appellant it has been brought to our notice by the appellant that the workmen themselves wanted that the age of superannuation should be fixed and it is also urged that fixing the age of superannuation at 60 as suggested by the respondent would be inconsistent with paragraph 69 of the Employees Provident Fund Scheme 1952 notified under section 5 of the Employees Provident Fund Act 1952 Act 19 of 1952 The argument that the workmen themselves wanted the age of superannuation to be fixed ignores the fact that this demand was coupled with the claim that the age should be fixed at 60 and option should be given to the employees to continue thereafter Therefore the alleged admission of the workmen cannot be pressed into service by the appellant in support of the fixation of the age of retirement at 55 The argument based on paragraph 69 is in our opinion wholly invalid because the said paragraph does not make it obligatory on the employer to fix the age of retirement of the employees at 55 Explanation 11 to the said paragraph provides that a member shall be deemed to have attained the age of superannuation on completing the age of 55 years but this deeming clause does not mean that in every case the employee must retire at the age of 55 Paragraph 69 1 specifically authorises the member to withdraw the full amount 363 standing to his credit in the fund on retirement from service in the industry at any time after the attainment of the age of superannuation In other words two conditions have to be satisfied before the member can withdraw the fund he must have attained the age of superannuation and he must have actually retired from service This position was fairly conceded by the learned Attorney General during the course of his argument On the other hand the learned Solicitor General contends that making the rule of superannuation applicable to the prior employees would be obviously unfair and unreasonable He no doubt sought to invoke the assistance of section 2 oo of the Industrial Disputes Act which defines retrenchment His argument was that the wrongful retirement of the prior employees on the ground that they had attained the age of 55 would amount to retrenchment within the meaning of the said provision and that would entitle them to make a claim for retrenchment benefit under section 25F of the said Act This according to him would constitute prejudice to the prior employees However he fairly conceded that this argument of prejudice would not be valid in view of the decision of this Court in Hariprasad Shivshankar Shukla vs AD Divikar1 That is why we do not propose to deal with this argument That takes us to the question as to whether the fixing of the age of superannuation at 55 in regard to the prior employees can be said to be reasonable and fair having regard to the fact that when they entered service there was no such limitation The Labour Appellate Tribunal has held that it would both be unreasonable and unfair to introduce this condition in respect of these workmen This view is supported by the decision of the Labour Appellate Tribunal in Jamadoba Colliery of Messrs Tata Iron and Steel Co Ltd vs Shri Nasiban 2 In that case the respondent Nasiban had joined the services of the colliery before the rules of superannuation were introduced and when she was sought to be retired on the strength of the said rules the action of the employer was challenged 1 19571 SCR 121 2 364 before the industrial tribunal The tribunal and the Labour Appellate Tribunal both held that the respondent having entered the service of the colliery before the new rules came into force could not be prejudicially affected by the conditions made thereunder when she did not exercise her option to be governed by the said rules In other words the view taken by the tribunals was that in the case of prior employees an option should be given to them to be governed by the new orders or rules and it is only if they exercise the said option that the new orders or rules should be made applicable to them In this connection the learned Attorney General has referred us to some other awards where the age of superannuation has been fixed generally by reference to all the employees The first award on which he has relied was passed in the dispute between the present appellant and its employees at the head office at Calcutta This award is of no assistance to the appellant because it is clear that the age of superannuation was fixed by the award solely on the basis of the agreement between the parties If the employees agree that a particular age of superannuation should be fixed inregard to all of them there can be no difficulty in upholding the validity of the agreement An award by agreement cannot therefore assist the appellant in its present contention The other award to which our attention has been drawn was in respect of an industrial dispute between the Bengal Chamber of commerce And Its Employees 2 This award did fix the age of retirement at 55 but it is not clear from the award that this age came to be fixed for the first time The question as to whether the rule as to the age of superannuation can be fixed for the first time in regard to both the past and future employees of the concern has not been considered in this award The third award which was cited before us was passed in an industrial dispute between Ms Calcutta Exchange Gazette Daily Advertiser and Shri Uma Prasanna Bhattacharjee 3 The dispute in 1 The Calcutta Gazette Pt 1 dt 24 9 53 P3261 2 Govt of West Bengal Labour Deptt Awards made by the Tribunals for quarter ending March at P131 3 The Calcutta Gazette Pt 1 dt 16 9 1954 P 3111 365 that case was in regard to the termination of Shri Uma Prasanna Bhattacharjee and this dispute was settled in favour of the employee It appears that in making the award the tribunal has referred to the Omnibus Press Tribunal Award in which the age of superannuation has been fixed at 55 This latter award has not been produced before us It is clear that in none of the awards on which the appellant has relied has the question of principle been considered whether the age of superannuation can be fixed for the first time so as to affect the legitimate expectations of the persons in previous employment who were not subjected to any such rule As we have alaeady pointed out this question has been considered by the Labour Appellate Tribunal in the case of the Jamadoba Colliery 1 and the view expressed therein has been followed by the present Labour Appellate Tribunal We do not think that on the record as it stands and in the circumstances of this case we would be justified in reversing the decision of the Labour Appellate Tribunal That however leaves one more point to be considered If the view taken by the Labour Appellate Tribunaj that it would be unfair and unreasonable to impose the rule of 55 against the previous employees is accepted does it follow that there should be no rule of superannuation in regard to them Unfortunately this aspect of the matter has not been considered by the Labour Appellate Tribunal at all Its omission to consider this point is all the more to be regretted because in the statement of the respondent it had been expressly suggested that the age of 60 years would be reasonable in regard to the previous employees though of course the statement had claimed an option for the said employees to continue in service after crossing the age bar of 60 subject to physical fitness The learned Solicitor General has expressly stated before us that having regard to the stand taken by the respondent in the present proceedings it would be open to us to consider whether the age of 60 should not be prescribed as the retirement age for the employees who were in the service of the appellant before the certification of 11955 LAC 582 366 the present standing orders He did not dispute the fact that the tribunals could have made an appropriate order in that behalf and he fairly conceded that we could ourselves give an appropriate direction if we thought it reasonable to do so In our opinion it is necessary to fix the age of superannuation even with regard to the prior employees and we feel no difficulty in holding that it would not be unfair or unreasonable to direct that these employees should retire on attaining the age of 60 An option to continue in service even thereafter which the respondent claimed is wholly unreasonable and is entirely inconsistent with the notion of fixing the age of superannuation itself Once the age of superannuation is fixed it may be open to the employer for special reasons to continue in its employment a workman who has passed that age but it is inconceivable that when the age of superannuation is fixed it should be in the option of the employee to continue in service thereafter We would accordingly hold that in the circumstances of this case the rule of retirement for the previous employees in the concern should be 60 instead of 55 and that the rule of 55 should apply to all employees who enter the service of the appellant after the relevant standing orders came into force In fixing the age of superannuation of I the prior employees at 60 years we are in substance giving effect to the plea made by the respondent before us We would however like to add that this conclusion should not be taken as a decision on the general question of fixing the age of superannuation in the case of industrial employees In fixing the age of superannuation industrial tribunals have to take into account several relevant factors What is the nature of the work assigned to the employees in the course of their employment What is the nature of the wage structure paid to them What are the retirement benefits and other amenities available to them What is the character of the climate where the employees work and what is the age of superannuation fixed in comparable industries in the same region What is generally the practice prevailing in the industry in the past in the matter of retiring its employees These 367 and other relevant facts have to be weighed by the tribunal in every case when it is called upon to fix an age of superannuation in an industrial dispute In the present case as we have already observed the age of 55 has been fixed by both the tribunals for future entrants and this is substantially based on the standing order which we have already considered In regard to the prior employees it is not seriously disputed that the retirement age can and may be fixed at 60 It is under these circumstances that we have come to the conclusion that the age of superannuation for prior employees should be fixed at 60 In regard to the 47 workmen shown in the list attached to the reference it appears that all of them have already passed the age of superannuation Annexure B giving the details about these workmen which has been filed by the appellant shows the year of birth of each one of them and the entries in the relevant column indicate that none of them would be entitled to claim reinstatement now as a result of this judgment But quite apart from this consideration as we have already pointed out they have accepted the order of retirement without protest and have voluntarily and willingly received their provident fund gratuity as well as presents given to them by the appellant the appellant has also appointed the relatives of many of these retired men We would therefore direct that none of them is entitled to reinstatement With these modifications the decision of the Labour Appellate Tribunal is confirmed Since both the parties have partly succeeded and failed before us we direct that each party should bear its own costs Appeal allowed in part

The appellant a Hindu undivided family carrying on business in grain kept its books of account according to the mercantile system and maintained in its cash books two accounts one showing the cash balances from day to day and the other known as Almirah account wherein were kept large balances which were not required for the day to day working of the business On January 12 1946 on which date the High Denomination Bank Notes Deinonetisation Ordinance 1946 was promulgated the cash balances of the appellant were RS 29284 in its Rokar and Rs 281397 in the Almirah account For the assessment year 1946 47 the appellant filed its Income tax Return showing a loss of Rs 464I5 in the business The Income tax Officer in the course of the assessment noticed that the appellant encashed high denomination notes of the value of RS 2g1000 on January 19 1946 and the explanation given by the appellant was that these notes formed part of its cash balances including cash balance in the Almirali account but it was rejected by the Income tax Officer relying on the following circumstances 1 that the appellant s food grains licence had been cancelled for the accounting year for its failure to keep proper stock accounts 2 that the appellant was prosecuted under the Defence of India Rules but had been acquitted having been given the benefit of doubt 3 that the appellant was a speculator and as such could easily have earned amounts far in excess of the value of the high denomination notes encashed 4 that notwithstanding the fact that the period was very favourable to the food grains dealers the appellant had declared a loss for the assessment year I944 45 UP to 1946 47 though it had the benefit of a large capital on hand and 5 that the appellant was one of the premier grain merchants of Sahibganj a place which had gained sufficient notoriety for smuggling foodgrains The Income tax Officer came to the conclusion that the appellant had all these probable sources from which it could have earned the sum of Rs 291000 and accordingly he treated the sum as the appellant s secreted profits from business and included it in its total income The Appellate Tribunal accepted the account books produced by the appellant 302 and examined the cash book and taking into consideration all the circumstances which had been adverted to by the Income tax Officer took the view that the appellant might be expected to have possessed as part of its business cash balance of at least Rs 150000 in the shape of high denomination notes on January 12 1946 when the Ordinance was promulgated but that the nature of the source from which the appellant derived the remaining 14i high denomination notes of Rs 1000 each remained unexplained to its satisfaction It accordingly reduced the amount considered as the secreted profits from Rs 291000 to Rs 141000 On reference the High Court held that the finding arrived at by the Tribunal was one of fact and that it could not be urged that it was based on no evidence On appeal to the Supreme Court it was contended for the appellant that the finding arrived at by the authorities concerned though it be one of fact was vitiated by reason of the authorities indulging in conjectures suspicions and surmises and basing the same on no material whatever which would go to support the same and that in any case it was a preverse one which a reasonable body of men could not have arrived at on the material on the record Held that the Tribunal had been influenced by the suspicions conjectures and surmises which were freely indulged in by the Income tax Officer and had arrived at its conclusion as it were by a rule of thumb without any proper materials before it and that its finding could not be sustained that having accepted the appellant s books of account it was not open to the Tribunal to accept the explanation of the appellant in part as to Rs 150000 and reject the same in regard to the sum of Rs 141000 Messrs Mehia Parikh Co vs The Commissioner of Income tax Bombay and Kanpur Steel Co Ltd vs Commissioner of Income tax Uttar Pradesh 1957 32 ITR 56 relied on Where a Tribunal has acted without any evidence or upon a view of the facts which could not reasonably be entertained or the facts found were such that no person acting judicially and properly instructed as to the relevant law could have found the court is entitled to interfere Dhirajlal Girdharilal vs Commissioner of Income tax Bombay Dhakeswari Cotton Mills Ltd vs Commissioner of Income tax West Bengal 1955 i SCR 941 Messrs Mehta Parikk and Co vs The Commisioner of Income tax Bombay and Meenakshi Mills Madurai vs Commissioner of rncome tax Madras 19561 SCR 69i followed

Civil Appeal No 431 of 1957 Appeal by special leave from the judgment and order dated the September 8 1955 of the Calcutta High Court in Income tax Reference No 77 of 1951 C K Daphtary Solicitor General of India R Ganapathy Iye r and D Gupta for the appellant N C Chatterjee B Sen Gupta and D N Mukherjee for the respondent May 15 The Judgment of the Court was delivered by DAS CJ This appeal by special leave is directed against the order of the High Court of Calcutta passed or September 8 1955 on a reference made by the Income Tax Appellate Tribunal under section 661 of the Indian Income tax Act whereby the High Court answered the first question referred to it in the negative and the second question in favour of the respondent assessee The facts leading up to the present appeal are briefly as hereinafter narrated The respondent was at all material times a Hindu undivided family of which one B K Rohatgi was the eldest male member and as such its karta It appears that in 1930 the said B K Rohatgi became interested in a concern called the India Electric Works carried on by Milkhi Ram and other persons none of whom was a member of the assessee family Evidently it was decided that a Company would be floated inter alia for the purpose of acquiring and taking over the said India Electric Works as a going concern The said B K Rohatgi was one of the promoters of that Company Pursuant to an agreement with the vendors of the business of India Electric Works the said B K Rohatgi as such promoter as aforesaid and on behalf of the said Company then to be formed took over the said business as a going concern on and from March 1 1930 and carried on the same since then until December 19 1930 when the contemplated 323 Company was eventually incorporated under the Indian Companies Act as a private company with limited liability under the name of India Electric Works Ltd hereinafter called the said Company Article 132 of the Articles of Association of the said Company provided that the first Managing Director would be the said B K Rohatgi or his assigns or successors in business whether under his name or any other style or firm and that the said B K Rohatgi would continue to be the Managing Director until he would resign or be found guilty of any act of fraud or dishonesty or be removed in the manner thereinafter provided Article 133 laid down the circumstances in which and the conditions on which the Managing Director might be removed Article 135 provided for the remuneration of the Managing Director which was fixed at Rs 6000 per annum or a commission of 15 per cent on the net profits of the Company to be computed in the manner therein mentioned The powers of the Managing Director were enumerated in article 136 under twenty sub heads Article 138 provided that the Company should forthwith enter into an agreement under the seal with Mr Benoy Krishna Rohatgi in terms of the draft which has been approved on behalf of the Company For some reason or other not apparent on the record it was not till January 31 1934 that an agreement was actually entered into between the said Company and the said B K Rohatgi The terms and conditions contained in the agreement and the powers and authorities conferred thereby on B K Rohatgi were in substance the same as those mentioned in the Articles of Association referred to above Of the total 950 ordinary shares of Rs 500 each issued and subscribed 326 shares stood in the name of the said B K Rohatgi 356 shares in the name of his brother R K Rohatgi and 10 shares in the name of one Laxminarain said to be an employee of the assessee family There is no dispute that prior to the accounting year relevant to the assessment year 1943 44 the Managing Director s remuneration received by the said B K Rohatgi was credited in the books of the 324 Hindu undivided family just as the dividends on the shares held in the names of his brother and of himself had been done In para 6 of the Statement of the Case it is stated It was not denied by the Assessee that India Electric Works Limited was floated mainly with the funds provided by the Assessee and Mr Rohatgi made no contribution in this respect Further all along its career India Electric Works Limited was financed from time to time by the Assessee Hindu Undivided Family It was further found that it was for the first time in the year of assessment that the Assessee claimed that the remuneration belonged to Mr Rohatgi personally Up to 1942 43 assessment all along both Mr Rohatgi and the Hindu Undivided Family Assessee in their accounts treated the whole of the remuneration paid to Mr Rohatgi as the income of the Hindu Undivided Family In the accounting year relevant to the assessment year 1943 44 the Managing Director s remuneration received by B K Rohatgi amounted to Rs 61282 and during the 1943 44 assessment proceedings it was claimed that the whole of it was the personal earnings of the said B K Rohatgi and should not be added to the income of the Hindu undivided family which is the respondent before us The Income tax Officer rejected this claim On appeal to the Appellate Assistant Commissioner the latter concurred with the view of the Income tax Officer The assessee went up on further appeal to the Income tax Appellate Tribunal The Tribunal struck a middle course It held that Rs 61282 was made up of two kinds of remuneration namely 1 remuneration for services rendered by the assessee family in the floatation and financing of the said Company and 2 remuneration for the personal services of the said B K Rohatgi The Tribunal therefore apportioned the amount received between the two categories of remuneration and allocated Rs 30000 computed at the rate of Rs 2500 per month to the personal services of the said B K Rohatgi and the 325 rest to the remuneration due to the services of the assessee family On the application of the respondent assessee the Tribunal made a reference under section 661 of the Indian Income tax Act and the questions referred were as follows 1 Whether on the facts and in the circumstances of this case the Income tax Appellate Tribunal was justified in apportioning the sum of Rs 61282 into two parts assessing one in the hands of the Assessee Hindu undivided family and the other in the hands of Mr B K Rohatgi 2 If the answer to the above question be in the negative whether the assessment of the said sum of Rs 61282 should be on Mr Rohatgi personally or on the Assessee Hindu undivided family When the reference came up before the High Court for hearing the learned judges felt that the statement of case submitted by the Tribunal was inadequate and that it would not be possible for the Court to answer the questions unless certain other facts were clearly stated The High Court accordingly directed the Tribunal to submit a further statement of case and to include therein answers to the following questions a With whose funds were the shares on the strength of which Mr Rohatgi has been and is the Managing Director purchased and to whom do they really belong b Who has been in enjoyment of the dividend paid on those shares c In what capacity was Mr Rohatgi originally appointed to and was holding at the relevant time the office of the Managing Director of the India Electric Works Ltd namely whether in his personal and individual capacity or otherwise d Besides the qualifying shares are there any further shares of the Company standing in the name of Mr Rohatgi and if there are such shares with whose funds were such shares acquired and to whom do they really belong 326 A further statement of case was accordingly submitted by the Tribunal The Tribunal concluded its findings and expressed its opinion on the questions specifically as follows Questions a b and d All the shares in the India Electric Works Limited standing In the name of Mr B K Rohatgi 326 shares and Mr R K Rohatgi 356 shares were acquired with funds belonging to the assessee family and they belong to the family and the family has been in enjoyment of the dividends paid on those shares Besides the 10 qualifying shares there are 316 more shares in the Company standing in the name of Mr BK Rohatgi and those shares also belong to the assessee family Question c The answer is a matter of inference from the facts above stated The Tribunal s conclusion was that Mr B K Rohatgi was originally appointed to and was at the relevant time holding the office of the Managing Director of the India Electric Works Limited in his capacity as a member and karta of the assessee family Learned counsel appearing before the High Court did not make any attempt to support the Tribunal in its choice of the middle path but conceded that the income was either the income of the family or the personal income of the said B K Rohatgi and that there could be no justification for ascribing a portion of it to the remuneration of the said B K Rohatgi as an officer of the Company and ascribing the other portion to a return made by the Company to the family for benefits received The High Court accordingly answered the first question in the negative As regards the second question the High Court thought that the case was covered by the decision in the case of Commissioner of Income tax Madras vs SNN Sankaralinga Iyar 1 and expressed the opinion that the assessment of the said sum of Rs 61282 should be on Mr Rohatgi personally Feeling aggrieved by the aforesaid answer the Commissioner of Income tax applied for and obtained from this Court special leave to appeal to this Court 1 327 against the order of the High Court The learned Solicitor General appearing before us in support of this appeal has not challenged the correctness of the answer given by the High Court to the first question and therefore we are now concerned only with the correctness of the answer given by the High Court to the second question It is now well settled that a Hindu undivided family cannot as such enter into a contract of partnership with another person or persons The karta of the Hindu undivided family however may and frequently does enter into partnership with outsiders on behalf and for the benefit of his joint family But when he does so the other members of the family do not vis a vis the outsiders become partners in the firm They cannot interfere in the management of the firm or claim any account of the partnership business or exercise any of the rights of a partner So far as the outsiders are concerned it is the karta who alone is and is in law recognised as the partner Whether in entering into a partnership with outsiders the karta acted in his individual capacity and for his own benefit or he did so as representing his joint family and for its benefit is a question of fact If for the purpose of contribution of his share of the capital in the firm the karta brought in monies out of the till of the Hindu undivided family then he must be regarded as having entered into the partnership for the benefit of the Hindu undivided family and as between him and the other members of his family he would be accountable for all profits received by him as his share out of the partnership profits and such profits would be assessable as income in the hands of the Hindu undivided family Reference may be made to the cases of Kaniram Hazarimull vs Commissioner of Income tax West Bengal and Dhanwatay V D vs Commissioner of Income tax Madhya Pradesh and Bhopal 2 in support of this view The same principle has been applied to the case of a karta appointed as a Treasurer of a Bank and the remuneration received by him for services rendered as such Treasurer has been treated 1 2 328 as the income of the Hindu undivided family of which he was the karta and was assessed in its hands The same principle has been extended to the remuneration received by a karta as the managing agent of a Company with limited liability See In re Haridas Purshottam 1 Stone CJ with whom Chagla J agreed held that as the managing agency was derived from or acquired with the assistance of the joint family property that is the mills in which the assessee as karta was beneficially interested the income from the managing agency received by the assessee must be treated as the income of the family of which he was the karta Reference is however made to certain decisions in support of the contrary view but those decisions appear to turn on the facts found to be established in those particular cases Thus in Murugappa Chetty vs Commissioner of Income tax Madras 2 it had not been established either that the managing agency agreement had in fact been obtained by the karta for and on behalf of the Hindu undivided family or that the income was earned by utilising the joint family property or utilising it to its detriment The case of R Hanumanthappa vs Commissioner of Income tax Madras simply follows Murugappa Chetty s case and does not carry the matter any further As will be seen hereafter to the facts established in the case now before us these two decisions can have no application It is then stated that the position of a Managing Director stands on a footing different from that of a partner or a managing agent and therefore the principles applicable to the income derived by a karta as a partner or managing agent cannot apply to the remuneration received by the karta as the Managing Director of a Company In the first place it is said that under the Indian Companies Act a Hindu undivided family cannot by reason of the definition given in section 2 9 A be appointed a managing agent of a Company In the next place the office of a managing director it is urged involves a personal element and the appointment of a 1 2 31952 22 329 managing director must necessarily be of a particular person for his personal skill and other qualities and therefore the remuneration received by him must be his personal earnings Neither of these two considerations appears to us to be tenable Vis a vis the Company the managing director is undoubtedly the individual person who is appointed as such The Company is not concerned with the managing direc tor s Hindu undivided family or the members thereof just as the outside partners know only the karta in his individual capacity as their partner and are not concerned with his Hindu undivided family or its members The question whether the amount received by the karta by way of managing director s remuneration in the one case or as his share of profits in the partnership business in the other case is his personal income or is the income of his Hindu undivided family cannot arise as between the Company and the karta as the managing director or between the outside partners and the karta as a partner Neither the Company nor the outside partners as the case may be is or are interested in such a question Such question can arise only as between the karta and the members of his family and the answer to the question will depend on whether the remuneration or profit was earned with the help of joint family assets The case of Sardar Bahaditr Indra Singh vs Commissioner of Income tax Bihar and Orissa 1 is clearly distinguishable in that it was expressly provided in the Articles of Association of the Company in that case that the remuneration of the managing director would be his personal income In Commissioner of Income tax Bihar and Orissa vs Darsanram 2 the finding of fact was that the joint family property had not been spent in earning the managing director s remuneration which was therefore held to be the personal earnings of the karta who had been appointed as the managing director The case of Commissioner of Income tax Madras vs section N N Sankaralinga Iyer 3 does not help the respondent because of the facts found in that case 1 2 3 42 330 In that case it was found that the remuneration of the managing director was earned by him in consideration of the services which he rendered to the bank and no part of the family funds had been spent or utilised for acquiring that remuneration except that the necessary shares to acquire the qualification of a managing director were purchased out of the joint family funds It was said that there was no detriment to the family property in any manner or to any extent as admittedly the shares earned dividends which were included in the income of the family Satyanarayana Rao J took the view that on the facts of that case it was impossible to infer that the appointment itself was on behalf and for the benefit of the family or in other words that he became the managing director as representing the undivided family Viswanatha Sastri J in a separate but concurring judgment expressed the view that the mere fact that the assessee had a particular quantity of shares as a manager of a joint family did not ipso facto enable him to function as the managing director His personal qualifications were mainly responsible in addition to the holding of shares for his selection and appointment as the managing director of the bank The remuneration according to the learned Judge was really quid pro quo for the work which he did under the contract of service with the bank The managing directorship he held was in fact a contract of service and it is not as if the family represented by the manager was the managing director It was the individual that was appointed and that was functioning as the managing director With great respect to the learned judges it appears to us that they overlooked the principles laid down by the Judicial Committee in Gokul Chand vs Hukam Chand Nath Mal 1 where it was pointed out that there could be no valid distinction between the direct use of the joint family fund and the use which qualified the member to make the gains on his own efforts The member of the joint family entered into the Indian Civil Service no doubt by reason of his intelligence and other attainments He certainly entered into a personal agreement with the 1 1921 LR 48 IA 162 331 Secretary of State in Council and he received his salary for rendering his personal service But all that was made possible by the use of the joint family funds which enabled to him to acquire the necessary qualification and that fact made his earnings part of the joint family properties That apart those decisions do not clearly govern the case now before us What are the facts here Here was the Hindu undivided family of which B K Rohatgi was the karta It became interested in the concern then carried on by Milkhi Ram and others under the name of India Electric Works The karta was one of the promoters of the Company which he floated with a view to take over the India Electric Works as a going concern In anticipation of the incorporation of that Company the karta of the family took over the concern carried it on and supplied the finance at all stages out of the joint family funds and the finding is that he never contributed anything out of his separate property if he had any The Articles of Association of the Company provided for the appointment as managing director of the very person who as the karta of the family had promoted the Company The acquistion of the business the floatation of the Company and appointment of the managing director appear to us to be inseparably linked together The joint family assets were used for acquiring the concern and for financing it and in lieu of all that detriment to the joint family properties the joint family got not only the shares standing in the names of two members of the family but also as part and parcel of the same scheme the managing directorship of the company when incorporated It is also significant that right up to the accounting year relevant to the assessment year 1943 44 the income was treated as the income of the Hindu undivided family It is true that there is no question of res judicata but the fact that the remuneration was credited to the family is certainly a fact to be taken into consideration It appears to us that the case is governed by the principles laid down in Haridas Purshottam s case 1 The recitals in the agreement also clearly point to the fact of BK Rohatgi 1 332 having been appointed managing director because of his being a promoter of the company and having actually taken over the concern of India Electric Works from Milkhi Ram and others The finding in this case is that the promotion of the Company and the taking over of the concern and the financing of it were all done with the help of the joint family funds and the said B K Rohatgi did not contribute anything out of his personal funds if any Ill the circumstances we are clearly of opinion that the managing directors remuneration received by BK Rohatgi was as between him and the Hindu undivided family the income of the latter and should be assessed in its hands We therefore set aside the answer given by the High Court to the second question and answer the same by saying that the assessment of the whole of the sum of Rs 61282 should be on the assessee Hindu undivided family The result is that this appeal is allowed with costs here and in the Court below

The appellant an Indian citizen entered India without a passport after and on the basis of the decision of the Supreme Court The appellant s contention was that section 3 of the Indian Passport Rules 1950 were ultra vires the Constitution and that on a proper interpretation the provisions of the section and rules did not apply to an Indian citizen and that when a case involves a constitutional question it should be referred to a Bench of five judges described as Constitution Bench Held Where there is a binding decision of the Constitution Bench of this Court on the question of law as to the interpretation of the Constitution and if the same question is raised in another matter then it cannot be said that any substantial question of law arises regarding the interpretation of the Constitution and the matter need not be referred to a Constitution Bench On a reasonable interpretation of section 3 of the Act and rr 3 and 4 of the rules which say that persons entering India shall be in possession of a valid passport there can be no manner of doubt that the provisions apply to all persons entering India including Indian citizen The Act of entry into India without a passport was in contravention of the Rules and the appellant was rightly convicted Ebrahim Vaziy Mavat vs The State of Bombay 1954 SCR 933 followed

tition No 174 of 1958 Petition under Article 32 of the Constitution of India for the enforcement of Fundamental Rights Purshottam Tricumdas P N Bhagwati Tanibhai D Desai and I N Shroff for the appellant and petitioner N C Chatterjee section K Kapur and A G Ratnaparkhi for the respondent in appeal and respondent No 2 in the petition B Sen and R H Dhebar for respondent No 3 in petition 390 1959 May 19 The Judgment of the Court was delivered by IMAMJ The case of the respondent Municipality was that the appellant s chemical works discharged effluent in very large quantities containing calcium sodium and other salts through Katcha Channels thereby corrupting potable water of the wells in the surrounding area so as to render it unfit for use and also prejudicially affecting the fertility of the soil in the surrounding area by percolation The respondent Municipality accordingly after having obtained the approval of the Government issued a notice dated the 14th June 1956 to the appellant under section 153 A 1 of the Bombay District Municipal Act 1901 as adapted and applied to the State of Saurashtra and as amended by Act XI of 1955 hereinafter referred to as the Act to show cause in writing within a period of one month from the date of the receipt of the notice why it should not be directed to arrange within a period of nine months from the date of such direction for the discharge of the effluent through a covered pucca drainage and for pumping it over a distance of about 8 miles in the Ran area of Cutch near Kuda as shown in the plan annexed to the notice The appellant replied to this notice by a letter dated the 10th of July 1956 According to the appellant the effluent was being discharged until 1943 through a Katcha Channel running parallel to the railway line in the direction of Halvad In 1944 it was felt that as the water of some of the wells in the areas known as Harijanvas and Kolivas close to the vicinity of the channel might be affected another channel was constructed for discharging the effluent which was at a considerable distance away from Kolivas and Harijanvas and still further away from the city which lies on the western side of the railway lines whereas the factory is at a considerable distance away on the eastern side of the railway lines It was pointed out that during the last 3 or 4 years periodical surveys of the water of various wells in the city had been taken by the appellant and these tests had shown that the water was not in any way polluted by reason of the effluent 391 being discharged through the existing channels that all the papers and reports relating to the tests carried out periodically by the appellant were available for inspection by the respondent Municipality and that they could be inspected by appointment The appellant further enquired whether before issuing the notice the respondent Municipality had carried out similar tests for analyzing the water of the various wells and that if such analysis had been made it might be allowed to inspect and survey the reports and other relevant papers connected therewith Regarding the fertility of the soil the appellant emphatically denied that the same had been in any way adversely affected by the discharge of the effluent through the existing channels The appellant further pointed out that the respondent Municipality s direction that the appellant should arrange the discharge of the effluent through a covered pucca drain for pumping it over a distance of about 8 miles as shown in the plan would involve an expenditure of nearly 8 to 9 lakhs of rupees which having regard to the prevailing conditions would involve a capital outlay of such an enormous amount as to cripple the appellant s activities The appellant further pointed out that the scheme suggested by the respondent Municipality was impracticable and difficult to implement for technical reasons and that the appellant s engineer had been consulted in that respect Finally the appellant informed the respondent Municipality that in these circumstances it objected to the requisitions and expressed its inability to carry out the same The respondent then requested the Government to appoint a Special Officer under the provisions of section 153 A 3 of the Act The Government by its order dated the 17th of May 1958 appointed Mr TU Mehta District and Sessions Judge Jhalawad District as a Special Officer to hold an enquiry into the matter and to complete it within three months from the date of the Notification When the matter came before the Special Officer he recorded the order which is the subject matter of the present appeal by special leave The Special Officer had framed 7 Issues of which Issues Nos 1 to 4 were 392 treated by him as preliminary Issues of law Of the 7 Issues framed Issue No 4 was one of the most important ones for consideration and it was to the following effect Is it shown that the question whether the discharge of the effluent from the factory of the respondent company is polluting water and adversely affects the fertility of the soil is a question of the subjective satisfaction of the Municipality and that this question is beyond the scope of the present enquiry Along with this Issue Issue No 6 had to be considered which was as follows it If the Point No 4 is decided in the negative is it proved that the effluents discharged by the factory of the respondent corrupt potable waters of the wells in the surrounding area so as to render them unfit for any use and also affect prejudicially the fertility of the soil in the surrounding area by percolation The Special Officer decided Issue No 4 in the affirmative and held that the question whether the discharge of the effluent polluted the water and adversely affected the fertility of the soil was one for the subjective satisfaction of the respondent Municipality and was beyond the scope of the enquiry before him Having found this he held that Issue No 6 did not arise for consideration In dealing with Issue No 5 whether the notice issued by the respondent Municipality was mala fide arbitrary capricious and that the same had been issued without the respondent Municipality sufficiently applying its mind the Special Officer was of the opinion that it wag out of the purview of the present enquiry Issues 2 and 3 were decided by the Special Officer in favour of the appellant and need not be referred to for the purpose of the present appeal Issue No I dealt with the question whether sections 153A to 153G of the Act violated the fundamental rights of the appellant guaranteed under Articles 14 19 and 31 of the Constitution It was pointed out by the Special Officer that during the course of the argument on behalf of the appellant it was not pressed that the 393 fundamental rights covered by Articles 14 and 31 were infringed The submission was confined to the infringement of article 19 of the Constitution This contention was rejected by the Special Officer The Special Officer in his order stated that The result of the above findings is that this Tribunal shall now proceed to decide the only remaining Issue which is Issue No 7 I therefore order that the case should proceed with the determination of this Issue This Issue was in these words If it is found that the effluents of the factory of the respondents corrupt the potable waters and fertility of the soil what final recommendation should be made about the method and manner of the discharge of these effluents It was urged on behalf of the appellant that the Special Officer had unduly restricted the scope of the enquiry by taking an erroneous view as to the scope of the enquiry before him and thus had refused to exercise jurisdiction which was vested in him under the Act It was further submitted that section 153A of the Act offends article 19 of the Constitution On behalf of the respondent it was contended that the Special Officer has not erred in holding that the existence of a nuisance of the kind mentioned in section 153A1 of the Act was a matter for the subjective satisfaction of the respondent Municipality and beyond the scope of his enquiry section 153A of the Act did not offend article 19 of the Constitution because it would be a reasonable restriction to the exercise of the fundamental right under article 191C to prevent a nuisance which would affect the public health and fertility of the soil Having regard to the submissions made on behalf of the appellant and the respondent it is necessary to quote the provisions of sections 153A and 153B of the Act Section 153A states Regulation of discharge of effluent containing salt or other chemicals by factories 1 If it be shown to the satisfaction of the Municipality that the owner or manager of a factory 50 394 situated or located within the limits of the Municipal District is discharging from such factory effluent containing salt or other chemicals in such manner as renders or is likely to render saline the potable waters of wells tanks ponds or other water receptacles or corrupts or is likely to corrupt such water in such a way as to render it unfit for any use by the public or is prejudicially affecting or is likely to so affect the fertility of the soil in the surrounding area either by percolation or otherwise the Municipality may with the previous approval of the Government issue a written notice to the manager or the owner of such factory requiring him to show cause in writing within a fixed period why he should not be directed to arrange within such period as may be fixed in such notice or as may be extended from time to time for the discharge of such effluents in such manner as may have been previously approved by the Government and as may be specified in the notice so that the discharge of such effluents may not have the effect of rendering saline or corrupting the waters of wells tanks ponds or other water receptacles or of prejudicially affecting the fertility of the soil in surrounding area 2 If no reply to the notice given under subsection 1 is received from the manager or the owner of the factory within the fixed period or if a reply is received to the effect that the manager or the owner consents to comply with the requisition in such notice the Municipality may forthwith pass such order as may be necessary for the purpose of regulating the discharge of effluents in the manner specified in such notice 3 If a reply to the notice given under subsection 1 is received from the manager or the owner of the factory objecting or consenting subject to modification to the requisition specified in such notice the Government shall on a request made to it by the Municipality in this behalf appoint a special judicial officer who shall not be below the rank of a District Judge hereinafter referred to as the Special Officer to hold an inquiry into the 395 matter The Special Officer shall make the inquiry in such manner and perform such functions and within such time as may be specified in the order of appointment Section 153B states Report by Special Officer and order to be passed by Municipality with sanction of Government The Special Officer shall on completion of the inquiry entrusted to him under subsection 3 of Section 153A send his report to the Municipality the Municipality shall with the previous approval of the Government pass an order in terms of the recommendations of such officer It was contended on behalf of the appellant that prior to the issuing of notice under section 153A 1 the existence of a nuisance in the terms of the sub section may be within the subjective satisfaction of the Municipality but after issuing the notice different considerations would arise when the provisions of sub section 3 are riven effect to The scheme of section 153A of the Act is to permit the Municipality if it is satisfied that a nuisance in the terms of sub section 1 exists to issue a notice requiring the person to whom the notice is issued to show cause why he should not be directed to arrange for the discharge of the effluent in such manner as may have been previously approved by the Government and as mentioned in the notice so that rendering saline or corrupting the water of the wells tanks ponds or other water receptacles or prejudicially affecting the fertility of the oil in the surrounding areas may be stopped In showing cause the person to whom the notice has been issued may under sub section 2 consent to comply with the requisition in such notice upon which the Municipality may forthwith pass such orders as may be necessary for the purpose of regulating the discharge of the effluent in the manner specified in such notice Upto this stage there is no contest between the Municipality and the person to whom the notice has been issued The question whether a nuisance in the terms of sub section 1 exists or not did not arise as the person to whom the notice has been issued by his consent and willingness 396 to comply with the requisition admits the existence of such a nuisance Different considerations however arise where the circumstances attract the provisions of sub section 3 and a Special Officer has to be appointed Under this sub section if the reply to the notice given under sub section 1 objects to the requisition specified in the notice or consents to it subject to modification the Government shall on the request of the Municipality appoint a special judicial officer to hold an inquiry into the matter It is urged on behalf of the appellant that if the requisition in the notice is objected to the objection includes not only to the allegation of the existence of the nuisance in terms of sub section 1 but also to the direction as to the manner in which the discharge of the effluent shall be made The objection being in regard to both the matters it was the bounden duty of the Special Officer to hold an enquiry with respect to the entire matter in dispute At this stage the satisfaction of the Municipality as to the existence of the nuisance alleged inevitably becomes justiciable The Special Officer was bound to enquire into the dispute and make its report both as to the existence of the nuisance and the direction as to the manner in which the effluent shall be discharged On behalf of the respondent Municipality it was submitted that under sub section 1 the satisfaction is the subjective satisfaction of the Municipality and of no other authority The requisition under this subsection is to the person on whom the notice is issued to show cause why he should not be directed to arrange for the discharge of the effluent in the manner specified in the notice and not to show cause against the existence of the nuisance Sub section 3 deals with this requisition which is the subject of the enquiry before the Special Officer and not the existence of a nuisance which was purely a matter for the subjective satisfaction of the Municipality It is contended that where the Legislature has conferred on the Municipality jurisdiction to determine whether a particular state of fact exists and on finding that it does exist to proceed further and to do something 397 more then the fact in question is not collateral but is a part of the very issue which the Municipality has to enquire into and that ceases to be justiciable Having regard to the submissions made on behalf of the appellant and the respondent it is necessary to construe the provisions of section 153A of the Act and to understand the scheme set out in its provisions for dealing with a nuisance of the kind mentioned in subs In our opinion to justify the issuing of a notice by the Municipality with the previous approval of the Government there must be in existence such a nuisance to the satisfaction of the Municipality The satisfaction here is the subjective satisfaction of the Municipality and no other authority could question the action of the Municipality in issuing the notice on the ground that it should not have been so satisfied Once the notice has issued ordering the person to whom the notice is issued to show cause why he should not be directed to arrange for the discharge of the effluent in the manner specified in the notice it is open to the person to whom the notice is issued to accept the assertion of the Municipality that the nuisance in question exists and to agree to comply with the direction to arrange the discharge of the effluent in the manner specified by the notice In such a case the Municipality may forthwith pass such orders as may be necessary for the purpose of regulating the discharge of the effluent in the manner specified in the notice In our opinion this authority is given to the Municipality because the person to whom the notice has been issued does not deny the existence of the nuisance in question and is prepared to comply with requisition in the notice without any objection If the person to whom the notice has been issued does not reply to the notice the Municipality may forthwith pass a similar order In both these cases there is no dispute about the existence of the nuisance in question and what was the subjective satisfaction of the Municipality is admitted to be in accordance with the existing facts Sub section 2 of section 153 A covers such a situation 398 Sub section 3 of section 153A deals with a situation entirely different from that which arises under sub section Under sub section 3 two situations arise 1 where the person to whom the notice has been issued objects to it and the requisition contained therein and 2 where he consents to it subject to modification In both cases the Government shall on the request made by the Municipality appoint a judicial officer not below the rank of a District Judge to hold an enquiry into the matter It will be noticed that while under sub section 2 the consent and willingness to comply with the requisition in the notice is absolute under sub s3 even if the person to whom the notice has been issued consents to the requisition subject to modification the consent is not absolute That is to say some dispute between the person concerned and the Municipality remains outstanding as to the manner of carrying it out and that dispute would be the subject of an enquiry by the Special Officer In this situation also the existence of the nuisance is implicitly admitted at id need not be enquired into Where however the person concerned objects to the notice and the requisition contained therein absolutely the objection is in substance to the issue of the notice itself which means he objects to the declaration of the Municipality that a nuisance exists as well as to the direction of the Municipality as to the manner in which the effluent shall be discharged If sub section 3 was intented to mean that the person to whom the notice has been issued could not object to the assertion of the Municipality that a nuisance existed then the words objecting or consenting subject to modification to the requisition would not find a place in the subsection because in that case it would have been quite sufficient to have used in the sub section the words consenting subject to the modification to the requisition The words to hold an enquiry into the matter clearly suggest that the Special Officer must enquire into the entire matter where a party objects absolutely to the notice and the requisition contained therein There would have been no need for the appointment of a special judicial officer not below the rank of a District Judge as a Special Officer if such 399 Officer was not required to enquire into the existence of the nuisance If the existence of a nuisance was assumed because that was a matter for the subjective satisfaction of the Municipality then it would not require a judicial officer of the rank of a District Judge to enquire and report only as to the manner in which the effluent should be discharged That task could be performed by engineers and experts in such matters In our opinion the scheme under section 153A is to leave it to the subjective satisfaction of the Municipality as to the existence of a nuisance before a notice is issued to the party concerned Sub section 1 does not deal with any enquiry into the matter It merely provides a machinery by which the scheme of section 153 A is set in motion No difficulty arises once a notice has been issued and the party concerned consents to it absolutely or does not choose to reply to it Under sub s3 however the appointment of a Special Officer was considered necessary because the dispute between the Municipality and the party concerned required investigation and a report from the Officer Under section 153E the Special Officer shall have the same powers as a Civil Court has while trying a suit under the Code of Civil Procedure in the following matters a summoning and enforcing the attendance of any person and examining him on oath b requiring the discovery and production of any documents c receiving evidence on affidavits d requisitioning any public record or copy there of from any court or office e issuing commissions for the examination of witnesses or documents f any other matters which may be prescribed Under section 153F there is a provision for the appointment of assessors to advise the Special Officer on any technical matter Under section 153G the proceedings before the Special Officer shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code These provisions make it clear that the Legislature intended where there was 400 an absolute objection to the notice and the requisition contained therein as in the present case that the dispute between the Municipality and the party concerned would be enquired into by a judicial officer of the rank of a District Judge Subs 3 was a protection to the party objecting to the requisition In these circumstances the enquiry must necessarily relate to the entire dispute and the words to hold an enquiry into the matter are wide enough to suggest this The Legislature intended that the party to whom the notice had been issued should not be the victim of exercise of any power vested in the Municipality in a capricious manner The Special Officer apparently made no attempt to construe the provisions of sub section 3 of section 153A of the Act In our opinion he erred in holding that it was beyond the scope of his enquiry to enquire into the question whether in fact the nuisance alleged by the Municipality existed He had thus denied himself the jurisdiction which he did possess and which he ought to have exercised It is plain that before the appellant could be called upon to comply with the requisition of the respondent Municipality involving several lakhs of rupees as expenditure the Special Officer ought to decide and report whether a nuisance of the kind alleged by the respondent Municipality existed The appellant rightly contends that the order of the Special Officer declining to go into the question whether the nuisance in question existed was one which ought to be set aside As in our opinion the Special Officer had wrongly decided that lie could not go into the question whether the nuisance existed his order must be set aside Having regard to the view which we take the contention on behalf of the appellant that the provisions of section 153A of the Act offend article 19 of the Constitution does not require to be decided this position is conceded by the appellant We must point out however that the enquiry should be completed without undue delay The notice was issued in June 1956 nearly 3 years ago Proceedings of this kind ought to be handled with the utmost 401 expedition because if a nuisance exists it should be removed without delay in order to preserve the health of the community and the fertility of the soil The appeal is accordingly allowed with costs A petition No 174 of 1958 under article 32 of the Constitution was also filed by the appellant It is unnecessary to pass any formal order on this petition as the appellant has succeeded in the Civil Appeal No 173 of 1959 and it is disposed of accordingly except that there will be no order for costs in this petition Appeal allowed

The appellant company in enforcement of a standing order framed under the XX of 1946 against which the respondent had preferred no appeal compulsorily retired 47 of its workmen at the age Of 55 A dispute was raised by the workmen as to the validity of such retirement and the three questions referred to the Tribunal for adjudication were 1 whether forced retirement of workmen at 55 was justified 2 what relief were the workmen entitled to on retirement and 3 supposing the forced retirement of the workmen in question was justified to what relief would they be entitled It was urged on behalf of the respondents that the age of superannuation fixed by the standing order should apply only to new entrants and in the case of old ones the age should be sixty with option to them to continue even thereafter The Labour Appellate Tribunal on appeal in reversal of the findings of the Industrial Tribunal held that the Standing Order in question could not bar adjudication as to the propriety of the system of forced retirement that in view of the admitted fact that there was no fixed age of retirement in the appellant s concern before the Standing Order it could not be enforced against workmen recruited prior to it and by its award directed that the workmen who had been compulsorily retired should be reinstated on refunding what they had received in the shape of gratuity and Provident Fund dues It was urged by way of preliminary objections on behalf of the appellant that 1 the 349 appeal to the Labour Appellate Tribunal was incompetent as no substantial question of law was involved in it and 2 that the reference to adjudication was itself bad and the delay in raising the present dispute showed that the respondent had acquiesced in the relevant standing order Held that the objections must fail The question as to what should be the proper age of super annuation for industrial workers was one of general importance as it affected a large number of employees and involved questions of industrial policy and principle so it was a substantial question of law under section 71a of the Industrial Disputes Appellate Tribunal Act 1950 A standing order even though binding as between the employer and the employees under section 7 of the was open to modification even under the Act as it stood prior to its amendment in 1956 in an industrial dispute raised by the workmen for that purpose and as such the present reference questioning the propriety and validity of the system of forced retirement as introduced by the appellant must be decided on merits Mettur Industries Ltd vs Varma and Others 1958 11 LLJ 326 and Bharat Starch and Chemicals Ltd vs The Industrial Tribunal Punjab referred to The delay inevitable in raising an industrial dispute could be no ground in the instant case for an inference that the respondent had acquiesced in the relevant standing order In industrial disputes legal technicalities should be avoided as far as it was reasonably possible to do so and industrial tribunals should be cautious in applying the principle of acquiescence and estoppel in the adjudication of such disputes Held further that it was evident in the instant case that it was unfair to fix the age of superannuation of previous employees by a subsequent standing order which should apply in that matter only to future entrants In view of the fact However that the previous employees had agreed that such age for them should be sixty with option to continue thereafter the age of superannuation for them should be fixed at sixty but without the option which must be held to be wholly unreasonable and inconsistent with the basic idea of a retirement age jamadoba Colliery of Messrs Tata Iron and Steel Co Ltd vs Shri Nasiban referred to Guest Keen Williams Private Ltd vs Its Workmen The Calcutta Gazette Pt 1 dt 24 9 53 P 3261 Ms Calcutta Exchange Gazette Daily Advertiser vs Shri Uma Prasanna Bhattacharjee The Calcutta Gazette Pt 1 dt 16 9 1954 P 3111 and Bengal Chamber of Commerce vs Its Employees Govt of West Bengal Labour Deptt Award made by the Tribunals for quarter ending March 1949 P 116 distinguished 350 In fixing the age of superannuation however industrial tribunals should take into consideration various relevant factors such as the nature of the work the wage structure retirement benefits and other amenities available the climate of the locality age of superannuation in comparable industries and the past practice prevailing in the industry

Civil Appeal No 291 of 1956 Appeal from the judgment and order dated November 25 1955 of the Circuit Bench of the Punjab High Court at Delhi in Civil Writ Application No 189 D of 1955 280 Jai Gopal Sethi J B Dadachanji section N Andley Rameshwar Nath and P L Vohra for the appellant R H Dhebar and T M Sen for respondent No 1 G section Pathak V P Nayar and Janardan Sharma for respondent No 3 1959 May 13 The Judgment of the Court was delivered by WANCHOO J This appeal comes before us on a certificate granted by the Punjab High Court under article 133 1 a and c of the Constitution The appellant is the manager Hotel Imperial New Delhi here in after called the hotel while the respondents are the Chief Commissioner Delhi the Additional Industrial Tribunal Delhi and the Hotel Workers Union Katra Shahanshahi Chandni Chowk Delhi The main contesting respondent is respondent No 3 here inafter called the union A dispute arose between the hotel and its workmen in October 1955 It was referred to an Industrial Tribunal on October 12 1955 by the Chief Commissioner of Delhi The portion of the order of reference relevant for our purposes is in these terms Whereas from a report submitted by the Director of Industries and Labour Delhi under section 12 4 of the as amended it appears that an industrial dispute exists between the management of the Hotel Imperial New Delhi and its workmen as represented by the Hotel Workers Union Katra Shahanshahi Chandni Chowk Delhi AND whereas on a consideration of the said report the Chief Commissioner Delhi is satisfied that the said dispute should be referred to a tribunal Then follows the order referring the dispute to the Additional Industrial Tribunal Delhi including the terms of reference Soon after the hotel filed a writ application in the Punjab High Court challenging the order of reference on a variety of grounds The writ application was heard by the High Court and dismissed on November 25 1955 The hotel then applied for leave to appeal to this Court which was granted on 281 January 13 1956 The hotel obtained stay of the proceedings before the Additional Industrial Tribunal from this Court on February 27 1956 That is how this dispute which would have been otherwise decided long ago is still in its initial stage The main contention on behalf of the hotel is that the reference is incompetent and two grounds have been urged in support of it namely 1 the union could not be made a party to the reference under the hereinafter called the Act and 2 the reference was vague as it did not indicate how many of the 480 workers of thirty different categories working in the hotel were involved in the dispute We are of opinion that there is no force in these grounds of attack An industrial dispute for our purposes has been defined in section 2 k of the Act as meaning any dispute or difference between employers and workmen which is connected with the employment or non employment or the terms of employment or with the conditions of labour of any person Section 10 1 of the Act gives power to the appropriate government where it is of opinion that an industrial dispute exists or is apprehended to refer the dispute to a tribunal for adjudication It cannot be denied on the facts of this case that there was a dispute between the hotel and its workmen and it went to this length that the hotel decided to dismiss a large number of workmen on October 7 1955 It is also undoubted that the dispute was With respect to the terms of employment Qr conditions of labour of the workmen The Chief Commissioner would therefore have power under section 10 1 of the Act to make a reference of the dispute to a tribunal for adjudication The attack of the hotel is on the form in which the reference was made and the contention is that the reference in this form is incompetent We have already set out the relevant part of the order of reference giving the form in which it was made The two parties to the dispute are clearly indicated namely 1 the employer which is the management of the hotel and 2 the workmen employed in the hotel The objection however is that the words as represented 36 282 by the Hotel Workers Union Katra Shahanshahi Chandni Chowk Delhi which appear in the order of reference make it incompetent inasmuch as the union could not be made a party to the reference We are of opinion that this objection is a mere technicality which does not affect the competence of the order of reference The fact remains that the dispute which was referred for adjudication was between the employer namely the management of the hotel and its employees which were mentioned as its workmen The addition of the words as represented by the Hotel Workers Union Katra Shahanshahi Chandni Chowk Delhi was merely for the sake of convenience so that the tribunal may know to whom it should give notice when proceeding to deal with the reference That however did not preclude the workmen if they wanted to be represented by any other union to apply to the tribunal for such representation or even to apply for being made parties individually Section 36 of the Act provides that a workman who is party to a dispute shall be entitled to be represented in any proceeding under the Act by a an officer of a trade union of which he is a member or b an officer of a federation of trade unions to which the trade union of which he is a member is affiliated or c where the workmen is not a member of any trade union by an officer of any trade union connected with or by any other workman employed in the industry in which the workman is employed The fact therefore that in the order of reference the quoted words were added for the sake of convenience as to where the notice to the workmen should be sent would not in our opinion make the reference incompetent The objection further is that even if the workman is entitled to be represented by an officer of a trade union of which he is a member the reference in this case does not mention any officer of the trade union but mentions the union itself This in our opinion is a technicality upon technicality for the union not being a living person can only be served through some officer such as its president or secretary and it is that officer who will really represent the workmen before the tribunal We are therefore of 283 opinion that the reference which is otherwise valid does not become incompetent simply because it is mentioned therein that the workmen will be represented by such and such union in the dispute We may in this connection point out that the large majority of references under the Act which we have come across are usually in this form and the reason for it is obvious namely the convenience of informing the tribunal to whom it should send a notice on behalf of the workmen whose number is generally very large We therefore reject the contention that the reference is bad simply because in the order of reference the words as represented by the Hotel Workers Union Katra Shahanshahi Chandni Chowk Delhi have been added Equally we see no force in the other ground of attack namely that the reference is bad because it does not specify how many of the 480 workmen of thirty different categories were involved in the dispute It is in our opinion unnecessary for the purposes of section 10 where the dispute is of a general nature relating to the terms of employment or conditions of labour of a body of workmen to mention the names of particular workmen who might have been responsible for the dispute It is only where a dispute refers to the dismissal etc of particular workmen as represented by the union that it may be desirable to mention the names of the workmen concerned In this case the dispute was also about workmen to whom notice of dismissal had been given and in that connection the names of the workmen concerned were mentioned in the order of reference We may in this connection refer to State of Madras vs C P Sarathy 1 where a similar attack on the competence of a reference was made on the ground of vagueness I In that case the reference was in these terms WHEREAS an industrial dispute has arisen between the workers and managements of the cinema talkies in the Madras City in respect of certain matters 1 1953 SC R 334 284 AND WHEREAS in the opinion of His Excellency the Governor of Madras it is necessary to refer the said industrial dispute for adjudication Thereafter followed the order of reference which did not even contain the terms of reference The order however indicated that the Industrial Tribunal may in its discretion settle the issues in the light of a preliminary enquiry which it may hold for the purpose and thereafter adjudicate on the said industrial dispute The Commissioner of Labour was requested to send copies of the order to the managements of cinema talkies concerned It was held there that the reference to the Tribunal under section 10 1 of the cannot be held to be invalid merely because it did not specify the disputes or the parties between whom the disputes arose It was further held that the Government must of course have sufficient knowledge of the nature of the dispute to be satisfied that it is an industrial dispute within the meaning of the Act as for instance that it relates to retrenchment or reinstatement But beyond this no obligation can be held to lie on the Government to ascertain particulars of the disputes before making a reference under section 101 or to specify them in the order The present reference as compared to the reference in that case cannot be called vague at all Here the parties to the dispute are clearly specified namely 1 the management of the hotel and ii its workmen The nature of the dispute is also specified in the terms of reference It was in our opinion entirely unnecessary to mention in the order of reference as to who were the workmen who were responsible for the dispute We are therefore of opinion that this attack on the ground of vagueness also fails There is no force in this appeal and it is hereby dismissed with costs to respondent No 3 In view of the fact that more than three years have passed since the reference was made we trust that the Additional Industrial Tribunal will now dispose of the matter as expeditiously as it can Appeal dismissed

R was the karta of the Hindu undivided family which became interested in a business concern which was then being carried on by others With a view to taking over the said business as a going concern a company was floated with R as one of the promoters Pursuant to an agreement with the vendors of the business and in anticipation of the incorporation of the company R on behalf of the company took over the concern carried it on and supplied the finance at all stages out of the joint family funds On December 19 1930 the contemplated company was incorporated under the Indian Companies Act as 321 a private company with limited liability in which of the total 950 ordinary shares R had 326 shares and his brother 356 shares The Articles of Association of the company provided for the appointment of R as the first managing director of the company Prior to the accounting year relevant to the assessment year I943 44 the amount received by R as managing director s remuneration was credited in the books of the Hindu undivided family just as the dividends on the shares held in the names of R and his brother had been done For the assessment year I943 44 it was claimed that the amount which R received as the managing director s remuneration in the relevant accounting year was his personal earnings and that it should not be added to the income of the Hindu undivided family but the Income tax Officer rejected this claim It was contended for the assessee that under the Indian Companies Act a Hindu undivided family cannot by reason of the definition given in section 29 A be appointed a managing agent of company and that the office of managing director involves a personal element and the appointment of a managing director must necessarily be of a particular person for his personal skill and other qualities and therefore the remuneration received by him must be his personal earnings Held that though vis a vis the company the managing director was undoubtedly the individual person who was appointed as such and the company was not concerned with the managing director s Hindu undivided family or the members thereof the question whether the amount received by the karta by way of managing director s remuneration was his personal income or was the income of the Hindu undivided family arises as between the karta and the members of his family and would depend on whether it was earned with the help of joint family assets In the present case on the facts found that the promotion of the company the taking over of the concern and the financing of it were all done with the help of the joint family funds and that R did not contribute anything out of his personal funds held that the managing director s remuneration received by R was as between him and the Hindu undivided family the income of the latter and should be assessed in its hands Kaniram Hazarimal vs Commissioner of Income tax West Bengal V D Dhanwatay vs Commissioner of Income tax Madhya Pradesh and Bhopal In re Haridas Purshottam and Gokul Chand vs Humam Chand Nath Mal 192I 48 IA 162 relied on Commissioner of Income tax Madras vs section N N Sankaralinga IYerl Murugappa Chetty vs Commissioner of Income tax Madras Sardar Bahadur Indra Singh vs Commissioner of Incomc tax Bihar and Orissa 41 322 and Commissioner of Income tax Bihar and Orissa vs Darsaram distinguished

ivil Appeal No 38 of 1955 Appeal by special leave from the judgment and order dated the April 29 1953 of the Punjab High Court at Simla in Civil Revision No 761 of 1951 arising out of the Appellate Order dated October 6 1951 of the Court of District Judge Delhi in Misc Civil Appeal No 248 of 1950 against the order of the Rent Controller Delhi dated the December 14 1950 47 370 C K Daphtary Solicitor General of India N C Chatterjee section N Andley and J B Dadachanji for the Appellant The respondent did not appear May 19 The following Judgments were delivered section K DAS J I have had the advantage and privilege of reading the judgments prepared by my learned brethren Sarkar J and Subba Rao J I agree with my learned brother Subba Rao J that the deed of May 1 1949 is a lease and not a licence I have nothing useful to add to what he has said on this part of the case of the appellant On the question of the true scope and effect of section 2b of the Delhi and Ajmer Merwara Rent Control Act 19 of 1947 hereinafter called the Rent Control Act I have reached the same conclusion as has been reached by my learned brother Sarkar J namely that the rooms or spaces let out by the appellant to the respondent in the Imperial Hotel New Delhi were rooms in a hotel within the meaning of section 2b of the Rent Control Act therefore that Act did not apply and the respondent was not entitled to ask for the determination of fair rent under its provisions The reasons for which I have reached that conclusion are somewhat different from those of my learned brother Sarkar J and it is therefore necessary that I should state the reasons in my own words I read first section 2b of the Rent Control Act so far as it is relevant for our purpose section 2 In this Act unless there is anything repugnant in the subject or context a b premises means any building or building which is or is intended to be let for use as a residence or for commercial any other purpose but does not include a room in a dharamshala hotel or lodging house The question before us is what is the meaning of the expression a room in a hotel Does it merely 371 mean a room which in a physical sense is within a building or part of a building used as a hotel or does it mean something more that is the room itself is not only within a hotel in a physical sense but is let out to serve what are known as hotel purposes If a strictly literal construction is adopted then a room in a hotel or dharamshala or lodging house means merely that the room is within and part of the building which is used as a hotel dharamshala or lodging house There may be a case where the entire building is not used as a hotel dharamshala or lodging house but only a part of it so used In that event the hotel lodging house or dharamshala will be that part of the building only which is used as such and any room therein will be a room in a hotel dharamshala or lodging house Rooms outside that part but in the same building will not be rooms in a hotel dharamshala or lodging house Take however a case where the room in question is within that part of the building which is used as a hotel dharamshala or lodging house but the room is let out for a purpose totally unconnected with that of the hotel lodging house or dharamshala as the case may be Will the room still be a room in a hotel lodging house or dharamshala That I take it is the question which we have to answer The word hotel is not defined in the Rent Control Act It is defined in a cognate Act called the Bombay Rents Hotel and Lodging House Rates Control Act 1947 Bom 57 of 47 The definition there says that a hotel or lodging house means a building or a part of a building where lodging with or without board or other service is provided for a monetary consideration I do not pause here to decide whether that definition should be adopted for the purpose of interpreting section 2b of the rent Control Act It is sufficient to state that in its ordinary connotation the word hotel means a house for entertaining strangers or travellers a place where lodging is furnished to transient guests as well as one where both lodging and food or other amenities are furnished It is worthy of note that in a 2b of the Rent Control Act three different words are used hotel dharamshals or lodging house 372 Obviously the three words do not mean the same establishment In the cognate Act the Bombay Rents Hotel and Lodging House Rates Control Act 1947 however the definition clause gives the same meaning to the words hotel and lodging house In my view section 2b of the Rent Control Act by using two different words distinguishes a hotel from a lodging house in some respects and indicates that the former is an establishment where not merely lodging but some other amenities are provided It was however never questioned that the Imperial Hotel New Delhi is a hotel within the meaning of that word as it is commonly understood or even as it is defined in the cognate Act Passing now from definitions which are apt not to be uniform the question is whether the partitioned spaces in the two cloak rooms let out to the respondent were rooms in that hotel In a physical sense they were undoubtedly rooms in that hotel I am prepared however to say that a strictly literal construction may not be justified and the word room in the composite expression room in a hotel must take colour from the context or the collocation of words in which it has been used in other words its meaning should be determined noscitur a sociis The reason why I think so may be explained by an illustration Suppose there is a big room inside a hotel in a physical sense it is a room in a hotel but let us suppose that it is let out to take an extreme example as a timber godown Will it still be a room in a hotel though in a physical sense it is a room of the building which is used as a hotel I think it would be doing violence to the context if the expression room in a hotel is interpreted in a strictly literal sense On the view which I take a room in a hotel must fulfil two conditions 1 it must he part a hotel in the physical sense and 2 its user must be connected with the general purpose of the hotel of which it is a part In the case under our consideration the spaces were let out for carrying on the business of a hair dresser Such a business I consider to be one of the amenities which a modern hotel provides The circumstance that people not resident in the hotel might also be served by the hair dresser does 373 not alter the position it is still an amenity for the residents in the hotel to have a hair dressing saloon within the hotel itself A modern hotel provides many facilities to its residents some hotels have billiard rooms let out to a private person where residents of the hotel as also non residents can play billiards on payment of a small fee other hotels provide post office and banking facilities by letting out rooms in the hotel for that purpose All these amenties are connected with the hotel business and a barber s shop within the hotel premises is no exception These are my reasons for holding that the rooms in question were rooms in a hotel within the meaning of section 2 b of the Rent Control Act 1947 and the respondent was not entitled to ask for fixation of fair or standard rent for the same 1 therefore agree with my learned brother Sarkar J that the appeal should be allowed but in the circumstances of the case there should be no order for costs SARKAR J The appellant is the proprietor of an hotel called the Imperial Hotel which is housed in a building on Queensway New Delhi R N Kapoor the respondent named above who is now dead was the proprietor of a business carried on under the name of Madam Janes Under an agreement with the appellant he came to occupy certain spaces in the Ladies and Gents cloak rooms of the Imperial Hotel paying therefore initially at the rate of Rs 800 and subsequently Rs 700 per month On September 26 1950 R N Kapoor made an application under section 71 of the Delhi and Ajmere Merwara Rent Control Act 1947 19 of 1947 to the Rent Controller New Delhi alleging that he was a tenant of the spaces in the cloak rooms under the appellant and asking that standard rent might be fixed in respect of them The appellant opposed the application contending for reasons to be mentioned later that the Act did not apply and no standard rent could be fixed The Rent Controller however rejected the appellant s contention and allowed the application fixing the standard rent at Rs 94 per month On 374 appeal by the appellant theDistrict Judge of Delhi If set aside the order of the Rent Controller and dismissed the application R N Kapoor then moved the High Court in revision The High Court set aside the order of the District Judge and restored that of the Rent Controller Hence this appeal We are informed that R N Kapoor died pending the present appeal and his legal representatives have been duly brought on the record No one has however appeared to oppose the appeal and we have not had the advantage of the other side of the case placed before us As earlier stated the appellant contends that the Act does not apply to the present case and the Rent Controller bad no jurisdiction to fix a standard rent This contention was founded on two grounds which I shall presently state but before doing that I wish to refer to a few of the provisions of the Act as that would help to appreciate the appellant s contention For the purpose of the present case it may be stated that the object of the Act is to control rents and evictions Section 3 says that no tenant shall be liable to pay for occupation of any premises any sum in excess of the standard rent of these premises Section 2d defines a tenant as a person who takes on rent any promises Section 2b defines what is a premises within the meaning of the Act and this definition will have to be set out later because this case largely turns on that definition Section 2c provides how standard rent in relation to any promises is to be determined Section 7 1 states that if any dispute arises regarding the standard rent payable for any premises then it shall be determined by the Court It is under this section that the application out of which this appeal arises was made the Court presumably being the Rent Controller It is clear from these provisions of the Act that standard rent can be fixed only in relation to premises as defined in the Act and only a tenant that is the person to whom the premises have been let out can ask for the fixing of the standard rent I now set out the definition of premises given in the Act so far as is material for our purposes 375 premises means any building or part of a building which is or is intended to be let separately but does not include a room in a dharamsala hotel or lodging house It is clear from this definition that the Act did not intend to control the rents payable by and evictions of persons who take on rent rooms in a dharamsala hotel or lodging house The appellant contends that the spaces are not premises within the Act as they are rooms in a hotel and so no standard rent could be fixed in respect of them Thus the first question that arises in this appeal is are the spaces rooms in an hotel within the definition If they are rooms in an hotel clearly no standard rent could be fixed by the Rent Controller in respect of them The Act does not define an hotel That word has therefore to be understood in its ordinary sense It is clear to me that the Imperial Hotel is an hotel however the word may be understood It was never contended in these proceedings that the Imperial Hotel was not an hotel within the Act Indeed the Imperial Hotel is one of the best known hotels of New Delhi It also seems to me plain that the spaces are rooms for this again has not been disputed in the Courts below and I have not found any reason to think that they are not rooms The language used in the Act is room in a hotel The word hotel here must refer to a building for a room in an hotel must be a room in a building That building no doubt must be an hotel that is to say a building in which the business of an hotel is carried on The language used in the Act would include an room in the hotel building That is its plain meaning Unless there is good reason to do otherwise that meaning cannot be departed from This is the view that the learned District Judge took Is there then any reason why the words of the statute should be given a meaning other than their ordinary meaning The Rent Controller and the High 376 Court found several such reasons and these I will now consider The learned Rent Controller took the view that a room in an hotel would be a room normally used for purposes of lodging and not any room in an hotel He took this view because he thought that if for example there was a three storeyed building the ground floor of which was used for shops and the two upper floors for an hotel it could not have been intended to exclude the entire building from the operation of the Act and so the rooms on the ground floor would not have been rooms in an hotel I am unable to appreciate how this illustration leads to the conclusion that a room in an hotel contemplated is a room normally used for lodging The learned Rent Controller s reasoning is clearly fallacious Because in a part of a building there is a hotel the entire building does not become a hotel Under the definition a part of a building may be a premises and there is nothing to prevent a part only of a building being a hotel and the rest of it not being one In the illustration imagined the ground floor is not a part of the hotel The shoprooms in the ground floor cannot for this reason be rooms in a hotel at all No question of these rooms being rooms in an hotel normally used for lodging arises We see no reason why a room in an hotel within the Act must be a room normally used for lodging The Act does not say so It would be difficult to say which is a room normally used for lodging for the hotel owner may use a room in an hotel for any purpose of the hotel he likes Again it would be an unusual hotel which lets out its lodging rooms the usual thing is to give licences to boarders to live in these rooms I now pass on to the judgment of the High Court Khosla J who delivered the judgment thought that a room in an hotel would be within the definition if it was let out to a person to whom board or other service was also given It would seem that according to the learned Judge a room in an hotel within the Act is a room let out to a guest in an hotel for only a guest bargains for lodging and food and services in an hotel But the section does not contain words 377 indicating that this is the meaning contemplated In defining a room in an hotel it does not circumscribe the terms of the letting If this was the intention the tenant would be entirely unprotected Ex hypothesi he would be outside the protection of the Act Though he would be for all practical purposes a boarder in an hotelthe would also be outside the protection of the cognate Act The Bombay Rents Hotels and Lodging House Rates Control Act 1947 Bom 57 of 1947 which has been made applicable toDelhi for that Act deals with lodging rates in an hotel which are entirely different from rents payable when hotel rooms are let out A lodger in an hotel is a mere licensee and not a tenant for there is involved in the term lodger that the man must lodge in the house of another see Foa on Landlord and Tenant 8th Ed p 9 It could hardly have been intended to leave a person who is practically a boarder in an hotel in that situation As I have earlier said it would be a most unusual hotel which lets out its rooms to a guest and the Act could not have been contemplating such a thing Khosla J also said that the room in a hotel need not necessarily be a bed room but it must be so intimately connected with the hotel as to be a part and parcel of it that it must be a room which is an essential amenity provided by an hotel eg the dining room in an hotel I am unable to agree I do not appreciate why any room in an hotel is not intimately connected with it by which apparently is meant the business of the hotel The business of the hotel is carried on in the whole building and therefore in every part of it It would be difficult to say that one part of the building is more intimately connected with the hotel business than another Nor do I see any reason why the Act should exempt from its protection a part which is intimately connected as it is said and which confess I do not understand and not a part not so intimately connected I also do not understand what is meant by saying that a part of an hotel supplies essential amenities The idea of essentiality of an amenity is so vague as to be unworkable This 48 378 test would introduce great uncertainty in the working of the Act which could not have been intended Nor do I see any reason why the Act should have left out of its protection a room which is an essential amenity of the hotel and not other rooms in it Though it is not clear it may be that Khosla J was thinking that in order that a room in an hotel may be within the definition it must be let out for the purposes of the hotel By this it is apparently meant that the room must be let out to supply board or give other services to the guests to do which are the purposes of an hotel Again I find no justification for the view There is nothing in the definition about the purposes of the letting out Nor am I aware that hotel proprietors are in the habit of letting out portions of the hotel premises to others for supplying board and services to the guests in the hotels It may be that an hotel proprietor grants licences to contractors to use parts of his premises to provide board and services to the guests in the hotel This however is a different matter and with such licences we are not concerned Again a proprietor of a different kind of business who lets out a portion of his business premises for the purposes of his business does not get an exemption from the operation of the Act I am unable to see why the proprietor of an hotel business should have special consideration The Act no doubt exempts a room in an hotel but it says nothing about the purposes for which the room must be let out to get the exemption Further not only a room in an hotel is exempted by the definition but at the same time also a room in a dharamsala If a room in an hotel within the Act is a room let out for the purposes of the hotel so must therefore be a room in a dharamsala It would however be difficult to see how a room in a dharamsala can be let out for the purposes of the dharamsala for a dharamsala does not as a rule supply food or give any services properly so called Having given the matter my best consideration I have not been able to find any reason why the words used in the definition should not have their plain meaning given to them I therefore come to the 379 conclusion that a room in an hotel within the definition is any room in a building in the whole of which the business of an hotel is run So understood the definition would include the spaces in the cloak rooms of the Imperiol Hotel with which we are concerned These spaces are in my view rooms in an hotel and excluded from the operation of the Act The Rent Controller had no power to fix any standard rent in respect of them The appellant also contended that Kapoor was not a tenant of the spaces but only a licensee and so again the Act did not apply The question so raised depends on the construction of the written agreement under which Kapoor came to occupy the spaces and the circumstances of the case I do not consider it necessary to express any opinion on this question for this appeal must in my view be allowed as the spaces are outside the Act being rooms in an hotel In the result I would allow the appeal and dismiss the application for fixing standard rent I do not propose to make any order for costs SUBBA RAO J I have had the advantage of perusing the judgment of my learned brother Sarkar J and I regret my inability to agree with him The facts material to the question raised are in a narrow compass The appellants the Associated Hotels of India Ltd are the proprietors of Hotel Imperial New Delhi The respondent R N Kapur since deceased was in occupation of two rooms described as ladies and gentlemen s cloak rooms and carried on his business as a hair dresser He secured possession of the said rooms under a deed dated May 1 1949 executed by him and the appellants He got into possession of the said rooms agreeing to pay a sum of Rs 9600 a year ie Rs 800 per month but later on by mutual consent the annual payment was reduced to Rs 8400 ie Rs 700 per month On September 26 1950 the respondent made an application to the Rent Controller Delhi alleging that the rent demanded was excessive and therefore a fair rent might be fixed under the Delhi and Ajmer Merwara 380 Rent Control Act 1947 19 of 1947 hereinafter called If the Act The appellants appeared before the Rent Controller and contended that the Act had no application to the premises in question at they were premises in a hotel exempted under section 2 of the Act from its operation and also on the ground that under the aforesaid document the respondent was not a tenant but only a licensee By order dated October 24 1950 the Rent Controller held that the exemption under section 2 of the Act related only to residential rooms in a hotel and therefore the Act applied to the premises in question On appeal the District Judge Delhi came to a contrary conclusion he was of the view that the rooms in question were rooms in a hotel within the meaning of section 2 of the Act and therefore the Act had no application to the present case Further on a construction of the said document he held that the appellants only permitted the respondent to use the said two rooms in the hotel and therefore the transaction between the parties was not a lease but a licence On the basis of the aforesaid two findings he came to the conclusion that the Rent Controller had no jurisdiction to fix a fair rent for the premises The respondent preferred a revision against the said order of the District Judge to the High Court of Punjab at Simla and Khosla J held that the said premises were not rooms in a hotel within the meaning of section 2 of the Act and that the document executed between the parties created a lease and not a licence On those findings he set aside the decree of the learned District Judge and restored the order of the Rent Controller The present appeal was filed in this Court by special leave granted to the appellants on January 18 1954 The learned Solicitor General and Mr Chatterjee who followed him contended that the Rent Controller had no jurisdiction to fix a fair rent under the Act in regard to the said premises for the following reasons 1 The document dated May 1 1949 created a relationship of licensor and licensee between the parties and not that of lessor and lessee as held by the High Court and 2 the said rooms were rooms in a hotel 381 within the meaning of section 2 of the Act and therefore they were exempted from the operation of the Act Unfortunately the legal representative of the respondent was ex parte and we did not have the advantage of the opposite view being presented to us But we have before us the considered judgment of the High Court which has brought out all the salient points in favour of the respondent The first question turns upon the true construction of the document dated May 1 1949 whereunder the respondent was put in possession of the said rooms As the argument turns upon the terms of the said document it will be convenient to read the relevant portions thereof The document is described as a deed of licence and the parties are described as licensor and licensee The preamble to the document runs thus Whereas the Licensee approached the Licensor through their constituted Attorney to permit the Licensee to allow the use and occupation of space allotted in the Ladies and Gents Cloak Rooms at the Hotel Imperial New Delhi for the consideration and on terms and conditions as follows The following are its terms and conditions 1 In pursuance of the said agreement the Licensor hereby grants to the Licensee Leave and License to use and occupy the said premises to carry on their business of Hair Dressers from 1st May 1949 to 30th April 1950 That the charges of such use and occupation shall be Rs 9600 a year payable in four quarterly installments ie 1st immediately on signing the contract 2nd on the 1st of August 1949 3rd on the 1st November 1949 and the 4th on the 1st February 1950 whether the Licensee occupy the premises and carry on the business or not That in the first instance the Licensor shall allow to the Licensee leave and license to use and occupy the said premises for a period of one year only That the licensee shall have the opportunity of further extension of the period of license after the expiry of one year at the option of the licensor on 382 the same terms and conditions but in any case the licensee shall intimate their desire for an extension at least three months prior to the expiry of one year from the date of the execution of this DEED The licensee shall use the premises as at present fitted and keep the same in good condition The licensor shall not supply any fitting or fixture more then what exists in the premises for the present The licensee will have their power and light meters and will pay for electric charges That the licensee shall not make any alterations in the premises without the prior consent in writing from the licensor That should the licensee fail to pay the agreed fee to the licensor from the date an d in the manner as agreed the licensor shall be at liberty to terminate this DEED without any notice and without payment of any compensation and shall be entitled to charge interest at 12 per annum on the amount remaining unpaid That in case the licensee for reasons beyond their control are forced to close their business in Delhi the licensor agrees that during the remaining period the license shall be transferred to any person with the consent and approval of the licensor subject to charges so obtained not exceeding the monthly charge of Rs 800 The document no doubt uses phraseology appropriate to a licence But it is the substance of the agreement that matters and not the form for otherwise clever drafting can camouflage the real intention of the parties What is the substance of this document Two rooms at the Hotel Imperial were put in possession of the respondent for the purpose of carrying on his business as hair dresser from May 1 1949 The term of the document was in the first instance for one year but it might be renewed The amount payable for the use and occupation was fixed in a sum of Rs 9600 per annum payable in four instalments The respondent was to keep the premises in good condition He should 383 pay for power and electricity He should not make alterations in the premises without the consent of the appellants If he did not pay the prescribed amount in the manner agreed to he could be evicted therefrom without notice and he would also be liable to pay compensation with interest He could transfer his interest in the document with the consent of the appellants The respondent agreed to pay the amount prescribed whether he carried on the business in the premises or not Shortly stated under the document the respondent was given possession of the two rooms for carrying on his private business on condition that he should pay the fixed amount to the appellants irrespective of the fact whether he carried on his business in the premises or not There is a marked distinction between a lease and a licence Section 105 of the Transfer of Property Act defines a lease of immoveable property as a transfer of a right to enjoy such property made for a certain time in consideration for a price paid or promised Under section 108 of the said Act the lessee is entitled to be put in possession of the property A lease is there fore a transfer of an interest in land The interest transferred is called the leasehold interest The lessor parts with his right to enjoy the property during the term of the lease and it follows from it that the lessee gets that right to the exclusion of the lessor Whereas section 52 of the Indian Easements Act defines a licence thus Where one person grants to another or to a definite number of other persons a right to do or continue to do in or upon the immoveable property of the grantor something which would in the absence of such right be unlawful and such right does not amount to an easement or an interest in the property the right is called a licence Under the aforesaid section if a document gives only a right to use the property in a particular way or under certain terms while it remains in possession and control of the owner thereof it will be a licence The legal possession therefore continues to be with the owner of the property but the licensee is permitted to 384 make use of the premises for a particular purpose But for the permission his occupation would be unlawful It does not create in his favour any estate or interest n the property There is therefore cleat distinction between the two concepts The dividing line is clear though sometimes it becomes very thin or even blurred At one time it was thought that the test of exclusive possession was infalliable and if a person was given exclusive possession of a premises it would conclusively establish that he was a lessee But there was a change and the recent trend of judicial opinion is reflected in Errington vs Errington 1 wherein Lord Denning reviewing the case law on the subject summarizes the result of his discussion thus at p 155 The result of all these cases is that although a person who is let into exclusive possession is prima facie to be considered to be tenant nevertheless he will not be held to be so if the circumstances negative any intention to create a tenancy The Court of Appeal again in Cobb vs Lane 2 considered the legal position and laid down that the intention of the parties was the real test for ascertaining the character of a document At p 1201 Somervell L J stated the solution that would seem to have been found is as one would expect that it must depend on the intention of the parties Denning L J said much to the same effect at p 1202 The question in all these cases is one of intention Did the circumstances and the conduct of the parties show that all that was intended was that the occupier should have a personal privilege with no interest in the land The following propositions may therefore be taken as well established 1 To ascertain whether a document creates a licence or lease the substance of the document must be preferred to the form 2 the real test is the intention of the parties whether they intended to create a lease or a licence 3 if the document creates an interest in the property it is a lease 1 2 385 but if it only permits another to make use of the property of which the legal possession continues with the owner it is a licence and 4 if under the document a party gets exclusive possession of the property prima facie he is considered to be a tenant but circumstances may be established which negative the intention to create a lease Judged by the said tests it is not possible to hold that the document is one of licence Certainly it does not confer only a bare personal privilege on the respondent to make use of the rooms It puts him in exclusive possession of them untrammelled by the control and free from the directions of the appellants The covenants are those that are usually found or expected to be included in a lease deed The right of the respondent to transfer his interest under the document although with the consent of the appellants is destructive of any theory of licence The solitary circumstance that the rooms let out in the present case are situated in a building wherein a hotel is run cannot make any difference in the character of the holding The intention of the parties is clearly manifest and the clever phraseology used or the ingenuity of the document writer hardly conceals the real intent I therefore hold that under the document there was transfer of a right to enjoy the two rooms and therefore it created a tenancy in favour of the respondent The next ground turns upon the construction of the provisions of section 2 of the Act Section 2b defines the term premises and the material portion of it is as follows Premises means any building or part of a building which is or is intended to be let separately but does not include a room in a dharmashala hotel or lodging house What is the construction of the words a room in a hotel The object of the Act as disclosed in the preamble is to provide for the control of rents and evictions and for the lease to Government of premises upon their becoming vacant in certain areas in the 49 386 Provinces of Delhi and Ajmer Merwara The Act was therefore passed to control exorbitant rents of buildings prevailing in the said States But section 2 exempts a room in a hotel from the operation of the Act The reason for the exemption may be to encourage running of hotels in the cities or it may be for other reasons Whatever may be the object of the Act the scope of the exemption cannot be enlarged so as to limit the operation of the Act The exemption from the Act is only in respect of a room in a hotel The collocation of the words brings out the characteristics of the exempted room The room is part of a hotel It partakes its character and does not cease to be one after it is let out It is therefore necessary to ascertain the meaning of the word hotel The word hotel is not defined in the Act A hotel in common parlance means a place where a proprietor makes it his business to furnish food or lodging or both to travellers or other persons A building cannot be run as a hotel unless services necessary for the comfortable stay of lodgers and boarders are maintained Services so maintained vary with the standard of the hotel and the class of persons to which it caters but the amenities must have relation to the hotel business Provisions for heating or lighting supply of hot water sanitary arrangements sleeping facilities and such others are some of the amenities a hotel offers to its constituents But every amenity however remote and unconnected with the business of a hotel cannot be described as service in a hotel The idea of a hotel can be better clarified by illustration than by definition and by giving examples of what is a room in a hotel and also what is not a room in a hotel 1 A owns a building in a part whereof he runs a hotel but leases out a room to B in the part of the building not used as hotel 2 A runs a hotel in the entire building but lets out a room to B for a purpose unconnected with the hotel business 3 A runs a hotel in the entire building and lets out a room to B for carrying on his business different from that of a hotel though incidentally the inmates of the hotel take advantage of it because of its proximity 4 A lets out a room in such a building 387 to another with an express condition that he should cater only to the needs of the inmates of the hotel and 5 A lets out a room in a hotel to a lodger who can command all the services and amenities of a hotel In the first illustration the room has never been a part of a hotel though it is part of a building where a hotel is run In the second though a room was once part of a hotel it ceased to be one for it has been let out for a non hotel purpose In the fifth it is let out as part of a hotel and therefore it is definitely a room in a hotel In the fourth the room may still continue as part of the hotel as it is let out to provide an amenity or service connected with the hotel But to extend the scope of the words to the third illustration is to obliterate the distinction between a room in a hotel and a room in any other building If a room in a building which is not a hotel but situated near a hotel is let out to a tenant to carry on his business of a hair dresser it is not exempted from the operation of the Act But if the argument of the appellants be accepted if a similar room in a building wherein a hotel is situated is let out for a similar purpose it would be exempted In either case the tenant is put in exclusive possession of the room and he is entitled to carry on his business without any reference to the activities of the hotel Can it be said that there is any reasonable nexus between the business of the tenant and that of the hotel The only thing that can be said is that a lodger in a hotel building can step into the saloon to have a shave or haircut So too he can do so in the case of a saloon in the neighbouring house The tenant is not bound by the contract to give any preferential treatment to the lodger He may take his turn along with others and when he is served he is served not in his capacity as a lodger but as one of the general customers What is more under the document the tenant is not even bound to carry on the business of a hair dresser His only liability is to pay the stipulated amount to the landlord The room therefore for the purpose of the Act ceases to be a part of the hotel and becomes a place of business of the respondent As the rooms in question were not let 388 out as part of a hotel or for hotel purposes I must hold that they are not rooms in a hotel within the meaning of section 2 of the Act In this view the appellants are not exempted from the operation of the Act The judgment of the High Court is correct The appeal fails and is dismissed ORDER In accordance with the opinion of the majority the appeal is allowed No order as to costs

The respondent Municipality issued a notice under sub section 1 Of section 153A of the Bombay District Municipal Act 1901 as adapted and applied to the State of Saurashtra and as amended by Act XI Of 1955 calling upon the appellant to show cause why it should not be directed to discharge the effluent Of it s chemical works in the manner specified in the notice On the appellant objecting to the notice and the requisition contained therein a Special Officer was appointed by the Government under sub section 3 of that section to hold an enquiry in the matter The Special Officer treated some of the issues raised as preliminary issues of law and held that the question whether the discharge of the effluent polluted the water and adversely affected the fertility of the soil was a matter for the subjective satisfaction of the Municipality and binding on him and was as such beyond the scope of his enquiry The question for determination in this appeal was whether the Special Officer was right in the view he took of section 153A3 Of the Act and in restricting the scope of the enquiry in the way he did 389 Held that Special Officer took a wrong view of his jurisdiction under section 153A3 Of the Act and was in error in restricting the scope of the enquiry There could be no doubt on a proper appreciation of the scheme laid down by the provision of section 153A of the Act correctly construed that while the subjective satisfaction of the Municipality as to the existence of the nuisance could not be questioned at the initial stage when it sought to put the machinery provided by sub section 1 in motion or under sub section 2 where such existence was admitted the situation contemplated by sub section 3 where the notice and the requisition were wholly disputed and no mere modification of the requisition sought was entirely different The language of sub section 3 and particularly the words to hold an enquiry into the matter used by it clearly indicated that where there was such a contest it was the duty of the Special Officer to enquire into the existence of the alleged nuisance and come to a finding of his own The status of the Special Official and powers conferred on him by the relevant provisions of the Act clearly indicated that sub section 3 was intended by the Legislature to be a protection against any arbitrary exercise of its power by the Municipality It was of the utmost importance that such proceedings should in the interest of the community be disposed of with all possible expedition CIVIL APPELLATE JURISDICTION Civil Appeal No 173 of 1959 Appeal by special leave from the judgment and order dated July 16 1958 of the Special Officer appointed under section 1533 of the Bombay District Municipal Act 1901 Bombay Act No 1 1 1 of 1901 as applied to Saurashtra Zalawad Division Surendarnagar

Criminal Appeal No 59 of 1959 Appeal from the judgment and order dated the January 8 1959 of the Calcutta High Court in Criminal Misc Case No 126 of 1958 AND PETITION No 51 OF 1959 Petition under Article 32 of the Constitution of India for the enforcement of Fundamental Rights Veda Vyasa section K Kapur and Ganpat Rai for the appellant and petitioner B Sen and P K Bose for the respondents May 20 The Judgment of the Court was delivered by SINHA J This appeal on a certificate of fitness granted by the Calcutta High Court is directed against the order of that Court dated January 8 1959 in Criminal Miscellaneous Case No 126 of 1958 refusing to issue a writ in the nature of habeas corpus in respect of one Ram Prasad Das who will hereinafter be referred to as the petitioner This Court by an order 413 dated April 20 1959 directed that the application of the petitioner under article 32 of the Constitution for a similar writ in respect of the same person be posted for hearing immediately after the aforesaid criminal appeal and that it shall not be necessary that the petitioner be produced before this Court at the time of the hearing of the writ petition Hence both the matters relating as they do to the same subject matter have been heard together and will be disposed of by this judgment It appears that Naresh Chandra Ganguli an advocate practising in the Calcutta High Court made an application under sections 491 and 561A of the Code of Criminal Procedure as a friend on behalf on the petitioner in detention in the Dum Dum Central Jail in 24 Parganas under the orders of the Government of West Bengal The application was made to the Calcutta High Court on the following allegations The peti tioner is the Secretary of the West Bengal Committee of the Bharatiya Jana Sangha one of the four big political parties as recognized by the Election Commission of India On or about October 7 1958 towards evening when the petitioner was coming out of the Basanta Cabin a tea stall at the crossing of the College Street and Surya Sen Street after having addressed a meeting at the College Square he was stopped on the street by the police and was taken to the office of the Special Branch Police on Lord Sinha Road From there he was sent to the Dum Dum Central Jail where he was served with an order being Order No 83 dated October 7 1958 purporting to have been made by the Commissioner of Police Calcutta under the provisions of the Preventive Detention Act No IV of 1950 hereinafter referred to as the Act The order is in these terms ORDER Dated 7 10 58 No 83 Whereas I am satisfied with respect to the person known as Sri Ram Prasad as son of late Bepin Behari Das of Village P S P Dist and of 6 Murlidhar Sen Lane Calcutta that with a view to preventing him from acting in a manner prejudicial 414 to the maintenance of Public Order it is necessary so to do Now therefore in exercise of the Powers conferred by Section 32 of the IV of 1950 1 made this order directing that the said Sri Ram Prasad Das be detained Given under my hand and seal of office Sd Illegible Commissioner of Police Calcutta On or about October 8 1958 the petitioner was served in the Dum Dum Central Jail with a further order being Order No 85 dated October 8 1958 which is as follows Government of West Bengal Office of the Commissioner of Police Calcutta Dated 8 10 58 No 85 Grounds for detention under clause ii of clause a of Sub section 1 of Section 3 of the Act IV of 1950 To Sri Rain Prasad Das SO Bepin Behari Das of 6 Muralidhar Sen Lane Calcutta You are being detained in pursuance of a detention order made in exercise of power conferred by Section 32 c of the PD Act 1950 Act IV of 1950 on the ground that you are acting in a manner prejudicial to the maintenance of public order as evidenced by the particulars given below 1That on 13 9 58 you attended a meeting of Eastern Indian Refugee Council held at the Refugee office at 6 Murlidhar Sen Lane and vilified Prime Minister of India for his allegedly turning a deaf ear to the untold miseries of the refugees and while referring to the recent agreement between the Prime Ministers of India and Pakistan you vented feelings of violence against the Prime Minister of India by emphasising that in order to save the refugees and the territories of the Indian Union Sri Nehru should be murdered if necessary and so the need of another Nathuram Godse was felt now 415 2 That in course of discussion with members of your party on 17 9 58 at 6 Murlidhar Sen Lane you stated that the Indian Prime Minister had made a Present of certain Indian enclaves to Pakistan in pursuance of the policy of appeasement which has been initiated by the Late Mahatma Gandhi and called upon the members to build uP strong movement against the implementation of Nehru Noon Pact You also tried to rouse passions by alleging that the Indian Prime Minister had no sympathy for West Bengal That on 26 9 58 you attended another meeting of the South Durtolla Branch of the Jana Sangha at Jatin Mitter Park where you denounced the aforesaid agreement between the two Prime Ministers and stressed the need of forming a militia with the youths of the country for the safety of the people living in border areas and urged all to enrol themselves for the said purpose That you intend to proceed to Delhi on 9 10 58 and that you are likely to instigate plans which may adversely affect the personal security of the Prime Minister of India Your action above is bound to result in the maintenance of public order being prejudicially affected You are hereby informed that you may make a representation to the State Government against the detention order and that such representation should be addressed to the Assistant Secy Home Special Department Government of West Bengal and forwarded through the Supt of the Jail in which you are detained as early as possible You are also informed that us 10 of the PD Act 1950 IV of 1950 the Advisory Board shall if you desire to be heard hear you in person and that if you desire to be so heard by the Advisory Board you should intimate such desire in your representation to the State Government Sd Illegible Commissioner of Police Calcutta 416 On or about October 11 1958 the petitioner was served with another order which is in these terms Government of West Bengal Home Department Special Section Order Calcutta 11 10 58 No 1882 H section In exercise of the power conferred by Section 32 of the Preventive Detention Act 1950 IV of 1950 the Governor is pleased to approve order No 83 dated the 7 10 58 made under Section 32 of the said Act by the Commissioner of Police Calcutta directing that Sri Ram Prasad Das son of Late Bepin Behari Das of 6 Murlidhar Sen Lane Calcutta be detained By order of the Governor Sd Illegible Dy Secty to the Govt of West Bengal The petitioner made a representation in writing against the order of detention aforesaid denying and refuting the grounds of his detention set out above He particularly denied the allegation contained in ground No 1 aforesaid as totally false and stated that there was no meeting as alleged on September 13 1958 and that he had not made any speech attributed to him in the said ground He also denied that he had advocated in any meeting for the formation of a militia as alleged But he claimed that he had a right to express his views about the policy of the Government or the Prime Minister relating to Pakistan and or about Nehru Noon Pact or similar other Agreements He denied that he indulged in any violent speeches or that he tried to rouse passions His further contention was that the ground No 4 was extremely vague in the absence of any particulars about how where and when and in what manner he was likely to instigate any plan which was to adversely affect the personal security of the Prime Minister of India and the nature or particulars of any such contemplated plan In his application to the High Court the petitioner also submitted that the grounds supplied to him had 417 no rational connection with the objects mentioned in section 3 of the Act and that therefore he was deprived of his right to make an effective representation He also alleged that he was a member of a political party opposed to the party in power and held definitely pronounced views about the failure of the Government to tackle the problem of refugees as also about the relationship between the Government and the State of Pakistan He also claimed to be a leader of the refugees and as such had been relentlessly criticising the policies of the present Government He further asserted that the order of detention passed against him was a clear case of political victimisation He alleged further that the order of detention on the face of it was malafide and was a clear infringement of his fundamental right to freedom of speech and association guaranteed by the Constitution On November 28 1958 the petitioner was brought to the Writers Buildings in Calcutta and placed before the Advisory Board as constituted under the Act The petitioner was heard in person by the Advisory Board on that date and on the next day that is November 29 1958 after the hearing by the Advisory Board another order being order No 1967 H section dated November 29 1958 made by the Governor of West Bengal was issued confirming the aforesaid order of detention No 83 dated October 7 1958 set out above and continuing the petitioner s detention till the expiration of 12 months from the date of detention On those allegations the petitioner submitted to the High Court that the orders aforesaid relating to his detention in the Dum Dum Central Jail were illegal invalid ultra vires void and inoperative An affidavit in opposition on behalf of the State of West Bengal and other opposite parties was sworn to by the Commissioner of Police Calcutta opposite party No 3 in the case In the aforesaid affidavit the deponent averrred that he was satisfied on the records and materials placed before him that the petitioner was a person likely to act in a manner prejudicial to the maintenance of public order and that with a view to preventing him from doing so it 418 was necessary to make the order of detention on the grounds mentioned in the Order No 85 dated October 8 1958 set out above He also averred that the orders of detention aforesaid together with the grounds and all other relevant particulars were reported by him to the Government of West Bengal which after duly considering the same duly approved of the orders of detention It was also stated in the affidavit that the petitioner personally appeared before the Advisory Board on November 28 1958 and the Advisory Board upon a consideration of the records and materials placed before it and the representation made by the petitioner and after hearing the petitioner in person reported to the Government of West Bengal that in the opinion of the Advisory Board there was sufficient cause for the detention of the petitioner The Commissioner of Police further stated in the affidavit that he had duly passed and signed the orders of detention after considering the records and materials in respect of the petitioner in exercise of the powers conferred under the Act bona fide and without any malice whatsoever on being satisfied about the necessity of the said orders of detention He also stated that he denied all statements of facts to the contrary contained in the affidavit in support of the petition and he undertook to produce the original records in the Court at the hearing Allegations of victimisation on political grounds and that the order of detention was mala fide and in infringement of the fundamental rights of the petitioner were specifically denied The matter was heard by a Division Bench of the Calcutta High Court Guha Roy and H K Sen JJ which by its order dated January 8 1958 discharged the Rule In the course of its judgment the High Court made the following observations On a reading of the order however it is quite clear to us that paragraphs 1 2 3 and 4 do not state the grounds of the order There is only one ground of the order and that is that the petitioner was acting in a manner prejudicial to the maintenance of public order and the remaining paragraphs of the order make it quite clear that what are stated 419 in paragraphs 1 2 3 and 4 constitute different pieces of evidence by which the authority making the order came to the conclusion that the petitioner was acting in a manner prejudicial to the maintenance of public order and therefore should be detained under the Act Hence the High Court on a construction of section 3 of the Act came to the conclusion that the grounds of detention in respect of the petitioner were not vague and that the statement in para 4 of the detention order No 85 dated October 8 1958 quoted above was not a ground but only a piece of evidence out of several such pieces of evidence on which the ground of detention was based It was further pointed out that para 4 aforesaid was not by itself a ground of the order but merely an inference of fact which had some bearing on the ground of the order The High Court also pointed out that there was no ambiguity in the recitals including these in para 4 aforesaid In that view of the matter the order of detention of the petitioner was upheld and the Court further held that the question whether the whole order was bad on the ground that one of the grounds was too vague did not arise in the case The petitioner moved the Calcutta High Court for a certificate that the case was a fit one for appeal to this Court The Chief Justice of the High Court delivering the order of the Division Bench of that Court granting the necessary certificate observed that the view of the High Court that para 4 aforesaid was not a ground of detention but only one of the items of evidence in support of the ground raised a serious question to be determined by this Court particularly because a view contrary to the one taken by the High Court in the instant case appeared to have been taken by this Court and by the Calcutta High Court itself in a number of decisions That is how this appeal has come to this Court Besides preferring the aforesaid appeal the petitioner moved this Court under article 32 of the Constitution praying for a writ in the nature of habeas corpus and a Constitution Bench by its order dated April 20 1959 directed that this appeal be posted for 420 hearing by a Constitution Bench on May 11 1959 on a cyclostyled paper book and that the filing of the petition of appeal and the statements of cases be dispensed with The Court further ordered that the application under article 32 of the Constitution be posted for hearing immediately after the criminal appeal That is how both the matters have been placed one after the other for hearing before us The order under appeal takes the view that the various grounds of detention are stated in section 3 1a i ii iii and b of the Act and that there can be no grounds apart from those The High Court then on a reading of the Order No 85 set out above has held that paragraphs 1 2 3 and 4 are not the grounds of detention as contemplated by section 3 of the Act but that they only constitute different pieces of evidence by which the authority making the order came to the conclusion that the petitioner was acting in a manner prejudicial to the maintenance of public order which was the only ground on which the order of detention in question was founded The High Court was right in its literal construction of the order impugned in this case which proceeds to recite the four numbered paragraphs preceded by the introductory clause as evidenced by the particulars given below But the case of The State of Bombay vs Atma Ram Sridhar Vaidya 1 has laid it down that cl 5 of article 22 of the Constitution confers two distinct though interrelated rights on the petitioner namely 1 the right to be informed of the grounds on which the order of detention has been made and 2 the right to be enabled at the earliest opportunity to make a representation against the order This Court further pointed out in that case that the grounds which have a rational connection with the objects mentioned in section 3 have to be supplied As soon as that is done the first condition of a valid detention is complied with The second condition of such a detention is fulfilled only after the detenu has been supplied with such information as will enable him to make a representation If the information supplied in order to enable a detenu 1 421 to make a representation does not contain sufficient particulars the detenu is entitled to ask for further particulars which will enable him to make a representation Therefore if there is an infringement of either of the two rights and any one of the two conditions precedent to a valid detention as aforesaid has not been fulfilled the detenu has a right to approach this Court for a writ in the nature of habeas corpus In other words the grounds for making an order of detention which have to be communicated to the detenu as soon as practicable are conclusions of facts and are not a complete recital of all the relevant facts Therefore the grounds that is to say those conclusions of facts must be in existence when the order of detention is made and those conclusions of facts have to be communicated to the detenu as soon as may be This Court and naturally the High Courts have treated the recitals in the orders of detention with particular reference to the several clauses and sub clauses of section 3 1 a and b of the Act as stating the object to be achieved in making the order of detention The order of detention may also contain recitals of facts upon which it is based If the order of detention also contains the recitals of facts upon which it is founded no further question arises but if it does not contain the recitals of facts which form the basis of the conclusions of fact justifying the order of detention then as soon as may be now under section 7 within a maximum period of five days from the date of detention the person detained has to be informed of those facts which are the basic facts or the reasons on which the order of detention has been made Section 3 of the Act requires the authority making an order of detention to state the fact of its satisfaction that it is necessary to make the order of detention of a particular person with a view to preventing him from acting in a manner prejudicial to one or more of the objects contained in clauses and sub clauses of section 3 1 a and b of the Act Section 7 requires that the person detained should be communicated the grounds on which the order of detention has been made so a to afford him the earliest opportunity to make a 422 representation against the order to the appropriate Government The statement of facts contemplated by section 7 would thus constitute the grounds and not the matters contained in one or more of the clauses and sub clauses under section 3 1 a and b of the Act Section 3 also requires that when an order of detention has been made the State Government concerned has to be apprised of the order of detention as also of the grounds on which the order of detention has been made together with such other particulars as have a bearing on the order and the grounds And finally after the order has been approved by the State Government that Government in its turn has to report to the Central Government the fact of the detention together with the grounds on which the order of detention had been made and such other particulars as in the opinion of the State Government have a bearing on the necessity for the order Thus on a consideration of the provisions of sections 3 and 7 of the Act it may be observed that the detenu has to be served with a copy of the order passed by the authority contemplated by sub section 2 of section 3 containing firstly recitals in terms of one or more of the subclauses of cl a and b of section 31 which we may call the Preamble and secondly the grounds contemplated by section 7 namely the conclusions of fact which have led to the passing of the order of detention informing the detenu as to why he was being detained lf the grounds do not contain all the particulars necessary for enabling the detenu to make his representation against the order of his detention he may ask for further particulars of the facts and the authority which passed the order of detention is expected to furnish all that information subject of course to the provisions of sub section 2 of section 7 that is to say the person detained shall not be entitled to the disclosure of such facts as the authority making the order considers against public interest to disclose Thus the order of detention to be served upon the person detained would usually consist of the first two parts namely the preamble and the grounds but it may also consist of the third part namely the 423 particulars if and when they are required or found to be necessary But it has to be noted that the particular referred to in sub sections 3 and 4 of section 3 would not be identical with the particulars which we have called the third part of the order The State Government as also the Central Government would naturally be placed in possession of all the relevant facts and particulars on which the order of detention has been passed But those particulars may contain such details of facts as may not be communicated in public interest to the person detained From what has been said above it is clear that the High Court was in error in so far as it treated what we have called the preamble as the grounds of detention contemplated by section 7 of the Act But this error as will presently appear has not affected the legality propriety or correctness of the order passed by the High Court in the habeas corpus proceedings before it The High Court as already indicated after making those observations which we have held to be erroneous proceeded further to say that there was no ambiguity in the recitals of facts as the High Court characterised them and which we have called the grounds The contention raised before the High Court has been repeated before us that the grounds contained in para 4 are vague and indefinite not enabling the person detained to make his representation It will appear from the paragraph aforesaid that the petitioner intended to proceed to Delhi on October 91958 with a view to instigating plans against the personal security of the Prime Minister It is clear that the place date and purpose of the planned nefarious activity have all been stated as clearly as could be expected But it was argued that it was also necessary to state the details of the plan to be hatched in Delhi There are several answers to this contention Paragraph 4 has reference to something which was apprehended but lay in the womb of the future From the nature of the fact that it was not an event which had already happened but what was apprehended to be in the contemplation of the detenu and his associates if any no further details of the plan could possibly be 424 disclosed As was observed in the decision of this Court in The State of Bombay vs Atma Ram Sridhar Vaidya 1 at pp 184 and 185 vagueness is a relative term Its meaning must vary with the facts and circumstances of each case What may be said to be vague in one case may not be so in another and it could not be asserted as a general rule that a ground is necessarily vague if the only answer of the detained person can be to deny it If the statement of facts is capable of being clearly understood and is sufficiently definite to enable the detained person to make his representation it cannot be said that it is vague Further it cannot be denied that particulars of what has taken place can be more definitely stated than those of events which are yet in the offing In the very nature of things the main object of the Act is to prevent persons from doing something which comes within the purview of any one of the sub clauses of cl a of section 31 of the Act It was next contended that some of the grounds at least are irrelevant This was not said of the first paragraph of the grounds set out above It was said of paragraphs 2 3 and 4 that they are irrelevant to the main object of the order of detention namely the maintenance of public order In our opinion there is no substance in this contention either All the statements in the four paragraphs of the grounds which have to be read together as being parts of a connected whole calling upon persons to build up strong movement against the implementation of Nehru Noon Pact and to rouse passions by alleging that the Indian Prime Minister had no sympathy for West Bengal cannot be said to be wholly unconnected with the maintenance of public order Similarly denouncing the agreement between the two Prime Ministers and stressing the need of forming a militia with the youths of the country cannot be said to have no repercussions on the maintenance of public order And lastly any instigation against the personal safety of the Prime Minister of India cannot but have a deleterious effect on the maintenance of public order 1 425 It was sought to be argued that any weak link in the chain of facts and circumstances said to have been the basis of the order of detention would affect the legality of the whole order This argument postulates that there are many grounds which are either vague or irrelevant In this connection particular reliance was placed on the observations of this Court in Dwarka Dass Bhatia vs The State of Jammu and Kashmir 1 to the effect that if some of the reasons on which the order of detention had been based are found to be non existent or irrelevant the Court ought to quash the order because it is not in a position to know which of the reasons or the grounds had operated on the mind of the authorities concerned when they decided the pass the impugned order As already pointed out no such situation arises in this case because in our opinion none of the grounds is either vague or irrelevant It may also be pointed out that the ground of irrelevance wag not urged before the High Court but even so we allowed the petitioner s counsel to urge that ground before us and having heard him on that aspect of the matter we have no doubt that there is no justification for the contention that any of the matters taken into consideration by the authorities concerned in the matter of the detention of the petitioner was irrelevant For the reasons given above it must be held that there is no merit in this appeal or in the application under article 32 of the Constitution They are accordingly dismissed Appeal and application dismissed

An industrial dispute between the hotel and its workmen was referred to an Industrial Tribunal The attack of the hotel was on the form of the order of reference the main contention being that the reference was incompetent on the grounds that the Union could not be made a party to the reference under the Industrial Disputes Act and that the reference was vague as it did not indicate how many of the workers of different categories working in the hotel were involved in the dispute Held that the order of reference was perfectly competent when the parties to it and the nature of the dispute were clearly specified The reference which was otherwise valid does not become incompetent simply because it was mentioned therein that the workmen will be represented by such and such Union in the dispute The addition of the name of the Union was merely for the sake of convenience so that the Tribunal may know to whom it should give notice when proceeding to deal with the reference that does not preclude the workmen from being represented by another Union or even being made parties individually It is unnecessary for the purpose of section 10 of the Act where the dispute was of a general nature relating to the terms of employment or condition of labour of a body of workmen to mention the names of particular workmen who might have been responsible for the dispute It was only where a dispute refers to the dismissal etc of particular workmen as represented by the Union that it would be desirable to mention the names of the workmen concerned State of Madras vs C P Sarathy referred to

vil Appeal No 310 of 1954 Appeal by special leave from the judgment and order dated March 22 1956 of the Labour Appellate Tribunal of India Calcutta in Appeal No Cal 183 of 1955 NC Chatterjee section N Mukherjee and B N Ghosh for the appellant Sukumr Ghosh for the respondent May 21 The Judgment of the Court was delivered by WANCHOO J This appeal by special leave against the decision of the Labour Appellate Tribunal of India is limited to the question whether an order of reinstatement can be made on an application under section 33 A of 60 474 the hereinafter called the Act The brief facts necessary for the decision of this question are these The appellant is a Jute Mill There was a dispute pending before an Industrial Tribunal between a number of jute mills in West Bengal and their employees and the appellant was a party to that dispute During the pendency of that dispute the appellant laid off the respondent who was an employee in the ration shop maintained by the appellant from July 19 1954 as rationing of food stuff came to an end from July 10 1954 The reason for the lay off was that the ration shop was closed following the end of rationing This resulted in the staff in that shop becoming surplus Consequently nine persons were selected for retrenchment on the principle of last come first go and the respondent was one of them The appellant also applied under section 33 of the Act to the Industrial Tribunal for permission to retrench the respondent along with others Shortly before the application under section 33 the respondent had applied under section 33 A of the Act and his case was that there was no reason to make Any retrenchment on account of the closure of the ration shop and that he was at any rate longer in service than others who had been retained and therefore the principle of last come first go had not been followed It was also said that the respondent had been laid off as he was an active worker of the union and as such was not in the good books of the appellant It was therefore prayed that the respondent should be allowed full wages and amenities since the so called lay off which was nothing more nor less than retrenchment and that he should be reinstated The Industrial Tribunal came to the conclusion that the lay off was justified because of the closure of the ration shop and gave permission to the appellant to retrench the respondent on the principle of last come first go The respondent appealed to the Labour Appellate Tribunal He did not urge there that there was no necessity for retrenchment at all What was urged there was that the Industrial Tribunal was wrong in holding that the principle of last come first 475 go had been followed in this case The Appellate Tribunal came to the conclusion that the respondent had been in service much longer than others who had been retained and therefore the principle of last come first go had been violated In consequence the appeal was allowed and the permission to retrench the respondent was refused The Appellate Tribunal also ordered that the respondent should be reinstated in service without any break in the continuity of service and the order of the appellant in laying him off and discharging him in effect from July 19 1954 was set aside Thereupon the appellant came to this Court and was granted special leave on the limited question set out above In our opinion the answer to the limited question on which the special leave has been granted can only be one in view of the language of section 33 A That section lays down that where an employer contravenes the provision is of section 33 during the pendency of proceedings before a tribunal any employee aggrieved by such contravention may make a complaint in writing to the tribunal and on receipt of such complaint the tribunal shall adjudicate upon the complaint as if it were a dispute referred to or pending before it in accordance with the provisions of the Act and shall submit its award to the appropriate government and the provisions of this Act shall apply accordingly It is thus clear that a complaint under section 33 A of the Act is as good as a reference under section 10 of the Act and the tribunal has all the powers to deal with it as it would have in dealing with a reference under section 10 It follows therefore that the tribunal has the power to make such order as to relief as may be appropriate in the case and as it can make if a dispute is referred to it relating to the dismissal or discharge of a workman In such a dispute it is open to the tribunal in proper cases to order reinstatement Therefore a complaint under section 33 A being in the nature of a dispute referred to a tribunal under section 10 of the Act it is certainly within its power to order reinstatement on such complaint if the complaint is that the employee has been dismissed or discharged in breach of section 33 476 Learned counsel for the appellant wanted to argue that this was not a case of discharge or dismissal but of lay off We did not permit him to raise this argument because the special leave was limited only to the question set out above The answer to that question has already been indicated above and on that answer the appeal must fail We therefore dismiss the appeal but in the circumstances we make no order as to costs of this Court Appeal dismissed

Section 2b of the Delhi and Ajmer Merwara Rent Control Act 1947 provided as follows section 2 In this Act unless there is anything repugnant in in the subject or context a b Premises means any building or part of a building which is or is intended to be let separately for use as a residence or for commercial use or for any other purpose but does not include a room in a dharamshala hotel or lodging house The respondent occupied two rooms in the appellant s hotel described as the Ladies and Gents Cloak Rooms where he used to carry on his business as a hair dresser The document executed by the parties purported to be one as between a licenser and licensee and provided inter alia that the respondent was to pay an annual rent of Rs 9600 in four quarterly installments which was later reduced to Rs 8400 by mutual agreement The respondent made an application for standardisation of rent under section 71 of the Delhi and Ajmer Merwara Rent Control Act 1947 and the Rent Controller of Delhi fixed the rent at Rs 94 per month On appeal by the appellant the I District judge reversed the order of the Rent Controller and dismissed the application holding that the Act did not apply The High Court in revision set aside the order of the District judge and restored that of the Rent Controller holding that the agreement created a lease and not a license and that section 2 of the Act did not exempt the two rooms from the operation of the Act The two questions for determination in this appeal were 1 whether the agreement created a lease or a license and 2 whether the said rooms were rooms in a hotel within the meaning of section 2b of the Act Held Per section K Das and Sarkar jj Subba Rao J dissenting that the rooms let out by the appellant to the respondent were rooms in a hotel within the meaning of section 2b of the AjmerMerwara Rent Control Act 1947 and were as such excluded from the purview of the Act and the respondent was not entitled to claim standardisation of rent under its provisions Per section K Das j In order that a room may be a room in a hotel within the meaning of the Act it must fulfill two conditions 1 it must be part of the hotel in the physical sense and 2 its user must be connected with the general purpose of the hotel of which it is a part 369 A hair dresser s business provided one of the amenities of a modern hotel and as such it was connected with the business of the hotel There could be no doubt from the terms of the agreement executed by the parties in the instant case that it was a lease and not a licence Per Sarkar J The words room in a hotel in section 2b of the Act must be given their plain meaning and a room in a hotel must therefore mean any room in a building in the whole of which the business of a hotel was carried on Per Subba Rao J Although the document executed by the parties was apparently in a language appropriate to a licence the agreement between them judged by its substance and real intention as it must be left no manner of doubt that the document was a lease It had all the characteristics that distinguished it from a license namely 1 that it created an interest in the property in favour of the respondent and 2 it gave him exclusive possession thereof which in the absence of any circumstances that negatived it must indicate a clear intention to grant a lease Errington vs Errington and Cobb vs Lane referred to The words room in a hotel properly construed must mean a room that was part of a hotel and partook of its character and did not cease to do so even after it was let out Consequently where a hotel as in the instant case occupied the entire building and rooms were let out for carrying on a business different from that of a hotel such rooms could not fall within purview Of section 2 of the Act There could be no reasonable nexus in this case between a hair dresser s business and that of a hotel as there was nothing in the document in question to prevent the tenant from carrying on any other business or to bind him to give any preferential treatment to the lodgers who could take their chance only as general customers the tenant s only liability being to pay the stipulated rent

Civil Appeal No 154 of 1951 Appeal from a judgment and order of the 1st April 1949 of the High Court of Judicature Madras Rajamannar CJ and Balakrishna Aiyar J in Civil Miscellaneous Peti tion No 1317 of 1949 arising out of Order dated 29th Janu ary 1949 of the Commissioner of Labour Madras SC Isaacs section N Mukherjee with him for the appel lant The respondent was not represented April 10 The Judgment of the Court was delivered by MUKHERJEA J This appeal is directed against a judgment of a Division Bench of the Madras High Court dated 1st April 1949 passed in a certiorari proceeding by which the learned Judges directed the issue of a writ of certiorari for quashing a portion of an order made by the Labour Com missioner Madras in any enquiry under section 51 of the Madras Shops and Establishments Act 520 The facts material for our present purpose lie within a narrow compass and to appreciate the point that requires consideration in this appeal it will be convenient first of all to advert to a few relevant provisions of the Madras Act referred to above The Act was passed in 1947 and its ob ject as stated in the preamble is to provide for the regulation of conditions of work in shops and other estab lishments Section 141 of the Act sets a statutory limi tation upon the working hours and lays down Subject to the other provisions of the Act no person employed in any establishment shall be required or allowed to work for more than 8 hours in any day and 48 hours in any week A proviso attached to the sub section which by way of exception to the rule enunciated therein allows employment of a person in any establishment for any period in excess of this statutory limit subject to payment of overtime wages provided the period of work including overtime work does not exceed 10 hours any day and in the aggregate 54 hours in any week Section 31 provides Where any person employed in any establishment is re quired to work overtime he shall be entitled in respect of such overtime work to wages at twice the rate of ordinary rate of wages Section 50 preserves the existing rights and privileges of an employee in any establishment if these rights and privileges are more favourable to him than those created by the Act The section runs as follows Nothing contained in this Act shall affect any rights or privileges which any person employed in any establishment is entitled to on the date on which this Act comes into operation in respect of such establishment under any other law contract custom Or Usage applicable to such estab lishment if such rights and privileges are more favourable to him than those to which he would be entitled under this Act 521 The only other relevant section is section 51 which says If any question arises whether all or any of the provi sions of this Act apply to an establishment or to a person employed thereto or whether section 50 applies to any case or not it shall be decided by the Commissioner of Labour and his decision thereon shall be final and shall not be liable to be questioned in a court of law The appellant is a limited company carrying on business in Madras while the respondent is an association of cleri cal employees including those working under the appellant On November 10 1948 the respondent presented an applica tion before the Labour Commissioner Madras under section 51 of the Shops and Establishments Act for decision of certain questions referred to in the petition which related to the rights and privileges of the employees of the appel lant The Commissioner issued a notice calling upon the appellant to appear and answer the contentions raised on behalf of the employees The parties appeared before the Commissioner on 26th November 1948 and again on 16th December following when they were represented by lawyers After hearing the parties and on a consideration of the evidence adduced by them the Labour Commissioner made his decision on 29th January 1949 The questions raised by the employees were classified by the Commissioner under six separate issues and two of them which are material for our present purpose are worded as follows Issue No 5 Whether there has been an increase in working hours from 6 to 612 on week days from 12th October 1948 and the increase is permissible Issue No 6 Whether overtime wages at twice the ordi nary rates should not be paid for work done by the employees after the normal working hours On Issue No 5 the decision of the Commissioner was that the business hours of the company were six and half prior to 1st April 1948 when the Act came into force and they continue to be so even now It is 522 true that a circular was issued which was to take effect from 12th October 1948 under which the lunch interval was reduced by half an hour but at the same time it was direct ed that the office would close for business with the general public at 5 PM instead of 5 30 PM On all working days so far as business hours are concerned As regards Issue No 6 the Labour Commissioner observes first of all that although it is customary in many estab lishments to fix certain hours of business during which business is transacted with the outside public yet they are not the real hours of employment and as a matter of fact the employees do work outside these business hours for which they are not entitled to any extra remuneration pro vided the statutory limit of 8 hours a day is not exceeded In the opinion of the Commissioner if the normal hours of work were previously fixed and strictly adhered to the employees could have acquired a right or privilege to work only for such hours and they would be entitled to seek protection under section 50 of the Act against the imposi tion of longer hours without a corresponding increase in emoluments The Commissioner goes on to say that in such cases it would be sufficient if compensatory wages are paid at the ordinary rate calculated according to rule 10 of the Madras Shops and Establishments Rules for work in excess of the normal hours but less than the statutory hours But for work of more than 8 hours a day or 48 hours a week wages at twice the ordinary rates should be paid as required by the proviso to section 14 1 and section 31 of the Act The conclusion reached by the Commissioner with regard to this issue is expressed by him in the following words I hold that the case of Messrs Parry and Company s employees falls under the former category and that the employees in this company will be entitled to overtime wages only when the statutory hours are exceeded This order as said above was made on 29th January 1949 and on 16th of February following the 523 respondent association filed a petition before the High Court at Madras praying for a writ of certiorari to quash the same This application was heard by a Bench of two Judges and by the judgment dated 1st of April 1949 the learned Judges allowed the petition in part and quashed the order of the Labour Commissioner in so far as it decided that the employees of the appellant will be entitled to overtime wages only when the statutory hours were exceeded It is thepropriety of this decision that has been chal lenged before us in this appeal It is somewhat unfortunate that the respondent remained unrepresented before us and the appeal had to be heard ex parte Mr Isaacs who appeared on behalf of the appellant has however rendered every assistance that he possibly could and has placed before us all the material facts and relevant provisions of law Having given the matter our best consideration we are of the opinion that the order of the High Court cannot be supported and that this appeal should be allowed The High Court seems to have based its decision on the ground that the Commissioner of Labour failed to answer the question raised by the association as to whether the company was entitled to require the employees to work more than six and half hours a day According to the learned Judge the Labour Commissioner was not right in holding that even if the working hours were fixed at six and half hours a day the employees would be entitled to overtime wages only when the statutory hours are exceeded As has been pointed out already the Labour Commission er did decide that if the normal hours of work were previ ously fixed and rigidly adhered to the employees would be entitled to seek protection under Section 50 of the Act against imposition of longer hours of work without a corre sponding increase in their emoluments The increase in such cases according to the Labour Commissioner should be on the scale of compensatory wages allowed under rule 10 of 524 the Madras Shops and Establishments Rules If however the increase is more than the statutory period the employees will be entitled to wages at double rate under Section 31 ofthe Act This decision may or may not be right but it has not been and cannot be suggested that the Labour Commis sioner acted without jurisdiction or in excess of his pow ers Under Section 51 of the Madras Shops and Establish ments Act the Labour Commissioner is the only proper and competent authority to determine the questions referred to it in that section and there is an express provision in it that the decision of the Labour Commissioner shall be final and not liable to be challenged in any court oflaw It was the respondent who took the matter before the Labour Commis sioner in the present case and invited his decision upon the questions raised in the petition The Commissioner was certainly bound to decide the questions and he did decide them At the worst he may have come to an erroneous conclu sion but the conclusion is in respect of a matter which lies entirely within the jurisdiction of the Labour Commis sioner to decide and it does not relate to anything collat eral an erroneous decision upon which might affect his jurisdiction The records of the case do not disclose any error apparent on the face of the proceeding or any irregu larity in the procedure adopted by the Labour Commissioner which goes contrary to the principles of natural justice Thus there was absolutely no grounds here which would justi fy a superior court in issuing a writ of certiorari for removal of an order or proceeding of an inferior tribunal vested with powers to exercise judicial or quasi judicial functions What the High Court has done really is to exer cise the powers of an appellate court and correct what it considered to be an error in the decision of the Labour Commissioner This obviously it cannot do The position might have been different if the Labour Commissioner had omitted to decide a matter which he was bound to decide and in such cases a mandamus might legitimately issue commanding the authority to determine questions which it left 525 undecided1 but no certiorari is available to quash a decision passed with jurisdiction by an inferior tribunal on the mere ground that such decision is erroneous The judg ment of the High Court therefore in our opinion is plain ly unsustainable In the view which we have taken it is unnecessary to express any opinion as to whether certiorari has been taken away if it can be taken away at all under our Constitution by the provision of section 51 of the Madras Shops and Establishments Act which lays down that the decision of the Labour Commissioner would be final and incapable of being challenged in any court of law It was conceded by Mr Isaacs that in spite of such statutory provisions the superior court is not absolutely deprived of the power to issue a writ although it can do so only on the ground of either a manifest defect of jurisdiction in the tribunal that made the order or of a manifest fraud in the party procuring it2 The result is that in our opinion the appeal succeeds and the judgment of the High Court is set aside and the order of the Labour Commissioner affirmed As the respondent was absent we do not think it proper in the circumstances of this case to make any order for costs 1 Vide Board of Education vs Rice and others 1911 AC 179 2 Vide Colonial Bank of Australasia vs Robert Willan 5PC Ap peals 417

The appellant was detained under section 31aii of the Pre ventive Detention Act 1950 The copy of the grounds of the order of detention served on him stated that he was detained as he had been acting in a way prejudicial to the maintenance of public order as evidenced by the particulars stated in its four paragraphs Paragraph 1 stated inter alia that the appellant had in a meeting of the refugees vilified the Prime Minister of India for his unsympathetic attitude towards the sufferings of the refugees and gave expression to violent feelings regarding his person while referring to the recent Nehru Noon Pact paragraph 2 stated that he called upon the members of his party to build up a strong movement against the implementation of the pact and tried to rouse passion by alleging the Prime Minister had no sympathy for West Bengal paragraph 3 stated that at another meeting he denounced the pact and stressed the need of forming a militia with the youths of the country for the safety of the people living in border areas and paragraph 4 that he intended to proceed to Delhi on the date mentioned and was likely to instigate plans endangering the personal safety of the Prime Minister The High Court on an application under sections 491 and 561A of the Code of Criminal Procedure for the issue of a writ of habeas corpus while upholding the order of detention held that the said paragraphs were really not the grounds of detention but merely pieces of evidence on which the only ground of detention namely acting in a manner prejudicial to the maintenance of public order was based that paragraph 4 was merely an inference of fact having a bearing on the ground of detention It was contended inter alia on appeal that paragraph 4 was extremely vague and devoid of particulars and that the allegations made had no rational connection with the objects mentioned in section 3 of the Act and so he was deprived of his right to make an effective representation All this was however denied on behalf of the State Held that the High Court had overlooked the difference between the objects of detention specified in cls a and b of section 31 of the Act and the statement of facts which constitute the grounds envisaged by section 7 of the Act 412 Sections 3 and 7 of the read together contemplate that the copy of the order passed by the detaining authority under section 32 Of the Act to be served on the detenu should contain 1 a preamble reciting in terms one or more of the sub clauses of cls a and b of section 31 as its object or objects 2 the grounds contemplated by section 7 namely the conclusions of fact which led to the passing of the order of detention informing the detenu as to why he was detained and 3 particulars if and where necessary but not those referred to in sub sections 3 and 4 Of section 3 of the Act In the instant case however the error of confusion made by the High Court could not invalidate its order since the grounds of detention characterised by the High Court as recitals of fact read together were in no way ambiguous indefinite or irrelevant to the object of the detention namely the maintenance of public order and did not deprive the detenu of his right of representation The State of Bombay vs Atma Ram Sridhay Vaidya 1951 SCR 167 considered Dwarka Das Bhatia vs The State of Jammu Kashmir held inapplicable

l Appeals Nos 31 33 of 1958 Appeal by special leave from the decision dated May 28 1956 of the Labour Appellate Tribunal Lucknow Delhi Branch in Appeals Nos Ill 313 315 of 1955 M C Setalvad Attorney General for India Jai Gopal Sethi J B Dadachanji section N Andley Rameshwar Nath and P L Vohra for the appellants in all appeals G section Pathak V P Nayar and Janardan Sharma for the respondents in all appeals May 21 The Judgment of the Court was delivered by WANCHOO J These are three appeals by special leave from three decisions of the Labour Appellate Tribunal of India We shall dispose of them by one judgment as they raise common points The three appellants are the managements of 1 Imperial Hotel New Delhi 2 Maiden s Hotel Delhi and 3 Swiss Hotel Delhi the respondents being their respective workmen represented by the Hotel Workers Union Katra Shahanshahi Chandni Chowk Delhi It seems that disputes were going on between these hotels and their workmen for some time past about the conditions of labour of the workmen employed therein Matters seem to have come to a head about the end of September 1955 and a strike of all the workmen in all the three hotels took place on October 51955 Before this general strike in the three hotels there had been trouble in Imperial Hotel only in August 1955 In that connection charge sheets were served on 22 workmen and an enquiry was held by the management which came to the conclusion that the workmen were 479 guilty of misconduct and therefore decided to dismiss them Consequently notices were served on October 1955 upon these workmen informing them that the management had decided to dismiss them subject to obtaining permission under section 33 of the Industrial Disputes Ac 1947 hereinafter called the Act It seems that this action of the management of Imperial Hotel led to the general strike in all the three hotels on October 5 1955 Thereupon the three managements issued notices to the workmen on October 5 1955 directing them to re join their duties within three hours failing which action would be taken against them As the workmen did not join within this time fresh notices were issued the same day asking them to show cause Why disciplinary action should not be taken against them In the meantime they were informed that they would be under suspension On October 7 1955 the three managements issued notices to the workmen informing them that it had been decided to dismiss them and that they were being suspended pending the obtaining of permission under section 33 of the Act As the disputes between the hotels and their workmen were already under consideration of Government an order of reference was made on October 12 1955 relating to Imperial Hotel In this reference a large number of matters were referred to adjudication including the case of 22 workmen whom the management of the hotel had decided to dismiss on October 4 1955 This reference with respect to Imperial Hotel however did not refer to the workmen whom the management had decided to dismiss on October 7 1955 Further enquiries seem to have been made by the management in this connection and eventually it was decided to confirm the action taken on October 7 with respect to nineteen workmen These nineteen workmen had in the meantime applied under section 33 A of the Act on the ground that they had been suspended without pay for an indefinite period and had thus been punished in breach of section 33 Thus the dispute so far as Imperial Hotel is concerned was with respect to 44 workmen in all 25 of whom were included in the 480 reference of October 12 1955 and the remaining 19 in had filed an application under section 33 A of the Act It does not appear however that Imperial Hotel made any application under section 33 of the Act for permission to dismiss these 19 workmen though an application under that section was made on October 22 1955 with respect to 22 workmen whose dismissal was decided upon on October 4 1955 So far as Maiden s Hotel is concerned the case relates to 26 workmen whose dismissal was finally considered by the management to be necessary on further enquiry after October 7 1955 An order of reference was made in the case of this hotel on November 23 1955 in which the case of 26 workmen was referred to the tribunal along with other matters Later however 12 of these workmen were re employed on December 10 1955 and the real dispute therefore so far as this hotel is concerned related to 14 workmen In the case of Swiss Hotel also there were further enquiries after the notices of October 7 In the meantime an application was made under section 33 A of the Act by the union to the conciliation officer Eventually it appears that on November 10 1955 reference was made with respect to 14 workmen to the tribunal for adjudication We now come to the proceedings before the Industrial Tribunal In all three cases applications were filed on behalf of the workmen for interim relief the date of the application being October 22 in case of Imperial Hotel and November 26 in case of Maiden s Hotel and Swiss Hotel Replies to these applications was filed by the managements on December 5 1955 On the same day the Industrial Tribunal passed an order granting interim relief In the case of Imperial Hotel it ordered that 43 out of 44 workmen who had applied for interim relief should be paid their wages plus a sum of Rs 25 per month per head in lieu of food till final decision in the matter of the dismissal of these workmen In the case of Maiden s Hotel the management was prepared to take back 12 workmen and they were ordered to report for duty or before December 10 1955 It was also ordered that these 12 481 workmen till they were re employed and the remaining 13 workmen till the decision of their case would be paid by way of interim relief their wages from October 1 1955 plus Rs 25 per month per head in lieu of food No order was passed with respect to the 26th workman namely Chiranjilal sweeper In the case of Swiss Hotel the management was prepared to take back six of the workmen and they were ordered to report for duty on or before December 10 1955 In other respects the order was in the same terms as in the case of Maiden s Hotel Then followed three appeals by the three hotels against the three orders granting interim relief These appeals were dismissed by the Labour Appellate Tribunal on May 28 1956 Thereupon the three hotels applied for special leave to appeal to this Court which was granted They also applied for stay of the order of the Industrial Tribunal relating to payment of wages plus Rs 25 per month per head in lieu of food Stay was granted by this Court on June 5 1956 on condition that the employers would pay to the employees a sum equal to half of the amount adjudged payable by the orders dated December 5 1955 in respect of the arrears accrued due till then and continue to pay in the same proportion in future until determination of the dispute between the parties It appears that after this order of June 5 1956 even those workmen who had not been re employed after the order of December 5 1955 were taken back in service on July 15 1956 by the three hotels Thus 2 workmen in the case of Swiss Hotel 13 workmen in the case of Maiden s Hotel and 43 workmen in the case of Imperial Hotel were taken back in service The main contentions on behalf of the hotels are two namely 1 are any wages payable at all to workmen who are suspended pending permission being sought under section 33 of the Act for their dismissal and 2 is an industrial tribunal competent to grant interim relief without making an interim award which should have been published 61 482 Re The contention of the appellants under this head is that suspension of the workmen pending permission under section 33 of the Act imposes an absolute bar to the payment of any wages to the suspended workmen On the other hand it is contended on behalf of the respondents that suspension of workmen involving non payment of wages is not contemplated at all under the ordinary law of master and servant in the absence of an express term in the contract of employment to that effect and as in these cases there were admittedly no standing orders providing suspension without payment of wages it was not open to the appellants to withhold wages as the orders of suspension made in these cases merely amounted to this that the employers were not prepared to take work from the workmen Even so the right of the workmen to receive wages remained and the employer was bound to pay the wages during the period of so called suspension The Industrial Tribunal as well as the Appellate Tribunal took the view that in the absence of an express term in the contract of employment wages could not be withheld even though the employer might suspend the workman in the sense that he was not prepared to take any work from them The first question therefore that falls for consideration is the extent of the power of the employer to suspend an employee under the ordinary law of master and servant It is now well settled that the power to suspend in the sense of a right to forbid a servant to work is not an implied term in an ordinary contract between master and servant and that such a power can only be the creature either of a statute governing the contract or of an express term in the contract itself Ordinarily therefore the absence of such power either as an express term in the contract or in the rules framed under some statute would mean that the master would have no power to suspend a workman and even if he does so in the sense that he forbid the employee to work he will have to pay wages during the so called period of suspension Where however there is power to suspend either in the contract of employment or in 483 the statute or the rules framed thereunder the suspension has the effect of temporarily suspending the relation of master and servant with the consequence that the servant is not bound to render service and the master is not bound to pay These principles of the ordinary law of master and servant are well settled and have not been disputed before us by either party Reference in this connection may be made to Hanley vs Pease and Partners Limited1 Wallwork vs Fielding 2 Secretary of State for India in Council vs Surendra Nath Goswami 3 and Bura Ram vs Divisional Superintendent N W Railway 4 The next question that falls for consideration is whether these principles also apply to a case where the master has decided to dismiss a servant but cannot do so at once as he has to obtain the permission necessary under section 33 of the Act and therefore suspends the workman till he gets such permission This brings us to the sphere of industrial law Ordinarily if section 33 of the Act did not intervene the master would be entitled to exercise his power of dismissing the servant in accordance with the law of master and servant and payment of wages would immediately cease as the contract would come to an end But section 33 of the Act has introduced a fundamental change in the law of master and servant so far as cases which fall within the Act are concerned It has therefore to be seen whether Industrial Tribunals which are dealing with the matter under the Act must follow the ordinary law of master and servant as indicated above or can imply a term in the contract in the peculiar circumstances supervening under section 33 of the Act to the effect that where the master has concluded his enquiry and come to the decision that the servant should be dismissed and thereupon suspends him pending permission under section 33 he has the power to order such suspension which would result in temporarily suspending the relation of master and servant so that the servant is not bound to render service and the master is not bound to pay wages The power of Industrial Tribunal in 1 3 I 2 4 ILR VII 1954 Punj 484 matters of this kind arising out of industrial disputes was considered by the Federal Court in Western India Automobile Association vs The Industrial Tribunal Bombay1 and the following observations of Mahajan J as he then was at p 345 are apposite Adjudication does not in our opinion mean adjudication according to the strict law of master and servant The award of the tribunal may contain provisions for settlement of a dispute which no Court could order if it was bound by ordinary law but the tribunal is not fettered in any way by these limitations In Volume 1 of Labour Disputes and Collective Bargaining by Ludwig Teller it is said at p 536 that industrial arbitration may involve the extension of an existing agreement or the making Of a new one or in general the creation of new obligation or modification of old ones while commercial arbitration generally concerns itself with interpretation of existing obligations and disputes relating to existing agreements In our opinion it is a true statement about the functions of an industrial tribunal in labour disputes This Court in Rohtas Industries Ltd vs Brijnandan Pandey 2 also recognised the correctness of the dictum laid down in the above Federal Court decision and observed that there was a distinction between commercial and industrial arbitration and after referring to the same passage in Labour Disputes and Collective Bargaining by Ludwig Teller Vol 1 p 536 proceeded to lay down as follows at p 810 A Court of law proceeds on the footing that no power exists in the courts to make contracts for people and the parties must make their own contracts The Courts reach their limit of power when they enforce contracts which the parties have made An Industrial Tribunal is not so fettered and may create new obligations or modify contracts in the interests of industrial peace to protect legitimate trade union activities and to prevent unfair practice or victimisation 1 2 485 It is clear therefore that Industrial Tribunals have the power to go beyond the ordinary law of master and servant if circumstances justify it In these cases the decision of the Labour Appellate Tribunal has proceeded strictly on the basis of the ordinary law of master and servant without regard to the fundamental change introduced in that law by the enactment of section 33 of the Act All the cases to which we have been referred with respect to the ordinary law of master and servant had no occasion to consider the impact of section 33 of the Act on that law as to the power of the master to suspend We have therefore to see whether it would be reasonable for an Industrial Tribunal where it is dealing with a case to which section 33 of the Act applies to imply a term in the contract giving power to the master to suspend a servant when the master has come to the conclusion after necessary enquiry that the servant has committed misconduct and ought to be dismissed but cannot do so because of section 33 It is urged on behalf of the respondents that there is nothing in the language of section 33 to warrant the conclusion that when an employer has to apply under it for permission he can suspend the workmen concerned This argument however begs the question because if there were any such provision in section 33 it would be an express provision in the statute authorising such suspension and no further question of an implied term would arise What we have to see is whether in the absence of an express provision to that effect in section 33 it will be reasonable for an Industrial Tribunal in these extraordinary circumstances arising out of the effect of section 33 to imply a term in the contract giving power to the employer to suspend the contract of employment thus relieving himself of the obligation to pay wages and relieving the servant of the corresponding obligation to render service We are of opinion that in the peculiar circumstances which have arisen on account of the enactment of section 33 it is but just and fair that Industrial Tribunals should imply such a term in the contract of employment This Court had occasion to consider this matter in four cases though the point was not specifically argued 486 in the manner in which it has been argued before us now But a consideration of these cases will show that though the point was not specifically argued the view of this Court has consistently been that in such cases a term should be implied giving power to the master to suspend the contract of employment after he has come to the conclusion on a proper enquiry that the servant should be dismissed and has to apply to the tribunal for permission under section 33 In Lakshmi Devi Sugar Mills Ltd vs Pt Ram Sarup 1 there was a provision in the standing orders for suspension for four days without pay In actual fact however the employer in that case after having come to the conclusion that the employees should be dismissed suspended them without pay pending permission of the tribunal and it was held that such suspension was not punishment even though it exceeded four days This was the main point which was under consideration in that case but it was further observed that such a suspension was only an interim measure and would last till the application for permission to punish the workman was made and the tribunal had passed orders thereon If the permission was accorded the workman would not be paid during the period of suspension but if the permission was refused he would have to be paid for the whole period In The Management of Ranipur Colliery vs Bhuban Singh 2 it was pointed out that but for this ban the employer would have been entitled to dismiss the employee immediately after the completion of his enquiry on coming to the conclusion that the employee was guilty of misconduct The contract of service would thus be brought to an end by an immediate dismissal after the conclusion of the enquiry and the employee would not be entitled to any further wager But section 33 steps in and stops the employer from dismissing the employee immediately on the conclusion of his enquiry and compels him to seek permission of the Tribunal It was therefore reasonable that the employer having done all that he could do to bring the contract of service to an end should not be 1 2 CA 76857 decided on April 20 1959 487 expected to continue paying the employee thereafter It was pointed out that in such a case the employer would be justified in suspending the employee without pay as the time taken by the tribunal to accord permission under section 33 of the Act was beyond the control of the employer Lastly it was pointed out that this would not cause any hardship to the employee for if the tribunal granted permission the employee would not get anything from the date of his suspension with out pay while if the permission was refused he would be entitled to his back wages from such date Lakshmi Devi Sugar Mills Ltd 1 was referred to and it was explained that the principle laid down in that case would only apply where section 33 would be applicable In Messrs Sasa Musa Sugar Works P Ltd vs Shobrati Khan 2 the view taken in the two earlier cases was reiterated with the rider that in case the employer did not hold an enquiry and suspend the workman pending permission he would have to go on paying the wages till the proceedings under section 33 were concluded and the tribunal granted permission to dismiss the workman In Phulbari Tea Estate vs Its Workmen 3 the rider laid down in the case Messrs Sasa Musa Sugar Works P Ltd 2 was further extended to a case of an adjudication under section 15 of the Act and it was pointed out that if there was any defect in the enquiry by the employer he could make good that defect by producing necessary evidence before the tribunal but in that case he will have to pay the wages up to the date of the award of the tribunal even if the award went in his favour It is urged on behalf of the respondents that there were at any rate some Standing Orders particularly in Lakshmi Devi Sugar Mills Ltd 1 and The Management of Ranipur Colliery 4 giving power to suspend for some period of time and therefore further suspension might be justified on the basis of those Standing Orders In the case of Messrs Sasa Musa Sugar 1 3 1960 1 SCR 32 2 CAs 746 74757 4 CA 76857 decided on April 29 1959 decided on April 20 1959 488 Works P Ltd 1 however there were no Standing Orders till then in force The ratio of the decision in these cases was however not based on the presence or absence of the Standing Orders for there is very little difference in principle between the cases where Standing Orders provided a few days suspension without pay and the suspension was continued for a much longer period and where there were no Standing Orders providing suspension without pay We are of opinion that though these cases did not expressly proceed on the basis of an implied term in the contract of employment to suspend the employee an thus suspend the relation of master and servant temporarily that must be the implicit basis on which these decisions were given But for such a term being implied it would not be possible at all to lay down as was laid down in these cases that if a proper enquiry bad been held and the employer had decided to dismiss the workman and apply for permission and in consequence had suspended the workman there would be no obligation on him to pay wages from the date of suspension if permission was accorded to him under section 33 We are therefore of opinion that the ordinary law of master and servant as to suspension can be and should be held to have been modified in view of the fundamental change introduced by section 33 in that law and a term should be implied by Industrial Tribunals in the contract of employment that if the master has held a proper enquiry and come to the conclusion that the servant should be dismissed and in consequence suspends him pending the permission required under section 33 he has the power to order such suspension thus suspending the contract of employment temporarily so that there is no obligation on him to pay wages and no obligation on the servant to work In dealing with this point the basic and decisive consideration introduced by section 33 must be borne in mind The undisputed common law right of the master to dismiss his servant for proper cause has been subjected by section 33 to a ban and that in fairness must mean that pending the removal of the said statutory ban the master can 1 CAs 746 74757 decided on April 29 1959 489 after holding a proper enquiry temporarily terminate the relationship of master and servant by suspending his employee pending proceedings under section 33 It follows therefore that if the tribunal grants permission the suspended contract would come to an end and there will be no further obligation to pay any wages after the date of suspension If on the other hand the permission is refused the suspension would be wrong and the workman would be entitled to all his wages from the date of suspension This however does not conclude the matter so far as the grant of interim relief in these cases is concerned Even though there may be an implied term giving power to the employer to suspend a workman in the circumstances mentioned above it would not affect the power of the tribunal to grant interim relief for such a power of suspension in the employer would not on the principles already referred to above take away the power of the tribunal to grant interim relief if such power exists under the Act The existence of such an implied term cannot bar the tribunal from granting interim relief if it has the power to do so under the Act This brings us to the second point which has been canvassed in these appeals After a dispute is referred to the tribunal under section 10 of the Act it is enjoined on it by section 15 to bold its pro ceeding expeditiously and on the conclusion thereof submit its award to the appropriate government An award is defined in section 2b of the Act as meaning an interim or final determination by an Industrial Tribunal of any industrial dispute or of any question relating thereto Where an order referring an industrial dispute has been made specifying the points of dispute for adjudication the tribunal has to confine its adjudication to those points and matters incidental thereto section 104 It is urged on behalf of the appellants that the tribunal in these cases had to confine itself to adjudicating on the points referred and that as the question of interim relief was not referred to it it could not adjudicate upon that We are of opinion 62 490 that there is no force in this argument in view of the words incidental thereto appearing in section 104 There can be no doubt that if for example question of reinstatement andor compensation is referred to a tribunal for adjudication the question of granting interim relief till the decision of the tribunal with respect to the same matter would be a matter incidental thereto under section 104 and need not be specifically referred in terms to the tribunal Thus interim relief where it is admissible can be granted as a matter incidental to the main question referred to the tribunal without being itself referred in express terms The next question is as to how the tribunal should proceed in the matter if it decides to grant interim relief The definition of the word award shows that it can be either an interim or final determination either of the whole of the dispute referred to the tribunal or of any question relating thereto Thus it is open to the tribunal to give an award about the entire dispute at the end of all proceedings This will be final determination of the industrial dispute referred to it It is also open to the tribunal to make an award about some of the matters referred to it whilst some others still remain to be decided This will be an interim determination of any question relating thereto In either case it will have to be published as required by section 17 Such awards are however not in the nature of interim relief for they decide the industrial dispute or some question relating thereto Interim relief on the other hand is granted under the power conferred on the tribunal under section 104 with respect to matters incidental to the points of dispute for adjudication It is however urged on behalf of the appellants that even if the tribunal has power under section 104 of the Act to grant interim relief of the nature granted in these cases it can only do so by submitting an award under section 15 to the appropriate government Reference in this connection is made to sections 15 17 and 17 A of the Act It is submitted that as soon as the tribunal makes a determination whether interim or final it must submit that determination to government which has to publish it as an award under section 17 and thereafter 491 the provisions of section 17 A will apply In reply the res pondents rely on a decision of the Labour Appellate Tribunal in Allen Berry and Co Ltd vs Their Work men1 where it was held that an interim award had not to be sent like a final award to the government for publication and that it would take effect from the date of the order We do not think it necessary to decide for present purposes whether an order granting interim relief of this kind is an award within the meaning of section 2b and must therefore be published under section 17 We shall assume that the interim order passed by the Tribunal on December 5 1955 could not be enforced as it was in the nature of an award and should have been submitted to the government and published under section 17 to become enforceable under section 17 A It is however still open to us to consider whether we should pass an order giving interim relief in view of this alleged technical defect in the order of the Industrial Tribunal We have the power to grant interim relief in the same manner as the Industrial Tribunal could do and our order need not be sent to government for publication for sections 159 17 and 17 A do not apply to the order of this Court just as they did not apply to the decision of the Appellate Tribunal which was governed by the Industrial Disputes Appellate Tribunal Act 1950 No XLVIII of 1950 since repealed We have already mentioned that this Court passed an order on June 5 1956 laying down conditions on which it stayed the operation of the order of December 5 1955 made by the Industrial Tribunal We are of opinion that order is the right order to pass in the matter of granting interim relief to the workmen in these cases Ordinarily interim relief should not be the whole relief that the workmen would get if they succeeded finally In fairness to the Industrial Tribunal and the Appellate Tribunal we must say that they granted the entire wages plus Rs 25 per mensem per head in lieu of food on the view that no suspension was possible at all in those cases and therefore the contract of service continued and full wages must be paid Their orders might have been different 1 492 if they had held otherwise It seems to us just and fair in the circumstances therefore to order that the appellants shall pay to their respective workmen concerned half the amount adjudged payable by the order dated December 5 1955 with respect to the entire period as the case may be from October 1 1955 to December 10 1955 or July 15 1956 by which date as we have already pointed out practically all the workmen were taken back in service We therefore order accordingly Lastly it is urged on behalf of the respondents that as all the workmen concerned were taken back in service they should be paid full wages for the interim period as their re employment means that the decision to dismiss them and the consequent order of suspension were waived This is a matter on which we do not propose to express any opinion The proceedings are so far at the initial stage and the effect of re empolyment in the absence of full facts on the question of waiver cannot be determined at this stage It is enough to point out that the order we have passed above is an interim relief and it will be liable to be modified one way or the other when the Industrial Tribunal proceeds to make the final determination of the questions referred to it in the light of the observations we have made on the matter of suspension The appeals are partly allowed and the order dated December 5 1955 granting interim relief is modified in the manner indicated above In the circumstances we order the parties to bear their own costs of this Court As more than three years have gone by in these preliminaries since the references were made we trust that the Industrial Tribunal will now dispose of the matter as expeditiously as possible Appeals allowed in part

The respondent made an application under section 33A of the which inter alia stated that there was no reason for retrenchment on account of the closure of a ration shop and that at any rate he was longer in service than others who had been retained and therefore the principle of last come first go had been violated The Tribunal dismissed the application whereupon the respondent appealed to the Appellate Tribunal which allowed the appeal and refused permission to retrench The Appellant Company was granted special leave to appeal only on the limited question as to whether an order of re instatement can be made on an application under section 33A of the Act Held that the complaint under section 33A of the is as good as a reference under section 10 of the Act and the Tribunal has all the powers to deal with it as it would have in dealing with a reference under section 10 of the Act and it is open to the Tribunal in proper case to order reinstatement

Appeal No 281 of 1955 Appeal from the judgment and order dated March 18 1954 of the Bombay High Court in Income tax Reference No 35 of 1953 K N Rajagopal Sastri and D Gupta for the appellant R J Kolah and Ram Ditta Mal for the respondent May 8 The Judgment of the Court was delivered by HIDAYATULLAH J This appeal on a certificate of fitness granted by the High Court of Judicature at Bombay has been filed by the Commissioner of Income tax Bombay against Ranchhoddas Karsondas of Bombay hereinafter referred to as the assessee under section 66A of the Indian Income tax Act The facts leading tip to this appeal are as follows For the assessment year 1945 46 a public notice under section 221 of the Income tax Act hereinafter called the Act was issued requiring every person whose total income during the previous year exceeded the maximum amount which was not chargeable to income tax to furnish within such period not being less than sixty days as might be specified in the notice a return of his income in the prescribed form and verified in the prescribed manner This notice was published on or about May 1 1945 The assessee did not make a return of his income The Income tax Officer while examining the books of account of a partnership called the Assar Syndicate of which the assessee was a partner found that in the account year corresponding to the assessment year 1945 46 there were six cash credits aggregating to Rs 59026 in the name of the assessee s wife Before however the Income tax 116 Officer could take any action the assessee submitted a voluntary return on January 5 1950 of his income for the accounting year 1944 45 assessment year 1945 46 showing a total net income of Rs 1935 He added a footnote to the return to the following effect My wife has sold her old ornaments and deposited the sum of Rs 59026 in the firm of Assar Syndicate in which I am a partner The Income tax Officer did not act on this return but on February 27 1950 he issued a notice purporting to be under section 34 of the Act calling upon the assessee to submit his return This notice was served on the assessee on March 31950 and in answer thereto the assessee submitted a similar return on March 14 1950 showing the same income and adding the same footnote The Income tax Officer then issued and served upon the assessee notices under sections 224 and 232 of the Act asking him to produce his books of account and to tender any evidence he cared to lead It appears from the record that these notices were complied with but on February 26 1951 the Income tax Officer included the sum of Rs 59026 in the total income of the assessee and assessed him on it for the assessment year 1945 46 The assessee appealed in turn to the Appellate Assistant Commissioner and the Income tax Appellate Tribunal His contentions were three viz that the amount of Rs 59026 could not and should not have been included in his income that the amended section 34 of the Act had no retrospective effect and that the assessment completed on February 26 1951 was invalid inasmuch as it was completed four years after the end of the relevant assessment year Both the Appellate Assistant Commissioner as well as the Tribunal rejected his contentions but the Tribunal on being moved by him raised and referred two questions of law under section 661 of the Act to the High Court of Judicature Bombay for its decision These questions were 1 Whether the notice issued under Section 34 of the Act by the Income tax Officer on 27 2 1950 117 after the assessee had filed a voluntary return was valid in law 2 Whether the assessment made on 26 2 1951 is valid in law This reference was heard by the High Court on March 18 1954 and by a judgment delivered on the same day Chagla CJ and Tendolkar J answered both the questions in the negative Before the High Court it was again contended by the assessee that since he had submitted a return under section 223 of the Act on January 5 1950 the assessment if any had to be completed before March 31 1950 as required by section 343 of the Act He also contended that he was entitled under section 223 to make a voluntary return on the date he did and with a voluntary return before the Income tax Officer there was no scope for the issuance of a notice under section 34 The High Court upheld the contentions of the assessee and gave its opinion that the Department ought to have issued a notice under section 222 within the assessment year and if no return was made within the time fixed by the notice the Department should have proceeded under section 234 to a best judgment assessment The other alternative for the Department was to issue a notice under section 34 of the Act if the period for sending a notice under section 222 had expired But it could not issue a notice under section 34 after a return was already made before it and the benefit of the extended period of limitation for assessment available under the first proviso to sub section 3 of section 34 of one year from the service of the notice under sub section 1 of that section was not available in this case The High Court granted a certificate of fitness and hence this appeal The arguments which were urged before the High Court were all raised in this Court by the parties The case of the Department was supplemented by an argument that inasmuch as the assessee had suppressed his income or given incorrect particulars thereof the period during which action under section 34 could be taken was the extended one of 8 years In the arguments before us our attention was drawn to a cleavage of opinion between the Bombay High 118 Court on the one hand and the Calcutta High Court on the other While the Bombay High Court seems to be of the view that a voluntary return showing a nontaxable income is still a good return for all purposes under the Act the Calcutta High Court is of the view that what section 221 of the Act requires is a return of taxable income and not a return of income which shows a loss or is below the taxable limit It appears that at one time the Calcutta High Court also entertained the view that such a return was no return at all but it was explained later that this meant that the return was ineffective for the purposes of section 221 of the Act though it might be a return being in the prescribed form The Bombay High Court also entertains the view that the assessment proceedings commence with the issue of a public notice and that section 34 of the Act cannot apply where in answer to the public notice a return is made whether of taxable income or not The view of the Calcutta High Court is that assessment proceedings commence either with a notice under section 222 of the Act or with the filing of a return showing taxable income We are not here concerned with the quantum but only with the legality of the assessment The side issue whether in point of fact the cash credits in the name of the wife represented the income if the husband does not survive for decision Thus the only question is whether the notice issued under section 34 of the Act on February 27 1950 after the assessee filed his voluntary return on January 5 1950 and the assessment thereon were valid in law Section 343 of the Act provides that no assessment except the assessment within el a of sub section 1 thereof or under section 23 to which el c of sub section 1 of section 28 applies shall be made after the expiry of four years from the end of the year in which income profits or gains were first assessable A proviso however allows one year from the date of the service of the notice for the completion of the assessment It reads omitting matters not relevant here where a notice under sub section 1 has been issued within the time therein limited the assessment or reassessment to be made in pursuance of such 119 notice may be made before the expiry of one year from the date of the service of the notice even if such period exceeds the period of four years It is therefore quite clear that the extra period is available only if a notice under sub section 1 of section 34 has been issued within the time therein limited This takes us to section 341 Section 341 omitting parts not relevant reads 1If a the Income tax Officer has reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under section 22 for any year I or b notwithstanding that there has been no omission or failure as mentioned in clause a on the part of the assessee the Income tax Officer has in consequence of information in his possession reason to believe that income profits or gains chargeable to income tax have escaped assessment for any year he may in cases falling under clause a at any time within eight years and in cases falliny under clause b at any time within four years of the end of that year serve on the assessee a notice and may proceed to assess such income It would appear from this that if the return filed on January 5 1950 was a return of income there was no failure or omission on the part of the assessee so as to bring the matter within section 341a of the Act and subs 3 of section 34 would then apply to the case limiting the period to four years In that event the assessment should have been completed on or before March 31 1950 But if the return made by the assessee was no return at all then the conditions under the first subsection of section 34 obtained and the assessment could be completed within one year of the date of service of the notice March 3 1950 ie on or before March 2 1951 In that event the assessment would be valid The validity of the return in this context is tied to the validity of the notice and also vice versa 120 Section 22 of the Act omitting the parts not relevant may now be quoted 1 The Income tax Officer shall on or before the 1st day of May in each year give notice by publication in the press requiring every person whose total income during the previous year exceeded the maximum amount which is not chargeable to income tax to furnish within such period not being less than sixty days a return setting forth his total income and total world income during that year 2 In the case of any person whose total income is in the Income tax Officer s opinion of such an amount as to render such person liable to income tax the Income tax Officer may serve a notice upon him requiring him to furnish within such period not being less than thirty days a return setting forth his total income and total world income during the previous year 3 If any person has not furnished a return within the time allowed by or under sub section 1 or sub section 2 or having furnished a return under either of those sub sections discovers any omission or wrong statement therein he may furnish a return or a revised return as the case may be at any time before the assessment is made It will be seen from this that as the Bombay High Court correctly pointed out there is a time limit provided in sub sections 1 and 2 and the failure or omission occurs when that period passes but sub s 3 allows a locus poenitentiae before the assessment is actually made There is no dispute that a return could be filed in this case late though it was The controversy centres round the fact that the return when it was filed disclosed an income which was below the maximum not chargeable to tax and the question is whether in such an event the Income tax Officer was precluded from issuing a notice under section 34 of the Act There has been in the past a well marked difference of opinion between the Bombay and the Calcutta High 121 Courts the leading cases in Bombay being Harakchand Makanji Co vs Commissioner of Income tax 1 All India Groundnut Syndicate Ltd vs Commissioner of Income tax2 and the decision under appeal here while the Calcutta view is to be found in Commissioner of Agricultural Income tax vs Sultan Ali Gharami 3 R K Das Co vs Commissioner of Income tax 4 and Commissioner of Income tax vs Govindlal Dutta 5 To these may be added P section Rama Iyer vs Commissioner of Income tax 6 in which the Madras High Court has accepted the Bombay view No useful purpose will be served in discussing these cases in detail In some of them the point need not have been taken up for decision though it was We shall refer very briefly to the two rival views and the grounds on which they are rested and in doing so we begin with the Calcutta decisions In Sultan Ali Gharami s case 3 a notice under section 241 of the Bengal Agricultural Income tax Act corresponding to section 221 of the Act was issued No return was filed Three years later a notice under section 242 of that Act corresponding to section 222 of the Act was served and a return showing an income below the taxable minimum was filed The contention was that without a notice under section 242 within the assessment year or a notice under section 381 corresponding to section 34 1 of the Act the best judgment assessment was bad The contention further was that the return could be taken to be under section 241 or section 243 Chakravarti J as he then was and Das Gupta J held that a person who had no assessable income was not placed under a duty to file a return that the return whether filed under section 241 or section 243 which had failed to show an assessable income could not possibly be treated as a return under section 241 or even section 243when filed in answer to a notice under section 242 They further observed at p 442 A return under section on 241 is a return filed by a person who decides for himself that he had an assessable income in the previous year and by filing 1 1948 16 4 1056 2 1954 25 1 T R R 5 1957 33 3 16 122 the return he offers that income for assessment A person who had no assessable income in the previous year is placed under no duty by a notice under section 241 to furnish a return and a person who thinks rightly or wrongly that he had no assessable income will furnish none A return under section 241 whether filed within the time allowed under the section or filed subsequently under the provisions of section 243 will therefore show an assessable income A return which showed no assessable income could not possibly be treated as a return filed under section 241 or a return called for under that section but filed under section 243 when in fact it was filed in response to a notice under section 242 The opinion here expressed was criticised in the judgment under appeal and in the next case R K Das Co vs Commissioner of Income tax1 the Calcutta High Court Chakravarti CJ and Sarkar J explained what was really meant It is not necessary to refer to the facts of that case This is what Chakravarti CJ observed at p 449 It should be remembered I observed that the return in the present case is being sought to be treated as a return under section 241 belatedly filed And then I went on to say that a return under section 241 would only be filed by a person who thought that he had a taxable income and therefore a return showing an income below the taxable limit could not be held on a construction thereof to be a return under section 241 and consequently the return in the case we were then considering could not be treated as such a return filed under section 243 To say that was not to say that even a return filed in compliance with a notice under section 222 if filed belatedly under section 223 could not be a return showing an income below the taxable limit This left the matter somewhat ambiguous as to what was really meant and in Commissioner of Income tax vs Govindlal Dutta2Chakravarti C J and Guha J 1 2 123 again explained the true import of the law laid down They referred to section 221 of the Act as it stood prior to the amendment of 1953 and observed that under that section a person was required to file a return only if his total income during the preceding year exceeded the maximum amount which was not chargeable to tax The return contemplated was thus only a return of income and not a return of loss and not even a return of income but a return of taxable income Not only had a person no duty but he had even no right to file a return voluntarily if he had suffered a loss to report that loss The learned Judges concluded that it was a complete mistake to think that section 223 provided for the filing of a voluntary return showing loss at any time before assessment That section they opined contemplated the filing of a return of taxable income and a return not showing such income was not a return at all in law The Calcutta view as shown above really proceeds upon the wording of section 221 It lays down that the public notice requires only persons having an income above the taxable limit to make a return A person who has no such income need not make a return and if he does make a return it is not a return which need be considered being not a return in law It is a little difficult to understand how the existence of a return can be ignored once it has been filed A return showing income below the taxable limit can be made even in answer to a notice under section 222 The notice under section 221 requires in a general way what a notice under section 222 requires of an individual If a return of income below the taxable limit is a good return in answer to a notice under section 222 there is no reason to think that a return of a similar kind in answer to a public notice is no return at all The conclusion does not follow from the words of section 221 No doubt under that sub section only those persons are required to make a return whose income is above taxable limits but a person may legitimately consider himself entitled to certain deductions and allowances and yet file a return to be on the safe side He may show his income and the 124 deductions and allowances he claims But it may be that on a correct processing his income may be found to be above the exempted limit No doubt it is futile for a person not liable to tax to rush in with a return but the return in law is not a mere scrap of paper It is a return such as the assessee considers represents his true income We are unable and we say this with due respect to accept the view adumbrated in the Calcutta cases The contrary view is expressed by the Bombay High Court in the earlier case of Harakchand Makanji Co vs Commissioner of Income tax 1 and in the judgment under appeal That view was accepted by the Madras High Court in P section Rama Iyer vs Commissioner of Income tax 2 and also in our opinion is the sounder view of the two In the earlier of the two Bombay cases Chagla C J and Tendolkar J held as stated in the head note Notice under section 34 is only necessary if at the end of the assessment year no return has been made by the assessee and the authorities wished to proceed under section 222 but where the assessee himself chooses voluntarily to make a return no question can arise under section 34 of assessment escaping and therefore there is no necessity to serve any notice under section 34 This represents the law applicable to the facts as they are to be found in this case In the assessment year no return of income was filed nor was any notice served under section 222 There was however the general notice under section 221 A return in answer to that notice could be filed under section 223 before assessment and for this there is no limit of time It was filed on January 5 1950 There was nothing to prevent the Income tax Officer from taking up the return and proceeding to assess the income of the assessee It was open to him if there was sufficient justification for it to hold that the amount noted in the footnote was really the assessee s income in which case an assessable income would have been found and the tax could be charged thereon If the Income tax Officer had acted on that return and assessed the assessee 1 2 125 before March 31 1950 the assessment would have been valid He chose to ignore the return and served on the assessee a notice under section 341 This notice was improper because with the return already filed there was neither an omission nor a failure on the part of the assessee nor was there any question of assessment escaping The notice under section 341 was therefore invalid and the consequent assessment equally so We accordingly agree with the judgment under appeal Before leaving this case we may refer to two other arguments which were raised Mr Rajagopala Sastri pointed out that an assessee might file the voluntary return on the last day showing income less than the taxable limit and the Department would in that case be driven to complete the assessment proceedings within a few hours or lose the right to send a notice under section 341 An argument ab inconvenienti is not a decisive argument The Income tax Officer could have avoided the result by issuing a notice under section 232 and not remaining inactive until the period was about to expire Further all laws of limitation lead to some inconvenience and hard cases The remedy is for the legislature to amend the law suitably The Courts can administer the laws as they find them and they are seldom required to be astute to defeat the law of limitation This argument is thus no answer to the clear meaning and implications of the Act The other argument was that the return was not a true one and fell within the mischief of cl c of sub s1 of section 28 and that therefore the period during which action could be taken was the extended one of 8 years The short answer to that is that this was not a part of the Department s case at any prior stage and cannot be allowed to be raised now In our opinion the answers given by the High Court of Bombay were correct in all the circumstances of this case The appeal thus fails and is dismissed with costs Appeal dismissed

The High Court cannot issue a writ of certiorari to quash a decision passed with jurisdiction by a Labour Com missioner under the Madras Shops and Establishments Act 1947 an the mere ground that such decision is erroneous Under section 51 of the Madras Shops and Establishments Act 1947 the Labour Commissioner is the only proper and compe tent authority todetermine the questions referred to him under that section and the decision of the Labour Commis sioner is final and not liable to be challenged in a Court of law

Civil Appeal No 250 of 1955 495 Appeal by special leave from the judgment and order dated February 11 1953 of the Calcutta High Court in Award No 254 of 1949 H N Sanyal Additional Solicitor General of IndiaB Sen R H Dhebar and T M Sen for the appellant C B Aggarwala and Sukumar Ghose for the respondent May 21 The judgment of Jafer Imam and Subba Rao JJ was delivered by Subba Rao J Sarkar J delivered a separate judgment SUBBA RAO J This appeal by special leave raises the question of survival of an arbitration clause in a contract after the said contract is superseded by a fresh one The respondent firm styled as Kishorilal Gupta Brothers entered into the following three contracts with the Governor General in Council through the Director General of Industries and Supplies hereinafter called the Government i contract dated April 2 1943 for the supply of 43000 Ladles Cook ii contract dated September 15 1944 for the supply of 15500 Bath Ovals and iii contract dated September 22 1944 for the supply of 100000 Kettles Camp Each of the said contracts contained an arbitration clause the material part of which was as follows In the event of any question of dispute arising under these conditions or any special conditions of contract or in connection with this contract except as to any matters the decision of which is specially provided for by these conditions the same shall be referred to the award of an arbitrator to be nominated by the purchaser and an arbitrator to be nominated by the contractor Under the terms of the said three contracts the Government supplied certain raw materials to the respondents and the latter also delivered some of the goods to the former On May 21 1945 the contract dated April 2 1943 hereinafter called the first contract was cancelled by the Government The Government 496 also demanded certain sums towards the price of the materials supplied by them to the respondents On the same day the Government cancelled the contract dated September 15 1944 hereinafter called the second contract and made a claim on the respondents for the price of the raw materials supplied to them The respondents made a counter claim against the Government for compensation for breach of the contract On March 9 1946 the Government cancelled the contract dated September 22 1944 hereinafter called the third contract Under that contract there were mutual claims by the Government for the raw material supplied to the contractors and by the latter for compensation for breach of contract The disputes under the three contracts were amicably settled The outstanding disputes under the first and the second contracts were settled on September 6 1948 and two separate documents were executed to evidence the said settlement As the decision to some extent turns upon the comparative study of the recitals in the said documents of settlement it will be convenient to read the material part of the recitals contained therein The settlement in respect of the first contract contained the following recitals 1 The contractor expressly agrees to pay the Government the sum of Rs 3164 8 as only on this contract 2 The contract on payment of the amount mentioned in clause 1 shall stand finally determined The recitals in the settlement of the second contract are as follows 1 The contractor expressly agrees to pay to the Government the sum of Rs 36276 If D G 1 section has recovered any amount under the contract out of the sum due credit will be given to the contractor 2 The contract stands finally determined and no party will have any further claim against the other One prominent difference in the phraseology used in the two settlements may be noticed at this stage 497 While under the settlement of the first contract the contract should stand finally determined Only payment of the amount agreed to be paid to the Government by the contractor under the settlement of the second contract the contract stood finally determined on the date of the settlement itself The third contract was settled on February 22 1949 and the material part of the recitals therein is as follows 1 The firm will pay a sum of Rs 45000 in full and final settlement of the amount due to the Government in respect of raw materials received against the contract and their claims for compensation for cancellation of the same contract 2 The firm will retain all surplus partly fabricated and fully fabricated stores lying with them 3 The firm agrees to pay the abovementioned sum of Rs 45000 only together with the sums owing by them to the Government under the settlements reached in two other cases AT Nos MP75762R 61 78 dated 15th September 1944 and MP507308R I 90 dated 2nd April 1943 in monthly instalments for Rs 5000 only for the first three months first instalment being payable on 10th March 1949 and further instalments of Rs 9000 per month till the entire dues payable to Government are paid 4 In the event of default of any monthly instalments interest will be charged by Government on the amount as defaulted at the rate of 6 per annum from the first day of the month in which the instalment shall be due If the instalments defaulted exceed two in number the Government will have the right to demand the entire balance of the money payable by the firm together with interest thereon at the rate abovementioned on that balance and take such steps to recover from them from the security to be offered 5 In order to provide cover for the money pay able to the Government the firm undertakes to hypothecate their moveable and immoveable property in Bamangachi Engineering Works together with all machinery sheds and leasehold interest in 498 land measuring about 575 acres in Mouja Bamungachi in Howrah The firm further undertakes to execute the necessary stamped documents for the purpose as drafted by the Government Solicitor at Calcutta 6 The contracts stand finally concluded in terms of the settlement and no party will have further or other claim against the other Broadly speaking this settlement was a comprehensive one including therein the earlier settlements and providing for the recovery of the amounts agreed to be paid under the said two earlier settlements The concluding paragraph is more analogous to that of the settlement of the second contract rather than that of the first Under the final settlement between October 28 1948 and January 17 1949 the respond ents paid a total sum of Rs 9000 to the Government under the first two settlements of the contracts Between March 10 1949 and October 31 1949 the respondents paid a total sum of Rs 1 1000 in instalments to the Government though the amounts paid were less than the amount payable in accordance with the agreed instalments Some correspondence passed between the Government and the respondents the former demanding the balance of the amount payable under the instalments and the latter putting it off on one ground or other Finally on August 10 1949 the Government wrote a letter to the respondents demanding the payment of Rs 151723 payable to them under the three original contracts ignoring the three settlements The Government followed that letter with another one of the same date informing the respondents that they had appointed Bakshi Shiv Charan Singh as their arbitrator and calling upon the respondents to nominate their arbitrator The respondents did not co operate in the scheme of arbitration and instead Kishori Lal Gupta as sole proprietor of the respondent firm made an application under section 33 of the in the Original Side of the High Court of Calcutta for a declara tion that the arbitration agreement was no longer in existence That application was dismissed by 499 Banerjee J of the said High Court on the ground that it was not maintainable as the two other partners of the respondent firm were not made parties to the said proceeding But in the course of the judgment the learned Judge made some observation on the merits of the case Thereafter the Government filed their statement of facts before the arbitrator and the respondents filed a counter affidavit challenging the arbitrator s jurisdiction and also the correctness of the claims made by the Government On July 31 1951 the arbitrator made an award in favour of the Government for a total sum of Rs 116446 11 5 in respect of the first and the third contracts and gave liberty to the Government to recover the amount due to them under the second contract in a suit The award was duly filed in the High Court and on receiving the notice the respondents filed an application in the High Court for setting aside the award and in the alternative for declaration that the arbitration clause in the three contracts ceased to have any effect and stood finally determined by the settlement of the disputes between the parties Bachawat J held that the first contract was to be finally determined only on payment in terms of the settlement and as such payment was not made the original contract and its arbitration clause continued to exist As regards the third contract the learned Judge came to the conclusion that by the third settlement there was accord and satisfaction of the original contract and the substituted agreement discharged the existing cause of action and therefore the arbitrator had no jurisdiction to entertain any claim with regard to that contract As the award on the face of it was a lump sum award the learned Judge held that it was not severable and therefore the whole award was bad In the result he gave the declaration that the arbitration clause contained in the contract dated September 221944 for Kettles Camp had ceased to exist since the settlement contract dated February 22 1949 and that the entire award was void and invalid The present appeal by special leave was filed by the Government against the said order of the High Court 500 At the outset a preliminary objection taken by Shri Aggarwal the learned Counsel for the respondents may be disposed of The learned Counsel contends that the special leave granted by this Court should be revoked on the ground that an appeal lay against the order of the learned Judge to an appellate bench of the same High Court both under cl 15 of the Letters Patent and section 39 of the It is not and cannot be contended that this Court has no jurisdiction to entertain an appeal against the order of a Court when an appeal lies from that order to another Court The provisions of article 136 of the Constitution are not circumscribed by any such limitation But what is argued in our view legitimately is that when an appeal lay to the appellate bench of the Calcutta High Court this Court should not have given special leave and thereby short circuited the legal procedure prescribed There is much force in this argument If the application for revoking the special leave had been taken at the earliest point of time and if this Court was satisfied that an appeal lay to an appellate bench of the Calcutta High Court the leave obtained without mentioning that fact would have been revoked But in the present case the special leave was granted on March 29 1954 and the present application for revoking the leave was made five years after the grant of special leave and the learned Counsel could not give any valid reason to explain this inordinate delay In the circumstances if we revoked the special leave the appellant would be prejudiced for if this objection had been taken at the earliest point of time the appellant would have had the opportunity to prefer a Letters Patent appeal to the appellate bench of the Calcutta High Court The appellant cannot be made to suffer for the default of the respondents In the circumstances we did not entertain that application for revoking the special leave and did not express our opinion on the merits of the question raised by the learned Counsel Now coming to the merits the main contentions of the parties may be stated at the outset The argument of the Additional Solicitor General for the 501 appellant may be summarized in the following propositions 1 The jurisdiction of the arbitrator depends upon the scope of the arbitration agreement or submission 2 its scope would depend upon the language of the arbitration clause 3 if the arbitration agreement in question is examined it indicates that the dispute whether the original contracts have come to an end or not is within its scope 4 on the facts of the case there had been no novation or substitution of the original contracts and 5 if there had been a novation of the original contracts the non perform ance of the terms of the new contract revived the original contracts and therefore the parties to the original contracts could enforce their terms including the arbitration clause The submission of Shri Aggarwal Counsel for the respondentsmay be stated thus 1 Upon the facts of the case there had been a recession of the old contracts and substitution of a new legally enforceable and unconditional contract which came into immediate effect 2 the new contract can be legally supported either under section 62 or section 63 of the Indian Contract Act or under the general law of contracts 3 the non performance of the terms of the new contract did not have the effect of reviving the rights and obligations under the old contracts as they did not remain alive for any purpose and 6 even if the arbitration clause did not remain alive after the new contract the arbitrator was bound to decide the case in terms of the new contract and he having not done so the error is apparent on the face of the record and therefore the award is liable to be set aside So stated the controversy covers a much wider field than that necessary to solve the problem presented in this case It would therefore be convenient at this stage to clear the ground Subtle distinctions sought to be made between the provisions of section 62 and section 63 of the Indian Contract Act need not detain us nor need we consider the question whether the settlement contract in question falls under section 62 or is covered by section 63 of the Indian Contract Act or is governed by the general principles of the law of contracts for the validity of the said contract is not questioned by either 64 502 party and indeed both rely upon it one to contend that it wholly superseded the earlier ones and the other to rely upon its terms to bring out its contingent character If so the only two outstanding questions are i what is the legal effect of the contract dated February 22 1949 on the earlier contracts and ii does the arbitration clause in the earlier contracts survive after the settlement contract The law on the first point is well settled One of the modes by which a contract can be discharged is by the same process which created it ie by mutual agreement the parties to the original contract may enter into a new contract in substitution of the old one The legal position was clarified by the Privy Council in Payana Reena Saminathan vs Pana Lana Palaniappa 1 Lord Moulton defined the legal incidents of a substituted contract in the following terms at p 622 The receipt given by the appellants and accepted by the respondent and acted on by both parties proves conclusively that all the parties agreed to a settlement of all their existing disputes by the arrangement formulated in the receipt It is a clear example of what used to be well known in common law plea ding as accord and satisfaction by a substituted agreement No matter what were the respective rights of the parties inter se they are abandoned in consideration of the acceptance by all of a new agreement The consequence is that when such an accord and satisfaction takes place the prior rights of the parties are extinguished They have in fact been exchanged for the new rights and the new agreement becomes a new departure and the rights of all the parties are fully represented by it The House of Lords in Norris vs Baron and Company 2 in the context of a contract for sale of goods brought out clearly the distinction between a contract which varies the terms of the earlier contract and a contract which rescinds the earlier one in the following passage at p 26 In the first case there are no such executory clauses in the second arrangement as would enable 1 622 2 26 503 you to sue upon that alone if the first did not exist in the second you could sue on the second arrangement alone and the first contract is got rid of either 2 by express words to that effect or because the second dealing with the same subject matter as the first but in a different way it is impossible that the two should be both performed Scrutton LJ in British Russian Gazette and Trade Outlook Limited vs Associated Newspaper Limited 1 after referring to the authoritative text books on the subject describes the concept of 11 accord and satisfaction thus at p 643 Accord and satisfaction is the purchase of a release from an obligation whether arising under contract or tort by means of any valuable consideration not being the actual performance of the obligation itself The accord is the agreement by which the obligation is discharged The satisfaction is the consideration which makes the agreement operative Formerly it was necessary that the consideration should be executed Later it was conceded that the consideration might be executory The consideration on each side might be an executory promise the two mutual promise making an agreement enforceable in law a contract I An accord with mutual promises to perform is good though the thing be not performed at the time of action for the party has a remedy to compel the performance that is to say a cross action on the contract of accord if however it can be shown that what a creditor accepts in satisfaction is merely his debtor s promise and not the performance of that promise the original cause of action is discharged from the date when the promise is made The said observations indicate that an original cause of action can be discharged by an executory agreement if the intention to that effect is clear The modern rule is stated by Cheshire and Fifoot in their Law of Contract 3rd Edn at p 453 The modern rule is then that if what the creditor has accepted in satisfaction is merely his 1 643 644 504 debtor s promise to give consideration and not the performance of that promise the original cause of action is discharged from the date when the agreement is made This therefore raises a question of construction in each case for it has to be decided as a fact whether it was the making of the promise itself or the performance of the promise that the creditor consented to take by way of satisfaction So too Chitty in his book on Contracts 31st Edn states at p 286 The plaintiff may agree to accept the performance of a substituted consideration in satisfaction or he may agree to accept the promise of such performance In the former there is no satisfaction until performance and the debtor remains liable upon the original claim until the satisfaction is executed In the latter if the promise be not performed the plaintiff s remedy is by action for the breach of the substituted agreement and he has no right of resort to the original claim From the aforesaid authorities it is manifest that a contract may be discharged by the parties thereto by a substituted agreement and thereafter the original cause of action arising under the earlier contract is discharged and the parties are governed only by the terms of the substituted contract The ascertainment of the intention of the parties is essentially a question of fact to be decided on the facts and circumstances of each case We have already given the sequence of events that led to the making of the contract dated February 22 1949 To recapitulate briefly the original three contracts were cancelled by the Government on May 21 1945 May 21 1945 and March 9 1946 respectively Under the first contract the Government made a claim for the price of the raw materials supplied and there was no counter claim by the respondents Under the second and third contracts there were counter claims the Government claiming amounts for the raw materials supplied and the respondents claiming damages for the breach thereof 505 The disputes under the first two contracts were settled on the same day As the claim was only on the part of the Government the amount due to them was ascertained at Rs 3164 8 0 and the first contract was expressly agreed to be finally determined on payment of that amount The express terms of the settlement leave no room to doubt that the contract was to be determined only after the payment of the ascertained amount But under the second settlement which was a compromise of disputed claims a sum of Rs 36276 was fixed as the amount due from the respondents to the Government presumably on taking into consideration the conflicting claims and on adjusting all the amounts ascertained to be due from one to the other The parties in express terms agreed that the earlier contract stood finally determined and that no party would have any claim thereunder against the other A comparative study of the terms of the said two settlement contracts indicates that under the first settlement the original contract continued to govern the rights of the parties till payment while under the second settlement contract the original contract was determined and the rights and liabilities of the parties depended thereafter on the substituted contract Coming to the third settlement it was in the pattern of the second settlement On the breach of the third contract there were mutual claims the Government claiming a large amount for raw materials supplied to the respondents and the latter on their side setting up a claim for damages Further though the earlier two contracts were settled on September 6 1948 the amounts payable under the said two settlements were not paid A comprehensive settlement therefore of the outstanding claims was arrived at between the parties and the rights and liabilities were attempted to be crystallized and a suitable procedure designed for realising the amounts In full and final settlement of the amounts due to the Government in respect of the raw materials received against the contracts and the respondents claim for compensation for cancellation of the contracts it was agreed that the respondents should pay a sum of Rs 45000 to the Government 506 and that the respondents should retain all the material partly fabricated and fully fabricated stores lying with them Clauses 3 4 and 5 provide for the realisation of the entire amounts covered by the three settlements Under cl 3 the respondents agreed to pay the total amount payable under the three settlements in monthly instalments for the first three months commencing from March 10 1949 at a sum of Rs 5000 and thereafter at a sum of Rs 9000 per month till the entire amount was paid Clause 4 prescribed that in case of default of any monthly instalment interest would be charged at the rate of 6 per annum and if the instalments defaulted exceeded two in number the Government was given the right to realise the entire amount payable under the three contracts with interest not only from the security but also otherwise Under cl 5 it was stipulated that the respondents should hypothecate their moveable and immoveable properties described thereunder to provide cover for the moneys payable to the Government Clause 6 in express terms declared that the contracts should be finally concluded in terms of the settlement and no party would have any claim against the other Is there any justification for the contention that the substituted contract should either come into force after the hypothecation bond was executed or that it should cease to be effective if the said bond was not executed within a reasonable time from the date of the settlement We do not find any justification for this contention either in the express terms of the contract or in the surrounding circumstances whereunder the document came to be executed It was a self contained document it did not depend upon the earlier contracts for its existence or enforcement The liability was ascertained and the mode of recovery was provided for The earlier contracts were superseded and the rights and liabilities of the parties were regulated thereunder No condition either precedent or subsequent was expressly provided nor was there any scope for necessarily implying one or either The only argument in this direction 507 namely that it is impossible to attribute any intention to the Government to take a mere promise on the part of the respondents to hypothecate their properties as satisfaction and therefore it should be held that the intention of the parties was that there would be no satisfaction till such a document was executed does not appeal to us We are concerned with the expressed intention of the parties and when the words are clear and unambiguous they are undoubtedly clear in this case there is no scope for drawing upon hypothetical considerations or supposed intentions of the parties nor are we attracted by the argument that the description of the properties intended to be hypothecated was not made clear and therefore the presumed intention was to suspend the rights under the new contract till a valid document in respect of a definite and specified property was executed Apart from the fact that we are not satisfied with the argument that the description was indefinite we do not think that such a flaw either invalidates a document or suspends its operation till the defect is rectified or the ambiguity clarified The substituted agreement gave a new cause of action and obliterated the earlier ones and if there was a valid defence against the enforcement of the new contract in whole or in part the party affected must take the consequences We have therefore no doubt that the contract dated February 22 1949 was for valid consideration and the common intention of the parties was that it should be in substitution of the earlier ones and the parties thereto should thereafter look to it alone for enforcement of their claims As the document does not disclose any ambiguity no scrutiny of the subsequent conduct of the parties is called for to ascertain their intention If so the next question is whether the arbitration clause of the original contracts survived after the execution of the settlement contract dated February 22 1949 The learned Counsel for the appellant contends that the terms of the arbitration clause are wide and comprehensive and any dispute on the question whether the said contract was discharged by any of the ways known to law came within its fold 508 Uninfluenced by authorities or case law the logical outcome of the earlier discussion would be that the arbitration clause perished with the original contract Whether the said clause was a substantive term or a collateral one it was none the less an integral part of the contract which had no existence de hors the contract It was intended to cover all the disputes arising under the conditions of or in connection with the contracts Though the phraseology was of the widest amplitude it is inconceivable that the parties intended its survival even after the contract was mutually rescinded and substituted by a new agreement The fact that the new contract not only did not provide for the survival of the arbitration clause but also the circumstance that it contained both substantive and procedural terms indicates that the parties gave up the terms of the old contracts including the arbitration clause The case law referred to by the learned Counsel in this connection does not in our view lend support to his broad contention and indeed the principle on which the said decisions are based is a pointer to the contrary We shall now notice some of the authoritative statements in the text books and a few of the cases bearing on the question raised In Chitty on Contract 21st Edn the scope of an arbitration clause is stated thus at p 322 So that the law must be now taken to be that when an arbitration clause is unqualified such a clause will apply even if the dispute involve an assertion that circumstances had arisen whether before or after the contract had been partly performed which have the effect of discharging one or both parties from liability eg repudiation by one party accepted by the other or frustration In Russel on Arbitration 16th Edn p 63 the following test is laid down to ascertain whether an arbitration clause survives after the contract is deter mined The test in such cases has been said to be whether the contract is determined by something outside itself in which case the arbitration clause 509 is determined with it or by something arising out of the contract in which case the arbitration clause remains effective and can be enforced The Judicial Committee in Hirji Mulji vs Cheong Yue Steamship Company 1 gives another test at p 502 That a person before whom a complaint is brought cannot invest himself with arbitral jurisdiction to decide it is plain His authority depends on the existence of some submission to him by the parties of the subject matter of the complaint For this purpose a contract that has determined is in the same position as one that has never been concluded at all It founds no jurisdiction A very interesting discussion on the scope of an arbitration clause in the context of a dispute arising on the question of repudiation of a contract is found in the decision of the House of Lords in Heyman vs Darwine Ltd 2 There a contract was repudiated by one party and accepted as such by the other The dispute arose in regard to damages under a number of heads covered by the contract The arbitration clause provided that any dispute between the parties in respect of the agreement or any of the provisions contained therein or anything arising thereout should be referred to arbitration The House of Lords held that the dispute was one within the arbitration clause In the speeches of the Law Lords a wider question is discussed and some of the relevant principles have been succinctly stated Viscount Simon LC observed at p 343 thus An arbitration clause is a written submission agreed to by the parties to the contract and like other written submissions to arbitration must be construed according to its language and in the light of the circumstances in which it is made If the dispute is as to whether the contract which contains the clause has ever been entered into at all that issue cannot go to arbitration under the clause for the party who denies that he has ever entered into the contract is thereby denying that he has ever joined in the submission Similarly if one party to 1 502 65 2 343 345 347 350 510 the alleged contract is contending that it is void ab initio because for example the making of such a contract is illegal the arbitration clause cannot operate for on this view the clause itself is also void If however the parties are at one in asserting that they entered into a binding contract but a difference has arisen between them as to whether there has been a breach by one side or the other or as to whether circumstances have arisen which have discharged one or both parties from further performance such differences should be regarded as differences which have arisen in respect of or with regard to or under the contract and an arbitration clause which uses these or similar expressions should be construed accordingly By the law of England though not as I understand by the law of Scotland such an arbitration clause would also confer authority to assess damages for breach even though it does not confer upon the arbitral body express power to do so I do not agree that an arbitration clause expressed in such terms as above ceases to have any possible application merely because the contract has come to an end as for example by frustration In such cases it is the performance of the contract that has come to an end The learned Law Lord commented on the view expressed by Lord Dunedin at p 344 thus The reasoning of Lord Dunedin applies equally to both cases It is in my opinion fallacious to say that because the contract has come to an end before performance begins the situation so far as the arbitration clause is concerned is the same as though the contract had never been made In such case a binding contract was entered into with a valid submission to arbitration contained in its arbitration clause and unless the language of the arbitration clause is such as to exclude its application until performance has begun there seems no reason why the arbitrator s jurisdiction should not cover the one case as much as the other 511 Lord Macmillan made similar observations at p 345 If it appears that the dispute is as to whether there has ever been a binding contract between the parties such a dispute cannot be covered by an arbitration clause in the challenged contract If there has never been a contract at all there has never been as part of it an agreement to arbitrate the greater includes the less Further a claim to set aside a contract on such grounds as fraud duress or essential error cannot be the subject matter of a reference under an arbitration clause in the contract sought to be set aside Again an admittedly binding contract containing a general arbitration clause may stipulate that in certain events the contract shall come to an end If a question arises whether the contract has for any such reason come to an end I can see no reason why the arbitrator should not decide that question It is clear too that the parties to a contract may agree to bring it to an end to all intents and purposes and to treat it as if it had never existed In such a case if there be an arbitration clause in the contract it perishes with the contract If the parties substitute a new contract for the contract which they have abrogated the arbitration clause in the abrogated contract cannot be invoked for the determination of questions under the new agreement All this is more or less elementary These observations throw considerable light on the question whether an arbitration clause can be invoked in the case of a dispute under a superseded contract The principle is obvious if the contract is superseded by another the arbitration clause being a component part of the earlier contract falls with it The learned Law Lord pin points the principle underlying his conclusion at p 347 I am accordingly of opinion that what is commonly called repudiation or total breach of a contract whether acquiesced in by the other party or not does not abrogate a contract though it may relieve the injured party of the duty of further fulfilling the obligations which he has by a contract undertaken 512 to the repudiating party The contract is not put out of existence though all further performance of the obligations undertaken by each party in favour of the other may cease It survives for the purpose of measuring the claims arising out of the breach and the arbitration clause survives for determining the mode of their settlement The purposes of the contract have failed but the arbitration clause is not one of the purposes of the contract Lord Wright after explaining the scope of the word repudiation and the different meanings its bears proceeded to state at p 350 In such a case if the repudiation is wrongful and the rescission is rightful the contract is ended by the rescission but only as far as concerns future performance It remains alive for the awarding of damages either for previous breaches or for the breach which constitutes the repudiation That is only a particular form of contract breaking and would generally under an ordinary arbitration clause involve a dispute under the contract like any other breach of contract This decision is not directly in point but the principles laid down therein are of wider application than the actual decision involved If an arbitration clause is couched in widest terms as in the present case the dispute whether there is frustration or repudiation of the contract will be covered by it It is not because the arbitration clause survives but because though such repudiation ends the liability of the parties to perform the contract it does not put an end to their liability to pay damages for any breach of the contract The contract is still in existence for certain purposes But where the dispute is whether the said contract is void ab initio the arbitration clause cannot operate on those disputes for its operative force depends upon the existence of the contract and its validity So too if the dispute is whether the contract is wholly superseded or not by a new contract between the parties such a dispute must fall outside the arbitration clause for if it is superseded the arbitration clause falls with it The argument therefore that the legal position is 513 the same whether the dispute is in respect of repudiation or frustration or novation is not borne out by these decisions An equally illuminating judgment of Das J as he then was in Tolaram Nathmull vs Birla Jute Manufacturing Co Ltd1 is strongly relied upon by the learned Counsel for the appellant There the question was whether an arbitration clause which was expressed in wide terms would take in a dispute raised in that case It was contended on one side that the contract was void ab intio and on the other side that even on the allegations in the plaint the contract was not ab initio void The learned Judge on the facts of that case held that no case had been made out for staying the suit and therefore dismissed the application filed by the defendant for stay of the suit The learned Judge exhaustively considered the case law oil the subject and deduced the principles and enumerated them at p 187 The learned Judge was not called upon to decide the present question namely whether an arbitration clause survived in spite of substitution of the earlier contract containing the arbitration clause by a fresh one and therefore we do not think that it is necessary to express our opinion on the principles culled out and enumerated in that decision The following principles relevant to the present case emerge from the aforesaid discussion 1 An arbitration clause is a collateral term of a contract as distinguished from its substantive terms but none the less it is an integral part of it 2 however comprehensive the terms of an arbitration clause may be the existence of the contract is a necessary condition for its operation it perishes with the contract 3 the contract may be non est in the sense that it never came legally into existence or it was void ab initio 4 though the contract was validly executed the parties may put an end to it as if it had never existed and substitute a new contract for it solely governing their rights and liabilities thereunder 5 in the former case if the original contract has no legal existence the arbitration clause also cannot operate for along with the original contract it is also void in the latter case as the 1 ILR 514 original contract is extinguished by the substituted one the arbitration clause of the original contract perishes with it and 6 between the two falls many categories of disputes in connection with a contract such as the question of repudiation frustration breach etc In those cases it is the performance of the contract that has come to an end but the contract is still in existence for certain purposes in respect of disputes arising under it or in connection with it As the contract subsists for certain purposes the arbitration clause operates in respect of these purposes We have held that the three contracts were settled and the third settlement contract was in substitution of the three contracts and after its execution all the earlier contracts were extinguished and the arbitration clause contained therein also perished along with them We have also held that the new contract was not a conditional one and after its execution the parties should work out their rights only under its terms In this view the judgment of the High Court is correct This appeal fails and is dismissed with costs SARKAR J On different dates in 1943 and 1944 a firm of contractors of the name of Kishorilal Gupta Brothers entered into three contracts with the appellant to fabricate and supply certain military stores The first contract was for 43000 ladles cook the second for 15500 bath ovals and the third for 100000 kettles camp Each of these contracts contained an arbitration clause The last mentioned contract provided that the appellant would supply materials for the fabrication of the articles to be delivered under it Before the contracts had been finally executed disputes arose between the parties These disputes were settled by mutual agreements which were contained in three separate documents The settlement in respect of the ladles cook contract which was made on September 6 1948 provided that the contractors would pay to the appellant a sum of Rs 3164 8 0 and on such payment that contract would stand finally determined Under the settlement in respect of the bath ovals contract which also was made on 515 September 6 1948 the contractors agreed to pay to the appellant Rs 36276 and it provided that the contract stands finally determined and no party shall have any further claim against the other The terms of the settlement of the kettles camp contract are set out below in full for this case depends on them Dated the 22nd February 1949 Messrs Kishorilal Gupta Bros Calcutta Subs AT No MP75442R 11397 dated the 22nd September 1944 Dear Sir Reference discussion held on 5th February 1949 between your Proprietor Mr Kishorilal Gupta and General Manager J B Breiter and the Claims Committee of the Directorate General I hereby confirm the following terms of settlement arrived at in the meeting The settlement has received the approval of Director General of Industries and Supplies New Delhi The firm will pay a sum of Rs 45000 in full and final settlement of the amount due to the Government in respect of raw materials received against the contract and their claims for compensation for cancellation for the same contract The firm will retain all surplus partly fabricated and fully fabricated stores lying with them The firm agree to pay the above mentioned sum of Rs 45000 only together with the sums owing by them to the Government under the settlements reached in two other cases AT Nos MP75762R 6178 dated 15th September 1944 and MP507308R 190 dated 2nd April 1943 in monthly instalments for Rs 5000 only for the first three months first instalment being payable on 10th March 1949 and further instalments of Rs 9000 per month till the entire dues payable to Government are paid In the event of default of any monthly instalments interest will be charged by Government on the amount as defaulted at the rate of 6 per annum from the first day of the month in which the instalment shall due If the instalments defaulted 516 exceed two in number the Government will have the right to demand the entire balance of the money payable by the firm together with interest thereon at the rate abovementioned on that balance and take such steps to recover from the Security to be offered by the firm in terms of the settlement or otherwise In order to provide cover for the monies payable to the Government the firm undertakes to hypothecate their movable and immoveable property in Bamangachi Engineering Works together with all machinery sheds and lease hold interest in land measuring about 575 acres at Mouja Bamangachi in Howrah The firm further undertakes to execute the necessary stamped documents for the purpose as drafted by the Government Solicitor at Calcutta The contracts stand finally concluded in terms of the settlement and no party will have any further or other claim against the other Please acknowledge receipt Yours faithfully Sd R B L Mathur Director of Supplies Claims for and on behalf of the Governor General The contract referred to in cl 1 of this document is the contract No MP75442R 1397 mentioned at the top of the letter and concerned the kettles camp The contracts referred to in cl 3 are the contracts concerning ladles cook and bath ovals which had been settled earlier but the amounts due in respect of the settlements concerning them had not been paid in full After the settlement of February 22 1949 the contractors made certain payments aggregating Rs 1 1000 the last payment made being on October 31 1949 These payments had not been made as provided in el The contractors also failed to execute the hypothecation deed mentioned in el Certain correspondence appears to have taken place but with no tangible result The appellant was unable to obtain payments or the hypothecation deed in terms of the settlement 517 In these circumstances the appellant made a claim against the contractors under the three original con tracts amounting to Rs 152723 and referred it to arbitration under the arbitration clauses contained in them The appellant nominated an arbitrator and called upon the contractors to nominate the other the arbitration clause providing that the arbitration shall be by two arbitrators one to be nominated by each party The contractors did not nominate any arbitrator contending that the matter had already been negotiated to a settlement and that there were no outstanding disputes to be referred to arbitration The appellant then appointed the person nominated by it as the sole arbitrator under the provisions of the and an arbitration was held by him in which the contractors joined In the arbitration proceedings for reasons with which we are not concerned the appellant abandoned its claim in respect of the bath ovals contract On July 31 1951 the arbitrator made an award in favour of the appellant in the sum of Rs 116446 11 5 in respect of its claim on the ladles cook and kettles camp contracts Being aggrieved by the award the respondent Kishorilal Gupta who is a partner of the contractors firm made an application to the High Court at Calcutta in its Original Jurisdiction for a declaration that the arbitration clauses in the original contracts had ceased to have any effect and the contracts stood finally determined as a result of the settlements earlier referred to and for an order setting aside the award as void and a nullity I wish to draw attention here to the fact that the application was really concerned with the contracts for ladles cook and kettles camp It had nothing to do with the bath ovals contract for the appellant withdrew its claim under it from arbitration and no award was made in respect of it So in this appeal we are not really concerned with that contract Bachawat J who heard the application held that the contract for ladles cook had not been abrogated by the settlement in respect of it for reasons which it is unnecessary to state here as this part of the decision 518 of the learned Judge has not been challenged before us a We have therefore to proceed on the basis that the arbitration clause contained in the ladles cook contract continued in force in spite of the settlement in respect of it The learned Judge however held that the contract for kettles camp including the arbitration clause contained in it had ceased to exist as a result of the settlement of February 22 1949 and the arbitrator had consequently no jurisdiction to make any award purporting to act under that arbitration clause He then proceeded to hold that as the award was a single and inseverable award in respect of the claims under the ladles cook as well as the kettles camp contracts the whole award became invalid In the result the learned Judge made an order declaring that the arbi tration clause contained in the kettles camp contract had ceased to exist and setting aside the award as a whole It is against this judgment that the present appeal has been filed with leave granted by this Court It was contended on behalf of the respondent that the leave should not have been granted as the appellant had a right of appeal to the High Court itself We were on this basis asked to revoke the leave It appears that there are some cases of the Calcutta High Court which create a good deal of doubt as to whether an appeal lay to that High Court from an order of the kind made in this case The appellants therefore were legitimately in difficulty in deciding whether an appeal lay to the High Court Again leave was granted by this Court as far back as March 29 1954 and the respondent at no stage earlier than the hearing of the appeal before us took any objection to that leave It is too late now to allow him to do that So to do would leave the appellant entirely without remedy as an appeal to the High Court would in any event be now barred I feel therefore that no question of revoking the leave should be allowed to be raised It is useful to remind ourselves before proceeding further that what was referred to arbitration in this case was a claim by the appellant for damages for 519 breach of the contracts said to have been committed by the contractors That indeed is the respondent s case With regard to the merits of this claim the Court has no concern But it is important to note that those claims were clearly within the arbitration clause in the contracts about this there does not appear to be any dispute No question therefore arises in this appeal that the claims referred to arbitration were not within the arbitration clauses What is in dispute in this case is whether the arbitration clause had ceased to exist as a result of settlement In considering the question it is not necessary however to concern ourselves with the settlements regarding the ladles cook contract or the bath ovals contract The bath ovals contract is not the subject matter of the award As regards the ladles cook contract the Court below has held that settlement did not affect the relative arbitration clause and that decision has not been challenged before us The real question that we have to consider is whether the settlement of February 22 1949 altogether put out of existence the arbitration clause in the kettles camp contract If it did the arbitration in this case was clearly without jurisdiction and the award resulting from it a nullity for on that basis there would be no arbitration agreement under which an arbitration could be held An arbitration agreement of course is the creature of an agreement and what is created by agreement may be destroyed by agreement Lord Macmillan considered it elementary that the parties to a contract may agree to bring it to an end to all intents and purposes and to treat it as if it had never existed and that In such a case if there be an arbitration clause in the contract it perishes with the contract Heyman vs Darwins 1 Now it is clear that the settlement of February 22 1949 does not expressly make the arbitration clause nonexistent It is however said that the settlement of February 22 1949 operated as an accord and satisfaction and therefore the arbitration clause in the relative original contract was brought to an end by it 1 371 520 It if said that such a settlement amounts to a substituted agreement which abrogated the original contract and the arbitration clause contained in it perished with it I venture to think that this view is wrong and originates from a misapprehension of the real nature of accord and satisfaction and an arbitration clause in a contract It must here be stated that the appellant disputes that the settlement of February 22 1949 amounted to an accord and satisfaction I will examine the appellant s contention later and shall for the present assume that the settlement constituted an accord and satisfaction Now what is an accord and satisfaction It is only a method of discharge of a contract It only means that the parties are freed from their mutual obligations under the contract see Cheshire and Fifoot on Contracts 3rd edn p 433 It is a good defence to an action for the breach of any contract whether made by parol or specialty that the cause of action has been discharged by accord and satisfaction that is to say by an agreement after breach whereby some consideration other than his legal remedy is to be accepted by the party not in fault Chitty on Contracts 21st edn p 286 In British Russian Gazette and Trade Outlook Ltd vs Associated Newspapers Ltd 1 Scrutton LJ said Accord and satisfaction is the purchase of the release from an obligation whether arising under contract or tort by means of any valuable consideration not being the actual performance of the obligation itself The accord is the agreement by which the obligation is discharged The satisfaction is the consideration which makes the agreement operative The effect of an accord and satisfaction is therefore to secure a release from an obligation arising under a contract Now it is difficult to conceive of an obligation arising from a contract unles the contract existed An accord and satisfaction which secures a release from such an obligation is really based on the existence of the contract instead of treating it as non existent 1 643 4 521 The contract is not annihilated but the obligations under it cease to be enforceable Therefore it is that when an action is brought for the appropriate remedy for nonperformance of these obligations that an accord and satisfaction furnishes a good defence The defence is not that the contract has come to an end but that its breach has been satisfied by accord and satisfaction and therefore the plaintiff in the action is not entitled to the usual remedy for the breach It would clearly appear from the terms of the settlement that it dealt with remedies for the breach of the kettles camp contract Clause 1 shows that the parties were making cross claims against each other for breach of that contract and these were settled by mutual agreement upon the term that the contractors would pay to the appellant Rs 45000 Clauses 3 4 and 5 state how this sum was to be paid and how the payment of it was to be secured Clause 6 provides that the contract stands finally concluded in terms of the settlement The parties therefore were only intending to decide the dispute as to cross claims made on the basis of the breach of the contract So they were assuming the existence of the contract for there could be no breach of it unless it existed Now I come to the nature of an arbitration clause It is well settled that such a clause in a contract stands apart from the rest of the contract Lord Wright said in Heyman s case 1 that an arbitration clause is collateral to the substantial stipulations of the contract It is merely procedural and ancillary it is a mode of settling disputes All this may be said of every agreement to arbitrate even though not a separate bargain but one incorporated in the general contract Lord Macmillan also made some very revealing observations on the nature of an arbitration clause in the same case He said at pp 373 4 I venture to think that not enough attention has been directed to the true nature and function of an arbitration clause in a contract It is quite distinct from the other clauses The other clauses 1 371 522 set out the obligations which the parties undertake towards each other hinc inde but the arbitration clause does not impose on one of the parties an obligation in favour of the other It embodies the agreement of both the parties that if any dispute arises with regard to the obligations which the one party has undertaken to the other such dispute shall be settled by a tribunal of their own constitution And there is this very material difference that whereas in an ordinary contract the obligations of the parties to each other cannot in general be specifically enforced and breach of them results only in damages the arbitration clause can be specifically enforced by the machinery of the Arbitration Act The appropriate remedy for breach of the agreement to arbitrate is not damages but its enforcement It seems to me that the respective nature of accord and satisfaction and arbitration clause makes it impossible for the former to destroy the latter An accord and satisfaction only releases the parties from the obligations under a contract but does not affect the arbitration clause in it for as Lord Macmillan said the arbitration clause does riot impose on one of the parties an obligation in favour of the other but embodies an agreement that if any dispute arises with regard to the obligations which the one party has undertaken to the other such dispute shall be settled by arbitration A dispute whether the obligations under a contract have been discharged by an accord and satisfaction is no less a dispute regarding the obligations under the contract Such a dispute has to be settled by arbitration if it is within the scope of arbitration clause and either party wants that to be done That cannot be unless the arbitration clause survives the accord and satisfaction If that dispute is not within the arbitration clause there can of course be no arbitration but the reason for that would not be that the arbitration clause has ceased to exist but that the dispute is outside its scope I am not saying that it is for the arbitrator to decide whether the arbitration clause is surviving that may in many cases have to be decided by the Court That would 523 depend on the form of the arbitration agreement and on that aspect of the matter it is not necessary to say anything now for the question does not arise In my view therefore an accord and satisfaction does not destroy the arbitration clause An examination of what has been called the accord and satisfaction in this case shows this clearly From what I have earlier said about the terms of the settlement of February 22 1949 it is manifest that it settled the disputes between the parties concerning the breach of the contract for kettles camp and its consequences All that it said was that the contract had been broken causing damage and the claim to the damages was to be satisfied in terms of the settlement It did not purport to annihilate the contract or the arbitration clause in it I feel no doubt therefore that the arbitration clause subsisted and the arbitrator was competent to arbitrate The award was not in my view a nullity The position is no different if the matter is looked at from the point of view of section 62 of the Contract Act That section is in these terms Section 62 If the parties to a contract agree to substitute a new contract for it or to rescind or alter it the original contract need not be performed The settlement cannot be said to have altered the original contract or even to have rescinded it It only settled the dispute as to the breach of the contract and its consequences For the same reason it cannot be said to substitute a new contract for the old one As 1 have earlier stated it postulates the existence of the contract and only decides the incidence of its breach It remains now to express my views on the question whether the settlement of February 221949 amounted to an accord and satisfaction I have earlier stated that an accord and satisfaction is the purchase of a release from an obligation under a contract This release is purchased by an agreement which is the accord But this agreement like all other agreements must be supported by consideration The satisfaction 524 is that consideration It was formerly thought that the consideration had to be executed In other words the consideration for which the release was granted had to be received by the releaser before the release could become effective The later view is that the consideration may be executory that the release may become effective before the consideration has been received by the releaser if he has agreed to accept the promise of the release to give the consideration Whether it is the one or the other depends on the agreement of the parties It is a question of intention And where as in the present case the agreement is expressed in writing the question is one of construction of a document So much is well settled The question then is Is it the proper construction of the settlement of February 22 1949 that the appellant agreed to accept the promise of the contractors to pay the moneys and create the security in discharge of their obligations Or is it the proper construction that the contractors were not to be discharged till they had carried out their promises contained in the settlement The High Court held accepting the respondent s contention that el 6 of the settlement showed that the appellant had accepted the promise of the contractors to pay the moneys and to execute a hypothecation bond in full discharge of their obligations under the contract That clause states that The contracts stand finally concluded in terms of the settlement It is said that these words show that it was intended to accept the promise of the contractors and thereupon to give them a discharge from their obligations under the contract Now it seems to me that the words stands finally concluded in terms of the settlement do not necessarily mean concluded by the promise of the contractors contained in the settlement It appears to me to be capable of the meaning that the contract is to stand concluded when its terms have been carried out The words are not stand finally concluded by the terms of the settlement but they are stand finally concluded in terms of settlement These terms are that the contractors would pay certain 525 moneys by certain instalments and would secure these payments by a hypothecation bond So it would appear that the contract was not to be concluded till the terms had been carried out for otherwise it would not be a conclusion in terms of the settlement That seems to me to be also the reasonable interpretation to put on the document in view of the circumstances of the case The appellant was to receive a substantial sum under the settlement It gave the contractors quite a long time in which to pay it It bargained for a security to be furnished to be sure of receiving the payments The discharge was to be by the payments The promise to make these payments may conceivably in proper circumstances itself amount to a discharge But I wholly fail to see that when there is an additional promise to secure the payments by a hypothecation the parties could have intended that there would be a discharge before the hypothecation had been made It does not seem reasonable to hold that the parties so intended Nor do I think that the words stand finally concluded in terms of the settlement are so strong as to impute such an intention to the parties These words are capable of the meaning that the contract was to stand concluded upon the terms of the settlement being carried out and for the reasons just mentioned that is the proper meaning to give to those words In my view therefore the settlement did not amount to an accord and satisfaction Till the terms of it had been carried out the appellant retained all its rights under the contract There was one other point argued on behalf of the respondent which I think I should notice It was said that the award was in any event liable to be set aside inasmuch as it disclosed an error on the face of it This error it was said consisted in awarding damages larger than those which the appellant had agreed to take by the settlement Now this depends on whether the settlement amounted to an accord and satisfaction if it did not the appellant s claim for damages could not be confined to the amount mentioned in the settlement 67 526 I have already said that in my opinion it did not amount to an accord and satisfaction So there was no error apparent on the face of the award It further seems to me that it is not open to the respondent to contend that the award is liable to be set aside as disclosing the error mentioned above on the face of it I do not find that such a case was made in the application out of which this appeal arises It was said that the case had been made in paragraphs 34 and 35 of the respondent s petition to the High Court I do not think it was there made These paragraphs refer to the arbitrator s decision that he had jurisdiction to arbitrate as the settlement had not destroyed the arbitration clause and the contention there made was that this decision was erroneous on the face of it This has nothing to do with the question that the award was wrong on the face of it as it awarded a sum in excess of the amount fixed by the settlement Whether the arbitrator was right or not in his decision that the arbitration clause had not been superseded is irrelevant for that is the question that the Court was called upon to decide in the application In my view therefore the appeal should succeed and the order of the High Court set aside I would order accordingly and award the costs here and below to the appellant ORDER In accordance with the opinion of the majority this appeal fails and is dismissed with costs

The appellants who were the managements of the three hotels decided to dismiss some of their workmen who were found guilty of misconduct as a result of enquiries held by them and suspended them without pay pending the receipt of the permission of the Industrial Tribunal under section 33 Of the The workmen applied to the Industrial Tribunal for the grant of interim relief pending disposal of the applications and the Tribunal granted the relief prayed for amounting to full wages and a sum of Rs 25 per head per month in lieu of food The managements appealed against such grant but the Labour Appellate Tribunal dismissed the appeal The appellants came up to this court by special leave The two questions for decision in the appeals were 1 whether any wages were at all payable to the suspended workmen pending permission being sought under section 33 to dismiss them and the decision of the applications under section 33 Of the Act and 2 whether the Industrial Tribunal was competent to grant interim relief except by an interim award that was published Held that it was well settled that under the ordinary law of master and servant the power to suspend the servant without 477 pay could not be implied as a term in an ordinary contract of service between the master and the servant but must arise either from an express term in the contract itself or a statutory provision governing such contract Hanley vs Pease Partners Limited Wallwork vs Fielding and Ors Secretary of State for India in Council vs Surendra Nath Goswami ILR and Rura Ram vs Divisional Superintendent N W R ILR VII 1954 Punj 415 referred to But section 33 of the which took away the right of the employer to dismiss the employee except with the permission of the Industrial Tribunal introduced a fundamental change in industrial law in modification of the common law by empowering the employer by implication to suspend the contract of employment and thus relieve himself of the obligation to pay the wages and the employee of rendering service where as a result of a proper enquiry he came to the conclusion that an employee should be dismissed In the peculiar circumstances created by the enactment of section 33 Of the Act it was just and fair that Industrial Tribunals which had the power to go beyond the ordinary law of master and servant should imply such a term in the contract of employment The result therefore would be that if the Tribunal granted the permission the suspended contract would come to an end and there would be no further obligation on the part of the employer to pay any wages after the date of suspension If on the other hand the permission was refused the workmen would be entitled to all their wages from the date of suspension Western India Automobile Association vs The Industrial Tribunal Bombay and Rohtas Industries Ltd vs Brijnandan Pandey referred to Lakshmi Devi Sugar Mills Ltd vs Pt Ram Sarup The Management of Ranipur Colliery vs Dhuban Singh CA 76857 decided on 20 4 59 Ms Sasa Musa Sugar Works P Ltd vs Shobrati Khan C As 746 and 74757 decided on 29 4 59 and Phulbari Tea Estate vs Its Workmen 1960 1 SCR 32 explained and relied on But the employer s power of suspension could not take away the power of the Tribunal to grant interim relief to the workmen under the Act the words incidental thereto occurring in section 104 of the Act made it clear that interim relief where admissible could be granted as a matter incidental to the main question under reference although it might not be expressly mentioned in the terms of the reference It is not necessary to decide whether an interim relief of this nature amounted to an interim award Even assuming that the Industrial Tribunal could not grant interim relief except by an interim award which required publication that could not preclude 478 this Court from granting interim relief in the same manner as the Industrial Tribunal could and sections 15 17 or 17A could have no of application to such an order passed by this Court Ordinarily interim relief could not be the whole relief the workmen would get in case of final success and the appellants should not be made to pay more than half the amount adjudged by the Industrial Tribunal as interim relief in these cases

Criminal Appeal No 114 of 1957 Appeal by special leave from the judgment and order dated December 6 1955 of the Punjab High Court Circuit Bench Delhi in Criminal Appeal No 25 D of 1953 arising out of the judgment and order dated August 27 1953 of the Court of the special judge at Delhi in Criminal Case No 3 of 1953 R L Anand and section N Anand for the appellant H J Umrigar and R H Dhebar for the respondent May 21 The Judgment of the Court was delivered by KAPUR J This appeal by special leave is brought against the judgment and order of the High Court of the Punjab confirming the order of conviction of the appellant under section 51c of the Prevention of Corruption Act 1947 11 of 1947 hereinafter referred to as the Act The High Court reduced the sentence of the appellant to nine months rigorous imprisonment 454 The appellant was employed as an Assistant Store keeper in the Central Tractor Organisation at Delhi and amongst other duties his duty was the taking of delivery of consignment of goods received by rail for Central Tractor Organisation and in that capacity he is alleged to have misappropriated a major portion of a wagon load of iron and steel weighing about 500 Mds received at Delhi Railway Station from the Tata Iron Steel Co Tatanagar under Railway Receipt No 039967 dated August 12 1950 This consignment of goods was taken delivery of on October 2 1950 at the Lahori Gate Depot The consignment had been lying at the Railway depot for a considerable time and the Central Tractor Organisation was before taking the delivery making efforts to have the wharfage and demurrage charges reduced but it only succeeded in getting a reduction of Rs 100 The appellant paid Rs 2332 4 0 for demurrage by means of credit notes P N and P 0 on October 2 and on the following day he paid a further sum of Rs 57 3 0 by a credit note P Q The prosecution case was that this consignment never reached the Central Tractor Organisation and that the appellant had removed these goods and had misappropriated them He was absent from work after October 4 1950 on the alleged ground of illness but he was sent for on October 7 and appeared before the Director of Administration Mr F C Gera and he gave an explanation that he the appellant had lost the Railway Receipt along with another Railway Receipt and blank credit notes which had been signed by the Petrol and Transport Officer He also stated that he did not know that the goods covered by that Railway Receipt had been cleared After this explanation the appellant was handed over to the police and a case was registered against him at the instance of Mr FC Gera on October 7 1950 On the following day that is October 8 1950 the appellant made a statement to Sub Inspector Sumer Shah Singh that he had given the goods to Gurbachan Singh who was traced and in the presence of this Sub Inspector who was not in uniform at the time Gurbachan Singh handed over Rs 200 to the appellant 455 which the Sub Inspector took possession of and then Gurbachan Singh took the party which consisted of the Sub Inspector Dharam Vir of the Central Tractor Organisation and witness Kartar Singh to the premises of Amar Singh at Kotia Khan where iron and steel goods were seized and recovery memos prepared Of the goods covered by the consignment seven packages were later recovered from the Lahori Gate Goods Depot The defence of the appellant was that he took delivery of the goods on October 2 and 3 and removed them to another Railway Siding known as Saloon Siding where the goods of the Central Tractor Organisation used occasionally to be stacked in order to save wharfage and demurrage In his evidence he stated that he removed these goods to the Saloon Siding on October 2 and 3 by means of a truck of the Central Tractor Organisation which was driven by Sukhdev Singh The appellant produced Sukhdev Singh and two chowkidars in support of his defence that he had removed these goods from the Lahori Gate Depot to the Saloon Siding by means of the truck of Sukhdev Singh and on some on carts The High Court has not accepted this evidence Therefore the position comes to this that the goods received in that consignment were according to the appellant s own showing removed from the Lahori Gate Depot but it is not proved that they reached the Saloon Siding and they did not reach the Central Tractor Organisation There is also the fact that the appellant gave false explanation on October 7 1950 as to what had happened to the Railway Receipt or the credit notes which he had received from the Central Tractor Organisation and there is the further fact that the appellant was absent from duty from October 4 to October 7 till he was sent for Mr FC Gera The prosecution also tried to show that the goods were removed by Gurbachan Singh to Amar Singh s place from where certain iron and steel goods were recovered Now these iron and steel goods do not tally with the goods which were received from Tatanagar under Railway Receipt No 039967 and the goods 456 seized from Amar Singh s place have not been shown to be of the Tata Iron Steel Co s manufacture Therefore the case reduces itself to this that the appellant took delivery of the goods These goods were removed from the Lahori Gate Railway Depot by the appellant and they never reached the Central Tractor Organisation The prosecution sought to connect the goods found at Amar Singh s place with the goods received taken delivery of and removed by the appellant but they failed to do so because neither the identity of the goods is the same nor has Gurbachan Singh been produced to depose that it was the appellant who asked him to remove the goods for being taken to Amar Singh s place In this view of the matter the question for decision is whether the case of the prosecution should be held to be proved that the appellant had misappropriated the goods It emerges from the evidence of both parties that the goods were received by the appellant and removed by him and they never reached the Central Tractor Origanisation Indeed before the High Court it was not disputed that the appellant took delivery of the whole consignment at Lahori Gate Depot and he was responsible for the actual removal of two considerable portions of the consignment on the 2nd and 3rd of October The offence of which the appellant has been convicted is section 51 c of the Act which is as follows 5 1 A public servant is said to commit the offence of criminal misconduct in the discharge of his duty c if he dishonestly or fraudulently misappropriates or otherwise converts for his own use any property entrusted to him or under his control as a public servant or allows any other person so to do The word dishonestly is defined in section 24 of the Indian Penal Code to be Whoever does anything with the intention of causing wrongful gain to one person or wrongful loss to another person is said to do that thing dishonestly 457 Fraudulently has been defined in the Indian Penal Code in section 25 as follows A person is said to do a thing fraudulently if he does that thing with intent to defraud but not other wise Wrongful gain includes wrongful retention and wrongful loss includes being kept out of the property as well as being wrongfully deprived of property Therefore when a particular thing has gone into the hands of a servant he will be guilty of misappropriating the thing in all circumstances which show a malicious intent to deprive the master of it As was said by Fazl Ali J in Harakrishna Mahtab vs Emperor 1 Now I do not mean to suggest that it is either necessary or possible in every case of criminal breach of trust to prove in what precise manner the money was spent or appropriated by the accused because under the law even temporary retention is an offence provided that it is dishonest I must point out that the essential thing to be proved in case of criminal breach of trust is whether the accused was actuated by dishonest intention or not As the question of intention is not a matter of direct proof the Courts have from time to time laid down certain broad tests which would generally afford useful guidance in deciding whether in a particular case the accused had or had not mens area for the crime So in cases of criminal breach of trust the failure to account for the money proved to have been received by the accused or giving a false account of its use is generally considered to be a strong circumstance against the accused The offence under section 51c is the same as embezzlement which in English law is constituted when the property has been received by the accused for or in the name or on account of the master or employer of the accused and it is complete when the servant fraudulently misappropriates that property Halsbury s Laws of England Vol 10 3rd Edition p 787 In Larnier vs Rex 2 the offence of embezzlement was 1 AI R 1930 Patna 209 2 458 described as a wilful appropriation by the accused of the property of another A court of Justice it was said in that case cannot reach the conclusion that the crime has been committed unless it be a just result of the evidence that the accused in what was done or omitted by him was moved by the guilty mind So the essence of the offence with which the appellant was charged is that after the possession of the property of the Central Tractor Organisation he dishonestly or fraudulently appropriated the property entrusted to him or under his control as a public servant and deprived the owner ie Central Tractor Organisation of that property It is not necessary or possible in every case to prove in what precise manner the accused person has dealt with or appropriated the goods of his master The question is one of intention and not a matter of direct proof but giving a false account of what he has done with the goods received by him may be treated a strong circumstance against the accused person In the case of a servant charged with misappropriating the goods of his master the elements of criminal offence of misappropriation will be established if the prosecution proves that the servant received the goods that he was under a duty to account to his master and had not done so If the failure to account was due to an accidental loss then the facts being within the servant s knowledge it is for him to explain the loss It is not the law of this country that the prosecution has to eliminate all possible defences or circumstances which may exonerate him If these facts are within the knowledge of the accused then he hag to prove them Of course the prosecution has to establish a prima facie case in the first instance it is not enough to establish facts which give rise to a suspicion and then by reason of section 106 of the Evidence Act to throw the onus on him to prove his innocence See Harries CJ in Emperor vs Santa Singh In the present case the appellant received the consignment of goods which came from Tatanagar It is admitted that he removed them and it was found by 1 AIR 1944 Lah 338 at P 346 459 the High Court that they never reached the Central Tractor Organisation He gave an explanation in court which has been found to be false Before Mr F C Gera he made a statement to the effect that he had lost the Railway Receipt and therefore had never got the delivery of the goods which was also false In these circumstances in our opinion the court would be justified in concluding that he had dishonestly misappropriated the goods of the Central Tractor Organisation The giving of false explanation is an element which the Court can take into consideration Emperor vs Chattur Bhuj 1 In Rex vs William 2 Coleridge J charged the jury as follows The circumstances of the prisoner having quit ted her place and gone off to Ireland is evidence from which you may infer that she intended to appropriate the money and if you think that she did so intend she is guily of embezzlement Again in Reg vs Lynch 3 Moore J said You have further the fact that after getting the money the prisoner absconded and did not come back till he was in custody You may infer that he intended to appropriate this money and if so he is guilty of embezzlement The appllent s counsel relied on certain observations in certain decided cases which according to his submission support his contention that the prosecution has to prove not only receipt of goods by the accused but also to prove that he converted them to his own use and did not apply them to the purpose for which he received them He referred to Ghulam Haider vs Emperor4 In re Ramakkal Others 5 Bolai Chandra Khara vs Bishnu Bejoy Srimani 6 Bhikchand vs Emperor 7 Pritchard vs Emperor 8 So broadly stated this submission does not find support even from the cases relied upon by the appellant s counsel They are all decisions on the peculiar circumstances of each case In Ghulam Haider s case 4 1 Patna 108 5 AIR 1938 Mad 2 1836 7 C P 338 6 AIR 1934 Cal 3 7 AIR 1934 Sindh 22 4 AIR 1938 Lah 8 AIR 1928 Lah 460 the proposition was qualified by saying that proof of receipt and failure to account is a long way towards proof of misappropriation but not the whole way In that case the books in which receipts ought to have been entered were not produced and there was absence of clear accounts In Ramakkal s case 1 the accused was the receiver of a currency note found by a child and it was held that mere intention to misappropriate or even preparation to that end was not an offence It was a case brought to the High Court at an intermediate stage for quashing the charge and the High Court did not do so Bolai Chandra Khara s case 2 only emphasised that proof of one element of the criminal breach of trust is not enough for conviction and proof of non payment of money collected by a gomastha must be given by the prosecution In Bhikchand s case 3 it was held that it is only on proof of non payment of money received by the accused that presumption will arise of misappropriation In Pritchard s case 4 also the prosecution did not produce the books of account showing nonpayment All these decisions must be confined to their peculiar facts and in their ultimate analysis do not support the proposition contended for by the appellant What the prosecution have proved in this case is that the appellant took delivery of the goods on October 2 and 3 His own statement on oath shows that he removed these goods from the Railway Siding This removal is also proved by documentary evidence in the form of gate passes There is also proof of the fact that the goods did not reach the Central Tractor Organisation The appellant has given an explanation that he removed these goods to the Saloon Siding This explanation has not been accepted The pro secution have also proved that the appellant in the first instance gave a false explanation that he had not taken delivery of the goods He had absented himself from duty and had to be called by the Officer in charge He has set up the defence of removal to the Saloon Siding which was not accepted 1 AIR 1938 Mad 3 AIR 1934 Sindh 22 2 AIR 1934 Cal 425 4 AIR 1928 Lah 461 The prosecution also set out to prove that the goods were disposed of by the appellant by giving them to one Gurbachan Singh who in turn put these at the premises of Amar Singh and some steel goods were recovered from there but the prosecution have neither produced Gurbachan Singh nor has it been proved that the goods are part of the consignment which was taken delivery of by the appellant If under the law it is not necessary or possible for the prosecution to prove the manner in which the goods have been misappropriated then the failure of the prosecution to prove facts it set out to prove would be of little relevance The question would only be one of intention of the appellant and the circumstances which have been above set out do show that the appellant in what he has done or has omitted to do was moved by a guilty mind In our opinion the appellant was rightly convicted and we would therefore dismiss this appeal Appeal dismissed

A public notice under section 221 of the Income tax Act 1922 was published on May 1 1045 requiring every person whose total income exceeded the maximum amount which was not chargeable to income tax to file returns for the assessment year 1945 46 On January 5 1950 the assessee submitted a voluntary return showing an income of Rs 1935 for the assessment year 1945 46 and added a footnote to the return that his wife had sold her old ornaments and deposited a sum of Rs 59026 with the Assar Syndicate in which he was a partner The Income tax Officer who had discovered these credits while examining the accounts of the Assar Syndicate ignored the voluntary return and on February 27 1950 issued a notice under section 341 of the Act calling upon the assessee to submit his return On March 14 1950 the assessee submitted an identical return The Income tax Officer made the assessment on February 26 1951 and included the sum of Rs 59026 in the total income of the assessee The assessee contended that the assessment was invalid as it was completed more than four years after the end of the assessment year in violation Of section 341b The appellant contended that the voluntary return was no return as it did not disclose any taxable income and the assessment was valid under the proviso to section 343 Of the Act having been made within one year of the notice issued under section 341 Held that the assessment was invalid The voluntary return filed by the assessee even though it did riot disclose any taxable income was a good return and could not be ignored As such no question arose under section 341 of income escaping assessment and the Income tax Officer was not justified in issuing the notice under section 341 The proviso to section 343 was applicable only when there was a Proper notice issued under section 341 and the appellant could not take advantage of the time allowed by this proviso The assessment was clearly made beyond four years of the end of the assessment year 1945 46 and was time barred Harakchand Makanji Co vs Commissioner of Income tax All India Groundnut Syndicate Ltd vs 115 Commissioner of Income tax 1953 25 ITR go and P section Rama Iyer vs Commissioner of Income tax 1957 33 ITR 458 approved Commissioner of Agricultural Income tax vs Sultan Ali Gharami B K Das Co vs Commissioner of Income tax and Commissioner of Income tax vs Govindlal Dutta 1957 33 disapproved

vil Appeal No 539 of 1958 Appeal by special leave from the judgment and order dated March 13 1958 of the Andhra Pradesh High Court in Special Appeal No 4 of 1957 arising out of the judgment and order dated November 18 1957 428 of the Election Tribunal Hyderabad in Election Petition No 83 of 1957 N C Chatterjee A N Sinha and T Satyanarayana for the appellant P Banta Reddy and R Mahalingaiyer for respondent No 1 section section Shukla for respondent No 2 1959 May 20 The judgment of B P Sinha Jafar Imam P B Ganjendragadkar and KN Wanchoo JJ was delivered by P B Gajendragadkar J J L Kapur J delivered a separate judgment GAJENDRAGADKARJ This appeal by special leave arises from an election petition filed by Mr V V Giri hereinafter called the appellant in which the validity of the election of Mr Dippala Suri Dora hereinafter called respondent 1 was challenged The Parliamentary Constituency of Parvatipuram in the State of Andhra Pradesh is a double member constituency one seat is reserved for the scheduled tribes and the other is general In the General Election to the House of the people held in 1957 four candidates had been nominated from the said constituency The appellant and Mr B Satyanarayana Dora hereinafter called respondent 2 were adopted by the Congress Party while respondent 1 and Mr V Krishnamoorthy Naidu hereinafter called respondent 3 were the candidates of the Socialist Party For this constituency polling took place between February 25 and March 19 1957 and the counting of votes disclosed that the appellant and the three respondents had secured 124039 124604 126792 and 118968 votes respectively The result of the election was declared on March 19 1957 It was announced that respondent 2 had been elected to fill the reserved seat and respondent 1 the general seat On April 16 1957 the appellant filed the present election petition No 83 of 1957 challenging the validity of respondent 1 s election He alleged that respondent I had offered himself as a candidate for the reserved seat and as such he was not entitled to be elected for the general seat In the alternative he urged that 429 respondent 1 was not a member of the scheduled tribe at the material time and so the declaration made by him in that behalf was false According to the appellant respondent 1 s nomination had therefore been L improperly accepted and it had materially affected the election That is why the appellant claimed a twofold declaration He wanted the tribunal to declare that the election of respondent I under the Representation of the People Act 1951 Act 43 of 1951 hereinafter called the Act was void and that he had himself been duly elected to the House of the People from the Parvatipuram Parliamentary Constituency for the general and non reserved seat These allegations were denied by respondent 1 Broadly stated the main part of the appellant s case rested on two grounds He relied on the fact that both the Congress and Socialist Parties had adopted two candidates each one for the reserved seat and the other for the general seat Respondent I had been adopted for the reserved seat and in the nomination forms filed on his behalf he had made the requisite declaration that he was a member of the scheduled tribe He conducted his election campaign on the basis that he was a candidate for the reserved seat and the voters must have voted for him on the same basis If it is found that his rival candidate for the said reserved seat respondent 2 secured a larger number of votes and so he was declared elected to fill the said seat it is not open to respondent to claim election for the general seat If a candidate offers himself for one seat how can he claim to be elected for the other asks the appellant The appellant concedes that the reservation of seats for the scheduled castes or tribes is a special concession shown to the members of the said castes and tribes in view of the fact that they are educationally socially and financially very backward it is also conceded that members of the scheduled castes or tribes are entitled to contest election for the general seat but the argument is that a member of a scheduled tribe must make up his mind and decide which seat he wishes to contest If he wants to contest the general seat he 430 may do so and in that event he should not make the prescribed declarations on his nomination form on the other hand if he wants to contest the reserved seat he should elect to do so make the necessary declaration and then concentrate his attention on the reserved seat Having once made his election he cannot subsequently fall back upon his right to be elected for the general seat Thus presented the argument no doubt appears to be plausible and even attractive Respondent 1 however dispute the validity of this contention His case is that the reservation of seats is intended as an additional and special concession to the scheduled castes or tribes That however does not affect the right of the members of the said castes or tribes to claim along with the other citizens of the country the right to be elected to the general seat In other words according to respondent 1 a member of the scheduled tribe is entitled to claim election either to the reserved seat or to the general seat in a double member constituency where one seat is reserved for the scheduled tribes or castes When a member of the scheduled tribe makes a declaration about his status on his nomination form it merely means that he claims the additional benefit of being eligible for election to the reserved seat If in the fight for the reserved seat his rival candidate defeats him that cannot detract from or affect his right to claim election to the general seat and if the voters in the constituencies have expressed their confidence in him by putting him at the top amongst the remaining candidates he is entitled to claim election to the said general seat The object of reserving seats obviously is to create confidence in the minds of the backward castes and tribes and to give them an assurance about their welfare and future in the political set up of the country This object necessarily implies that the members of the said castes and tribes should have a double opportunity of seeking election from a double member constituency Respondent 1 does not concede that he contested the election solely for the reserved seat It is admitted on his behalf that he did make the necessary declaration and he may have brought it to the notice of the voters 431 that he was a member of the scheduled tribe That was inevitable since he was claiming to be elected for the reserved seat It is however urged that if in law election took place for the constituency as a whole and not for separate seats the fact that his nomination paper referred to the reserved constituency and some of his statements during the course of his election campaign mentioned the fact that he was t member of the scheduled tribe would not prejudicially affect his right to claim election for the general seat Incidentally respondent I claimed that the declaration of his election to the general seat in fully consistent with the express provisions of section 544 of the Act whereas the appellant pleaded in reply that the construction sought to be placed upon the provisions of section 544 by respondent I was unreasonable and if not the said provision was ultra vires On the three major points which thus arose for decision in the present election petition the Election Tribunal at Hyderabad and the High Court of Andhra Pradesh have differed The Tribunal upheld the appellant s contentions made the two declarations claimed by him and allowed his election petition with costs On appeal to the High Court the points made by respondent I have been accepted the findings made by the tribunal and the declarations granted by it have been reversed and the appellant s election peti tion dismissed with costs throughout The appellant s application for a certificate was dismissed by the High Court Thereupon he applied to this Court and obtained special leave to appeal That is how this appeal has come before us What then is the true constitutional and legal position with regard to the election to the House of the People from a double member constituency where one seat is reserved for the members of the scheduled tribes or castes The answer to this question would depend upon the effect of the relevant provisions of the Constitution and the Act respectively Let us first examine the relevant articles of the constitution Article 325 provides that there shall be one general electoral roll for every territorial constituency for 432 election to either House of Parliament and that no person shall be ineligible for inclusion in any such roll or claim to be included in any such electoral roll for any such constituency on grounds only of religion race caste sex or any of them Article 326 which deals inter alia with the elections to the House of the People lays down that the said elections shall be on the basis of adult suffrage that is to say every person who is a citizen of India and who is not less than 21 years of age at the relevant date and is not otherwise disqualified under the Constitution or any law made by the appropriate Legislature on the grounds specified shall be entitled to be registered as a voter at any such election It is thus clear that the electoral roll is prepared on a purely secular basis without any reference to religion race caste or sex and that the qualification for being included as a voter on the said electoral roll is likewise wholly secular and of general application to all citizens in the country Let us then refer to the articles that deal with the composition of the House of the People and qualification for membership of Parliament Article 81 1 provides that subject to the provisions of article 331 the House of the People shall consist inter alia of not more than 500 members chosen by direct election from territorial constituencies in the States This article contemplates the division of the States into territorial constituencies and it provides for the election of 500 members from these constituencies to the House of the People Article 84 deals with the question of qualification and it provides that a person shall not be qualified to be chosen to fill a seat in the Parliament unless he is a a citizen of India b in the case of a seat in the House of the People not less than 25 years of age and c possesses such other qualifications as may be prescribed in that behalf by or under any law made by Parliament It is by virtue of article 84c that the Parliament has passed the two relevant statutes They are the Re presentation of the People Act 1950 Act 43 of 1950 and the Act We will presently refer to the relevant provisions of the Act Meanwhile we would like to 433 refer to another article of the Constitution which is very important It is article 330 It occurs in Pt XVI of the Constitution which deals with special provisions relating to certain classes It provides for the reservation of seats for scheduled castes and scheduled tribes in the House of the People Article 331 lays down that seats shall be reserved in the House of the People for the three categories enumerated in a b and c In the present case we are concerned with the second category which deals with the scheduled tribes Article 3302 provides inter alia that the number of seats reserved in any State for the scheduled tribes under sub Art1 shall bear as nearly as may be the same proportion to the total number of seats allotted to that State in the House of the People as the population of the scheduled tribes in the State or part of the State as the case may be in respect of which seats are so reserved bears to the population of the State In providing for the members of the scheduled tribes the special concession by way of reservation of seats the Constitution has adopted the fair just and equitable method of fixing the number of the said reserved seats on the basis of the proportion mentioned in article 3302 Whilst we are referring to this article we may incidentally mention article 334 which provides that the reservation of seats provided by article 330 shall cease to have effect on the expiration of a period of ten years from the commencement of the Constitution subject to the proviso Thus it is clear that election to the House of the People even from a double member constituency where one seat is reserved for the members of the scheduled tribes in one and though the Constitution shows just anxiety to afford necessary protection to the members of the scheduled tribes it deliberately refused to adopt the system of separate electorates The constituency is one and election is held to the said constituency from one joint electoral roll prepared on the basis of qualifications which are of general and uniform application In regard to double member constituencies like Parvatipuram the Constitution has not even adopted the course of providing for a special constituency 55 434 confined to the members of the scheduled tribe All that is done is to provide for the reservation of seats for the members of the said tribes or castes in the manner already indicated Even for the reserved seat all voters in the constituency are entitled to vote The reservation of a seat in a double member constituency cannot therefore affect the main basic position that the constituency is one and for returning representatives to the House of the People it is the same joint electorate that goes to the poll Let us now proceed to consider the position under the relevant provisions of the Act It is necessary to begin with the definitions of parliamentary constituency and election Section 2f of the Representation of the People Act 43 of 1950 defines a parliamentary constituency as meaning a constituency provided by law for the purpose of elections to the House of the People whereas section 2d of the Act defines election to mean an election to fill a seat or seats inter alia in House of Parliament These definitions show that it is a parliamentary constituency that sends the representatives to fill the seats in the House of the People Elections are held from such constituencies and candidates declared duly elected fill the seats in the House of Parliament to which they are elected Section 4 prescribes qualification for membership of the House of the People Section 4b provides that a person shall not be qualified to be chosen to fill a seat in the House of the People unless in the case of a seat reserved for the scheduled tribes he is a member of any of the scheduled tribes and is an elector for any parliamentary constituency This section expressly provides what was clearly implicit in the relevant articles of the Constitution that before a person can claim to be elected to fill a seat reserved for the scheduled tribes he must be a member of the said tribes besides being an elector for the parliamentary constituency in question Section 32 deals with the nomination of candidates for election and it provides that any person may be nominated as a candidate for election to fill a seat if he is qualified to be chosen to fill a seat under the provisions of the Constitution and the Act The next section 435 to consider is section 33 It deals with the presentation of nomination papers and prescribes the requirements for a valid nomination Section 332 is relevant for our purpose It provides that any constituency where any seat is reserved a candidate shall not be deemed to be qualified to be chosen to fill that seat unless his nomination paper contains a declaration by him specifying the particular tribe of which he is a member and the area in relation to which the tribe is a scheduled tribe of the State Section 336 lays down that nothing in this section shall prevent any candidate from being nominated by more than one nomination paper for election in the same constituency The effect of section 332 is that unless a member of the scheduled tribe makes the required declaration he would not be entitled to claim election to the reserved seat In other words if a member of the scheduled tribe does not want to be considered for election to the reserved seat be need not make the said declaration and in that case be would be entitled to contest the election only for the general seat But it does not follow that if a scheduled tribe candidate makes the said declaration he forfeits his right to contest for the general seat It is necessary to point out at this stage that the prescribed nomination paper Form 24 is common to all the candidates In regard to the candidates contesting for the reserved seat however the form prescribes the declaration which they are required to make In the matter of deposits required by section 34 another concession is made in favour of the members of the scheduled castes or tribes whereas in the case of an election from a parliamentary constituency a candidate is required to make a deposit of Rs 500 the amount is fixed at Rs 250 in the case of members of scheduled castes or tribes It is significant that this concession is not confined to members of the scheduled tribe contesting the election only for the reserved seat It is available to them even if they want to contest only for the general seat Section 35 requires a notice of nominations and a time and place for their scrutiny to be published and section 38 requires a list of contesting candidates to be published The two prescribed forms for 436 the said notices are Forms 3A and 4 _they make no reference to the two respective seats and give the particulars about all the candidates in the respective columns It is true that in col 6 of Form 3A particulars of caste or tribe of candidates belonging to scheduled castes or tribes are required to be mentioned That is consistent with the requirement of section 332 It would thus be seen that the scheme of the relevant provisions of the Act like the scheme of the relevant articles of the Constitution is clear The election to the House of the People from a double member constituency is held as an election from the whole of the constituency as such It is on that basis that the nomination papers are required to be filed The notifications about the nominations are published and the list of the validly nominated candidates is announced on the same basis The counting of votes is similarly made by reference to all the candidates It is only when the result of the election is prepared for declaration that the votes of candidates who have made the prescribed declarations are first taken into account and the result of the election in respect of the reserved seat is first determined and then the votes secured by the remaining candidates are taken into account and the result of the election for the other general seat is determined and declared Section 63 of the Act would also assist us in deciding the point in dispute between the parties Section 63 1 provides for the method of voting and it lays down that in plural member constituencies other than Council constituencies every elector shall have as many votes as there are members to be elected but no member shall give more than one vote to any one candidate It is not disputed that voters in a double member constituency are not bound to vote in reference to the two seats If the Act had intended that the election in such a constituency should take place by reference to the two respective seats it would have provided for voting by the electors on that basis and would have required the voters to cast their two votes respectively by reference to the two seats Section 631 on the other hand allows voters to cast their two 437 votes to any two candidates of their choice whether both of them claim to be elected to the general seat or to the reserved seat or one of them claims one seat and other claims the other This method of voting is inconsistent with the appellant s case that the election to the double member constituency is held seat wise Section 544 emphatically brings out the same position Section 54 1 provides that it shall apply in relation to any election in a constituency where the seats to be filled include one or more seats reserved for the scheduled castes or scheduled tribes Subsection 4 reads thus If the number of contesting candidates qualified to be chosen to fill the reserved seats exceeds the number of such seats and the total number of contesting candidates also exceeds the total number of seats to be filled a poll shall be taken and after the poll has been taken the returning officer shall first declare those who being qualified to be chosen to fill the reserved seats have secured the largest number of votes to be duly elected to fill the reserved seats and then declare such of the remaining candidates as have secured the largest number of votes to be duly elected to fill the remaining seats On a fair and a reasonable construction of this provision there can be no doubt that in a case like the present after respondent 2 was declared duly elected to the reserved seat the votes secured by the remaining three candidates had to be considered before declaring the election for the unreserved seat and that is precisely what the returning officer has done when he declared that respondent I had been duly elected to the said seat The illustration to this sub section makes this position absolutely clear This is how the illustration reads At an election in a constituency to fill four seats of which two are reserved there are six contesting candidates A B C D E and F and they secure votes in descending order A securing the largest number B C and D are qualified to be chosen to fill the reserved seats while A E and F 438 are not so qualified The returning officer will first declare B and C duly elected to fill the two reserved seats and then declare A and D not A and E to fill the remaining two seats In our opinion section 544 and the illustration are wholly consistent with the relevant provisions of the Constitution and of the Act Whilst we are dealing with section 54 we may incidentally refer to the appellant s argument based on section 62 c of the 81 of 1952 which provides that in every two member constituency one seat shall be reserved either for the scheduled castes or for the scheduled tribes and the other seat shall not be so reserved It is urged that in view of this provision the case contemplated by the illustration to section 54 4 is not likely to occur any more and in that sense the illustration has become otiose That may be true But even so the significance of the illustration lies in the fact that it clarifies and explains concretely how the reservation of seats for the depressed castes and tribes will actually work out in elections in the relevant constituencies There is another argument which nay be noticed It was faintly suggested by the appellant that section 544 is ultra vires since it is inconsistent with articles 14 and 330 of the Constitution One has merely to recall the provisions of article 15 3 and 4 to reject the argument that section 544 offends against article 14 As regards Art 330 it is obvious that the reservation of seats as therein specified is intended to guarantee a minimum number of seats to the scheduled castes and tribes therefore if members of the said castes and tribes secure additional seats by election to general unreserved seats there would be no repugnancy at all There is no substance in the contention that section 54 4 is ultra vires There is one more section of the Act to which reference must be made It is section 55 For the avoidance of doubt this section declares that a member of the scheduled castes or scheduled tribes shall not be disqualified to hold the seat not reserved for members of those castes or tribes if he is otherwise qualified to 439 hold such seat under the Constitution and the Act If the appellant s contention is upheld then the provisions of section 55 would be inapplicable to a member of the scheduled tribe solely because he has made the prescribed declaration in his nomination form in order to claim the benefit of the concession of the reserved seat in his constituency We see no justification for adopting such an artificial and restricted construction of section 55 In our opinion section 55 like section 544 is consistent with the other relevant provisions of the Constitution and the Act A member of the scheduled tribe is entitled to contest for the reserved seat and for that purpose he can and must make the prescribed declaration but it does not follow that because he claims the benefit of the reserved seat and conforms to the statu tory requirement in that behalf he is precluded from contesting the election if necessary for the general seat Once it is realised that the election is from the constituency as a whole and not by reference to two separate and distinct Beats there would be no difficulty in accepting the view taken by the returning officer when he declared respondent I to have been duly elected for the general seat It is true that some articles of the Constitution and some sections of the Act refer to seats in connection with election to the House of the People For instance when article 81 2 b provides for the same ratio throughout the State between the population of each constituency and the number of seats allotted to it it does refer to seats but in the context the use of the word seats was inevitable Similarly article 84 which lays down the qualification for the members of Parliament begins by saying that a person shall not be qualified to be chosen to fill a seat in Parliament unless he satisfies the tests prescribed by its cls a b and c Here again the expression to fill a seat had to be used in the context The same comment can be made about the use of the word seat in articles 101 2 and in 330 There is no doubt that when a candidate is duly elected from any constituency to the House of the People he fills a seat in the House as an elected representative of the said constituency 440 and so the expression filling the seat is naturally used whenever the context so requires The position in regard to the sections of the Act which use the word seat or the expression fill the seat is exactly similar Section 32 of the Act says that any person may be nominated as a candidate for election to fill a seat if he is qualified in that behalf This section does not mean that the nomination of a person as a candidate for election is for a seat such nomination is for the constituency After the election is over the elected candidate is qualified to fill a seat in the House of the People to which he is elected It is in that sense that the expression a candidate for election to fill a seat is used in this section The use of the same expression in sections 332 532 54 and 55 bears the same interpretation The use of the said expression or the reference to seat in some of the articles of the Constitution or the sections of the Act does not therefore mean that election to the House of the People from a double member constituency is held not for the constituency as a whole but by reference to the two seats There is no doubt that in the case of double member constituencies recognised political parties usually adopt two candidates one for the general seat and the other for the reserved seat and it does appear that under the relevant statutory order issued by the Election Commission the symbol reserved for the party is allotted to both such candidates with the only difference that the symbol allotted to the scheduled caste or the scheduled tribe candidate of the party is the particular symbol enclosed within a thick black circle This order has been issued for convenience in order to enable the very large number of illiterate and uneducated voters to identify the political affiliations of the candidates for election and to show which of the candidates are eligible for the reserved seat but the said order cannot affect the nature of the election nor does it purport to do so Similarly a candidate who has made the prescribed declaration under section 33 may withdraw his candidature under section 37 which would mean that he is no longer contesting any seat in the 441 constituency but that again cannot justify the inference that his candidature was in regard to a reserved seat for which election was separately intended to be held In fact in regard to a double member constituency election recognises no compartments at all it is one general election with reservation of seats that is all It was then contended by the appellant that even if it may be open to a member of the scheduled tribe to seek election either for the reserved seat or failing that for the general seat he ought to file two nomination papers in that behalf In our opinion this contention is not wellfounded It is conceded that there is no provision for the presentation of two nomination papers for two different seats in the same constituency Indeed such an assumption would be inconsistent with the basic character of the election from a double member constituency In our opinion the true posi tion is that a member of a scheduled caste or tribe does not forego his right to seek election to the general seat merely because he avails himself of the additional concession of the reserved seat by making the prescribed declaration for that purpose The claim of eligibility for the reserved seat does not exclude the claim for the general seat it is an additional claim and both the claims have to be decided on the basis that there is one election from the double member constituency In this connection we may refer by way of analogy to the provisions made in some educational institutions and universities whereby in addition to the prizes and scholarships awarded on general competition amongst all the candidates some prizes and scholarships are reserved for candidates belonging to backward communities In such cases though the backward candidates may try for the reserved prizes and scholarships they are not precluded from claiming the general prizes and scholarships by competition with the rest of the candidates We are therefore satisfied that the High Court was right in rejecting the appellant s contention that respondent 1 could not have been validly elected 56 442 for the general seat from the constituency of Parvatipuram That takes us to the alternative contention raised by the appellant against the validity of respondent 1 s election That contention is that respondent I had ceased to be a member of the scheduled tribe at the material time because he had become a kshatriya In dealing with this contention it would be essential to bear in mind the broad and recognized features of the hierarchical social structure prevailing amongst the Hindus It is not necessary for our present purpose to trace the origin and growth of the caste system amongst the Hindus it would be enough to state that whatever may have been the origin of Hindu castes and tribes in ancient times gradually castes came to be based on birth alone It is wellknown that a person who belongs by birth to a depressed caste or tribe would find it very difficult if not impossible to attain the status of a higher caste amongst the Hindus by virtue of his volition education culture and status The history of social reform for the last century and more has shown how difficult it is to break or even to relax the rigour of the inflexible and exclusive character of the caste system It is to be hoped that this position will change and in course of time the cherished ideal of casteless society truly based on social equality will be attained under the powerful impact of the doctrine of social justice and equality proclaimed by the Constitution and sought to be implemented by the relevant statutes and as a result of the spread of secular education and the growth of a rational outlook and of proper sense of social values but at present it would be unrealistic and utopian to ignore the difficulties which a member of the depressed tribe or caste has to face in claiming a higher status amongst his coreligionists It is in the light of this background that the alternative plea of the appellant must be considered The evidence adduced by respondent I shows that all the documents from 1885 to 1928 consistently described him as a Mukka Dora or a member of the scheduled tribe The appellant has however produced documentary evidence which indicates that from 1928 443 onwards respondent 1 has described himself and the members of his family as belonging to the kshatriya caste Oral evidence led by the appellant is intended to show that respondent 1 has for some years past adopted the customs and the rituals of the kshatriya caste It shows that marriages in the family of respondent I are celebrated as they would be amongst the kshatriyas and homa is performed on such occasions It is also attempted to be shown that the family of respondent is connected by marriage ties with some kshatriya families that a Brahmin priest officiates at the religious ceremonies performed by respondent 1 and that he wears a sacred thread The High Court has held that even if the documentary and oral evidence adduced by the appellant is accepted at its face value it falls far short of establishing his plea that respondent had become a kshatriya at the material time The caste status of a person in the context would necessarily have to be determined in the light of the recognition received by him from the members of the caste into which he seeks an entry There is no evidence on this point at all Besides the evidence produced by the appellant merely shows some acts by respondent 1 which no doubt were intended to assert a higher status but unilateral acts of this character cannot be easily taken to prove that the claim for the higher status which the said acts purport to make is established That is the view which the High Court has taken and in our opinion the High Court is absolutely right Therefore the alternative plea made by the appellant cannot succeed In the result the appeal fails and is dismissed with costs in favour of respondent 1 KAPUR J I regret I am unable to agree with the judgment prepared by my learned brother Gajendragadkar and I shall proceed to give my reasons for my dissent In an election for Parliament the candidate asks for the votes of the electors by offering himself for a seat in a parliamentary constituency and it is a fundamental principle of elections that the voters exercise their suffrage in favour of a candidate who is standing 444 for a particular seat in a single or in a two member constituency The language used in the Constitution as well as in the Election Laws tends to show that the election though in a constituency is for the filling of a seat and it is for the filling of that seat that the voters in a constituency exercise their right to vote The Constitution itself shows that the election is for filling a seat in a constituency The scheme of the Constitution itself when it deals with Parliament and election to Parliament supports this view Parliament its composition and qualification for membership of Parliament are dealt with in Chapter 11 of Part V of the Constitution Article 81 deals with the composition of the House of the People Sub cl a of cl 1 of article 81 lays down that there shall be not more than 500 Members chosen by direct election from territorial constituencies and not more than 20 Members to represent Union territories Clause 2 of article 81 provides that to each State shall be allotted a certain number of seats in the House of the People in such manner that the ratio between the number and population of the State is the same for all States and sub cl b provides that the State shall be divided into territorial constituencies in such manner that the ratio between the population of each constituency and the number of seats allotted to it is the same throughout the State Article 84 provides for the qualifications of persons to be chosen to fill a seat in Parliament and in el c it is laid down that the qualifications shall be such as may be prescribed by an Act of Parliament Part XV deals with Elections Under article 324 there is one general electoral roll for every territorial constituency and there is no exclusion from such roll on the ground only of religion race caste creed sex or any of them Article 327 confers on Parliament the power to make provision with respect to elections to Legislatures Part XVI of the Constitution make special provision relating to certain classes and under article 330 seats are reserved in the House of the People for Scheduled Castes and Scheduled Tribes and it also provides for the proportion that these seats shall bear to the 445 total number of seats allotted to any State and the reservation of seats and special representation are to cease after 10 years article 334 These provisions show that the emphasis is on seats The number seats is fixed so also reserved seats and election is to fill a seat and for that purpose qualifications of candidates are prescribed by Parliamentary legislation A perusal of those various articles mentioned above shows that there is no separate electoral roll and that the elections are on the basis of joint electorate Although there is reservation of seats for the Scheduled castes there is no exclusion of Scheduled Castes or Scheduled Tribes from what are called general seats and every citizen without any consideration of caste creed or sex is entitled to vote as well as stand for election provided he is otherwise qualified The reservation of seats was a concession given to the Scheduled Castes and Tribes because of their social and educational backwardness and it had to have only a temporary existence and it must be conceded that although there is a reservation of a certain number of seats for the Scheduled Castes and Tribes the members of these castes or tribes are not excluded from contesting general seats In order to carry out the intention of the Constitution in regard to elections two Acts were enacted by the Parliament The Representation of People s Act 1950 43 of 1950 hereinafter called the 1950 Act and the Representation of People s Act 1951 43 of 1951 hereinafter called the 1951 Act The object of the 1950 Act was to provide for allocation of seats and delimitation of constituencies for election and the object of the 1951 Act was to provide for the conduct of elections to the Houses of Parliament etc and the qualifications and disqualifications for membership In section 2f of the 1950 Act a Parliamentary constituency is defined as a constituency provided for the purpose of election to the House of the People In Part II of that Act provision is made for the allocation of seats in the House of the People and for reservation of seats in that House for Scheduled Castes and Tribes for filling up of seats in that House and all these provisions 446 show that the seats in the House of the People allotted to the various States have to be filled by direct elections It is significant that in all these provisions the word used is seat and the election is to fill a seat Coming to the 1951 Act election is defined in section 2d to mean an election to fill a seat or seats in either House of Parliament In section 2e an elector means the person whose name is entered in the electoral roll of a constituency Section 4 of the 1951 Act lays down the qualifications for membership of the House of the People and a person is not qualified to be chosen to fill a reserved seat in the House unless he is a member of a Scheduled Caste or Tribe and he is an elector for any Parliamentary constituency In the case of any other seat the only qualification required is that he is an elector in a Parliamentary constituency Part V of 1951 Act deals with nomination of candidates Section 31 provides for public notice of elections and section 32 for nomination of candidates for election Under this section no person may be nominated as a candidate for election to fill a seat unless he is qualified to fill that seat Section 33 deals with presentation of nomination papers and the requirements for a valid nomination Under sub section 1 a nomination paper completed in the prescribed form and signed as required under that provision has to be presented to the Returning Officer and under sub section 2 where in a constituency any seat is reserved the candidate is not qualified to be chosen to fill that seat unless his nomination papers contain a declaration by him specifying the caste or tribe to which he belongs and sub section 6 provides that a candidate can file more than one nomination paper for election in the same constituency Under section 34 for a valid nomination for election a deposit has to be made which in the case of members of Scheduled Castes or Tribes is Rs 250 and in other cases Rs 500 The contention raised on behalf of the appellant was that these various provisions of the 1951 Act show that the election is for filling a seat and therefore when a member of the Scheduled Caste or Tribe contests an election he has to make a choice as to which seat he is 447 contesting There is no prohibition against his standing for election for the general constituency but if he wants to do so he has to indicate to the electors that he is so standing because when the electors vote they vote for the election of the candidate to that particular seat and to no other This is made further clear by the fact that only one vote out of the two which every elector has the right to cast can be polled in favour of one candidate Every candidate has to have a symbol the necessity for which arises because of the illiteracy of the general electorate Each party has allotted to it a symbol In the present case the successful candidate Mr Dippala Suri Dora was standing for the reserved seat on behalf of the Socialist Party and had been allotted the symbol of a tree which was his party symbol In the case of a reserved seat the distinguishing feature is the black circle round the symbol so that the electors would know where to cast their vote in the case of a Scheduled Caste or Tribe candidate It is true that the Form 2A is the same whether the candidate is contesting a reserved seat or a general seat but in the case of a person contesting a reserved seat there is a further declaration to be made that he belongs to Scheduled Caste or Tribe It is also true that in Form 3A when notice of nomination is given the Form used is the same for both the seats but in column 6 of this Form the particulars of the caste or tribe are to be given presumably to show which of the candidates belongs to a Scheduled Caste or Tribe otherwise indicating the caste is meaningless Similarly in Form 7A which is for the final list of contesting candidates after withdrawals have taken place the names of candidates are given along with their addresses and symbols allotted to them but candidates belonging to members of the Scheduled Castes or Tribes are distinguished by separate special marks against their names All these distinguishing features have been provided so that electors when they cast votes for the various candidates know which of them is contesting the reserved seat and which is contesting the general seat If that is not the object the giving of the caste would be meaningless if not against the ideal of castelessness 448 it was contended that section 32 only deals with nominations for election to fill a seat but it has nothing to do with qualifications which are laid down in section 33 and that sub sections 2 and 6 of section 33 showed that the election was for a constituency and not for a seat but this argument ignores the definition of election which means election to fill a seat and therefore where the word election in a constituency is used it is to be construed as election to fill a seat in a constituency Besides sub section 2 of section 33 makes it clear that a candidate cannot be qualified to be chosen to fill a reserved seat in a constituency unless he makes a particular declaration The emphasis is again on a seat It is true that a candidate has to make a deposit for due nomination for election from a constituency but here again the word election must be read as election to fill a seat from a constituency These various sections indicate therefore and particularly the definition of the word election in section 2d of the 1951 Act that when a candidate offers himself for election in a constituency he does so to fill a particular seat in a constituency At a pole every elector can cast one vote in favour of one candidate and another in favour of another It was contended that it was open to an elector to cast both his votes in favour of the two candidates standing for a general seat or the two candidates for the reserved seat or one for the general seat and the other for reserved seat and that there was no law which enjoins an elector to cast one vote for the general seat and the other for the reserved seat But this will lead us nowhere because if there are only four candidates as they were in the present case two belonging to Scheduled Castes or Tribes and two non Scheduled Caste candidates then the voter who casts both his votes one for one Scheduled Caste and the other for the other or one for the non Scheduled Caste and the other for the other non Scheduled Caste candidate would be wasting his votes One has to presume that the elector when he takes the trouble of going to the polling booth and to vote is not going to waste his votes 449 In the present case the party which set up Mr Dippala Suri Dora set him up as a candidate for the Scheduled Caste constituency which is clear from the application on behalf of the party setting him up The final list of candidates for Parliament Ext P3c also shows that Mr Dippala Suri Dora was a candidate for the reserved seat in Parvatipuram double member constituency The nomination papers filed by him also show that he was being nominated for election from the Parvatipuram reserved parliamentary constituency Thus as far as Mr Dippala Suri Dora was concerned he had made it quite clear to the electorate that he was seeking their suffrage for filling a reserved seat in the constituency and in this view of the matter as far as he and the electors were concerned the contest was for the reserved seat and not the general seat and the people voted for him for filling the reserved seat and not the general seat Counsel for the respondent Mr Dippala Suri Dora submitted that the mere fact that respondent filed his nomination papers in a particular manner does not give a different interpretation to the various provisions of the law and if under the law a nomination like that of the respondent Mr Dippala Suri Dora was a nomination for both the seats the mere fact that he had filled his form differently would make no difference This contention is correct but as I have indicated above the election is to fill a seat in the constituency and the nomination must be taken to fill that seat and no other Reliance was next placed on sections 53 54 and 55 of the 1951 Act to support the case put forward on behalf of the respondent Mr Dippala Suri Dora No doubt in sub s4 of section 54 it is laid down that in a case where the number of contesting candidates qualified to be chosen to fill the reserved seat exceeds the number of such seats and the total also exceeds the total number of seats to be filled then after the poll has been taken the qualified candidate receiving the largest number of votes for the reserved seat has to be declared elected and then such of the remaining candidates as have secured the largest number of votes have to be declared 57 450 elected to fill the remaining seats and there is an illust ration added to the section which supports the case of the respondent But in view of section 8 of the which makes provisions for readjustments and delimitations it is doubtful if the provisions of section 544 retain their efficacy Under section 8 cl2 of Delimitation Act it is provided that all constituencies have to be single member constituencies or two member constituencies and wherever practicable seats may be reserved for Scheduled Caste or Tribe in a single member constituency but in every two member constituency one seat has to be reserved for Scheduled Caste or Tribe This provision destroys the effect of section 54 If in a single member constituency a seat can be reserved which means that only a Scheduled Caste candidate can be elected to that seat the effect of reservation of seat in the double member constituency will also be that when a member of the Scheduled Caste offers himself for election to a reserved seat he can be elected only to that seat and to no other This is also supported by the definition of electoral rights in section 79 of the 1951 Act which is defined as a right of a person to stand or not to stand as a candidate at an election ie an election to fill a seat in either House of Parliament The electoral right which a citizen has is to stand for election to fill a seat and a successful candidate is one who is elected by securing the largest number of votes cast for that seat This necessarily leads to the conclusion that the respondent Mr Dippala Suri Dora who offered himself for election to fill a reserved seat could only be elected to that seat and not to the general seat The next contention raised on behalf of the appellant was that if a member of the Scheduled Caste or Tribe wants to contest both the seats ie general and reserved he would have to file two nomination papers and pay two deposits In view of what has been said above and in view of sections 32 and 33 and the definition of the word election such candidate has to file two nomination papers one for the general seat and the other for the reserved seat setting out the necessary qualifications which are required under the law 451 Similarly he will have to make two deposits under section 34 for the same reason A question of some importance has been raised as to whether a member of Scheduled Caste or Scheduled Tribe can by his own act transform himself into different and higher caste That depends upon the view one takes of the caste system and whether cast is dependent upon birth or it varies as a consequence of Guna Karma and Subhavana that is merit on qualities actions and character In Hinduism caste had its origin in vocation and was not dependent upon birth Birth as the sole criterion of caste is a much later development and caste became rigid and hereditary when vocations became hereditary Caste was nothing but division of labour There is a high authority to support the view that in Hinduism caste was dependent upon actions and not on birth In Bhagwat Gita in the fourth Discourse it is stated The four castes were created by me in accordance with their aptitude and actions know me the author of these castes though I am actionless and inexhaustible There are Verses in the Mahabharta also which go to support this One such Verse is given as follows Truth Charity fortitude good conduct gentleness austerity and compassion he in whom these are observed is a Brahmana If these marks exist in a Sudra and are not found in a twice born the Sudra is not a Sudra nor the Brahmana a Brahmana Teaching given by Yudhisthira Even in Bhagwata Purana it is stated One becomes a Brahmana by his deeds and not by his family or birth even a Chandala is a Brahmana if he is of pure character In the Chandogya Upanisad there is the interesting incident of Satyakama who was raised to the position of a Brahmana because he had spoken the truth Thus it was his character and not his birth which deter mined his caste Amongst the Hindus many have raised themselves to the position of Brahmana by their good qualities and one such instance is of Sage 452 Matanga who was a Chandala Vishva Mitra was a Kshtriya and became a Brahman Hinduism might have become static at one stage but its modern history shows that this is not so now and it would not be wrong to say that caste in Hinduism is not dependent upon birth but on actions The whole theory of karma is destructive of the claim of caste being dependent upon birth In my opinion Mr Dippala Suri Dora had by his actions raised himself to the position of Kshtriya and he was no longer a member of the Scheduled Caste or Tribe and on that ground also his election cannot be supported I would therefore allow this appeal set aside the order of the High Court and restore that of the Tribunal The appellant will be entitled to costs of this Court as well as of the Courts below ORDER In view of the majority judgment of the Court the appeal is dismissed with costs in favour of Respondent No 1 Appeal dismissed

The respondents entered into three several contracts with the appellant for the fabrication and supply of diverse military stores each of which contracts contained an arbitration clause Before the contracts had been fully executed disputes arose between the parties one alleging that the other was committing a breach of the contract The parties then entered into three fresh contracts on successive dates purporting to settle these disputes on the terms therein contained By the first two of these settlement contracts the respondents agreed to pay to the appellant certain moneys in settlement respectively of the disputes relating to the first two original contracts By the last of these settlement contracts the respondents agreed to pay to the appellant in specified instalments certain moneys in settlement of the disputes relating to the third original contract as also the moneys which had then become due on the first two settlement contracts and had not been paid and further undertook to hypothecate certain properties to secure the due repayment of these moneys The third settlement contract provided The contracts stand finally concluded in terms of the settlement and no party will have any further or other claim against the other The respondents paid some of the instalments but failed to pay the rest They also failed to create the hypothecation The appellant then referred its claims for breach of the three original contracts to arbitration under the arbitration clauses contained in them On this reference an award for a total sum of Rs 1i6446 iI 5 was made against the respondents in respect of the appellant s claim on the first and the third original contracts the claim in respect of the second original contract having been abandoned by the appellant and this award was filed in the High Court at Calcutta The respondents applied to the High Court for a declaration that the arbitration clauses in the original contracts had ceased to have any effect and the contracts stood finally determined as a result of the settlement contracts and for an order setting aside the award as void and nullity The High Court held that the first original contract had not been abrogated by the settlement in respect of it but the third original contract and the arbitration clause contained in it had ceased to exist as a result of the last settlement and the arbitrator had no jurisdiction to arbitrate under that arbitration clause It further 63 494 held that as the award was a single and inseverable award the whole of it was null and void In this view the High Court set aside the award Held per Imam and Subba Rao JJ Sarkar J dissenting that the third settlement properly construed left no manner of doubt that it was for valid consideration and represented the common intention of the parties to substitute it for the earlier contracts between them It gave rise to a new cause of action by obliterating the earlier contracts and the parties could look to it alone for the enforcement of their claims There could therefore be no question that the arbitration clause which whether a substantive or a collateral term was nevertheless an integral part of the said contracts must be deemed to exist along with them as a result of the said settlement Hirji Mulji vs Cheong Yue Steamship Company 1926 AC 502 and Heyman vs Darwin Ltd referred to Tolaram Nathmull vs Birla Jute Manufacturing Co Ltd ILR distinguished Held further that it was well settled that the parties to an original contract could by mutual agreement enter into a new contract In substitution of the old one Payana Reena Saminathan vs Pana Lana Palaniappa 19I4 AC 618 Norris vs Baron and Company 1918 AC i and British Russian Gazette and Trade Outlook Ltd vs Associated Newspaper Limited referred to Per Sarkar J The award was valid and could not be set aside as the third settlement neither expressly put an end to the arbitration clause nor considered as an accord and satisfaction did it have that effect An accord and satisfaction is only a method of discharge of a contract It does not annihilate the contract but only makes the obligation arising from it unenforceable An arbitration clause stands apart from the rest of the contract in which it is contained It does not impose on the one party an obligation in favour of the other it only embodies an agreement that if any dispute arises with regard to any obligation which one party has undertaken to the other such dispute shall be settled by arbitration An accord and satisfaction which is concerned with the obligations arising from the contract does not affect an arbitration clause contained in it Heyman vs Darwins and British Russian Gazette and Trade Outlook Ltd vs Associated Newspapers Ltd referred to The settlement of February 22 1949 did not in the circum stances of the case amount to an accord and satisfaction

Criminal Appeal No 177 of 1957 Appeal by special leave from the judgment and order dated April 11 1957 of the Punjab High Court in Criminal Appeal No 7 D of 1955 arising out of the 463 judgment and order dated January 19 1955 of the Court of Special Judge at Delhi in Corruption Cas No 2 of 1953 G section Pathak R Ganapathy Iyer and G Gopalakrishnan for the appellant C K Daphtary Solicitor General of India GC Mathur and R H Dhebar for the respondents May 21 The Judgment of the Court was delivered by SINHA J This appeal by special leave is directed against the judgment and order of the High Court on Judicature for the State of Punjab at Chandigarh dated April 11 1957 affirming those of the Special Judge Delhi dated January 19 1955 convicting the appellant under section 52 of the Prevention of Corruption Act 2 of 1947 The sentence passed upon the appellant was six months rigorous imprisonment The facts leading upto this appeal may shortly be stated as follows During and after the Second World War with a view to augmenting the food resources of the country the Government of India instituted a Grow More Food Division in the Ministry of Agriculture section Y Krishnaswamy a Joint Secretary in that Ministry was placed in charge of that Division with effect from January 2 1947 The appellant was working in that Department as Director of Fertilizers He was a former employee of the well known producers of fertilizers etc called Imperial Chemical Industries Fertilizers were in short supply and therefore large quantities of such fertilizers had to be imported from abroad As chemical fertilizers were in short supply not only in India but elsewhere also an international body known as the International Emergency Food Council IEFC had been set up in United States of America and India was a member of the same That body used to consider the requirements of different countries in respect of fertilizers and used to make allotments Russia was not a member of that Organisation Towards the end of 1946 a Bombay firm called Messrs Nanavati and Company 464 which used to deal in fertilizers and had bussiness contcts with Russia offered to supply ammonium sulphatefrom Russia to the Government of India In the years 1947 and 1948 considerable quantities of ammonium sulphate were obtained through Messrs Nanavati and Company aforesaid One D N Patel who was a former employee of Messrs Nanavati and Company joined a partnership business under the style of Messrs Agri Orient Industries Limited of Bombay This firm obtained a contract from the Government for the supply of twenty thousand tons of ammonium sulphate from United States of America in February 1950 In the course of this business deal the said patel experienced some difficulty in obtaining Government orders regarding some consignments The appelant was approached in that connection and it is aleged that Patel paid to the appellant Rs 10000 at Bombay as bribe for facilitating matters But in spite of the alleged payment difficulties and delays occurred and the consignments even after they had reached heir destination in India were not moving fast enough thus causing considerable loss to the firm in which Patel was interested Patel therefore approached Shri K M Munshi who was then the Minister For Food and Agriculture in Delhi and disclosed to him the alleged payment of bribe of Rs 10000 as also the fact that the appellant had been receiving arge sums of money by way of bribes for showing favours in the discharge of his duties in the Department The Minister aforesaid directed thorough enquiries to be made and the matter was placed in the hands of the Inspector General of Special Police Establishment A departmental committee was also set up of three senior officers of the Department to hold a departmental inquiry and ultimately as a result of that inquiry the Minister passed orders of dismissal of the appellant in August 1950 A further inquiry in the nature of a quasi judicial inquiry was held by the late Mr Justice Rajadhyaksha of the Bombay High Court in 1951 The inquiry related to matters concerned with the import of fertilizers into India After receipt of the report of the inquiry by 465 the late Mr Justice Rajadhyaksha in January 1952 and after consideration of the matters disclosed in that report a first information report was lodged on April 4 1952 and thorough investigations were made into the complaints The result was that two cases were instituted The first one related to an alleged conspiracy involving the appellant Krishnaswamy and one of the proprietors of Messrs Nanavati and Company and several others relating to bribery and corruption in connection with the supplies of ammonium sulphate from Russia With that case we are not concerned here The second case out of which the present appeal arose was instituted against two persons namely the appellant and Krishnaswamy that they had entered into a conspiracy to receive bribes and presents from various firms in connection with the import of fertilizers The learned Special Judge who heard the prosecution evidence came to the conclusion that it did not disclose any conspiracy as alleged except in certain instances which formed the subject matter of the charge of conspiracy which was being tried separately as aforesaid The present case therefore proceeded against the appellant alone under two heads of charge namely 1 that he had been habitually accepting or obtaining for himself or for others illegal gratifications from a number of named firms and others in connection with the import and distribution of fertilizers section 51 a of the Prevention of Curruption Act 1947 hereinafter referred to as the Act and 2 that he had been habitually receiving presents of various kinds by abusing his position as a public servants 6 1 d of the Act The High Court in agreement with the learned Special Judge found the evidence of P Ws 9 and 10 who were the principal prosecution witnesses as regards the passing of certain sums of money from certain named firms to the appellant as wholly unreliable Further more Patel being in the position of an accomplice his evidence did not find sufficient corroboration from other facts and circumstances proved in the case The High Court not being is a position to accept the tainted evidence aforesaid found that the case of payment of 59 466 particular sums of money by way of bribes had not been established But relying upon the presumption under sub section 3 of section 8 of the Act the High Court came to the conclusion that the appellant had not satisfactorily accounted for the receipt of Rs 73000 odd in cash and about Rs 18000 by cheques during the years 1947 and 1948 which sums were wholly disproportionate to the appellant s known source of income namely his salary as a Government servant and that therefore he was guilty of criminal mis conduct in the discharge of his official duties In that view of the matter the High Court confirmed the conviction and sentence of six months rigorous imprisonment passed by learned Special Judge of Delhi The learned counsel for the appellant has contended 1 that on the admitted facts the ingredients of section 53 of the Act had not been established 2 that when the charge in respect of specific instances of corruption has not been proved as found by the courts below it should have been held that the contrary of the presumption contemplated by section 53 namely of the guilt of criminal misconduct had been established and 3 that the appellant s statement under section 342 of the Code of Criminal Procedure as also his statements contained in his written statement had not been proved to be false and that therefore it should have been held that the case against the appellant had not been proved beyond all reasonable doubt It is true that section 53 of the Act does not create a new offence but only lays down a rule of evidence enabling the court to raise a presumption of guilt in certain circumstances a rule which is a complete departure from the established principles of criminal jurisprudence that the burden always lies on the prosecution to prove all the ingredients of the offence charged and that the burden never shifts on to the accused to disprove the charge framed against him With reference to the provisions of section 53 of the Act it has been contended in the first instance that the charge of criminal misconduct in the discharge of his official duties is now confined to the fact as disclosed in his bank accounts with the Imperial Bank of India 467 New Delhi Branch and the Chartered Bank of India Australia and China Chandni Chowk Branch that his nett credit with those banks totalled upto a figure just over Rs 91000 He accounted for that large balance by stating that he was the only son of his father who had been able to give him advanced education in England for a period of over seven years that after his return to India he had been holding highly paid posts for about 20 years in the Imperial Chemical Industries in the Army and in the Government of India that he had no children and no other dependants except his wife that with his limited household expenses he was able to save a good round sum out of his salary and allowances which were considerable because his duty took him throughout the length and breadth of the country thus enabling him to earn large sums of money by way of travelling allowances which he saved by staying with his friends and relations during his official tours He added that he had received a gratuity for services rendered to the Army and also considerable sums of money as his provident fund from the Imperial Chemical Industries towards the end of November 1947 He also stated that his deposits in the two banks aforesaid represented sums of money saved in cash out of his salaries allowances and gifts from his parents as also re payments of loans advanced by him to his friends while he was in the Army and later He added that some of the deposits in cash were really re deposits of earlier withdrawals from the banks as also the sale proceeds of his old car sold in June 1948 for Rs 5500 together with the sale proceeds of gold jewelry belonging to his wife He also tried to explain the large deposits of cash in 1948 by alleging that he had borrowed a sum of rupees 20000 from one Ganpat Ram on a pronote which he later on re paid and obtained a receipt with a view to building a house of his own in Delhi but as that negotiation fell through he deposited that cash amount in his account in the two banks aforesaid in August 1948 as the creditor aforesaid would not accept re payment of the loan within a period of two years unless the interest for that period was also paid 468 at the same time With reference to those statements of the accused from the dock it was contended by the learned counsel for the accused that in view of those facts it could not be said that the accused had not accounted for those large deposits with the two banks aforesaid The High Court has pointed out that the matters alleged in the statement aforesaid of the accused were capable of being easily proved by evidence which had not been adduced that allegation was no proof and that his lucrative posts in the Imperial Chemical Industries and in the Army were matters of history in relation to the period for which the charge had been framed The High Court therefore found it impossible to accept the appellant s bare statement from the dock as to how amounts earned far in the past could find their way into the banks during the years 1947 and 1948 It has been repeatedly observed by this Court that this Court is not a Court of criminal appeal and we would not therefore examine the reasons of the High Court for coming to certain conclusions of fact Apparently the High Court considered all the relevant statements made by the accused under section 342 of the Code of Criminal Procedure and in his written statement and came to the conclusion that those statements had not been substantiated We cannot go behind those findings of fact Reference was also made to cases in which courts had held that if plausible explanation had been offered by an accused person for being in possession of property which was the subject matter of the charge the court could exonerate the accused from criminal responsibility for possessing incriminating property In our opinion those cases have no bearing upon the charge against the appellant in this case because the section requires the accused person to satisfactorily account for the possession of pecuniary resources or property disproportionate to his known sources of income Ordinarily an accused person is entitled to acquittal if he can account for honest possession of property which has been proved to have been recently stolen see illustration a to section 114 of the The rule of law is that if there 469 is a prima facie explanation of the accused that he came by the stolen goods in an honest way the inference of guilty knowledge is displaced This is based upon the well established principle that if there is a doubt in the mind of the court as to a necessary ingredient of an offence the benefit of that doubt must go to the accused But the Legislature has advisedly used the expression satisfactorily account The emphasis must be on the word satisfactorily and the Legislature has thus deliberately cast a burden on the accused not only to offer a plausible explanation as to how he came by his large wealth but also to satisfy the court that his explanation was worthy of acceptance Another argument bearing on the same aspect of the case is that the prosecution has not led evidence to show as to what are the known sources of the appellant s income In this connection our attention was invited to the evidence of the Investigating Officers and with reference to that evidence it was contended that those officers have not said in terms as to what were the known sources of income of the accused or that the salary was the only source of his income Now the expression known sources of income must have reference to sources known to the prosecution on a thorough investigation of the case It was not and it could not be contended that known sources of income means sources known to the accused The prosecution cannot in the very nature of things be expected to know the affairs of an accused person Those will be matters specially within the knowledge of the accused within the meaning of section 106 of the Evidence Act The prosecution can only lead evidence as it has done in the instant case to show that the accused was known to earn his living by service under the Government during the material period The prosecution would not be justified in concluding that travelling allowance was also a source of income when such allowance is ordinarily meant to compensate an officer concerned for his out of pocket expenses incidental to journeys performed by him for his official tours That could not possibly be alleged 470 to be a very substantial source of income The source of income of a particular individual will depend upon his position in life with particular reference to his occupation or avocation in life In the case of a Government servant the prosecution would naturally infer that his known source of income would be the salary earned by him during his active service His pension or his provident fund would come into calculation only after his retirement unless he had a justification for borrowing from his provident fund We are not therefore impressed by the argument that the prosecution has failed to lead proper evidence as to the appellant s known sources of income It may be that the accused may have made statements to the Investigating Officers as to his alleged sources of income but the same strictly would not be evidence in the case and if the prosecution has failed to disclose all the sources of income of an accused person it is always open to him to prove those other sources of income which have not been taken into account or brought into evidence by the prosecution In the present case the prosecution has adduced the best evidence as to the pecuniary resources of the accused person namely his bank accounts They show that during the years 1947 and 1948 he had credit at the banks amounting to a little over Rs 91000 His average salary per mensem during the relevant period would be a little over Rs 1100 His salary during the period of the two years assuming that the whole amount was put into the banks would be less than one third of the total amount aforesaid to his credit It cannot therefore be said that he was not in possession of pecuniary resources disproportionate to his known sources of income It was next contended that the burden cast on the accused by sub s3 of section 5 of the Act was not such a heavy burden as lies on the prosecution positively to prove all the ingredients of an offence In that connection reference was made to a number of decisions particularly Rex vs Carrbriant1 to the effect 1 referred to under article 3907 at p 1511 in Archbold Criminal Pleading Evidence and Practice 34th Edn 471 that the onus of proof lies on the accused person to show that a certain proved payment was in fact not a corrupt payment but that the burden is less heavy than that which ordinarily lies on the prosecution to prove its case beyond all reasonable doubt Reference was also made to Otto George Gfeller vs The King 1 Hate Sing Bhagat Singh vs State of Madhya Bharat 2 and Regina vs Dunbar3 In our opinion those decisions do not assist the appellant in the present case In this case no acceptable evidence beyond the bare statements of the accused has been adduced to show that the contrary of what has been proved by the prosecution has been established because the requirement of the section is that the accused person shall be presumed to be guilty of criminal misconduct in the discharge of his official duties unless the contrary is proved The words of the statute are peremptory and the burden must lie all the time on the accused to prove the contrary After the conditions laid down in the earlier part of sub section 3 of section 5 of the Act have been fulfilled by evidence to the satisfaction of the court as discussed above the court has got to raise the presumption that the accused person is guilty of criminal misconduct in the discharge of his official duties and this presumption continues to hold the field unless the contrary is proved that is to say unless the court is satisfied that the statutory presumption has been rebutted by cogent evidence Not only that the section goes further and lays down in forceful words that his conviction therefore shall not be invalid by reason only that it is based solely on such presumption Lastly it was argued that when the section speaks of the burden being on the accused person to prove the contrary it must mean adducing evidence to disprove the charge The argument proceeds that as in the present case the facts and circumstances mentioned in the charge had not been proved the accused person must be acquitted as having disproved the charge with reference to the particular cases of bribery which had been held not proved In our opinion there is a 1 AIR 1943 PC 211 2 AI R 3 472 fallacy in this argument The finding of the High Court and the court below is that the prosecution had failed to adduce sufficient evidence to prove those particular facts and circumstances of criminal misconduct within the meaning of section 51a of the Act but the failure to bring the charge home to the accused under section 51a does not necessarily lead to the legal effect contended for As soon as the requirements of sub section 3 of section 5 have been fulfilledthe Court will not only be justified in making but is called upon to make the presumption that the accused person is guilty of criminal misconduct within the meaning of section 51d In order to succeed in respect of the charge under section 51a the prosecution has to prove that the accused person had accepted or obtained or agreed to accept or attempted to obtain from any person any gratification by way of bribe within the meaning of section 161 of the Indian Penal Code That charge failed because the evidence of PW 9 was not accepted by the High Court or the trial court The charge under section 51d does not require any such proof If there is evidence forthcoming to satisfy the requirements of the earlier part of sub section 3 of section 5 conviction for criminal misconduct can be had on the basis of the presumption which is a legal presumption to be drawn from the proof of facts in the earlier part of the sub section 3 aforesaid That is what has been found by the courts below against the accused person Hence the failure of the charge under cl a of sub section 1 of section 5 does not necessarily mean the failure of the charge under section 51d In our opinion the judgment of the High Court is correct and the appeal is accordingly dismissed If the accused is on bail he must surrender to his bail bond Appeal dismissed

The appellant was employed as an Assistant Store Keeper in the Central Tractor Organisation Delhi He took delivery of a consignment of iron and steel received by rail for the Organisation and removed them from the railway siding The goods did not reach the Organisation The appellant absented himself from duty on the following days and when he was called he gave a false explanation that he had not taken delivery of the goods The appellant 1 was tried for misappropriation of the goods under section 51c of the Prevention of Corruption Act 1947 At the 453 trial he took the defence that he had moved the goods to another siding but this was not accepted and the appellant was convicted The appellant contended that his conviction was bad as the prosecution had failed to prove that he converted the goods to his own use and did not apply them to the purpose for which he had received them Held that the appellant had been rightly convicted The offence of misappropriation was established when the prosecution proved that the servant received the goods that he was under a duty to account to his master and that he had not done so If the failure to account was due to an accidental loss then the facts being within the servant s knowledge it was for him to explain the loss it was not for the prosecution to eliminate all possible defences or circumstances which may exonerate him The giving of a false explanation was an element which the Court could take into consideration in determining the guilty intention Harakrishna Mehtab vs Emperor AIR 1930 Pat 209 Larnier vs Rex Emperor vs Santa Singh AIR 1944 Lah 338 Emperor vs Chattur Bhuj Rex vs William 1836 7 C P 338 and Reg vs Lynch referred to

Civil Appeal No 161 of 1955 Appeal from the judgment and decree dated 4th Jeth 2011 of the Jammu and Kashmir High Court in Appeal No 1 of 2009 arising out of the judgment and decree dated the 2nd Magh 2008 of the said High Court in original suit No 40 of 2007 SK Kapur and N H Hingorani for the appellant Bhawani Lal and K P Gupta for the respondents August 19 The Judgment of the Court was delivered by SARKAR J This appeal arises out of a suit filed in the High Court of Jammu and Kashmir for recovery of price of goods sold and delivered The only point involved in it is whether the suit was governed by article 115 of the Jammu and Kashmir Limitation Act The courts below have held and this has not been disputed in this appeal that if that article did not apply the suit would fail on the ground of limitation Sometime in November 1946 the parties entered into an agreement in writing for the supply by the sellers the respondents to the buyer the appellant of 5000 maunds of maize 500 maunds of wheat and 100 maunds of Dal at the rates and times specified The agreement stated that on the date it had been made the buyer had paid to the sellers Rs 3000 and had agreed to pay a further sum of Rs 10000 within ten or twelve days as advance and the balance due for the price of goods delivered after the expiry of every month It is admitted that the said sum of Rs 10000 was later paid by the buyer to the sellers 565 Various quantities of goods were thereafter delivered by the sellers to the buyer and though such deliveries had not been made strictly at the times specified in the contract they had been accepted by the buyer The buyer in its turn made various payments towards the price of the goods delivered but not month by month and had not further paid it in full The last delivery of goods was made on June 23 1947 and the suit was brought on October 10 1950 for the balance of the price due The learned Judge of the High Court who heard the suit held that article 115 had no application and dismissed the suit as barred by limitation The sellers went up in appeal which was heard by two other learned Judges of the High Court The learned Judges of the appellate bench of the High Court held that article 115 of the Jammu Kashmir Limitation Act applied and the suit was not barred They thereupon allowed the appeal and passed a decree in favour of the sellers The buyer has now come up in appeal to this Court Article 115 of the Jammu and Kashmir Limitation Act which is in the same terms as article 85 of the Indian Limitation Act except as to the period of limitation is set out below Description of suit Period of Limitation Time from which period begins to run For the balance due Six years The close of the on a mutual open and which the last current account wh item admitted or ere there have been proved is entered reciprocal demands in the account between the parties such year to be computed as in the account If the article applied the suit would be clearly within time as the last item found to have been entered in the account was on June 23 1947 The only question argued at the bar is whether the account between the parties was mutual The question what is a mutual account has been considered by the courts frequently and the test to determine it is well settled The case of the Tea Financing Syndicate Ltd vs Chandrakamal Bezbaruah 1 may be referred to There a company had been 1 Cal 649 72 566 advancing monies by way of loans to the proprietor of a tea estate and the proprietor had been sending tea to the company for sale and realisation of the price In a suit brought by the company against the proprietor of the tea estate for recovery of the balance of the advances made after giving credit for the price realised from the sale of tea the question arose as to whether the case was one of reciprocal demands resulting in the account between the parties being mutual so as to be governed by article 85 of the Indian Limitation Act Rankin CJ laid down at p 668 the test to be applied for deciding the question in these words There can I think be no doubt that the requirement of reciprocal demands involves as all the Indian cases have decided following Halloway ACJ transactions on each side creating independent obligations on the other and not merely transactions which create obligations on one side those on the other being merely complete or partial discharges of such obligations It is further clear that goods as well as money may be sent by way of payment We have therefore to see whether under the deed the tea sent by the defendant to the plaintiff for sale was sent merely by way of discharge of the defendant s debt or whether it was sent in the course of dealings designed to create a credit to the defendant as the owner of the tea sold which credit when brought into the account would operate by way of set off to reduce the defendant s liability The observation of Rankin CJ has never been dissented from in our courts and we think it lays down the law correctly The learned Judges of the appellate bench of the High Court also appear to have applied the same test as that laid down by Rankin CJ They however came to the conclusion that the account between the parties was mutual for the following reasons The point then reduces itself to the fact that the defendant company had advanced a certain amount of money to the plaintiffs for the supply of grains This excludes the question of monthly 567 payments being made to the plaintiffs The plaintiffs having received a certain amount of money they became debtors to the defendant company to this extent and when the supplies exceeded Rs 13000 the defendant company became debtors to the plaintiff and later on when again the plaintiff s supplies exceeded the amount paid to them the defendants again became the debtors This would show that there were reciprocity of dealings and transactions on each side creating independent obligations on the other The reasoning is clearly erroneous On the facts stated by the learned Judges there was no reciprocity of dealings there were no independent obligations What in fact had happened was that the sellers had undertaken to make delivery of goods and the buyer had agreed to pay for them and had in part made the payment in advance There can be no question that in so far as the payments had been made after the goods had been delivered they had been made towards the price due Such payments were in discharge of the obligation created in the buyer by the deliveries made to it to pay the price of the goods delivered and did not create any obligation on the sellers in favour of the buyer The learned Judges do not appear to have taken a contrary view of the result of these payments The learned Judges however held that the payment of Rs 13000 by the buyer in advance before delivery had started made the sellers the debtor of the buyer and had created an obligation on the sellers in favour of the buyer This apparently was the reason which led them to the view that there were reciprocal demands and that the transactions had created independent obligations on each of the parties This view is unfounded The sum of Rs 13000 had been paid as and by way of advance payment of price of goods to be delivered It was paid in discharge of obligations to arise under the contract It was paid under the terms of the contract which was to buy goods and pay for them It did not itself create any obligation on the sellers in favour of the buyer it was not intended to be and did not amount to an independent transac 568 tion detached from the rest of the contract The sellers were under an obligation to deliver the goods but that obligation arose from the contract and not from the payment of the advance alone If the sellers had failed to deliver goods they would have been liable to refund the monies advanced on account of the price and might also have been liable in damages but such liability would then have arisen from the contract and not from the fact of the advances having been made Apart from such failure the buyer could not recover the monies paid in advance No question has however been raised as to any default on the part of the sellers to deliver goods This case therefore involved no reciprocity of demands Article 115 of the Jammu and Kashmir Limitation Act cannot be applied to the suit The learned Judges appear also to have taken the view that since the goods were not delivered at the times fixed in the contract and the prices due were not paid at the end of the months the parties clearly indicated their intention not to abide by the contract We are unable to agree with this view Such conduct only indicated that the parties had extended the time fixed under the contract for delivery of the goods and payment of price leaving the contract otherwise unaffected The learned Judges also observed that the contract did not provide how the amount advanced was to be adjusted But it seems clear that when the contract provided that the advance was towards the price to become due as the learned Judges themselves held it followed by necessary implication that the advance had to be adjusted against the price when it became due So there was a provision in the contract for adjusting the advance We think it fit also to observe that it is somewhat curious that any question as to the application of article 115 was allowed to be raised The applicability of that article depends on special facts No such facts appear in the plaint There is no hint there that the account was mutual We feel sure that if the attention of the learned Judges of the High Court had been 569 drawn to this aspect of the matter they would not have permitted any question as to article 115 being raised and the parties would have saved considerable costs thereby We therefore come to the conclusion that the appeal must be allowed The judgment and I order of the learned Judges of the appellate bench of the High Court are set aside and those of the learned Single Judge of the High Court are restored The appellant will be entitled to the costs in this Court and of the hearing of the appeal before the High Court Appeal allowed

In a double member Parliamentary constituency one seat was reserved for the scheduled tribes and the other was general Four persons filed their nominations for the election G 1 and G 2 for the general seat and S1 and S2 for the reserved seat At the polls the number of votes received by the candidates were in the following order S1 S2 G1 and G2 In accordance with the provisions of section 544 of the Representation of the People Act 1951 S1 was declared elected to the reserved seat and S2 who had received the largest number of votes out of the remaining candidates was declared elected to the general seat G1 filed an election petition for a declaration that the election of S2 was void and for a further declaration that he had himself been duly elected to the general seat The petition was based on three grounds viz i that upon a proper interpretation Of section 544 a candidate who had filed his nomination for the reserved seat could not be declared elected to the general seat ii that if the interpretation be otherwise then section 544 was ultra vires and iii that S2 had ceased to be a member of a scheduled tribe at the relevant time and his nomination was improperly accepted Held Kapur J dissenting that S2 was properly and validly declared elected The provisions of the Constitution and of the Act show that the election in a double member constituency was held for the whole constituency and not for the seats and a candidate who had filed nomination as a member of the scheduled tribes was entitled to contest for both the seats On a fair and reasonable construction Of section 544 Of the Act there could be no doubt that in a case like the present after S1 was declared duly elected to the reserved seat the votes secured by the remaining three candidates had to be considered before declaring the election for the general seat A member of the scheduled tribe or caste did not forego his right to seek election to the general seat merely because he availed himself of the additional concession of standing for the reserved seat by making the prescribed declaration for that purpose It was not necessary for him to file two nomination papers for the two seats Section 544 of the Act did not offend article 14 or article 330 Of the Constitution and was not unconstitutional 427 Held further that the appellant had failed to establish that S2 had ceased to be a member of the scheduled tribe and had become a Kshatriya Whatever may have been the origin of Hindu castes and tribes in ancient times gradually castes came to be based on birth alone A person who belonged by birth to a depressed caste or tribe would find it very difficult if not impossible to attain the status of a higher caste by virtue of his volition education culture and status The caste status of a person had to be determined in the light of the recognition received by him from the members of the caste into which he sought an entry unilateral acts of such a person asserting a higher status were not enough to establish the higher status It is to be hoped that this position will change and in course of time the cherished ideal of castless society truly based on social equality will be attained under the powerful impact of the doctrine of social justice and equality proclaimed by the Constitution and sought to be implemented by the relevant statutes and as a result of the spread of secular education and the growth of a rational outlook and of proper sense of social values but at present it would be unrealistic and utopian to ignore the difficulties which a member of the depressed tribe or caste has to face in claiming a higher status amongst his co religionists Per Kapur J The election Of S2 to the general seat was not valid When a member of the scheduled tribe or caste offered himself for election to a reserved seat he could be elected only to that seat and not to the general seat The provisions of the Constitution and of the Act show that the election in a constituency was for filling of a seat in the constituency and not for a constituency When a candidate offers himself for election in a constituency he does so for election to fill a seat in the constituency Therefore if a candidate wanted to contest both the seats he had to file two nomination papers one for the general seat and the other for the reserved seat and he had to make two deposits Section 82 Of the destroyed the effect of section 54 of the Act Caste in Hinduism had its origin not on the basis of birth but of guna karma and subhavana quality actions and character Caste is nothing but division of labour Hinduism might have become static at one time it is no longer so and it is wrong to say that caste is dependent upon birth and not on kayma ie action section 2 had by his actions raised himself to the position of a Kshatriya and he was no longer a member of the scheduled tribe or caste

Civil Appeal No 262 of 1955 Appeal by special leave from the judgment and decree dated February 4 1953 of the Calcutta High Court in Appeal from original decree No 68 of 1952 arising out of the judgment and decree dated January 14 1952 of the said High Court in Special Suit No 2 of 1951 571 N C Chatterjee C B Agarwala and Sukumar Ghose for the appellants B Sen section N Mukherjee section N Andley J B Dadachanji and Rameshwar Nath for the respondents August 21 The Judgment of the Court was delivered by WANCHOO J This is an appeal by special leave against the judgment of the Calcutta High Court The appellant is a company incorporated in India with its registered office in Calcutta dealing in jute It entered into a contract on June 18 1945 with the respondent company which is incorporated in England and has its registered office in London The contract was for the supply of five hundred bales of jute of crop 1945 46 to be shipped from Calcutta or Chittagong to Rio de Janeiro when freight became available The contract provides that in the event of default of tender or delivery the seller shall pay to the buyer as and for liquidated damages 10s per ton plus the excess if any of the market value over the contract price the market value being that of jute contracted for on the day following the date of default This date was to be the date in London on declaration of default by telegram or without such declaration if default was eventually made by lapse of time on the 21st day after expiry of the extended period There is also a provision for arbitration which lays down that any claim or dispute whatever arising out of or in relation to this contract or its construction or fulfilment shall be referred to arbitration in London in accordance with the bye laws of the London Jute Association and it was open to either party to claim arbitration whenever and as often as disputes arose The contract also provides for an appeal by any party dissenting from an arbitration award to the London Jute Association in accordance with the regulations in force for the time being Lastly it is provided that the contract would be construed according to the laws of England whatever the residence and nationality of the parties might be or become and would be deemed to be performed there The courts of England or 572 arbitrators as the case might be would have exclusive jurisdiction over all disputes which might arise under the contract except for the purpose of enforcing in the Colonies or abroad any arbitration award made under this contract On June 23 1947 thirty nine bales of jute were consigned by the appellant to Rio de Janeiro in part performance of the contract and information of this was given to the respondent by letter on July 17 1947 It was said in this letter that difficulty had arisen because of the non availability of quota and it was hoped that the balance remaining under the contract would be shipped as soon as quota was available The respondent sent a reply to this letter on July 25 1947 and the appellant wrote a further letter on August 1 1947 in which it was said that the remaining amount of jute under the contract would be shipped as soon as the quota was available We do not know what happened thereafter till we come to August 1948 It seems that the respondent received a cable on August 12 1948 from the appellant stating that the contract stood cancelled long ago The respondent by its letter dated August 12 1948 refused to accept this position Thereafter there were disputes and differences between the parties and eventually the respondent claimed default on or about June 1949 in terms of the contract On or about July 14 1949 the respondent referred the matter to the arbitration of the London Jute Association which appointed two of its member as arbitrators The respondent filed its claim before the arbitrators on July 23 1949 On July 27 1949 the arbitrators gave notice to the appellant to file its answer by August 19 1949 The appellant however filed no answer before the arbitrators What the appellant did in reply was to file an application under section 33 of the Indian hereinafter called the on the original side of the Calcutta High Court in which it made three prayers namely a declaration that the arbitration agreement if any between the parties was void ab initio on the 573 ground of uncertainty and was not binding on the appellant b declaration that there was in fact and in law no contract between the parties on account of mutual mistake of the parties and c that the court might be pleased to adjudicate on the existence andor validity of the alleged arbitration agreement and the effect of the same This application was moved on August 12 1949 It appears that on August 13 1949 the appellant sent a cable to the respondent and the London Jute Association informing them that an application had been made in the Calcutta High Court challenging the submissions contained in the contract and that the arbitrators had become functus officio pending disposal of the application which was fixed for August 29 The appellant received a reply to its cable in which it was asserted that no such application as the appellant bad made to the Calcutta High Court could be made there and that the arbitrators would proceed with the adjudication on August 27 as already fixed On August 17 1949 the appellant sent a letter to the London Jute Association in which it referred to its cable and the reply of the Association to that and reiterated its stand that any further steps taken in the arbitration proceedings pending disposal of the application under section 33 would be invalid under the The arbitrators however proceeded with the arbitration and gave their award on October 17 1949 No proceedings thereafter were taken by the appellant in London nor does it appear that any steps were taken by it to have its application under section 33 decided till we come to November 26 1951 On that date an application was filed by the respondent in the Calcutta High Court under section 5 of the hereinafter called the Protocol Act Along with this application it filed the award dated October 17 1949 and prayed that judgment be pronounced in accordance with the award and decree be passed accordingly Notice of this was issued to the appellant which filed its reply on January 14 73 574 1952 We do not think it necessary to set out the petition of the respondent under section 5 of the Protocol Act and the appellant s reply thereto in detail because when the matter came to be heard in court only two points were urged on behalf of the appellant namely 1 that the award was made after the notice of filing of the petition dated August 10 1949 under section 33 of the had been given to the respondent and the arbitrators and consequently the award made after the receipt of the said notice and during the pendency of the said application was bad under section 35 of the and 2 that the award was bad on the face of it and could not therefore be enforced in view of the provisions of section 7e of the Protocol Act which lays down that an award cannot be enforced in India if it is contrary to the law of India It was contended that the award was contrary to the law of India and this appeared on the face of it inasmuch as the arbitrators had purported to award such damages as could not be done under the provisions of the Both these contentions were negatived by the learned Single Judge and he ordered the award to be filed in court and passed a decree in terms thereof The appellant then went up in appeal which was heard by a Division Bench of the Calcutta High Court The grounds of appeal show that the same two points which were urged before the learned Single Judge were reiterated therein When the matter came to be heard before the Division Bench the same two points were raised on behalf of the appellant there also The Division Bench negatived the two contentions raised before it on behalf of the appellant and confirmed the judgment of the learned Single Judge It is curious however to notice that though all these proceedings were being taken on the application under section 5 of the Protocol Act the appellant apparently took no steps to have its application under section 33 of the which seems to have been adjourned sine die decided along with the respondent s application under section 5 of the Protocol Act 575 This was followed by an application for a certificate to appeal to this Court which was refused Then the appellant applied to this Court for special leave to appeal which was granted In the special leave petition also the appellant raised the same to points namely i the construction of sections 33 and 35 of the and the application of these provisions to the facts of this case and ii the construction of section 7 of the Protocol Act and the with respect to the damages awarded by the award In the statement of case also after narrating the facts and circumstances the same two points were mentioned as the principal questions which arose for determination in the appeal namely i the effect of sections 33 and 35 of the on the facts and circumstances of this case and ii the interpretation of section 7 of the Protocol Act in the light of sections 73 and 74 of the and their bearing on the damages awarded by the arbitrators and its effect on the validity of the award Learned counsel for appellant however wanted to raise before us other points arising out of section 7 of the Protocol Act We do not think that the appellant should be permitted to raise at this late stage any new point in addition to the two points which were urged before the learned Single Judge and which only have all along been raised in the appeal to the High Court and in the appeal before this Court We shall therefore confine the appellant to these two points only and proceed on the assumption in the same manner as has been done by the High Court namely that an application under section 33 of the would lie in the circumstances of this case and therefore the provisions of section 35 of the would be attracted The part of section 33 of the relevant for our purpose lays down that any party to an arbitration agreement desiring to challenge the existence or validity of an arbitration agreement or to have its effect determined shall apply to the court and the court shall decide the question It will thus be clear that 576 s33 contemplates an application for three purposes namely i when it is desired to challenge the existence of an arbitration agreement ii when it is desired to challenge its validity and iii when it is desired to have its effect determined An arbitration agreement may come into existence in one of two ways it may either arise out of an agreement which contains nothing else besides the arbitration agreement or it may arise out of a term contained in a contract which deals with various other matters relating to the contract which is the present case Where one is dealing with an arbitration agreement of the second kind section 33 is concerned only with the term relating to arbitration in the contract and not with the other terms of the contract which do not arise for consideration on an application under that section Then we come to section 35 It provides that no reference or award shall be rendered invalid by reason only of the commencement of legal proceedings upon the subject matter of the reference but when legal proceedings upon the whole of the subject matter of the reference has been commenced between all the parties to the reference and a notice thereof has been given to the arbitrators or umpire all further proceedings in a pending reference shall unless a stay of proceedings is granted under section 34 be invalid It will be seen therefore that section 35 makes proceedings before the arbitrators invalid in the absence of an order under section 34 staying the legal proceedings where whole of the subject matter of the reference is covered by any legal proceedings taken with respect to it In other words an arbitrator can continue the proceedings and proceed to make the award on the reference unless the whole of the subject matter of the reference is covered by the legal proceedings which have been instituted Assuming that the proceedings taken under section 33 are legal proceedings mentioned in section 35 the question which immediately arises on the facts of the present case is whether the whole of the subject matter of the reference in this case was covered by the legal pro ceedings taken by the appellant by its application under section 33 of the 577 In dealing with this aspect of the case learned counsel for the appellant raised the question of frustration of the contract and the powers of the court and the arbitrator in that behalf It is true that the words frustration of contract have been used in paragraph 8 of the application But the prayers do not show that any relief was claimed on that ground relief c being merely a repetition of the words of section 33 of the Learned counsel relied on Heymen vs Darwins Ltd 1 in this connection We do not think we should permit the appellant to raise this contention at this late stage and would content ourselves by pointing out incidentally that even if the dictum in Heymen s case 1 is accepted it will not help the appellant for on that dictum the question of frustration would be for the arbitrators to decide on the basis of the terms used in this contract which are of the widest amplitude and would not be a matter for consideration of the court On this basis there would be no identity of subject matter between what can be raised in an application under section 33 on the facts of this case and what can be decided by the arbitrators However we do not propose to pursue this matter any further and to decide it Then we turn to prayers a and b of paragraph 9 of the application based on paragraphs 6 and 7 thereof These prayers undoubtedly cannot be the subject matter of arbitration for they go to the very root of the contract and imply that there was no contract between the parties at all and therefore no arbitration agreement These prayers can certainly form the basis of an application under section 33 for they relate to the existence and validity of the arbitration agreement contained in the contract but not being matters within the competence of the arbitrators there can be no identity of the subject matter under reference to the arbitrators and the subject matter of prayers a and b The conclusion therefore is that prayers a and b can be the subject matter of an application under section 33 but they cannot be the subject matter of the reference to the arbitrators Therefore 1 19421 2 AC 356 578 the subject matter of the legal proceedings under section 33 in this case cannot and does not cover any part of the subject matter of the reference Section 35 in consequence can have no application and the award cannot be assailed as invalid on the ground that it violates section 35 of the The first contention therefore must fail The argument under this head is that the liquidated damages provided under cl 1 2 of the contract include not only the difference between the contract price and the market price on the date of default but also a further sum of 10s per ton Reference in this connection is made to sections 73 and 74 of the and it is said that the extra amount of 10s per ton included in the sum of liquidated damages is against the provision of these sections and therefore the award being against the law of India is bad on the face of it and should not be enforced in India Section 73 provides for compensation for loss or damage caused by breach of contract It lays down that when a contract has been broken the party who suffers by such breach is entitled to receive from the party who has broken the contract compensation for any loss or damage caused to him thereby which naturally arose in the usual course of things from such breach or which the parties knew when they made the contract to be likely to result from the breach of it Section 74 provides for breach of contract where penalty is stipulated for or a sum is named and lays down that when a contract has been broken if a sum is named in the contract as the amount to be paid in case of such breach or if the contract contains any other stipulation by way of penalty the party complaining of the breach is entitled whether or not actual damage or loss is proved to have been caused thereby to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or as the case may be the penalty stipulated for What cl 12 of the contract provides in this case is the measure of liquidated damages and that consists of 579 two things namely i the difference between the contract price and the market price on the date of default and ii an addition of 10s per ton above that There is nothing in section 73 or section 74 of the Contract Act which makes the award of such liquidated damages illegal Assuming that the case is covered by section 74 it is provided therein that reasonable compensation may be awarded for breach of contract subject to the maximum amount named in the contract What the arbitrators have done is to award the maximum amount named in the contract If the appellant wanted to challenge the reasonableness of that provision in cl 12 it should have appeared before the arbitrators and represented its case It cannot now be heard to say that simply because cl 12 provided for a further sum of 10s per ton over and above the difference between the contract price and the market price on the date of the default this was per se unreasonable and was therefore bad according to the law of India as laid down in sections 73 and 74 of the Contract Act Both these sections provide for reasonable compensation and section 74 contemplates that the maximum reasonable compensation may be the amount which may be named in the contract In this case the arbitrators have awarded the maximum amount so named and nothing more Their award in the circumstances cannot be said to be bad on the face of it nor can it be said to be against the law of India as contained in these sections of the Contract Act The second contention must also fail We therefore dismiss the appeal with costs to the respondent Appeal dismissed

The appellant was put up on trial on charges under sections 51a and 51d of the Prevention of Corruption Act 1947 Payments of particular sums by way of bribe were not proved against him But the High Court holding that the appellant s bare statements from the dock unsupported by any other acceptable evidence could not satisfactorily account for the large deposits standing to his credit in his bank accounts raised the presumption under section 53 of the Act and held him guilty of criminal misconduct in the discharge of his official duty under section 51d of the Act concerning the conviction and sentence passed on him by the 462 special Magistrate It was contended on behalf of the appellant that the charge relating to specific instances of bribery having failed the contrary to the presumption under section 53 Of the Act should have been held as established and in absence of any finding that his statements were false it should have been held that the charge against him had not been proved beyond all reasonable doubt Held that section 53 of the Prevention of Corruption Act did not create a new offence but only laid down a rule of evidence that empowered the Court to presume the guilt of the accused in certain circumstances contrary to the well known principle of criminal law that the burden of proof was always on the prosecution and never shifted on to the accused The Legislature by using the expression satisfactorily account in section 53 of the Act cast the burden on the accused not only to offer a plausible explanation as to how he came by the large wealth disproportionate to his known sources of income but also to satisfy the court that his explanation was worthy of credence Consequently cases under the general law where it had been held that the accused could be exonerated if he offered a plausible explanation could have no application The expression known sources of income used in that section referred to such sources of income as became known to the prosecution as a result of the investigation and could not mean those that were witthin the special knowledge of the accused and it was no part of the duty of the prosecution to lead evidence in that regard Where the prosecution fulfilled the conditions laid down by the earlier part of section 53 Of the Act the statutory presumption had to be raised and it would be for the accused to rebut the same by cogent evidence Rex vs Carrbriant and Otto George Gfeller vs The King AIR 30 Hate Singh Bhagat Singh vs State of Madhya Bharat AIR 1953 SC 468 and Regina vs Dunbar held inapplicable The failure to substantiate a charge under section 51a of the Act on evidence would not necessarily mean an acquittal in respect of a charge under section 51d of the Act If the requirements of the earlier part of section 53 were established by evidence conviction for criminal misconduct under section 51d based on the presumption under section 53 Of the Act would be perfectly valid in law

Civil Appeals Nos 198 to 200 of 1959 Appeals from the judgment and order dated the 5th March 1959 of the Andhra Pradesh High Court in Writ Petitions Nos 1511 and 1512 of 1958 and 23 of 1959 N C Chatterjee G Suryanarayana K Mangach and T V R Tatachari for the appellants D Narasaraju Advocate General for the State of Andhra Pradesh D Venkatappiah Sastry and T M Sen for the respondents August 21 The Judgment of the Court was delivered by SUBBA RAO J These appeals on certificates are directed against the judgment of the High Court of Judicature Andhra Pradesh at Hyderabad dismissing the petitions filed by the appellants under Art 226 74 582 of the Constitution for issuing writs of certiorari to quash the orders of the Government of Andhra Pradesh confirming a scheme of nationalization of transport and the subsequent orders of the Regional Transport Authority cancelling the appellants stage carriage permits These appeals are the off shoot of the judgment of this Court in Gullapalli Nageswara Rao vs Andhra Pradesh State Road Transport Corporation 1 delivered on November 5 1958 The facts were fully stated therein It would be only necessary to recapitulate briefly the facts relevant to the present enquiry The appellants were carrying on motor transport business for several years in Krishna District in the State of Andhra Pradesh Shri Guru Pershad styled as the General Manager of the State Transport Undertaking of the Andhra Pradesh Road Transport published a scheme for nationalization of motor transport in the said State from the date to be notified by the State Government Objections to the said proposed scheme were invited by the State Government and the appellants among others filed their objections On December 26 1957 the Secretary in charge of the Transport Department gave a personal hearing to the objectors and heard the representations made on behalf of the State Transport Undertaking The entire material gathered by him was placed before the Chief Minister of the State in charge of transport who made the order approving the scheme The approved scheme was published in the Andhra Pradesh Gazette dated January 9 1958 and it was directed to come into force with effect from January 10 1958 Thereafter the Andhra Pradesh Road Transport Corporation which was formed under the provisions of the Road Transport Corporation Act 1950 took over the Undertaking and proceeded to implement the scheme under a phased programme The appellants moved this Court under article 32 of the Constitution for quashing the said scheme on various grounds This Court rejected most of the objections raised by the appellants except in regard to two pertaining to the hearing given by the Secretary in charge 1 583 of the Transport Department which resulted in the quashing of the order of the Government approving the scheme and directing it to forbear from taking over any of the routes on which the appellants were engaged in transport business After the said order notices were issued by the Government to all the objectors informing them that a personal hearing would be given by the Chief Minister on December 9 1958 and they were further informed that they were at liberty to file further objections before November 30 1958 The Chief Minister heard the representatives of the objectors and the Corporation and passed orders dated December 19 1958 rejecting the objections filed and approving the scheme as originally published The order approving the scheme was duly published by the Government in the official Gazette oil December 22 1958 On December 23 1958 the Corporation applied to the Road Transport Authority for the issue of permits for plying stage carriages and for eliminating the permits granted to the private bus operators On December 24 1958 the said Authority passed orders rendering the permits of the appellants ineffective from December 24 1958 and also issuing permits to the Corporation in respect of the routes previously operated by the appel lants The said orders were communicated to the appellants on December 24 1958 and they were also directed to stop plying their buses from December 25 1958 on their respective routes The appellants who were aggrieved by the orders of the Government as well by the order of the Regional Transport Authority filed petitions in the High Court under article 226 of the Constitution for quashing the same The petitions were heard by a Division Bench of the said High Court consisting of Chandra Reddy CJ and Srinivasachari J who negatived the contentions raised by the appellants and dismissed the petitions Hence these appeals The arguments of Mr Chatterjee learned Counsel for the appellants maybe summarized thus 1 This Court held in Gullapalli Nageswara Rao vs Andhra Pradesh State Road Transport Corporation that the 1 584 Secretary in charge of the Transport Department was disqualified from deciding the dispute between the Department and the private bus operators on the basis of the principle that a party cannot be a judge in his own cause and that as the Chief Minister was in charge of the portfolio of transport the same infirmity attached to him also and therefore for the same reason he should also be disqualified from hearing the objections to the scheme published by the Undertaking and 2 the Chief Minister by his acts such as initiating the scheme and speeches showed a clear bias in favour of the Undertaking and against the private bus operators and therefore on the basis of the principles of natural justice accepted by this Court he was precluded from deciding the dispute between the said parties The learned Advocate General sought to make out a distinction between official bias of an authority which is inherent in a statutory duty imposed on it and personal bias of the said authority in favour of or against one of the parties and contended that the mere fact that the Chief Minister of the Government had supported the policy of nationalization or even the fact that the Government initiated the said scheme did Dot disqualify him from deciding the dispute unless it was established that he was guilty of personal bias and that there was no legal proof establishing the said fact At this stage it would be convenient to notice briefly the decisions cited at the Bar disclosing the relevant principles governing the doctrine of bias The principles governing the doctrine of bias vis a vis judicial tribunals are well settled and they are i no man shall be a judge in his own cause ii justice should not only be done but manifestly and undoubtedly seem to be done The two maxims yield the result that if a member of a judicial body is subject to a bias whether financial or other in favour of or against any party to a dispute or is in such a position that a bias must be assumed to exist he ought not to take part in the decision or sit on the tribunal and that any direct pecuniary interest however small in the 585 subject matter of inquiry will disqualify a judge and any interest though not pecuniary will have the same effect if it be sufficiently substantial to create a reasonable suspicion of bias The said principles are equally applicable to authorities though they are not courts of justice or judicial tribunals who have to act judicially in deciding the rights of others ie authorities who are empowered to discharge quasi judicial functions The said principles are accepted by the learned Counsel on both sides but the question raised in this case is whether when a statute confers a power on an authority and imposes a duty on it to be a judge of its own cause or to decide a dispute in which it has an official bias the doctrine of bias is qualified to the extent of the statutory authorization In The King vs Bath Compensation Authority 1 the licensing justices of a county borough referred the application for the renewal of the licence of a hotel to the compensation authority of the borough and also resolved that a solicitor should be instructed to appear before the compensation authority and oppose the renewal of the licence on their behalf The solicitor so instructed appeared before the authority and supported the opposition and in the result the compensation authority refused the renewal subject to payment of compensation It may be mentioned that a majority of the justices who sat on the compensation tribunal and voted against the renewal of the licence had as members of the licensing committee been parties to the resolution referring the question of renewal to the compensation authority The Court of Appeal by a majority Atkin L J dissenting held that in view of the provi sions of the Licensing Act 1910 the facts in that case did not disclose such bias or likelihood of bias as would disqualify them from sitting on the tribunal This decision was reversed by the House of Lords on appeal reported in The House of Lords held that the decision of the tribunal whereon three justices who referred the matter to the said authority sat must be set aside on the ground that no one can both be a party and a judge in the same cause 1 586 Viscount Cave LC meets the argument based upon the statutory duty thus at p 592 No doubt the statute contemplates the possibility of the licensing justices appearing before the compensation authority and taking part in the argument for it is provided by section 19 sub section 2 that the compensation authority shall give any person appearing to them to be interested in the question of the renewal of a licence including the licensing justices an opportunity of being heard But the statute nowhere says that justices who elect to appear as opponents of the renewal and take active steps such as instructing a solicitor to take their opposition affective may nevertheless act as judges in the dispute and in the absence of a clear provision to that effect I think that the ordinary rule that no one can be both party and judge in the same cause holds good This decision therefore is an authority for the pro position that unless the legislature clearly and expressly ordained to the contrary the principles of natural justice cannot be violated In The King vs Leicester Justices 1 a case also arising under the Licensing Consolidation Act 1910 the king s Bench Division held that the mere fact that the licensing justice has originated an objection to the renewal of a licence does not disqualify him by reason of interest from sitting and adjudicating as a member of that authority upon the matter of that licence Salter J brought out the distinction between the Bath Justices Case 2 and the case before him in the following terms at p 565 The distinction is that in that case Parliament had not sanctioned what was done in this case it has Dealing with the argument that there was some risk of bias if the statutory duty was discharged the learned Judge rejected it with the observation that some risk of bias is inseparable from the machinery which Parliament has set up At first sight this judgment appears to be inconsistent with the decision 1 1927 1 KB 557 2 587 of the House of Lords in Bath Justices Case1 but a scrutiny of the latter case shows that in that case the licensing justices had themselves actively opposed the renewal of the licence before the compensation authority and instructed a solicitor to do so on their behalf This is not a duty cast on them by the statute whereas the licensing justices in dealing with an application for renewal of a licence and when the question of renewal was referred for decision to the compensation authority in sitting as members of that authority are merely carrying out the duties in accordance with the procedure prescribed by the legislature These decisions show that in England a statutory invasion of the common law objection on the ground of bias is tolerated by decisions but the invasion is confined strictly to the limits of the statutory exception It is not out of place here to notice that in England the Parliament is supreme and therefore a statutory law however repugnant to the principles of natural justice is valid whereas in India the law made by Parliament or a State Legislature should stand the test of fundamental rights declared in Part III of the Constitution In the instant case the relevant provisions of the Act do not sanction any dereliction of the principles of natural justice Under the Act a statutory authority called the Transport Undertaking is created and specified statutory functions are conferred on it The said Undertaking prepares a scheme providing for road transport service in relation to an area to be run or operated by the said Undertaking Any person affected by the Scheme is required to file objections before the State Government and the State Government after receiving the objections and representations gives a personal hearing to the objectors as well as to the Undertaking and approves or modifies the scheme as the case may be The provisions of the Act therefore do not authorise the Government to initiate the scheme and thereafter constitute itself a judge in its own cause The entire scheme of the Act visualises in case of conflict between the Undertaking and the operators of private buses that the State Government 1 588 should sit in judgment and resolve the conflict The Act therefore does not authorise the State Government to act in derogation of the principles of natural justice The next question is whether the State Government in the present case acted in violation of the said principles The argument that as this Court held in the previous stage of this litigation that the hearing given by the secretary in charge of the Transport Department offended the principles of natural justice we should hold as a logical corollary to the same that the same infirmity would attach to the Chief Minister This argument has to be rejected on two grounds firstly for the reason that on the last occasion the appellants did not question the right of the Chief Minister to decide on the objections to the scheme and indeed they assumed his undoubted right to do so but canvassed the validity of his order on the basis that the secretary who was part of the Transport Department gave the hearing and not the Chief Minister and therefore a party to the dispute was made a judge of his own cause If as it is now contended on the same reasoning the Chief Minister also would be disqualified from deciding the dispute that point should have been raised at that stage instead a distinction was made between the Secretary of a Department and the Chief Minister and the validity of the order of the Chief Minister was questioned on the basis of this distinction This Court accepted that argument Having obtained the judgment of this Court on that basis it could not be open to the appellants at this stage to reopen the closed controversy and take a contrary position That apart there are no merits in this contention There is a clear distinction between the position of a Secretary of the Department and the Chief Minister of the State Under the Constitution the Governor is directed to act on the advice of the Ministers headed by the Chief Minister In exercise of the powers conferred by cls 2 and 3 of article 166 of the Constitution the Governor of Madras made rules styled as The Madras Government Business Rules and Secretariat Instructions and r 9 thereof 589 prescribes that without prejudice to the provisions of r 7 the Minister in charge of a department shall be primarily responsible for the disposal of the business pertaining to that department The Governor of Andhrain exercise of the powers under the Constitution directed that until other provisions are made in this regard the business of the Government of Andhra shall be transacted in accordance with the said Rules It is therefore manifest that under the Constitution and the Rules framed thereunder a Minister in charge of a department is primarily responsible for the disposal of the business pertaining to that department but the ultimate responsibility for the advice is on the entire ministry But the position of the Secretary of a department is different Under the said Rules the Secretary of a department is its head ie he is part of the department There is an essential distinction between the functions of a Secretary and a Minister the former is a part of the department and the latter is only primarily responsible for the disposal of the business pertaining to that department On this distinction the previous judgment of this Court was based for in that case after pointing out the position of the Secretary in that Department it was held that though the formal orders were made by the Chief Minister in effect and substance the enquiry was conducted and personal hearing was given by one of the parties to the dispute itself We cannot therefore accept the argument of the learned Counsel that the Chief Minister is part of the department constituted as a statutory Undertaking under the Act The next question is whether the Chief Minister by his acts and speeches disqualified himself to act for the State Government in deciding the dispute In the affidavit filed by Nageswara Rao one of the appellants herein in respect of the writ petitions filed in the High Court he states in ground 8 of paragraph 14 thus He the Chief Minister is the Minister in charge of the Transport Department at whose instance the Scheme was first published under Section 68C of the Act He is not only the initiator of the Scheme but also the person who is interested in its approval and 75 590 implementation He has thus a direct and specific connection with the dispute being a party thereto and he would be acting as a Judge in his own cause when he gives a personal hearing and considers the objections Mr Chatterjee contends that this allegation embodied in ground 8 has not been contradicted by the respondents It is not correct to say that these allegations went unchallenged for in paragraph 6 of the counter affidavit filed on behalf of the State we find the following statements The contentions of the petitioner in para 14 of his affidavit are without substance The scheme as approved by the Government is neither illegal nor without jurisdiction In sub paragraph 3 of paragraph 6 it is alleged The allegations that the hearing and determination of the questions in issue are not in accordance with law or principles of judicial procedure but only a farce gone through to satisfy the direction of the Supreme Court is not correct Sub paragraph 7 of paragraph 6 reads The Minister in charge ie the Chief Minister can hear and decide The State Government itself cannot be regarded as interested in the cause and therefore disqualified to decide Sub paragraph 8 of the said paragraph says The contention that the Chief Minister is not competent to give the hearing and consider the objections inasmuch as he is biassed and has also prejudged the issue is not well founded On facts on 9 12 1958 there was no Road Transport Department at all but a Road Transport Corporation which is a completely autonomous body with which the Chief Minister has no concern Hence on the date of the enquiry the Corporation being a completely autonomous body is an entirely independent body altogether and hence there can be no question of bias to the Chief Minister hearing the objectors The bearing given by the Chief Minister is just like a hearing of the court of law after remand 591 by a Superior Court The allegation that the Chief Minister had closed his mind and was biased is absolutely baseless He kept an open mind and considered all the objections fully The counter affidavit further gives in detail how the scheme was initiated by Guru Pershad and how the various steps were taken in compliance with the provisions of the Act It is therefore clear that the Government did not accept the allegations made by the appellants in their affidavits Whatever may be the policy of the Government in the matter of nationalisation of the bus transport it cannot be said that the Chief Minister initiated the scheme in question The learned Counsel then relied upon certain extracts from the reports published in the newspapers purporting to be the speeches of the Chief Minister Exhibit IV is said to be a summary of the speech of the Chief Minister made on October 14 1957 and the relevant portion thereof reads I do not have any prejudice against the Krishna District The bus transport in Telangana was nationalised 25 years ago The Bus Transport nationalisation was extended to Krishna District since it is contiguous to Telangana in regard to transport services It will be extended to the other districts gradually It requires 12 crores of rupees to introduce nationalisation in all the districts at the same time The Government is aware that Nationalisation of Bus Transport is not profitable But we should fall in line with other States and move with the times There are 360 buses in Krishna District I cannot give an assurance that all these would be taken over It is regrettable that these should be subjected to severe criticism when they are being done in public interest This speech only reflects the policy of the Government Exhibit V is said to be an extract from the report of the Indian Express dated October 18 1957 The material part of it runs thus Nationalisation of road transport services in the Andhra area was a settled fact and there was absolutely no question of going back on it 592 This speech also only states the policy of the Government and has no reference to Krishna District or to the transport services in that district Exhibit VI is an extract from the report in the Hindu dated October 25 1957 wherein it is alleged that the Chief Minister made the following statement Mr N Sanjiva Reddy Chief Minister said here today that the nationalised road transport in Krishna would be administered by a Corporation The Chief Minister who was addressing a press conference said There is no question of postponement of the decision to nationalise bus transport in that district The Chief Minister said firmly that there was no public support to the contention of the private bus operators that there should be no nationalisation This speech has a direct reference to the nationalisation of bus transport in Krishna District and indicates a firm determination on the part of the Chief Minister not to postpone it any further Exhibit IX is an extract from the report in the Indian Express dated December 13 1957 and it reads The Andhra Pradesh Chief Minister Sanjeeva Reddy told pressmen here to day that the State Government would go ahead with the implementation of its decision to extend nationalisation of bus transport to Krishna district from April I next This also indicates the Chief Minister s determination to implement the scheme of nationalisation of bus transport in Krishna District from a particular date Exhibit X is a report in the Mail under date April 1 1958 purporting to be a speech made by the Chief Minister in inaugurating the first phase of the extension of the nationalised road transport services to Guntur and Krishna Districts by the State Road Transport Corporation Relevant extracts of the speech read thus He the Chief Minister considered the implementation of the scheme simple first but he regretted to find it difficult since bus operators filed writ petitions in the High Court raised a I huge noise and fought 593 till the very end against the scheme and finally even approached the Congress President Mr U N Dhebar to save them Mr Sanjeeva Reddi affirmed that the Government was determined to implement the scheme of nationalisation of bus transport services against all opposition and persons like him trained by the late T Prakasam were never afraid of opposition If it had been established that the Chief Minister made the speeches extracted in Exhibits VI lX and X there would have been considerable force in the argument of the learned Counsel for the appellants but no attempt was made to prove that the Chief Minister did in fact make those speeches It is true that the extracts from the newspapers were filed before the Chief Minister and they were received subject to proof but no person who heard the Chief Minister making those speeches filed an affidavit before him The Chief Minister did not admit that he made the statements attributed to him The Chief Minister in his order approving the scheme says As regards the paper cuttings I may mention that in the course of a long and varied political career I have made hundreds of statements on many an occasion and many of them may be purely personal opinions Moreover it is not always that the press people consult the persons on the accuracy of the statements made before they are published The press cuttings filed before me are not communiques issued by the Government with the approval of the Government They are published records of several statements said to have been made by me on various occasions It is common knowledge press cuttings here and there torn out of context will give a completely twisted picture and version of a man s real intentions It is not possible for me to state any thing definite about the veracity of these statements said to have been made by me at different points of time It is quite possible that I might have made many such on many an occasion and it is also quite possible that some points spoken here and there may have been published with Head lines in the papers 594 It is not possible nor desirable to treat paper cuttings of statements said to have been made on several occasions as legal evidence in a judicial enquiry Notwithstanding the fact that the Chief Minister did not accept the correctness of the statements attributed to him in the newspapers no attempt was made by the appellants to file any affidavit in the High Court sworn to by persons who had attended the meetings addressed by the Chief Minister and heard him making the said statements In the circumstances it must be held that it has not been established by the appellants that the Chief Minister made the speeches indicating his closed mind on the subject of nationalisation of bus transport in Krishna District If these newspaper cuttings are excluded from evidence the factual basis for the appellants argument disappears We therefore hold that the Chief Minister was not disqualified to hear the objections against the scheme of nationali sation A subsidiary argument is raised on the basis of r 11 of the Andhra Pradesh Motor Vehicles Rules It is contended that the Road Transport Authority made an order rendering that the permits of the appellants ineffective without giving them due notice as required by that rule and therefore the said order was invalid Rule 11 of the said Rules reads In giving effect to the approved scheme the Regional Transport Authority or Authorities concerned shall before eliminating the existing services or cancelling any existing permit or modifying the conditions of the existing permit so as to i render the permit ineffective beyond a specified date ii reduce the number of vehicles authorised to be used under a permit or iii curtail the area or route covered by the permit in so far as such permit relates to the notified route give due notice to the persons likely to be affected in the manner prescribed in these rules 595 This rule will have to be read along with section 68 F sub section 2 which reads For the purpose of giving effect to the approved scheme in respect of a notified area or notified route the Regional Transport Authority may by order a refuse to entertain any application for the renewal of any other permit b cancel any existing permit c modify the terms of any existing permit so as to i render the permit ineffective beyond a specified date ii reduce the number of vehicles authorised to be used under the permit iii curtail the area or route covered by the permit in so far as such permit relates to the notified area or notified route A combined reading of section 68F 2 and r 11 makes it clear that the order contemplated under the said subsection can be made by the Regional Transport Authority only after giving due notice to the persons likely to be affected by the said order On December 24 1958 the Regional Transport Authority made the following order The permits of the following buses are rendered ineffective beyond 24 12 1958 under section 68F 2c1 of as amended by Act 100 of 1956 for the purpose of giving effect to the approved scheme of Nationalisation in respect of the following notified routes The routes on which the appellants were operating their buses were also included in the routes mentioned in the order On December 24 1958 the Regional Transport Authority issued an order to the operators directing them to stop plying their buses on their respective routes from December 25 1958 and that order was served on the appellants on the same day ie December 24 1958 Though the learned Advocate General suggested that the provisions of r 11 have been satisfied in the present case we find it impossible to accede to his contention There are two defects in the procedure followed by the Regional 596 Transport Authority i while the rule enjoins on the Authority to issue notice to the persons affected before making the relevant order the Authority made the order and communicated the same to the persons affected and ii while the rule requires due notice ie reasonable notice to be given to the persons affected to enable them to make representations against the order proposed to be passed the Regional Transport Authority gave them only a day for complying with that order which in the circumstances could not be considered to be due notice within the meaning of the rule We have therefore no hesitation to hold that the Regional Transport Authority did not strictly comply with the provisions of the rule But in view of the supervening circumstances the High Court while noticing this defect in the procedure followed by the Regional Transport Authority refused to exercise its jurisdiction under article 226 of the Constitution Pursuant to the order of the Regional Transport Authority the appellants withdrew their vehicles from the concerned routes and the vehicles of the Road Transport Corporation have been plying on those routes The judgment of this Court conclusively decided all the questions raised in favour of the respondents and if the order of the Regional Transport Authority was set aside and the appellants were given another opportunity to make their representations to that Authority it would be as the High Court says only an empty formality As their vehicles have already been withdrawn from the routes and replaced by the vehicles of the Corporation the effect of any such order would not only be of any help to the appellant but would introduce unnecessary complication and avoidable confusion In the circumstances it appears to us that as the appellants have failed all along the line to interfere on a technical point of no practical utility is to strain at a gnat after swallowing a camel We cannot therefore say that the High Court did not rightly exercise its discretion in this matter The appeals fail and in the circumstances are dismissed without costs Appeals dismissed

Under a contract for the sale of goods the buyer paid an advance amount towards the price of the goods to be supplied and various quantities of goods were thereafter delivered by the sellers The buyer from time to time made various other payments towards the price of the goods after they had been delivered The last delivery of goods was made on June 23 1947 and the suit was brought on October 10 1950 by the sellers for the balance of the price due for goods delivered The sellers pleaded that the suit was within time and relied on article 115 Of the Jammu and Kashmir Limitation Act under which the period of limitation was six years for a suit for the balance due on a mutual open and current account where there have been reciprocal demands between the parties 564 Held that article 115 was not applicable to the case as there was no mutual account based on reciprocal demands The payment made by the buyer after deliveries had been given to it were in discharge of the obligations to pay the price due on account of these deliveries the amount paid in advance was paid under the contract in discharge of obligations to arise none of such payments created an independent obligation in the sellers towards the buyer Tea Financing Syndicate Ltd vs Chandrakamal Bazbaruah Cal 649 approved

ION Criminal Appeal No 32 of 1958 Appeal by special leave from the judgment and order dated April 25 1957 of the Allahabad High Court in Criminal Appeal No 992 of 1954 arising out of the judgment and order dated January 25 1954 of the Additional Sessions Judge Gorakhpur in Sessions Trial No 71 of 1953 section P Sinha and section D Sekhri for the appellant G C Mathur and C P Lal for G N Dikshit for the respondent September 3 The Judgment of the Court was delivered by WANCHOO J This is an appeal by special leave against the judgment of the Allahabad High Court in a criminal matter The facts of the case as found by the High Court are no longer in dispute and the 648 question that is raised in this appeal is whether the appellant had exceeded the right of private defence of person The relevant facts for our purposes are these Gopal deceased was married to the sister of the appellant The appellant and his father Badri were living in a railway quarter at Gorakhpur Gopal s sister was married to one Banarsi who was also living in another railway quarter nearby Gopal had been living for some time with his father in law They did not however pull on well together and Gopal shifted to the house of Banarsi Badri persuaded Gopal to come back to his house but the relations remained strained and eventually Gopal shifted again to the quarter of Banarsi about 15 days before the present occurrence which took place on June 11 1953 at about 10 pm Gopal s wife had continued to live with her father as she was unwilling to go with Gopal Her father Badri and her brother Vishwanath appellant sided with her and refused to let her go with Gopal Gopal also suspected that she had been carrying on with one Moti who used to visit Badri s quarter Consequently Gopal was keen to take away his wife the more so as he had got a job in the local department some months before and wanted to lead an independent life On June 11 there was some quarrel between the appellant and Gopal about the girl but nothing untoward happened then and the appellant went back to his quarter and Gopal went away to Bansari s quarter Gopal asked Banarsi s sons to help him in bringing back his wife Banarsi also arrived and then all four of them went to Badri s quarter to bring back the girl On reaching the place Banarsi and his two sons stood outside while Gopal went in In the meantime Badri came out and was asked by Banarsi to let the girl go with her husband Badri was not agreeable to it and asked Banarsi not to interfere in other people s affairs While Badri and Banarsi were talking Gopal came out of the quarter dragging his reluctant wife behind him The girl caught hold of the door as she was being taken out and a tug of war followed between her and Gopal The appellant was also there and shouted to his father 649 that Gopal was adamant Badri thereupon replied that if Gopal was adamant he should be beaten tomaro On this the appellant took out a knife from his pocket and stabbed Gopal once The knife penetrated into the heart and Gopal fell down senseless Steps were taken to revive Gopal but without success Thereupon Gopal was taken to the hospital by Badri and the appellant and Banarsi and his sons and some others but Gopal died by the time they reached the hospital On these facts the Sessions Judge was of opinion that Badri who had merely asked the appellant to beat Gopal could not have realised that the appellant would take out a knife from his pocket and stab Gopal Badri was therefore acquitted of abetment The Sessions Judge was further of opinion that the appellant had the right of private defence of person and that this right extended even to the causing of death as it arose on account of an assault on his sister which was with intent to abduct her He was further of opinion that more harm than the circumstances of the case required was not caused and therefore the appellant was also acquitted The State then appealed to the High Court against the acquittal of both accused The High Court upheld the acquittal of Badri The acquittal of the appellant was set aside on the ground that the case was not covered by the fifth clause of section 100 and the right of private defence of person in this case did not extend to the voluntary causing of death to the assailant and therefore it was exceeded The High Court relied on an earlier decision of its own in Emperor vs Ram Saiya 1 The appellant was therefore convicted under section 304 Part 11 of the Penal code and sentenced to three years rigorous imprisonment He applied for a certificate to enable him to appeal to this Court but this was refused Thereupon he applied to this Court for special leave which was granted and that is how the matter has come up before us The main question therefore that falls for consideration in this appeal is whether the decision in Ram 1 ILR 1948 All 650 Saiya s case 1 is correct It appears that four other high Courts have taken a view which is different on that taken in Ram Saiya s case 1 namely Jagat singh vs King Emperor 2 Daroga Lokar vs Emperor Lohar vs The State 4 and Dayaram Laxman vs State here is however no discussion of the point in these our cases and we need not refer to them further the view taken in Ram Saiya s case 1 is that the lord abducting used in the fifth clause of section 100 of the Penal Code refers to such abducting as is an offence under that Code and not merely to the act of abduction as defined in section 362 thereof Mere abduction is not an offence and therefore cannot give rise of any right of private defence and the extended right of private defence given by section 100 only arises if the offence which occasions the exercise of the right is of the Of the kinds mentioned in section 100 Section 97 gives the right of private defence of person against any offence affecting the human body Section 99 lays down that the right of private defence a no case extends to the inflicting of more harm than it is necessary to inflict for the purpose of defence Section 100 with which we are concerned is in these terms The right of private defence of the body extends under the restrictions mentioned in the last preceding section to the voluntary causing of death or of any other harm to the assailant if the offence which occasions the exercise of the right be of any of the descriptions hereinafter enumerated namely First Such an assault as may reasonably cause the apprehension that death will otherwise be the consequence of such assault Secondly Such an assault as may reasonably cause the apprehension that grievous hurt will otherwise be the consequence of such assault Thirdly An assault with the intention of committing rape 1 ILR 1948 All 3 AI R 1930 Pat 347 2 2 AIR 1923 Lab 155 1 4 1 5 A 1 R 1953 Madhya Bharat 182 651 Fourthly An assault with the intention of gratifying unnatural lust Fifthly An assault with the intention of kidnapping or abducting Sixthly An assault with the intention of wrongfully confining a person under circumstances which may reasonably cause him to apprehend that he will be unable to have recourse to the public authorities for his release The right of private defence of person only arises if there is an offence affecting the human body Offences affecting the human body are to be found in Ch XVI from section 299 to section 377 of the Penal Code and include offences in the nature of use of criminal force and assault Abduction is also in Ch XVI and is defined in section 362 Abduction takes place whenever a person by force compels or by any deceitful means induces another person to go from any place But abduction pure and simple is not an offence under the Penal Code Only abduction with certain intent is punishable as an offence If the intention is that the person abducted may be murdered or so disposed of as to be put in danger of being murdered section 364 applies If the intention is to cause secret and wrongful confinement section 365 applies If the abducted person is a woman and the intention is that she may be compelled or is likely to be compelled to marry any person against her will or may be forced or seduced to illicit intercourse or is likely to be so forced or seduced section 366 applies If the intention is to cause grievous hurt or so dispose of the person abducted as to put him in danger of being subjected to grievous hurt or slavery or the unnatural lust of any person section 367 applies If the abducted person is a child under the age of ten and the intention is to take dishonestly any movable property from its person section 369 applies It is said that unless an offence under one of these sections is likely to be committed the fifth clause of section 100 can have no application On a plain reading however of that clause there does not seem to be any reason for holding that the word abducting used there means anything more than what is defined as abduction in section 362 652 It is true that the right of private defence of person arises only if an offence against the human body is committed Section 100 gives an extended right of private defence of person in cases where the offence which occasions the exercise of the right is of any of the descriptions enumerated therein Each of the six clauses of section 100 talks of an assault and assault is an offence against the human body see section 352 So before the extended right under section 100 arises there has to be the offence of assault and this assault has to be of one of the six types mentioned in the six clauses of the section The view in Ram Saiya s case 1 seems to overlook that in each of the six clauses enumerated in section 100 there is an offence against the human body namely assault So the right of private defence arises against that offence and what section 100 lays down is that if the assault is of an aggravated nature as enumerat ed in that section the right of private defence extends even to the causing of death The fact that when describing the nature of the assault some of the clauses in section 100 use words which are themselves offences as for example grievous hurt rape kidnapping wrongfully confining does not mean that the intention with which the assault is committed must always be an offence in itself In some other clauses the words used to indicate the intention do not themselves amount to an offence under the Penal Code For example the first clause says that the assault must be such as may reasonably cause the apprehension of death Now death is not an offence anywhere in the Penal Code Therefore when the word abducting is used in the fifth clause that word by itself reed not be an offence in order that clause may be taken advantage of by or on behalf of a person who is assaulted with intent to abduct All that the clause requires is that there should be an assault which is an offence against the human body and that assault should be with the intention of abducting and whenever these elements are present the clause will be applicable Further the definition of abduction is in two parts namely i abduction where a person is compelled 1 ILR 1948 All 653 by force to go from any place and ii abduction where a person is induced by any deceitful means to go from any place Now the fifth clause of section 100 contemplates only that kind of abduction in which force is used and where the assault is with the intention of abducting the right of private defence that arises by reason of such assault extends even up to the causing of death It would in our opinion be not right to expect from a person who is being abducted by force to pause and consider whether the abductor has further intention as provided in one of the sections of the Penal Code quoted above before he takes steps to defend himself even to the extent of causing death of the person abducting The framers of the Code knew that abduction by itself was not an offence unless there was some further intention coupled with it Even so in the fifth clause of section 100 the word abducting has been used without any further qualification to the effect that the abducting must be of the kind mentioned in section 364 onwards We are therefore of opinion that the view taken in Ram Saiya s case 1 is not correct and the fifth clause must be given full effect according to its plain meaning Therefore when the appellant s sister was being abducted even though by her husband and there was an assault on her and she was being compelled by force to go away from her father s place the appellant would have the right of private defence of the body of his sister against an assault with the intention of abducting her by force and that right would extend to the causing of death The next question is whether the appellant was within the restrictions prescribed by section 99 It was urged that the right of private defence never extends to the inflicting of more harm than what is necessary for the purpose of defending and that in this case the appellant inflicted more harm than was necessary We are of opinion that this is not so The appellant gave only one blow with a knife which he happened to have in his pocket It is unfortunate that the blow landed right into the heart and therefore Gopal died But considering that the appellant had given 1 ILR 1948 All 83 654 only one below with an ordinary knife which if it had been a little this way or that could not have been fatal it cannot be said that he inflicted more harm than was necessary for the purpose of defence As has been pointed out in Amjad Khan vs The State 1 these things cannot be weighed in too fine a set of scales or in golden scale We therefore allow the appeal and hold that the appellant had the right of private defence of person under the fifth clause of section 100 and did not cause more harm than was necessary and acquit him Appeal allowed

The appellant company incorporated in India entered into a contract on June 18 1945 for the supply of five hundred bales of jute with the respondent company which was incorporated in England and which had its registered office in London The contract inter alia provided that in the event of default of tender or delivery the seller shall pay to the buyer as and for liquidated damages 10s per ton plus the excess if any of the market value over the contract price the market value being that of jute contracted for on the day following the date of default There was a provision for arbitration under which any claim or dispute whatever arising out of or in relation to this contract or its construction or fulfilment shall be referred to arbitration in London in accordance with the bye laws of the London jute Association Disputes having arisen regarding the performance of the contract the respondent referred the matter to the arbitration of the London jute Association who appointed two of its members as the arbitrators The appellant did not reply to the notice given by the arbitrators but filed an application on 570 August 10 1949 under section 33 Of the in the Calcutta High Court praying inter alia a for a declaration that the arbitration agreement was void on the ground of uncertainty and b for a declaration that there was in fact and in law no contract between the parties on account of mutual mistake of the parties Notice was given by the appellant to the respondent and the London jute Association that further steps in the arbitration proceedings should not be taken pending disposal of the application under section 33 Of the The arbitrators however proceeded with the arbitration and gave their award on October 17 1949 On November 26 195i an application was filed by the respondent in the Calcutta High Court under section 5 of the praying that judgment be pronounced in accordance with the award The appellant contended that the award was invalid on the grounds inter alia i that the award was bad under section 35 of the as it was made after the receipt of the notice of filing of the petition dated August 10 1940 under section 33 of the by the respondent and the arbitrators and during the pendency of the said application and 2 that the liquidated damages provided under the award included not only the difference between the contract price and the market price on the date of default but also a further sum of 10s per ton that the extra amount was against the provisions Of sections 73 and 74 of the and that therefore the award was bad on the face of it and could not be enforced in view of the provisions Of section 7e of the which lays down that an award cannot be enforced in India if it is contrary to the Law of India Held i that the subject matter of the legal proceedings under section 33 Of the which relates to the existence and validity of the arbitration agreement are not matters within the competence of the arbitrators and do not therefore cover any part of the subject matter of the reference Consequently section 35 of the is inapplicable 2 The award does not violate the provisions of sections 73 and 74 Of the as the arbitrators have only awarded the maximum amount named in the contract

Civil Appeal No 342 of 1956 Appeal from the judgment and order dated September 141956 of the Bombay High Court in Special Civil Application No 2496 of 1956 R V section Mani for the appellant C K Daphtary Solicitor General of India B Sen and R H Dhebar for the respondents August 28 The Judgment of the Court was delivered by section K DAS J This is an appeal on a certificate granted by the High Court of Bombay under article 132 1 of the Constitution and the question involved in the appeal is the true scope and effect of article 3 of the Constitution particularly of the proviso thereto as it stands after the Constitution Fifth Amendment Act 1955 607 On December 22 1953 the Prime Minister of India made a statement in Parliament to the effect that a Commission would be appointed to examine objectively and dispassionately the question of the reorganisation of the States of the Indian Union so that the welfare of the people of each constituent unit as well as the nation as a whole is promoted This was followed by the appointment of a Commission under a resolution of the Union Government in the Ministry of Home Affairs dated December 29 1953 The Commission submitted its report in due course and on April 18 1956 a Bill was introduced in the House of the People Lok Sabha entitled The States Reorganisation Bill No 30 of 1956 Clauses 8 9 and 10 of the said Bill contained a proposal for the formation of three separate units namely 1 Union territory of Bombay 2 State of Maharashtra including Marathawada and Vidharbha and 3 State of Gujurat including Saurashtra and Cutch The Bill was introduced in the House of the People on the recommendation of the President as required by the proviso to article 3 of the Constitution It was then referred to a Joint Select Committee of the House of the People Lok Sabha and the Council of State Rajya Sabha The Joint Select Committee made its report on July 16 1956 Some of the clauses of the Bill were amended in Parliament and on being passed by both Houses it received the President s assent on August 31 1956 and became known as the 37 of 1956 hereinafter called the Act It is necessary to read here section 81 of the Act which instead of constituting three separate units as originally proposed in the Bill constituted a composite State of Bombay as stated therein S8 1 As from the appointed day there shall be formed a new Part A State to be known as the State of Bombay comprising the following territories namely a the territories of the existing State of Bombay excluding 608 i Bijapur Dharwar and Kanara districts and Belgaum district except Chandgad taluka and ii Abu Road taluka of Banaskantha district b Aurangabad Parbhani Bhir and Osmanabad districts Ahmadpur Nilanga and Udgir taluks of Bidar district Nanded district except Bichkonda and Jukkal circles of Deglur taluk and Modhol Bhiansa and Kuber circles of Modhol taluk and Islapur circle of Boath taluk Kinwat taluk and Rajura taluk of Adilabad district in the existing State of Hyderabad c Buldana Akola Amaravati Yeotmal Wardha Nagpur Bhandara and Chanda districts in the existing State of Madhya Pradesh d the territories of the existing State of Saurashtra and e the territories of the existing State of Kutch and thereupon the said territories shall cease to form part of the existing States of Bombay Hyderabad Madhya Pradesh Saurashtra and Kutch respectively The appointed day from which the new State of Bombay came into existence was defined in the Act as meaning November 1 1956 But before that date to wit on September 12 1956 the appellant herein filed a petition under article 226 of the Constitution in the High Court of Judicature at Bombay in which he alleged in substance that the formation of the composite State of Bombay as one unit instead of the three separate units as originally proposed in the Bill contravened article 3 of the Constitution inasmuch as the Legislature of the State of Bombay had no opportunity of expressing its views on the formation of such a composite State The appellant asked for a declaration that section 8 and other consequential provisions of the Act were null and void and prayed for an appropriate writ directing the State Government of Bombay and the Union Government not to enforce and implement the same This writ petition was heard by the Bombay High Court on September 14 1956 and by its judgment of even date the High 609 Court dismissed the petition holding that there was no violation or contravention of article 3 of the Constitution The appellant then obtained the necessary certificate under article 1321 of the Constitution and filed his appeal in this Court on October 18 1956 on the strength of that certificate Now it is both convenient and advisable to read at this stage article 3 of the Constitution as amended by the Constitution Fifth Amendment Act 1955 the alleged violation of which is the main ground of attack by learned counsel for the appellant article 3 Parliament may by law a form a new State by separation of territory from any State or by uniting two or more States or parts of States or by uniting any territory to a part of any State b increase the area of any State c diminish the area of any State d alter the boundaries of any State and e alter the name of any State Provided that no Bill for the purpose shall be introduced in either House of Parliament except on the recommendation of the President and unless where the proposal contained in the Bill affects the area boundaries or name of any of the States the Bill has been referred by the President to the Legislature of that State for expressing its views thereon within such period as may be specified in the reference or within such further period as the President may allow and the period so specified or allowed has expired It is clear that by its substantive part the Article gives a certain power to Parliament viz the power to make a law in respect of any of the five matters mentioned in cls a to e thereof This power includes the making of a law to increase the area of any State diminish the area of any State and alter the name of any State The substantive part is followed by a proviso which lays down certain conditions for the exercise of the Power It states that no Bill for the purpose the word purpose obviously has reference 610 to the power of making law in respect of the matters mentioned in the substantive part shall be introduced in either House of Parliament except on the recommendation of the President and unless where the proposal contained in the Bill affects the area boundaries or name of any of the States the Bill has been referred by the President to the Legislature of that State for expressing its views thereon Thus the proviso lays down two conditions one is that no Bill shall be introduced except on the recommendation of the President and the second condition is that where the proposal contained in the Bill affects the area boundaries or name of any of the States the Bill has to be referred by the President to the Legislature of the State for expressing its views thereon The period within which the State Legislature must express its views has to be specified by the President but the President may extend the period so specified If however the period specified or extended expires and no views of the State Legislature are received the second condition laid down in the proviso is fulfilled in spite of the fact that the views of the State Legislature have not been expressed The intention seems to be to give an opportunity to the State Legislature to express its views within the time allowed if the State Legislature fails to avail itself of that opportunity such failure does not invalidate the introduction of the Bill Nor is there anything in the proviso to indicate that Parliament must accept or act upon the views of the State Legislature Indeed two State Legislatures may express totally divergent views All that is contemplated is that Parliament should have before it the views of the State Legislatures as to the proposals contained in the Bill and then be free to deal with the Bill in any manner it thinks fit following the usual practice and procedure prescribed by and under the rules of business Thus the essential content of the second condition is a reference by the President of the proposal contained in the bill to the State Legislature to express its views thereon within the time allowed It is worthy of note and this has been properly emphasised in the judgment of the High 611 Court that what has to be referred to the State Legislature by the President is the proposal contained in the Bill The proviso does not say that if and when a proposal contained in the Bill is modified subsequently by an amendment properly moved and accepted in Parliament there must be a fresh reference to the State Legislature and a fresh bill must be introduced It was pointed out in the course of arguments that if the second condition required a fresh reference and a fresh bill for every amendment it might result in an interminable process because any and every amendment of the original proposal contained in the Bill would then necessitate a fresh Bill and a fresh reference to the State Legislature Other difficulties might also arise if such a construction were put on the proviso for example in a case where two or three States were involved different views might be expressed by the Legislatures of different States If Parliament were to accept the views of one of the Legislatures and not of the other a fresh reference would still be necessary by reason of any amendment in the original proposal contained in the Bill We are referring to these difficulties not because we think that a forced meaning should be given to the words of the proviso to avoid certain difficulties which may arise We are of the view that the words of the proviso are clear enough and bear their ordinary plain meaning According to the accepted connotation of the words used in the proviso the second condition means what it states and what has to be referred to the State Legislature is the proposal contained in the Bill it has no such drastic effect as to require a fresh reference every time an amendment of the proposal contained in the Bill is moved and accepted in accordance with the rules of procedure of Parliament That in the present case the States Reorganisation Bill was introduced on the recommendation of the President has not been disputed nor has it been disputed that the proposal contained in the Bill was referred to the State Legislatures concerned and their views were received According to learned counsel for 612 the appellant however this was not enough compliance with the second condition of the proviso He has put his argument in several ways Firstly he has contended that the word State in article 3 should be given a larger connotation so as to mean and include not merely the geographical entity called the State but its people as well this according to learned counsel for the appellant is the democratic process incorporated in article 3 and according to this democratic process so learned counsel has argued the representatives of the people of the State of Bombay assembled in the State Legislature should have been given an opportunity of expressing their views not merely on the proposal originally contained in the Bill but on any substantial modification thereof Secondly and following the same line of argument he has contended that the word Bill should be given an extended meaning so as to include any amendment at least any substantial amendment of the proposal contained in the Bill and thirdly he has contended that in the present case the formation of a new Bombay State as one unit was so different from the three units originally proposed in the Bill that it was not really an amendment of the original proposal but a new I proposal altogether for which a fresh Bill and a fresh reference were necessary We proceed now to consider these contentions It is necessary to state at the outset that our task is to determine on a proper construction the true scope and effect of article 3 of the Constitution with particular reference to the second condition laid down by the proviso thereto We bring to our task such considerations as are germane to the interpretation of an organic instrument like the Constitution but it will be improper to import into the question of construction doctrines of democratic theory and practice obtaining in other countries unrelated to the tenor scheme and words of the provisions which we have to construe In plain and unambiguous language the proviso to article 3 of the Constitution states that where the proposal contained in the Bill affects the area boundaries or name of any of the States the Bill must be referred by the 613 President to the Legislature of the State for expressing its views It does not appear to us that any special or recondite doctrine of democratic process is involved therein Learned counsel for the appellant has invited our attention to article IV section 3 of the American Constitution which says inter alia that no new State shall be formed or erected within the jurisdiction of any other State nor any State be formed by the junction of two or more States or parts of States without the consent of the Legislatures of the State concerned as well as of the Congress That provision is quite different from the proviso we are considering the former requires the consent of the State Legislature whereas the essential requirement of our proviso is a reference by the President of the proposal contained in the Bill for the expression of its views by the State Legislature For this reason we do not think that the decisions relied on by learned counsel for the appellant State of Louisiana vs State of Mississipi 1 and State of Washington vs State of Oregon1 are in point The expression I State occurs in article 3 and as has been observed in the State of Texas vs George W White 3 that expression may have different meanings it may mean a territorial region or people united in political relation living in that region or it may refer to the government under which the people live or it may even convey the combined idea of territory people and government Article 1 of our Constitution says that India is a Union of States and the States and the territories thereof are specified in a Schedule There is therefore no difficulty in understanding what is meant by the expression State in article 3 It obviously refers to the States in the First Schedule and the I Legislature of the State refers to the Legislature which each State has under the Constitution That being the position we see no reasons for importing into the Construction of article 3 any doctrinaire consideration of the sanctity of the rights of States or even for giving an extended meaning to the expression I State occurring therein None of the constituent units of the 1 2 3 i869 78 614 Indian Union was sovereign and independent in the sense the American colonies or the Swiss Cantons were before they formed their federal unions The Constituent Assembly of India deriving its power from the sovereign people was unfettered by any previous commitment in evolving a constitutional pattern suitable to the genius and requirements of the Indian people as a whole Unlike some other federal legislatures Parliament representing the people of India as a whole has been vested with the exclusive power of admitting or establishing new States increasing or diminishing the area of an existing State or altering its boundaries the Legislature or Legislatures of the States concerned having only the right to an expression of views on the proposals It is significant that for making such territorial adjustments it is not necessary even to invoke the provisions governing constitutional amendments The second line of argument presented on behalf of the appellant is that the word I Bill in the proviso must be interpreted to include an amendment of any of the clauses of the Bill at least any substantial amendment thereof and any proposal contained in such amendment must be referred to the State Legislature for expression of its views We do not think that this interpretation is correct Wherever the introduction of an amendment is subject to a condition precedent as in the case of financial bills the Consti tution has used the expression I A bill or amendments eg in article 117 No such expression occurs in art 3 Secondly under article 118 Parliament has power to make rules of its own procedure and conduct of business including the moving of amendments etc Rule 80 of the rules of procedure of the House of the People Lok Sabha lays down the conditions which govern the admissibility of amendments to clauses or schedules of a Bill and one of the conditions is that an amendment shall be within the scope of the Bill and relevant to the subject matter of the clause to which it relates Article 122 1 of the Constitution says that the validity of any proceedings in Parliament shall not be called in question on the ground of any alleged 615 irregularity of procedure In view of these provisions we cannot accept an interpretation of article 3 which may nullify the effect of article 122 an interpretation moreover which is based not on the words used therein but on certain abstract and somewhat illusory ideas of what learned counsel for the appellant has characterised as the democratic process We recognise that the formation of a new composite State of Bombay as in section 8 of the Act was a substantial modification of the original proposal of three units contained in the Bill That however does not mean that it was not a proper amendment of the original proposal or that the State Legislature had no opportunity of expressing its views on all aspects of the subject matter of the proposal The High Court rightly pointed out that in the debates in the State Legislature several members spoke in favour of a composite State of Bombay The point to note is that many different views were expressed in respect of the subject matter of the original proposal of three units and as a matter of fact it cannot be said that the State Legislature had no opportunity of expressing its views in favour of one composite unit instead of three units if it so desired It cannot be said that the proposal of one unit instead of three was not relevant or pertinent to the subject matter of the original proposal ID T H Vakil vs Bombay Presidency Radio Club Ltd 1 a decision on which learned counsel for the appellant has relied the question arose of the power of the chairman of a club to rule an amendment out of order It was said therein that 1 an amendment must be germane to the subject matter of the original proposition and 2 it must not be a direct negative thereof Judged by these two conditions it cannot be said that the proposal of one unit instead of three was not germane to the subject matter of the original proposal or was a direct negative thereof We are unable therefore to accept the third contention of learned counsel for the appellant to the effect that the formation of a new Bombay State as envisaged in section 8 of the Act was so completely divorced from the proposal contained in 1 616 the Bill that it was in reality a new bill and therefore a fresh reference was necessary It is advisable perhaps to add a few more words about article 1221 of the Constitution Learned counsel for the appellant has posed before us the question as to what would be the effect of that Article if in any Bill completely unrelated to any of the matters referred to in Cls a to e of article 3 an amendment was to be proposed and accepted changing for example the name of a State We do not think that we need answer such a hypothetical question except merely to say that if an amendment is of such a character that it is not really an amendment and is clearly violative of article the question then will be not the validity of proceedings in Parliament but the violation of a constitutional provision That however is not the position in the present case For these reasons we hold that there was no violation of article 3 and the Act or any of its provisions are not invalid on that ground The appeal accordingly fails and is dismissed with costs Appeal dismissed

The appellants were carrying on motor transport business in Krishna District in Andhra Pradesh The General Manager of the State Transport Undertaking published a scheme for nationalisation of motor transport and objections to the said scheme were invited The appellants among others filed their objections The Secretary in charge of the Transport Department gave personal hearing to the objectors and heard the representation made on behalf of the State Transport Undertaking The Chief Minister who was in charge of transport passed the order approving the scheme The appellants moved this Court under article 32 of the Constitution for quashing the said scheme and this Court in Gullapalli Nageswara Rao vs Andhra Pradesh Road Transport Corporation previously decided held that the Secretary in charge of the Transport Department was incompetent to hear the objections on the around that no party could be a judge in his own cause and quashed the order approving the scheme Thereafter notices were issued by the Government to the objectors The Chief Minister himself heard the representatives of the objectors and the Road Transport Corporation and passed the order approving the scheme as originally published The appellants moved the High Court under article 226 of the Constitution for writs of certiorari quashing the order passed by the Government confirming the scheme and subsequent orders Made by the Regional Transport Authority canceling their stage carriage permits The High Court rejected the petitions and the appellants appealed It was contended inter alia on their behalf that the same infirmity which attached to the Secretary in charge of the Transport Department on the previous occasion attached to the Chief Minister who was in charge of transport and rendered him incompetent to hear the objections Held that the two well settled principles of the doctrine of bias that applied equally to judicial as well as quasi judicial tribunals were i that no man shall be a judge in his own cause and that 2 justice should not merely be done but must also appear to be done Any kind of bias therefore in a judicial authority whether financial or other for or against any party or any position that might impute bias must disqualify him as a judge 581 But when a State Legislature or the Parliament in trans gression of the aforesaid principles by statute empowers an authority to be a judge in its own cause or decide a dispute in which it has an official bias such statute unlike one passed by the English Parliament has to stand scrutiny in the light of the fundamental rights enshrined in the Constitution The King vs Bath Compensation Authority and The King vs Leicester justices 1927 i KB 557 discussed In the instant case however the relevant provisions of the Act do not sanction any transgression of the aforesaid principles of natural justice or authorise the Government to constitute itself a judge in its own cause Nor could it be said that the State Government in the present case acted in violation of the aforesaid principles Since the appellants never questioned the competence of the Chief Minister to decide the objections on the last occasion and obtained the judgment of this Court on that basis it was not open to them at this stage to reopen the closed controversy or take a contrary position The position of the Chief Minister was quite distinct from that of the Secretary of the Department While the Secretary of the Department was its head and so a part of it the Minister in charge was only primarily responsible for the disposal of the business pertaining to that Department It was not therefore correct to say that the Chief Minister was a part of the Department constituted as a Statutory Undertaking under the Act

Civil Appeal No 254 of 1954 Appeal by special leave from the judgment and order dated February 19 1952 of the Patna High Court in Misc Case No 244 of 1949 B Sen section K Majumdar and I N Shrojj for the appellant M C Setalvad Attorney General for India B K Saran and R C Prasad for the respondent May 15 The Judgment of the Court was delivered by HIDAYATULLAH J This appeal with the special leave of this Court has been filed by Maharajadhiraja 334 Sir Kameshwar Singh of Darbhanga hereinafter referred to as the assessee against the judgment of the High Court of Patna dated February 19 1952 by which the High Court answered in the affirmative the following two questions referred to it under section 251 of the Bihar Agricultural 1 Whether in view of the circumstances of the case and particularly the manner in which after due consideration the learned Agricultural Incometax Officer in his first judgment dated the 5th January 1946 had held that the assessee was not liable to be assessed for the receipt on account of the zarpeshgi lease the learned Agricultural Incometax Officer has jurisdiction to revise his own order under section 26 of the Act and 2 Whether if he had the jurisdiction to revise his own order under section 26 of the Act the income from the zarpeshgi lease of the assessee was taxable under the Act The facts of the case lie within a very narrow com For the assessment year 1944 45 which corresponded to the year of account 1351 Fasli the assessee returned Rs 3743520 as his agricultural income He claimed a deduction of Rs 942137 3 10 12 on account of land revenue rent etc including a sum of Rs 282192 shown to have been paid to the Tekari Raj from which two leasehold properties were taken on zarpeshgi lease by indentures dated August 15 1931 and January 31 1936 respectively The amount was sought to be deducted as a capital receipt The Agricultural Income tax Officer of Darbhanga by his order dated December 28 1945 accepted this contention and exempted the amount from payment of agricultural income tax He observed Out of Rs 942137 3 10 12 claimed on account of Land Revenue and rent Rs 282192 is shown as payment to Tekari Raj and then taken towards the realisation of Zarpeshgi Loan to self I have gone through the bond of Gaya Zarpeshgi Lease This payment is allowed to the assessee as it is a capital income according to the terms of the bond At the 335 same time I think this amount of Rs 282192 should be treated as income to Tekari Raj and assessed in Gaya Circle along with other income of Tekari Raj as it is credited to that Raj by the assessee and then set off against the Zarpeshgi loan advanced to Tekari Raj The assessment was approved by the Assistant Commissioner of Agricultural Income tax on January 4 1946 and on the day following the Income tax Officer passed his formal order and issued a demand notice The assessee paid two instalments out of three when on March 22 1946 the Agricultural Income tax Officer recorded the following order It appears that some agricultural income from Gaya Zarpeshgi lease which should have been taxed for the year 1944 45 1351 Fasli has escaped assessment Issue notice under section 26 fixing the 20th May 1947 After the assessee appeared a supplementary assessment order was passed and Rs 39512 6 0 were assessed as tax on Rs 252879 In deciding the matter the Agricultural Income tax Officer gave the following reasons According to the terms of the lease the assessee is to remain in possession and enjoy the usufruct of the lands given in lease for a fixed number of years on payment of an annual thica rent of Rs 1000 to the lessor and thus satisfy himself for the entire amount of consideration money of the zarpeshgi lease in question In fact by this zarpeshgi lease the assessee has been given the grant of lands for a fixed term on a fixed rent Whatever income is derived from these lands during the tenure of this lease is the income of the assessee and as such it should be taxed in the hands of the assessee and not in the hands of the lessor The Agricultural Income tax Officer purported to act under section 26 of the Bihar Agricultural hereinafter referred to as the Act The assessee appealed The Commissioner of Agricultural Income tax reversed the decision He pointed 336 out that the agricultural income from Tekari Raj property was returned by the assessee but was held to be exempt and thus could not be said to have escaped assessment so as to bring the case within section 26 of the Act The Province of Bihar as it was then called moved the Board of Revenue Bihar which by a resolution dated February 7 1948 referred the two questions to the High Court of Patna The Board did not express any opinion on the two questions In the High Court both the questions were answered in favour of the State of Bihar Leave having been refused by the High Court the assessee applied for and obtained special leave from this Court Section 26 of the Act under which the Agricultural Income tax Officer purported to act is substantially the same as section 34 of the Indian prior to its amendment Necessarily therefore the rulings on the interpretation of the latter section were freely cited by the contending parties Section 26 of the Act reads as follows If for any reason any agricultural income chargeable to agricultural income tax has escaped assessment for any financial year or has been assessed at too low a rate the Agricultural Income tax Officer may at any time within one year of the end of that financial year serve on the person liable to pay agricultural income tax on such agricultural income or in the case of a company on the principal officer thereof a notice containing all or any of the requirements which may be included in a notice under subsection 2 of section 17 and may proceed to assess or re assess such income and the provisions of this Act shall so far as may be apply accordingly as if the notice were a notice issued under that subsection Provided that the tax shall be charged at the rate at which it would have been charged if such income had not escaped assessment or full assessment as the case may be For facility of reference the previous section 34 before the amendment in 1948 of the Indian may likewise be quoted here It read 337 If in consequence of definite information which has come into his possession the Income tax Officer discovers that income profits or gains chargeable to income tax have escaped assessment in any year or have been under assessed or have been assessed at too low a rate or have been the subject of excessive relief under this Act the Income tax Officer may in any case in which he has reason to believe that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars thereof at any time within eight years and in any other case at any time within four years of the end of that year serve on the person liable to pay tax on such income profits or gains or in the case of a company on the principal officer thereof a notice containing all or any of the requirements which may be included in a notice under sub section 2 of section 22 and may proceed to assess or re assess such income profits or gains and the provisions of this Act shall so far as may be apply accordingly as if the notice were a notice issued under that sub section Provided that the tax shall be charged at the rate at which it would have been charged had the income profits or gains not escaped assessment or full assessment as the case may be The short question is whether income which was returned but was held to be exempt from tax could be said to have escaped assessment so that the Agricultural Income tax Officer could exercise his powers under section 26 of the Act to tax it This question arising under section 34 of the Indian has been considered on many an occasion by the High Courts and also by the Privy Council and this Court The Patna High Court has correctly pointed out that the preponderance of opinion is in favour of holding that such income can be said to have escaped assessment The High Court in deciding that the Agricultural Income tax Officer had jurisdiction to revise his earlier assessment referred to the opening words of section 26 namely for any reason and observed that it was 43 338 not necessary to give a restricted meaning to the word escaped and that if an item of income was not charged to tax due to a mistake or oversight on the part of the taxing authorities that item could well come within the term escaped According to the High Court the phrase escaped assessment was not confined to cases where there had been an inadvertent omission but in view of the later part of the section where income has been assessed at too low a rate included a case where there was a deliberate action Learned counsel for the assessee contends that the generality of the words any reasonhas no bearing upon the construction of the wordsescaped assessment that the word assessment does not connote the final determination to tax income but the entire process by which the result is reached and that inasmuch as the income was actually returned and held to be exempt there was no question of an escaped assessment because it passed through the processing of income He also contends that the later part of the section which deals with assessment at too low a rate cannot be called in aid to decide when income can be said to have escaped assessment He submits that the section has no application to cases where income is returned but is held to be not liable to tax and relied upon the following cases Maharaja Bikram Kishore vs Province of Assam 1 Commissioner of Income tax vs Day Brothers 2 Madan Mohan Lal vs Commissioner of Income tax 3 per Dalip Singh J and Chimanram Motilal Gold and Silver Bombay vs Commissioner Of Income tax Central Bombay 4 per Kania J as he then was The learned Attorney General drew the attention of the Court to other cases in which the view has been taken that even if income is returned and deliberately not charged to tax the condition required for the application of the section is fulfilled He cited the following cases in support of his contention AngloPersian Oil Co India Ltd vs Commissioner of IncometaX 5 P C Mullick and D 0 Aich In re The 11949 21936 319351 4 BOM 5 1933 ITR 129 6 339 Commissioner of Income tax vs Raja of Parlakimedi 1 Chimanram Moti Lal Gold and Silver Bombay vs Commissioner of Income tax Central Bombay 2 and Madan Mohan Lal vs Commissioner of Income tax 3 The learned Attorney General also relied strongly upon a recent decision of this Court in Kamal Singh vs Commissioner of Income tax Bihar and Orissa 4 where Gajendragadkar J after a review of all the authorities held that section 34 of the Indian Income tax Act was applicable to a case where an item of income was returned but deliberately and after consideration was held to be not liable to tax Learned counsel for the assessee contends that the point was left open in that case and refers to Messrs Chatturam Horilram Ltd vs Commissioner of Income tax Bihar and Orissa5 as having held the contrary Before referring to the other authorities of the High Courts it will be proper to see if the two cases of the Supreme Court are in point or not and if so which of them In Kamal Singh s case 4 the point arose under the following circumstances The father of the appellant in that case was assessed to income tax for the year 1945 46 The total income assessed to incometax was Rs 100000 which included a sum of RE 93604 received by him on account of interest on arrears of rent due to him after deduction of collection charges It was urged before the Income tax Officer that this interest was not assessable to income tax being agricultural income in view of the decision of the Patna High Court in Kamakshya Narain Singh vs Commissioner of Income tax6 The Income tax Officer did not accept this contention on the ground that an appeal was pending against the Patna High Court s decision before the Privy Council On appeal the Appellate Assistant Commissioner held that the Income tax Officer was bound to follow the decision of the High Court and he set aside the order and directed the Income tax Officer to make a fresh assessment The Income tax Officer thereupon deducted the amount 1 Mad 2 Bom 3 4 5 1955 2 S CR 290 6 I946 340 and brought only the remaining income after some minor adjustments to tax His order was passed on August 20 1946 In the year 1948 the Privy Council reversed the Patna High Court s decision The judgment of the Privy Council is reported in Commissioner of Income tax vs Kamakshya Narain Singh The Income tax Officer then issued a notice under section 34 of the Indian and after hearing the party assessed the sum of Rs 93604 After sundry procedure which it is not necessary to detail the matter reached this Court and the question which was before it was whether in the circumstances of the case the assessment order under section 34 of the Act of the interest on arrears of rent is legal Two questions were involved The first was whether the word information was wide enough to include knowledge about the state of the law or about a decision on a point of law With that point we are not concerned in this case The second was when income could be said to have escaped assessment Emphasis was laid on the word assessment in the arguments and it was contended that it denoted not merely the order of assessment but included all steps taken for the purpose of levying of tax and during the process of taxation It was also contended that escaped meant that the income must have eluded observation search etc or in other words eluded the notice of the Income tax Officer Gajendragadkar J however did not confine the phrase to such a narrow meaning He observed Even if the assesse has submitted a return of his income cases may well occur where the whole of the income has not been assessed and such part of the income as has not been assessed can well be regarded as having escaped assessment In the present case the rents received by the assessee from his agricultural lands were brought to the notice of the Income tax Officer the question as to whether the said amount can be assessed in law was considered and it was ultimately held that the relevant decision of the Patna High Court Which was binding on 11948 341 the department justified the assessee s claim that the said income was not liable to be assessed to tax There is no doubt that a part of the assessee s income had not been assessed and in that sense it has clearly escaped assessment Can it be said that because the matter was considered and decided on the merits in the light of the binding authority of the decision of the Patna High Court no income has escaped assessment when the said Patna High Court decision has been subsequently reversed by the Privy Council We see no justification for holding that cases of income escaping assessment must always be cases where income has not been assessed owing to inadvertence or oversight or owing to the fact that no return has been submitted In our opinion even in a case where a return has been submitted if the Income tax Officer erroneously fails to tax a part of assessable income it is a case where the said part of the income has escaped assessment The appellant s attempt to put a very narrow and artificial limitation on the meaning of the word escape in section 341b cannot therefore succeed The assessee seeks to distinguish that case on the ground that this Courtlaid down the law in the special circumstances where a new interpretation to the law was given and that it was not a case of the Incometax Officer changing his mind He contends that there was at least some information which had come to the Income tax Officer on which his subsequent action could be rested The learned counsel argued that Gajendragadkar J had expressly left the question open where there was no information but the Incometax Officer merely changed his mind without any information from an external source Reference in this connection is made to the following observations in the judgment It appears that in construing the scope and effect of the provisions of section 34 the High Courts have had occasion to decide whether it would be open to the Income tax Officer to take action under a 34 on the ground that he thinks that his original decision in making the order of assessment was 342 wrong without any fresh information from an external source or whether the successor of the Income tax Officer can act under section 34 on the ground that the order of assessment passed by his predecessor was erroneous and divergent views have been expressed on this point Mr Rajagopala Sastri for the respondent suggested that under the provisions of section 34 as amended in 1948 it would be open to the Income tax Officer to act under the said section even if he merely changed his mind without any information from an external source and came to the conclusion that in a particular case he had erroneously allowed an assessee s income to escape assessment We do not propose to express any opinion on this point in the present appeal We may say at once that the words of section 26 of the Act do not involve possessing of or coming by some fresh information The section says If for any reason any agricultural income chargeable to agricultural income tax has escaped assessment for any financial year the Agricultural Income tax Officer may proceed to assess such income The use of the words any reason which are of wide import dispenses with those conditions by which section 34 of the Indian is circumscribed The point which was thus left over by Gajendragadkar J cannot arise in the context of the Act we are dealing with In view of this clear opinion it is hardly necessary for us to consider again the cases which Preceded the decision of this Court The most important of them are considered in the judgment of Gajendragadkar J Most of the cases are also considered in the judgment of Harries C J and Mukherjea J as he then was in Maharaja Bikram Kishore vs Province of Assam 1 In all the cases where a contrary view was taken reliance was placed upon the decision of the Privy Council in Rajendra Nath Mukerjee vs Income tax Commissioner particularly a passage wherein it was observed 1 2 1933 LR 61 IA 10 16 343 The fact that section 34 requires a notice to be served calling for a return of income which had escaped assessment strongly suggests that income which has already been duly returned for assessment cannot be said to have escaped assessment within the statutory meaning The facts of the case were entirely different The income was returned and was not yet processed when the notice under section 34 was issued The key to the case is furnished by the approval by their Lordships of the observations of Rankin CJ in In re Lachhiram Basantlal 1 that Income has not escaped assessment if there are pending at the time proceedings for the assessment of the assessees income which have not yet terminated in a final assessment thereof Their Lordships held that the expression has escaped assessment should not be read as equivalent to has not been assessed because so to do gives too arrow a meaning to the word assessment and too wide a meaning to the word escaped That those observations were related to the facts then before their Lordships is clear from the following passage To say that the income of Burn Co which in January 1928 was returned for assessment and which was accepted as correctly returned though it was erroneously included in the assessment of Martin Co has escaped assessment in 1927 28 seems to their Lordships an inadmissible reading Their Lordships find it sufficient for the disposal of the appeal to hold as they do that the income of Burn Co did not escape assessment in the year 1927 28 within the meaning of section 34 It was in the context of the pendency of assessment proceedings that the remarks were made and the matter is decisively cleared of any doubt by the following passage It may be that if no notice calling for a return under section 22 is issued within the tax year then section Cal 909 912 344 provides the only means available to the Crown of remedying the omission but that is a different matter In our opinion the error in the cases relied upon by the assessee arises in using the dicta in the above case shorn of the context in which they were made and applying them to facts where they cannot The judgment of Gajendragadkar J has dealt with the matter if we may say so respectfully very adequately and we do not consider it necessary to cover the same ground again The preponderance of opinion in the High Courts is also to accept the contrary view and we think rightly The learned counsel for the assessee argued that the decision of this Court in Messrs Chatturam Horilram Ltd vs Commissioner of Income tax Bihar Orissa 1 discloses a different view and that we should follow it in preference to the later view of Gajendragadkar J We do not think that in the case last cited the point was the same The same case was relied upon before the Bench of Venkatarama Aiyar Gajendragadkar and Sarkar JJ and Gajondragadkar J distinguished it This is what he observed Mr Sastri has also relied on the decision of this Court in Messrs Chatturam Horilram Ltd vs Commissioner of Income tax Bihar Orissa 1 in support of his construction of section 34 In Chatturam s case 1 the assessee had been assessed to income tax which was reduced on appeal and was set aside by the Income Tax Appellate Tribunal on the ground that the Indian Finance Act of 1939 was not in force during the assessment year in Chota Nagpur On a reference the decision of the tribunal was upheld by the High Court Subsequently the Governor of Bihar promulgated the Bihar Regulation IV of 1942 and thereby brought into force the Indian Finance Act of 1939 in Chota Nagpur retrospectively as from March 30 1939 This ordinance was assented to by the Governor General On February 8 1944 the Income Tax Officer passed an order in pursuance of which proceedings were taken against 11955 2 SCR 290 345 the assessee under the provisions of section 34 and they resulted in the assessment of the assessee to incometax The contention which was raised by the assessee in his appeal to this Court was that the notice issued against him under section 34 was invalid This Court held that the income profits or gains sought to be assessed were chargeable to income tax and that it was a case of chargeable income escaping assessment within the meaning of section 34 and was not a case of mere non assessment of income tax So far as the decision is concerned it is in substance inconsistent with the argument raised by Mr Sastri He however relies on the observations made by Jagannadhadas J that the contention of the learned counsel for the appellant that the escapement from assessment is not to be equated to non assessment simpliciter is not without force and he points out that the reason given by the learned Judge in support of the final decisions was that though earlier assessment proceedings had been taken they had failed to result in a valid assessment owing to some lacuna other than that attributable to the assessing authorities notwithstanding the chargeability of income to the tax Mr Sastri says that it is only in cases where income can be shown to have escaped assessment owing to some lacuna other than that attributable to the assessing authorities that section 34 can be invoked We do not think that a fair reading of the judgment can lead to this conclusion The observations on which reliance is placed by Mr Sastri have naturally been made in reference to the facts with which the Court was dealing and they must obviously be read in the context of those facts It would be unreasonable to suggest that these observations were intended to confine the application of section 34 only to cases where income escapes assessment owing to reasons other than those attributable to the assessing authorities Indeed Jagannadbadas J has taken the precaution of adding that it was unnecessary to lay down what exactly constitutes escapment from assessment and that it would be sufficient to place their decision on 44 346 the narrow ground to which we have just referred We are satisfied that this decision is of no assistance to the appellant s case For the reasons we have given we are of opinion that the Agricultural Income tax Officer was competent under section 26 of the Act to assess an item of income which he had omitted to tax earlier even though in the return that income was included and the Agricultural Income tax Officer then thought that it was exempt The answer given by the High Court was therefore correct This brings us to the second question The income was received from the leasehold properties and was agricultural income The contention of the assessee is that it may be agricultural income in the hands of the Tekari Raj but in his hands it was capital receipt and in repayment of the loan of about Rs 1700000 paid to Ram Bhuwaneshwari Kuer The State of Bihar however denies that there was a loan or a mortgage at all The assessee it is contended was placed in possession for a number of years on a rent of Rs 1000 per year and the amount paid was premium and not a loan The documents in question are two They are plainly indentures of lease between the Rani and the assessee From these documents it is clear that in consideration of a payment of Rs 1716000 the lessee was placed in possession of the leasehold property for 28 years There is no express term which makes the sum a loan returnable either by repayment or by the enjoyment of the usufruct There is no interest fixed or right of redemption granted There is no provision for any Personal liability in case any amount remained outstanding at the end of the term of 28 years These are the tests to apply to find out whether the transaction was one of zarpeshgi lease or a lease with a mortgage See Mulla s Transfer of Property Act 4th Edition page 352 The learned counsel for the assessee in his careful argument took us through the two documents and endeavoured to prove that the relation of debtor and creditor subsisted between the parties He referred 347 us to cl 4 which embodies a provision entitling the lessee to deduct 12 12 per cent of the gross aggregate amount payable by the mokarraridars as expenses of collection and other charges incidental thereto after payment of rent reserved to the I lessor and to appropriate to himself the remainder He submitted that the payment to the lessor was not a premium but a loan and the intention was that the lessee or creditor would be thus repaid The clause by itself may admit of diverse constructions and possibly one such construction may be the one suggested but that is not the true purport of the clause read in the context of the rest of the instrument To interpret this clause the instrument must be read as a whole and when so viewed it is found that it provides for an exemption of the lessor from the liability for collection charges It places beyond doubt that the collection charges were not to be debited to the lessor but were to be borne by the lessee Unless such a provision was included in the instrument it might have been a matter of some dispute as to who was to be responsible for this expenditure The learned counsel for the assessee next drew our attention to the last clause of the instrument of January 31 1936 That however was a special covenant and the provision therein was in relation to matters not covered by the instrument That the income from this leasehold property which was land would fall within the definition of agricultural income was not seriously contested before us The case of the assessee rests upon the claim that this was a money lending transaction and the receipts represented a capital return If however the payment to the lessor was premium and not a loan the income being agricultural from these leasehold properties was assessable under the Act We are of opinion that it was so and that the Agricultural Income tax Officer was right when he assessed it to agricultural income tax The income was not the income of money lending and this does not depend upon the character of the recipient The Thika 348 profits were clearly agricultural income being actually derived from land The answer to the question by the High Court was thus correct The result is that the appeal must fail and it is accordingly dismissed with costs Appeal dismissed

The relations between one G and his wife were strained and she went to live with her father B and her brother V the appellant G with three others went to the quarter of B and he went inside and came out dragging his reluctant wife behind him She caught hold of the door and G started pulling her At this the appellant shouted to his father that G was adamant and thereupon B replied that he should be beaten The appellant took out a knife from his pocket and stabbed G once The knife penetrated the heart of G and he died B and the appellant were 647 tried for the murder of G B was acquitted and the appellant was convicted under section 304 Part II Indian Penal Code and sentenced to three years rigorous imprisonment The appellant contended that he had acted in the right of private defence of person under section 100 fifthly Indian Penal Code which extended to the causing of death as G had assaulted his wife with the intention of abducting her The respondent urged that section 100 fifthly applied only when the abduction was of such a nature as was punishable under the Penal Code Held that the appellant had the right of private defence of the body of his sister which extended to the causing of death of G The extended right under section 100 arose when there was the offence of assault of one of the types mentioned in the six clauses of that section It was not necessary that the intention with which the assault was committed must always bean offence itself The word abduction used in the fifth clause of section 100 meant nothing more than what was defined as abduction in section 362 and it was not necessary to get the protection of this clause that the abduction must be of a type punishable under the Penal Code Further the appellant had not inflicted more harm than was necessary and was not guilty of any offence Emperor vs Ram Saiya ILR 1948 All i65 overruled jagat Singh vs King Emperor AIR 1923 Lah 155 Daroga Lohar vs Emperor AIR 1930 Pat 347 Sakha vs The State ILR and Dayaram Laxman vs State AIR I953 Madhya Bharat 52 referred to

ON Criminal Appeal No 193 of 1957 Appeal by special leave from the judgment and order dated August 1 1957 of the Bombay High Court in Criminal Appeal No 365 of 1957 arising out of the judgment and order dated the November 28 1956 of Joint Civil Judge Junior Division and Judicial Magistrate First Class Broach in Summary Case No 57 of 1956 Rajni Patel and M section K Sastri for the appellant H J Umriyar T M Sen and R H Dhebar for the respondent September 4 The Judgment of the Court was delivered by WANCHOO J This appeal by special leave against the judgment of the Bombay High Court raises the question of the interpretation of sub sections 3 and 4 of section 36 of the Facts Act LXIII of 1948 hereinafter called the Act The brief facts necessary for the 656 purpose are these The appellant is the occupier of the Gopal Mills Co Ltd Broach which is a factory as defined in the Act It appears that there is a pit in the factory in which dangerous fumes are likely to be present This pit was securely covered as required by section 331 of the Act and no one was expected to go down into the pit for the normal work of the factory as the pit was worked by gadgets fixed nearby above the ground It appears however that something went wrong with the machinery inside the pit on July 4 1955 Fakirji Dhanjishaw was the person in charge of those who were working in the purification plant with which this pit is connected when the accident took place at about 9 30 a m on July 4 1955 It seems that when something went wrong with the machinery inside the pit a labourer named Melia Dadla was asked to go down into it to attend to it and he went down without wearing suitable breathing apparatus and a belt securely attached to a rope the free end of which should have been held by a person standing outside the confined space The result was that Melia Dadla was seen overcome by poisonous gases and died Thereafter Fakirji Dhanjishaw Maganlal Gordhandas Chunilal Bochar and Chhotalal Nathubbai went down into the pit without wearing breathing apparatus and were overpowered with poisonous gases and died one after the other It is not clear when the superior officers in the mill were informed of this tragedy But it appears that after the death of these five persons the Superintendent Municipal Fire Brigade was sent for with breathing apparatus and other appliances and he went down into the pit to save the dying persons but be was also attacked by the fumes and became unconscious The mill doctor and some other doctors also came but nothing could be done to revive the five persons who were dead The matter was reported to the Inspector of Factories and he went and made enquiries It was then found that suitable breathing apparatus reviving apparatus belts and ropes were not available anywhere in the factory and were not kept ready for instant use beside the confined space Consequently 657 the appellant was prosecuted as the occupier for the breach of section 36 3 and 4 of the Act The appellant took advantage of section 101 of the Act and filed a complaint against the manager section D Vashistha and the engineer H P Tripathi In view of this complaint of the appellant the first question that the magistrate had to decide was whether the commission of the offence had been proved If the commission of the offence was proved the magistrate would have to consider whether the appellant could be discharged from liability if he proved to the magistrate s satisfaction that he had used due diligence to enforce the Act and that the other two persons committed the offence in question without his knowledge consent or connivance In considering the question whether an offence had been committed the magistrate had to interpret sub sections 3 and 4 of section 36 of the Act He was of the view that no offence under section 36 3 had been made out as the prosecution had failed to prove any permission express or implied to Fakirji Dhanjishaw and others to enter the pit He was further of the view that no offence under section 36 4 had been committed because no permission under sub section 3 having been granted to anybody to enter the pit it was not necessary to keep the breathing apparatus etc near the pit or anywhere else in the factory He therefore held that no offence had been committed and acquitted the appellant as well as the manager and the engineer There was an appeal by the State of Bombay to the High Court against the acquittal of the appellant alone The High Court disagreed with the interpretation of sub sections 3 and 4 of section 36 by the magistrate and held that For attracting the application of sub section 3 it is not necessary that a positive act of obtaining permission must be done by a worker or a positive act of granting permission must be done by the occupier or manager If the occupier or manager acquiesces in the entry he permits the entry If he connives at the entry then also he permits the entry If he fails to prevent the entry then also he permits the entry 658 It went on to say The scheme of the Act which is a welfare legislation is to require an employer to take precautionary measures for safeguarding the lives of his workers prudent or imprudent rash or careful against all possible danger while they are working on the premises of the factory It therefore held that as the appellant had not taken all reasonable steps to prevent the workers from entering the pit in case of the machinery getting out of order he had failed to prevent the entry of the workers into the pit and therefore must be held in law to have permitted the entry and committed the breach of sub section 3 of section 36 As to sub section 4 the High Court was of the view that it was not sufficient compliance with it to provide breathing apparatus etc only after coming to know that some person was about to enter the confined space and that the apparatus must be kept ready for instant use and must be immediately available near the confined space not only to the person who might enter the confined space with permission but even to the person who might enter the confined space without permission The High Court therefore set aside the acquittal of the appellant and directed that the appellant s complaint against Vashistha and Tripathi should be first decided by the magistrate thus in effect setting aside the acquittal of Vashistha and Tripathi and thereafter the magistrate should proceed to decide the case against the appellant in the light of the law laid down There was then an application for a certificate to enable the appellant to appeal to this Court which was rejected The appellant then applied to this Court for special leave to appeal which was granted and that is how the matter has come up before us The relevant part of section 36 is in these terms 3 No person in any factory shall enter or be permitted to enter any confined space such as is referred to in sub section 1 until all practicable measures have been taken to remove any fumes which may be present and to prevent any ingress of fumes and unless either 659 a a certificate in writing has been given by a competent person based on a test carried out by himself that the space is free from dangerous fumes and fit for persons to enter or b the worker is wearing suitable breathing apparatus and a belt securely attached to a rope the free end of which is held by a person standing outside the confined space 4 Suitable breathing apparatus reviving apparatus and belts and ropes shall in every factory be kept ready for instant use beside any such confined space as aforesaid which any person has entered and all such apparatus shall be periodically examined and certified by a competent person to be fit for use and a sufficient number of persons employed in every factory shall be trained and practised in the use of all such apparatus and in the method of restoring respiration Taking sub section 3 first the question that falls for consideration is the meaning of the words be permitted to enter The contention on behalf of the State before the High Court was that these words cast an absolute duty on the occupier to prevent the entry of any person in a pit etc of the kind mentioned in sub section 1 of section 36 and this seems to have been accepted by the High Court Learned counsel for the appellant however urges that in the context of this provision the duty cast on the occupier is not absolute and there must be some kind of permission whether express or implied to the person entering the pit etc before the occupier is made liable In other words it is submitted that it will be for the court on the facts and circumstances of each case to infer whether there was permission express or implied of the occupier to the person who enters the pit etc Mr Umrigar appearing for the State of Bombay urges before us that this latter construction would make the provision liable to evasion by the occupier According to him this provision means that whenever anyone enters such a pit etc the burden is cast on the employer to show that the entry was against the occupier s instructions He even went to the length of saying that if a worker 660 entered the pit in order to commit suicide it would still be for the occupier to show that the entry was against his instructions and that he did all that he could to prevent it In this connection he drew our attention to certain other sections in the Act where similar words are used for example sections 51 52 54 60 64 67 68 and 71 We do not think it necessary to consider these other sections in detail It is enough to point out that there is one vital difference between the provisions of these other sections and the provision contained in section 363 Section 363 prohibits the worker from entering the pit etc while these other sections have no such prohibition against the worker and cast the entire duty on the employer Section 363 therefore will have to be construed in the context of the words used therein It begins with prohibiting any person from entering any such pit etc The primary prohibition therefore is of the person working in the factory and others and the effect of this prohibition is worked out in section 97 of the Act Sub section 1 of section 97 provides that if a worker employed in a factory contravenes any provision of this Act imposing any duty or liability on workers he shall be punishable with fine Sub section 2 of this section then lays down that if a worker is convicted of an offence under sub section 1 the occupier or manager of the factory shall not be deemed to be guilty of an offence in respect of that contravention unless it is proved that he fails to take all reasonable measures for its prevention Reading section 36a with section 97 it is clear that the prohibition of the worker against entering any such pit etc is absolute and if any worker enters such a pit etc he is guilty under section 971 In this case if the five workers who are dead were alive they would have been guilty under section 971 for contravening section 36 3 by entering the pit Then section 97 2 would come into operation and it would be for the prosecution to prove that the occupier or the manager had failed to take all reasonable measures for preventing the entry The burden thus is on the prosecution to prove that the occupier or the manager had not taken all reasonable steps for preventing the entry and not on the occupier or the manager to prove that he 661 had taken all such reasonable steps The Court will therefore have to consider all the facts and circumstances in a particular case to see if the burden has been discharged by the prosecution It is in this background that we have to consider the meaning to be given to the words be permitted to enter appearing in section 36 3 It seems to us that in the circumstances these words do not cast an absolute duty on the employer to prevent the entry and the mere fact that a person has entered such a pit etc would not by itself prove that he bad been permitted to enter The Court will have to look into the facts and circumstances of the case to come to the conclusion whether the person who entered the pit was permitted to do so and mere entry would not necessarily lead to the conclusion that there was permission to enter whether express or implied The magistrate in this case seems to have thought that a positive act of obtaining permission must be done by the worker or a positive act of granting permission must be done by the occupier or the manager though he has not said so in so many words It is not necessary that there should be a positive act of obtaining permission by the worker or a positive act of granting permission by the occupier or the manager What the court has to see is whether on the facts and circumstances of a particular case it will be reasonable to infer that the entry was with permission whether express or implied The High Court also with respect seems to have gone too far on the other side when it said that it was the duty of the employer to take all the precautionary measures for safeguarding the lives of his workers prudent or imprudentrash or careful against all possible danger whilethey are working on the premises of the factory Thiswould imply that there was an absolute duty cast on the employer to prevent the entry irrespective of the considerations that might arise on the facts and circumstances of a particular case The true view of section 36 3 in our opinion is that the primary duty is cast on the worker or any other person prohibiting his entry into any such pit etc At the same time the occupier is also liable if his permission 84 662 to the entry whether express or implied can be inferred on the facts and circumstances of the case IS but this permission cannot in all cases be inferred by the mere fact of the entry The High Court has remanded the case to the magistrate for retrial and in that retrial the magistrate will proceed to consider the liability of the occupier in the light of the observations made by us on the construction of section 36 3 Turning now to sub section 4 it will be found that it is in two parts The first part provides that suitable breathing apparatus reviving apparatus belts and ropes shall in every factory be kept ready for instant use beside any such confined space as aforesaid which any person has entered This to our mind means that if for any reason a person has to enter such confined space the apparatus etc shall be kept ready for instant use beside such space The duty for keeping the apparatus ready beside the space arises only when a person is entering the confined space obviously with the permission of the occupier or the manager We do not think that sub section 4 contemplates that the apparatus etc shall always be kept ready near the confined space whether there is any occasion for any person to enter it or not The necessity of keeping the apparatus etc ready near the confined space arises when any person is about to enter such space obviously with the permission of the employer The second part of the section provides that all such apparatus shall be periodically examined and certified by a competent person to be fit for use and a sufficient number of persons employed in every factory shall be trained and practised in the use of all such apparatus and in the method of restoring respiration This clearly shows that the apparatus etc must always be available in the factory though it need not be kept near the confined space till such time as some one is about to enter it There will be no possibility of periodical examination and training of sufficient number of persons in the use of the apparatus unless the apparatus was always available in the factory The duty cast by sub section 4 is absolute So far as the first part is concerned the duty of keeping the apparatus 663 ready for instant use near the confined space arises as soon as a person is about to enter it obviously with the permission of the occupier So far as the second part is concerned it is the duty of the occupier to see that the apparatus is always available in the factory and is periodically examined and certified fit for use and a sufficient number of persons are trained in its use The view taken by the magistrate of the effect of this section is not correct and the view taken by the High Court is right except that it is not necessary to keep the apparatus all the time near the confined space The High Court has ordered retrial with respect to the contravention of sub section 4 also and the magistrate who now retries the case will do so in accordance with the construction of the sub section given by us We have carefully refrained from saying anything on the facts of this case as there is going to be a retrial and it will be for the magistrate to consider all the facts and circumstances before coming to a decision one way or the other The appeal is hereby dismissed Appeal dismissed

A Bill introduced in the House of the People on the report of the States Reorganisation Commission and as recommended by the President under the proviso to article 3 Of the Constitution contained a proposal for the formation of three separate units viz 1 Union territory of Bombay 2 Maharashtra including Marathawada and Vidarbha and 3 Gujrat including Saurashtra and Cutch This Bill was referred by the President to the State Legislatures concerned and their views obtained The joint Select Committee of the House of the People Lok Sabha and the Council of States Rajya Sabha considered the Bill and made its report Subsequently Parliament amended some of the clauses and passed the Bill which came to be known as the That Act by section 81 constituted a composite State of Bombay instead of the three separate units as originally proposed in the Bill The petition out of which the present appeal has arisen was filed by the appellant under article 226 of the Constitution in the High Court of Bombay His contention was that the said Act was passed in contravention of the provisions of article 3 of the Constitution since the Legislature of Bombay had not been given an opportunity of expressing its views on the formation of the composite State The High Court dismissed the petition Held that the proviso to article 3 lays down two conditions and under the second condition therein stated what the President has to refer to the State Legislature for its opinion is the proposal contained in the Bill On a true construction the proviso does not contemplate that if Parliament subsequently modifies that proposal there must be a fresh bill or a fresh reference to the State Legislature The word State in article 3 of the Constitution has obvious reference to article i and the States mentioned in the First Schedule to the Constitution and the expression Legislature of the State means the Legislature of such a State There are therefore no reasons for the application of any special doctrine of democratic theory or practice prevalent in other countries in interpreting those words nor any justification for giving an extended meaning to the word State in determining the true scope and effect of the proviso 77 606 The requirements of article IV section 3 of the American Constitu tion are materially different from those of the second proviso to article 3 Of the Indian Constitution and consequently decisions based on the former are not in point State of Louisiana vs State Of Mississipi 1905 202 US I and State of Washington vs State of Oregon 19O8 2II US 127 held inapplicable State of Texas vs George W White referred to It is not correct to contend that the word Bill in the proviso must be interpreted to include an amendment of any of the clauses of the Bill or at least a substantial amendment thereof and that any proposal contained in such amendment must be referred back to the State Legislature Such an interpretation of article 3 will nullify the effect of article 1221 and is untenable in view of the provisions in articles 117 and 118 of the Constitution Although the formation of a composite State in terms of section 8 of the Act was without doubt a substantial modification of the proposal as originally contained in the Bill it could not be said that the said modification was not germane to the subject matter of the original proposal or was a direct negative thereof so as to be beyond the scope of an amendment T H Vakil vs Bombay Presidency Radio Club Ltd 1944 47 Bom LR 428 applied Therefore the Act could not be held to have been enacted in violation of article 3 Of the Constitution

ON Criminal Appeal No 60 of 1958 Appeal from the judgment and order dated the 19th February 1958 of the Jammu and Kashmir High Court in Writ Petition No 53 of 1957 682 R V section Mani for the appellants Jaswant Singh Advocate General for the State of Jammu and Kashmir G section Pathak and T M Sen for the respondent September 10 The Judgment of the Court was delivered by WANCHOO J This appeal on a certificate granted under article 132 of the Constitution of India hereinafter called the Constitution by the High Court of Jammu and Kashmir raises the constitutionality of the Enemy Agents Ordinance No VIII of section 2005 hereinafter called the Ordinance promulgated by His Highness under section 5 of the Jammu and Kashmir Constitution Act section 1996 hereinafter called the Constitution Act The appellants also made an application under article 132 3 of the Constitution to this Court for permission to urge other grounds taken by them in the High Court besides those relating to the interpretation of the Constitution We intimated at the outset of the arguments that this application was being allowed and learned counsel for the appellants was permitted to make his submissions on all points raised in the High Court The appellants are being prosecuted before a Special Court constituted under the Ordinance for offences under section 3 of the Ordinance sections 3 4 and 5 of the Explosive Substances Act VI of 1908 section 120 B of the Penal Code and section 29 of the Public Security Act read with rr 28 and 32 of the Rules thereunder The incidents out of which this prosecution arose took place on June 27 and 28 1957 The circumstances in which the Ordinance came to be passed were these Outside raiders began attacking Kashmir on October 22 1947 The State acceded to India on October 26 1947 It appears that the Enemy Agents Ordinance No XIX of section 2004 was enacted soon after in January 1948 There was cease fire on January 1 1949 and the raids came to an end This was followed by the present Ordinance which became law an January 24 1949 The preamble to the Ordin ance says that an emergency had arisen as a result of 683 wanton attacks by outside raiders and enemies of the State which made it necessary to provide for the trial and punishment of enemy agents and persons committing certain offences with intent to aid the enemy and as it was necessary to amend Ordinance XIX of section 2004 therefore the Ordinance was passed consolidating the law and repealing the earlier Ordinance The main contentions of the appellants in the High Court were that the Ordinance was unconstitutional and void by reason of the violation of article 14 of the Constitution and that His Highness had no legislative competence to enact it and that in any case it came to an end when section 5 of the Constitution Act was repealed in 1951 The High Court was of the view that there was a reasonable classification and that the classification was founded on an intelligible differentia which distinguished persons or things that were grouped together from those left out of the group and the differentia had a rational relation with the object sought to be achieved by the Ordinance It therefore held that the Ordinance was not hit by article 14 It was further of the view that His Highness had legislative competence to promulgate the Ordinance when he did so and that when certain subjects were made over to the Government of India by the Instrument of Accession the State retained its powers to legislate even on these subjects so long as the State law was not repugnant to any law made by the Central Legislature thus holding that there was concurrent power in the State to legislate even on the subjects transferred to the Government of India Finally the High Court held that the repeal of section 5 of the Constitution Act did not result in the Ordinance coming to an end as section 6 of the Jammu and Kashmir General Clauses Act saved it It therefore dismissed the writ petition filed by the appellants The main contentions of the appellants before us are these 1The Ordinance is unconstitutional as it violates article 14 of the Constitution 2There was no legislative competence in His Highness to issue the Ordinance under section 5 of the 684 Constitution Act as His Highness had executed the Instrument of Accession on October 26 1947 surrendering his powers regarding Defence Communications and External Affairs to the Government of India and the Ordinance came under the head Defence 3Section 5 of the Constitution Act was repealed by an amending Act No XVII of section 2005 passed on November 17 1951 and therefore the Ordinance also came to an end on the day section 5 was repealed 4The Ordinance has in any case lapsed as the conditions under which it was enacted had become obsolete and did not exist any more 5The Ordinance was void as it was inconsistent with article 352 of the Constitution and the Articles following 1 The Ordinance defines enemy and enemy agent in section 2 Section 3 provides that whoever is an enemy agent or with intent to aid the enemy does or attempts or conspires with any other person to do any act which is designed or likely to give assistance to the military or air operations of the enemy or to impede the military or air operations of Indian forces or His Highness forces or the forces of any Indian State or to endanger life or is guilty of incendiarism shall be liable to various punishments Section 4 provides that any offence punishable under section 3 shall be triable under this Ordinance and that where any other offence is committed along with an offence under section 3 which may be jointly tried under the Code of Criminal Procedure a special Judge trying the offence under section 3 shall also try the other offence in accordance with the procedure laid down by the Ordinance Section 5 provides for appointment and jurisdiction of Special Judges Section 6 gives power to the government of the State to transfer proceedings from one Special Judge to another and provides for the procedure to be followed by the Special Judge to whom a case is transferred Section 7 lays down that the procedure for trial of warrant cases shall be followed by Special 685 Judges and no commitment proceedings would be necessary This action also gives powers to Special Judges in the matter of recording evidence summoning witnesses and adjournments and the Special Judge is deemed to be a Court of Session Section 8 provides for sentences to be passed by the Special Judge Section 9 provides for power of review by a Judge of the High Court designated by the Government and the decision of such Judge is made final Section 10 gives power to the Special Judge and the Reviewing Judge to hear proceedings in camera if it is expedient in the interest of public safety or the defence of the State so to do Section 11 days down that an accused person triable under the Ordinance may be defended by a pleader if the Special Judge or the Reviewing Judge grants permission in this behalf and also gives power to the Special Judge or the Reviewing Judge to appoint a pleader for an accused who has not engaged a pleader himself Section 12 provides for a special rule of evidence empowering the Special Judge to admit certain statements recorded by a magistrate when the person who made them is dead or cannot be found or is incapable of giving evidence Section 13 provides for powers to deal with a situation arising out of intransigent conduct of accused persons during the course of trial Section 14 takes away the power of all courts to interfere with the proceedings or orders of the Special Judge or to transfer any case pending before him or to make any order under section 491 of the Code of Criminal Procedure Section 15 prohibits the giving of copies of records of any case before a Special Judge to any one except to an accused or his pleader and makes it punishable for such accused or pleader to show the copy to any other person or to divulge its contents to anybody except in the course of proceedings for the purpose of which it was obtained It further provides for the return of the copies within ten days after the conclusion of the proceedings before the Special Judge Section 16 provides for the application of the Code of Criminal Procedure or any other law for the time being in force to proceedings under the Ordinance in so far as they are not inconsistent with its 87 686 provisions Section 17 makes disclosure of information prohibited under section 15 punishable Section 18 gives power to the Government to make rules necessary to carry into effect the purposes of the Ordinance Section 19 repeals the Enemy Agents Ordinance XlX of section 2004 but provides that all rules made orders issued prosecution and action taken and punishment awarded under the repealed Ordinance shall be deemed to have been made issued taken and awarded under the Ordinance It will be clear from this analysis of the provisions of the Ordinance that the procedure under the Ordinance is in material respects different from the ordinary procedure of Criminal Courts dealing with offences The contention of the appellants is that this amounts to discrimination and therefore the Ordinance is void and unconstitutional as it violates article 14 of the Constitution The provisions of article 14 of the Constitution have come up for discussion before this Court in a number of cases It is now well established that while article 14 forbids class legislation it does not forbid reasonable classification for the purposes of legislation In order however to pass the test of permissible classification two conditions must be fulfilled namely i that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and ii that differentia must have a rational relation to the object sought to be achieved by the statute in question The classification may be founded on different bases namely geographical or according to objects or occupations or the like What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consider ation It is also well established by the decisions of this Court that article 14 condemns discrimination not only by a substantive law but also by a law of procedure see Sri Ram Krishna Dalmia vs Shri Justice section R Tendolkar 1 We have therefore to see whether there is reasonable classification for the purposes of the 1 687 Ordinance Now the Ordinance was passed in January 1949 soon after the cease fire But though the attack by the outside raiders and enemies of the State had come to an end it was felt that conditions were such that the emergency continued and it was necessary to provide for trial and punishment of enemy agents and persons committing certain offences with intent to aid the enemy by a special procedure which was enacted in the Ordinance With that end in view an enemy was defined to mean and include any person directly or indirectly participating or assisting in the campaign recently undertaken by raiders from outside in sub verting the Government established by law in the State An enemy agent was defined as meaning a person not operating as a member of enemy armed force who is employed by or works for or acts on instructions received from the enemy It is clear therefore that enemy and enemy agent are a clearly defined class of persons and would give rise to a reasonable classification for the purpose of the Ordinance Section 3 provides for punishment of a person who is an enemy agent or who does certain things with intent to aid the enemy There can be no doubt in the circumstances existing in the State then and now that the classification is reasonable and is founded on an intelligible differentia which distinguished persons brought under the Ordinance from others There is also no doubt that the differentia had a rational relation to the object sought to be achieved by the Ordinance There had recently been a campaign to subvert the government established by law in the State and though the actual raids were over the danger of subversion of the government was not over and the threat from those who intended to aid the enemy continued In these circumstances the Ordinance was enacted and provided a special procedure for the trial of enemy agents or those who did certain things with intent to aid the enemy the object of such persons being to subvert the government established bylaw in the State If it is said that the Ordinance does not purport to make any classification of persons at all but only creates an offence and 688 provides a stringent procedure for the punishment of that offence then there is no discrimination at all for anybody who commits that offence is subjected to the drastic procedure It has also to be remembered that in order to repel the charge of discrimination the permissible classification need not be of persons only Certain offences may be so heinous or serious that they may in certain circumstances be treated as a class and tried in a different way The offence created by section 3 of the Ordinance is not found as such in the Penal Code but is a new offence of an aggravated kind which may in the circumstances prevailing in the State mentioned above be treated as different from the ordinary offences and may well be dealt with by a drastic procedure without encountering the charge of violation of the equal protection clause We are therefore of opinion that on the principles laid down by this Court in the large number of cases summarised in the Dalmia case 1 the Ordinance cannot be said to be discriminatory and therefore violative of article 14 of the Constitution The contention under this head on the constitutionality of the Ordinance therefore must be rejected The Ordinance purports to have been promulgated under section 5 of the Constitution Act which declared that all powers legislative executive and judicial in relation to the State and its government were always inherent in and possessed and retained by His Highness and nothing in the Act was to affect or deemed to have affected the right and prerogative of His Highness to make laws and issue proclamations orders and ordinances by virtue of his inherent authority It is however submitted that on account of the accession of the State to India on October 26 1947 certain matters were surrendered to the Government of India and therefore His Highness had no power left to legislate on matters so surrendered These matters are to be found in the Schedule to the Instrument of Accession 2 This Schedule consists of 20 items grouped under 1 19591 SCR 279 2 Appendix VII of the White Paper on Indian States p 165 689 four heads A Defence B External Affairs C Communications and D Ancillary We are not here concerned with heads B and C and need only consider the items under A and D There are four items under the head Defence namely 1The naval military and air forces of the Dominion and any other armed force raised or maintained by the Dominion any armed forces including forces raised or maintained by an acceding State which are attached to or operating with any of the armed forces of the Dominion 2Naval military and air force works administration of cantonment areas Arms fire arms ammunition Explosives And there are four items under the head Ancillary namely 1Elections to the Dominion Legislature subject to the provisions of the Act and of any Order made thereunder Offences against laws with respect to any of the aforesaid matters 3Inquiries and statistics for the purposes of any of the aforesaid matters 4Jurisdiction and powers of all courts with respect to any of the aforesaid matters but except with the consent of the Ruler of the acceding State not so as to confer any jurisdiction or powers upon any courts other than courts ordinarily exercising jurisdiction in or in relation to that State The contention on behalf of the appellants is that the provisions of the Ordinance were in particular covered by item 1 under the head Defence It is also urged that the High Court was not correct in holding that there was concurrent jurisdiction in the State as well as the Central Legislature even with respect to items in the Schedule and that on a correct interpretation of the Instrument of Accession the Central Legislature alone had power to legislate with respect to the matters in the Schedule We do not think it necessary to decide in this case whether the State had concurrent 690 powers to legislate on matters covered by the Schedule and shall proceed on the assumption that the Central Legislature alone had the power to legislate on these matters The question then which immediately arises is whether the Ordinance is covered by item 1 under the head Defence The other items either under the head Defence or under the head Ancillary are immaterial for this purpose If the Ordinance is not covered by item 1 under the head Defence it would then be within the competence of the State Legislature or of His Highness to promulgate it for all other matters besides those covered by the twenty items in the Schedule in any case remained with the State Item 1 under the head Defence deals with the naval military and air forces of the Dominion and any other armed forces raised or maintained by the Dominion and includes any armed forces including those raised or maintained by any acceding State which are attached to or operating with any armed forces of the Dominion Howsoever wide an interpret ation is given to this entry it will be seen that it deals only with the armed forces whether on land or sea or in the air and the raising or maintenance of such forces and their operations The Ordinance has in our opinion nothing to do with the matters covered by this entry It is true that it defines enemy and enemy agent and creates offences with reference to certain acts done with intent to aid the enemy including giving of assistance to the military or air operations of the enemy or impeding the military or air operations of Indian forces or His Highness forces or the forces of any Indian State But it is only indirectly concerned with the operations of the armed forces and its main purpose is to deal with persons who with intent to aid the enemy commit certain acts including assistance to the military or air operations of the enemy or impediment to the military or air operations of the Indian armed forces Besides this reference to military or air operations the rest of the provisions of the Act has nothing to do with the armed forces and if one looks at the pith and substance of the Ordinance it will be found that it deals with persons who are concerned with the 691 subversion of the government established by law by becoming enemy agents or doing certain acts with intent to aid the enemy In pith and substance therefore the Ordinance deals with public order and criminal law and procedure the mere fact that there is an indirect impact on armed forces in section 3 of the Ordinance will not make it in pith and substance a law covered by item 1 under the head Defence in the Schedule We are therefore of opinion that there is no force in the contention that the Ordinance was beyond the legislative competence of His Highness because certain matters were ceded in the Instrument of Accession dated October 26 1947 to the Government of India This contention must also fail The contention is that as section 5 of the Constitution Act was repealed on November 17 1951 the Ordinance which is stated to have been passed under that section also came to an end It is enough to say that there is no force in this argument Clause b of section 6 of the Jammu and Kashmir General Clauses Act JKXX of section 1977 clearly saves the Ordinance It is as follows Where this Act or any Act made after the commencement of this Act repeals any enactment hitherto made or hereafter to be made then unless a different intention appears the repeal shall not b affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder It will be clear that the promulgation of the Ordinance was a thing duly done under section 5 of the Constitution Act and the repeal of section 5 of the Constitution Act would thus leave the Ordinance which was promulgated thereunder entirely unaffected The repeal of section 5 can only mean the withdrawal of that legislative power on and from the date of repeal Anything done while the power subsisted cannot be affected by such repeal A law enacted under a Constitution Act does not lose its vitality and would continue even though there may be repeal of parts of the Constitution Act under which it was enacted as long as the law 692 is not inconsistent with the Constitution Act as it emerges after the amendment and repeal of certain provisions thereof It derives its binding force from the fact that it was within the competence of the legislature when it was passed and being permanent would continue till amended or repealed under the amended Constitution Act We are therefore of opinion that the Ordinance did not come to an end on the repeal of section 5 of the Constitution Act and remained a valid piece of legislation in view of section 6 b of the Jammu and Kashmir General Clauses Act It is urged that the conditions in the State have changed considerably since 1949 and therefore the Ordinance must be held to have lapsed It is enough to say that there is nothing in this contention even assuming that conditions in the State are not now exactly the same as they were in 1949 The Ordinance was a permanent piece of legislation It is true that it came into existence because of an emergency but that was only the occasion for passing the Ordinance The Ordinance however tries to reach an evil of deeper roots an evil which cannot be said to have ceased to exist viz subversion of the government established by law in the State in conjunction with the enemies of the State Being a permanent law it can only be brought to an end by means of repeal by competent authority It is not the case of the appellants that the Ordinance has been repealed by any competent authority It must therefore be held to be in force till such repeal even if the conditions now are assumed not to be exactly the same as in 1949 This contention therefore also fails It is urged that the Ordinance was unconstitutional because it is inconsistent with article 352 and the subsequent Articles We must say that article 352 and the subsequent Articles in Part XVIII of the Constitution relating to Emergency Provisions have nothing whatsoever to do with the validity or otherwise of the Ordinance We have been unable to understand how there can be any inconsistency between the Ordinance 693 and the provisions contained in Part XVIII of the Constitution This contention also fails It now remains to notice three points that were urged during the course of arguments on behalf of the appellants namely i section 4 1 of the Ordinance is hit by article 20 1 of the Constitution ii section 11 1 is hit by article 22 1 of the Constitution and iii the Special Judge has no jurisdiction to try an offence under the Explosive Substances Act Apart from the fact that these points not having been raised by the appellants in their writ petition or urged before the High Court we should be reluctant to permit them to raise these points for the first time in this Court we may in passing point out that the offences for which the appellants are being prosecuted are said to have taken place in June 1957 and that they have been allowed to engage lawyers of their choice They can therefore have no grievance so far as the first two points are concerned and we leave them to be decided in a case where there is grievance There is no substance in the third point There is no force therefore in this appeal and it is hereby dismissed Appeal dismissed

In his return of agricultural income for the assessment year I944 45 the appellant showed a sum of Rs 282192 which he had paid to the Tekari Rai for two lease hold properties taken on Zarpeshgi lease as one of the items of the total amount of deduction claimed by him as capital receipt The Agricultural Income tax Officer accepted his claim and exempted the amount from Payment of agricultural income tax The Assistant Commissioner of Agricultural Income tax affirmed the decision A demand notice was issued and the assessee paid two instalments Thereafter the Agricultural Income tax Officer served on the assessee a notice under section 26 of the Bihar Agricultural to the effect that income from the said Zarpeshgi lease had escaped assessment and after he appeared passed a 333 supplementary assessment order and assessed Rs 395I2 6 o as tax The assessee appealed The Commissioner of Agricultural Income tax reversed the said decision The Province of Bihar moved the Board of Revenue and the two questions it referred to the High Court under section 251 Of the Act were 1 whether in the facts and circumstances of the case the Agricultural Income tax Officer had jurisdiction to revise his own order under section 26 of the Act and 2 if so whether the income from the Zarpeshgi lease was taxable under the Act The High Court answered both the questions in favour of the State of Bihar Hence this appeal by the assessee by special leave Held that under section 26 of the Bihar Agricultural the Agricultural Income tax Officer had the power to revise his own order and assess an item of income which even though shown in the return he had earlier omitted to tax under a misapprehension that it was not taxable The use of the words any reason in section 26 of the Act made the section wider than section 34 Of the Indian by dispensing with the conditions which circumscribed the section Kamal Singh vs Commissioner of Income tax Bihar Orissa applied Messrs Chatturam Hoyilyam Ltd vs Commissioner of Income tax Bihar and Orissa distinguished Case law discussed Since the appellant had failed to prove his case that the income in question was income from his money lending business or that the payment made to the lessor was not by way of premium but as a loan the income from the lease hold property which was admittedly agricultural in character must be held to be liable to tax under the Act irrespective of the character of the recipient

TION Civil Appeal No 207 of 1955 Appeal by special leave from the judgment and order dated the 6th December 1950 of the Madras High Court in CMA No 332 of 1945 arising out of the judgment and order dated the 17th January 1945 of the Subordinate Judge Devakottai in E P No 90 of 1944 in 0 section No 14 of 1926 M section K Iyengar for the appellants A V Viswanatha Sastri and T B V Sastri for respondent No 1 1959 August 28 The judgment of section K Das and A K Sarkar JJ was delivered by Sarkar J Subba Rao J delivered a separate judgment SARKAR J This appeal arises out of an application for execution of a decree for money and the only question is whether the application was made within the time prescribed by the Limitation Act 619 The decree was passed in favour of one Venkatachalam Chettiar on May 91935 against the appellants and certain other persons On February 3 1936 Venkatachalam Chettiar transferred the decree to his mother Meenakshi Achi by an assignment in writing never having tried to execute it himself Soon thereafter namely on March 26 1936 a creditor of Venkatachalam Chettiar presented a petition under the Provincial Insolvency Act hereinafter referred to as the Act for adjudicating him an insolvent on the ground that the transfer of the decree to Meenakshi Achi was a fraudulent preference and as such an act of insolvency This petition remained pending for a considerable time and ultimately on January 7 1939 an order was made on it adjudicating Venkatachalam Chettiar an insolvent By that order respondent No 1 the Official Receiver of Ramanathapuram was appointed the receiver in insolvency and the insolvent s estate vested in him This order was based on the finding that the transfer of the decree by Venkata chalam Chettiar to Meenakshi Achi was a fraudulent preference and an act of insolvency On January 26 1942 the receiver made an application in the insolvency proceedings for an order annulling the transfer of the decree by the insolvent to Meenakshi Achi and on this application an order was made on April 9 1943 under section 54 of the Act annulling that transfer In the meantime Meenakshi Achi had made two applications for execution of the decree as the assignee of it and a reference to them is necessary The first of these applications was made on December 14 1936 for an order recognising her as the assignee of the decree and for its execution against some of the judgment debtors This application was disposed of by an order made on September 27 1937 recognising her right to execute the decree as the assignee and directing a certain compromise made presumably with the judgment debtors concerned to be recorded The terms of this compromise are not relevant for the purpose of the appeal Thereafter on August 2 1940 Meenakshi Achi as the assignee of the decree made another application for its execution and this 620 application was disposed of by an order made on September 30 1940 dismissing it for default of prosecution It will be remembered that it was after these applications and the orders thereon had been made that the order annulling the assignment of the decree to Meenakshi Achi was passed After the order annulling the transfer of the decree to Meenakshi Achi had been made the receiver considering himself then entitled to the decree made an application for its execution on September 27 1943 It is this application which has given rise to the present appeal The executing court dismissed the application as having been made beyond the time prescribed by the Limitation Act On appeal the High Court at Madras set aside the order of the executing court and held that the application was within time Some of the judgment debtors have now come up in appeal to this Court The appeal is contested by the receiver the respondent No 1 The other respondents among whom are the remaining judgment debtors or their successors in interest have not appeared Applications for execution like the present one are governed by article 182 of the Limitation Act That article provides a period of three years within which the application must be made The article prescribes different points of time for different cases from which the period is to commence running The first point of time so prescribed is the date of the decree The fifth point of time prescribed is expressed in these words Where the application next hereinafter mentioned has been made the date of the final order passed on an application made in accordance with law to the proper court for execution The question for determination is whether the fifth point of time applies to the receiver s application for execution If it does not the application must be held to have been made out of time while if it does the application would not be barred by limitation The receiver contends that the two applications by Meenakshi Achi were applications made in accordance with law to the proper court for execution 621 within the meaning of the article and his application was within time as it had been made within three years of the date on which the final order on Meenakshi Achi s last application was made It is said on behalf of the appellants that in view of the orders in the insolvency proceedings it must be held that she was not entitled to the decree on any of the dates on which she applied for its execution and that her applications were therefore incompetent and not in accordance with law The appellants put their contention in several ways It is first said that the order annulling the assignment of the decree to Meenakshi Achi related back to the date of the assignment with the result that it has to be deemed as if she had never been entitled to the decree and that therefore the applications for execution by her were not competent and hence were not in accordance with law We think this contention is wholly unfounded We will assume for the purpose of the present case that when an order is made tinder section 54 of the Act annulling a transfer the transfer stands annulled as from the date it was made But even so the transfer stands till it is annulled and therefore till then the transferee hag all the rights in the property transferred So long as the transferee had such rights he was competent to exercise them and such exercise would be legal and fully in accordance with law The fact if it be so that the transfer on annulment becomes void as from the date of the transfer cannot turn the exercise of a right under the transfer made prior to the annulment and which was legal when made illegal Meenakshi Achi had hence full legal competence to execute the decree till the transfer of it to her was annulled Her two applications for execution of the decree were therefore fully in accordance with law when they had been made and that is all that article 182 requires Next it is said that the provisions of sub sections 2 and 7 of section 28 of the Act make Meenakshi Achi s two applications for execution incompetent in law These provisions have now to be considered Sub section 2 79 622 says that upon the making of an order of adjudication the whole of the property of the insolvent shall vest in the receiver and sub section 7 says that an order of adjudication shall relate back to and take effect from the date of the presentation of the petition on which it is made It is said that under these provisions the assets of the insolvent in this case including the decree under execution became vested in the receiver on March 26 1936 when the petition for adjudicating him an insolvent had been presented and consequently the two applications for execution by Meenakshi Achi which had been made after that date were incompetent and not in accordance with law It seems to us that this contention also is fallacious These sub sections cannot have the effect of vesting the decree in the receiver till its transfer to Meenakshi Achi had been annulled Till then it was not a part of the insolvent s estate The annulment as we have earlier pointed out was made under section 54 of the Act That section provides that certain transfers of property by the insolvent would be deemed fraudulent and void as against the receiver in insolvency and shall be annulled by court It is obvious that a transfer liable to be annulled under this section remains a perfectly valid transfer till it is annulled If it had become void automatically on an order for adjudication being made there would be no need to provide for its annulment by court It would follow that Meenakshi Achi was legally possessed of the decree and competent to apply for its execution till the transfer of the decree to her was annulled under section 54 It is then said that though it may generally be that a transfer liable to be annulled under section 54 remains valid till it is annulled that is not so where the transfer is the act of insolvency upon which the order of adjudication is founded for in such a case the order itself annuls the transfer So it is said that as the order of adjudication in this case was founded upon the transfer of the decree to Meenakshi Achi that transfer became annulled on the order being made on January 7 1939 and the second application for execution by Meenakshi Achi was incompetent It is 623 true that if this in the correct view then the receiver s application for execution must be held to have been made beyond the time allowed for it had been made more than three years after the final order on the first application for execution by Meenakshi which is the only order on which the receiver can on this basis rely for resorting to the fifth point of time fixed by article 182 Now this argument is based solely on the decision of the Judicial Committee in Mahomed Siddique Yousuf vs Official Assignee of Calcutta1 which it is said held that where a transfer is the act of insolvency on which the order of adjudication is founded that order itself has the effect of annulling the transfer We think this case has been misunderstood We find nothing in it to lead to the view that an order of adjudication founded on an act of insolvency constituted by a transfer of property amounting to a fraudulent preference itself and without more annuls that transfer That was a case decided under the Presidency towns Insolvency Act In that case one of the acts of insolvency on which the order of adjudication had been founded was a transfer by the insolvent of a certain decree in his favour to the appellant which was held to have been a fraudulent preference The transferee was not a party to the order of adjudication The official assignee that is the receiver in insolvency applied to have that transfer annulled It was contended on behalf of the official assignee before the judge in insolvency in the High Court that the order of adjudication holding the transfer to be a fraudulent preference was conclusive and binding on the transferee though he was not a party to the insolvency petition It was said that had been held in Ex parte Learoyd2 which turned on the English Bankruptcy Act 1869 the terms of which were similar to the relevant provisions in the Presidency towns Insolvency Act The learned judge felt some difficulty in view of a decision of the Madras High Court to which it is unnecessary to refer whether the principle of the 1 1943 LR 70 IA 93 2 624 English decision applied to a case under the Presidency towns Insolvency Act He therefore went into the facts and came to the conclusion that the transfer amounted to a fraudulent preference and thereupon made an order annulling it On appeal the appellate Judges of the High Court expressed some doubt whether the intent to prefer was in fact proved but they were both of opinion following Ex parte Learoyd 1 that the order of adjudication was conclu sive and could not be disputed They hold that this was so though the transferee was not a party to the order of adjudication In that view of the matter the appellate Judges felt that there was a decision binding on the transferee that the transfer was void as a fraudulent preference and they thereupon annulled the transfer as a matter of course The judgments in the High Court are reported in The transferee who was not a party to the insolvency petition then asked for an extension of time to prefer an appeal from the order of adjudication but this was refused Then the matter was taken up to the Judicial Committee in further appeal The Judicial Committee held that the appellate Judges of the High Court were right in their view that the principle of Ex parts Learoyd 1 applied to cases under the Presidency towns Insolvency Act but they thought that in the circumstances of the case the order of the appellate judges refusing to extend time for the transferee to appeal from the order of adjudication was not justified and set it aside and extended the time to appeal In order however to make the order in the contemplated appeal should it succeed effective they also set aside the order annulling the transfer though in their view it was plainly right This would appear from their observations at p 99 of the report It is plain that an appeal against the adjudication order would be useless while the orders stand in this independent proceeding declaring the transfer void because of the adjudication order itself On the other hand the decision of the High Court avoiding the transfer is plainly right while the adjudication 1 625 order stands and the appellant as a condition of the extension of time must pay as he has offered to do the costs thrown away And at p 100 they said The order is without prejudice to the right of the official assignee if he is so advised to make a further application to have the transfer declared void It is therefore abundantly clear that all that the Judicial Committee held in Mahomed Siddique Yousuf s case 1 was that in a case under the Presidency towns Insolvency Act when the act of insolvency upon which an order of adjudication is founded is a transfer amounting to a fraudulent preference the transferee cannot so long as the order of adjudication stands question that finding namely that the transfer was a fraudulent preference and that therefore in an application by the official assignee to have that transfer annulled on the ground that it was a fraudulent preference the order of adjudication is conclusive proof that the transfer was by way of a fraudulent preference and it was not open to the transferee to lead evidence to prove that the transfer was not a fraudulent preference In such a case therefore the order of annulment had to be made as a matter of course on proof of the order of adjudication The Judicial Committee did not hold that in such a case the order of adjudication itself annulled the transfer and no separate order of annulment was required for the purpose In fact it is obvious that they thought that a separate order annulling the transfer would be necessary even in such a case for otherwise they would not have stated that the decision of the High Court avoiding the transfer is plainly right nor while setting aside the order annulling the transfer reserved the right of the official assignee should the occasion arise to make a further application to have the transfer declared void The case therefore does not support the proposition for which it has been cited On the contrary it clearly proceeds on the basis that even where the order of adjudication is based on an act of insolvency constituted by a 1 1943 LR 70 IA 93 626 transfer of property found to be a fraudulent preference the transfer stands till it is set aside In our view this is the correct position and nothing to the contrary has been brought to our notice An argument had been raised at the bar that under the Provincial Insolvency Act an order of adjudication has not that binding force which Mahomed Siddique Yousuf s case 1 held it had under the Presidency towns Insolvency Act It was said that this was so because the terms of the two Acts were dissimilar We do not think it necessary to express any opinion on this question We have discussed Mahomed Siddique Yousuf s case 1 only to show that it does not support the proposition for which it was cited It is un necessary for us to say whether it will govern a case Under the Provincial Insolvency Act or what the effect of the dissimilarity pointed out in the terms of the two Acts is That question is not before us There remains one other point to deal with It is said that the official receiver was not entitled to take advantage of the applications for execution made by Meenakshi Achi as he had not been claiming under her but had actually claimed against her This contention is equally unfounded Article 182 does not say that no advantage of a previous application can be taken for the purposes of saving the bar of limita tion unless it had been made by a person under whom the applicant in a later application which is said to be barred by limitation claimed All that the article contemplates is an application for execution of a decree made within three years of the final order on a previous application made in accordance with law for the execution of the same decree That being so we must reject this contention of the appellants also In view of what we have already said it becomes unnecessary to deal with the other points raised at the bar In the result we think that the appeal should be dismissed and we order accordingly The appellant must pay the costs of this appeal 1 1943 LR 70 IA 93 627 SUBBA RAO J This appeal raises a question of limitation There is no dispute about the facts On May 9 1935 one Venkatachalam Chettiar obtained a compromise decree against the appellants and respondents 2 3 and 4 and predecessors in interest of respondents 5 and 6 in A section No 226 of 1930 on the file of the High Court of Madras Under the decree the defendants were directed to pay the plaintiffs therein a sum of Rs 1101014 0 together with interest at 3 per cent per annum in certain instalments the last of the instalments being payable on May 30 1942 The decree also provided that in the event of a default in payment of any one of the instalments the entire decree amount would become payable On February 27 1937 one Visvanathan Chettiar obtained a decree against the said Venkataclialam Chettiar in 0 section No 22 of 1936 on the file of the Court of Subordinate Judge Devakottai for a sum of Rs 33000 The suit ending in the above decree was filed on January 29 1936 On February 3 1936 Venkatachalam Chettiar executed a deed of assignment transferring the decree obtained by him in C section No 14 of 1926 to his mother Meenakshi Achi for consideration On March 26 1936 Visvanathan Chettiar filed 1 P No 10 of 1936 in the Court of Subordinate Judge Devakottai for adjudicating Venkata chalam Chettiar an insolvent on the ground that the transfer of the decree in favour of Meenakshi Achi was an act of insolvency On December 14 1936 the assignee Meenakshi Achi filed EP No 37 of 1937 for recognition of the assignment in her favour and for execution of the decree The judgment debtors did not object either to the recognition of the assignment of the decree or the execution thereof The said Visvanatban Chettiar intervened in the execution petition and applied in EA No 817 of 1937 for stay of execution of the decree on the ground that he had filed an insolvency petition against the decree holder and also on the ground that the said assignment was nominal The learned Subordinate Judge disallowed the objection of the creditor recognised the assignment and permitted the assignee decree holder to proceed with the execution of the decree 628 On September 27 1937 a settlement was entered into between the assignee decree holder and the judgment debtors and the said execution petition was closed On January 7 1939 Venkatachalam Chettiar was adjudicated insolvent on the ground that the assignment of the said decree by him in favour of his mother Meenakshi Achi was an act of insolvency whereupon his properties vested in the first respondent the Official Receiver Ramanathapuram at Madurai On August 2 1940 the assignee decree holder filed another execution petition EP No 243 of 1940 and it was struck off on September 30 1940 On January 26 1942 the Official Receiver filed IA No 20 of 1942 in 1 P No 10 of 1936 in the Court of the Subordinate Judge Devakottai for setting aside the assignment and by order dated April 9 1943 the assignment was set aside by the Court on the ground of fraudulent preference within the meaning of section 54 of the hereinafter called the Act On September 27 1943 the Official Receiver filed a fresh execution petition EP No 90 of 1944 for executing the decree It was alleged by the appellants and the respondents 2 to 6 inter alia that the said execution petition was barred by limitation on the ground that the two earlier execution petitions were not in accordance with law within the meaning of article 182 cl 5 of the Limitation Act The Official Receiver contended that they were in accordance with law and therefore the present execution petition was in time He further pleaded that the present execution petition was also saved from the bar of limitation by the payments made by the judgment debtors to Meenakshi Achi and that in any event the decree in respect of the last three instalments was not barred by limitation The learned Subordinate Judge rejected the contentions of the Official Receiver and held that the execution petition was barred by limitation The Official Receiver preferred an appeal against the said order of the Subordinate Judge to the High Court of Madras Govinda Menon and Basheer Ahmed Sayeed JJ of the said High Court came to the conclusion that the earlier execution petitions were in accordance with 629 law and therefore the present execution petition was within time They also expressed the view that the payments made by the judgment debtors to Meenakshi Achi were valid payments and therefore they also saved the bar of limitation In any view they found that the last two instalments were not barred by limitation On their findings the learned judges of the High Court set aside the order of the learned Subordinate Judge and remanded the execution petition to the Court of the Subordinate Judge Devakottai for taking steps in furtherance of execution The present appeal to this Court was filed against the said order of remand Learned Counsel for the appellants contended that the execution petitions EP No 37 of 1937 and EP No 243 of 1940 were not in accordance with law for the following reasons 1 The order dated April 9 1943 annulling the assignment of the decree by Venkatachalam Chettiar in favour of his mother Meenakshi Achi related back to the date of the transfer ie February 3 1936 and therefore EP No 37 of 1937 which was filed on December 14 1936 and E P No 243 of 1940 which was filed on August 2 1940 were ineffective to save the bar of limitation as on the dates they were filed Meenakshi Achi had no title in the decree 2 the order of adjudication dated January 7 1939 was based on the finding that the said assignment of the decree was an act of fraudulent preference and that the order related back to the date of the filing of I P No 10 of 1936 on March 26 1936 and therefore the two execution petitions filed thereafter were filed by a person without title with the result that the said two petitions were not in accordance with law 3 assuming that the said two execution petitions were in accordance with law the Official Receiver neither claims under nor represents the assignee decree holder and therefore he has no locus standi to file the present execution petition 4 payments made by the judgment debtors to Meenakshi Achi who had no title in the decree could not save the bar of limitation and 5 as Meenakshi Achi in her execution petitions by exercising her option claimed the entire decree amount the Official Receiver 80 630 cannot now claim that the last two instalments are within time At the outset it may be stated that it would be sufficient if we consider the objections of the appellants in regard to E P No 243 of 1940 for if that was not in accordance with law the present execution petition would be barred by limitation The validity of E P No 37 of 1937 was also questioned on the same grounds of attack taken against the later execution petition The relevant part of the Limitation Act is article 182 and it reads Description of Period of Time from which period application Limitation begins to run For the execution Three years or 5 where the applic of a decree or where a certified tion next hereinafter order of any copy of the decree mentioned has been m Civil Court not or order has been ade the date of the provided for by registered Six final order passed on article 183 or Years an application made in by section 48 of accordance with law to the code of Civil the proper Court for Under this article the latest execution petition should have been filed within three years from the date of the final order passed on an application made in accordance with law to the proper Court of execution Taking first the second contention of the learned Counsel for the appellants the question may be posed thus Whether the execution petition EP No 243 of 1940 filed on August 2 1940 by Meenakshi Achi after Venkatachalam Chettiar was adjudicated insolvent on January 7 1939 was one in accordance with law If the order of adjudication of Venkatachalam Chettiar on the ground that the assignment of the decree made by him in favour of Meenakshi Achi was an act of insolvency ex proprio vigore annul the transfer in her favour the execution petition filed by her after the said order of adjudication would not be one filed in accordance with law On the other hand if the assignment of the decree continued to be good till it was annulled on an application filed by the Official Receiver which was done in 631 the present case on April 9 1943 the execution petition subject to another argument that I would consider at a later stage would be one filed in accordance with law What then is the legal effect of such an order of adjudication The question in the main falls to be decided on a true construction of the relevant provisions of the Act Section 6 of the Act defines the act of insolvency it enumerates eight acts of insolvency and one of them is a transfer made by a debtor which would be void as a fraudulent preference if he were adjudicated insolvent Section 7 enables a creditor or a deter to present an insolvency petition for adjudicating the debtor an insolvent Section 9 lays down the conditions on which a debtor may petition Section 13 prescribes the particulars a creditor has to give in his petition and one of the particulars to be given is the act of insolvency committed by the debtor When an insolvency petition is admitted section 19 provides that notice should be given to creditors in such manner as may be prescribed and when the debtor is not the petitioner notice of the order admitting the petition should be served on the debtor On the date fixed for hearing the Court should require proof of the matters mentioned under section 24 of the Act it enables the Court to examine the debtor and the creditors and take the evidence adduced by them After making the necessary enquiry the Court may dismiss the petition or make an order of adjudication On the making of the said order of adjudication the whole property of the insolvent would vest in the Court or in the Receiver appointed under the Act and the said property becomes divisible among the creditors Under sub section 7 of section 28 the order of adjudication shall relate back to and take effect from the date of the presentation of the petition Under section 30 notice of an order of adjudication stating the name address and description of the insolvent the date of adjudication the period within which the debtor should apply for his discharge and the Court by which the adjudication is made should be published in the Official Gazette and in such manner as may be prescribed It will be seen from the aforesaid provisions that till an order of adjudication is made the 632 person to whom the insolvent transferred his property does not come into the picture at all The purchaser is neither a party to the proceedings nor any notice is given to him It would therefore be contrary to all principles of natural justice to hold that the finding arrived at in regard to an assignment of a property by the insolvent in favour of a third party behind his back is binding on him If the legislature intended that the order should have that effect it would have provided for personal or at any rate public notice to the purchasers or would have given in express terms such a binding effect and the fact that it did not do so is a clear indication of the legislative intention that an incidental finding was not intended to have such a far reaching effect On the other hand the Act makes ample provision for setting aside such transfers Sections 53 and 54 of the Act enable the Official Receiver to have voluntary transfers made within two years of the insolvency petition and that made in fraudulent preference of one creditor over another within three months from the date of the petition annulled by the Court If the legislature intended to exclude a transfer constituting an act of insolvency from the operation of these provisions it would have introduced a proviso to that effect Therefore unless such a transfer is duly annulled in the manner prescribed the transfer would be valid That this is the intention of the legislature is also made clear by the other provisions of the Act vis avis transfers The Act provides for three stages 1 Transfers made before the presentation of the insolvency petition 2 transfers made after the presentation of the petition and before the order of adjudication and 3 transfers made after adjudication A transfer made after adjudication is not binding on the Receiver A transfer by an insolvent after the filing of the petition is also not binding on the Receiver subject to a protection clause A purchase in good faith under a sale in execution section 513 and a transfer inter vivos in good faith for valuable consideration 633 A transfer before the filing of the petition is binding on the Receiver unless it is annulled under sections 53 54 or 54 A of the Act The scheme of the Act in regard to transfers clearly demonstrates that transfers before the filing of the petition are good unless they are annulled in the manner prescribed in the Act and even the doctrine of relating back of the order of adjudication does not reach them as they fall on the other side of the line If it was the intention of the legislature that the said order by its own force should declare the transaction void it would have fixed the date of the transfer as the datum line instead of the date of the filing of the petition It appears to me that this was designedly done to give an opportunity to the party affected to defend his title when the Official Receiver filed an application to annul the transfer Sections 53 54 and 28 must be reconciled and they can be reconciled without doing violence to the language of the said sections if the order of adjudication is conclusive only in regard to the status of the insolvent it declares and the transfer though it formed the basis of the adjudication so far as the transferee is concerned continues to be good till set aside Strong reliance is placed upon the judgment of the Judicial Committee in Mohamed Siddique Yousuf vs Official Assignee of Calcutta 1 in support of the contention that the finding that the transfer of the decree in favour of Meenakshi Achi was an act of insolvency was binding on the transferee though she was not a party to the adjudication proceedings That decision turned upon the relevant provisions of the Presidency towns Insolvency Act 1909 and the corresponding provisions of the Bankruptcy Act of 1869 That decision cannot apply to a situation created under the unless the provisions of said Act are pari materia with those of the Presidencytowns Insolvency Act and the Bankruptcy Act A comparative study of the three sets of provisions by placing them in juxtaposition will facilitate a better understanding of the problem 1 1943 LR 7o IA 93 634 Bankruptcy Act 1869 section 10 A copy of an order of the Court adjudging the debtor to be bankrupt shall be published in the London Gazette and be advertised locally in such manner if any as may beprescribed and the date of such order shall be the date of the adjudication for the purposes of this Act and the production of a copy of the Gazette containing such order as aforesaid shall be conclusive evidence in all legal proceedings of the debtor having been duly adjudged a bank rupt and of the date of the adjudication section 11 The bankruptcy of a debtor shall be deemed to have relation back to and to conimence at the time of the act of bankruptcy being completed on which the order is made adjudging him to be bankrupt or if the bankrupt is proved to have committed more acts of bankruptcy than one to have relation back and to commence at the time of the first of the acts of bankruptcy that may be proved to have been committed by the bankrupt within twelve months next preceding the order of adjudication but the bankrcptcy shall not relate to any prior act of bankruptcy unless it be that at the time of committing such prior act the bankrupt was indebted to some creditor or creditors in a sum or sums sufficient to support a petition in bankruptcy and unless such debt or debts are still remaining due at the time of the adjudication The section 116 6 1 A copy of the Official Gazette containing any notice inserted in pursuance of this Act shall be evidence of the facts stated in the notice 2 A copy of the Official Gazette containing any notice of an order of adjudication shall be conclusive evidence of the order having been duly made and of its date section 5I The insolvency of a debtor whether the same takes place on the debtor s own petition or upon that of a creditor or creditors shall be deemed to have relation back to and to commence at a the time of the commission of the act of insolvency on which an order of adjudication is made against him or b if the insolvent is proved to have committed more acts of insolvency than one the time of the first of the acts of insolvencyproved to have been cornmited by the insolvent within three months next preceding the date of the presentation of the insolvency petition Provided that no insolvency petition or order of adjudication shall be rendered invalid by reason of any act of insolvency committed anterior to the debt of the petitioning creditor The section 30 Notice of an order of adjudication stating the name address and description of the insolvent the date of the adjudication the period within which the debtor shall apply for his discharge and the Court by which the adjudication is made shall be published in the Official Gazette and in such other manner as may be prescribed section 287 An order of adjudication shall relate back to and take effect from the date of the presentation of the petition on which it is made 635 Bankruptcy Act 1869 Nil The S561 Every transfer of property every payment made every obligation incurred and every judicial proceeding taken or suffered by any person unable to pay his debts as they become due from his own money in favour of any creditor with a view of giving that creditor a preference over the other creditors shall if such person is adjudicated insolvent on a petition presented within three months after the date thereof be deemed fraudulent and void as against the Official assignee 2This section shall not affect the rights of any person making title in good faith an for valuable consideration through or under a creditor of the insolvent 635 The S541 Every transfer of property every payment made every obligation incurred and every judicial proceeding taken or suffered by any person unable to pay his debts as they become due from his own money in favour of any creditor with a view of giving that creditor a preference over the other creditors shall if such person is adjudged insolvent on a petition presented within three months after the date thereof be deemed fraudulent and void as against the receiver and shall be annulled by the Court 2This section shall not affect the rights of any person who in good faith and for valuable consideration has acquir ed a title through or under a creditor of the insolvent With some difference in the phraseology with which we are not concerned Ss 116 and 51 of the Presidencytowns Insolvency Act are in terms similar to the corresponding sections sections 10 and II of the Bankruptcy Act Section 10 of the Bankruptcy Act and section 116 of the Presideticy towns Insolvency Act make the copy of the Official Gazette containing the order of adjudication conclusive evidence of the date of adjudication and the fact that the order of adjudication was duly made But section 30 of the only enjoins that the notice of the order of adjudication with the necessary particulars should be published in the Official Gazette and in such manner as may be prescribed but a copy of the said Gazette containing the said notification is not made conclusive evidence either of the facts mentioned therein or of the fact that adjudication has been duly made Section 51 of the is in terms similar to that of section II of the Bankruptcy Act and 636 under both the sections the insolvency of a debtor relates back to the time of the commission of the act of insolvency on which the order of adjudication has been made against him But under section 287 of the the order of adjudication relates back to and takes effect from the date of the presentation of the application on which it is made Under section 56 of the transfer of a property in favour of a creditor with a view to give preference to him over other creditors shall be deemed fraudulent and void as against the Official Assignee whereas under section 54 of the the said transfer has to be annulled by the Court There are therefore essential differences in the structure of the scheme between the three Acts in the matter of adjudication With this background let us look at the Privy Council decision in Mohomed Siddique Yousuf s case 1 to ascertain the basis of that decision The facts in that case were On January 20 1939 the insolvent assigned to the appellant a decree obtained by him for consideration On April 19 1939 the petitioning creditor filed a petition in the High Court for the adjudication of the insolvent as such One of the acts of insolvency alleged was the said assignment of the decree in favour of the appellant On June 13 1939 an adjudication order was made against the insolvent No one appeared except the petitioning creditor and the order recited that the insolvent had committed each of the acts of insolvency alleged in the petition On November 23 1939 the Official Assignee gave notice of motion in the Insolvency Court for a declaration that the indenture of assignment dated January 20 1939 should be declared void as against the Official Assignee and that the transfer should be set aside The Judge in Insolvency held on the merits that the said transfer was void under section 56 of the On appeal the High Court held that the order of adjudication was conclusive evidence against the appellant that the assignment was a fraudulent preference and on that 1 1943 LR 70 IA 93 637 ground it declared the transfer void On further appeal the Privy Council agreed with the High Court Relying on the decision in Ex _varte Learoyd 1 a decision on analogous provisions of the Bankruptcy Act the Privy Council made the following observations at p 98 The provisions of the are also in similar terms and their Lordships feel no doubt that the principles of the English decision are as valid in India as in England No doubt it is anomalous that a decision affecting the right of a third party should be conclusively determined against him in his absence and even without notice to him but the words of the section and the importance of maintaining the status of the debtor as determined by an order of adjudication and the necessity of securing the stability of the administration of the debtor s estate once his status has been fixed have been justly held to outweigh the consideration of hardship to the private citizen But the Privy Council came to the conclusion on the facts that a case was made out for the High Court for excusing the delay in preferring the appeal against the order of adjudication On that view they set aside the order of the High Court and made the following observations for its guidance at p 99 It may be that if the appellant takes advantage of the extension of time and appeals the High Court may adopt the procedure in Ex parte Tucker 2 and content themselves with striking out the act of bankruptcy complained of and leaving the official assignee to make a fresh application without themselves determining the facts This decision decides three points namely i having regard to the express provisions of the and for maintaining the status of the debtor and the stability of the administration of his estate the decision affecting the rights of a third party though made behind his back would be binding on him ii an appeal can be entertained against the 11878 2 81 638 order of the adjudication at the instance of the trans feree and if necessary by excusing the delay in preferring the appeal and iii in such an appeal the High Court may strike out one of the acts of insolvency ie the transfer in favour of the appellant and leave it to the Official Assignee to make a fresh application Though the principles underlying the relevant provisions of the Act were expounded the decision mainly rested on the express provisions of the Nor did the Privy Council hold that when there was an order of adjudication on the basis of an act of insolvency there was no necessity on the part of the Official Assignee to take out an application for setting aside the transfer constituting the act of insolvency Though it is not very clear it appears to me that what the Privy Council stated was that in such an application the decision on the transfer forming part of the order of adjudication is conclusive evidence of the invalidity of the transfer To put it differently in such an application the Official Assignee need not prove afresh that the transfer was a fraud on creditors or an act of fraudulent preference That decision was mainly based upon Ex parte Learoyd 1 which in its turn was founded upon the interpretation of sections 10 and 11 of the Bankruptcy Act sections corresponding to sections 116 and 51 of the A scrutiny of that decision therefore will disclose the raison detre of the decision of the Privy Council There on August 30 1877 an insolvent executed in favour of George Payne a bill of sale of his household furniture etc by way of security for consideration The goods remained in the apparent possession of the mortgagor until January 1 1878 when Payne removed them On January 3 1878 a bankruptcy petition was presented against the insolvent by a creditor relying upon an alleged act of bankruptcy namely that the insolvent being a trader departed from his dwelling house on December 31 1877 On January 3 1878 an order of adjudication was made on the petition upon proof of the said act of bankruptcy and that 1 639 order was advertised in the usual way in the London Gazette On January 8 1878 the goods removed by Payne were sold on his behalf The trustees in the Bankruptcy claimed the proceeds of the sale and the Judge of the County Court ordered the payment On appeal Bacon C J allowed the appeal on the ground that it had not been established that there was an act of insolvency before Payne took possession of the goods On further appeal the Court of Appeal set aside the judgment of Bacon CJ on the ground that by virtue of sections 10 and 11 of the Bankruptcy Act 1869 a bill of a sale holder is conclusively bound by the adjudication so long as it stands and cannot dispute that the act of bankruptcy on which the adjudication professedly proceeded was in fact committed and that the trustee s title related back to that act of bankruptcy James LJ after a brief survey of the historic background of the Bankruptcy Act based his judgment mainly on the construction of the provisions of sections 10 and I I of the Bankruptcy Act The learned Judge observed at p 8 A man cannot be I duly adjudged a bankrupt unless the great requisite of all exists that he has committed an act of bankruptcy That is the capital offence of which he must have been guilty before he can be duly adjudged a bankrupt That he has been duly adjudged a bankrupt necesssarily involves the previous commission of an act of bankruptcy The mere fact that an adjudication has been made could have been proved without the aid of sect That section may however only involve this that some act of bankruptcy had been committed before the adjudication was made But then comes sect II which has no operation at all as between the bankrupt and the trustee The bankrupt has no rights whatever all his rights have been transferred to the trustee The mere fact that sect 1 1 is dealing with the relation back of the trustee s title shews that it is dealing with the rights of third persons and not merely with the rights of the bankrupt and persons indebted to him Then sect 11 goes on to provide that by way of enlargement 640 of the trustee s title he may go behind the act of bankruptcy on which the adjudication was founded and may under certain circumstances and subject to certain limitations prove that other earlier acts of bankruptcy have been committed and if this is done the trustee s title is to relate back to the earliest act of bankruptcy which is proved to have been committed within twelve months before the adjudication This however is to be proved by evidence whereas the act of bankruptcy on which the adjudi cation is founded is proved by the production of the adjudication itself It seems to me to be impossible to evade the words of these sections Baggallay L J also after emphasizing on the words duly made in section 10 of the Bankruptcy Act remarked on the scope of section 11 thus at p 10 But then comes sect II which I think if more was needed makes the adjudication conclusive on third persons that the act of bankruptcy on which it was founded was really committed Thesiger L J also said much to the same effect at P 11 We start therefore with this that we are bound to hold conclusively that a due adjudication was made on the 3rd January It must therefore have been founded upon a proper act of bankruptcy Then sect 11 goes still further and it is important to compare it with the provisions contained in the prior Bankruptcy Acts Sects 234 and 235 enabled third persons to dispute the act of bankruptcy upon giving notice of their intention so to do That provision is swept away by the Act of 1869 and in language clear and distinct the Legislature has said by sect II that I the bankruptcy of a debtor shall be deemed to have relation back to and to commerce at the time of the act of bankruptcy being completed on which the order is made adjudging him to be bankrupt From the aforesaid extracts from the judgments it is manifest that the decision turned upon the express provisions of sections 10 and 11 of the Bankruptcy Act Under section 10 of that Act the gazette containing the 641 order was conclusive evidence that the order of adjudication was duly made on the basis of an act of insolvency and section 11 fixed the datum line for the commencement of the trustee s title from the act of bankruptcy The former section made the order of adjudication conclusive against third parties and the latter section vests the title of the property concerned in the official receiver from the date of the act of insolvency This judgment therefore cannot be applied to an Act which differs in all respects from the relevant provisions of sections 10 and 11 of the Bankruptcy Act on the basis of which that judgment was given In the neither the order of adjudication is conclusive evidence that it has been duly made nor the trustee s title dates back to the act of insolvency on which the adjudication is founded I am therefore of the view that neither the decision in Ex parte Learoyd 1 based on the provisions of the Bankruptcy Act 1869 nor the Privy Council decision in Mahomed Siddique Yousuf vs Official Assignee of Calcutta 2 based upon the provisions of the Presidencytowns Insolvency Act has any bearing in construing the relevant provisions of the A similar view was expressed by a Full Bench of the Madras High Court in The Official Receiver Guntur vs Narra Go vs Narra Gopala Kri8hnayya3 and by a Full Bench of the Nagpur High Court in D G Sahasrabudhe vs Kila Chand Deochand Co Bombay 4 Both Courts held that the decision of the Privy Council did not apply to a case under the and that a transferee who was not a party to the adjudication proceeding could contend in subsequent proceedings for annulment that his transfer was good notwithstanding that the order of adjudication was based on the alleged transfer as being an act of insolvency I accept the correctness of the said two decisions If so it follows that the order of adjudication made in the present case did not by its own force divest the title of Meenakshi Achi and vest it in the official receiver and that she continued to be the transferee of the decree at the time 1 2 1943 LR 70 IA 93 3 I L E 4 1LR 642 when she filed the second execution petition EP No 243 of 1940 For the same reasons when EP No 37 of 1937 was filed Meenakshi Achi had subsisting title to the decree runder the transfer deed dated February 3 1936 and therefore the said execution petition was also in accordance with law The next argument of the learned Counsel for the appellants is that the order of the Insolvency Court dated April 9 1943 related back to the date of the transfer ie February 3 1936 and that by the order of annulment the transfer became void from its inception with the result that on the dates when the Execution Petitions Nos 37 of 1937 and 243 of 1940 were filed Meenakshi Achi had no title to the decree and therefore the said petitions were not filed in accordance with law The answer to this contention depends upon the true legal effect of the order of annulment of the transfer on the ground of fraudulent preference That part of section 54 of the so far relevant to the present enquiry reads thus section 54 1 Every transfer of property in favour of any creditor with a view of giving that creditor a preference over the other creditors shall if such person is adjudged insolvent on a petition presented within three months after the date thereof be deemed fraudulent and void as against the receiver and shall be annulled by the Court 2 This section shall not affect the rights of any person who in good faith and for valuable consideration has acquired a title through or under a creditor of the insolvent It is clear from the provisions of this section that a transfer of property by a debtor before insolvency in favour of a creditor giving him preference over other creditors is not absolutely void As between the transferor and the transferee the title in the property conveyed passes from one to the other but it is liable to be annulled at the instance of the receiver This is because the Insolvency Act confers on the official receiver a title superior that of the insolvent enabling 643 the former to get it annulled in the interest of the creditors Sub section 2 of that section also indicates that the transfer is not void ab initio for under that sub section the rights of any person who in good faith and for valuable consideration acquired title through or under a creator of the insolvent are protected If the transfer was ab initio void in the sense that it is a nullity all the depending transactions should fall with it Emphasis is laid upon the word void in section 541 of the Act but the said word in the context can only mean voidable for it is made void only against the receiver and requires to be annulled by the Court It follows from the aforesaid premises that such a transfer is valid till annulled in the manner prescribed by the provisions of the The legal effect of annulling a transfer under section 53 of the Act was considered by a Division Benchof the Madras High Court in The Official Receiver Coimbatore vs Palaniswami Chetti 1 In that decision Devadoss J observed as under at p 758 But till such a declaration is made by the Insolvency Court under section 53 the transaction is good and the mortgagee could proceed with the suit or with the execution of his decree against the insolvent s property Wallace J elaborated thus at p 764 Section 53 implies an attack by the Official Receiver on behalf the general body of creditors and the remedy which he is entitled to get on proving his case is that the transfer is voidable against him and may be annulled by the Court it does not really affect the relationship of the transferor and transferee as mortgagor and mortgagee For example if the property is sold by the Official Receiver and the creditors and costs are fully paid out of the proceeds and there is a surplus remaining that surplus belongs primafacie to the transferee and not to the transferor and is his unless the transferor has by appropriate proceedings established his right to it The relationship between the mortgagor and mortgagee remains 1 Mad 644 unaffected by any proceedings under section 53 and the mortgagee is entitled therefore to enforce his mortgage against the mortgagor except so far as proceedings under section 53 may have held the property mortgaged as assets of the mortgagor at the disposal of the general body of creditors The observations of the learned Judges establish two propositions i that the transaction inter se between the debtor and transferee is good and ii it is not binding on the Official Receiver so far as it is necessary to protect the interests of the creditors The decision in Amir Ahmad vs Saiyid Hasan 1 is also one laying down the legal effect of section 53 of the Act The learned Judges made the following observations in that case at p 903 It seems quite clear that if a transfer made by a debtor is wholly fictitious and bogus and no interest in the property passes to the transferee then the transfer is void ab initio and subsequent transferees can never be protected because the foundation of their title does not exist On the other hand if the transfer made by the debtor was not wholly fictitious and bogus but the intention of the parties was that property should is fact pass to the transferee then the result would depend on whether the transferee was a purchaser in good faith and for valuable consideration or not The transfer for the time being is valid though it is voidable at the option of the receiver and it is discretionary with court to annul it under section 53 of the The said observations will apply mutatis mutandis to a situation under section 54 of the Act Indeed a Division Bench of the Nagpur High Court in Rukhmanbai vs Govindram 1 in the context of section 54 of the Act stated to the same effect thus at p 275 The wording of the section section 54 thus very clearly indicates that a transfer of the nature mentioned therein is voidable as against the receiver and is not void ab initio and may be annulled by the Court It is thus clear from the section 1 All 900 2 ILR 645 that till the transfer is actually annulled by the Court it remains a valid transaction The aforesaid discussion yields the following result 1 a transfer by a debtor of his property before insolvency in favour of a creditor with a view to giving him preference over other creditors conveys a valid title to the transferee 2 under circumstances mentioned in section 54 of the Act it is voidable against the receiver 3 when it is annulled by the Court on the ground of fraudulent preference the property vests in the official receiver who can administer it in the interest of the creditors and 4 even after the transfer is annulled it continues to be good between the transferor and transferee and in a contingency of any balance remaining of the sale proceeds after the cre ditors are fully paid the transferee would be entitled to the same Two lines of decisions have been relied upon by the learned Counsel for the appellants The first one holds that in the case of conflicting claims to an estate the claimant ultimately declared to be the owner thereof by the final Court cannot rely to save the bar of limitation upon a petition filed by the rival claimant to execute the decree pertaining to the estate at the time the title was in his favour and the other decides that when a transfer is set aside on the ground of fraudulent preference the official receiver can claim to recover mesne profits from the transferee of the property of an insolvent from the date of the transfer The first line of decisions turns upon the principle that a defeated claimant had no title to the property at the time he filed the application for the effect of the final decree is that the said claimant had no title at any time and the second line of decisions is founded on some equitable doctrine There are also decisions taking the contrary view It is not necessary in this case either to go into that question or attempt to resolve the conflict As I have held that in the case of a transfer in fraud of creditors or by fraudulent preference the transfer is good till set aside by the Court the transferee would have title to file the execution petition before the transfer was set aside 82 646 The third contention of the learned Counsel for the appellants is a weak one It is said that the official receiver does not claim under Meenakshi Achi and therefore he cannot rely upon the execution petition filed by her to save the bar of limitation There is a fallacy underlying this argument The question for decision is not whether the official receiver claims under Meenakshi Achi but whether the execution petitions filed by her were in accordance with law If as I held at the time the previous execution petitions were filed Meenakshi Achi had a valid title to execute the decree the execution petitions filed by her would certainly be in accordance with law within the meaning of article 1825 of the Indian Limitation Act I therefore reject this contention In view of the aforesaid conclusions arrived at by me the last two contentions based on payments of instalments do not arise for consideration In the result the appeal fails and is dismissed with costs Appeal dismissed

The appellant was the occupier of a factory where there was a pit in which dangerous fumes were likely to be present The pit was securely covered and enclosed and no one was expected to go down into it for normal work as it was worked by gadgets fixed nearby above the ground Something went wrong with the machinery inside the pit and five workers went down without wearing suitable breathing apparatus and without wearing a belt securely attached to a rope the free end of which could be held by some person standing outside All the workers were overcome by poisonous gases and died It was found that suitable breathing apparatus reviving apparatus belts and ropes were not available anywhere in the factory and were not kept for ready use near the pit The appellant was prosecuted as the occupier for breach of the provisions Of section 363 and 4 of the Indian The trial Court held that no offence under section 363 had been made out and it was not proved that any permission express or implied had been given to the workmen to enter the pit and I that no offence under section 364 had been made out because no permission having been given it was not necessary to keep the breathing apparatus etc near the pit or anywhere else in the factory and consequently it acquitted the appellant On appeal by the State the High Court set aside the 1 1952 SCR 67 655 acquittal and directed the trial Court to decide the case against the appellant in the light of the interpretation of the law made by the High Court The High Court was of the view that as c the appellant had failed to prevent the entry of the workers he must in law be held to have permitted the entry and committed breach Of section 363 and that it was not sufficient compliance with section 364 to provide breathing apparatus etc only after coming to know that some person was about to enter the pit but that such apparatus must be immediately available at the pit at all times Held that section 363 did not cast an absolute duty on the occupier to prevent the entry into the pit and the mere fact that a person had entered the pit did not by itself prove that he had been permitted to enter within the meaning of that subsection The primary duty was on the worker prohibiting him from entering the pit At the same time the occupier was also liable if his permission to the entry whether express or implied could be inferred from the facts and circumstances of the case Held further that section 364 cast an absolute duty on the occupier to see that the breathing apparatus etc was always available in the factory and was periodically examined and certified fit for use and a sufficient number of persons were trained in its use But there was no duty to keep the apparatus at the pit at all times such a duty arose when some person was about to enter the pit with the permission of the occupier

Appeal No 24 of 1955 Appeal by special leave from the judgment and decree dated March 11 1949 of the Bombay High Court in Letters Patent Appeal No 22 of 1945 arising out of the judgment and decree dated August 3 1944 of the said High Court in Second Appeal No 754 of 1942 695 M section K Sastri for the appellants Naunit Lal for respondents September 11 The Judgment of the Court was delivered by DAS C J This appeal by special leave has arisen out of Original Suit No 582 of 1937 filed in the Court of the Subordinate Judge of Chikodi by one Tukaram Shidappa Borgavi alias Teli since deceased and his son Mallappa Tukaram Borgavi alis Teli 1st respondent herein against the appellants for the redemption of certain mortgaged property and possession thereof free from encumbrances and for other ancillary reliefs The mortgaged property consists of R section No 301 which is Devasthan Inam Lands burdened with the obligation to supply oil for Nand Deep ie keeping a lamp always burning before Shri Tholaba Deity in the village of Nipani The said property originally belonged to two brothers Shiddappa and Annappa The khata of the land however stood in the name of Shiddappa as the registered occupant under section 74 of the Bombay Land Revenue Code 1879 Bombay Act V of 1879 The facts material for our present purpose may now be stated On January 23 1888 Shiddappa and Annappa executed a usufructuary mortgage ExD 51 in favour of Lalchand Bhavanchand Gujar and Tuljaram Bhavanchand Gujar for Rs 1300 made up of Rs 1100 due under a previous mortgage and Rs 200 presently advanced in cash That deed provided that the mortgage money would be repaid within a period of three years and that the mortgagors would pay the judi and incur the expenses of the Nand Deep and that on failure of the mortgagors to meet the said out goings the mortgagees would incur the said expenses and add the same to their claim on the mortgage On March 10 1900 Shiddappa alone executed a simple mortgage exhibit D 52 for Rs 600 in favour of the same mortgagees A part of the consideration for this simple mortgage consisted of moneys borrowed by both the brothers on bonds executed by both of them This simple mortgage deed provided 696 that the mortgagees would bear the expenses of the Nand Deep and debit the same to the mortgagors in the mortgage account On March 22 1900 before the simple mortgage deed was presented for registration Shidappa who was the registered occupant gave a Rajinama under section 74 of the Bombay Revenue Code recording his desire to submit an unconditional surrender of the above mentioned khata of R section No 307 from the end of the then current year On the same day the mortgagees by a Kabuliyat prayed that the occupancy in the mortgaged property may be granted to them Both the Rajinama and the Kabuliyat were sanctioned by the Mamlatdar on May 51900 Shiddappa having died Annappa in 1905 applied to the Mamlatdar alleging that the mortgaged property was Devasthan Inam and praying for the cancellation of the transfer in favour of the mortgagees and for placing the mortgaged property in his name This application was rejected In 1907 Shiddappa s son Tukaram the original first plaintiff hereinand Annappa the brother of Shiddappa filed suits against the mortgagees for accounts to be taken under the Deccan Agriculturists Relief Act That suit having been dismissed they appealed to the District Court Belgaum but that appeal was dismissed on March 15 1909 Annappa again applied for the lands being put in his possession but that application also was rejected on August 4 1910 Thereafter in 1911 Annappa and Tukaram the brother and son respectively of Shiddappa filed C section No 362 of 1911 under the same Deccan Agriculturists Relief Act for the same reliefs That suit was also dismissed and the appeal there from met with a like fate on March 171914 In 1922 Annappa died without any issue The mortgagee Lalchand died issueless and the mortgagee Tuljaram died leaving a son named Lilachand Tuljaram who became entitled to the entire mortgage securities On November 1 1937 Tukaram and his son Ganpat alleging that they were the legal representatives of both Shiddappa and Annappa filed Original Suit No 586 of 1937 out of which this appeal arises against the appellants Lilachand and his three sons for the redemption of the mortgages In the 697 written statement the defendants appellants pleaded that the deceased Shiddappa having sold the mortgaged property to the mortgagees the equity of redemption became extinguished and that as Shiddappa alone was the registered occupant the Rajinama given by him was valid and binding on Annappa They further alleged that the plaintiffs were not the heirs of the deceased Annappa for the latter had died after having transferred his interests in the mortgaged properties to others It transpires that Annappa died in 1922 after having made and published his last will and testament bequeathing his interest in the mortgaged properties to one Krishna Kallappa that Krishna Kallappa applied for Letters of Administration in respect of Annappa s estate and that in spite of the opposition of Tukaram Letters of Administration with a copy of the will annexed was granted to Krishna Kallappa Krishna Kallappa having died his four sons were added as party defendants to this suit and then on their own application they were transposed to the category of plaintiffs The trial Court held that the Rajinama executed by Shiddappa did not extinguish the title of the mortgagors in the mortgaged property that the plaintiffs were agriculturists that they were bound to pay the amount also under the simple mortgage and that on taking accounts the mortgages had redeemed themselves Accordingly the trial court passed a decree for possession declaring that both the mortgages had been satisfied The mortgagees defendants 1 to 4 appealed to the District Court Belgaum in Regular Civil Appeal No 322 of 1940 The District Court held that by the Rajinama Shiddappa intended to convey the title in the suit land to the mortgagees and hence Shiddappa s heirs the plaintiffs 1 and 2 could not claim redemption of Shiddappa s one half share in the suit land As regards Annappa s share the learned Judge held that the Rajinama had not the effect of transferring the interest of Annappa to the mortgagees and that inasmuch as the mortgages were subsisting the defendants could not acquire title by adverse possession In this view he allowed the appeal in part with the result that 698 the suit was dismissed so far as the claims of plaintiffs 1 and 2 were concerned but the claims of plaintiffs 3 to 6 as the legal representatives of Annappa were upheld and they were allowed to redeem Annappa s one half share of and in the mortgaged property on payment of one half of the amounts due under the two mortgages The mortgagee defendants 1 to 4 appealed to the High Court in Second Appeal No 754 of 1942 against that part of the decree which rejected their claim to Annappa s share and the plaintiffs 1 and 2 also filed Second Appeal No 1011 of 1942 against the dismissal of their claim for redemption of one half share of Shiddappa in the mortgaged property Both the appeals were disposed of by a common judgment by Weston J The learned Judge held that so far as Shiddappa s share was concerned the Rajinama was a complete relinquishment of his interest but as regards Annappa s share he agreed with the District Judge s conclusion that Shiddappa could not bind Annappa s share by the Rajinama and in this view of the matter he dismissed both the appeals Against this decree both the parties preferred Letters Patent Appeals namely LPA No 22 of 1945 which was filed by defendants 1 to 4 and LPA No 16 of 1945 which was filed by plaintiffs 1 and 2 The Division Bench dismissed both the appeals The present plaintiff No 1 the son of Tukaram the deceased son of Shiddappa who was the original plaintiff No 1 has not come up to this Court and therefore the decision of the Division Bench has become final so far as he is concerned The High Court having refused to grant leave to appeal to this Court the mortgagees defendants 1 to 4 applied to and obtained from this Court special leave to appeal against the decision of the Division Bench in so far as it upheld the rejection of their claims to Annappa s half share in the mortgaged property Hence the present appeal The plaintiffs respondents who are the legal representatives of Annappa and against whom the present appeal is directed have not entered appearance in this appeal Learned advocate appearing in support of the appeal urges that the Rajinama and the Kabuliyat taken 699 together evidenced a transfer of title from the mortgagors to the mortgagees and therefore operated to extinguish the equity of redemption not only of Shiddappa but also of Annappa for there is sufficient evidence on record that Shiddappa was the manager and karta of the joint family and that in the matter of passing the Rajinama he had acted in that capacity and therefore the Rajinama was binding on his brother Annappa As pointed out by the Division Bench in their judgment in the Letters Patent Appeal this case of Shiddappa having acted as karta was nowhere made by the defendants appellants in their written statement and in agreement with the High Court we declined to allow learned advocate for the appellants to make out such a new case This case being thus out of the way learned advocate for the appellants urges that under section 74 of the Bombay Land Revenue Code as Shiddappa was the registered occupant the Rajinama filed by him operated upon the entire occupancy and amounted to a relinquishment of the rights of both the brothers Shiddappa and Annappa Section 74 of the Bombay Land Revenue Act as it stood at all material times ran as follows An occupant may by giving written notice to the Mamlatdar or Mahalkari relinquish his occupancy either absolutely or in favour of a specified person provided that such relinquishment applied to the entire occupancy or to whole survey numbers or recognized shares of Survey Numbers An absolute relinquishment shall be deemed to to have effect from the close of the current year and notice thereof must be given before the 31st March in such year or before such other date as may be from time to time prescribed in this behalf for each district by the Governor in Council A relinquishment in favour of a specified person may be made at any time When there are more occupants than one the notice of relinquishment must be given by the registered occupant and the person if any in whose favour an occupancy is relinquished or if such 700 occupancy is relinquished in favour of more persons than one the principal of such persons must enter into a written agreement to become the registered occupant and his name shall thereupon be substituted in the records for that of the previous registered occupant Reliance is placed on the concluding paragraph of the section which provides that when a relinquishment is made in favour of more persons than one the principal one of such persons must enter into a written agreement to become the registered occupant and his name shall thereupon be substituted in the records for that of the previous registered occupant This provision it is said makes it clear that so far as the revenue authorities are concerned it is the registered occupant who represents the entire occupancy and the fact that the notice of relinquishment must under the section be given by the registered occupant also supports the contention that the Rajinama passed by the registered occupant binds all the occupants We are unable to accept this argument as correct The concluding paragraph of the section clearly recognises that a relinquishment may be in favour of more persons than one It is true that the principal one of such persons must enter into a written agreement to become the registered occupant This is for facilitating the purpose of the Code but it does not mean that the other persons in whose favour the occupancy is relinquished cease to have any right That their right as occupants remains is clearly recognised by the opening paragraph of the section which gives an occupant a right to relinquish his occupancy either absolutely or in favour of a specified person This right is given to all occupants if there are more than one for the singular includes the plural It is true that where there are more occupants than one the notice of relinquishment on behalf of any occupant must be given by the registered occupant That does not mean in the absence of any specific pleading and cogent proof that a notice of relinquishment given by the registered occupant must necessarily be a notice on behalf of all occupants or any particular occupant other than the 701 registered occupant or that the registered occupant has the right to give such a notice without reference to the other occupants so as to effect their interest in the occupancy Turning to the Rajinama it is clear that Shiddappa did not purport to file the same on behalf of Annappa nor had he any right to do so by reason only of his being the registered occupant In Lalchand Sakharam Marwadi vs Khendu Kedu Ughade 1 one out of four brother mortgagors who was the registered occupant of the mortgage land passed a Rajinama of the land in favour of the mortgagee who executed a Kabuliyat for the same The remaining three mortgagors sued to redeem the mortgage alleging that the Rajinama passed by their brother conveyed only his interest and nothing more It was held that though the conveying brother was a co mortgagor with the plaintiffs he had no right to sell their interest in the equity of redemption and that so far as they were concerned he was in the same position as an outsider It is true that no specific reference was made in the judgment to section 74 of the Bombay Land Revenue Code but the actual decision in that case the facts of which are very similar to those of the instant case quite clearly indicates the court s understanding of the law applicable to those facts and that law was nothing but the provisions of section 74 of the Code In our opinion on a correct interpretation of section 74 where there are more occupants than one in respect of the same occupancy each occupant has his own rights and the fact of registration of one of them as the registered occupant attracts the operation of the Code and confers certain rights or imposes certain obligations on the registered occupant as laid down in the Code but does not take away the rights of other occupants It is true that if any of the occupants other than the registered occupant desires to relinquish his occupancy he cannot himself give a notice of relinquishment but must give it by and through the registered occupant Nevertheless the registered occupant in the absence of any authority express or implied to be clearly pleaded and strictly proved has no inherent or independent 1 89 702 right to give any such notice so as to affect the interests of the other occupants In our opinion the Rajinama passed by Shiddappa did not affect the right of Annappa and his equity of redemption subsisted at all material times In our judgment the conclusion of the Division Bench of the High Court in the Letters Patent Appeals was correct and the principal contention urged before us must be repelled Learned Advocate for the appellant then faintly urges that Annappa s interest in the property was extinguished by reason of the adverse possession exercised by the mortgagees Since at least 1905 when the claim of the Annappa to get the mortgaged property registered in his name failed It should be remembered that the mortgagees came into possession of the property pursuant to the usufructuary mortgage Therefore their possession had a lawful origin A mere assertion of an adverse title on the part of the appellants cannot affect the subsisting equity of redemption of the mortgagors or operate to shorten the period of limitation prescribed for a suit for redemption In view of the observation of the Judicial Committee in Khiarajmal vs Daim 1 the learned advocate for the appellants did not seriously press the point of limitation any further No other point having been urged before us in this appeal the appeal must for reasons stated above be dismissed As the respondents did not appear there will be no order as to costs Appeal dismissed 1 1904 L R 32 Ind App

Under the Jammu and Kashmir Constitution Act all powers legislative executive and judicial vested in the Ruler On the accession of the State to India on October 22 1947 the powers in respect of defence external affairs and communications were ceded to India Under section 5 Of the Constitution Act the Ruler promulgated the Enemy Agents Ordinance section 2005 which provided for the trial and punishment of enemy agents and other persons siding the enemy The Ordinance provided for trial of offences by Special judges and prescribed a procedure materially different from that followed in the criminal Courts Section 5 of the Constitution Act was repealed on November 17 1951 The appellants were prosecuted under the Ordinance for offences alleged to have been committed on June 27 and 28 1957 They contended 1 that the Ordinance violated article 14 of the Constitution of India ii that the Ruler had no legislative competence to issue the Ordinance as it dealt with defence iii that S 5 of the 681 J K Constitution Act having been repealed the Ordinance came to an end iv that the Ordinance had lapsed as the emergency on account of which it was issued had ceased and v that the Ordinance was void as it was inconsistent with the Emergency Provisions in Part XVIII of the Constitution of India Held that the Ordinance was intra vires valid and subsisting The Ordinance was riot discriminative and did not violate article 14 Of the Constitution In view of the circumstances existing in the State enemy agents and other persons aiding the I enemy to whom the Ordinance applied formed a reasonable classification which was founded on an intelligible differentia which distinguished such persons from others and the differentia had a rational relation to the object of the Ordinance which was to check subversion of the Government Besides if the Ordinance did not make any classification of persons but only created an offence and provided stringent procedure and punishment then there was no discrimination at all as everybody who committed the offence was subjected to the same procedure Ram Krishna Dalmia vs Shri justice section R Tendolkar followed The Ordinance was not legislation with respect to defence and was within the legislative competence of the Ruler The entry defence dealt only with the armed forces whether on land or sea or in the air and the raising or maintenance of such forces and their operations The Ordinance dealt in the main with certain acts done with the intent to aid the enemy though indirectly it was concerned with the operations of the armed forces In pith and substance the Ordinance was a law relating to public order criminal law and procedure and not defence Though section 5 Of the Constitution Act was repealed the Ordinance was saved by section 6b of the Jammu and Kashmir General Clauses Act Section 6b saved inter alia anything duly don under a repealed enactment and the Ordinance was a thing duly done under section 5 of the Constitution Act The Ordinance was a permanent piece of legislation It came into existence because of an emergency but that was only the occasion for passing it Being a permanent law it could only be brought to an end by means of repeal by competent authority The Emergency Provisions in Ch XVIII of the Constitution of India had nothing to do with the validity or otherwise of the Ordinance and the question of any inconsistency between the Ordinance and these provisions did not arise

Civil Appeal No 19 of 1954 Appeal from the judgment and decree dated April 8 1949 of the Patna High Court in Appeal from Original Decree No 116 of 1947 arising out of the judgment and decree dated the February 28 1947 of the Sub Judge at Begusarai in Title Suit No 1414 of 194445 L K Jha and B K Sinha for the appellant G section Pathak B Sen B K Saran and R C Prasad for respondent No 1 section D Sekhri for respondents Nos 3 and 4 1959 September 7 The Judgment of the Court was delivered by DAS GUPTA J Though a member of questions some of fact and some of law were originally raised in this suit for pre emption the main question for consideration in this appeal from the judgment of the 665 High Court of Patna reversing the decree for preemption granted by the Trial Court the Subordinate Judge of Monghyr is the question on which the High Court based its decision of reversal That question is whether the ceremonies essential for exercising the right of pre emption were properly performed Issue No 9 in which this question was raised is in these words Did the plaintiff perform the ceremonies of Talab E Mowasibat and Talab E Ishtashad as required by law The plaintiff Radha Prasad Singh brought this suit for pre emption in respect of 5 items of property described in Schedule B of the plaint which along with certain other properties were sold by the Defendant 2nd Party Mst Jogeshwari Kumari alias Jageshwari Kumari widow of Babu Ganga Prasad Singh deceased and daughter of Babu Narsingh Prasad Singh by a deed executed on November 18 1943 at Moghra and registered on November 23 1943 at Monghyr The Trial Court held that the plaintiff had failed to prove that he was a co sharer in respect of Item 2 of Schedule B As regards the other 4 Items of properties he held that the plaintiff was a co sharer and as already indicated he gave the plaintiff a decree for pre emption in respect of these 4 Items The sale deed is in favour of the defendant first party Gajadhar Singh It is no longer disputed however that Gajadhar Singh was a mere Benamidar and the real purchaser by this deed was Babu Lakshmi Prasad Singh his son Satya Narayan Singh and others A dispute was raised as to whether 4 annas 5 gandas odd share of Mauza Majhaul Kilan Shri Ram was sold or the entire 8 annas odd share of the vendor was sold It has been held by both the Courts below that the plaintiff s original case that the 4 annas 5 gandas odd share of Majhaul Kilan Shri Ram was sold is not correct and that really 8 annas odd share the entire interest of the vendor in this property was sold by the deed but that after the registration of the sale deed it was tampered with and by an act of forgery the 666 8 annas odd share was altered fraudulently to 4 annas 5 gandas It was after the defendant s pleading in the written statement that 8 annas odd gandas of this Mauza was sold and not 4 annas odd gandas as mentioned in Schedule B that the plaintiff prayed for and obtained an amendment of the plaint by which an alternative prayer for pre emption in respect of 8 annas odd share of this Mauza was made But for this amendment it is obvious the prayer for pre emption could not be granted as being only for a partial pre emption once it has been found that 8 annas odd gandas were sold and not 4 annas odd gandas One question which was therefore raised whether the amendment was rightly granted by the Trial Court The question that the suit as brought was for partial pre emption was also raised from another aspect viz that though the sale of this Mauza Majhaul Kilan Shri Ram was of all villages Asli Mai Dakhili ie original with dependencies there is no prayer for pre emption in this suit in respect of Dakhili villages As already indicated however the main question in controversy was whether the essential ceremonies required in law ie Talab E Mowasibat and Talab E Ishtashad were performed in accordance with law A regards this the plaintiff s case is that he came to know of this sale by his co sharer Jogeshwari for the first time on January 2 1944 at about 11 am when Jadunath Singh a resident of Majhaul informed him of this and that he at once completed the formality of Talab E Mowasibat in the presence of some persons and that shortly after this he went to the properties of Tauzis 1130 4201 and 1136 and also Mauza Bugurgabad and performed Talab E Ishtashad that he went then to the residence of the purchaser Gajadhar Singh at Matihani on January 3 1944 and again performed the Talab E Ishtashad and that very day he started for the residence of the vendor and performed the Talab E Ishtashad there on January 4 1944 The defence was that the story of any such ceremonies having been performed is wholly untrue and that in fact the plaintiff had knowledge of the sale 667 from long before January 2 1944 he having been a rival bidder for the purchase of those very properties A detailed story of a proclamation by beat of drums of the proposed sale by Bindeshwary and the plaintiff s attempt to secure the property at the sale was set out by the defendant in the written statement and was sought to be proved by his witnesses The Trial Court disbelieved the defendant s story on this point He also rejected the defence allegation that the plaintiff was himself responsible for the forgery that was committed in respect of the deed of sale by altering the statement of the share in Majhaul Kilan Shri Ram that was sold from 8 annas odd gandas to 4 annas odd gondas On these findings he held the plaintiff s suit was not barred by estoppel Proceeding then to the consideration of the question whether the plaintiff came to know of the sale in favour of the first defendant for the first time on January 2 1944 from Jadunath as alleged the learned Judge has accepted the evidence given by the plaintiff and Jadunath on this point and held that the plaintiff s case that he received information for the first time on that day was true He also accepted the evidence of the plaintiff as regards the requisite ceremonies having been duly performed The very important question that arose for the decision of the Court was whether the plaintiff s story that he came to know of the sale for the first time from Jadunath on January 2 1944 is true The Trial Court held that it was true On this point the High Court came to a contrary conclusion The learned judges of the High Court were of opinion that the evidence of witness Jadunath was wholly unacceptable and that the plaintiff s evidence that he came to know of the alleged sale on January 2 1944 could not be accepted After pointing out that the whole basis of the plaintiffs claim that he performed the ceremonies of Talab E Mowashibat and Talab E Ishtashad was without substance they examined the evidence as regards the performance of the ceremonies and held that this evidence was also not acceptable 668 The question in dispute before us is thus a pure question of fact viz whether the plaintiff came to know of the sale for the first time on January 2 1944 and thereupon performed the ceremonies of Talab E Mowasibat and Talab E Ishtashad The main contention raised by Mr Jha who appeared in support of the appeal is that in considering this question of fact the High Court approached the question from a wrong point altogether and was not justified in reversing the judgment of the Trial Court on that point The question as to what should be the right approach for a Court of Appeal in deciding a question of fact already decided in one way by the Judge in the Court of the first instance has often engaged the attention of the courts though the views expressed have not been uniform Emphasis has been laid in some cases on the importance of the Court of Appeal deciding for itself the question of fact when the appeal is on facts though remembering that it should not lightly do so not having had the advantage which the Trial Judge had of seeing the witnesses More emphasis has been laid in other cases on the importance of not reversing the Trial Judge s findings of fact without compelling reasons All the Courts in all the cases have stressed the rule which the courts of appeal should observe for themselves that a Judge sitting on appeal not having had the opportunity of seeing and hearing the witnesses should think twice and more than twice before reversing the findings of fact arrived at by the Trial Court who has had that opportunity To say that however is not to say that the Court of Appeal will never reverse a finding of fact of the Trial Court In Shunmugaroya Mudaliar vs Manikka Uudaliar 1 Lord Collins pointed out that It is always difficult for judges who have not seen and heard the witnesses to refuse to adopt the conclusions of fact of those who have but that difficulty is greatly aggravated where the Judge who heard them has formed the opinion not only that their inferences are unsound on the balance 1 1909 LR 36 IA 185 669 of probability against their story but they are not witnesses of truth In the same judgment Lord Collins referred approvingly to the judgment delivered by Lindley Master of the Rolls in the Court of Appeal in the case of Coghlan vs Cumberland 1 which set out the limitations of the rule even where the appeal turns on a question of fact the Court of appeal has to bear in mind that its duty is to rehear the case and the Court must reconsider the materials before the Judge with such other materials as it may have decided to admit The Court must then make up its own mind not disregarding the judgment appealed from but carefully weighing and considering it and not shrinking from overruling it if on full consideration the Court comes to the conclusion that the judgment is wrong When as often happens much turns on the relative credibility of witnesses who have been examined and cross examined before the Judge the Court is sensible of the great advantage he has had in seeing and hearing them It is often very difficult to estimate correctly the relative credibility of witnesses from written depositions and when the question arises which witness is to be believed rather than another and that question turns on manner and demeanour the Court of Appeal always is and must be guided by the impression made on the Judge who saw the witnesses But there may obviously be other circumstances quite apart from manner and demeanour Which may shew whether a statement is credible or notand these circumstances may warrant the Courtin differing from the Judge even on a question offact turning on the credibility of witnesses whom the Court has not seen Almost the same view was expressed by Lord Thankerton in Watt or Thomas vs Thomas 2 I Where a question of the fact has been tried by a Judge without a jury and there is no question if misdirection of himself by the Judge an appellate 11898 1 Ch 704 2 1947 I All ER 582 85 670 court which is disposed to come to a different conclusion on the printed evidence should not do so unless it is satisfied that any advantage enjoyed by the Trial Judge by reason of having seen and heard the witnesses could not be sufficient to explain or justify the trial judge s conclusions The appellate Court may take the view that without having seen or heard the witnesses it is not in a position to come to any satisfactory conclusion on the printed evidence The appellate Court either because the reasons given by the Trial Judge are not satisfactory or because it unmistakably so appears from the evidence may be satisfied that he has not taken proper advantage of his having seen and heard the witnesses and the matter will then become at large for the appellate court It is obvious that the value and importance of having seen and heard the witnesses will vary according to the class of case and it may be the individiual case in question These observations were cited with approval by Lord Reid in Bonmax vs Austin Motor Co Ltd 1 See also the observations of Mokerjee J in Laljee Mahomed vs Girlder 2 This question of the proper approach of the Court of Appeal to decisions on questions of fact arrived at by the Trial Court was considered by this Court in Sarju Pershad vs Raja Jwaleshwari Pratap Narain Singh3 Mukherjea J while delivering the judgment of the Court observed In such cases the appellate court has got to bear in mind that it has not the advantage which the trial Judge had in having the witnesses before him and observing the manner in which they deposed in Court This certainly does not mean that when an appeal lies on facts the appellate court is not competent to reverse a finding of fact arrived at by the trial judge The rule is and it is nothing more than a rule of practice that when there is conflict of oral evidence of the parties on any matter in issue and the decision hinges upon the credibility of 1 1955 I All ER 326 2 Cal 3 1950SCR781784 671 the witnesses then unless there is some special feature about the evidence of a particular witness which has escaped the trial judge s notice or there is a sufficient balance of improbability to displace his opinion as to where the credibility lies the appellate court should not interfere with the finding of the trial Judge on a question of fact The position in law in our opinion is that when an appeal lies on facts it is the right and the duty of the Appeal Court to consider what its decision on the question of facts should be but in coming to its own decision it should bear in mind that it is looking at the printed record and has not the opportunity of seeing the witnesses and that it should not lightly reject the Trial Judge s conclusion that the evidence of a particular witness should be believed or should not be believed particularly when such conclusion is based on the observation of the demeanour of the witness in Court But this does not mean that merely because an appeal court has not heard or seen the witness it will in no case reverse the findings of a Trial Judge even on the question of credibility if such question depends on a fair consideration of matters on record When it appears to the Appeal Court that important considerations bearing on the question of credibility have not been taken into account or properly weighed by the Trial Judge and such considerations including the question of probability of the story given by the witnesses clearly indicate that the view taken by the Trial Judge is wrong the Appeal Court should have no hesitation in reversing the findings of the Trial Judge on such questions Where the question is not of credibility based entirely on the demeanour of witnesses observed in Court but a question of inference of one fact from proved primary facts the Court of Appeal is in as good a position as the Trial Judge and is free to reverse the findings if it thinks that the inference made by the Trial Judge is not justified Turning now to the instant case we find that the Trial Judge having seen and heard Jadunath and the plaintiff believed their evidence on the point of information being given to plaintiff by Jadunath about the 672 sale on January 2 1944 at about II am It does not however appear that the learned Trial Judge arrived at his conclusion on the basis of the demeanour of these witnesses having created a favourable impression on his mind as to their credibility In scrutinising the evidence of the plaintiff and of Jadunath it must be borne in mind that the case of the plaintiff is that on January 2 1944 certain information having been received by him he performed the formalities There is no case that the formalities were performed on any other date Therefore if the story of the communication of information on January 2 1944 is not established then the whole case of the plaintiff must fail Jadunath s evidence on this point was On 2 1 44 I told Radha Babu at his house in Manjhaul that Maghrawalli Jugeshwari Kumari had sold away her Milkiat to Gajadhar Rai of Matihani this was about 11 am Radha was startled to hear this and standing up said Jo jo jaidad Babu Gajadhar Singh hath then says Maghrawalli Mussammat Jageshwari Kumari ne jo jo jaidad Babu Gajadhar Singh ka liath becha hai uske kharidne ka haq mere Ham Kharida Ham Kharida Ham Kharida Talab Mowashibat karte hain Babu Jagdamba Prasad aur Babu Narayan Prasad gabah rahie I came to know from a man of Chitral I kos from Matihani that gajadhar had a marriageable grandson Mention should be made in this connection also of the evidence of Jagdambi Prasad On 2 1 44 I had been to plaintiff s house at 10 30 am Babu Narayan Prasad Singh a pleader of Samastilpur was at plaintiff s house at the time Jadunath Singh told Radha Prasad that Musanimat Jagesliwari Kumari of Maghra had sold away her property in Manjhaul to Gajadhar Singh of Matihani As soon as Jadunath Singh said this Radha Prasad Singh was startled stood up and said I have a right to purchase this property I have purchased I have purchased I have purchased 673 You Jagdamba Prasad Singh you Narayan Prasad Singh and you Jadunath Singh bear witness to this fact He uttered these words thrice In deciding the question whether the information from Jadunath was the first information received by the plaintiff the Trial Judge had necessarily to consider whether the story that Jadunath came to know of the sale and brought this information on to the plaintiff on January 2 1944 at about 11 am was true or not In arriving at a decision on the point it was necessary for him to consider the probabilities of the story of Jadunath having gone to Gajadhar s house in search of a bridegroom and that there Gajadhar Singh informed him of the sale and then of the probability of the story that he would be taking upon himself the task of going to the plaintiffs house immediately on return to his village to convey this information the probability of the story as to how the plaintiff reacted to the account and also the question of discrepancy It does not appear that the learned Trial Judge took any of these matters into consideration All that he says about Jadunath s credibility is that his evidence had been criticised on the ground that he was one of plaintiff s witnesses in the previous suit brought by him against Satya Narain Singh s ancestors and that is in his opinion was not a valid ground for discarding the evidence of Jadunath Singh We agree with the learned Judge that the mere fact that Jadunath was one of the plaintiff s witnesses in the previous suit brought by him against Satya Narain Singh s ancestors about 33 years ago would not by itself be a valid reason for discarding his testimony The fact that this was not a valid reason for discarding his testimony does not however absolve the Court of the duty of testing the witness s testimony on the touch stone of probability The learned judges of the High Court applied that touch stone and came to the conclusion that Jadunath was not a witness of truth It is clearly a case where the words used by Lord Thankerton that the Trial Judge had not taken proper advantage of his having seen and heard the witnesses and the matter would become at large for the appellate 674 court should apply Here was a witness who could not be considered to be wholly independent For on his own showing he took the trouble of going to plaintiff s house after what may be taken to be an arduous country in an unsuccessful search for a bridegroom to inform the plaintiff of a matter in which he himself had no interest a witness who had figured though many years ago in a pre emption suit brought by the same person These facts made close scrutiny of the witness s account necessary before the Judge could say just by looking at him that he was a witness of truth That scrutiny is conspicuous by its absence Taking his evidence as a whole we find that his story that after coming to know of the sale in question he went to the house of Gajadhar the first defendant at village Matihani to make enquiries about a marriage proposal in respect of his daughter with his grandson and that it was in that connection that Gajadhar spoke to him about his purchase But it is curious that in his examination in chief this witness came straight to his account of coming to the plaintiff s house on January 2 1944 and informing him about the sale by Jogeshwari of her Milkiat to Gajadhar without saying a word as to his visit to Gajadhar s house to the purpose of his visit and the manner in which Gajadhar gave him the information or even the detailed nature of the information It was in cross examination that he disclosed that he went to Gajadhar s house for barthuari It is in vain that we look into his evidence whether in examination in chief or in cross examination for the exact information given by Gajadhar It has to be remembered in this connection that it is no longer disputed that Gajadhar himself had no interest in these properties and was a mere Benamidar Even if Gajadhar s own account that he was completely in the dark about these transactions be left out of account it was necessary for the Court to consider how far it was probable that Gajadhar would put on Jadunath a false story of purchase by himself of properties It was urged that this Gajadhar did with a view to raise the Tilak which he could thus obtain 675 Jadunath himself has not said anything about the negotiations about Tilak but one Mahabir Ray has said that when he was going to the fields Gajadhar called him and there lie heard Gajadhar demanding a higher Tilak stating that he had recently purchased properties at Majhaul from Mussammat Jadunath himself does not mention having seen this Mahabir at Gajadhar s house Jadunath claims to have gone to his house with a servant Mahabir has not mentioned the presence of this servant The question whether a man like Mahabir who was a total stranger to the plaintiff would be called by Gajadhar to hear such talks also requires the serious consideration of the Court The Trial Judge does not appear to have given the slightest consideration to this aspect of the matter The learned judges of the High Court thought that there was no reason that Gajadhar would go out of his way to convey the information to Jadunath that he had purchased the Milkiat of Jogeshwari the defendant No 2 It is difficult not to agree to this estimate of probability Even more important was the question of probability as regards the story of the plaintiff s reaction when the information is said to have been given to him Both Jadunath and Jagdambi say that the plaintiff was startled on getting information of the sale and at once uttered the words which have been set out already of the Talab E Mowsibat What would a man of ordinary prudence not to speak of the man of property and with experience of previous litigation like the plaintiff would do under such circumstances There cannot be any two opinions on this question He may consider it unwise to ask his informant any further question before making the first Talab ie Talab E Mowasibat Once that was completed he would ply his informant with questions as to where he got this information what the information exactly was what properties had been sold what the consideration was and other connected questions In this case according to the evidence of Jadunath no such questions were asked by the plaintiff In his examination in chief Jadunath says 676 He plaintiff asked his syce to bring his tandom He told Jagdamba Babu that he would go to make talab e isthashad and asked him to accompany him While they were boarding the tandom Jai Prakash Narayan came that way Radha Babu asked him also to accompany him The same night Radha Babu met us at my house at 8 pm He asked me where I had obtained the information about the sale From this evidence it is clear that though Jadunath was at the place until the Tandom bad been brought and the plaintiff and Jagdamba got into the Tandom and Jai Prakash Narayan also arrived no question was put by the plaintiff to Jadunath in this behalf It has to be noted that the plaintiff went to Jadunath s house the same night at 8 pm and the only question which was asked was Where he had obtained the information about the sale and nothing was asked about what properties had been sold or for how much had they been sold In cross examination Jadunath made the further statement in these words When I broke the news Radha Prasad did not ask me where I had received the information or who had purchased the properties what properties had been purchased or what the consideration was Such conduct on the part of Jadunath is incredible and any Judge of facts with experience of normal human conduct could have no hesitation in coming to the conclusion that things could not have happened in the way Jadunath has described Mr Jha the learned Counsel for the appellant urged that it would be unfair to base any conclusion on the supposed improbability or unnaturalness of such silence on the part of the plaintiff without having given him an opportunity to explain why be acted in this peculiar manner It has to be noticed however that Jadunath had been examined and cross examined on January 9 1947 and when the plaintiff was put in the Witness Box on the following day ie January 10 1947 the lawyer who examined him had before him the fact that Jadunath s evidence had brought out this strange silence on the part of the plaintiff after he had been informed of the 677 sale It was his duty to obtain from Radha Prasad an explanation of such conduct But he put no questions to Radha Prasad about this The obvious reason is that Radha Prasad had no explanation to offer and the lawyer knowing this kept quiet It appears to us that the learned judges of the High Court of Patna were right in attaching great importance to this conduct of the plaintiff and were justified when they thought that this was an improbable story and rejected in disagreement with the Trial Judge Jadunath s evidence altogether Mention has to be made of another circumstance which was noticed in the High Court judgment That is as regards the exact information which is said to have been given by Jadunath Jadunath s own account in the examination in chief is that he told Radha Babu at his house in Majhaul that Maghrawalli Jugeshwari Kumari had sold away her Milkiat to Gajadhar Rai of Motihani In his cross examination he first said The information I gave was in these terms Maghrawali Musammat apni Jaidad Babu Gajadhar Singh Motihani wale ke chan bech dia and then correcting himself said Babu Gajadhar Singh ne kaha ki Maghrawali Musammat ki jaidad kharid kia It is not possible for anybody to remember exactly the words used by himself many years ago and it is reasonable to say that there was no substantial difference between the account given by him of this matter in his examination in chief and in cross examination It is interesting to remember however that in paragraph 4 of the plaint it was stated that the information that Jadunath gave was That the defendants 2nd and 3rd parties had sold the properties entered in Schedule B of this plaint along with other properties to the defendant 1st party under a registered deed of sale According to Jadunath s evidence he does not appear to have mentioned the defendant 3rd parties as the sellers nor gave any details to show that the properties 86 678 entered in Schedule B were covered by the sale nor that there was a registered deed of sale Turning to the evidence on the plaintiff and Jagdamba as regards the information said to have been given by Jadunath we find that Jagdamba says Jadunath Singh told Radha Prasad that Musammat Jogeshwari Kumari of Maghra had sold away her property in Majhaul to Gajadhar Singh of Motihani According to the plaintiff himself the information which Jadunath gave was that Gajadhar Singh had purchased the Majhaul properties from the Maghrawali Musammat An examination of Schedule B shows that while the first 3 items were properties in Mauza Majhaul the 4th item is a property in Buzurgabad while the 5th item is a property in Mauza Dundit There appears to be no reason to think that these properties 4 and 5 could be even loosely be considered to be properties in Majhaul or Majhaul Properties Commenting on Jagdamba s evidence on this point Mr Justice Sinha who delivered the leading judgment stated Plaintiff s witness No 2 has stated that Jadunath told the plaintiff that the second defendant had sold her property in Majhaul to the first defendant If that is so it is a little difficult to under stand how they went to Bugurgabad or to the other items of property to perform the ceremonies if they ever did so It is strange that there should be such discrepancy between the evidence of Jadunath himself and the plaintiff and Jagdamba as to what actually was said But if Jagdamba s account such as is supported by the plaintiff himself is true then there is no acceptable explanation as to why the plaintiff could think of going to Bugurgabad at all as he and his witnesses say he did It was the duty of the Trial Judge to take into account these several considerations in testing the credibility of the account given by Jadunath the plaintiff and Jagdambi that Jadunath informed the plaintiff on January 2 1944 about the sale He did not do so The learned judges of the High Court as a 679 Court of Appeal were in duty bound to consider these questions before accepting the decision of the learned Trial Judge The criticism that the approach of the learned judges of the High Court was wrong is therefore wholly without foundation The learned judges of the High Court rightly took these matters into consideration and the decision they arrived at on these considerations that the Trial Judge s assessment of the evidence was wrong and that Jadunath was not a witness of truth and that the account given by the plaintiff that the information was conveyed to him by Jadunath on January 2 1944 should not be accepted is clearly right Once this decision is reached it is unnecessary to consider the further question whether any ceremonies were performed at all on 2nd 3rd or 4th January 1944 as stated by the plaintiff and his witnesses Even if they were they would be of no assistance to the plaintiff as the plaintiff had failed to show that it was on January 2 1944 that he received the information about the same It is unnecessary for us therefore to decide the further question that appears to have been raised viz that even if the evidence as regards the performance of the two Talabs i e Talab E Mowashibat and Talab E Ishtashad is accepted at its face value the requirements of the law have not been fulfilled The High Court held that the plaintiff had failed to prove that the words used by him at the time of the making of the second demand of Talab E Ishtashad were sufficient to draw the attention of the witnesses to the specific properties in respect of which he was demanding his right of pre emption We express no opinion whether this view of the learned judges of the High Court is correct or not We also express no opinion on the two other questions viz whether the Trial Court acted in accordance with law in granting leave to the plaintiff to amend his plaint so as to include the alternative prayer for pre emption in respect of 8 annas odd share of Tauza No 1130 instead of 4 annas odd share as originally claimed and also whether the suit was bound to fail because there was 680 no prayer for pre emption for the Dakhili villages of Tauza No 1130 In our opinion the plaintiff having failed to prove that the information of the sale was conveyed to him by Jadunath on January 2 1944 the suit was rightly dismissed by the High Court This appeal is therefore also dismissed with costs

On May 91 1935 one V obtained a decree against R and later assigned the same in favour of his mother M M made an application for an order recognizing her as the assignee and for 617 execution which was disposed of on September 27 1937 In 1939 V was adjudicated an insolvent on the ground that the assignment was a fraudulent preference Thereafter M made a second application for execution which was disposed of on September 30 1940 The Official Receiver who had been appointed receiver in insolvency applied under section 54 of the Provincial Insolvency Act and on April 9 1943 obtained an order annulling the assignment On September 27 1943 the Receiver applied for execution of the decree relying upon the applications made by M to save limitation under article 182 Limitation Act The judgment debtor objected that the execution application was time barred because in view of the orders in the insolvency proceedings M was not entitled to the decree on the dates she applied for execution and her applications were incompetent and could not save limitation The judgment debtor contended that i the order of annulment related back to the date of assignment and consequently M had never been entitled to the decree ii the order of adjudication had the effect itself of annulling the assignment and vesting the decree in the receiver from the date of presentation of the application for adjudication and iii the receiver was not entitled to take advantage of the applications made by M as he was not claiming through her but against her Held per curiam that the application for execution made by the receiver was within time as the previous applications made by M were competent and saved the limitation The assignment in favour of M stood till it was annulled and till then M had the right to execute the decree Even if the annulment related back to the date of assignment it did not make illegal the exercise of the rights under the assignment made prior to the annulment Sub sections 2 and 7 Of section 28 of the Provincial Insolvency Act which provided that upon adjudication all the assets of the insolvent vested in the receiver with effect from the date of the application for adjudication could not have the effect of vesting the decree in the receiver The order of adjudication though it was based on the ground that the assignment was a fraudulent preference amounting to an act of insolvency did not itself annul the assignment and the assignment stood till it was annulled by an order under section 54 As such M was competent to execute the decree and the applications made by her were in accordance with law and could be relied upon by the receiver to save the limitation for the application made by him The fact that the receiver did not claim through M did not disentitle him from taking advantage of the applications made by M Article 182 Limitation Act merely required the application for execution of a decree to be made within three years of the final order on a previous application made in accordance with law for the execution of the same decree Mahomed Siddique Yousuf vs Official Assignee of Calcutta 1943 LR 70 IA 93 Ex Parte Learoyd 1878 10 Ch D 3 distinguished 618 Subba Rao J The order of adjudication did not by its own force divest the title of M and vest it in the Official Receiver An assignment made before the filing of the application for adjudication was binding on the Official Receiver until it was annulled under sections 53 54 or 54 A of the Act Mahomed Siddique Yousuf vs Official Assignee of Calcutta 1943 LR 70 IA 93 and Ex parte Learoyd 1878 10 Ch D 3 distinguished Official Receiver Guntur vs Narra Gopala Krishnayya ILR and D G Sahasrabudhe vs Kala Chand Deochand i A transfer by a debtor before insolvency with a view to give fraudulent preference conveyed a valid title to the transferee 2 such a transfer was voidable against the Official Receiver in circumstances mentioned in section 54 of the Act 3 when the transfer was annulled the property vested in the Official Receiver who could administer it in the interest of the creditors and 4 even after annulment the transfer stood as between the transferor and the transferee and the transferee was entitled to the balance of the sale proceeds remaining after satisfying the creditors Official Receiver Coimbatore vs Palaniswami Chetti Mad 75o Amir Hasan vs Saiyid Hasan All 900 and Rukhmanbai vs Govindram ILR relied on

iminal Appeal No 36 of 1958 Appeal by special leave from the judgment and order dated May 9 1957 of the Patna High Court in Criminal Reference No 51 of 1957 and Criminal Revision No 323 of 1957 arising out of the judgment and order dated March 20 1957 of the First Additional Sessions Judge Patna in Criminal Revision No 14 of 1957 K P Varma and R C Prasad for the appellant H J Umrigar and B P Maheshwari for the respondents 728 1959 September 14 The Judgment of the Court was delivered by SUBBA RAO J This is an appeal by special leave by the State of Bihar against the judgment of the High Court of Judicature at Patna quashing the criminal proceedings launched against the respondents in the Court of Munsif Magistrate Patna The two respondents were the proprietors of a firm called Ms Patna Textiles doing business in cotton at Patna On August 30 1955 they despatched two bales of saries to Ms Hiralal Basudev Prasad cloth merchants of Balia from Patna Ghat without obtaining a permit from the Textile Controller Bihar They were prosecuted under section 7 of the X of 1955 hereinafter called the Act read with section 3 of the Cotton Textiles Control of Movement Order 1948 hereinafter called the Order in the Court of the Munsif Magistrate Patna The respondents filed a petition before the said Munsif Magistrate praying for their discharge on the ground that the Essential Supplies Temporary Powers Act 1946 XXIV of 1946 hereinafter called the 1946 Act whereunder the said Order was made had been repealed and therefore the Order ceased to have any legal force thereafter and consequently they could not be prosecuted under the expired Order The Munsif Magistrate rejected that petition The Additional Sessions Judge Patna after perusing the records transmitted the same to the High Court under section 438 of the Code of Criminal Procedure with his opinion that the order of the Munsif Magistrate was wrong and therefore it might be set aside with the direction to the Munsif Magistrate to discharge the accused The respondents also filed a revision to the High Court against the order of the Munsif Magistrate The reference as well as the revision were heard together by Imam J of the High Court at Patna and the learned Judge accepting the reference and the revision set aside the order of the Munsif Magistrate and directed the accused to be discharged Hence the appeal 729 The learned Counsel appearing for the state contended that the Order made under the 1946 Act was saved under section 16 of the Essential Commodities Ordinance of 1955 hereinafter called the Ordinance and section 16 2 of the Act and therefore the accused were validly prosecuted under the provisions of the Order The learned Counsel for the respondents argued that the order was not saved under either of the said two sections To appreciate the contention of the parties it is necessary to notice the relevant provisions of the 1946 Act the Order the Ordinance and the Act Essential Supplies Temporary Powers Act 1946 section 1 3 It shall cease to have effect on the twenty sixth day of January 1955 except as respects things done or omitted to be done before that date and section 6 of the X of 1897 shall apply upon the expiry of this Act as if it had then been repealed by a Central Act section 3 1 The Central Government so far as it appears to it to be necessary or expedient for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices may by order provide for regulating or prohibiting the production supply and distribution thereof and trade and commerce therein Cotton Textiles Control of Movement Order 1948 section 3 No person shall transport or cause to be transported by rail road air sea or inland navigation any cloth yarn or apparel except under and in accordance with i a general permit notified in the Gazette of India by the Textile Commissioner or ii a special transport permit issued by the Textile Commissioner The Essential Commodities Ordinance 1955 Preamble Whereas the Essential Supplies Temporary Powers Act 1946 XXIV of 1946 which confers powers to control the production 730 supply and distribution of and trade and commerce in certain commodities expires on the 26th day of January 1955 the President in pleased to promulgate the following Ordinance section 16 Any order made or deemed to be made under the Essential Supplies Temporary Powers Act 1946 XXIV of 1946 and in force immediately before the commencement of this Ordinance shall in so far as such order may be made under this Ordinance be deemed to be made under this Ordinance and continue in force and accordingly any appointment made licence or permit granted or direction issued under any such order and in force immediately before such commencement shall continue in force unless and until it is superseded by any appointment made licence or permit granted or direction issued under this Ordinance This Ordinance was published in the Gazette of India on January 21 1955 and came into force on January 26 1955 The section 3 1 If the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices it may by order provide for regulating or prohibiting the production supply and distribution thereof and trade and commerce therein section 7 1 If any person contravenes any order made under section 3 a he shall be punishable i in the case of an order made with reference to clause h or clause i of sub section 2 of that section with imprisonment for a term which may extend to one year and shall also be liable to fine and ii in the case of any other order with imprisonment for a term which may extend to three years and shall also be liable to fine 731 Provided that if the Court is of opinion that a sentence of fine only will meet the ends of justice it may for reasons to be recorded refrain from imposing a sentence of imprisonment section 16 1 The following laws are hereby repealed a the Essential Commodities Ordinance 1955 b any other law in force in any State immediately before the commencement of this Act in so far as such law controls or authorizes the control of the production supply and distribution of and trade and commerce in any essential commodity 2 Notwithstanding such repeal any order made or deemed to be made by any authority whatsoever under any law repealed hereby and in force immediately before the commencement of this Act shall in so far as such order may be made under this Act be deemed to be made under this Act and continue in force and accordingly any appointment made licence or permit granted or direction issued under any such order and in force immediately before such commencement shall continue in force until and unless it is superseded by any appointment made licence or permit granted or direction issued under this Act 3 The provisions of sub section 2 shall be without prejudice to the provisions contained in section 6 of the X of 1897 which shall also apply to the repeal of the Ordinance or other law referred to in sub section 1 as if such Ordinance or other law had been an enactment The said provisions may be briefly summarized thus Under the Act of 1946 the Central Government had the power to make an order for regulating or prohibiting the production supply and distribution of essential commodities That Act itself provided that it would cease to have effect on January 26 1955 In exercise of the powers conferred under section 3 of the said Act the Central Government made the Cotton Textile Control of Movement Order 1948 prohibiting any person 732 from transporting cloth among others without the permit of the Textile Commissioner Before the Act ceased to have effect ie on January 26 1955 the Ordinance was promulgated on January 21 1955 conferring on the Central Government a power similar to that conferred upon it under section 3 of the 1946 Act The said Ordinance also provided for saving clauses in respect of certain things done under the 1946 Act On April 1 1955 the Act was passed practically reenacting the same provisions of the Ordinance and thereunder the same power exercised by the Central Government under section 3 of the 1946 Act and section 3 of the Ordinance was preserved The Act also provided for repeals and savings The question therefore is whether on the date of commission of the offence the Order whereunder the prosecution was launched was subsisting or whether it ceased to exist It is common case that an Order made under an Act ceases to have any legal force after the expiry of the term for which the Act is made But it is contended that the Order survived the expiry of the 1946 Act by reason of the saving clauses provided by the Ordinance and the Act Ordinarily the Order should have expired on January 26 1955 Unless it was saved by section 16 of the Ordinance the saving clause of the Act could not operate on it We shall therefore consider the question from two aspects i whether section 16 of the Ordinance saved the operation of the Order and ii if it saved it whether section 162 of the Act gave it a further lease of life Section 16 of the Ordinance is in two parts Under the first part any order made or deemed to be made under the Essential Supplies Temporary Powers Act 1946 and in force immediately before the commencement of this Ordinance shall in so far as such order may be made under this Ordinance be deemed to be made under this Ordinance and continue in force The necessary condition for the operation of this part of section 16 is admittedly complied with The Order made under section 3 of the 1946 Act can be made under section 3 of the Ordinance and if so by reason of the express words of the section the Order must be deemed to be made under the Ordinance and continue to be in force 733 after its promulgation But it is said that the second part of the section cuts down the wide amplitude of the phraseology used in the first part After stating that the said Order shall continue to be in force the second part proceeds to state and accordingly any appointment made licence or permit granted or direction issued under any such order and in force immediately before such commencement shall continue in force unless and until it is superseded by any appointment made licence or permit granted or direction issued under this Ordinance If the Order continues in force the argument proceeds the second part of the section becomes otiose for the appointment made licence or permit granted or direction issued under the Order automatically continues in force and therefore there is no necessity for enacting the second part of section 16 The anomaly occurs even if the argument be accepted for in that event the first part becomes unnecessary The same result can be achieved by enacting only the second part of section 16 and omitting the first part altogether To ascertain the meaning of a section it is not permissible to omit any part of it the whole section should be read together and an attempt should be made to reconcile both the parts There is no ambiguity in the provisions of the first part of the section In clear and unambiguous terms it posits the continuation in force of the Order notwithstanding the repeal of the Act thereafter it proceeds to enumerate certain past acts done under the Order and in force immediately before the commencement of the Ordinance and says that they will continue in force in consequence of the continuance of the Order The word accordingly which means consequently indicates that the enumerated acts will not continue in force but for the continuance of the Order itself they depend upon the continuation of the Order It is said that this interpretation imputes tautology to the legislature and therefore should not be accepted A scrutiny of the section shows that the second part is not really redundant as at the first blush it appears to be Under section 16 of the Ordinance the Order made under the Act of 1946 continues to be 93 734 in force till another Order is made under the Ordinance It covers two periods i the period up to the date of the commencement of the Ordinance and ii the period thereafter The first part gives life to that Order and therefore the acts authorised under that Order can be done subsequent to the coming into force of the Ordinance But a question may be raised whether the past acts done under that Order are saved by the continuance of the Order or whether the acts already done are covered by the words that the Order shall continue in force The second part appears to have been enacted for the purpose of avoiding this difficulty or at any rate to dispel the ambiguity Under the section both the Order and the acts previously done under the Order are saved If so it follows that the Order was saved and the prosecution authorized by the Order could legitimately be launched after the Ordinance came into force Even so it is contended that the Order saved by section 16 of the Ordinance fell with the repeal of that Ordinance and was not continued under the Act This argument is based upon the provisions of section 161 and 2 of the Act Section 16 has three sub sections For the present argument we are concerned only with sub sections 1 and 2 of section 16 Sub section 2 is a repetition of section 16 of the Ordinance But it is said that section 161b of the Act indicates that the Order was not saved under that section Under section 161a the Essential Commodities Ordinance 1955 is repealed and under section 161b any other law in force in any State immediately before the commencement of this Act in so far as such law controls or authorizes the control of the production supply and distribution of and trade and commerce in any essential commodity is also repealed The argument is that the Order is comprehended by the words any other law in cl b of section 161 and therefore when that Order is repealed under cl b of section 161 it is unreasonable to hold that it is restored under sub section 2 of section 16 To put it in other words an intention cannot be imputed to the legislature to repeal an order under one sub section and restore it by another sub section If we may say 735 so there is a fallacy underlying this argument The words any other law in section 161b can only mean any law other than the Essential Commodities Ordinance 1955 mentioned in section 161a It is admitted that there are laws other than the said Ordinance in force in many States controlling the production supply and distribution of essential commodities An order made or deemed to be made under the Commodities Ordinance 1955 cannot be described as a law other than Essential Commodities Ordinance whereunder it is made Such an order is comprehended by cl a of section 161 itself and therefore cl b thereof has no application to it In this view an interpretation different from that we have put on the provisions of section 16 of the Ordinance cannot be given to sub section 2 of section 16 of the Act For the reasons we have given in interpreting the provisions of section 16 of the Ordinance we hold that under section 162 both the order and the acts enumerated in the second part of it survived the expiry of the Ordinance and continued in force under the Act For the above reasons we hold that the prosecution was validly launched against the accused under section 3 of the Order Even so the learned Counsel for the respondents contends that it is not a fit case for this Court to interfere under article 136 of the Constitution The offence was alleged to have been committed on August 30 1955 ie more than four years ago The varying views expressed by the Courts indicate that there was a plausible justification for reasonable belief on the part of the accused that the Order did not survive the expiry of the life of the 1946 Act The order of the High Court dismissing the application for leave to appeal to the Supreme Court shows that it was filed in contravention of the provisions of r 28 of the Patna High Court Rules Under the said Rules the application should have been filed immediately after the judgment was delivered In the affidavit filed in support of that application the only reason given for not doing so was that the appellant did not give the necessary instructions The learned Judge of the High Court rightly did not accept that reason as a sufficient 736 ground for permitting the application to be filed at a later stage In the application for special leave filed in this Court though it was stated that the application filed in the High Court for certificate was rejected the reason for the rejection was not disclosed Further the State presumably filed this appeal to get the legal position clarified We also believe that public interest does not require that the stale matter should be resuscitated In the circumstances we would be justified not to exercise our discretionary jurisdiction and we accordingly dismiss the appeal Appeal dismissed

The suit out of which the present appeal arose was one for redemption of some occupancy lands owned and mortgaged by two brothers S and A the Khata of the lands standing in the name of S as the registered occupant under section 74 of the Bombay Land Revenue Code 1879 The mortgage which was a usufructuary one was executed by S and A in 1888 in favour of the predecessors in interest of the appellants By a Rajinama filed under section 74 of the Code in 1900 S made an unconditional 88 694 surrender of the occupancy On the same day the mortgagees by a Kabuliyat prayed that the occupancy in the mortgaged property might be granted to them Both the Rajinama and the Kabuliyat were granted by the Mamlatdar By the Rajinama S did not however purport to relinquish the occupancy on behalf of A After the death of S A applied to the Mamlatdar for the cancellation of the transfer in favour of the mortgagees and registering the mortgaged property in his name That application was rejected The heirs of S claiming also to be the heirs of A brought the suit for redemption The defence of the appellants was that the plaintiffs were not the heirs of A and that the right of redemption in the entire occupancy had been extinguished by the Rajinama The administrators of the estate of A were then added as defendants but were later on transposed to the category of co plaintiffs The courts below found against the appellants Hence this appeal by special leave The question for determination was whether the surrender by S amounted to a relinquishment of the entire occupancy including the share of A Held that the Rajinama could in no way affect the right of A to his share in the occupancy and the right of redemption in respect of his share still subsisted Under section 74 of the Bombay Land Revenue Code 1879 rightly construed the registered occupant had no inherent or independent right in the absence of any authority express or implied which must be clearly pleaded and strictly proved to give a notice of relinquishment so as to affect the interest of other occupants as well Although the section conferred certain rights and imposed certain obligations on the registered occupant it was not intended to take away the rights of other occupants Lalchand Sakharam Marwadi vs Khendu Kedu Ugbade 22 Bom LR 1431 referred to Held further that even though A s application to get the mortgaged property registered his name had failed there could be no question of adverse possession since the possession of the mortgagees had a lawful origin in the usufructuary mortgage Nor could a mere assertion of adverse title affect the subsisting equity of redemption or shorten the prescribed period of limitation for the suit Khiarajmal vs Diam ILR referred to

ION Criminal Appeal No 11 of 1959 Appeal by special leave from the judgment and order dated April 301958 of the Bombay High Court in Criminal Application No 508 of 1958 K M Desai and 1 N Shroff for the appellant Ganpat Rai for respondents Nos 1 to 4 and 6 KL Hathi and B H Dhebar for respondent No 5 76 598 1959 August 27 The Judgment of the Court was delivered by SARKAR J The appellant is an unmarried Sunni Moslem woman She has an infant female illegitimate child called Anjum The appellant made an application to the High Court at Bombay under section 491 of the Code of Criminal Procedure for the recovery of the custody of the child from the respondents That the application was refused Hence this appeal The appellant s case is as follows She is the daughter of one Panna Bai The respondent Kaniz Begum is Panna Bai s sister Kaniz Begum whom it will be convenient to refer as the respondent took the appellant over from Panna Bai and brought her up Prior to 1951 the respondent had put her in the keeping of two persons and had thereby made pecuniary gain for herself In 1951 the appellant met one Trivedi and since then she was been living continuously in his exclusive keeping The appellant stayed with Trivedi at Jabalpur up to 1954 On September 4 1952 the child Anjum was born to her by the said Trivedi In November 1953 she bore another child to him of the name of Yusuf alias Babul In 1954 the appellant with her said two children her mother who had been living with her and Trivedi left Jabalpur and came to live in Bombay After coming to Bombay Trivedi for sometime lived with his relatives as he could not find independent accommodation During this time the appellant with her children and mother stayed with the respondent who was then living in Bombay but Trivedi used to visit the appellant daily at the residence of the respondent In January 1956 the appellant bore a third child to Trivedi called Unus alias Chandu After the birth of Unus Trivedi took the appellant her mother and the two younger children to a hill station near Bombay called Khandala and the party stayed there for three or four months At the time the appellant had gone to Kandala the respondent went to Pakistan on a temporary visa and she took the child Anjum with her presumably with the consent of the appellant 599 After returning from Khandala Trivedi was able to secure a flat for himself in Marine Drive Bombay and the appellant with her mother and two sons began to stay with him there In April 1937 Trivedi moved into another flat in Warden Road Bombay with the appellant her two younger children and mother and has since then been living there with them After the respondent returned from Pakistan with Anjum the appellant who had then moved into the flat in Marine Drive asked the respondent to send Anjum to her but the respondent refused to do so Since then the respondent has been refusing to restore the custody of the child Anjum to the appellant In these circumstances the appellant made her application under section 491 of the Code of Criminal Procedure on April 18 1958 She stated that she apprehended that the respondent would remove Anjum to Pakistan any day and there was already a visa for Anjum available for that purpose She also stated that in view of the relationship between the parties she had not earlier taken the matter to court On the date of the application the respondent was away in Pakistan She had not however taken the child Anjum with her but had left her in her flat at Bombay in charge of her cousin Suggi and an Aya Rozi Bhangera The appellant stated that the respondent had asked her sister Bibi Banoo and the latter s husband Mahomed Yakub Munshi to look after the child The appellant had therefore made these four persons only the respondents to her application Later on the respondent s arrival back in Bombay she also was made a party to the application The other respondents contended in the High Court that they had nothing to do with the child and had been made parties to the application unnecessarily They have not appeared in this appeal It is clear however that they did not make over the custody of the child Anjum to the appellant when the application was made and the affidavits filed by them leave no doubt that their sympathies are with the respondent Kaniz Begum The state of Bombay was also Made a respondent to the application but that was a mere matter of form The State has no interest 600 in the case and has not taken any part in the proceedings The respondent opposed the application denying the correctness of some of the allegations made in the petition of the appellant She denied that Trivedi was the father of the child Anjum and said that the father was a Shia Moslem called Samin Naqui She said that the appellant s mother had given the appellant to her to bring up when very young as she had not the means to do so herself and since then the appellant had been living with her all along and left her flat in company with Trivedi only during her temporary absence in Pakistan in 1956 She denied that she had made the appellant live in the keeping of any person as alleged by the latter She contended that she had intended that the appellant would marry and live a clean and respectable life but other influences operated upon her and she went to live with Trivedi as his mistress She denied that she had prevented the appellant access to the child Anjum as the latter stated She contended that she was looking after the child Anjum with great care and solicitude and had put her in a good school and kept a special Aya for her She also said that she was well off and had enough means to look after the child well She contended that it was not in the interest of the child to live with the appellant because she was living in the keeping of a man who might turn her out and she would then have to seek the protection of another man She said that she had no child of her own and was fond of Anjum whom she had been treating as her own child The learned Judges of the High Court observed that the case raised various controversial questions specially as to the paternity of the child as to whether the respondent had made the appellant live in the keeping of different persons and also as to whether she had prevented the appellant from having access to the to the child The learned Judges observed that it was not the function of a court in an application under section 491 to record findings on such controversial facts and that in these circumstances the proper forum for the appellant was to move a civil court under the 601 Guardian and Wards Act for the custody of the child The learned Judges further observed that they were prima facie satisfied that the child was not illegally and improperly detained by the respondents They therefore dismissed the appellant s application We are unable to appreciate the view the learned Judges of the High Court It seems to us that the controversial facts referred to by them were wholly irrelevant to the decision of the application We have not been able to find one single fact relevant to the issue in this case which is in controversy The facts which are abundantly clear and beyond dispute are these The child Anjum is the illegitimate daughter of the appellant who is a moslem woman The child was at the date of the application less than six years old and now she is just over seven years old The appellant is a singing girl by profession and so is the respondent The appellant stated in her affidavit that the respondent was in the keeping of a man and this the respondent has not denied It is not the respondent s case that she is a married woman leading a respectable life In fact she admits that she allowed Trivedi to live in her flat with the appellant as his mistress and took money from him for Lodging and Boarding Charges Trivedi has sworn an affidavit acknowledging the paternity of the child and undertaking to bring her up properly as his own child He is a man of sufficient means and the appellant has been for a considerable time living with him as his mistress On these undisputed facts the position in law is perfectly clear Under the Mohammedan law which applies to this case the appellant is entitled to the custody of Anjum who is her illegitimate daughter no matter who the father of Anjum is The respondent has no legal right whatsoever to the custody of the child Her refusal to make over the child to the appellant therefore resulted in an illegal detention of the child within the meaning of section 491 This position is clearly recognised in the English cases concerning writs of habeas corpus for the production of infants 602 In The Queen vs Clarke 1 Lord Campbell C J said at p 193 But with respect to a child under guardianship for nurture the child is supposed to be unlawfully imprisoned when unlawfully detained from the custody of the guardian and when delivered to him the child is supposed to be set at liberty The courts in our country have consistently taken the same view For this purpose the Indian cases hereinafter cited may be referred to The terms of section 491 would clearly be applicable to the case and the appellant entitled to the order she asked We therefore think that the learned Judges of the High Court were clearly wrong in their view that the child Anjum was not being illegally or improperly detained The learned Judges have not given any reason in support of their view and we are clear in our mind that view is unsustainable in law Before making the order the court is certainly called upon to consider the welfare of the infant concerned Now there is no reason to think that it is in the interest of the child Anjum to keep her with the respondent In this connection it is relevant to state that at some stage of the proceedings in the High Court the parties appeared to have arrived at a settlement whereby it had been agreed that the child Anjum would be in the custody of the appellant and the respondent would have access to the child The learned Judges of the High Court however were not prepared to make an order in terms of this settlement because as they said It did not appear to be in the interest and welfare of the minor Here again they give no reason for their view Both parties belong to the community of singing girls The atmosphere in the home of either is the same The appellant as the mother can be expected to take better care of the child than the respondent Trivedi has acknowledged the paternity of the child So in law the child can claim to be maintained by him She has no such right against the respondent We have not been able to find a single reason how the interests of the child 1 603 would be better served if she was left in the custody of the respondent and not with the appellant We further see no reason why the appellant should have been asked to proceed under the Guardian and Wards Act for recovering the custody of the child She had of course the right to do so But she had also a clear right to an order for the custody of the child under section 491 of the Code The fact that she had a right under the Guardians and Wards Act is no justification for denying her the right under section 491 That is well established as will appear from the cases hereinafter cited The learned Advocate for the respondent said we should not interfere with the order of the High Court as it was a discretionary order The learned Judges however have not given any reason which led them to exercise their discretion in the way they did We are not satisfied that the discretion was judicially exercised We are clear in our view that the judgment of the High Court was wrong and should be set aside It is further well established in England that in issuing a writ of habeas corpus a court has power in the case of an infant to direct its custody to be placed with a certain person In The King vs Greenhill 1 Lord Denman C J said When an infant is brought before the Court by habeas corpus if he be of an age to exercise a choice the Court leaves him to elect where he will go If he be not of that age and a want of direction would only expose him to dangers or seductions the Court must make an order for his being placed in the proper custody See also The Queen vs Clarke 2 In Halsbury s Laws of England Vol IX article 1201 at p 702 it is said Where as frequently occurs in the case of infants conflicting claims for the custody of the same individual are raised such claims may be enquired into on the return to a writ of habeas 1 640 III ER 922 927 2 604 corpus and the custody awarded to the proper person Section 491 is expressly concerned with the directions of the nature of a habeas corpus The English principles applicable to the issue of a writ of habeas corpus therefore apply here In fact the Courts in our country have always exercised the power to direct under section 491 in a fit case that the custody of an infant be delivered to the applicant see Rama Iyer vs Nataraja Iyer 1 Zara Bibi vs Abdul Razzak 2 and Subbuswami Goundan vs Kamakshi Ammal 3 If the courts did not have this power the remedy under section 491 would in the case of infants often become infructuous We therefore set aside the judgment and order of the High Court and direct the respondents other than the State of Bombay to make over the custody of the child Anjum to the appellant Let the child be produced by the respondents before the Registrar Appellate Side High Court of Bombay and the Registrar will than make over custody to the appellant The passport in respect of the child Anjum deposited in this Court by the respondents may be made over to the Advocate on record for the appellant The injunction restraining the removal of the child Anjum outside Greater Bombay will continue till she is delivered to the appellant Appeal allowed 1 AIR 1948 Mad 2 1910 XII Bom LR 891 3 Mad

Although it is well settled that a court of appeal should not lightly disturb a finding of fact arrived at by the trial judge who had the opportunity of observing the demeanour of the witnesses and hearing them that does not mean that an appellate court hearing an appeal on facts can never reverse such a finding Where the decision on a question of fact depends on a fair consideration of matters on record and it appears to the Appeal Court that important considerations have not been taken into account and properly weighed by the trial judge and such considerations clearly indicate that the view taken by the trial judge is wrong it is its duty to reverse the finding even if it involves the disbelieving of witnesses believed by the trial court Where again the trial judge omits to properly weigh or take into account 664 important considerations bearing on the credibility of witnesses or the probability of their version which point the other way it is the duty of the court of appeal to reverse the findings of the trial Court If the question of fact does not solely depend on the credibility of witnesses for its determination but is one of inference from proved facts on a consideration of probabilities the court of appeal stands in the same position as the trial court and is free to reverse its findings Shunmugayoya Mudaliay vs Manikka Mudaliar 1909 LR 36 IA 185 Coghlan vs Cumberland 1898 i Ch 704 Wall Thomas vs Thomas 1947 i All ER 582 Bonmax vs Austin Motor Co Ltd 1955 i All ER 326 Sayju Pershad vs Raja jwaleshwari Pratap Narain Singh 195I ILR and Laljee Mohomet vs Girlder referred to Consequently where as in the present case the plaintiff brought a suit for pre emption and the question for determination was one of fact namely whether the plaintiff had performed the essential ceremonies of Talab E Mowasibat and Talab E Ishtashad and the trial court believed his witnesses not because it had been impressed by their demearour and the High Court in appeal disbelieved them in the light of the probabilities of the case and reversed the decision of the trial court Held that it was not correct to contend that the way in which the High Court had approached the case was wrong or that its decision was not justified

N Criminal Appeal No 15 of 1951 Appeal under articles 1321 and 1341c of the Constitu tion of India against the Judgment and Order dated 28th February 1951 of the High Court of Saurashtra at Rajkot Shah CJ and Chhatpar J in Criminal Appeal No 162 of 1950 The material facts appear in the Judgment SL Chibber amicus curia for the appellant B Sen for the respondent 439 1952 February 27 The following Judgments were delivered PATANJALI SASTRI CJ This appeal raises questions under article 14 of the Constitution more or less similar to those dealt with by this Court in Criminal Appeal No 297 of 1951 The State of West Bengal vs Anwar Ali Sarkar1 and it was heard in part along with that appeal but was adjourned to enable the respondent State to file an affidavit explaining the circumstances which led to the enactment of the Saurashtra State Public Safety Measures Third Amendment Ordinance 1949 No XLVI of 1949 hereinafter referred to as the impugned Ordinance As in the West Bengal case the jurisdiction of the Special Court of Criminal Jurisdiction which tried and convicted the appellant was challenged on the ground that the impugned Ordinance under which the Court was constitut ed was discriminatory and void The Objection was overruled by the Special Judge as well as by the High Court of Sau rashtra on appeal and the appellant now seeks a decision of this Court on the point The impugned Ordinance purports to amend the Saurashtra State Public Safety Measures Ordinance No IX of 1948 which had been passed to provide for public safety mainte nance of public order and preservation of peace and tran quillity in the State of Saurashtra by the insertion of sections 7 to 18 which deal with the establishment of Spe cial Courts of criminal jurisdiction in certain areas to try certain classes of offences in accordance with a simplified and shortened procedure Section 9 empowers the State by notification to constitute Special Courts for such areas as may be specified in the notification and section 10 provides for appointment of Special Judges to preside over such courts Section 11 enacts that the Special Judge shall try such offences or classes of offences or such cases or classes of cases as the Government may by general or special order in writing direct 1 Since reported as 57 57 440 Then follow provisions prescribing the procedure applicable to the trial of such offences The only variations in such procedure from the normal procedure in criminal trials in the State consist of the abolition of trial by jury or with the aid of assessors and the elimination of the inquiry before commitment in sessions cases Even under the normal procedure trial by jury is not compulsory unless the Govern ment so directs sections 268 and 269 1 while assessors are not really members of the court and their opinion is not binding on the judge with whom the responsibility for the decision rests Nor can the commitment proceeding in a sessions case be said to be an essential requirement of a fair and impartial trial though its dispensation may involve the deprivation of certain advantages which an accused person may otherwise enjoy Thus the variations from the normal procedure are by no means calculated to imperil the chances of a fair and impartial trial In exercise of the power conferred by sections 9 10 and 11 the Government issued the notification No H35 5 C dated 911 February 1950 directing that a Special Court shall be constituted for certain special areas and that it shall try certain specified offences which included offences under sections 302 307 and 392 read with section 34 of the Indian Penal Code as adapted and applied to the State of Saurashtra for which the appellant was convicted and sen tenced It is contended on behalf of the appellant that section 11 and the notification referred to above are discriminatory in that the offences alleged to have been committed by the appellant within the specified areas are required to be tried by the Special Judge under the special procedure while any person committing the same offences outside those areas would be tried by the ordinary courts under the ordi nary procedure It is also urged that sections 9 and 11 by empowering the State Government to establish a Special Court and to direct it to try under a special procedure such offences as may be notified by the Government in effect authorise the Government to 441 amend section 5 of the Criminal Procedure Code read with the Second Schedule as adapted and applied to the State of Saurashtra which provides that all offences under the Indian Penal Code shall be investigated enquired into tried and otherwise dealt with according to the provisions hereinafter contained and that delegation of such power to the executive Government was beyond the competence of a legislature and was therefore void On the first point many of the considerations which weighed with me in upholding the constitutionality of sec tion 5 1 of the West Bengal Special Courts Act which is in identical terms with section 11 of the impugned Act apply a fortiori to the present case The West Bengal case 1 arose out of a reference by the State Government of certain individual cases to the Special Court for trial and 1 there expressed the view that it was wrong to think that classification was something that must somehow be discovera ble in every piece of legislation or it would not be legis lation That way of regarding classification I pointed out tended only to obscure the real nature of the problems for which we have to find solution In the present case howev er the State Government referred not certain individual cases but offences of certain kinds committed in certain areas and so the objection as to discriminatory treatment is more easily answered on the line of reasoning indicated in my judgment in the West Bengal case 1 Again the varia tions from the normal procedure authorised by the impugned Ordinance are less disadvantageous to the persons tried before the Special Court than under the West Bengal Act It was however said that any variation in procedure which operates materially to the disadvantage of such persons was discriminatory and violative of article 14 On the other hand it was contended on behalf of the respondent State that in the field of personal liberty the only constitu tional safeguards were those specifically provided in articles 20 to 22 and this Court having held in 1 1952 SCR284 442 Gopalan s case 1 that any procedure prescribed by law satisfies the requirements of article 21 the only article relevant here the impugned Ordinance which prescribes a special procedure for trial of offences falling within its ambit could not be held to be unconstitutional Reliance was placed on a decision of a Full Bench of the Hyderabad High Court Abdur Rahim and others vs Joseph A Pinto and others 2 which seems to lend some support to this view I am however of opinion that neither of these extreme con tentions is sound All legislative differentiation is not necessarily dis criminatory In fact the word discrimination does not occur in article 14 The expression discriminate against is used in article 15 1 and article 162 and it means according to the Oxford Dictionary to make an adverse distinction with regard to to distinguish unfavourably from others Discrimination thus involves an element of unfa vourable bias and it is in that sense that the expression has to be understood in this context If such bias is disclosed and is based on any of the grounds mentioned in articles 15 and 16 it may well be that the statute will without more incur condemnation as violating a specific constitutional prohibition unless it is saved by one or other of the provisos to those articles But the position under article 14 is different Equal protection claims under that article are examined with the presumption that the State action is reasonable and justified This pre sumption of constitutionality stems from the wide power of classification which the legislature must of necessity possess in making laws operating differently as regards different groups of persons in order to give effect to its policies The power of the State to regulate criminal trials by constituting different courts with different procedures according to the needs of different parts of its territory is an essential part of its police power cf Missouri vs Lewis3 Though the differing 1 3 101 US22 2 AIR 1951 Hyderabad ll 443 procedures might involve disparity in the treatment of the persons tried under them such disparity is not by itself sufficient in my opinion to outweigh the presumption and establish discrimination unless the degree of disparity goes beyond what the reason for its existence demands as for instance when it amounts to a denial of a fair and impar tial trial It is therefore not correct to say that arti cle 14 provides no further constitutional protection to personal liberty than what is afforded by article 21 Notwithstanding that its wide general language is greatly qualified in its practical application by a due recognition of the State s necessarily wide powers of legislative clas sification article 14 remains an important bulwark against discriminatory procedural laws In the present case the affidavit filed on behalf of the respondent State by one of its responsible officers states facts and figures relating to an increasing number of incidents of looting robbery dacoity nosecutting and murder by marauding gangs of dacoits in certain areas of the State and these details support the claim that the securi ty of the State and public peace were jeopardised and that it became impossible to deal with the offences that were committed in different places in separate courts of law expeditiously The statement concludes by pointing out that the areas specified in the notification were the main zones of the activities of the dacoits as mentioned above The impugned Ordinance having thus been passed to combat the increasing tempo of certain types of regional crime the two fold classification on the lines of type and territory adopted in the impugned Ordinance read with the notifi cation issued thereunder is in my view reasonable and valid and the degree of disparity of treatment involved is in no way in excess of what the situation demanded On the second point the appellant s learned counsel claimed that the majority view in In re The etc1 supported his contention He attempted to make this out by piecing together certain dicta 1 444 found in the several judgments delivered in that case While undoubtedly certain definite conclusions were reached by the majority of the Judges who took part in the decision in regard to the constitutionality of certain specified enact ments the reasoning in each case was different and it is difficult to say that any particular principle has been laid down by the majority which can be of assistance in the determination of other cases I have there expressed my view that legislatures in this country have plenary authori ty to delegate their power to make laws to subordinate agencies of their choice and such delegation however inex pedient or undesirable politically is constitutionally competent I accordingly reject this contention It follows that the Special Judge had jurisdiction to try the appellant and the persons accused along with him As the majority concur in overruling the preliminary objection the appeal will be heard on the merits FAZL ALI J This is an appeal by one Kathi Raning Rawat who has been convicted under sections 302 307 and 392 read with section 34 of the Indian Penal Code and sentenced to death and to seven years rigorous imprison ment The appellant was tried by a Special Court constitut ed under the Saurashtra State Public Safety MeasuresThird Amendment Ordinance 1949 Ordinance No LXVI of 1949 which was issued by the Rajpramukh of Saurashtra on the 2nd November 1949 and his conviction and sentence were upheld on appeal by the State High Court He has preferred an appeal to this Court against the decision of the High Court The principal question which arises in this appeal is whether the Ordinance to which reference has been made is void under article 131 of the Constitution on the ground that it violates the provisions of article 14 It appears that on the 5th April 1948 the Rajpramukh of Saurashtra State promulgated an Ordinance called the Criminal Proce dure Code 1898 Adaptation Ordinance 1948 Ordinance No XII of 445 1948 by which the Criminal Procedure Code of the Dominion of India as in force in that Dominion on the 1st day of April 1948 was made applicable to the State of Saurashtra with certain modifications In the same month another Ordinance called the Saurashtra State Public Safety Measures Ordinance Ordinance No IX of 1948 was promulgated which provided among other things for the detention of persons acting in a manner prejudicial to public safety maintenance of public order and peace and tranquillity in the State Subsequently on the 5th November 1949 the Ordinance with which we are concerned namely the Saurashtra State Public Safety Measures Third Amendment Ordinance 1949 was promulgated which purported to amend the previous Ordinance by inserting in it certain provisions which may be summa rised as follows Section 9 of the Ordinance empowers the State Government by notification in the Official Gazette to constitute Spe cial Courts of criminal jurisdiction for such area as may be specified in the notification Section 11 provides that a Special Judge shall try such offences or classes of offences or such cases or classes of cases as the State Government may by general or special order in writing direct Sec tions 12 to 18 lay down the procedure for the trial of cases by the Special Judge the special features of which are as follows 1 The Special Judge may take cognizance offences without the accused being committed to his court for trial 2 There is to be no trial by jury or with the aid of assessors 3 The Special Judge should ordinarily record a memo randum only of the substance of the evidence of each wit ness and 4 The person convicted has to appeal to the High Court within 15 days from the date of the sentence 446 The Ordinance further provides that the provisions of sections 491 and 526 of the Code of Criminal Procedure shall not apply to any person or case triable by the Special Judge and the High Court may call for the record of the proceedings of any case tried by a Special Judge and may exercise any of the powers conferred on an appellate court by sections 423 426 427 and 428 of the Code From the foregoing summary of the provisions of the Ordinance it will appear that the difference between the procedure laid down in the Criminal Procedure Code and the procedure to be followed by the Special Judge consists mainly in the following matters 1 Where a case is triable by a court of session no commitment proceeding is necessary and the Special Judge may take cognizance without any commitment 2 The trial shall not be by jury or with the aid of assessors 3 Only a memorandum of the substance of the evidence of each witness is ordinarily to be recorded 4 The period of limitation for appeal to the High Court is curtailed and 5 No court has jurisdiction to transfer any case from any Special Judge or to make an order under section 491 of the Criminal Procedure Code It appears that pursuant to the provisions contained in sections 9 10 and 11 of the Ordinance the State Government issued a Notification No H35 5 C dated the 911th Febru ary 1951 directing the constitution of a Special Court for certain areas mentioned in a schedule attached to the Noti fication and empowering such court to try the following offences namely offences under sections 183 189 190 212 216 224 302 304 307 323 335 341 344 379 382 384 389 and 392 402 of the Indian Penal Code 1860 as adapted and applied to the State of Saurashtra and most of t be offences under the Ordinance of 1948 447 In the course of the hearing an affidavit was filed by the Assistant Secretary in the Home Department of the Sau rashtra Government stating that since the integration of different States in Kathiawar in the beginning of 1948 there had been a series of crimes against public peace and that had led to the promulgation of Ordinance No IX of 1948 which provided among other things for detention of persons acting in a manner prejudicial to public safety and mainte nance of public order in the State Notwithstanding this Ordinance the crimes went on increasing and there occurred numerous cases of dacoity murder nosecutting ear cutting etc for some of which certain notorious gangs were respon sible and hence Ordinance No LXVI of 1949 was promulgated to amend the earlier Ordinance and to constitute Special Courts for the speedy trial of cases arising out of the activities of the dacoits and other criminals guilty of violent crimes As has been already indicated the main contention advanced before us on behalf of the appellant is that the Ordinance of 1949 violates the provisions of article 14 of the Constitution by laying down a procedure which is dif ferent from and less advantageous to the accused than the ordinary procedure laid down in the Criminal Procedure Code and thereby discriminating between persons who are to be tried under the special procedure and those tried under the normal procedure In support of this argument reliance is placed on the decision of this court in The Slate of West Bengal vs Anwar Ali Sarkar and Gajen Mali Cases Nos 297 and 298 of 1951 1 in which certain provisions of the West Bengal Special Courts Act 1949 have been held to be unconstitutional on grounds similar to those urged on behalf of the appellant in the present ease A comparison of the provisions of the Ordinance in question with those of the West Bengal Act will show that several of the objectionable features in the latter enactment do not appear in the Ordi nance 1 58 448 but on the whole I am inclined to think that that circum stance by itself will not afford justification for upholding the Ordinance There is however one very important differ ence between the West Bengal Act and the present Ordinance which in my opinion does afford such justification and I shall try to refer to it as briefly as possible I think that a distinction should be drawn betweendis crimination without reason and discrimination with rea son The whole doctrine of classification is based on this distinction and on the well known fact that the circum stances which govern one set of persons or objects may not necessarily be the same as those governing another set of persons or objects so that the question of unequal treat ment does not really arise as between persons governed by different conditions and different sets of circum stances The main objection to the West Bengal Act was that it permitted discrimination without reason or with out any rational basis Having laid down a procedure which was materially different from and less advantageous to the accused than the ordinary procedure that Act gave uncon trolled and unguided authority to the State Government to put that procedure into operation in the trial of any case or class of cases or any offence or class of offences There was no principle to be found in that Act to control the application of the discriminatory provisions or to correlate those provisions to some tangible and rational objective in such a way as to enable anyone reading the Act to say If that is the objective the provisions as to special treatment of the offences seem to be quite suitable and there can be no objection to dealing with a particular type of offences on a special footing The mere mention of speedier trial as the object of the Act did not cure the defect because the expression speedier trial standing by itself provided no rational basis of classification It was merely a description of the result sought to be achieved by the application of the special procedure laid down in the Act and afforded no help in determining what cases required speedier trial 449 As regards the present Ordinance we can discover a guiding principle within its four corners which cannot but have the effect of limiting the application of the special procedure to a particular category of offences only and establish such a nexus which was missing in the West Bengal Act between offences of a particular category and the object with which the Ordinance was promulgated as should suffice to repel the charge of discrimination and furnish some justification for the special treatment of those of fences The Ordinance as I have already stated purported to amend another Ordinance the object of which was to provide for public safety maintenance of public order and preservation of peace and tranquillity in the State It was not disputed before us that the preamble of the original Ordinance would govern the amending Ordinance also and the object of promulgating the subsequent Ordinance was the same as the object of promulgating the original Ordinance Once this is appreciated It is easy to see that there is something in the Ordinance itself to guide the State Govern ment to apply the special procedure not to any and every case but only to those cases or offences which have a ra tional relation to or connection with the main object and purpose of the Ordinance and which for that reason become a class by themselves requiring to be dealt with on a special footing The clear recital of a definite objective furnishes a tangible and rational basis of classification to the State Government for the purpose of applying the provi sions of the Ordinance and for choosing only such offences or cases as affect public safety maintenance of public order and preservation of peace and tranquillity Thus under section 11 the State Government is expected to select only such offences or class of offences or class of cases for being tried by the special court in accordance with the special procedure as are calculated to affect public safety maintenance of public order etc and under section 9 the use of the special procedure must necessarily be confined to only disturbed areas or those areas where adoption of 450 public safety measures is necessary That this is how the Ordinance was intended to be understood and was in fact understood is confirmed by the Notification issued on the 911th February by the State Government in pursuance of the Ordinance That Notification sets out 49 offences under the Indian Penal Code as adapted and applied to the State and certain other offences punishable under the Ordinance and one can see at once that all these offences directly affect the maintenance of public order and peace and tran quillity The Notification also specifies certain areas in the State over which only the special court is to exercise jurisdiction There can be no dispute that if the State Legislature finds that lawlessness and crime are rampant and there is a direct threat to peace and tranquil lity in certain areas within the State it is competent to deal with offences which affect the maintenance of public order and preservation of peace and tranquillity in those areas as a class by themselves and to provide that such offences shall be tried as expeditiously as possible in accordance with a special procedure devised for the purpose This in my opinion is in plain language the rationale of the Ordinance and it will be going too far to say that in no case and under no circumstances can a legislature lay down a special procedure for the trial of a particular class of offences and that recourse to a simplified and less cumbrous procedure for the trial of those offences even when abnormal conditions prevail will amount to a violation of article 14 of the Constitution I am satisfied that this case is distinguishable from the case relating to the West Bengal Act but I also feel that the legislatures should have recourse to legislation such as the present only in very special circumstances The question of referring individual cases to the special court does not arise in this appeal and I do not wish to express any opinion on it Certain other points were urged on behalf of the appel lant namely that the Ordinance suffers from excessive delegation of legislative authority and that 451 the Rajpramukh had exceeded his powers in amending the provisions of the Criminal Procedure Code These contentions were found to be devoid of all force and have to be reject ed In the result I would hold that the Saurashtra State Public Safety Measures Third Amendment Ordinance is not unconstitutional and accordingly overrule the objection as to the jurisdiction of the special court to try the appel lant MAHAJAN J The principal point for decision in the appeal is whether section 11 of the Saurashtra State Public Safety Measures Third Amendment Ordinance No LXVI 1949 which came into force on 2nd November 1949 is hit by article 14 of the Constitution inasmuch as it mentions no basis for the differential treatment prescribed in the Ordinance for trial of criminals in certain cases and for certain offences Section 11 of the Ordinance is in these terms A Special Judge shall try such offences or classes of offences or such cases or classes of cases as the Government of the United State of Saurashtra may by general or special order in writing direct This section is in identical terms with section 51 of the West Bengal Special Courts Act Act X of 1950 Section 51 of that Act provided as follows A Special Court shall try such offences or classes of offences or cases or classes of cases as the State Govern ment may by general or special order in writing direct The question whether section 51 of the Bengal Act X of 1950 was hit by article 14 of the Constitution was an swered in the affirmative by this court in The State of West Bengal vs Anwar Ali Sarkar etc1 In that case I was of the opinion that even if the statute on the face of it was not discriminatory it was so in its effect and opera tion inasmuch as it vested in the executive government unregulated official discretion and therefore had to be adjudged unconstitutional Section 11 of the Ordinance like section 51 1 452 of the West Bengal Act suggests no reasonable basis or classification either in respect of offences or in respect of cases It has laid down no measure for the grouping either of persons or of cases or of offences by which meas ure these groups could be distinguished from those outside the purview of the special Act The State Government can choose a case of a person similarly situate and hand it over to the special tribunal and leave the case of another person in the same circumstances to be tried by the procedure laid down in the Criminal Procedure Code It can direct that the offence of simple hurt be tried by the special tribunal while a more serious offence be tried in the ordinary way The notification in this case fully illustrates the point Offence of simple hurt punishable with two years rigorous imprisonment is included in the list of offences to be tried by the Special Judge while a more serious offence of the same kind punishable with heavier punishment under section 308 is excluded from the list It is the mischief of section 11 of the Ordinance that makes such discrimination possible To my mind offences falling in the group of sections 302 to 308 Indian Penal Code possess common characteristics and the appellant can reasonably complain of hostile dis crimination I am therefore of the opinion that section 11 of the Ordinance is unconstitutional and the conviction of the appellant under the Ordinance by the special judge is bad and must be quashed There will be a retrial of the appellant under the procedure prescribed by the Code of Criminal Procedure The contention of the learned counsel for the State that the provisions of the Ordinance are in some respects distinguishable from the provisions of the West Bengal Special Courts Act cannot be sustained Reference was made to section 9 of the Ordinance which is in these terms The Government of the United State of Saurashtra may by notification in the official gazette constitute Special Courts of criminal jurisdiction for such area as may be specified in the notification 453 This section is in the same terms as section 3 of the West Bengal Special Courts Act It only empowers the State Government to constitute Special Courts for any area or for the whole of the State of Saurashtra in the like manner in which section 3 empowered the West Bengal Government to constitute special courts for the whole of the State or any particular area It does not in any way limit or curtail the power conferred on the State Government by the provi sions of section 11 Reference was also made to the pream ble of the original Ordinance which uses the familiar con ventional phraseology An Ordinance to provide for public safety maintenance of public order and preservation of peace and tranquillity in the State of Saurashtra These words cannot limit the plain and unambiguous language of section 11 of the Ordinance which authorises the State Government to send any case or commit persons guilty of any offence to the special judge for trial by the procedure prescribed in the Ordinance MUKHERJEA J The appellant before us was triedalong with two other persons by the Special Judge Court of Criminal Jurisdiction Saurashtra State on charges of murder at tempted murder and robbery under sections 302 307 and 392 of the Indian Penal Code read with section 34 By his judgment dated 20th December 1950 the Special Judge con victed the appellant on all the three charges and sentenced him to death under section 302 and to seven years rigorous imprisonment both under sections 307 and 392 of the Indian Penal Code The conviction and sentences were upheld by the High Court of Saurashtra on appeal The appellant has now come to this court on the strength of a certificate granted by the High Court under articles 1321 and 1341c of the Constitution The appeal has not been heard on its merits as yet It was set down for hearing on certain preliminary points of law raised by the learned counsel for the appellant attacking the legality of the entire trial on the ground that section 11 of the Saurashtra Public 454 Safety Measures Ordinance No XLVI of 1949 passed by the Rajpramukh of Saurashtra as well as the Notification issued by the State Government on 911th February 1951 under which the Special Court was constituted and the trial held were void and inoperative The first and the main ground upon which the constitutional validity of the section and the notification has been assailed is that they are in conflict with the provision of article 14 of the Constitu tion The other point raised is that the provision of section 11 the Ordinance is illegal as it amounts to delegation of essential legislative powers by the State Legislature to the Executive So far as the first point is concerned the learned counsel for the appellant has placed great reliance upon the majority decision of this court in two analogous appeals from the Calcutta High Court being cases Nos 297 and 298 of 19511 where a similar question arose in regard to the validity of section 5 1 of the West Bengal Special Courts Act 1950 In fact it was because of our pronouncement in the Calcutta appeals that it was considered desirable to have the present case heard on the preliminary points of law It is not disputed that the language of section 11 of the Saurashtra Ordinance with which we are now concerned is identically the same as that of section 5 1 of the West Bengal Special Courts Act The wording of the section is as follows 11 Jurisdiction of Special Judges A Special Judge shall try such offences or classes of offences or such cases or classes of cases as the Government of the United State of Saurashtra may by general or special order in writing direct In the West Bengal Act there is a further provision em bodied in clause 2 of section 5 which lays down that no such direction as is contemplated by clause 1 could be given in respect of cases pending before ordinary criminal courts at the date when the Act came into force No such exception has been made in the Saurashtra Ordinance In the Calcutta cases referred 1 Since reported as 455 to above the notification under section 51 of the West Bengal Act directed certain individual cases in which speci fied persons were involved to be tried by the Special Court and it was held by the High Court of Calcutta that section 5 1 of the West Bengal Special Courts Act to the extent that it empowers the State Government to direct any case to be tried by Special Courts was void as offending against the provision of the equal protection clause in article 14 of the Constitution and this view was affirmed in appeal by a majority of this court With regard to the remaining part of section 51 which authorises the State Government to direct offences classes of offences or classes of cases for trial by Special Courts the majority of the Judges of the Calcutta High Court were of opinion that it was not obnoxious to article 14 of the Constitution In the present case the notification that was issued by the Sau rashtra State Government on 911th February 1951 did not relate to individual cases The notification constituted in the first place a Special Court in the areas specified in the schedule It appointed in the next place a judge to preside over the Special Court and finally gave a list of offences with reference to appropriate sections of the Indian Penal Code which were to be tried by the Special Judge If the view taken by the Chief Justice of the Cal cutta High Court and the majority of his colleagues is right such notification and that part of section 11 of the Ordinance under which it was issued could not be chal lenged as being in conflict with article 14 of the Constitu tion This point did come up for consideration before us in the appeals against the Calcutta decision with reference to the corresponding part of section 5 1 of the West Bengal Act but although a majority of this court concurred in dismissing the appeals there was no such majority in the pronouncement of any final opinion on this particular point In my judgment in the Calcutta appeals I was sceptical about the correctness of the view taken upon this point by the learned Chief Justice of the Calcutta High Court and the majority of his colleagues The 59 456 consideration that weighed with me was that as the learned Judges were definitely of opinion that the necessity of speedier trial as set out in the preamble was too elusive and uncertain a criterion to form the basis of a proper classification the authority given by section 5 1 of the Special Courts Act to the State Government to direct any class of cases or offences to be tried by the Special Court would be an unguided authority and the propriety of the classification made by the State Government that is said to be implied in the direction could not be tested with refer ence to any definite legislative policy or standard Mr Sen appearing for the State of Saurashtra has argued be fore us that in this respect the Saurashtra Ordinance stands on a different footing and he has referred in this connec tion to the preamble to the original ordinance as well as the circumstances which necessitated the present one As the question is an important one and is not concluded by our previous decision it merits in my opinion a careful consideration It may be stated at the outset that the Criminal Procedure Code of India as such has no application to the State of Saurashtra After the State acceded to the Indian Union there was an Ordinance promulgated by the Rajpramukh on 5th of April 1948 which introduced the provisions of the Criminal Procedure Code of India Act V of 1898 with certain modifications into the Saurashtra State Another ordinance known as the Public Safety Measures Ordinance was passed on the 2nd of April 1948 and this ordinance like similar other public safety measures obtaining in other States provided for preventive detention imposition of collective fines control of essential supplies and similar other matters On 11th of November 1949 the present ordinance was passed by way of amendment of the Public Safety Measures Ordinance and inter alia it made provisions for the establishment of special courts Section 9 of this Ordinance empowers the State Government to constitute spe cial courts of criminaljurisdiction for such areas as may be specified in the notification Section 10 relates to appointment 457 of Special Judges who are to preside over such courts and section 11 lays down that the Special Judge shall try such offences or classes of offences or classes of cases as the Government of United State of Saurashtra may by general or special order in writing direct The proce dure to be followed by the Special Judges is set out in sections 12 to 18 of the Ordinance In substance the Spe cial Court is given the status of a sessions court although committal proceeding is eliminated and so also is trial by jury or with the aid of assessors The Special Judge has only to make a memorandum of the evidence and he can refuse to summon any witness if he is satisfied after examination of the accused that the evidence of such witness would not be material Section 16 1 curtails the period of limita tion within which an accused convicted by the Special Judge has to file his appeal before the High Court and clause 3 of the section provides that no court shall have jurisdic tion to transfer any case from any Special Judge or make any order under section 491 of the Criminal Procedure Code The ordinance certainly lacks some of the most objectionable features of the West Bengal Act Thus it has not taken away the High Court s power of revision nor does it expose the accused to the chance of being convicted of a major offence though he stood charged with a minor one There is also no provision in the ordinance similar to that in the West Bengal Act which enables the court to proceed with the trial in the absence of the accused But although the ordinance in certain respects compares favourably with the West Bengal Act the procedure which it lays down for the Special Judge to follow does differ on material points from the normal procedure prescribed in the Criminal Procedure Code and as these differences abridge the rights of the accused who are to be tried by the Special Court and deprive them of cer tain benefits to which they would otherwise have been enti tled under the general law the ordinance prima facie makes discrimination and the question has got to be answered whether such discrimination brings it in conflict with article 14 of the Constitution 458 The nature and scope of the guarantee that is implied in the equal protection clause of our Constitution have been explained and discussed in more than one decision of this court and do not require repetition It is well settled that a legislature for the purpose of dealing with the complex problems that arise out of an infinite variety of human relations cannot but proceed upon some sort of selection or classification of persons upon whom the legislation is to operate The consequence of such classification would un doubtedly be to differentiate the persons belonging to that class from others but that by itself would not make the legislation obnoxious to the equal protection clause Equal ity prescribed by the Constitution would not be violated if the statute operates equally on all persons who are included in the group and the classification is not arbitrary or capricious but bears a reasonable relation to the objective which the legislation has in view The legislature is given the utmost latitude in making the classification and it is only when there is a palpable abuse of power and the differ ences made have no rational relation to the objectives of the legislation that necessity of judicial interference arises Section 11 of the Saurashtra Ordinance so far as it is material for our present purpose lays down that a Special Court shall try such offences or classes of offences or classes of cases as the State Government may direct This part of the section undoubtedly contemplates a classi fication to be made of offences and cases but no classifica tion appears on the terms of the statute itself which merely gives an authority to the State Government to determine what classes of cases or offences are to be tried by the special tribunal The question arises at the outset as to whether such statute is not on the face of it discriminatory as it commits to the discretion of an administrative body or officials the duty of making selection or classification for purposes of the legislation and there is a still further question namely by what tests if any is the propriety of the administrative action to be adjudged and what would be the remedy of the aggrieved person if the 459 classification made by the administrative body is arbitrary or capricious It is a doctrine of the American courts which seems to me to be well founded on principle that the equal protection clause can be invoked not merely where discrimination ap pears on the express terms of the statute itself but also when it is the result of improper or prejudiced execution of the law 1 But a statute will not necessarily be condem ned as discriminatory because it does not make the classi fication itself but as an effective way of carrying out its policy vests the authority to do it in certain officers or administrative bodies Illustrations of one class of such cases are to be found in various regulations in the USA which are passed by States in exercise of police powers for the purposes of protecting public health or welfare or to regulate trades business and occupations which may become unsafe or dangerous when unrestrained Thus there are regu lations where discretion is lodged by law in public officers or boards to grant or withhold licence to keep taverns or sell spirituous liquors2 or other commodities like milk3 or cigarettes4 Similarly there are regulations relating to appointment of river pilots5 and other trained men necessary for particularly difficult jobs and in such cases ordinarily conditions are laid down by the statute on compliance with which a candidate is consid ered qualified But even then the appointment board has got a discretion to exercise and the fact of the candidate for a particular post is submitted to the judgment of the officer or the board as the case may be It is true that these cases are of a somewhat different nature than the one we are dealing with but it seems to me that the principle underly ing all these cases is the same The whole problem is one of choosing the method by which the legislative policy is to be effectuated As has been observed by Frankfurter J in 1 Vide Weaver on Constitutional Law p 404 2Crowley vs Uhristensen 3 People of the State of New York vs Job E Van De Carr 199 US552 4 Gundling vs Chicago 5 Kotch vs Board of River Port Pilot Commissioners 330 US552 460 Tinger vs Texas1 laws are not abstract propositions but are expressions of policy arising out of specific difficulties addressed to the attainment of specif ic ends by the use of specific remedies In my opinion if the legislative policy is clear and definite and as an effective method of carrying out that policy a discretion is vested by the statute upon a body of administrators or officers to make selective application of the law to certain classes or groups of persons the statute itself cannot be condemned as a piece of discriminatory legislation After all the law does all that is needed when it does all that it can indicates a policy and seeks to bring within the lines all similarly situated so far as its means allow2 In such eases the power given to the executive body would import a duty on it to classify the subject matter of legislation in accordance with the objective indicated in the statute The discretion that is conferred on official agencies in such circumstances is not an un guided discretion it has to be exercised in conformity with the policy to effectuate which the direction is given and it is in relation to that objective that the propriety of the classification would have to be tested If the administra tive body proceeds to classify persons or things on a basis which has no rational relation to the objective of the legislature its action can certainly be annulled as offend ing against the equal protection clause On the other hand if the statute itself does not disclose a definite policy or objective and it confers authority on another to make selec tion at its pleasure the statute would be held on the face of it to be discriminatory irrespective of the way in which it is applied This it seems to me is the true principle underlying the decision of the Supreme Court of America in Yick Wo vs Hopkins3 The object of the ordinance of the City and County of San Francisco which came up for consid eration in that case was as found by the court not to regulate laundry business in that locality in the interests of the general public4 The business was 1 at 147 2 Vide Buck vs Belt 208 3 4 Vide the observations of Field J in Crowley vs Chris tensen 94 461 harmless in itself and useful to the community No policy was indicated or object declared by the legislature but an uncontrolled discretion was given to the Board of Supervi sors who could refuse license at their pleasure to anybody carrying on laundry business in wooden buildings The classification contemplated by the statute was an arbitrary classification depending on the caprice of the Board and consequently it was condemned as discriminatory on the face of itits application against the Chinese was a confirmation of the discriminatory character and the really hostile intention of the legislation I would be inclined to think that the West Bengal case which we have decided already comes within the purview of this principle as the desira bility of speedier trial which is hinted at in the pream ble to the West Bengal Act is too vague elusive and uncer tain a thing to amount to an enunciation of a definite policy or objective on the basis of which any proper classi fication could be made the matter has been left to the unfettered discretion of the State Government which can classify offences or cases in any way they like without regard to any objective and as such the statute is open to the challenge of making arbitrary discrimination The point that requires consideration is whether the Saurashtra Ordinance presents any distinguishing features or occupies the same position as the West Bengal Act As has been stated already section 11 of the Saurash tra Ordinance is worded in exactly the same manner as sec tion 51 of the West Bengal Special Courts Act and that part of it with which we are here concerned authorises the State Government to direct any classes of offences or cases to be tried by the special tribunal The State Government therefore has got to make a classification of cases or offences before it issues its directions to the Special Court The question is on what basis is the classification to be made If it depends entirely upon the pleasure of the State Government to make any classification it likes with out any guiding principle at all it cannot certainly be a proper classification Which requires that a reasonable relation must exist 462 between the classification and the objective that the legis lation has in view On the other hand if the legislature indicates a definite objective and the discretion has been vested in the State Government as a means of achieving that object the law itself as I have said above cannot be held to be discriminatory though the action of the State Govern ment may be condemned if it offends against the equal pro tection clause by making an arbitrary selection Now the earlier ordinance to which the present one is a subsequent addition by way of amendment was passed by the Rajpramukh of Saurashtra on 2nd April 1948 It is described as an ordinance to provide for the security of the State mainte nance of public order and maintenance of supplies and serv ices essential to the community in the State of Saurashtra The preamble to the ordinance sets out the objective of the ordinance in identical terms It is to be noted that the integration of several States in Kathiawar which now form the State of Saurashtra was completed some time in Febru ary 1948 It appears from the affidavit of an officer of the Home Government of the Saurashtra State that soon after the integration took place an alarming state of lawlessness prevailed in some of the districts within the State There were gangs of dacoits operating at different places and their number began to increase gradually As ordinary law was deemed insufficient to cope with the nefarious activi ties of those criminal gangs the Saurashtra Public Safety Measures Ordinance was promulgated by the Rajpramukh on 2nd April 1948 The ordinance as stated already provided principally for preventive detention and imposition of collective fines and it was hoped that armed with these extraordinary powers the State Government would be able to bring the situation under control These hopes however were belied and the affidavit gives a long list of offences in which murder and nose cutting figure conspicuously in addition to looting and dacoity which were committed by the dacoits during the years 1948 and 1949 In view of this ugly situation in the Star the new Ordinance was 463 passed on 11th of November 1949 and this ordinance pro vides inter alia for the establishment of Special Courts which are to try offenders under a special procedure Acting under section 11 of the Ordinance the Government issued a notification on 911th February 1950 which Con stituted a Special Court for areas specified in the sched ule and here again the affidavit shows that all these areas are included in the districts of Gohilwad Madhya Saurashtra and Sorath where the tribe of marauders principally flour ished The object of passing this new ordinance is identi cally the same for which the earlier ordinance was passed and the preamble to the latter taken along with the sur rounding circumstances discloses a definite legislative policy which has been sought to be effectuated by the dif ferent provisions contained in the enactment If Special Courts were considered necessary to cope with an abnormal situation it cannot be said that the vesting of authority in the State Government to select offences for trial by such courts is in any way unreasonable In the light of the principles stated already I am unable to hold that section 11 of the Ordinance in so far as it authorises the State Government to direct classes of offences or cases to be tried by the Special Court offends against the provision of the equal protection clause in our Constitution If the notification that has been issued by the State Government proceeds on any arbitrary or unreasona ble basis obviously that could be challenged as unconstitu tional It is necessary therefore to examine the terms of the notification and the list of offences it has prescribed The notification as said above constitutes a Special Court for the areas mentioned in the Schedule and appoints Mr PP Anand as a Special Judge to preside over the Spe cial Court The offences triable by the Special Court are then set out with reference to the specific sections of the Indian Penal Code Mr Chibber attacks the classification of offences made in this list primarily on the ground that while it mentions offences of a particular character it excludes at the same time other offences of a cognate char acter in reference to 60 464 which no difference in treatment is justifiable It is pointed out that while section 183 of the Indian Penal Code is mentioned in the list sections 184 186 and 188 which deal with similar offences are excluded Similarly the list does not mention section 308 Indian Penal Code though it mentions section 307 The learned counsel relies in this connection upon the decision of the Supreme Court of America in Skinner vs Oklahoma1 In that case the question for consideration related to the constitutionality of a certain statute of Oklahoma which provided for sterilization of certain habitual criminals who were convicted two or more times in any State of felony involving moral turpitude The statute applied to persons guilty of larceny which was a felony but not to embezzlement and it was held that the legislation violated the equal protection clause It is undoubtedly a sound and reasonable proposition that when the nature of two offences is intrinsically the same and they are punishable in the same manner a person accused of one should not be treated differently from a person accused of the other because it is an essential principle underlying the equal protection clause that all persons similarly circumstanced shall be treated alike both in privileges conferred and liabilities imposed At the same time it is to be noted as Douglas J observed in the very case that in determining the reach and scope of particular legislation it is not necessary for the legislature to provide abstract symmetry It may mark and set apart the classes and types of problems according to the needs and as dictated or sug gested by experience A too rigid insistance therefore on a thing like scientific classification is neither practica ble nor desirable It is true that the notification men tions section 183 of the Indian Penal Code though it omits section 184 but I am unable to hold that the two are iden tically of the same nature Section 183 deals with resist ance to the taking of property by the lawful authority of public servant while section 184 relates to obstructing sale of property offered for sale 1 465 by authority of public servant Section 186 on the other hand does not relate to the taking of property at all but is concerned with obstructing a public servant in the dis charge of his public duties Then again I am not sure that it was incumbent upon the State Government to include section 308 Indian Penal Code in the list simply because they included section 307 It is true that culpable homicide as well as attempt to murder are specified in the list but an attempt to commit culpable homicide is certain ly a less heinous offence and the State Government might think it proper having regard to all the facts known to them that an offence of attempt to commit culpable homicide does not require a special treatment Be that as it may I do not think that a meticulous examination of the various offences specified in the list with regard to their nature and punishment is necessary for purposes of this case The appellant before us was accused of murder punishable under section 302 of the Indian Penal Code There is no other offence I believe described in the Indian Penal Code which can be placed on an identical footing as murder Even culpable homicide not amounting to murder is something less heinous than murder although it finds a place in the list In my opinion the appellant can have no right to complain if he has not been aggrieved in any way by any unjust or arbitrary classification As he is accused of murder and dacoity and no offences of a similar nature are excluded from the list I do not think that it is open to him to complain of any violation of equal protection clause in the notification There are quite a number of offences specified in the notification and they are capable of being grouped under various heads Simply because cer tain offences which could have been mentioned along with similar others in a particular group have been omitted therefrom it cannot be said that the whole list is bad The question of inequality on the ground of such omission can be raised only by the person who is directed to be tried under the special 466 procedure for a certain offence whereas for commission of a similar offence not mentioned in the list another person has still the advantages of the ordinary procedure open to him In my opinion therefore the first point raised on behalf of the appellant cannot succeed The other point urged by the learned counsel for the appellant which relates to the question of delegation of legislative authority by the Rajpramukh to the State Govern ment admits I think of a short answer It is conceded by the learned counsel that the facts of this case are identi cal with those of King Emperor vs Benoarilal Sarma 1 which was decided by the Privy Council In fact the language of section 5 of the Special Criminal Courts Ordinance No II of 1942 which came up for consideration in that case is almost the same as that of section 11 of the Saurashtra Ordinance It was held by the Privy Council that it was not a ease of delegated legislation at all but merely an exam ple of the not uncommon legislative arrangement by which the local application of the provision of a statute is deter mined by the judgment of a local administrative body as to its necessity In other words it was a case of conditional legislation coming within the rule of Queen vs Burah 2 The pronouncement of the Judicial Committee in Benoarilal s case 2 has been accepted and acted upon by this court in more than one case and it is too late now to question its correctness My conclusion therefore is that both the preliminary points must be disallowed and the appeal should be heard on its merits DAS J The appellant before us was tried by a Special Court constituted under the Saurashtra Public Safety Meas ures Third Amendment Ordinance No LXVI of 1949 for of fences alleged to have been committed by him under sections 302 307 and 392 of the Indian Penal Code On December 20 1950 he was found guilty of the offences charged against him and was convicted and sentenced to death under section 302 1 72 IA 57 2 3 App 889 467 Indian Penal Code and to seven years rigorous imprisonment under each of the charges under sections 307 and 392 Indian Penal Code the sentences of imprisonment running concur rently He appealed to the High Court of Saurashtra but the High Court by its judgment pronounced on February 28 1951 rejected his appeal and confirmed his conviction and the sentences passed by the Special Court By its order made on March 21 1951 however the High Court granted him a cer tificate for appeal to this Court both under article 132 and article 134 1 c of the Constitution This appeal has accordingly been filed in this Court A preliminary point has been raised by learned counsel for the appellant namely that the Special Court had no jurisdiction to try this case and the whole trial and con viction have been illegal and void ab initio and should be quashed in limine It is necessary for the disposal of the preliminary objection to refer to the provisions of the Ordinance and the circumstances in which the Special Court came to be constituted In the beginning of 1948 the different States in Kathia war were integrated into what is now the State of Saurash tra About that time different dacoits indulged in lawless activities in Kathiawar and in particular in the area now known as the districts of Gohilwad and Madhya Saurashtra and on the outskirts of Sorath that was formerly a district in Junagadh State Their activities gathered such strength and virulence that the security of the State and the maintenance of public peace became seriously endangered In order to check their nefarious activities the Rajpramukh of the State of Saurashtra on April 2 1948 promulgated Ordinance No IX of 1948 The preamble of the Ordinance recited that it was expedient to provide for public safety maintenance of public order and preservation of peace and tranquillity in the State of Saurashtra that Ordinance gave power to the State Government to make orders amongst other things for detaining or restricting the movements or 468 actions of persons and impose collective fines The Rajpra mukh on April 5 1948 promulgated another Ordinance No XII of 1948 which extended to the State of Saurashtra the provi sions of the Code of Criminal Procedure Act V of 1898 subject to certain adaptations and modifications mentioned in the Schedule thereto It appears from the affidavit of Ramnikrai Bhagwandas Vesavada Assistant Secretary in the Home Department Government of Saurashtra that the Ordi nance was not sufficient to cope with the activities of the gangs of dacoits and that cases of looting dacoity rob bery nose cutting and murder continued as before and indeed increased in number frequency and vehemence and it became impossible to deal with the offences at different places in separate Courts of law expeditiously In view of the seri ous situation prevailing in those districts the State of Saurashtra considered it necessary to constitute Special Courts and to provide for a special procedure of trials so as to expedite the disposal of cases in which offences of certain specified kinds had been committed The Rajpramukh of Saurashtra accordingly on November 2 1949 promulgat ed Ordinance No LXVI of 1949 called The Saurashtra State Public Safety Measures Third Amendment Ordinance 1949 whereby it amended the Saurashtra State Public Safety Meas ures Ordinance No IX of 1948 By section 4 of the Ordi nance No LXVI of 1949 several sections were added to Ordi nance No IX of 1948 Three of the sections thus added which are material for our present purposes were sections 9 10 and 11 which run as follows 9 Special Courts The Government of the United State of the Saurashtra may by notification in the Official Ga zette constitute Special Courts of Criminal Jurisdiction for such area as may be specified in the notification Special Judges The Government of the United State of Saurashtra may appoint a Special Judge to preside over a Special Court constituted under section 9 for any area any person who has been 469 a Sessions Judge for a period of not less than 2 years under the Code of Criminal Procedure 1898 as applied to the United State of Saurashtra Jurisdiction of Special Judges A Special Judge shall try such offences or classes of offences or such cases or classes of cases as the Government of the United State of Saurashtra may by general or special order in writing direct Pursuant to the provisions of the Ordinance as amended the State of Saurashtra issued a notification the material part of which is as follows No H35 5 C In exercise of the powers conferred by sections 9 10 and 11 of the Saurashtra State Public Safety Measures Ordinance 1948 Ordinance No IX of 1948 here inafter referred to as the said Ordinance Government is pleased to direct i that a Special Court of a Criminal Jurisdiction hereinafter referred to as the said Court shall be consti tuted for the areas mentioned in the schedule hereto an nexed and that the headquarters of the said Court shall be at Rajkot ii that Mr PP Anand shall be appointed as a Spe cial Judge to preside over the said Court and iii that the Special Judge hereby appointed shall try the following offences viz a offences under sections 183 189 190 212 216 224 302 304 307323 to 335 341 to 344 379 to 382 384 to 389 and 392 to 402 of the Indian Penal Code 1860 XLV of 1860 as adapted and applied to the United State of Saurashtra and b all offences under the said Ordinance except an offence punishable under sub section 6 of section 2 of the said Ordinance in so far as it relates to the contravention of an order made under clause a of subsection 1 of the said section The appellant having been charged with offences included in the Notification he was tried by the Special Court with the result I have mentioned The preliminary objection raised on his behalf is that section 470 11 of the Ordinance is invalid in that a it offends against article 14 of our Constitution and b it autho rises illegal delegation of legislative power to the State Government In support of the first ground on which the preliminary objection is rounded reliance is placed by learned coun sel for the appellant on the judgment of this Court in Case No 297 of 1951 The State of West Bengal vs Anwar Ali Sarkar That case was concerned with the validity of the trial of the respondent therein by a Special Court consti tuted under the provisions of the West Bengal Special Courts Act 1950 West Bengal Act X of 1950 The preamble to that Act recited that it was expedient to provide for the speedier trial of certain offences Sections 3 4 and 5 1 of the West Bengal Special Courts Act 1950 reproduced substantially if not verbatim the provisions of sections 9 10 and 11 of the Saurashtra Ordinance of 1948 as subse quently amended The notification issued by the State of West Bengal under that Act was however different from the notification issued by the State of Saurashtra in that the West Bengal notification directed certain specific cases to be tried by the Special Court constituted under the West Bengal Special Courts Act That notification had obviously been issued under that part of section 5 1 of the West Bengal Special Courts Act which authorised the State Govern ment to direct particular cases to be tried by the Special Court A majority of this court held that at any rate section 5 1 of the West Bengal Special Courts Act in so far as it authorised the State to direct cases to be tried by the Special Court and the notification issued thereunder offended against the provisions of article 14 of the Consti tution and as such were void under article 13 The Saurash tra notification however has been issued quite obviously under that part of section 11 which authorises the State Government to direct offences classes of offences or classes of cases to be tried by the Special Court and the question before us on the present appeal is whether that part of section 11 under 471 which the present notification has been issued offends against the equal protection clause of our Constitution It is contended that the opinion expressed by the majority of this Court in the West Bengal case on the corresponding part of section S 1 of the West Bengal Special Courts Act was not necessary for the purposes of that appeal and re quires reconsideration After referring to our previous decisions in Chiranjit Lal Choudhury vs The Union of India and Others 1 and The State of Bombay vs FN Balsara 2 I summarised the meaning scope and effect of article 14 of our Constitu tion as I understand it in my judgment in the West Bengal case which I need not repeat but to which I fully adhere It is now well established that while article 14 forbids class legislation it does not forbid reasonable classification for the purposes of legislation In order however to pass the test of permissible classification two conditions must be fulfilled namely i that the classifi cation must be rounded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and iithat that differ entia must have a rational relation to the object sought to be achieved by the Act What is necessary is that there must be a nexus between the basis of classification and the object of the Act It will be noticed that section 11 of the Saurashtra Ordinance like section 5 1 of the West Bengal Special Courts Act refers to four distinct categories namely offences classes of offences cases and classes of cases and empowers the State Government to direct any one or more of these categories to be tried by the Special Court constituted under the Act The expressions offences classes of offences and classes of cases clearly indi cate and obviously imply a process of classification of offences or cases 1 2 at p 326 61 472 Prima facie those words do not contemplate any particular offender or any particular accused in any particular case The emphasis is on offences classes of offences or classes of cases The classification of offences by itself is not calculated to touch any individual as such although it may after the classification is made affect all individuals who may commit the particular offence In short the classification implied in this part of the sub section has no reference to and is not directed towards the singling out of any particular person as an object of hostile State action but is concerned only with the grouping of offences classes of offences and classes of cases for the purposes of the particular legislation as recited in its preamble An argument was raised as in the West Bengal ease that even this part of the section gave an uncontrolled and unguided power of classification which might well be exer cised by the State Government capriciously or with an evil eye and an unequal hand so as to deliberately bring about invidious discrimination between man and man although both of them were situated in exactly the same or similar circumstances I do not accept this argument as sound for the reasons I adopted in my judgment in the West Bengal case in repelling this argument apply with equal if not with greater force to the argument directed against the validity of the Saurashtra Ordinance It is obvious that this part of section 11 of the Ordinance which like the corresponding part of section 5 1 of the West Bengal Special Courts Act confers a power on the State Government to make a classifi cation of offences classes of offences or classes of cases makes it the duty of the State government to make a proper classification that is to say a classification which must fulfil both conditions namely that it must be based on some intelligible differentia distinguishing the offences grouped together from other offences and that that differentia must have a reasonable relation to the object of the Act as recited in the preamble A 473 classification on a basis which does not distinguish one offence from another offence or which has no relation to the object of the Act will be wholly arbitrary and may well be hit by the principles laid down by the Supreme Court of the United States in Jack Skinner vs Oklahoma1 On the other hand as I observed in the West Bengal case it is easy to visualise a situation when certain offences by reason of the frequency of their perpetration or other attending circumstances may legitimately call for a special treatment in order to check the commission of such offences Are we not familiar with gruesome crimes of murder arson loot and rape committed on a large scale during communal riots in particular localities and are they not really different from a case of a stray murder arson loot or rape in another district which may not be affected by any communal upheaval Does not the existence of the gangs of dacoits and the concomitant crimes committed on a large scale as mentioned in the affidavit filed on behalf of the State call for prompt and speedier trial for the maintenance of public order and the preservation of peace and tranquillity in the State and indeed of the very safety of the community Do not those special circumstances add a peculiar quality to the offences or classes of offences specified in the notifi cation so as to distinguish them from stray cases of similar crimes and is it not reasonable and even necessary to the State with power to classify them into a separate group and deal with them promptly I have no doubt to my mind that the surrounding circumstances and the special features mentioned in the affidavit referred to above furnish a very cogent and reasonable basis of classification for they do clearly distinguish these offences from similar or even same species of offences committed elsewhere and under ordinary circumstanceS This differentia quite clearly has a reason able relation to the object sought to be achieved by the Act namely the maintenance of public order the preserva tion of public safety the peace and tranquillity of the State Such a classification 1 216 US 535 L Ed 1655 474 will not be repugnant to the equal protection clause of our Constitution for there will be no discrimination for whoever may commit the specified offence in the specified area in the specified circumstances will be treated alike and sent up before a Special Court for trial under the special procedure Persons thus sent up for trial by a Special Court cording to the special procedure cannot point their fingers to the other persons who may be charged before an ordinary Court with similar offences alleged to have been committed by them in a different place and in different circumstances and complain of unequal treatment for those other persons are of a different category and are not their equals In my judgment this part of the section properly construed and understood does not confer an uncontrolled and unguided power on the State Government On the con trary this power is controlled by the necessity for making a proper classification which is to be guided by the pream ble in the sense that the classification must have a ration al relation to the object of the Act as recited in the preamble It is therefore not an arbitrary power The Legislature has left it to the State Government to classify offences or classes of offences or classes of cases for the purpose of the Ordinance for the State Government is in a better position to judge the needs and exigencies of the State and the Court will not lightly interfere with the decision of the State Government If at any time however the State Government classifies offences arbitrarily and not on any reasonable basis having a relation to the object of the Act its action will be either an abuse of its power if it is purposeful or in excess of its powers even if it is done in good faith and in either case the resulting discrimination will encounter the challenge of the Constitu tion and the Court will strike down not the law which is good but the abuse or misuse or the unconstitutional admin istration of the law creating or resulting in unconstitu tional discrimination In this case however the facts stated in the affidavit filed on behalf of the State make it abundantly 475 clear that the situation in certain parts of the State was sufficient to add a particularly sinister quality to certain specified offences committed within those parts and the State Government legitimately grouped them together in the notification The criticism that the State Government in cluded certain offences but excluded certain cognate of fences has been dealt with by my learned brother Mukherjea and I have nothing more to add thereto In my opinion lot reasons given in my judgment in the West Bengal case and referred to above section 11 of the Saurashtra Ordinance in so far as it authorises the State Government to direct offences or classes of offences or classes of cases to be tried by the Special Court does not offend against the equal protection clause of our Constitu tion and the notification which has been issued under that part of the section cannot be held to be invalid or ultra vires On the question of delegation of legislative power the matter appears to be concluded by the decision of the Privy Council in Benoarilal s case1 and the section may well be regarded as an instance of conditional legislation Fur ther I would be prepared to say for reasons stated in my judgment in the President s Reference2 that there has been no illegal delegation of legislative power For reasons stated above I agree that the preliminary point should be rejected and the appeal should be heard on its merits CHANDRASEKHARA AIYAR J Mr Sen tried his best to distinguish this case from our decision on the West Bengal Special Courts Act 1950 The State of West Bengal vs Anwari Ali Sarkar and Gajan Mali 3 But in my view he has not succeeded in his attempt Sections 9 and 11 of the Ordinance in question do not lay down any classification in themselves The preamble to the earlier Ordinance of 1948 which is still intact as the later one is only an amending 1 LR 72 IA 57 3 Cases Nos 297 298 of 1951 Since 2 reported as 476 measure merely refers to the need to provide for public safety maintenance of public order and the preservation of peace and tranquillity in the State of Saurashtra This by itself indicates no classification as the object is a general one which has to be kept in view by every enlight ened government or system of administration Every law dealing with the commission and the punishment of offences is based on this need The notification under which the Special Court was established no doubt deals with offences as distinguished from cases or groups of cases but here also there is no rational classification Offences present ing the same characteristic features and cognate in this sense have been separately dealt with some of them are to go before the Special Court while others are left to be tried by the ordinary courts The circumstance that the deviations from normal procedure prescribed in the Ordinance are not so many or vital as in the Bengal case does not in nay humble opinion affect the result as the defect of the absence of a reasonable or rational classification is still there The negation of committal proceedings is a matter of much moment to the accused as it deprives him of the un doubted advantage of knowing the evidence for the prosecu tion and discrediting it by cross examination leading possibly to his discharge even at that early stage The argument for the respondent that there has been no discrimination as against the appellant visa vis other persons charged with the same offences is unacceptable Cognate offences have been left over for trial by the ordi nary courts It is no answer to the charge by A of discrim inatory legislation to say that B C have also been placed in the same category as himself when he finds that D E F also liable for the same or kindred offences have been left untouched and are to be tried by ordinary courts under the normal procedure Much importance cannot be attached to the affidavit of the Assistant Secretary to the Government It may be that all the facts stated by him as regards the frequency and locale of the particular 477 offences are true But no such grounds for the classifica tion are indicated much less stated either in the impugned Ordinance or notification This is certainly not a legal requirement but a wise prudence suggests the need for such incorporation as otherwise the ascertainment of the reasons for the classification from extraneous sources may involve the consideration of what may be regarded as after thoughts by way of explanation or justification In my view the West Bengal Special Courts Act deci sion governs this case also and section 11 is bad It is unnecessary to deal with the other point raised by the learned counsel for the appellants as regards the dele gation of legislative powers involved in the pro tanto repeal of some of the provisions of the Criminal Procedure Code viz sections 5 and 28 and the Schedule especially as it seems concluded against him by the decision in King Emperor vs Benoari Lal Sarma and Others1 The convictions of the appellant and the sentences imposed on him are set aside and there will be a retrial under the ordinary procedure Boss J I agree with my brothers Mahajan and Chandra sekhara Aiyar that the Saurashtra State Public Safety Meas ures Third Amendment Ordinance offends article 14 As I explained in my judgment in The State of West Bengal vs Artwar Ali Sarkar2 I prefer not to base my decision on the classification test For the reasons given there I am of opinion that the differentiation here travels beyond bounds which are legitimate It is true the points of differentiation are not as numerous here as in the other case but the ones which remain are in my judgment of a substantial character and cut deep enough to attract the equality clauses in article 14 I would hold the Ordinance invalid Preliminary objection overruled 1 1945 72 IA 57

In exercise of the powers under section 3 of the Essential Supplies Temporary Powers Act 1946 the Central Government made the Cotton Textile Control of Movement Order 1948 The 1946 Act was to expire on January 26 1955 but before that on January 21 1955 the Essential Commodities Ordinance was promulgated which conferred on the Central Government a power similar to that conferred by section 3 of the 1946 Act Section 16 of the Ordinance provided that all Orders made under the 1946 Act in so far as such Orders could be made under the Ordinance shall continue in force and that accordingly any appointment made license or permit granted or direction issued under any such Order shall continue in force The 955 by section 16ia repealed the Ordinance and by section 16ib 727 repealed any other law in force in any State in so far as such law controlled the production supply and distribution of and trade and commerce in any essential commodity The savings clause section 162 of the 1955 Act was a repetition of section 16 of the Ordinance The respondent contended that the amplitude of the first part of section 16 of the Ordinance was cut down by the second part and consequently section 16 did not save the Order but only the acts done under the Order and that even if the Order was saved by section 16 of the Ordinance it was repealed by section 16ib of the 1955 Act and was not continued under that Act Held that the Cotton Textiles Control of Movement Order 1948 was saved by section 16 of the Ordinance and was continued by section 162 of the and was in force on August 30 1955 when the offence was committed The first part of section 16 of the Ordinance saved the order and the acts done under the Order subsequent to the coming into force of the Ordinance and the second part of section 16 saved past acts done under the Order before the coming into force of the Ordinance The words any other law in section 16ib of the 1955 Act meant any law other than the Ordinance and an order made or deemed to be made under the Ordinance was not repealed by section 16ib Such an order was saved by section 16ia of the Act Held further that this was not a fit case for interference under article 136 of the Constitution with the order of the High Court discharging the respondent The offence was committed more than four years ago the application by the appellant to the High Court for a certificate of fitness to appeal to the Supreme Court was belated there was plausible justification for the belief of the accused that the Order did not survive the expiry of the 1946 Act in view of the varying views expressed by the Courts the State filed the appeal presumably to get the legal position clarified in such circumstances public interest did not require that the stale matter should be resuscitated

minal Appeal No 143 of 1957 Appeal from the judgment and order dated the 8th May 1957 of the Allahabad High Court in Criminal Reference No 149 of 1956 arising out of the judgment and order dated the 14th January 1956 of the First Additional Sessions Judge Agra in Sessions Trial No 141 of 1954 and Criminal Misc No 1 of 1956 G section Pathak and Mohan Behari Lal for the appellants G C Mathur C P Lal and G N Dikshit for the respondent No 1 Janardan Sharma for respondent No 2 1959 September 14 The Judgment of the Court was delivered by WANCHOO J This is an appeal oil a certificate granted by the Allahabad High Court in a criminal matter The facts of the case may be set out in some 738 detail to bring out the point raised in this appeal A complaint was filed by Rajendra Kumar Jain against the four appellants and three others under sections 409 465 467 471 and 477A of the Indian Penal Code It is not necessary for present purposes to set out the details of the complaint Suffice it to say that after the statement of the complainant under section 200 of the Code of Criminal Procedure hereinafter referred to as the Code summonses were issued to the accused persons requiring them to answer a charge under section 406 of the Penal Code Prosecution witnesses were then examined and cross examined and the statements of the accused persons recorded The Magistrate then heard argu ments on the question of framing of charges which were concluded on September 23 1954 It was then ordered that the case should be put up on September 30 1954 for orders On that date the Magistrate framed charges against the four appellants under sections 409 and 465 read with section 471 and 477A of the Penal Code On the same date the Magistrate ordered commitment of the four appellants to the Court of Session on these charges The remaining three accused were discharged There was then a revision petition by Rajendra Kumar Jain against the discharge of one of the three accused namely Bhajan Lal When the matter came up before the First Additional Sessions Judge Agra he ordered suo motu on April 9 1955 after a perusal of the commitment order that Bhajan Lal be committed to the Court of Session to stand his trial In view of this order he dismissed the revision petition as infructuous Thereupon Bhajan Lal went in revision to the High Court That petition was heard by Roy J and he set aside the order of commitment of Bhajan Lal and one of the reasons given by him for doing so was that a Magistrate was not empowered to frame a charge and make an order of commitment until he had taken all such evidence as the accused might produce before him As Bhajan Lal had not been called upon to produce evidence in defence the order of commitment made by the Sessions Judge was held to be not in accordance with law This order was passed on 739 October 6 1955 Thereupon on January 7 1956 the four appellants filed a revision petition before the Sessions Judge praying that the order of commitment passed against them be quashed and the main reason advanced in support of this petition was that the learned Magistrate had not observed the mandatory provisions of law laid down in sections 208 to 213 of the Code which were essential for a valid commitment This petition came up before the same First Additional Sessions Judge and he made a reference to the High Court that as the procedure followed by the Magistrate was irregular the order of commitment dated September 30 1954 was bad in law and should be quashed This reference came up for bearing before another learned Judge of the High Court namely Chowdhry J and he took the view that the Magistrate had not failed to comply with the provisions of section 208 and that non compliance with the provisions of sections 211 and 212 was curable under section 537 of the Code He therefore rejected the reference There was then an application for a certificate to appeal to this Court which was allowed particularly as the view taken by Chowdhry J was in conflict with the view taken by Roy J already referred to The main contention of the appellants before us is that as the case began before the Magistrate as a warrant case under section 406 of the Penal Code it was incumbent upon the Magistrate when he decided in view of the provisions of section 347 1 of the Code that the case should be committed to the Court of Session to follow the procedure provided in Ch XVIII of the Code and inasmuch as he had failed to comply with sections 208 to 213 of the Code the commitment was bad in law and should be quashed The first question that falls for consideration therefore is whether the Magistrate when he began this case was proceeding in the manner provided for the trial of warrant cases Section 347 1 of the Code comes into play when at any stage of the proceedings in any trial before a Magistrate it appears to him that the ease ought to be tried by the Court of 740 Session he has then to commit the accused under the provisions herein before contained The Sessions Judge who made the reference held that the case before the Magistrate proceeded from the beginning as if it was a trial of a warrant case It was on that basis that the Sessions Judge held that when the Magistrate made up his mind that the case ought to be committed to the Court of Sessions in view of the provisions of section 3471 of the Code it was his duty to observe the procedure laid down in Ch XVIII particularly under sections 208 211 and 212 of the Code The order of reference was sent to the Magistrate for explanation if any and the Magistrate replied that he had no explanation to submit He did not say in his explanation that he was not proceeding as in a warrant case and that the proceedings before him throughout were proceedings in the nature of an inquiry under Ch XVIII When however the matter came up before the High Court Chowdhry J was of opinion that though the Magistrate was competent to try the case as summonses has been issued under section 406 1 P C only it was open to him to hold an inquiry under Ch XVIII from the very beginning in view of the provisions of section 207 which empower a Magistrate to follow the procedure provided in Ch XVIII in cases exclusively triable by a Court of Session and also in cases which are not exclusively triable by the Court of Session but which in the opinion of the Magistrate ought to be tried by such Court The High Court was further of the view that the offence mentioned in the summons should be deemed to have given notice to the accused that it was optional with the Magistrate to hold an inquiry with a view to commit them to the Court of Session or to try them himself as in a warrant case because column 8 of Schedule 11 of the Code says that a case under section 406 is triable by a Court of Session Presidency Magistrate or Magistrate of the first or second class Therefore according to the High Court the matter was at large whether the Magistrate was going to adopt one procedure or the other despite the issue of summonses under section 406 of the Penal Code and that 741 nothing had happened to induce the belief in the accused that they would be tried as in a warrant case The High Court therefore held that the case was proceeded with from the beginning as if it was an inquiry under Ch XVIII and on that view it held that there was no non compliance with section 208 of the Code As for non compliance with sections 211 and 213 the High Court was of the view that it was curable under section 537 of the Code as no prejudice was caused We must say with respect that this view of the nature of the proceedings before the Magistrate is not correct It is true that it is open to a Magistrate to hold an inquiry from the beginning under Chapter XVIII in a case not exclusively triable by the Court of Session But the mere fact that the Magistrate has such power does not necessarily indicate to the accused that he is holding an inquiry under Ch XVIII rather than a trial before himself Where the case is not exclusively triable by the Court of Session the accused would naturally conclude that the proceedings before the Magistrate are in nature of a trial and not an inquiry under Ch XVIII If the Magistrate intends to use his powers under section 207 and hold an inquiry from the beginning in a case not exclusively triable by the Court of Session the only way in which the accused Can know that he is holding an inquiry and not a trial is by the Magistrate informing the accused that he is holding an inquiry under Ch XVIII and not trial If he fails to do so the accused can reasonably conclude that a trial is being held In this case undoubtedly the Magistrate did not indicate to the accused from the beginning that his proceedings were in the nature of an inquiry under Ch XVIII Therefore the accused would naturally conclude that the proceedings before him were in the nature of a trial of a warrant case as the summonses that they had received were under section 406 of the Penal Code only The fact that in the complaint section 467 which is exclusively triable by a Court of Session was mentioned is of no consequence for the summonses to the accused were only for a trial under section 406 of the Penal Code It must therefore be held that the proceedings before 742 the Magistrate began as in the trial of a warrant case and if the Magistrate at a subsequent stage of the proceedings was of the view that the case should be committed to the Court of Session he would have to act under section 347 1 of the Code We have been at pains to refer to this aspect of the matter for considerations would be different if the case was exclusively triable by the Court of Session and began from the outset as an inquiry under Ch XVIII What we shall say hereafter must therefore be taken to apply only to a case which began as a proceeding in a warrant or summons case and in which the Magistrate at a later stage takes action under section 347 1 This brings us to a consideration of the duty of the Magistrate who takes action under section 347 1 of the Code That section reads as follows If in any inquiry before a Magistrate or in any trial before a Magistrate before signing judgment it appears to him at any stage of the proceedings that the case is one which ought to be tried by the Court of Session or High Court and if he his empowered to commit for trial he shall commit the accused under the provisions hereinbefore contained The first question that has to be decided is the meaning of the words under the provisions hereinbefore contained These words have been the subject of decision by a number of High Courts and the High Courts are unanimous that they mean that if the Magistrate decides at some stage of the trial to commit the accused he has to follow the provisions contained in Ch XVIII It is not necessary to refer to those decisions for the words themselves are quite clear They lay down that if the Magistrate comes to the conclusion that the accused ought to be committed for trial he shall commit in accordance with the provisions contained in the earlier part of the Code namely in Ch XVIII This of course does not mean that the Magistrate must begin over again from the beginning All that he has to do when he decides that the case ought to be committed is to inform the accused and see that the provisions of Ch XVIII are complied with so far as they have not been complied 743 with up to the stage at which he decides that there ought to be a commitment Now the procedure under Ch XVIII is laid down in sections 208 to 213 of the Code The Magistrate begins by hearing the complainant if any and takes all evidence that may be produced in support of the prosecution or on behalf of the accused or as the Magistrate may call himself The Magistrate is also required to issue process to compel the attendance of any witness or the production of any document or other thing if the complainant or officer conducting the prosecution of the accused applies to him After the evidence under section 208 has been taken the Magistrate then examines the accused for the purpose of enabling him to explain any circumstances appearing in evidence against him under section 209 Thereafter if he is of opinion that there are not sufficient grounds for committing the accused for trial lie can discharge him unless it appears to him that such person should be tried before himself or some other Magistrate in which case he has to proceed accordingly On the other hand if the Magistrate is of opinion after taking the evidence and examining the accused that there are sufficient grounds for committing the accused for trial he has to frame a charge under section 210 declaring with what offence the accused is charged The charge is then read over and explained to the accused and a copy thereof if he so requires is furnished to him free of cost After the charge is framed the Magistrate calls upon the accused under section 211 to furnish a list of persons orally or in writing whom he wishes to be summoned to give evidence on his trial The Magistrate may also allow the accused to furnish a further list at a later stage in his discretion Section 212 gives power to the Magistrate in his discretion to summon and examine any witness named in any list under section 211 Then comes section 213 which lays down that if the accused has refused to give a list as required by section 211 or if he has given one and the witnesses if any included therein whom the Magistrate desires to examine have been summoned and examined under section 212 the Magistrate may make an order committing the accused for trial by the High Court or the 744 Court of Session and shall also briefly record the reasons for such commitment On the other hand if he is satisfied after hearing the witnesses for the defence that there are not sufficient grounds for committing the accused he may cancel the charge and discharge the accused It will be seen from this analysis of the provisions relating to commitment that section 208 gives a right to the accused to produce evidence in defence before the Magistrate examines him under section 209 and proceeds to frame a charge under section 210 Now when a Magistrate makes up his mind to commit a case not exclusively triable by the Court of Session under the power given to him under section 347 1 of the Code he has to follow this procedure But as we have said earlier it is not necessary that the Magistrate should begin from the beginning again when he so makes up his mind The Magistrate may make up his mind at any stage of the trial before him and generally speaking four contingencies may arise Firstly he may make up his mind after the trial is practically over and the witnesses for the prosecution have been examined and crossexamined after the charge the accused has be en examined both under sections 253 and 342 of the Code and and all the defence evidence has been taken In such a case sections 208 209 and 210 have been complied with and all that the Magistrate has to do is to intimate to the accused that he intends to commit him for trial and ask him to give the list of witnesses under section 211 and proceed thereafter as provided in Ch XVIII Secondly the Magistrate may make up his mind after all the witnesses for the prosecution have been examined and cross examined and the charge has been framed but no defence has been taken In such a case that part of section 208 which lays down that all the evidence for the prosecution shall be taken has been complied with and the Magistrate may then proceed to comply with the rest of section 208 and take the defence evidence and then proceed further under sections 209 to 213 and amend the charge so as to make it conformable to a charge in an inquiry under Ch XVIII or cancel it Thirdly the Magistrate may make up his mind after 745 some of the prosecution witnesses have been examined and cross examined and a charge has been framed In such a case he has to examine the rest of the prosecution witnesses under section 208 and take the defence evidence if any produced by the accused and then proceed under sections 209 to 213 amending or cancelling the charge already framed as indicated earlier Lastly the Magistrate may have only just begun taking evidence for the prosecution and may not have framed a charge In such a case he takes the rest of the prosecution evidence and complies with the provisions from sections 208 to 213 But in each of these four contingencies it is the duty of the Magistrate to intimate to the accused that he has made up his mind to commit in view of the provisions of section 3471 and then proceed in the manner indicated above It is necessary that the accused should know when the Magistrate makes up his mind to commit so that their right under section 208 to produce defence if any before commitment is made is safeguarded Now what happened in this case was this The Magistrate had apparently taken all the prosecution evidence and the prosecution witnesses had been examined and cross examined the Magistrate had framed no charges upto September 30 1954 He had heard arguments on the question whether any charges should be framed and had fixed September 301954 for orders in this respect When therefore he decided on September 301954 that the case ought to be committed to the Court of Session the proper course for him was to refrain from framing any charges and intimate to the accused that he intended to commit them for trial He then should have called upon them to produce defence evidence if any under section 208 and then proceeded further under Ch XVIII The Magistrate however failed to inform the accused that he had made up his mind to proceed under section 347 1 and to commit them for trial What he did on September 30 1954 was to frame charges forthwith and record an order committing the accused to the Court of Session under section 213 of the Code He thus deprived them of their right to lead defence evidence if any under section 208 It may be that if he had told them that he was 746 going to proceed under section 347 1 and commit them for trial and asked them if there was any defence evidence to be produced they might have said that they did not wish to produce any defence before him at that stage But what the accused would have said if the Magistrate had proceeded in this manner is irrelevant in considering the question whether the commitment in this case was bad in law inasmuch as it did not comply with section 208 so far as giving the accused an opportunity to lead defence evidence if any was concerned The fact remains therefore that in this case the Magistrate when he decided to act under section 347 1 did not intimate that decision to the accused and proceeded forthwith to commit them for trial under section 213 thus depriving them of the right to produce defence evidence if any under section 208 The next question which falls for consideration is the effect of this non compliance with section 208 of the Code and whether it is curable under section 537 of the Code The effect of Don compliance with various provisions of the Code and whether such non compliance is curable under section 537 have been the subject of a large number of cases before various High Courts and also before their Lordships of the Judicial Committee of the Privy Council It is not necessary to refer to this mass of authorities One of the earliest of these case decided by the Privy Council is Subramania Iyer vs King Emperor 1 while one of the latest is Pulukuri Kotayya vs King Emperor2 The law was summed up by their Lordships of the Judicial Committee in Pulukuri Kotayya s case 2 at p 75 in these words When a trial is conducted in a maner different from that prescribed by the Code as in NA Subramania Iyer s case 1 the trial is bad and no question of curing an irregularity arises but if the trial is conducted substantially in the manner prescribed by the Code but some irregularity occurs in the course of such conduct the irregularity can be cured under section 537 and none the less so because the irregularity involves as must nearly always be the case a breach of one or more of the very comprehensive provisions of the code The distinction 1 1901 LR 28 IA 257 2 1948 LR 74 IA 65 747 drawn in many of the cases in India between an illegality and an irregularity is one of degree rather than of kind This view finds support in the decision of their Lordships Board in Abdul Rehman vs The King Emperor1 where failure to comply with sections 360 of the Code of Criminal Procedure was held to be cured by section 535 and 537 These observations were quoted with approval by this Court in Narain Rao vs The State of Andhra Pradesh2 It seems therefore fruitless to consider whether the non compliance with section 208 in this case is an illegality which cannot be cured under section 537 or an irregularity which is curable thereunder As the stage of trial has not been reached in this case no question arises of considering whether the trial has been conducted in a manner different from that prescribed by the Code What we have to see is whether the breach of section 208 which has occurred in this case is such that the Court will presume prejudice to the accused by the mere fact of the breach If such presumption can be made the breach would obviously be not curable under section 537 of the Code even assuming that that section applies The question therefore which eventually emerges is whether this breach of section 208 is of such a character that the Court will presume that there has been prejudice to the accused by the mere fact of the breach Now the accused has a right under section 208 to produce evidence in defence if any before the Magistrate proceeds to decide whether a charge should be framed or not The Magistrate s decision whether the charge should be framed or not is bound to be affected one way or the other if evidence is produced by the accused for the Magistrate Would then be bound to consider the effect of that evidence on the question of framing the charge If the accused is denied the opportunity of leading that evidence which he has a right to do under section 208 it seems to us that the denial of such right is sufficient to cause prejudice to the accused and section 537 would have no application to a case of this kind The possibility that the accused may not have produced defence if asked by the Magistrate whether he would do so 1 1926 LR 54 IA 96 2 748 is of no consequence so far as this conclusion is concerned If this is the reply expected it makes it all the more incumbent on the Magistrate to inform the accused that he was intending to commit the case and ask him if he wished to produce evidence If the accused did not want to do so the Magistrate would have done his duty and his way would be clear to proceed further with his intention to commit the accused But when the Magistrate did not intimate to the appellants in this case that he was intending to commit them for trial and proceeded to frame charges and pass the order of commitment forthwith on September 30 he was denying to them their right to produce defence under section 208 of the Code The denial of that right is in our opinion in itself sufficient to cause prejudice to the accused and failure of justice inasmuch as the accused were prevented from leading evidence which might have induced the Magistrate not to frame a charge against them or cancel it We are therefore of opinion that the breach of section 208 which took place in this case was such as was bound to cause a failure of justice and there is therefore no question of the application of section 537 in these circumstances The commitment is therefore bad in law and must be quashed on this ground alone In the petition of appeal the appellants have referred also to breach of provisions of sections 211 212 and 213 of the Code As we have come to the conclusion that the breach of section 208 in this case is sufficient to invalidate the commitment it is not necessary to consider the effect of the further breach of sections 211 212 and 213 What we have said in this case wit respect to the effect of the breach of section 208 may not be taken as applying to the breach of sections 211 212 and 213 for the considerations arising out of those breaches may be different We therefore allow the appeal quash the order of commitment as well as the charges framed and send the case back to the Magistrate to proceed in the manner indicated above according to law Appeal allowed

An unmarried Sunni Muslim mother of an illegitimate female child made an application under section 49I Of the Code of Criminal Procedure for the recovery of the child from the respondents Held that under the Mohammedan Law the mother of an illegitimate female infant child is entitled to its custody The refusal to restore such a child to the custody of its mother would result in an illegal detention of the child within the meaning of section 49I of the Criminal Procedure Code A dispute as to the paternity of the child is irrelevant for the purpose of the application The Supreme Court will interfere with the discretionary powers of the High Court if the discretion was not judicially exercised Held also that before making the order for the custody of the child the court is called upon to consider its welfare Held further that the fact that a person has a remedy under the Guardian and Wards Act is no justification for denying him the remedy under section 49I Of the Criminal Procedure Code Held further that in issuing writs of habeas corpus the courts have power in the case of an infant to direct its custody to be placed with a certain person The Queen vs Clarke and The King vs Greenhill relied on Zara Bibi vs Abdul Razzak 1910 XII Bom LR 891 Subbuswami Gounden vs K Kamakshi Ammal Mad 72 and Rama Iyer vs Nata Raja lyer AIR 1948 Mad 294 referred to